What sets a nation state apart from privet business, is the monopoly on violence, according to Barack Obama, while talking about contracting out the invasion of Iraq. He excused the monopoly on violence with the what he called 'the structure of accountability' which we know doesn't exist, and never will for any one who has a monopoly on violence! ;)

 http://www.youtube.com/watch?v=H7ilSNa0Cgs

 http://en.wikipedia.org/wiki/Monopoly_on_violence

The STATEus quo is maintained by the Army, enforcing foreign policy, and the Policy Force, enforcing domestic policy. Contracting out the violence is hardly privatising anything. We won't get a free market choice wether or not to purchase these services, or who to purchase them from, as we do from genuine privet traders.