What a liberal (free) society would look like

In Omnipotent Government: The Rise of the Total State and Total War, first published in 1944, economist Ludwig von Mises offers an ideological explanation of the causes of the two world wars. 

"All the oratory of the advocates of government omnipotence," Mises writes, "cannot annul the fact that there is but one system that makes for durable peace: a free market economy. Government control leads to economic nationalism and thus results in conflict." [p. 286]

Mises provides a glimpse of what a free market system would look like:

In order to grasp the meaning of this liberal program we need to imagine a world order in which liberalism is supreme. Either all the states in it are liberal, or enough are so that when united they are able to repulse an attack of militarist aggressors. In this liberal world, or liberal part of the world, there is private property in the means of production. The working of the market is not hampered by government interference. There are no trade barriers; men can live and work where they want. Frontiers are drawn on the maps but they do not hinder the migrations of men and shipping of com­modities. Natives do not enjoy rights that are denied to aliens. Gov­ernments and their servants restrict their activities to the protec­tion of life, health, and property against fraudulent or violent ag­gression. They do not discriminate against foreigners. The courts are independent and effectively protect everybody against the en­croachments of officialdom. Everyone is permitted to say, to write, and to print what he likes. Education is not subject to government interference. Governments are like night-watchmen whom the citizens have entrusted with the task of handling the police power. The men in office are regarded as mortal men, not as superhuman beings or as paternal authorities who have the right and duty to hold the people in tutelage. Governments do not have the power to dictate to the citizens what language they must use in their daily speech or in what language they must bring up and educate their children. Administrative organs and tribunals are bound to use each man's language in dealing with him, provided this language is spoken in the district by a reasonable number of residents.

In such a world it makes no difference where the frontiers of a country are drawn. Nobody has a special material interest in en­larging the territory of the state in which he lives; nobody suffers loss if a part of this area is separated from the state. It is also im­material whether all parts of the state's territory are in direct geographical connection, or whether they are separated by a piece of land belonging to another state. It is of no economic importance whether the country has a frontage on the ocean or not. In such a world the people of every village or district could decide by plebi­scite to which state they wanted to belong. There would be no more wars because there would be no incentive for aggression. War would not pay. Armies and navies would be superfluous. Police­men would suffice for the fight against crime. In such a world the state is not a metaphysical entity but simply the producer of secu­rity and peace. It is the night-watchman, as Lassalle contemptuously dubbed it. But it fulfills this task in a satisfactory way. The citizen's sleep is not disturbed, bombs do not destroy his home, and if some­body knocks at his door late at night it is certainly neither the Gestapo nor the O.G.P.U.

The reality in which we have to live differs very much from this perfect world of ideal liberalism. But this is due only to the fact that men have rejected liberalism for etatism. They have burdened the state, which could be a more or less efficient night-watchman, with a multitude of other duties. Neither nature, nor the working of forces beyond human control, nor inevitable necessity has led to etatism, but the acts of men. Entangled by dialectic fallacies and fantastic illusions, blindly believing in erroneous doctrines, biased by envy and insatiable greed, men have derided capitalism and have substituted for it an order engendering conflicts for which no peaceful solution can be found. [pp. 91-92]