Aren't Free Markets concerned solely with personally beneficial agreements? How do you ensure the common interest is protected?
In the example of security, it is a personal issue, so I assume you mean in the broader sense?
Insurance is a good way of protecting yourself against externalities. For example, if you want to pay small premiums on your car insurance, it is your interest to not cause accidents. In turn, this may mean the insurance companies, asking people to stick to suggested speeds, not drink and drive, use mobile phones etc. Therefore, the common interest for people not to drive dangerously, is also the individual's interest to keep their premiums low.
There are many other examples, but where damages have been done, there is a case for compensation to be due.
Additionally, in a free market for justice, there is a human element. The likes of common law were built from the bottom up through judgements and precedence, rather than from the top down via the legislative process. Bottom up law is a free market approach and this inevitably means your actions will be judged by arbitrators and your peers.
Furthermore, with free market justice, any obligation to comply is optional. While not complying to good judgements will see offenders being ostracised*, not complying to bad judgements may lead to little in the way of consequences. This give and take over contracts and agreements would lead to a safety valve, which is missing in our force backed legal system.
If someone decided to ring fence some land and then charge rent for people to use it, this contract may well be ignored by the greater population. In turn, this would lead to arbitrators peddling such decisions to lose respect and influence. Essentially, bad 'law' would be ignored, so if something wasn't in the common interest, it would be rejected.
[* Would you employ a convict? Would you form contracts with people who breaks them? Would you want to associate yourself with people who violate others etc?]
edit: fixed wording
Edited by Traktion, 28 February 2012 - 11:36 PM.