What Do Charter Cities Tell Us Of The Legitimacy Of Governance?

I want to indulge in a thought experiment. Let us envision that I am fabulously wealthy. (It is my thought experiment after all!) Using my fabulous wealth and moved by the profit motive and humanitarian desire, I decide to found a charter city of sorts. I fly to some poor country, purchase a vast tract of land, make some agreement with local officials, hire a private security company to protect my property and declare a charter. The city’s charter being a model of anarcho-capitalistic and libertarian principles, I am vested in my full property rights. This allows me to set all sorts of corporate policies which one must agree to if one is to come onto my land.

I am of course both a pragmatic and a principled libertarian, so without divesting myself of my property rights and subject to corporate policies, (such as to allow the operation of the security forces in my employ who are tasked with enforcing corporate policies) I grant property-like contracts in land in exchange for some payment. The holder of this contract may exclude others, transfer the contract, etc… This gives the contract holders the incentives they need to found businesses, improve the land and carry-out other fruitful activities. (from which I benefit thanks to rental agreements for parts of the land) For the sake of convenience, we call these contracts sales. There is no confusion, I (or my corporation of which I am sole owner) still own the entire city. But those contracts are so similar to sales, that we call them sales and outside of formal arbitration proceedings, everyone refers to these contracts as sales and say that they “own” the piece of land which the contract has given them some control over.

Anyone who enters into the city must first sign a contract at first agreeing to abide by corporate policy. Same thing for anyone who wants to stay in the city. But after a couple generations, it is generally understood that those are the conditions to stay in the city and so from an explicit contract, the city moves to an implicit contract whereby staying in the city is understood to mean agreement to be bound by the corporate policies.

The city thrives and I become even wealthier. But times passes and I passe on, leaving this wonderful economic enterprise to my only child who herself follows my wise example, leading the city to thrive and expand (who wouldn’t want to sell their nearby land to be included in this wonderful world?) and so on for generation after generation. But some 300 years later, something changes. My descendant and sole owner of the corporation went to college to study late-20th and early 21st century United States history and fell in love with the beautiful rhetoric of politicians. So armed with his power to modify corporate policy, he embarks on an ambitious project of reform. Advisers and long-time executives protest, but he nevertheless imports the early 21st century body of law into corporate policy. Much has to be re-written to account for a different legal environment and some things just cannot be done, but the vast majority of laws can be ported over. For instance, a variety of narcotics are prohibited, everyone is required to purchase some sort of health insurance, representative bodies are elected, the practice of certain professions requires a license issued by the city, etc… In practice, those who live in the city in 2313 are subject to the same rules as we in 2013 real-world America are subject to.

Now, my question is this: What is the difference between my 2313 charter city and modern America? A simple libertarian answer is that my descendant owns the place and therefore can do as he pleases, while nobody owns the United States and therefore, the government’s action is illegitimate. But I find that intuitively hard to believe. Would libertarians really change their mind about everything if it was suddenly revealed that 300 years ago some guy held clear title to the whole landmass of the United States and decided that from now on the Constitution was going to be the rule on his property? Would the War On Drugs suddenly be acceptable if we found out it was authorized by some absent landlord whose rules we all agreed to live by implicitly upon entering or remaining in the United States? I don’t think I would change my mind. Is there any libertarian that would?

I ask these questions because they have fundamental implications for libertarianism. If libertarian principles prohibit my descendant in the above thought experiment from waging a war on drugs on his property, what other private actors may be prohibited by libertarian principles from exercising their property rights? On the other hand, if it is legitimate under libertarian principles for my descendant to act as he does above, is it really because of the unbroken chain of clear property titles? If not, could current government entities have the legitimacy to enact some of these laws? Could we for instance consider that a municipality owns the land it covers and that land-owners there have merely contractually acquired some rights, but not all property rights? I find these hard questions and I want to know what others think.

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4 Responses to What Do Charter Cities Tell Us Of The Legitimacy Of Governance?

  1. Hannibal says:

    Interesting stuff, but I have some trouble with combining the “implicit contract” that recognises the wide-ranging power of the Owner.

    At the point when the Owner decides to exercise his power and change the corporate policy to U.S. 2013, he would only be legitimate in doing so if the power to change corporate policy was not abridged by the long term sale-like leases conducted between the owner and the inhabitants of the city. The sale-like contracts would therefore have to include a phrase like: “The Owner may change the corporate policy at any time without the inhabitants consent”. Assuming the that a rational agent could ever sign such a contract, I question whether the move to implicit contracts would be legitimate then.

    I think there is some merit to the idea of an implicit contract. For example, the corporate policy “I will allow the security forces to trespass on any land I might own if necessary for security reasons” would be quite reasonable to pass down to an implicit contract. In very practical terms, this means by being born in the charter city, your parents have signed you up to that corporate policy. And I think that’s legitimate, given that parents can enter into contracts on their children’s behalf. Some of these are quite legitimate, even wide-ranging restrictions on freedom, arguably. However, I don’t think that ability is unlimited. For example, I think it would be illegitimate for a parent to agree on their child’s behalf to never engage in homosexual behaviour, punishable by death, as is the case in many countries around the world.

    I think any contract with a wide-ranging change clause such as “The Owner may change the corporate policy at any time without the inhabitants consent” would be illegitimate in its “implicit contract” form precisely because it de facto means parents are agreeing on their child’s behalf to do potentially anything, even those things that are illegitimate to pass down as an “implicit contract”.

    • PrometheeFeu says:

      I can see what you mean with the implicit contract and I do think it’s a weakness in the argument, but imagine we moved to an explicit contract system both in the thought experiment and the real world. Your parents sign a temporary (and maybe limited) version until you are 18. Then, on your 18th birthday, you have a choice: you sign or you have to leave. Do you really think this changes the outcome substantially? In practice, your choices are identical: you stay and are bound the contract or you leave.

      I am also assuming that the sales-like contracts and the entrance of the city contracts are respected in the change. I was initially suspicious as to whether anybody would ever agree to something like that, but the reality is that this is our daily lives. Ultimately, this is the relationship we have to the government and while there is much to complain about, most of us put up with it when push comes to shove.

      • Hannibal says:

        I do think it changes the outcome substantially in the sense that this would no longer be an interesting thought experiment. Removing the implicit contract (which is what the change you just suggested practically does) means moving to a version where everybody has explicitly consented to a contract with the all-encompassing change clause. The thought experiment then is identical to a single generation opt-in charter city, and changing the rules there mid-way. The answer to the paradox at the end for the single-generation charter city without implicit contracts is obvious: yes it is legitimate to change the rules if people explicitly consented to changes of the rules.

        The single-generational opt-in charter city, sadly, does not serve the purposes of the philosophical tool you propose since:
        1) It loses its relevance to reality, since no one signs explicit contracts with open-ended change clauses without any checks and balances whatsoever. (I.e. contracts where one party can fundamentally change the contract to anything they wanted as in the example.)
        2) It loses its relevance to question of property & political legitimacy you are trying to raise since states are analogous to the multi-generational implicit contracts you described in the post, they are not to the single-generation opt-in charter city.

        A practical solution might be to adapt the change change clause to read: changes to contracts are possible only with the consent of both parties. But then the thought experiment becomes identical to an opt-in full consensus direct democracy, which is not an interesting thought experiment either since it is one of the few prima facie legitimate forms of government…

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