Yesterday, I talked about the place of the city in science fiction, as was discussed on a panel at Boskone.
A topic I did not raise was the Charter City, as proposed by Paul Romer, in Prospect . Nations are often stuck in development hell because of bad institutions. But because of skewed incentives, there is no way to incrementally improve those institutions. You're stuck in a kind of local minimum, which takes too much energy to jump out of. Romer's proposal is to allow extraterritorial cities with good institutions (profit motive, rule of law, security of property rights, the kinds of things we take for granted and can afford to take lightly) to operate within territorial nations. Allow free migration between those cities and their mainland, and see what happens.
Now we've really created a plot engine. Because there is nothing straightforward about this. Is this neocolonialism under another label? Violations of national sovereignty "for your own good" are rightly regarded with suspicion. But I'm a fiction writer, not a development economist. As far as a writer is concerned, a contradiction in a concept is a plot twist, not a bug.
I suppose the city of Todos Santos in Niven and Pournelle's Oath of Fealty is, in a sense, a predecessor to this concept (I actually found the book dull and never finished it--but now that I'm thinking about it I will try again). But there are any number of voluntary systems that could be set up, and set into competition. Of course, national governments would play along, until such time as it did not benefit them to do so.
The model is Hong Kong, sitting right on the border of China and showing the benefits of capitalism. For one reason or another, it was never forcibly brought into the Chinese sphere. It did have the advantage of a well-structured state (thought given to occasional paroxisms like the Cultural Revolution) to serve as counterparty, not a failed or warlord state.
One interesting suggestion in the comments to the Romer article was to allow such a voluntary city near New Orleans, in the United States. I think that makes perfect sense. All jurisdictions should face the prospect of competition. If we are sponsoring charter cities abroad, we should accept them within our own national boundaries as well.
The issue, of course, is the use of coercion and force, when the territorial government loses that competition. States like to maintain a monopoly on the use of force, and they use it against entities that damage their interest. Stalin forced the collectivization of farming not because he thought it would increase productivity, but in order to assure political control of the countryside. He could extort enough food to feed the potentially volatile cities, and rely on the dispersed peasants to be unable to organize to resist. That there were alternative models that would have made everyone materially better off was not relevant to him. Successful charter cities would face expropriation, invasion, blockade, and deliberately incented immigration, among other threats.
But wealthy, successfuly charter cities would also face the temptation to intervene in the territorial government to get themselves a better deal, instead of just outcompeting it. A capitalist is someone who competes to earn a profit so that he can afford to buy a way out of competition. The system that prevents businesspeople from being able to buy a pass from competition without also taking away the incentives to competition is a delicately balanced one. Subconscious cultuarl assumptions play a big role in how the balance is maintained.
So here's the story: The Franchise State. There are several collections of cities (Chinese state-guided development model, North American free competition model, maybe even a European social democracy model, plus a grab bag of other schemes) sometimes right next to each other. They recruit not only from their hinterland, but from other areas as well, subverting immigration control. Someone will need to protect them, and keep them from being taken over by conspiracies, combinations, cartels, and other extra-market organizations, as would be inevitable otherwise. The wealthy city would be tempted to bribe local strongmen for protection, since maintaining your own military is expensive. Such a city is like a natural resource, and would encourage rent-seeking and stationary bandits, recapitulating the rise of government in the first place.
Refugees crowd the approaches to the city, which has become fussy about who it lets in. Standards have increased, and those who got aboard first are anxious to maintain their favorable position. One can hypothesize a guild of Disruptors, secret officials specifically trained to break down cartels and mutual backscratching arrangements in favor of naked competition.
This all provides an alternate model to the national territorial state, which we have all be indoctrinated to value. But seeing the charter city folks as pure-of-heart libertarians devoted to pure competition runs up against the inevitable temptations of success. On the panel I set down a challenge: can anyone right a genuinely complex science fictional city? I think Romer's Charter City concept provides a good template for one, if not for an actual city existing in some actual location.