London as a City-State

Since London was one of the areas that voted overwhelmingly to remain a member of the EU, there are now calls for it to become an independent city-state. Such a proposal is something I find interesting as a libertarian anarchist, as it means the decentralisation of powers toward smaller units and thus power and accountability toward constituent actors in their economy and polity.

London as a city-state would have some very interesting, as well as contradictory, dynamics. The pre-eminence of London’s financial power would most likely remain, however serious liberalisation would need to occur. The central bank would become futile except as a private lender of last resort paid for by financial institutions. Thus interest rates would be set by market interactions among investors and fund managers. Stock markets would become more decentralised and numerous, as the FTSE became one of many exchanges for stock options, currency speculation and the movement of money. Rather than the pound being predominant, the City of London could move toward becoming a free currency zone, where numerous currencies interacted and circulated through investment funds and into foreign or domestic companies. In this sense, London would be governed in a similar manner to Bitcoin or the Blockchain, with high levels of speculation but an evening out of interest rates through the interaction of multiple currencies. Banks may also take more of a conservative position on investments, particularly land speculation, as they cannot rely on a national central bank to act as lender of last resort. They could not also rely on the pumping of capital into their coffers, so they would minimise presumed capital misallocation and instead invest in longer-term business propositions, thus moving toward the position of flexible financial markets which Mises wrote of.

In terms of the rest of the City, much of it votes Labour and believes in cosmopolitanism and social justice. In this sense, direct democracy and economically left-wing policies would win out. The property market, currently being ravaged by QE-based capital investment and speculation, would be brought under the control of community land trusts through local councils. Much political decision-making would follow a Swiss-like model of referenda on city-wide economic decisions (like a Living Wage or a new form of taxation), with most other decisions made by local, directly elected councils with small voting blocs which would eliminate the party machines in London.

Because of the significance of land and property prices in London, a land value tax would bring in the most revenue as well as being politically acceptable among the wide range of people in London (a similar thing in found in Hong Kong). Currencies could be decentralised (similar to the Brixton pound) and maintained in the local community. Further, due to stock exchange liberalisation, stock exchanges could be developed around these local currencies which encourage investments in the local area and local businesses and infrastructure. Things like pension funds and employee stock could be put into these forms of stock exchanges.

As a result of London’s position being predominantly based in the financial sector, things like manufacturing or heavy/light industry would not blossom. Instead, artisanal markets and niche production in hi-tech and internet-based technology would likely develop. Alongside direct democracy, these types of small businesses could represent themselves through guilds (as done historically) so as to engage with the social justice politics found in London boroughs. Things like workers rights, pollution regulation and the interaction of business with labour would be regulated from the ground-up, through direct democracy and incorporated groups of entrepreneurs, employers and labourers.

In terms of the national political institutions that are seated there, in particular Westminster, they could still function as such. Westminster’s laws and legislation could still be applicable to the rest of the UK, but not to London. However, such a small point hardly bothers me. I much prefer to see the British Parliament treated as voluntary, with subsidiarity held through nested local and regional parliaments which are also voluntary.

These are just some theoretical ideas of what London as a city-state may look like. Looking at the current dynamics of London, I think these ideas hold water. The financial sector, if liberalised, could still hold the position as an international marketplace of currency movements and capital allocation. However, it could not rely on the subsidisation of central banking from either Britain or America. Instead, currency ownership and movement becomes much more messy, akin to the cryptocurrencies found on the Blockchain. And these things can interact perfectly well with decentralised economies of scale which suit the left-wing economics of the population of London boroughs. Directly democratic governance structures can rely on decentralised economies of scale as well as locally oriented investment decisions through local stock exchanges.

London becoming a city-state is something I whole-heartedly support. Let’s hope that Brexit encourages more of these decentralist, secessionist movements which end unaccountable power seated firmly in Westminster.

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