Speech by Dr. Titus Gebel on the occasion of receiving the Roland Baader Award
14 June 2025.
Once upon a time, there was a king who took a portion of people’s income as taxes and dictated how his subjects should live. Today, there is a democratically elected government that takes a large portion of people’s income as taxes and dictates how citizens should live. State-aligned intellectuals argue that this represents the end of history.
This is, of course, nonsense, and I would like to explain why. Imagine the following scene: a boy angrily confronts two other boys who have a bicycle and asks, “Why did you steal my bike?” One of the other boys responds, “We didn’t steal it; we created a democracy. As the majority, we decided that your bike now rightfully belongs to us.”
This small scene contains all the reasons why today’s systems cannot be the end of history. Even one of the founding fathers of social contract theory, Jean-Jacques Rousseau, recognized this. He wrote: “Whence would arise, without a prior agreement, the obligation for a minority to submit to the choice of the majority? The law of majority rule itself rests on an agreement and presupposes at least one instance of unanimity.”
In our example, the boy would first have to agree to the creation of a democracy and to the majority’s ability to change rules at will. This conclusion remains unchanged even if each of the three boys represents a million voters as elected officials, and the appropriation of the bicycle is formalized into law.
Another thought experiment for clarity: Imagine a parallel universe with a political system called “Car Democracy.” In this system, everyone has a constitutional right to buy a car. There are car dealers. When you visit one, the dealer says, “Indeed, you have the right to buy a car. However, I, as the seller, unilaterally decide the car type, engine, interior, and color you get. I also set the price. And now that you’re here, you’re obligated to buy the car I’ve chosen for you.”
In our universe, we’d likely tell the dealer, “No thanks, I’ll go to another dealer and choose a model and features that suit my budget.” Yet, in our universe, we seem to have no issue with being subjected to a similar regime in other areas of life. Simply replace the word “car” with “public services.” You’re forced to pay taxes, the amount of which the state arbitrarily determines, yet you have no say in how these funds are used. This is clearly unsatisfactory—yet this is supposed to be the end of history?
I have more questions:
If one party promises to cover all life’s risks and provide free services, while another offers freedom and self-responsibility, which party will likely be elected?
Will politicians, who rise to parliaments and leadership roles through their parties, generally prioritize their own or their party’s interests, or those of the voters they represent?
How successful can a society be if every innovation requires majority approval?
You may already sense the answers—we’ll return to them later.
The Minimal Principle Meets Politics
When I was young, naive, and inexperienced, I was frustrated with classical liberal politicians who supported redistribution policies. Today, I know they had no choice if they wanted to survive politically. The dilemma lies in the human minimal principle: wanting maximum gain for minimal effort. This leads to a recurring political cycle, which can be summarized as follows:
People want to improve their standard of living; the easiest way is to take from others; most don’t dare take directly from their neighbor, so they delegate this to the state, the only entity that can take away from others unpunished; politicians fulfill these wishes by redistributing tax revenues, or they’re voted out; the state gradually replaces the economy as the primary source of improving living standards; fewer people work in productive sectors, and state beneficiaries eventually form the majority of voters; distribution conflicts intensify, the state’s share grows, and public debt rises; state bankruptcy leads to system collapse and radical reforms; the cycle begins anew.
Or, as George Bernard Shaw put it: “A government that robs Peter to pay Paul and Andrew can always count on the support of Paul and Andrew.” But eventually, Peter is gone or penniless, and the system collapses.
This happened in ancient Greece, as described in Plato’s Republic or by Aristotle. The free cities of the Middle Ages also suffered from these symptoms as democratic participation expanded. We can see what happened to Ludwig Erhard’s reforms in West Germany, or those in Sweden, New Zealand, or Chile. Within 15–20 years, they eroded. I fear that Milei’s Argentina will face the same fate in 15–20 years.
In summary, representative democracies as they exist today are not the end of history for three main reasons:
First, without exception, conventional democracies eventually slide into a form of socialism once the majority realizes it can vote money into its own pockets. This is why no company in the world is run democratically. Second, redistributive systems that not all affected parties have consented to are illegitimate. They are contracts to the detriment of third parties, a legal construct impermissible in all private law systems worldwide. Third, there is no ethical-moral justification for being subject to a law one hasn’t agreed to. There’s no sound philosophical basis for this, assuming the equal worth of all adults, despite countless philosophers bending over backward to craft justifying narratives for those in power.
Any system, however legitimized, that legally mandates expropriation for the benefit of third parties (e.g., through taxes and social contributions) without the prior consent of all affected parties cannot create a peaceful or predictable coexistence in the long term. It destroys the foundations and outcomes of voluntary cooperation through state coercion.
These are not new insights. They led classical liberal philosophers like John Locke, David Hume, and Ludwig von Mises to conclude that only a minimal state is legitimate, as only the protection of freedom, life, and property is in everyone’s interest. Even a criminal doesn’t want to be robbed when leaving the house. Any state intervention beyond this serves the special interests of specific groups.
But people are different. What’s right for one may be wrong for another. The fact that individual values are ultimately subjective, and that people objectively face different life circumstances, means every “political solution” leaves behind those forced to comply against their will. “Doing politics” means taking sides and imposing one group’s wishes on everyone, if necessary, by force, as all political solutions are ultimately backed by the threat of executive violence. Politics thus becomes an invisible civil war, its subtlety stemming from the fact that victims of state interventions have no realistic chance of resistance.
The Classical Liberal Solution Doesn’t Work
The problem with the classical liberal minimal state is that it cannot be sustained under democratic conditions. Its erosion is inevitable due to the political cycle described above, rooted in the minimal principle.
Offering freedom, the chance to rise from dishwasher to millionaire, security, and independent dispute resolution is, in truth, a lot. But in a democracy, it must compete against rivals promising to eliminate all life’s risks. This battle is doomed to fail.
Otto von Bismarck already recognized this. After his resignation, he said:
“It’s possible that our policy will one day perish when I’m gone. But the welfare state will prevail. Whoever takes up this idea will come to power.”
Actually, Bismarck didn’t use the term “welfare state,” as it wasn’t common then. Do you know what term he used instead? State socialism. He said, “State socialism will prevail.”
In real-world democracies, so-called liberal parties have no choice but to fight constant rearguard battles, claiming to prevent worse outcomes to keep their core voters loyal. In the end, they’re barely distinguishable from state-socialist redistribution parties.
It’s futile to blame people for following their evolutionary instincts or to complain about politicians fulfilling voters’ wishes. The only solution is to decentralize and limit power. The fewer areas of life politics controls, the less it matters who controls or influences politicians. To prevent the state from granting special privileges at others’ expense, a system must be created that cannot grant special privileges at all. The only true human problem is that some people want to impose their will on others. The task is to create an order that prevents this.
Any new, long-term stable social order must require those governing the community to:
– Be unable to grant special privileges to individuals or groups (avoiding lobbying, corruption, and distribution conflicts).
– Be accountable for mistakes (linking power and responsibility).
– Have a personal economic stake in the community’s success (skin in the game).
– Allow citizens to leave or secede at any time without financial or other barriers (enabling competition).
– Have clearly defined, written obligations and powers that cannot be unilaterally changed (legal certainty, predictability).
– Be subject to lawsuits by affected parties before independent courts or arbitration bodies in case of disputes (neutral dispute resolution).
It’s clear that even Western democratic rule-of-law states only meet the last criterion, often with limitations, as only certain bodies can sue the government. The legal certainty and predictability envisioned by constitutions are no longer upheld in practice. Those in power can largely control both the wording and interpretation of the constitution through parliamentary majorities and judicial appointments.
We can also outline a historical evolution of state legitimation that doesn’t end with representative democracy. In the past, the monarch decided how I should live, claiming divine appointment as legitimation. People believed this for a surprisingly long time—until they didn’t. Since then, the majority, or its elected representatives, decides how I should live, with legitimation derived from majority elections. A logical next step is that I decide for myself how to live, requiring no further legitimation as long as I don’t infringe on others’ rights. For the necessary protection of freedom, life, and property, I rely on service providers.
One such provider is the Free Private City.
The Free Private City
A Free Private City is an apolitical state service provider. Accordingly, citizens are treated as customers. The city is operated by a profit-oriented company, the city operator, which guarantees the protection of life, liberty, and property in exchange for payment. The profit requirement prevents resource waste and ensures the city doesn’t fall into hopeless debt.
In Free Private Cities, the traditional ruler-subject relationship is replaced by a customer-service provider relationship. For the first time in history, there is a genuine social contract with fixed rules, not a fictional one that can be repeatedly altered by one side.
The services provided by the operator include internal and external security, a predefined legal and regulatory framework, and an independent dispute resolution system.
Participation is entirely voluntary: interested individuals and companies sign a “citizen contract” with the city operator and pay a fixed annual fee for these services instead of taxes.
Within this framework, a “spontaneous order” can emerge from the voluntary actions and decisions of citizens, who are sovereign over themselves and treated as such. The operator cannot unilaterally change the citizen contract later without the affected citizen’s consent. Disputes between citizens and the operator are handled by external arbitration courts not affiliated with the operator’s organization. If the operator ignores arbitration rulings or abuses its power, customers leave, and the operator faces insolvency.
The Free Private City is currently the only peaceful and voluntary alternative to the political status quo that doesn’t rely on a benevolent dictator. My model has nothing to do with Plato’s know-it-all philosopher-king model or authoritarian top-down ideas where an entrepreneur builds a city and controls everything.
My city operator is a service provider creating a framework within which citizens can freely develop. The operator is bound by contracts and can be sued before neutral bodies.
Free Private Cities are essentially classical liberal minimal states, but operated by a private entity with exclusively voluntary contract citizens. Thus, they are neither purely minarchist nor purely anarcho-capitalist systems.
While all residents are free to agree on any legal system and corresponding dispute resolution mechanisms, and can hire private security providers, the city operator has a fallback legal system and mandatory dispute resolution mechanisms in case no agreement is reached. The operator also holds the monopoly on force, particularly when it comes to expelling disruptors or criminals from the city. In my view, this is unavoidable for creating an attractive and secure community. Cruise ships and shopping malls don’t have competing security services either.
However, Free Private Cities are open to variations and developments. We’ll likely see attempts to establish systems without a monopoly on force. I believe I can predict the outcome, but competition will serve as a discovery process here as well.
Free Private Cities are ready to face competition. Systems unwilling to do so clearly have something to hide—perhaps the fact that privileged groups enrich themselves at others’ expense?
Free Private Cities are not a utopia but a business idea whose functional elements are already known (providing services for payment) and simply applied to a new area: coexistence.
Viewing a social order as a “product” in the “market of coexistence” and peaceful competition among systems for citizens as “customers” will bring more peace and freedom. Market-based solutions are non-violent, non-revolutionary, and evolutionary, driven by mutation (trial and error), selection (profitability or bankruptcy), and reproduction (imitation of successful solutions).
Therefore, first, alternative social forms must be permitted, and second, citizens must not be prevented from exiting any system. Those who prefer collective life and “social warmth” over individual sovereignty have every right to do so. But they have no right to force others who value freedom to stay or finance their preferred lifestyle. Social orders that only function by forcibly retaining people and compelling specific behaviors will ultimately fail. A good product doesn’t fear criticism or competition and thus doesn’t need to ban or regulate them. Indeed, competition has proven to be the only enduringly effective means of limiting human power.
The operator is a service provider who can be sued at any time, with a narrow scope of duties: protecting life, liberty, and property according to predefined, agreed-upon rules that cannot be unilaterally changed. The vast majority of decisions in residents’ lives thus occur outside the operator’s influence. When individuals can decide almost everything themselves, including how to live, with whom to associate and which goals to support, there’s no need to delegate these decisions to a parliament, government, or majority.
Free Private Cities aim to enable maximum self-determination, not maximum co-determination. As communities evolve from majority rule to self-determination, the principal-agent problem—where representatives prioritize their own interests over those they represent—disappears.
The market-oriented Free Private City model also solves other problems of existing social orders. The public choice problem, where public interest representatives are often guided by personal interests, leading to misallocation and waste, is largely neutralized. The profit requirement in Free Private Cities counters this. A CEO of a Free Private City might want international conferences or the Olympics, but this would reduce profits or drive the city toward insolvency, so self-interest in financial success prevents the worst excesses. The minimal principle problem—wanting maximum gain for minimal effort and thus voting for redistribution parties—is eliminated in Free Private Cities because there’s no forum to hijack that can interfere with bilateral citizen contracts. Finally, unlike politicians, the city operator has skin in the game. They are liable with their own assets, face insolvency if they fail, and suffer reputational damage, making it hard to continue in the industry. Better operators then take over.
The market thus provides suitable tools for an area we’ve previously treated as separate, where only political solutions were considered.
Implementation in the Real World
Since all land is currently controlled by governments, establishing a Free Private City requires the operator to reach a contractual agreement with an existing state. In this agreement, the “host state” grants the operator the right to establish the Free Private City on a specific territory under certain conditions, including legal autonomy in various areas.
States may be willing to cede some power if they expect benefits, such as job creation, foreign investment, and a share of the operator’s profits. The existence of thousands of special economic zones in 150 countries proves states’ general willingness to pursue this path.
In the little-known industry of special economic zones, there are three major trends. First, a long-term trend of expansion: from free ports and customs warehouses to manufacturing, services, and permanently inhabited zones. Second, a trend toward privately managed zones, as these tend to be more successful than state-run ones. Third, a trend toward greater zone autonomy, including independent courts and legislative bodies, as seen first in the Dubai International Financial Centre (DIFC).
This all leads to the logical next step: Free Private Cities, privately managed on behalf of the host state using internationally proven methods. Not only companies but also individuals, especially talent and high achievers, are seeking better and freer regulations.
The DIFC demonstrates the immense impact of an internationally recognized legal system, in this case, Common Law, combined with independent courts: a single square kilometer in Dubai now accounts for nearly 10% of its GDP.
Innovative governments will jump on this trend—it brings them revenue, jobs, and international prestige.
This development has already begun. Besides projects in Honduras, my company, Tipolis, recently signed a contract with Brunei, and even a state actor, Saudi Arabia, aims to create an attractive system for Westerners with distinct institutions in its NEOM megaproject, where different rules apply than in the rest of the country.
Conclusion
Most people don’t want to submit to rules and regulations they haven’t agreed to. Most people don’t want to pay for things they didn’t order. And reasonable people don’t need hundreds or thousands of laws to live together peacefully. Instead, people need a secure space to live and collaborate with others while otherwise being left alone.
Free Private Cities can fulfill these desires. Existing political systems cannot. That’s why Free Private Cities have a chance to succeed. Because in the end, people go where they are treated best.