Comment: Yes there is. Competition.

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Yes there is. Competition.

Yes there is. Competition. If you had only one defense contractor, sure. But with many, part of their selling point would be to keep their own limitations in place, as well as keeping tabs on other contractors to insure we don't get any Cobra Commanders.

A defense contractor doesn't start from nothing. They require money to start and operate. They must convince share holders of why they need to purchase X Y or Z. They must have safeguards in place to convince customers why they aren't going to turn into a gang of bandits and start plundering. The moment a defense contractor fails to convince their share-holders and customers that they are not only effective, but safe to the public, they will watch their money supply drain away until they either fix their problem or go out of business.

When you say "real-world" you refer to our artificially manipulated market. However your logic is backwards. It is exactly the force-monopolist that creates violent conflicts between entities wishing to engage in the trade of goods. Look at the drug war. Were drugs legal, and would that drug dealers could use normal legal services to settle disputes, there wouldn't "be" a drug war, much like there is no longer an "alcohol war." It is the force-monopoly, a violation of rights in and of it self who naturally begins to deprive other rights, such as what we can put into our bodies or purchase that inevitably starts the violence by forcing people to operate outside of a legal system.

When it comes to force-based businesses, its important to note that a stalemate is far more effective than a monopoly on maintaining stability. This is the entire philosophy behind the 2nd amendment. The founders understood that a force-monopoly creates a tyranny as the monopolist can bring overwhelming force against its slaves.

However a society based on the notion of self-defense where most everyone is either armed or has resources close to hand for self defense has little to fear from any defense contractor. But really that is insurance only against the rise of a cartel. The fact that there would be thousands of defense contractors all keeping tabs on one another, and unable to monopolize without a government to clear the path would be more than enough check on the growth of any one group into a substantial threat.

In a society without government privileges and monopolies, defense contractors would have to convince customers why they should use their service over their competitors. Any defense contractor who was even mildly close to becoming a threat to the public would undergo a smear campaign from all of its competitors as they try to capture the market and tank their opponent. As is always the case in the free market, competition breeds a better product for a cheaper price as companies strive to be the best. Selling protection is no different than selling anything else.

The argument that defense contractors would eventually take over the world is ironic at best considering that if they did, we'd be exactly where we are now. Governments and perpetual war and slavery with the constant threat nuclear extinction looming at all times. We are living in the worst case scenario, and you're worried about dangers of too much freedom because there might be some violence?

In a free society, it is the individual who is the guarantor of laws and rights. The defense contractor is only a group who is hired to assist in that. Unlike a government, they can be fired at will. A well armed people would form militia at will to deal with rogue defense contractors. The Bundy Ranch is a good example of this.