The Private Provision of Public Goods: The History and Future of Communal Liberalism

Fred E. FoldvarySanta Clara University, California

“Liberalism and Communal Self-administration”Friedrich Naumann Foundation for Freedom

Potsdam, Germany, Sept. 18, 2009

Public Goods and Private Communities, 1994

Research network on private urban governance

• Institute of Geography at the University of Mainz

• http://www.gated-communities.de• International Conference on Private

Urban Governance; Mainz 2002

“public”

• Latin “publicus,” pertaining to the people.• The “public sector,” government,as in “public school” or “public library.”• “Public school” originally meant a school

intended for the benefit of the public.• In the USA it came to mean a school run by

government.

“private”

• The “private sector,” non-governmental.• “Private goods,” individually used.• Public goods = collective goods.• Collective: non-rival• Excludable and non-excludable.• Club goods: excludable

Government versus Private Enterprise

• Governance: rules and enforcement.

• Government: imposed by force.• State: government and territory.• Club: voluntary, contractual.

Governments vs. Communal Liberalism

Government:• No explicit agreement.• Sovereign immunity; inequality.Communal liberalism:• Explicit contracts, real agreement.• All are legal equals.

What is freedom?

• Voluntary action.• An ethic provides the meaning.• Must be a universal ethic.• Derived from human nature:• Equality and independence.

The universal ethic

• 1. Benefit, welcomed by the recipient.• 2. Benefits are morally good.• 3. Harm, invasion into other’s domain.• 4. All acts, and only those acts, that

coercively harm others are evil.• 5. All other acts are morally neutral.

Liberty

• A liberal society implements and enforces the universal ethic.

• The moral right to do X means the negation of X is morally wrong.

• We have the natural right to do what does not coercively harm others.

History of self-governance thought

• Thomas Spence, 1775, leaseholds.• Ebenezer Howard, 1902, garden cities.• Spencer Heath, Citadel, Market and Altar,

1957.• Spencer MacCallum, Art of Community,

1970.• The Voluntary City, 2002

Recent scholars of communal self-governance

• Spencer MacCallum• Fred Foldvary• Evan McKenzie, Privatopia• David Beito• Robert Nelson• Chris Webster, U.K.• Georg Glasze, Germany, geographer.

Communal self-governance• Proprietary communities: hotels,

landlord-owned apartments, shopping centers, office buildings, industrial estates, ships.

• Civic associations: co-operatives, condominiums, homeowners’ or residential associations.

• Demand is revealed by rent.

Residential associations

• Clubs that provide collective goods• to their members• with rules, CC&Rs:• conditions, covenants, and restrictions.• Covenant: contract to do or not do.

History of self-governance

• Towns of medieval Europe.• Anglo-Saxon freeholders.• The hotel, a proprietary community.• Real estate “art of community.”

Early residential associations

• 1700s, London, Leicester Square.• 1837, Victoria Park, Manchester.• 1918, New York City, housing

cooperatives.

Proprietary Communities

• Apartment buildings.• Hotels.• Shopping centers.• Industrial parks and estates.• Multiple-use real estate.• Mobile houses.

Examples in PGPC

• Walt Disney World, Florida, 1971.• Arden Village land trust, Delaware, 1900.• Private places in St. Louis, from 1800s.

The future of communal liberalism

• Larger, varied, real estate projects; multiple-tenant income properties.• Developers stay involved.• Federations of private communities.• More civic associations, e.g. in China.• Gated communities for protection.

Greater demand for contractual governance:

• Greater wealth creates a greater demand for collective goods, more than government provides.

• Bad government is remedied by communal self-governance.

Technology

Better technology reduces the rationale for government intervention.

Better technology

• Increases economic complexity.• Reduces natural monopolies.• Creates better boundaries.• Makes information cheaper.• Favors communal self-governance.

The impact of complexity

• It complicates what it is the regulator seeks to know. Example: financial assets.

• Requires knowledge of future outcomes.• As Hayek said, knowledge is decentralized,

ever changing, not able to be collected by a central planner.

• Markets coordinate, innovate, liberate.

Questions?

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