History of Somalia (1991–2006)

Somalia, from 1991 to 2006, is cited as a real-world example of a stateless society and legal system. Since the fall of Siad Barre's government in January 1991, there had been no central government in Somalia until the establishment of the Transitional National Government and its successor the Transitional Federal Government. Large areas of the country such as Puntland, Somaliland and Galmudug were internationally unrecognized and administered as autonomous regions of Somalia. The remaining areas, including the capital Mogadishu, were divided into smaller territories ruled by competing faction leaders. In many areas, there were no formal regulations or licensing requirements for businesses and individuals.

The Transitional Federal Government, formed in 2004, was recognized as the central government of Somalia. Before December 2006, the TFG controlled only the town of Baidoa, the sixth largest city. The intervention of Ethiopian government forces following the rise of the Islamic Courts Union, culminating in the latter's defeat in the Battle of Baidoa, allowed the TFG to expand its control under the protection of Ethiopian troops. The TFG was at the time not able to effectively collect taxes, had no notable finances or real power base, and struggled to exert control over Mogadishu following an attempted move in late December 2006. However, the TFG later succeeded in capturing most of Somalia from insurgents, but struggled to cement its control and establish law and order.

Benjamin Powell argued that statelessness led to more order and less chaos than had the previous state, and economist Alex Tabarrok claimed that Somalia in its stateless period provided a "unique test of the theory of anarchy", in some aspects near of that espoused by anarcho-capitalists David D. Friedman and Murray Rothbard, although this is disputed by various anarchists, of both the capitalist and anti-capitalist varieties, who contend it is not anarchy, but merely chaos, perhaps resulting from unequal distribution of power and meddling by neighbors and developed nations like the United States. The Somali experience since the collapse of the state, and especially the failure of international intervention, has offered a clear challenge to elements of conventional economic, political and social order theory and the very premises under which Western diplomacy and development agencies operate, and in particular, in the words of anthropologist Peter D. Little, "assumptions about the role of states in maintaining order and services".

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