It was a pleasure to read Sarah Moser’s thoughtful response to my essay. Though it was critical, I found myself agreeing with much of it.
Her essay as makes four important points. First, innovative governance projects already exist. Second, innovative governance has potential downsides. Third, the conditions responsible for China’s success are relatively unique. Finally, “total freedom” isn’t feasible, and governmental institutions are important.
Moser writes, “the new types of city building, governance, and urbanization of the ocean that startup societies describe are already underway.” Moser is correct in noting that innovative governance projects are underway worldwide, though they remain under-researched. Part of my goal with the Center for Innovative Governance Research is to jumpstart a wider conversation about innovative governance projects and capture new audiences.
I was first exposed to innovative governance via techno-libertarianism. However, over time I became frustrated with the lack of progress, as well as my realization that techno-libertarians were missing the wider context of innovative governance. This is not to suggest that they have nothing to offer to the conversation. Systematic thinking and willingness to experiment, two attributes commonly associated with techno-libertarians, are valuable additions to innovative governance.
Regarding the potential downside of innovative governance, Moser writes, “there is a wide range of negative impacts that deserve careful study.” I agree. While I believe the expected value of innovative governance is positive, we should not be blind to the risk involved. I share concerns about ecological damage, the property rights of indigenous or otherwise marginalized people, and the disappearance of welfare as governance becomes more of a service.
The proper tool to understand both the potential negative and positive impacts of innovative governance and to avoid falling prey to the nirvana fallacy is comparative institutional analysis. The alternative to innovative governance is rarely liberal democracy, but dictatorships, autocracies, or other forms of illiberal government. In sub-Saharan Africa, for example, it costs on average 50% of a person’s yearly per capita income merely to legally register a business. Such unnecessary constraints on entrepreneurs are one reason Africa remains impoverished.
Moser’s third point focuses on China. She writes, “the success of Chinese SEZs cannot be celebrated in isolation from broader demographic factors and economic history.” I agree that innovative governance should not be thought of in isolation from larger demographic and geopolitical trends. While governance is important for the economic success of a city, it isn’t sufficient. One of the reasons I am most optimistic about innovative governance in Africa is the high urbanization rate which necessitates the construction of new cities.
Moser’s last point is that “total freedom” isn’t feasible. If by “total freedom” Moser means a Rothbardian property rights system, then I agree — territorial governance is not necessarily helpful. My interest in innovative governance is not to construct ideologically pure libertarian societies, but rather to build governments within the real world which improve human flourishing. I attribute much of the lack of success of libertarian innovative governance projects to their utopianism.
Charter cities, and innovative governance more broadly, are tools for governance reform, not for escaping government. One of the understudied benefits of innovative governance space is how charter cities can be used to improve state capacity.
Countries often remain stagnant because of regional states which are unable to control violence or provide basic public goods. Reforming these states internally could take decades by conservative estimates. However, charter cities can serve as catalysts to spark improvements in state capacity, bypassing existing government structures which might resist such improvements.
I appreciate Moser’s essay; it raises important challenges about the potential for failure in innovative governance projects that prioritize idealism over pragmatism. However, while she is pessimistic about the future of charter cities, I remain cautiously optimistic. We are in the early stages of a global revolution in governance. Given this, we should be aware of, and minimize, the downside risk. However, if managed correctly, innovative governance has the potential to improve hundreds of millions of lives on global scale. This is a future worth fighting for.