If you’re in the market for a banana republic, have I got a deal for you. Head on down to the digital offices of Petri Friedman’s Pronomos Capital, a band of plucky upstarts using the “lessons of Silicon Valley” to provide an investment vehicle “where the city is the product.”
If you’re just joining us, this is the third entry in the series “How Much Could a Banana Republic Cost,” where we use the titular question to help pinpoint who and what the ruling class is made of. The first post set up our candidates: Big Guns (armies, militias, and mafias), Big Graphs (technocrats and knowledge companies), and Big Green (investors, corporations, or individual plutocrats). The second gave us a first-pass answer to the series’ guiding question, based on the actual history of the concept: A banana republic would cost a sizable $202,014,343.21 in 2021 dollars.
Today, we’re trying out a version of the Big Green theory that we can call the “Monopoly” model: think Elizabeth Magie’s famous board game, not Microsoft. At the beginning of the game, the game board is wildly open. As players play, they buy and develop specific squares on the board that represent parcels of land or property, and compete over who can own more than the others. Maybe the world today is something like the middle of a Monopoly game: A few people own and manage different bits of our society, a few bits are up for grabs, but nobody owns the whole board—yet. This Monopoly version of the Big Green theory describes the world as a patchwork of connected fiefdoms rather than a total system with a shadowy central ruling cabal. In principle, each social “square” can be—and often is—bought, sold, developed, and traded by those with enough money.
There’s a lot to be said for this view—after all, much of what is now the United States was acquired in exactly this way. The success of the Haitian Revolution forced French Emperor Napoleon to sell much of the French empire’s territory in the Western Hemisphere. The famous Louisiana Purchase doubled the size of the country by transferring to the United States the imperial right to displace Native Americans. But that kind of brazen buying and selling of whole groups of people and their territory is supposed to belong to a bygone era, like the empires of old dynastic families: houses such as Windsor, Osman, Solomon, and Aisin-Gioro.
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But modern problems have a way of finding modern solutions. Allow me to introduce a more recent dynasty: the house of Friedman. Milton Friedman was a prominent economist, serving as an economic adviser to President Ronald Reagan and Prime Minister Margaret Thatcher. The house of Friedman’s influence extends far beyond policy wonkery: Milton and his wife, Rose, teamed up to write Capitalism and Freedom, a plain-language defense of capitalism as a part of liberal society that became a best seller hailed by some as a “modern classic.”
Prominent students of Milton’s, known as the “Chicago Boys,” counseled authoritarian regimes throughout Latin America. In 1976, economist Orlando Letelier, who had fled the brutally repressive Pinochet regime, noted the irony in Friedman’s serving as the “the intellectual architect and unofficial adviser for the team of economists now running the Chilean economy” from their perch in the United States. Friedman received a Nobel Prize that year for his contributions to the field of economics. And that very year, Letelier was slain by a car bomb in the middle of Washington, D.C.
In an influential 2009 Ted Talk, another Chicago-trained economist suggested a marriage between capitalism and freedom worthy of Friedman’s legacy. Nobel Prize winner Paul Romer called for literal private government in the form of “charter cities”—essentially, allowing the rich to buy a square on the global Monopoly board. Part of why poor countries are trapped in poverty are their bad rules and bad government, Romer reasoned. So why not let rich countries buy parts of poor countries? Then you would have rules and rulers decided by proven historical winners.
Milton’s grandson Patri, noble heir of the house of Friedman, agreed with the general spirit of Romer’s proposal. Romer’s original vision for the charter city concept had involved rich countries’ buying pieces of small countries, but Patri Friedman wanted to put private investors in the driver’s seat instead. So in 2019 he passed Go, collected a few million dollars, and bought himself a banana republic.
For years, journalists Ian MacDougall and Isabelle Simpson report, residents of Crawfish Rock had assumed that the nearby construction was building some kind of resort. It wasn’t until earlier this year that they realized they were about to live next to a private charter city called Próspera, for which Pronomos Capital is a major investor.
Patri Friedman’s goal was helped along by two developments. First, his successful founding of and fundraising for Pronomos Capital, a venture capital firm that aims to fund charter city development across the globe. Second, a 2013 Honduran law paving the way for zonas de empleo y desarrollo económico (ZEDEs), “zones for employment and economic development,” which functionally legalized charter cities—and drew immediate opposition from Indigenous and Afro-descendant political groups in Honduras. According to reporting by Beth Geglia and Andrea Nuila, the byzantine structure of the city’s private government is overseen by a 13-member Committee for the Adoption of Best Practices—nine of which are US citizens. As of October 2021, the project was moving forward, despite weeks of protests by Hondurans.
Próspera is just one relatively new city. But we might think of Próspera as a particularly brazen version of the buying and selling of parts of society that has structured global politics over much of the 20th and 21st centuries. Próspera is just one example of an attempt to build explicitly private governance: Dafe Oputu chronicles the continued elite interest in private charter cities in West Africa despite the spectacular failure of “Eko Atlantic” off the coast of Lagos, the Nigerian mega-city (and I’m sure Akon’s cryptocurrency city is coming any day now).
But private cities are themselves just the tip of the iceberg. Rather than thinking of the “squares” of the game board as whole cities or countries, we could think of individual economic sectors or parts of a city. Billionaire French industrialist Vincent Bolloré has managed to secure major stakes in container terminals of 18 ports in African countries along the Gulf of Guinea, and Israeli billionaire Dan Gertler grafted his way into control of some of the Democratic Republic of Congo’s most lucrative mines. Neither of these men needed to take whole cities—just the piece that interested them and their shareholders.
You might be thinking: OK, the Monopoly model might tell us about ruling in Africa, but only because Africa is a special case, an exotic and dysfunctional land. But fire sales of whole swaths of public life are also very much a “First World problem.” In the United States, monopolies on public utilities like energy and water are sold to investors and run for profit. Privatization of public housing in Germany has led to a housing crisis that sent the city of Berlin scrambling to recover the privatized housing units (though a heroic grassroots organizing effort just succeeded in seizing nearly a quarter of a million housing units from private landlords earlier this year).
These squares on the social game board have been put up for sale by governments or run through public-private partnerships, which economists Ndongo Samba Sylla and Daniela Gabor describe as “budgetary time bombs.” By the way: Both the political situation in which governments feel the need to turn to the private sector and the ideological situation in which the private sector seems to have the answers are both deliberately engineered, as Naomi Klein famously investigated in The Shock Doctrine. According to her research, crises in Russia, New Orleans, and Afghanistan gave economists the opportunity to implement long-standing plans to auction off government services and public property to the higher transnational bidders.
Though few of us live in private cities, maybe the line between our government and Próspera’s is thinner than we might hope. Maybe we all live on one of the world’s Monopoly squares or other. We can use Próspera’s funding target from Pronomos Capital and other investors as an estimate of about how much a city might cost: $40,000,000.
