A curious article recently appeared in Canada’s Globe and Mail. The authors are US economist Paul Romer and Octavio Sanchez, chief of staff to the President of Honduras. They are promoting Romer’s idea for “charter cities,” in which Canada is invited to play a role in an ostensibly new model to promote development and prosperity in the Third World. As the authors put it:
With the near unanimous support of its Congress, Honduras recently defined a new legal entity: la Región Especial de Desarrollo. A RED is an independent reform zone intended to offer jobs and safety to families who lack a good alternative; officials in the RED will be able to partner with foreign governments in critical areas such as policing, jurisprudence and transparency. By participating, Canada can lead an innovative approach to development assistance, an approach that tackles the primary roadblock to prosperity in the developing world: weak governance.1
This special development region would be a step beyond special enterprise zones now existing in the Global South in that it would have its own government. Romer argues that traditional aid and development models have not worked because they are hamstrung by corrupt and inefficient governments. So the charter city is offered as an alternative to traditional aid and to migration of Third World peoples to First World countries in search of work and a better life.
This proposal is spelled out in more detail in a paper Romer co-authored for the Canadian right-wing think tank the Macdonald-Laurier Institute.2 In critiquing traditional development aid, Fuller and Romer make the bold claim that charter cities can “offer people a chance to live and work in a safe and well-run city, a city that provides economic opportunities for Canadians and Hondurans alike, and a city that has the potential to inspire reform in Honduras and throughout the Americas.”3 The plan is to have internal city self-government modeled on and assisted by a First World partner like Canada. Such a partnership would also give the charter city legitimacy. Fuller and Romer set their proposal in the context of a report by the United Nations Department of Economic and Social Affairs forecasting a wave of urbanization, with the global urban population doubling over the next four decades.4 “The Charter Cities Initiative aims to channel this unprecedented scale of urban growth in a positive direction, offering new choices to reform-minded political leaders as well as new choices to migrants in search of better places to live and work.”5
Romer and his colleagues repeat the themes of choice and an ostensibly new model of growth and development throughout their writings. They emphasize that the charter cities will be sites designed to attract private-sector foreign direct investment in infrastructure and production. They argue that previous attempts in the Third World have failed because of governments that have failed to establish rules to support private-sector growth and development and that have allowed opportunistic and predatory firms to exploit institutional weaknesses, thus leading to distrust, crime, and violence. To overcome this, Third World countries need rules promoting transparency, efficiency, and fairness to attract investment by honest and efficient firms. This in turn will attract the new citizen-workers looking for a better life.
Canada is presented as a model case of government upholding the values of transparency, efficiency, and fairness in private-sector development that Romer and his colleagues are promoting. So, for example, charter city judiciary and police for Honduras could be developed by Canadians, with institutions such as the Royal Canadian Mounted Police (RCMP) assisting to set up an “honest and efficient” police force.
Romer’s illustration of a successful charter city is Hong Kong. “Should the new city [in Honduras] succeed, it can demonstrate the potential for reform elsewhere in Honduras, much as Hong Kong helped to inspire reform and development in China.”6 Fuller and Romer even go so far as saying: “Most Chinese still view Britain’s use of force in seizing Hong Kong as an affront to Chinese sovereignty. But many will also acknowledge that, if they had the chance to replay history, they would gladly and voluntarily offer Hong Kong to the British.”7
There are obvious problems with Romer’s proposal for charter cities. First of all, the accounts given by Romer and his colleagues depict an ahistorical fantasy world. Theirs is the mainstream economics notion of competitive markets devoid of imperialism and monopoly. Their private-sector firms engaged in foreign direct investment are seen as benign institutions of this market economy, with the opportunistic firms they mention being somehow the product of weak governments without strong rules-based institutions. So, typical of neoclassical economics, government is variously blamed for what it does do and what it does not do. In reality, capitalist firms themselves, especially transnational ones, are the psychopathic institutions so vividly depicted in Joel Bakan’s book and documentary film The Corporation.8 President Porfirio Lobo of Honduras has already appointed a so-called Transparency Commission to oversee his proposed charter city, with four members, including Romer, being US economists and corporate officers, and the fifth a corporate officer and former military general from Singapore.9 This is hardly a group to be critical of transnational corporations.
Contrary to Romer et al.’s view, the problems of underdevelopment and social decay found in the Third World are the products of imperialism — political, military, and direct and portfolio foreign investment. By now dependency and world systems theorists have established that underdevelopment was not an original state, but rather the product of what Andre Gunder Frank termed “the development of underdevelopment” resulting from colonialism and imperialism.10 After five centuries, it should be obvious that more of the same will not promote the happy state of growth and development that Romer et al. envision. In interviews, Romer asserts that his proposal for charter cities in the Third World is not a form of imperialism. On his Charter Cities Web site, the Frequently Asked Questions list includes the following question and answer:
Q: Wouldn’t this amount to a form of colonialism?
A: Colonialism is a word that people use when they want to stir up emotions and stop rational discourse. The intended emotional response is guilt by association: ‘This sounds like colonialism. Colonialism was morally wrong. This must be morally wrong.’ The best response when someone uses this term is to ask people to explain whether they mean that creating a charter city is morally wrong.11
This is clearly an evasion of the question, glibly dismissing the questioner as irrational. Authors like Harry Magdoff have demonstrated that we can easily have imperialism without formal colonies, which has clearly been the actual history of direct and portfolio foreign investment in the Third World.12
Honduras is a curious case for piloting a charter city. The country is a prototypical “banana republic” whose economy and governments have been historically manipulated by transnational firms like the US-based United Fruit Company, whose profits have been ensured by US government and military intervention. The country is second only to Bolivia in having the highest number of military coups in Latin America since formal independence in the early 1800s. The Honduran capital city of Tegucigalpa is thus sometimes jokingly referred to as Tegucigolpe, “golpe” being the Spanish word for coup. Fuller and Romer do mention the most recent Honduran coup, without referring to it as such.13 In 2009, President Manuel Zelaya was removed from office by the military when his government tried to implement reforms that could have led to improvements in democracy and social welfare for Hondurans. The coup and subsequent political regime were supported by the US and Canadian governments, leading to the eventual election of current President Porfirio Lobo Sosa. Fuller and Romer refer to a Truth and Reconciliation Commission which reported that both President Zelaya and those mounting the coup had broken the law, but the comprador rulers remain in office. Again, there is plenty of historical evidence to conclude that this Commission and the post-coup elections in conditions of repression and misery are unlikely to have any true democratic legitimacy.14 Consequently, we should be suspect of the true goals of President Lobo’s promotion of Romer’s charter city.
Citing Hong Kong as a prime example of a successful charter city is also curious, given that Hong Kong has never had a government independent of colonialism. Romer claims that an essential feature of the charter city is that it is a place where people choose to live because of the opportunity for prosperity and security the city offers. But this overlooks the argument that people’s choices are generally made within the context of social strictures, all the more so for those who are poor and oppressed, like the majorities in Asia and Latin America. And to give Hong Kong credit for inspiring reform and development throughout China is at the very least an overstatement and misses the larger forces that brought about the rise of Deng Xiaoping and the “capitalist roaders” in China. Generally, Hong Kong is hardly the model of democracy and prosperity for all that the charter city is supposed to offer. Anyone who has visited Hong Kong can clearly see the significant socio-economic inequality that exists there and that is becoming obvious throughout China since it has opened up more to the capitalist world economy.
Nor is Canada the model of democracy, development, and prosperity for all that Romer et al. present it to be. One has only to observe the continuing neocolonial oppression of Aboriginal Canadians to see this. Canadians as a whole have been experiencing greater degrees of underemployment and social inequality in recent decades. And current right-wing federal and provincial governments are using austerity policies to further undermine working and welfare conditions and democratic rights, through legislative changes and attacks on trade unions and other popular organizations, and moves toward government by executive fiat. While the federal government of Prime Minister Stephen Harper has been busy signing free trade agreements with more and more countries, including Honduras, it is also changing immigration laws to permit more low-wage migrant labor into Canada, citing a supposed shortage of skilled labor. As well, the Canadian federal and provincial governments are increasingly busy selling off the country’s resources to other countries, following a long history of Canada being a dependent political-economic middle power that continues to experience neocolonialism itself.15 So how Canada can serve as a model of growth, development, and prosperity for anyone is a mystery. Nor do Canadian legislative and judicial institutions serve as models of transparency, honesty, and efficiency. The RCMP is a clear case in point, with its long history as an agent of postcolonial and class domination in Canada.16
For anyone who has studied the actual history of the capitalist world economy, the idea for these charter cities is patently absurd. On the surface it looks like some sort of fantasy market utopia, but in reality it would be more like the kind of science fiction dystopias that novelists like George Orwell and Kurt Vonnegut have written about, where gated cities house a prosperous few, while the masses outside experience the neocolonial conditions that make them “the damned of the earth,” as described by the original French title of Frantz Fanon’s book of that name.17 Therefore, the charter city promoters are either very naïve, or are presenting a façade for continuing imperialist domination and super-exploitation of labor throughout the world. Romer presents the idea as something new, but it is at best a case of putting old wine in new bottles.
A rational person might well see the charter city proposal as preposterous, but then again it is also preposterous that, despite the failure of the neoliberal model even in its own private-sector market terms (not to mention the global economic crisis of capitalism), major global economic institutions and governments are still animated by this very model. So, the charter city proposal is being given currency by neoliberal politicians and pundits in Canada, Honduras, and elsewhere. But we also know, along with Fanon, that capitalist imperialism will continue to draw opposition from popular forces demonstrating that the emperor has no clothes, while posing a more rational humane social order. The charter city, a bad deal for both the Honduran and Canadian working classes, will be opposed by both.
2 Brandon Fuller and Paul Romer, Success and The City: How Charter Cities Could Transform the Developing World (Ottawa: The Macdonald-Laurier Institute, April 2012).
3 Fuller and Romer, p. 1.
5 Fuller and Romer, p. 1.
6 Fuller and Paul Romer, p. 3.
7 Brandon Fuller and Romer, p. 14.
8 Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (Toronto: Penguin Books, 2004); The Corporation, dirs. Mark Achbar, Jennifer Abbott, and Joel Bakan, Toronto: Mongrel Media, 2005.
9 Fuller and Romer, pp. 9-10.
10 Andre Gunder Frank, “The Development of Underdevelopment,” Monthly Review, Vol. 18, No. 4 (September 1966), pp. 17-31.
13 Brandon Fuller and Paul Romer, p. 8.
14 See, for example, the numerous publications by Noam Chomsky and Edward S. Herman on this subject.
Dave Broad is a Professor of Sociology at the University of Regina, Saskatchewan, Canada. His publications include Dave Broad, Hollow Work, Hollow Society? Globalization and the Casual Labour Problem; Dave Broad and Wayne Antony (eds.), Capitalism Rebooted? Work, Welfare and the New Economy (both Fernwood Publishing); and Dave Broad, “The Productivity Mantra,” Socialist Studies, Vol 7, No. ½ (Spring/Fall 2011).