Introduction to proprietary cities

The Freeman was kind enough to publish a short introduction to the intellectual history of proprietary cities, by yours truly. Here’s an excerpt.

There has been a lot of discussion about what Tyler Cowen calls shareholder states. A shareholder state is a territorial governance structure where the decision-makers have a monetary incentive for performance: Decision-makers would be rewarded for decisions leading to long-term growth. This system contrasts with democracy, where decision-makers rarely think past the next election cycle.

But the discussion has been missing an understanding of the intellectual history of proprietary communities, the “purest” type of shareholder state. A proprietary community is a territorial governance structure under a single owner. This structure more closely approximates private property, giving it an advantage over other governance structures. In a proprietary community, there is a single decision-maker with an interest in property values, which are highly correlated with economic development.