Core Theory

Contracts

A contract is a voluntary agreement between individual private property owners that transfers, exchanges, or creates obligations over their respective property.

The key word is individual. Contracts can only bind persons who actually own the things they’re contracting over.

What Makes a Valid Contract

Three requirements — all of them obvious once you accept Private Property:

Consenting parties — no coercion, no fraud
Defined subject matter — specific property or performance being exchanged
Individual ownership — each party must actually own what they’re offering

If any of these are missing, it’s not a contract. It’s either a wish or a threat.

The Group Ownership Contradiction

This is where “collective contracts” and socialist arrangements collapse immediately.

Suppose Alice, Bob, and Carol sign a contract saying they “jointly own” a piece of land. Fine. Now Alice wants to farm it, Bob wants to build on it, and Carol wants to sell it. Who decides?

Three options:

Unanimous consent required → Any one person has veto power. The resource is effectively paralysed. Nothing gets done without everyone agreeing. You don’t own it; you’re all hostages to each other.
Majority vote decides → 2 out of 3 can override 1. But then the minority’s property rights just got voted away. The majority owns the asset, not all three equally.
Designated decision-maker → One person gets final say. That person is the de facto owner. The “joint ownership” was a fiction from the start.

Every version of group ownership collapses into either paralysis or hierarchy. There is no stable middle ground. Ownership means the exclusive right to direct a resource’s use — exclusive being the operative word. Two people cannot both have exclusive control of the same thing at the same time for conflicting purposes.

This is why “common ownership” is not a property ethic — it’s a property abolition ethic dressed up in nice language. See: Homesteading (First-comer Ethic).

What You Can and Can’t Contract Away

A valid contract can only transfer what you legitimately own:

✅ Your labour for a period of time
✅ Goods you own
✅ Services you’re capable of providing
✅ Future delivery of the above

What you cannot contract away:

❌ Your self-ownership — a permanent slavery contract is void. You can contract your labour indefinitely in practice, but you can never give someone the right to own your body. If the relationship becomes slavery (no ability to exit), it has ceased to be a contract. Self-ownership is inalienable because to argue against it you must already be exercising it.
❌ Third parties’ property — you can’t contract to give someone else’s land to a buyer
❌ Rights you don’t have — governments “contracting” citizens into tax obligations they never agreed to is not a contract; it’s extortion with paperwork

The social contract theory claims that by living in a society, you implicitly agree to its rules and taxes.

This fails every test of a real contract:

You never signed it
You were never shown the terms
You cannot opt out without leaving everything you own
You were not born consenting — you were born into it

A contract you can’t refuse, don’t know the terms of, and never signed is not a contract. It’s a territorial claim backed by force. Calling it a “contract” is an attempt to launder coercion through legal-sounding language.

Enforcement Without the State

In anarcho-capitalism, contracts are enforced through:

Reputation — breach a contract and no one does business with you
Private arbitration — both parties agree in advance to a neutral third-party arbitrator; the ruling is binding because both parties staked their reputation (and often collateral) on it
Escrow — valuable consideration held by a neutral party until obligations are fulfilled
Bonding and insurance — contractors post bonds; if they default, the insurer pays out and pursues them
Ostracism — private defence and arbitration agencies maintain reputations of reliable vs. unreliable parties

This is not hypothetical. Merchant law (lex mercatoria) operated this way for centuries in medieval Europe — enforced entirely through reputation and private arbitration, with no state involved.

The state does not create contract enforcement. It monopolised it.

Contracts and the Price System

When contracts are freely negotiated between property owners, prices emerge. Each contract represents two parties agreeing that the exchange is worth it to both of them — a mutual declaration of subjective value. Aggregate these across an economy and you get the price system: the distributed information network that makes economic calculation possible.

Interfering with contracts (price controls, minimum wages, rent controls) doesn’t remove prices — it corrupts them, feeding false information into the calculation system and producing shortages, surpluses, and misallocated resources.

July 5, 2026