Nozick’s natural rights—particularly the right of self-ownership and the consequent right to the fruit’s of one’s labor—present an obvious problem if we desire any state at all, no matter how minimal.

In order for a state to really be a state under most definitions, it needs to make two claims—and have them obeyed. First, the state maintains a monopoly on the use of force within the geographical region it controls. Second, the state collects taxes. Both of these are clearly incompatible with anarchism—and both seem incompatible with an individual’s right to protect his own rights and with his right to keep what he’s earned.

If this is true, then Nozick’s natural rights necessarily demand anarchism. But Nozick doesn’t want his natural rights to tie us to anarchy. Instead, he wants to argue that these rights are, in fact, compatible with a minimal state—what’s often called minarchism.

Nozick argues that we can get from anarchism to minarchism without anyone’s rights being trampled if we keep in mind the principle of compensation. His story goes like this:

Begin with an anarchist society. Every person is responsible for protecting his or her own rights. Soon, however, people realize that rights protection is a service like any other, and service providers will appear, selling protection to customers, and competing with each other for clients. Nozick calls these “protection agencies.” So far, this world looks very much like the hypothetical anarcho-capitalist worlds of Murray Rothbard and David D. Friedman.

Nozick thinks the natural progression will be from many, smaller agencies to fewer, larger ones. If I’m looking for an agency to protect my family and my property, chances are I’ll be drawn to the biggest and most well-established. Over time, this will concentrate clients among a handful of firms.

In order to handle disputes between clients of different firms, the agencies will either merge further or enter into agreements with each other on how to handle inter-agency conflicts. This will lead eventually to a single “dominant protection agency”—or a single dominant organization of large agencies.

We’re still living in anarchy, however. None of those agencies can compel people to accept and pay for its services and so the world still contains many “independents,” as Nozick calls them. These independents—either individuals or smaller, non-affiliated agencies—present a problem for the dominant protection agency. In the mind of that agency and its clients, independents take justice into their own hands. The dominant protection agency’s job is to protect the rights of its own clients, so it understandably gets concerned when an independent seeks to extract restitution from one of those clients. Not knowing for sure if the client is guilty, the dominant protection agency is obligated to prevent the punishment until guilt is assured. And the only way for the dominant protection agency to be sure (or sure enough) of its client’s guilt is to subject that client to its own procedures.

In other words, the dominant protection agency’s obligations to its clients prevent it from allowing the continued existence of independents. But notice that this move takes the agency one huge step toward statehood, because it has claimed for itself an exclusive right to the use of force (independents cannot use force without the agency’s permission). According to Nozick, the dominant protection agency has now become an “ultra-minimal state.”

The ultra-minimal state isn’t quite a state, not yet. For that, one more step is needed: taxation. Because independents cannot be denied rights protection entirely without that denial turning into a rights violation, and because the ultra-minimal state now prevents independents from protecting their own rights, the ultra-minimal state must itself protect independents. Put another way, the ultra-minimal state is obligated to protect the rights of everyone within the territory it claims jurisdiction over.

Doing so requires resources. If independents know they’ll receive protection even if they don’t pay, we’ll end up with a classic free-rider problem as the state’s clients gradually break off payments and become (still-protected) independents. So the ultra-minimal state has no choice but to force those it protects to pay for its service. It has no choice but to collect taxes. Because it’s giving independents rights-protecton services, it’s justified in forcing them to pay for those service.

Thus anarchism becomes the ultra-minimal state, which becomes the minimal state. And all, Nozick thinks, without anyone’s rights getting violated.

Does it work? The trouble for Nozick is illustrated by a single question: “What don’t the anarchists want?” Under anarchism, the independents were independents precisely because they did not want the protection agency’s services enough to pay for them. Maybe they thought the price was too high. Maybe they thought they could better protect their rights on their own. Maybe they took a principled stand against a market in rights protection. The precise reasons independents chose their independent status doesn’t matter. That they chose it—and thus rejected agency protection at agency prices—does.

But the ultra-minimal state, as it becomes a genuine state, forces independents to accept its services and then forces them to pay for those services. Nozick hopes to keep this force from turning into a rights violation by having the ultra-minimal state compensate the independents with services—services that were precisely what the independents didn’t want in the first place.

For this reason, most anarchists find Nozick’s moral justification for the state far from compelling. It’s as if Nozick said, “I’m going to force you to listen to my album even if you don’t want to—and I’m going to charge you for the album, too. But don’t worry! I’ll compensate you for all this coercion by letting you listen to my album.”

In the end, almost no one thinks Nozick’s argument against anarchism holds up. There may well be other ways to get from strong natural rights to a morally legitimate state, of course. But for those we’ll have to look elsewhere.