A Booming Anarcho-Capitalist City in India?

At the Mises Blog, Stephan Kinsella points to this fascinating article about a booming city in India.

Gurgaon appears to operate on a very unusual or unorthodox dynamic which the author calls as ‘dysfunctional’.

The New York Times, (bold emphasis mine)

With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a rising "new" India, yet it also represents a riddle at the heart of India's rapid growth: how can a new city become an international economic engine without basic public services? How can a huge country flirt with double-digit growth despite widespread corruption, inefficiency and governmental dysfunction?

In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the government rather than because of it…

In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government.

To compensate for electricity blackouts, Gurgaon's companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private borewells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers.

The article continues with the success story.

Today, Gurgaon is one of India's fastest-growing districts, having expanded more than 70 percent during the past decade to more than 1.5 million people, larger than most American cities. It accounts for almost half of all revenues for its state, Haryana, and added 50,000 vehicles to the roads last year alone. Real estate values have risen sharply in a city that has become a roaring engine of growth, if also a colossal headache as a place to live and work.

Before it had malls, a theme park and fancy housing compounds, Gurgaon had blue cows. Or so Kushal Pal Singh was told during the 1970s when he began describing his development vision for Gurgaon. It was a farming village whose name, derived from the Hindu epic the Mahabharata, means "village of the gurus." It also had wild animals, similar to cows, known for their strangely bluish tint.

"Most people told me I was mad," Mr. Singh recalled. "People said: 'Who is going to go there? There are blue cows roaming around.' "

And makes a comparison with the sibling city which has been managed by orthodox means…

Gurgaon was widely regarded as an economic wasteland. In 1979, the state of Haryana created Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half would revolve around the city of Faridabad, which had an active municipal government, direct rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon, had rocky soil, no local government, no railway link and almost no industrial base.

As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won, easily. Faridabad has struggled to catch India's modernization wave, while Gurgaon's disadvantages turned out to be advantages, none more important, initially, than the absence of a districtwide government, which meant less red tape capable of choking development.

Gurgaon’s success comes amidst a seeming absence of central planning agencies…

Ordinarily, such a wild building boom would have had to hew to a local government master plan. But Gurgaon did not yet have such a plan, nor did it yet have a districtwide municipal government. Instead, Gurgaon was mostly under state control. Developers built the infrastructure inside their projects, while a state agency, the Haryana Urban Development Authority, or HUDA, was supposed to build the infrastructure binding together the city.

And that is where the problems arose. HUDA and other state agencies could not keep up with the pace of construction. The absence of a local government had helped Gurgaon become a leader of India's growth boom. But that absence had also created a dysfunctional city. No one was planning at a macro level; every developer pursued his own agenda as more islands sprouted and state agencies struggled to keep pace with growth.

Where public services have been delivered by the private sector…

Even at the fringes of Gurgaon's affluent areas, large pools of black sewage water are easy to spot. The water supply is vastly inadequate, leaving private companies, developers and residents dependent on borewells that are draining the underground aquifer. Local activists say the water table is falling as much as 10 feet every year.

Meanwhile, with Gurgaon's understaffed police force outmatched by such a rapidly growing population, some law-and-order responsibilities have been delegated to the private sector. Nearly 12,000 private security guards work in Gurgaon, and many are pressed into directing traffic on major streets.

Well the above somewhat or partly resembles a society which Austrians call as anarcho-capitalism, where

law enforcement, courts, and all other security services would be provided by voluntarily-funded competitors such as private defense agencies rather than through taxation, and money would be privately and competitively provided in an open market.

Gurgaon's development may not be perfect, but her unorthodox model seems to have vastly outclassed her politically oriented development models adapted by her peers.

Nevertheless Gurgaon’s experience isn’t about attaining perfection but about relative efficiencies.

It’s one development model which should be look at, learned from and possibly assimilated.