If you would like to understand this question and accept the possibility that your assumptions and conlusions might be wrong, I suggest you start with this article "Law As A Private Good" http://www.daviddfriedman.com/Academic/Law_as_a_private_good... by David D. Friedman (he's an economist AND a law professor).
That is an outright horrifying idea. What Friedman is suggesting in this article is basically applying the model of inter-state diplomacy to criminal law. That is an inherently unfair and inequality-promoting system.
Happen to be a poor man who opposed the death penalty? Too bad. The rich guys' law corp. is pressuring your law corp. to accept it in cases of inter-corporation conflicts, and - while your firm is very much against it - they represent lower-class people and simply can't afford to purchase the anti-tank weapons they'd need to survive a war with the other corp.
(Did I mention the other guys have tanks? Of course they do; they have the liquid funds and it's a sound investment.)
And what about this idea that inter-corporation conflicts are to be resolved by arbitration or ad-hoc negotiations? That spits in the face of the very basic concept of law where you're supposed to know if something you're doing is illegal or not. Would you really want to live in a world where anything you do can get you thrown in jail at any time because the corporation representing you decided it's cheaper to settle? I sure wouldn't.
It's horrifying until you realize that all the same things you fear actually happen today, except that the entity doing those things is a monopoly which is less accountable and more hostile to the public than any corporation ever could be. When you dislike something a government does, you can't just stop paying and hire another government - you have to wait n number of years and then vote hoping the next candidate is going to keep his promises (and they never do). When you dislike something a corporation does, you can stop paying it (recent successful example related to the current thread: godaddy and SOPA).
>It's horrifying until you realize that all the same things you fear actually happen today, except that the entity doing those things is a monopoly which is less accountable and more hostile to the public than any corporation ever could be.
That's only the way one sees it if you have a market bias.
For what it actually is, is an organization setup by the people (in most countries people literally died and fought to be able to set up their own government and state) and controlled by the people through voting off and on and through participating in it.
It's not perfect but far better than the alternatives were private interests play it out. And we had those, historically, only instead of corporations the private interests at the time feudal lords and large land-owners.
The effectiveness of government, and the purer representation of the people, only depends on one thing: the people's vigilance and participation in politics. People withdrawn into their own private affairs do not deserve neither freedom nor a state, and they don't get one, either. They get "career politics" to fuck them over. But that's not a flaw of democracy: it's a flaw of the people not taking care of it.
It does happen today - to a point. (The extent this happens depends greatly on your state and government.) And I dislike it when it happens today. What you're advocating is basically taking the instances where the current system fucks up and embracing them, making them not only legitimate, but the focal point of the entire system.
The system as set up is meant to make everyone - both rich and poor - equal before the law; in theory at least. Granted, it's not as perfect as that in practice. But what you're suggesting is basically allowing the rich to pay their way to their own laws, and if they happen to run afoul of some of those - to pay their way out of them. That is not a version of justice I can get behind.
