Honduras Sells Out: Three Cities to be Privately Run

I have woken up this morning to very interesting news. According to Honduras, which has the “highest murder rate in the world, an impoverished population, and political instability,” has decided to sell three of its cities to MGK.

These cities are to exist as “states within a state,” and will presumably include different currencies, defense agencies, and court systems than the larger republic of Honduras. The funding is not all there yet, but if this gets underway it’ll have the potential to provide a very interesting case for decentralization and statelessness.

I say this because, even though these cities might not be entirely stateless per se , they could perhaps provide an interesting model for transitioning to statelessness. Historically, the problem of stateless societies–which actually have existed to a greater extent than conventional historical accounts allow for–has not been that they are unstable themselves, but rather that they are usually not given time to build adequate institutions for private security before the surrounding states intrude on them. (For examples of viable stateless societies, see Europe’s Moresnet , the American Wild West , the Zomia region of Upland Southeast Asia , and even some elements of Somalia in the late 1990s. As far as Somalia goes, I am unfamiliar with the literature on this, but I know that Jonathan Finegold has posted on it on his blog , and that he draws from papers , here , and –all of which I intend to read and post on when I find the time.)

The advantage of an approach such as the one Honduras is taking could be that a centralized authority–essentially the owner and financier of the city, in this case–could oversee the installation of private security firms during a time of centralized stability, and then withdraw when these firms were stable enough to provide security on their own. Of course, I realize the inherent problems with this idea: it’s possible that the owner of the city would just continue rule as a monarch, or, as Nozick would probably suggest, that the private security firms would themselves develop into a state. As to the former, I have a vague idea that the potential for profit is far greater without a monarchical rule, and that a city owner might recognize this and choose to benefit accordingly. As for the latter, many have responded to Nozick’s arguments, including Murray Rothbard in The Ethics of Liberty , so I will not go into it here.

This analysis is relatively undeveloped for now, but has inspired me to post a little more on the question of states arising endogenously from a stateless society, and I will hopefully find the time to post a lengthier analysis of this situation soon.

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