For almost five years now, Reason has been shilling for a corporate-owned charter cities project (Zones for Economic Development and Employment, or ZEDE) in Honduras. A whole body of articles by Senior Editor Brian Doherty takes a consistently boosterish approach to the project, repeatedly using such language as “a freer economy or better legal institutions,” “clean slate for innovations in political and economic growth,” “laboratory for creating wealth-producing institutions that can then be replicated worldwide,” “freedom-friendly,” “libertarian space,” “unrestricted free markets.” Just site search “site:reason.com Doherty Honduras” and you’ll get a long — very long — evening’s reading material.
Doherty mocks critics of the project like Danielle Marie Mackey at The New Republic (“Honduras Charter Cities Spearheaded by U.S. Conservatives, Libertarians,” Dec. 14, 2014) for their apprehension that it might simply promote corporate extraction of wealth at the expense of the people of Honduras. In fact he describes a female journalist in Mackey’s story as “driven to vapors.” But Mackey’s apprehensions, based on the interests that brought the present government to power and the political context in which the ZEDE project has been promoted, strike me as quite justifiable:
Oscar Cruz is a silver-haired 64-year-old lawyer in Tegucigalpa. “The coup in 2009 unleashed the voracity of the groups with real power in this country. It gave them free reins to take over everything,” Cruz says. “They started to reform the Constitution and many laws — the ZEDE comes in this context — and they made the Constitution into a tool for them to get rich.”
Doherty, in stating his hopes for the project, points out that Honduras is “a mess,” and repeatedly cites descriptions of the country as ridden by violence, corruption and organized crime; “free cities” owned by transnational corporations, he argues, might institute “good governance” and “rule of law,” enabling prosperity to take hold in place of the present chaos. The elephant in the room is that Honduras is corrupt and violent in large part because of the U.S.-backed coup that took place there — a coup brought about to promote the interests of the same white-knighting transnational corporations that want these charter cities.
You might think — as suggested by Doherty’s choice of a title for one of his pieces (“The Blank Slate State,” Reason, June 2013) — the charter cities movement is happening in a historical vacuum. You’d get the idea that Honduras and the rest of Latin America are corrupt and violent “just because,” perhaps owing to the unaccountable cultural vagaries or primitive character of the people living there, and that Western capital is finally coming to the rescue with its job-creating investments and experiments in cutting-edge good governance.
The fact is, though, that Latin America — like the rest of the global South — has had relations with global capital going back centuries. The countries of Latin America have been impoverished by the hacienda system (in which neo-feudal landed oligarchs mercilessly squeezed surplus labor from the landless and land-poor peasants), and by foreign corporate ownership of natural resources like the mineral wealth of the Andes. Local governments have violently repressed peasant activists and labor organizers, in the interests of the land-owning and employing classes. And for decades Latin America has been swept by wave after wave of military coups, backed by transnational corporations (and by the U.S. military and CIA), whose main purposes were to protect the existing ownership of land and natural resources from challenge and to keep labor in line.
Given such a history, perhaps Mackey’s suspicions that the charter cities might fit into this previous narrative should not be so quickly dismissed as vapors and megrims. And given the track record of the Disaster Capitalism model of “economic liberalization” in countries like Pinochet’s Chile, Yeltsin’s Russia and Bremer’s Iraq, it’s not entirely unreasonable to wonder why this marvelous new project just happened to find fertile ground in a country whose right-wing government had just seized power by overthrowing the previous leftist government in a U.S.-backed coup.
Even if it did occur in a historical vacuum, and all the robbery, rape and plunder of Latin America by global capital had never happened, there are good reasons to view corporate-owned charter cities with some skepticism. Capital is one factor of production among several. Despite being unrepresented as an internal stakeholder in corporate governance, “human capital” — the tacit, job-related knowledge of workers, and the fabric of cooperative social relationships and horizontal transfer of knowledge they bring to the job — is the source of more productivity and equity value than the absentee-owned physical capital in many industries, and a major source of it in all of them. Although corporate management uses the myth of ‘shareholder ownership’ to justify denying worker
representation based on the value they contribute, in fact most large corporations are self-perpetuating managerial oligarchies that run the firm in their own interests and deliberately strip assets and gut long-term productivity to boost short-term earnings and game their own compensation. So there’s no literal conflict of interest in an alleged “free market” utopia in which all the laws and rules are written by one party, corporate management.
So these are the questions. They all boil down to “Will the charter cities reflect the exploitative historical context they’re situated in?”
And now an answer comes in: Yes.
The charter cities project is all about rhetoric cribbed from De Soto’s “The Mystery of Capital” about “rule of law” and “strong property titles” as a solution to corruption. But it turns out that the corporate promoters of this “free market” project are relying on the corruption and unclear land titles in that country… to steal land from peasants to build their charter cities on! According to Laura Carasik at Foreign Policy (“There Are No Peasants Here,” Oct. 23, 2015), the vast majority of land in Honduras has no clear title. Most peasant land is held under customary title not recognized by the state, which makes it easy prey for the landed oligarchy to seize — exactly the kind of thing de Soto wrote about.
Former president Zelaya was working on a major land reform that would formalize and register peasant communities’ title to their land. Yeah, that Zelaya — the one whose overthrow the U.S. backed in 2009. And the same government that’s promoting “free market reforms” like this charter cities project is also creating a friendly climate for the local patron to take over peasant land and build enclosing walls around it. The old landed oligarchy has been seizing peasant land right and left since the coup. And to top everything off, under the ZEDE law the government has the right to seize land by eminent domain (eminent domain, Doherty? really?) for creating these “free market” enclaves — seizures which Honduran peasants won’t even be able to contest or claim compensation for because they have no title recognized by the state.
In short, the ZEDE project, which purportedly aims to cure corruption by instituting the “rule of law” which is missing on account of “weak state institutions,” actually takes advantage of that corruption and those undeveloped institutions to get what it wants — by robbing people! Despite all the pious talk, the corruption is a feature — not a bug.
As Gomer Pyle would say, “Surprise! Surprise! Surprise!” It turns out that, yes indeed, Honduras isn’t just some blank slate for experiments in neoliberal theory. Honduras — and the charter cities project — are still very much a part of the ongoing history of colonial and neo-colonial plunder.
Who could have guessed that a partnership between capital and the state, in a region where the state has a long history of violence to serve the needs of capital by murdering or robbing ordinary people, might turn out… to benefit capitalist interests by robbing ordinary people? Almost makes you suspect that “free market” projects carried out by the state in league with capital will inevitably amount to robbery.
Brian Doherty is the right-wing mirror image of the naive Leftists who take the Castro regime’s rhetoric about “socialism” at face value, seriously believing that genuine socialism and workers’ power can be implemented by an authoritarian dictatorship. There’s a libertarian sucker born every minute, and two right-wing dictators talking about “free markets” to take ’em. Perhaps Doherty should reread Jesse Walker’s classic “The Mad Dream of a Libertarian Dictatorship.”
Despite occasional articles denouncing “crony capitalism” in principle, Reason has a long history of endorsing things like charter schools, Michigan emergency managers “privatizing” common resources, and this ZEDE project — all of which are the epitome of crony capitalism if the term means anything at all.
It’s time to admit that “free market reforms” carried out by the capitalist state, at the behest of corporate capital, cannot result in anything but crony capitalism.
