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The Political Economy of Non-Territorial Exit


Trent J. MacDonald

Territorial political organisation forms the backbone of western liberal democracies. However, political economists are increasingly aware of how this form of government neglects the preferences of citizens, resulting in dramatic conflicts. The Political Economy of Non-Territorial Exit explores the theoretical possibility of ‘unbundling’ government functions and decentralising territorial governance.
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Summary and conclusion

Trent J. MacDonald


The modern nation-state is a bundled territorial form of political organisation. The purpose of this book has been to explore variants of the political system almost diametrically opposed to this: unbundled and non-territorial governance. The various models and arguments have drawn on new institutional, public choice, and Austrian economic theory in undertaking these explorations. Particular focus has gone to panarchist and cryptoanarchist political theory (Ludlow 2003; Tucker & de Bellis 2015); the Coase theorem, the theory of fiscal commons and the new institutional economics (Coase 1960; Wagner 1992); institutional possibilities, political transformations and the new comparative economics (Djankov et al. 2003; Rodrik 2014); the theory of fiscal exploitation and internal exit (Buchanan & Faith 1987); and polycentric spontaneous political orders (diZerega 2000; Andersson 2012; Martin & Wagner 2009). All these diverse threads have come together in an analysis of the theory of unbundled and non-territorial governance. The book started with an appreciation of the many paradoxes and problems of majoritarian voting in bundled, territorially monopolistic nationstates, and contended that a more efficient system of governance is one in which citizens relate their political preferences in detailed and filigreed ways. A public choice style framework was used to find that decoupling political jurisdiction from geographical location (so that citizens can switch political jurisdictions without switching location) and unbundling government (so that collective goods and services can be provided separately by independent public enterprises) leads to greater efficiency in public good provision and more citizen welfare. The conclusion to this first chapter was not to rule out all political bundling but rather to promote an ‘unbundleable’ system of governance so that political entrepreneurs could discover ways to rebundle the various political goods and services. Non-territorial unbundling forms a platform for experiments in bundling, unbundling and rebundling, and ultimately fosters discovery of optimal scale of scope in political bundles.

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