For a moment, imagine yourself in a truly anarchic society with no rules or laws, no protection of property rights, no defense, no publicly provided goods or services, and no taxes. Would this society be paradise or a nightmare? Each morning, if you have not been murdered the night before, you would have a daunting decision: how to divide your time that day among providing for your needs, guarding the fruits of your past labors, and stealing from others. The greater the amount of time devoted to either guarding your “pile” or robbing others, the less would remain for productive activities that augment your overall wealth and that of society. Stealing or watching over your assets uses up scarce resources in an unproductive activity that reduces society's overall well-being. Under the best of circumstances, theft is a zero-sum game.

In this natural anarchic state, there would evolve a collective of individuals – perhaps thugs – who would specialize in providing protection in return for a share of the wealth of those being protected. These guardians would amass weapons to counter threats both within and beyond their society. Some of the additional goods, produced because you now have time released from having to watch over your assets, could pay the protectors. If the value of this tribute were less than the value of these additional goods, then both the protected and the protectors would gain from the arrangement.