Every political change must be accepted by the populace, either tacitly or explicitly. On a more granular level, different types of political change require different levels of acceptance from different networks of people. Therefore, types of political change can be categorized by the intensity with which they affect networks of people. Given my interest in free cities, cities with a degree of legal autonomy, I thought I would take Adam Gurri’s kind invitation to discuss the discourse on free cities.

My interest in free cities stems largely from my understanding of political change. Politics is highly path dependent. Free cities offer a way to break that, potentially accelerating institutional improvements. However, there remains a great deal of hostility to free cities.

First, there are three groups with interest in free cities, libertarians, Silicon Valley, and developers. Libertarians largely have the ideas right. Some focus on outlandish Rothbardian ideas of property rights unlikely to work. However, a strand of libertarians has focused on best practices for institutions and how to recreate them in the developing world. Paul Romer largely fits this description, though I expect he would deny the association with libertarians. Unfortunately, while libertarians have the ideas, they lack the influence and money to build free cities. Hopefully Honduras can break this generalization.

The second group is Silicon Valley. They have some overlap with libertarians, but are distinct enough to justify a second category. Initially led by Peter Thiel and Patri Friedman, Silicon Valley focuses more on achieving the best institutions, rather than improving those in the developing world. Y Combinator is a welcome recent addition to Silicon Valley discussions about cities. Silicon Valley largely has the ideas, as well as some of the money, but lacks the influence to implement free cities.

Much of the difficulty that libertarians and Silicon Valley have faced in their quest to build free cities is their aversion to politics. A free city is seen as opting out of politics, rather than an inherently political act. They want a blank slate on which to build a city, but don’t fully understand how to achieve the autonomy required for a blank slate. Luckily, they have also been realizing this over the past several years, and will hopefully have more luck in the future.

The third group is international developers, a group which should be interested in free cities, but isn’t yet. The New Cities Foundation has an annual forum, Cityquest, which brings together developers building new cities. These are multi-billion dollar projects, but they, by and large, conceive of cities as construction projects, not realizing the value of legal institutions. Luckily, again, based on conversations with development groups, they are slowly realizing the value of legal institutions.

The last relevant question is, what prevents the emergence of free cities? Of course, countries are still reluctant to allow such high levels of autonomy, but what are the particulars? My current understanding is that the primary barriers are McKinsey and World Bank types. They are often presidential advisors in countries that could host free cities. However, they are unimaginative and risk averse. When presented with free cities, their response is to suggest a special economic zone with slightly lower taxes.

Building free cities means changing the mind of McKinsey and World Bank types. Free cities have to be normalized. As such they can no longer be fevered dreams to create a libertarian utopia or a techno-futurist city. Instead, free cities must be seen as adopting the best practices of governance, as an addition to the existing world order, not an attempt to opt out from it. Institutional change requires the ruling elite. Advocates of free cities should heed that lesson.