Wow, it really kicked off on Saturday with that whole thing about whether the market could provide police protection!
Anyway, Mark said that, in a free market society, firms would only be incentivised to protect their clients, not anybody else. So he said that if your neighbour was getting burgled, and your security firm knew, it would have no incentive, or little incentive to do anything about it.
My thoughts on this are, firstly, it is simply not true that security firms have no incentive not to protect people who are not their clients: Think about mall security. If you were gtting beaten up in your local mall, the security would come help you. You aren't their client, though.
Secondly, Ian's point was good that the firm might want to increase goodwill towards it, kind of like Wal*Mart following hurrican Katrina. However, Mark's point in response was good, that the burglar could have his own security firm, and so yours and his would have to resolve disputes between them, which could be costly for your firm, but it couldn't cover those costs in you bill, etc. On the other hand, though, your firm could film the guy burgling, keep a record of the movements, and submit this in case your neighbour wanted to bring the burglar to justice. This won't cost as much.
However, another thought on this I had was, OK, so that means that if you don't hire the services of private protection agencies, you may not get protected - other firms may have little incentive to protect you, because you haven't paid them to. But so what? Should it really be the case that people should be robbed to pay for the protection of others against being robbed because those others don't get their own protection?