This article was published in the Autumn 1999 issue of Formulations
by the Free Nation Foundation

Observations upon the

Limón REAL Proposal, Costa Rica

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Letter by Richard Hammer
Rigoberto Stewart Replies

[Editor’s Introduction: In May of this year Rigoberto Stewart solicited feedback upon his forthcoming book, Limón REAL, from a number of libertarian friends, including FNF President Richard Hammer. Hammer responded with a six-page letter, which is reproduced below. Stewart then sent a brief reply, an edited version of which appears at the end of this article.

Rigoberto Stewart proposes to have the Limón province of Costa Rica declare itself autonomous from the central Costa Rican government, and thus to launch a new regime of limited government, freedom, and prosperity. He visited FNF in February 1998 (as reported in Formulations, Vol. V, No. 4, Summer 1998). You can find his proposal "The REAL Limón Project" online in FNF’s archive (this also appeared in the Summer ’98 issue). Dr. Stewart is a native of Limón, founder of the Institute for Liberty and Policy Analysis, Alajuela, Costa Rica, and Representative of the International Society for Individual Liberty in Costa Rica.

Limón REAL is the title of the Spanish version of the book, which will be available in time for the ISIL World Conference, meeting in San José, Costa Rica, in August of this year. "REAL" is an acronym for free and autonomous region. An English version will appear later, possibly under the title Limón, A Libertarian´s Paradise.]

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Letter by Richard Hammer

Outline of Rich Hammer's Letter
What Does "Private" Mean?
Constitutions Need Mechanisms, More Than Declarations of Rights
Do the People of Limon Really Want Limited Government?
History of Gangs and States, and How It Affects Our Plans for New Free Nations
Is It Possible to Establish a Regime with No Taxes?
Why Not Consider a Limited Government, with Minimal Power to Tax, During a Transition?
Much Can Be Accomplished by Strong Leadership

31 May 1999
Dear Rigoberto,

I write to communicate several thoughts about your Limón REAL proposal. These thoughts have been stimulated both by the Chapters, numbered 12-15 which you sent earlier this month, and by what I learned from you last year, around the time we met.

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As I write I realize that my thoughts are jumbled and inconclusive. I have the impression that your plan overlooks some important issues. But, as I try to explain, I get going on some long tangents. I say things which you might already understand, and I say things which might not be useful to you. Furthermore:

You might take my comments in this light: Imagine that we are sitting somewhere, drinking beer. After I get a few beers in my belly I start talking. These words pour out of me. Some of it might be worthwhile. You be the judge.

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What Does "Private" Mean?

I noticed a combination of ideas in your Chapters which seemed inconsistent to me. You say (Chapter 14, Section V, Article 1) that "Police forces will be strictly private." Then you say (Article 6) "Nobody shall be the police without...clear evidence [of] an offense...." I agree with the spirit of these clauses.

But can private police forces be regulated by statutes and still remain "private"? I think the nature of private property is that the owners of that property can manage it as they see fit. To the extent that government controls any choices, then those choices are no longer private. Regulated businesses tend to become extensions of the state, and I believe this would happen to government-regulated police forces.

Of course it may be natural to have a period of transition, during which citizens would rely upon government-regulated police forces, until completely private police forces got going. But ultimately, to the extent that I understand the theory of private law, and to the extent that you want law in Limón to be totally private, I believe we can trust market forces to limit the police—to protect just those rights which we libertarians cherish, without any regulation by the state. [I have argued this in a few of my articles, starting with "The Power of Ostracism," Formulations Vol. II, No. 2 (Winter 1994-95) <>].

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Constitutions Need Mechanisms, More Than Declarations of Rights

I have been forming an opinion about constitutions: Constitutions will not preserve liberty unless they specify the ways that victims of governmental abuse of power can strike back. Bills of Rights do not preserve liberty. Institutions can, however, preserve liberty.

My thoughts in this area are sketchy. But I think some people would agree. Recently, for instance, I saw the following sentence in Hayek’s The Constitution of Liberty (Chapter 12).

"The main lesson of the period of the [American Articles of] Confederation was that the mere writing-down on paper of a constitution changed little unless explicit machinery was provided to enforce it." As I grope to clarify my own thinking, let me use this example. Suppose we are writing specifications for pencil sharpeners rather than for political structures. And suppose there are two schools of thought on how we should write specifications for pencil sharpeners. First school: We should specify the result of the operation of the pencil sharpener. For example: "This Pencil Sharpener will sharpen pencils precisely, to a fine point." Second school: We should specify the mechanical design of the pencil sharpener. For example: "This machine will be built in accord with the attached drawings." (The drawings would show the handle attached to the shaft, the rotor blades mounted on bearings around the shaft, etc. Additionally, the drawings would specify the dimensions and materials of all the parts.) As you might surmise, here I argue for merits of the second school. You could say "This machine will sharpen pencils." But if you neglect to specify how the parts will be shaped and how the parts will interconnect, then you might not get a pencil sharpener. Instead you might get a mouse trap, or something else that you did not want.

Notice that we could specify a pencil sharpener, according to the second school, without ever using the words "pencil" or "sharp".

To a certain extent, human organizations are like machines. Within limits, we can predict what human organizations will do when we see how those organizations are structured. So, if we want to specify the results that will be produced by the operation of a human organization, we had better specify what the parts of the organization are, and how those parts will interact. This specification will be better than a Declarations of Rights which contains only statements about how we hope the organization will behave.

Suppose, for example, that we want to protect the right of free speech. I would suggest that we put a clause such as this in the constitution:

"Any statute which has been judged by a panel of five arbiters to violate the right of free speech shall be void." (Arbiters would need to be certified somehow, in a way I have not specified.) Such language creates a process, an institution, at the disposal of a citizen. A citizen who feels that his right has been violated sees what he can do: assemble a panel of five arbiters and then argue his case before that panel.

So, you can see that I am trying to formulate a constitution which formally establishes a set of institutions (processes through which people will act and interact). When people operate these institutions the result will be, I hope, that rights are preserved. I am trying to describe the machine, made of human parts, which will act to preserve rights—without having to rely upon wishful language such as we usually see in Bills of Rights.

But I must admit that I am far from satisfied with my formulation as it now stands. It seems easier to write Bills of Rights, in which we say what we hope will happen, than to design institutions in which people will preserve their own rights.

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Do the People of Limón Really Want Limited Government? Or Do They Just Want Change Which Promises Them Greater Prosperity?

If I recall the things that you have said, the people of Limón are fed up with the government of Costa Rica. Many of them will say, if asked, that they want a new regime with no taxes and no meddlesome government regulations.

But I suspect that they are like most of the people that I know here in the US. Most people here will say they want government to get off their backs. But they will also accept any handout or special privilege which government offers to them. They will vote for politicians who promise "free" handouts.

If most people in Limón are the same as most people in the US, then I fear that your proposal may lack deep popular support. I worry that populists could beat your candidates in elections, by promising handouts.

To change my mind on this point, I would want to see evidence which suggests that most individuals in Limón will say "no" to each promise of a "free" government service or handout. If the people of Limón actually say "no" to handouts, then they are, in my opinion, the best-educated people on Earth.

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History of Gangs and States, and How It Affects Our Plans for New Free Nations

As I understand history, the nation states which now cover most of the surface of the Earth are only the current culmination of a long struggle for power. Originally all people lived in tribes or clans. These communities had elders or judges, but not kings. There was no organized coercive power. Political power came into existence only when and where the populace obtained enough wealth to make organized theft a viable occupation. (I accept the explanation of the birth of the state told by Franz Oppenheimer in The State, 1908.)

At the dawn of "civilization," around 4000 years ago, states existed in only a few lush spots on Earth. Everywhere else the tribes were stateless. Later on states grew almost everywhere, because there was enough wealth almost everywhere to support this style of parasitism. But initially these states were small. In Europe around 1000 A.D., for example, there were hundreds of little kingdoms or fiefdoms.

Evidently there is a tendency for states to coalesce or conquer one another, as history unfolds, with the result that the number of states declines while the size of each individual state increases, on average. So the history of states seems to be affected by economy of scale. I believe that this observation, if it is true, tells us something important about our ambition to constitute a free zone.

I used to believe that all coercive government was bad, and that it would always be bad for a population to be conquered by an invading army. But in Thomas Sowell’s recent book, Conquests and Cultures, there was a chapter on the history of Britain which made me think. What was eye-opening to me was the evidence that Britain had a higher standard of living—during the time it was occupied by Rome—than it had either before that time or after that time for the next thousand years.

After the Romans withdrew, in the early fifth century A.D.:

"The use of coins declined. Pottery ceased to be mass produced. Roads and waterways fell into disrepair. Central heating and hot baths disappeared for many centuries. So did bricks, which the Romans used, but which did not reappear in Britain until the fourteenth century, when they were imported from the continent. Glass bottles, which had been produced in Roman times, disappeared from England and did not reappear until Elizabethan times, when bottles began to be imported from Venice, and it was the seventeenth century before glass-blowing was re-established in the British Isles." (page 27) I did not like this evidence because it contradicts my libertarian belief that big government is bad, that big government impoverishes people. But I believe Sowell. The British people were conquered—then they lived better. So I had to reformulate my understanding of the relationship between government and economic productivity.

What happened, I now suppose, is that the Romans imposed a single, uniform, and efficient rule of law, across their whole empire. During the Roman occupation trading took place in markets which extended over long geographical distances. While surely the Romans collected tariffs on trade, the Roman tariffs may have been less burdensome and more predictable than the tariffs which were charged by local feudal chieftains both before and after the Roman occupation. When Britain was ruled by local chieftains, a traveling trader might have been required to pay a new tariff every ten miles or so, every time he passed into the territory of a new chief. As such, trade across long distances may have ceased.

The Roman empire worked economically because the one gang in charge of the whole area (the Roman government) imposed less restrictions upon trade than the alternative mode of government (which was hundreds of small and local gangs). The whole system worked, and lasted as long as it did, because tax rates were low enough that the inhabitants lived better. The Roman government fed itself from the increase in productivity. Anyhow, that is the way I now understand it.

We know that a free nation should prosper for the same reason that the Roman empire prospered, and it should prosper even more because we would have less (or no) tariffs. But notice that the Romans did have to beat the competing forms of government. The Romans had to overpower the alternatives. And so will we.

I suspect that power structures will always grow among humans. I suspect that local gangs grow, and tax or extort, wherever there is enough wealth to feed this kind of parasitism, and wherever the gangs are not beaten by another force which is either stronger or smarter.

Unless I have reason to believe otherwise, I would guess that the communities in Limón are like communities everywhere. In these communities I bet there is a tendency for some thugs to establish local power structures, and to tax or extort as much as they can get away with. If this is true, freedom, of the sort that we desire, could be secured in Limón only if some organization confronts, and consistently beats down, these local would-be kings.

I doubt that your proposed constitution for Limón, as I understand it, will establish an organization which has power to act as I would think necessary, power to strike down all the mini-states which will tend to start growing there.

One concern I have is that the people of Limón have lived all their lives with the present, corrupt, state. They have become accustomed to paying taxes and bribes when demanded. Even worse, many of them have learned how to demand taxes or bribes for themselves, as a way to make a living.

Indeed, in my simplistic model, the present condition of Limón may equate to the condition of Britain either before or after the Roman occupation. Even though Costa Rica exists under a central government, I surmise that the central government is weak and ineffectual. It does not enforce protection of rights, but rather only creates a structure which gives an appearance of legitimacy to an army of local thug/officials, who extort as much as possible from the inhabitants.

So, to the extent that I might be correct, the present sociological structure in Limón (as well as in most other poor countries) consists of many small fiefdoms, in which gang leaders or government officials extort, and subjects comply.

Now, as I said, the central Costa Rican government gives an appearance of legitimacy to many local beneficiaries (local extortionists). But I would not assume that the structure of many small fiefdoms would collapse as soon as the central government is gone—because fiefdom can exist without any larger government. When the Costa Rican government withdraws from Limón, I would expect to see some rearrangements of local power structures. But I worry that the basic structure of many small fiefdoms would survive—unless somehow you replace it or overpower it.

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Is It Possible to Establish a Regime with No Taxes?

You propose that the new government in the autonomous region will have no taxes, that it will pay all its expenses by raising money in an honest way, by selling services. The government would be, in effect, a business. It could survive only to the extent that it received voluntary payments for the services it sold. Certainly this conforms with libertarian ideals.

But I am concerned that I cannot think of any example in history of such a business actually existing, in a place where there is no coercive government, and actually providing protection for the rights which we libertarians want protected. It is true, of course, that we in FNF say that such a businesses could exist. In theory I believe this. But I have never seen it. I think it could grow only in favorable circumstances. I have not been persuaded that those circumstances exist in Limón.

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Why Not Consider a Limited Government, with Minimal Power to Tax, During a Period of Transition?

On the other hand, we can see examples of governments, in first-world nations, which are coercive but nonetheless limited. These succeed, better than the governments in most poor countries, in preserving many important rights of their citizens. Because of these examples, it is easy for me to imagine the successful constitution of a limited government in Limón. Such a government would tax, but in a very limited way.

It would provide tax-financed enforcement of basic rights, at some skeletal level. But it would not give itself a monopoly in policing or in administering justice. Then private security agencies could be expected to grow to fill local needs. The limited government could actually shrink away after it became clear that private security agencies were capable of providing all necessary services (as I proposed in my article, "A State Can Be Designed to Shrink," Formulations Vol. 3, No. 3; <www.freenation. org/a/f33h1.html>).

I imagine that the law, which this limited government would enforce, would be an ultimate law, or law of last resort. Citizens could call upon this law to strike down the worst cases, which are bound to happen, of local thugs trying to establish fiefdoms, trying to extort unlawful payments from citizens. This ultimate law may be needed, I think, until some sizeable and reputable private enforcement agencies grow.

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Much Can Be Accomplished by Strong Leadership

In spite of the questions which I have raised about your plan as I understand it, I must admit that good leadership might be more important than a good plan. A strong leader, or group of leaders, might successfully guide the people of Limón, one step at a time, to embrace a constitution of the sort you describe—even if there was never a perfect plan. It does seem possible, based upon my limited knowledge, that you and/or others might provide such leadership during the transitional time when there will be much uncertainty.

That is all Rigoberto. I wish you the best of luck as you advance with this project.

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Rigoberto Stewart replies

8 June 1999
Dear Rich,

Thanks for such a nice letter and for taking the time to make those comments and give illustrations. I really appreciate it and will give serious thought to your points. I will not do anything lengthy right now (We will do that over some "Imperial" beers here in Costa Rica in a few weeks), but let me touch on a few points.

1. Police. I really do not propose a government-regulated police; but private police who must abide by the rules based on individual rights. I think there is a difference; you might disagree.

2. Pencil Sharpener Example. I totally agree with you. It is even more valid in a place like Costa Rica where most, if not all, have no clue as to how most of it would work. What I did, Rich, was build up the "how’s" and the "why’s" in the previous chapters. That has been the whole point of the previous 11 chapters. So, I am sure now that you are going to enjoy the book.

3. Popular Support. Yes, I would say the natives of Limón are like most other people. Yet, I am counting on a number of special circumstances that make them different now. A lot hinges on our being able to "sell" them the project. I must do a heck of a selling job. And I plan to. This is not too different from your case. You must sell your idea [FNF] to a bunch of rich people; we must sell our idea to a bigger bunch of poor people.

4. Local Kings and Fiefdoms. I have many answers, but let me only say for now that by having free immigration, strong people will come from elsewhere and provide a balance.

Thanks again, and I look forward to seeing you in August. D

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