# How would a lawless city function economically?

Background:

Say there is a country that is ruled by a king, medieval era style. It rules over several cities and towns, maintaining control with a national guard.

Now let's say within the boundaries of this country, but close to the border, is a city that has rejected the monarchy, and rules itself.

There is no established government in this city, and no leaders. There are several gangs, large and small ones, that operate on an honor based system. There are people that are not "within" a gang (like inn owners etc.), but most people have an unofficial affiliation with at least one faction.

Each of the gangs understand that if they were to fight with each other constantly, no one would benefit. So grievances are hashed out in a fighting pit. This can be between individuals within gangs, or entire gangs pitted against each other.

There is a lot of crime in this city, as there are no official laws, but there are a set of 'rules' people are expected to adhere to (no stealing and no murder included). If these rules are broken, they get thrown into jail without a trial. Once the jail is full the individual prisoners fight it out in the pit, and the last one surviving gets freed.

It is a flawed system, as the strongest survive even after multiple infractions, and gangs tend not to rat out their own very often, but it has kept the peace between gangs for many years, and everyone accepts it.

Most of the larger gangs have chapters in cities around the country that still come under the reign of the king. The monarchy accepts their presence, as none of the gangs are large enough to pose a threat to the throne individually, but if they combined they might overthrow the entire country. So it is in their best interest to have them pitted against each other, rather than join forces.

The gangs offer services to people and businesses, from basic mercenary work like protecting trade caravans between towns, to basic farm labor at the harvest, to assassinations (by the less reputable gangs).

Question:

How would the lawless city function at an economic level? Could earning money from the separate chapters and funneling it to this town provide them with enough money for trading for goods? How large could such a city become before it simply collapses due to the lack of infrastructure and government?

There are probably more considerations for a lawless town to function that I'm overlooking, so feel free to throw them in if you choose, but I feel the biggest problem would be maintaining a flow of money without taxes etc.

People do live in/near and trade with this town so they don't have to pay taxes, but as there is no government they are generally at the mercy of bandits etc. which is where caravan protection becomes a lucrative business. But would it be enough?

• Eventually, "laws" would be created; gangs would have their own rules and possibly keep treaties and have inter-gang rules with others. – theonlygusti May 8 '15 at 15:14
• But that's all that laws are; all laws will have started off as "rules", and been written down with time, and enforced more strongly by the more powerful gangs and gang leaders. – theonlygusti May 8 '15 at 15:24
• If these rules are broken, they get thrown into jail without a trial. The purpose of a trial is to determine whether the rules have been broken. Without one, how do you know who to throw into jail? If someone makes an accusation, is that proof enough? How then to deal with false accusations? And if not, what's the standard of proof? Who's throwing people into the jail? Who's guarding the jail and keeping people in? They've got to have some role in the admission and processing of new inmates. In the absence of a formal legal system, one will create itself very quickly. ("Emergent behavior.") – Mason Wheeler May 8 '15 at 15:42
• If there are no laws, how is there "a lot of crime"? – KSmarts May 8 '15 at 22:00
• Why do u call those structures "gangs"? Do they earn by assaulting people? Do they extort businesses? Do they call themselves "gangs"? If they follow their own rules (no stealing, no murder) then why still u call these groups gangs? Maybe they would prefer be called otherwise (Liberation front, National anti-monarchy movement, Anarchist league, Freedom Federation, Revival Movement, Christian morale guards etc)? – Anixx May 9 '15 at 1:15

How different is this from a standard feudal system during conflict?

It sounds like the gangs aren't totally anarchist, each one is likely to have its own territory and (effectively) laws. After all, laws aren't something magical, they tend to come down to someone with a big stick able to enforce them. The gang leaders would likely be similar to small time warlords.

So we've got a small island of feuding warlords who don't follow the local king. I imagine that would normally upset a monarch but I assume you've got some good reasons worked out for why he'd leave them alone.

The gangs are going to be extorting "protection money" out of businesses in the city like old time mob bosses. Free from royal control the city is going to be a hub for trade in contraband items and illicit events banned in the rest of the kingdom. Does the king really hate prostitution? The city will have a lot of it. Ditto intoxicants, gambling or people practicing protected trades that would be controlled by the crown in the rest of the country. Keep in mind that royally recognized guilds often prevented people from practicing a trade without being a member and traders might need the approval of the crown to operate. This city would welcome craftsmen who had angered the guilds somehow.

Indeed any items that are highly taxed in the rest of the country will also be big business.

• I was going to answer but you pretty much covered everything. – the_OTHER_DJMethaneMan May 8 '15 at 15:14
• Contraband is pretty much a given, but I really like the idea of exiled guildsmen taking up residence. – Mike.C.Ford May 8 '15 at 15:25
• as the strongest survive even after multiple infractions, and gangs tend not to rat out their own very often, And if you change "strongest" by "richest" and gangs by "political parties", how different is from a civilized country? :-p – SJuan76 May 8 '15 at 16:11

All right, let's say there's a blacksmith. He makes cookware, horseshoes, weapons, and any other things that are made out of metal in a medieval world. This particular blacksmith lives in your city, so he has some sort of gang affiliation. Even if he wants to remain neutral, he's probably going to get adopted by a gang sooner or later, simply because it's more convenient that way. This gang will hire him for any blacksmithing jobs they need, and even without a monetary system they can probably pay him by giving him access to other gang services (for instance, he now gets fed by the gang butcher and farmer). At this point, though, they're going to want him to work only for them, and since they've got the muscle, he's probably going to agree.

If we imagine all services work like this, suddenly we don't have one city, but many small cities situated next to each other. Each gang has its own ecosystem, with everything they need to stay alive. Just like with real gangs, each of these gangs would probably claim a chunk of their city for themselves, and try and keep other gangs out. Essentially, the city would work a lot like a series of city-states or nations.

So, then, just like with nations, the gangs would only deal with one another when trade becomes beneficial. Say one gang has the good blacksmith, and another gang has the good farmland, so the first gang might give the second gang a really nice set of armor in exchange for some food if their own stores run out. The smaller the gangs, the more they're going to have to rely on each other to survive. On the small end of the spectrum, you'd have a city that looks pretty uniform, as everyone is forced to share most of their resources. On the large end, there could be night and day differences between the gangs, as their interactions are kept to a minimum.

Of course, at this point I should mention that I don't see why a single gang wouldn't just take over, or at least that the number of gangs would settle at <=2. If you look at American history, the two-party system developed in about a decade; despite the large number of countries involved in WWII, most people agree it was Allies vs Axis; in your lawless city, I don't think it would take long before gangs built up alliances and formed two factions. Just going by my earlier points, the smaller gangs will need to rely on other gangs more; thus, either they will eventually become dependent on a larger gang and get absorbed, or become co-dependent with a similar-sized gang and combine. This process will most likely continue until you get two gangs. At that point, I guess you could secure an uneasy equilibrium, but like I said earlier, the bigger the gangs get, the less they'll need from each other. With this in mind, I don't see why the gangs would keep on living next to each other; people killing each other usually good for business.

• The two-party system in American politics is a direct result of the Constitutionally established voting system that makes a two-party system more stable than a multiple party system. There are plenty of other republics in the world that have different voting laws and more than two major political parties. – Mason Wheeler May 8 '15 at 15:44
• And "WWII[...] was Allies vs Axis" is only true when you want to explain all of WWII in one or two sentences. If you leave out so many details, you are not really giving a realistic explanation. +1 for the idea of minicities, though. – SJuan76 May 8 '15 at 16:15
• All right, so maybe my examples were bad. But I get the feeling there are a lot of cases of things boiling down to binaries (or a singularity) over time, especially in politics. If anyone can think of a better example than the two I provided, I can edit it in. – DaaaahWhoosh May 8 '15 at 17:15

Try reading the history of Iceland. Instead of gangs there were family-based groups; each group was based on a farmstead, with the economy based on farming. No cities, no towns, no villages, no king, no single ruler. Eventually law-and-order mostly prevailed. In time, the system broke down when individual leaders became too powerful and tried to take over property and wealth from the others. After that Iceland eventually ended up becoming a protectorate of Denmark.

What will they do for money?

It's likely that the lawless city will largely focus its economy on an area in which it has a distinct advantage over communities in the surrounding areas: doing things that are illegal in those areas. For example, if gambling and prostitution are generally banned in the nearby areas, I would expect those activities to contribute significantly to the economy of the city.

The city is also likely to be home to a large number of people who engage in criminal activity in the surrounding kingdoms. A highway robber, for example, wouldn't need to fear the actions of the police of the areas in which he commits his larceny if he spends his down time in a city where those forces have no jurisdiction. Human trafficking could likewise use the lawless city as a base for operations in the surrounding lands. These unscrupulous individuals will also have needs which will be fulfilled by a standard array of grocers, dentists, and the like.

Real world context

There are two good real-world examples of lawless cities that behaved more or less like this: Tortuga and Mong La.

Tortuga, of course, is the well known pirate haven of the Caribbean. While is was theoretically a colony of various colonial powers, its de facto lawlessness meant that it could serve as a home base for pirates acting in the region.

Mong La, on the other hand, is a modern city in Myanmar near the Chinese border. It's largely controlled by criminal gangs, who make their money in large part through cross border tourism from China. Mong La has prostitutes, casinos, and a large market specializing in the illegal wildlife trade. The government of Myanmar has no real control over the area, and the most common currency is the Chinese Yuan. Similar patterns of activity can be seen in other 'lawless' cities like Kowloon Walled City in Hong Kong.

Currency

The outlaws, without having control over the city itself, are likely to simply use the currency of nearby 'civilized' kingdoms, especially as robbery and patronage from people in those regions will likely bring in this kind of currency.

Q: How would the lawless city function at an economic level?

A:
Badly. Historically warlord-ism and anarchy go hand in hand. A lawless city would have a bit of both. Neither is known to enable the economy to flourish, as that requires personal safety for the average person.

Basically the economy would function exactly the same as normal, exchanges will be made when and if both parties feel it is beneficial. However one can only function in such an unsafe environment if able to protect oneself.

Consequences:
Everything is very expensive and mortality is high. Likely only the very base necessities will be available at all for most. Gangs will form, clash, collapse, and will provide temporary and flawed structure at best. They will exploit everyone else to get by. Most people will lie low and will barely get by. They will try to safeguard assets by hiding them. A very small number of people at the top will be able to wallow in every imaginable luxury, too small a number to really impact the economy at large.

Q: Could earning money from the separate chapters and funnelling it to this town provide them with enough money for trading for goods?

A: The city chapters will have no lever to request funds from other chapters, so they are on their own. The strong will flourish until taken out by another party. The weak will either die or end up as slave of someone stronger. Trade will be at a bare minimum: Weapons, food, a tiny bit of luxuries. Payment will be protection, favours, money, gold.

Q: How large could such a city become before it simply collapses due to the lack of infrastructure and government?

A: It will not collapse. Neither will it grow. It will simply be an unattractive place to be so the population will decrease rather than increase. There will come in little money from the outside; safety is required for peddling out prostitutes and illicit activities or substances. Such would be the domain of criminals operating inside policed environments, where the customers are. One possible exception would be if a gang becomes powerful enough to set up a safe smuggle line or slave trade. All the other gangs would then try to get a piece of the action as well, which would destroy the nice profitable niche again.

Q: There are probably more considerations for a lawless town to function that I'm overlooking, so feel free to throw them in if you choose, but I feel the biggest problem would be maintaining a flow of money without taxes etc.

A: Money will take second place to the ability to survive. Stealing will have a sizeable niche in the economy. Protection money flowing from the producers to the powerful will replace taxes. And the powerful will give back very little.

Q: People do live in/near and trade with this town so they don't have to pay taxes, but as there is no government they are generally at the mercy of bandits etc. which is where caravan protection becomes a lucrative business. But would it be enough?

A: Often, no. Economic activity will remain at a low level due to high risk. Safety on a personal level will be... gone.

In the end
Usually anarchy leads to warlord-ism leads to dictatorship. Which will provide policed streets but does not provide a free economy. More likely would be that the nest of lawlessness will be eradicated when the state grows stronger, or more annoyed. The state would have to be VERY weak for gangs to overcome it. I personally know of no historical example.

An example you could run with is a Wild West town - the "law" is either non-existent, or is just a guy with a gun and a badge instead of just the gun. There might be "laws", but they're only enforced if you can take out the crook - if you have enough influence and enough guns, you can do what you like.

Money will work like money always does - as a medium between commodities. (Unless people start trading chickens for bullets, you'll always have some sort of currency). But that's not your problem. The problem is how do people run their businesses if there's crazy people with weapons running amok?

Everyone will be armed, because you're in a might-is-right scenario. Someone might avenge your death, but that don't help you stay alive.

Houses and stores (which will probably be in the same structure) will be built to be defended. An example is a turn-of-the-century Western bank, where the teller lives upstairs with a shotgun, and there's a grill in his floor that he can stick a shotgun through, pointing directly in front of the safe.

Now, in practical terms, people are going to start banding together for safety and support and strength, which is where your gangs come in. If the gangs can't get along, you don't really have a town - you have several walled compounds that happen to be very close to each other. If they're on speaking terms (in the "it's not worth our time to shoot each other on sight" sense), you really are a lot closer to feudalism - it's just a bunch of gang leaders instead of a bunch of nobles in charge.

Law - Noun. The system of rules that a particular country or community recognizes as regulating the actions of its members and may enforce by the imposition of penalties.

Strictly speaking, if there are no laws either written or unwritten, then there is anarchy and chaos. Everyone does what they want to do, and the only consequences are those suffered while enacting their wills. This situation does not and never has existed; because usually killing someone or taking their stuff makes their family and friends upset. Then they enforce the social law of not murdering or stealing by (ironically) murdering the offender or taking his stuff in retribution. This process continues until both sides call off the war, or only one social group is left standing.

So, what you're asking is not how a lawless city could function, but rather how a city without an official government could function.

## So, how would a group of gangs control the city?

The same way any normal government maintains order, through forced collection of dues, recruitment of individuals from the populace, and strength of arms. A gang leader can convince people to run with him, but in order to keep them they at least need to eat. Some thugs may have loyalty, but most will want to be paid. There will always be neighboring gangs who will be vying for control of the territory and sabotaging each other's client businesses.

A craftsman looking to start up a business there will want to select his patron carefully to get under the thumb of one of the larger and nicer gangs. As others have said, the city would have started out with smaller gangs that combined until reaching a level where they lost interest in merging and could not easily displace one another.

At this point it depends on the temperament of their leaders. Fight to own everything, or negotiate truces with your neighbors so there is some stability. Fighting is always more profitable when it is on someone else's turf, and it is too easy for an arson or two to slip in and even the score. If a gang cannot protect their clients then they'll lose the confidence of their clients and thus the financial support to maintain their territory.

For a modern and successful rendition of this, look at the Las Vegas Strip, an area which is still unincorporated into the City of Las Vegas. The Strip is owned by a collection of casinos, resorts and other businesses who handle the regular maintenance of roads and utilities on their own properties. They depend on tourism to survive, so they make things as nice as possible for their customers.

A libertarian city where the only rules are existent are such that they perpetuate the absolute freedom of the citizenry. Each man or woman works to his or her own ends. No man nor woman has the right to impose their business upon another. This ethos is enforced by those, democratically elected, to essentially keep the peace. You see, this community is only loosely confederated. Taxes are non or barely existent as this would imply a forceful coercion or 'theft' upon another sovereign individual.

The economy would function easily without proper governance. The free market is remarkably flexible and easily adapts to the wants and needs of the total civilizational mass. When a want is popularly supported an individual, by his own will, rises up and fills this demand with supply. The reason for this efficient assumption of responsibility (something the statist would beg and plead for the government to slowly adapt the needs of it's subject, if at all) is that the individual who quickly reacts to a need, or more formally, acts upon a realized need, benefits greatly by filling this role. It is a net positive for all parties when an individual, by his own sovereign will, fills a need within society. Thus forming a cohesive group that would cooperatively work to protect itself from the impositions of outside forces (gangs, warlords, etc).

As the civilizational mass grows in size and complexity the wants and needs of the individual grow more diverse and the need for diverse occupations arises along with it. And thus, a role for each citizen according to their present mode of functionality arises. Education, being of utmost importance to the improvement of the individual, would be privately funded for all who are in need. Likewise health care. Scaling this to nearly any size wouldn't be much of an issue. The only issue would be maintaining a cultural cohesion (which would emphasize the need to protect and respect the needs of one another within the civilizational mass). Thus, a form of city-state nationalism that is self-reinforcing would be passed throughout the civilizational mass via cultural transactions.

Compared to heavy-handed bureaucracies inefficiently doling out subsistence each local group of individuals takes care of whatever individual need arises This system would maximize efficiency, life, and liberty.

Iceland and 17th century Pennsylvania but both were really pre-modern libertarian societies - Iceland's althing and Pennsylvania's caretaker state government during the colonial era, and more to the point, both were monolithic, agrarian, and isolated cultures at the time; it worked in Pennsylvania at the time because of the Quaker influence of living in peace.

• This does not seem to answer the question of how the economy would work. Please reread the question and edit your answer to actually answer the question. – the_OTHER_DJMethaneMan May 8 '15 at 19:01
• @DJMethaneMan better? – hownowbrowncow May 8 '15 at 19:09
• This feels more like a wishful libertarian manifesto than anything factual. – Dan Smolinske May 8 '15 at 19:23
• @DanSmolinske are you implying that man needs to bear the burdensome yoke of governmental coercion in order for the sovereign individual to function effectively within a group? Much like other political thought structures this one is entirely based upon a reachable Ideal of Man. – hownowbrowncow May 8 '15 at 19:32
• The other critic is whether this would also work in a city. OP did not specified but I would guess it's around 5000 to 10 000 people. Your describing small isolated communities but what about a moderate size city, would it still work the same? – Vincent May 8 '15 at 20:19