Why can't the free market, instead of government, provide "agencies of defense?"

What is the flaw in the argument made by market anarchists that governments are not needed; that free market private agencies of defense will solve the problem of protecting individuals? They say that this is not the same as "competing governments"--it is, rather, competing private organizations.

They claim that, historically, government has been known to initiate force (they point to cases such as U.S. imperialism in Latin America, allowing companies such as the United Fruit company to use the government to seize and control vast amounts of land, etc.).

Why do Objectivists believe that a government can exist without initiating force, when there are abundant historical cases of the state engaging in rights violations?

Roy A. Childs, Jr. makes this case by challenging Ayn Rand's view of the nature of government. Here is an excerpt from his open letter to Ayn Rand:

1. "If a society provided no organized protection against force, it would compel every citizen to go about armed, to turn his home into a fortress, to shoot any strangers approaching his door," etc.

   This is a bad argument. One could just as easily assert that if "society" (subsuming whom?) provided no organized way of raising food, it would compel every citizen to go out and raise vegetables in his own backyard, or to starve. This is illogical. The alternative is most emphatically not either we have a single, monopolistic governmental food-growing program or we have each man growing his own food, or starving. There is such a thing as the division of labor, the free market – and that can provide all the food man needs. So too with protection against aggression.

2. "The use of physical force – even its retaliatory use – cannot be left at the discretion of individual citizens."

   This contradicts your epistemological and ethical position. Man's mind – which means: the mind of the individual human being – is capable of knowing reality, and man is capable of coming to conclusions on the basis of his rational judgment and acting on the basis of his rational self-interest. You imply, without stating it, that if an individual decides to use retaliation, that that decision is somehow subjective and arbitrary. Rather, supposedly the individual should leave such a decision up to government which is – what? Collective and therefore objective? This is illogical. If man is not capable of making these decisions, then he isn't capable of making them, and no government made up of men is capable of making them, either. By what epistemological criterion is an individual's action classified as "arbitrary," while that of a group of individuals is somehow "objective"?

   Rather, I assert that an individual must judge, and evaluate the facts of reality in accordance with logic and by the standard of his own rational self-interest. Are you here claiming that man's mind is not capable of knowing reality? That men must not judge, or act on the basis of their rational self-interest and perception of the facts of reality? To claim this is to smash the root of the Objectivist philosophy: the validity of reason, and the ability and right of man to think and judge for himself.

   I am not, of course, claiming that a man must always personally use retaliation against those who initiate such against him – he has the right, though not the obligation, to delegate that right to any legitimate agency. I am merely criticizing your faulty logic.

3. "The retaliatory use of force requires objective rules of evidence to establish that a crime has been committed and to prove who committed it, as well as objective rules to define punishments and enforcement procedures."

   There is indeed a need for such objective rules. But look at the problem this way: there is also a need for objective rules in order to produce a ton of steel, an automobile, an acre of wheat. Must these activities, too, therefore be made into a coercive monopoly? I think not. By what twist of logic are you suggesting that a free market would not be able to provide such objective rules, while a coercive government would? It seems obvious that man needs objective rules in every activity of his life, not merely in relation to the use of retaliation. But, strange as it may seem, the free market is capable of providing such rules. You are, it seems to me, blithely assuming that free market agencies would not have objective rules, etc., and this without proof. If you believe this to be the case, yet have no rational grounds for believing such, what epistemological practice have you smuggled into your consciousness?"