Military private or governmental will always do abuses, because the training and the discipline is dehumanizing. Probably the best solution is to replace them with robots. Still even so they can be ordered to kill and pillage, and if private it is kinda hard to have measures to prevent that (a private corporation is entitled to secrets). Lets not forget that in ancient times many armies were funded privately, and we know how "well" that worked.

OTOH if the people are armed (and have robots if possible), can serve as a deterrent against invasion, and eliminates the need of a military.

This idea of protecting escrow or free trade is nonsense, in my country they only exist to protect against foreign invasion.