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Governments often wage war against each other.

A common libertarian argument is that governments already compete. They are already in a state of anarchy with each other, yet the world still works somehow, and states can and do have agreements and common standards (eg extradition rules).

Rand’s illustration is an instance of a mistake Karl Popper calls the myth of the framework: https://blog.dennishackethal.com/posts/objectivism-vs-the-myth-of-the-framework

Libertarians such as David Friedman have explained how that situation could be resolved peaceably:

https://www.youtube.com/watch?v=_yo7vnXmVlw
https://www.youtube.com/watch?v=-PnkC7CNvyI

One illustration will be sufficient [to show that a society made of competing governments cannot work]: suppose Mr. Smith, a customer of [arbitration service] A, suspects that his next-door neighbor, Mr. Jones, a customer of [arbitration service] B, has robbed him; a squad of Police A proceeds to Mr. Jones’ house and is met at the door by a squad of Police B, who declare that they do not accept the validity of Mr. Smith’s complaint and do not recognize the authority of [arbitration service] A. What happens then? You take it from there.

As I have written before, Rand “implies that they could never resolve their conflict – or worse, that they would be in a perpetual state of war – because they don’t have a shared jurisdiction, an underlying legal framework.”

A monopoly on violence amplifies the risk of abuse.

KodoKB points out a risk of abuse:

The use of retaliatory force has an objective risk of being misapplied and therefore of violating the rights of others.

Related: #4

Defensive force and security services are productive endeavors.

Retaliatory force is only part thereof, and defense involves the employment of scarce resources, thus economic principles apply. (Logan Chipkin)

[There is a] difference between the functions of government and the functions of industry, between force and production.

Rand says ancaps make the same mistake as “modern statists” – they don’t see this difference.

There exist many legal variations between states of the US, eg with regard to wiretapping laws (single-party vs two-party-consent states), yet presumably that wouldn’t lead KodoKB to conclude that federalism is bad.

Since an objectivist government, by definition, cannot aggress upon its citizens, it cannot stop them from forming private arbitration services anyway. It has no way to enforce its monopoly. So an objectivist society would sooner or later turn into an ancap one anyway.

Even if it’s true that people need shared, objective legal standards for a society to function, that doesn’t mean government is the only way to supply such standards. (Logan Chipkin)

Private protection/arbitration agencies would actually be better than the governments described in #5 (the US and Chinese government, respectively). Consider how things would be different if these governments were not extorting their citizens for money, but instead had to rely on a value proposition to earn their money – that is, if they both operated like private arbitration agencies. Then both would prefer to have shared rules around intellectual property so their customers continue to give them money.

That sounds no worse than the current situation between the US and China, say. China protects Chinese companies violating US trademarks.

(There’s a common libertarian saying about how criticisms of libertarianism are usually just criticisms of the status quo.)

KodoKB writes:

If someone decides to make a website that only supports a certain browser, or to only allow certain encoding methods in their phonelines, while that may exclude me from their services it does not violate my rights. If someone decides that they can steal my IP [intellectual property] and they have an agency that supports this view, they are violating my rights and are being protected in doing so.

Common standards often emerge voluntarily because people prefer objectivity and wish to avoid arbitrariness.

Consider communications technology and the web. Competing phone companies agree on standards for underlying technology so their customers can call each other. Developers of web browsers adopt common standards for the web. Developers of operating systems follow shared, cross-OS standards (called POSIX).

These standards result in objectivity, and they emerged without government involvement. People develop and agree upon such standards voluntarily because of the benefits they offer: without them, there’d be chaos. People generally don’t like chaos.

[I]t is the need of objective laws and of an arbiter for honest disagreements among men that necessitates the establishment of a government.

In other words, having multiple governments in a single territory would not result in having objective laws.

Reddit user KodoKB explains why:

[T]here could be thousands of slight (or not so slight) variations between the different agencies. Because there are so many different definitions of what’s allowed, the law then would not be objective in the sense that it’s not practically possible for an individual to know what actions are permissible and which aren’t.

The anarcho-capitalist stance: competing governments in a single territory would not only work but be superior to having a single government, a monopoly on violence.