Pesky Details

I was recently at a convention of free enterprise educators, and I attended a thought-provoking presentation concerning the free cities movement, and the possibility that Honduras will be listed in history as an innovator of this libertarian dream.

The concept of free cities includes the creation if something akin to city states where people can freely choose the type of legal framework under which they wish to exist. Of interest to transnational capital, it can also choose which regulations govern the labor relations, environmental impact, taxation, and ownership requirements.

The idea is to stimulate a competitive environment to enable competing models of social organization to flourish or fail, depending on the perceived value or quality of life offered. So in theory, a person could choose to live in a monarchy, an anarcho-syndicalist collective, a Moaist collective, or a free enterprise, right-to-work city on the hill.

A simple example given by the panelists concerned construction investment in Mexico. A company and worker could choose to enter into an agreement based on Mexican law, law that makes it extremely difficult to fire employees, or under Texan law, which, well, let’s just say anything just short of lynching is seen as acceptable in labor relations.

The idea behind free cities is that it will eliminate the drag of government rent-seekers or parasites from siphoning off productive capital, as well as providing investors with attractive environments which will produce economic growth that raises all ships. In theory, workers will flock to these Meccas of economic development and states will be able to provide social services from the windfall of rational uses of local resources.

While ideas that offer the potential to diminish the considerable drag of state corruption and rent-seeking needs to be applauded, the fact that capital is free to move, yet labor’s movement continues to be restricted does not permit the appropriate conditions for such ideas to be considered Libertarian, Democratic, or free enterprise. While capital is free to move, if developing world nationals do not share in that freedom as they search for best employment, investment, or business opportunity, then you do not have the actual freedom of choice on which the system is based. Rather, you have marginalized groups of labor whose only recourse to defend basic economic interest continues to be fragmented, leaving them at the mercy of the bottom line.

Furthermore, a cause of great concern with the advancement of these ideas is the component of international arbitration to settle disputes concerning agreements that are considered to be unalterable by the nation states. The planners of the free city movement intend to enter into contracts which are linked to international agreements, thereby reinforcing agreements with international law. The proponents of the free city movement propose that this is ethical and democratic because they are entering into agreements with the dually elected representatives, while insisting, in the case of Honduras for example, that the last coup d’état, which removed a democratically elected president, was not a coup d’état because he was a really crazy guy who needed to be removed.

This (logic) is demonstrative of what Dr. Joan Bach refers to as Salami Politics. Salami Politics state that everything left of center is chopped off and what’s left is a rather bloody mix that no one really wants to digest. Cuba has the most respected elections in the world- no one doubts the mechanisms of Cuban elections. However, there are very few people who consider the Cuban process to be democratic. As Florida can easily demonstrate, elections a democracy do not make. Therefore, it is rather disingenuous to describe contracts rendered through negotiations with the political elite of nation states which can hardly be considered democratic, as legitimate instruments to lock into perpetuity land and labor resources.

The libertarian vision of competition is great, and I would love to see the current proponents of the free city movement condition agreements with clauses that facilitate people from participating nation states to have the freedom of movement to any other city or nation state, as well as include provisions which take into consideration the enforceability of contracts signed by dually elected representatives produced under undemocratic condition.