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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