The libertarian governance experiment has been running in multiple live environments simultaneously, and the 2026 results are in from three of them: a New Hampshire town that was overrun by bears, a Honduran charter city that is suing the country that created it for $10.7 billion, and a network of Free State legislators who have quietly become one of the most effective political insurgencies in American state politics. Each experiment tested a different theory about what happens when you try to minimize or replace the state. Each produced a result that neither supporters nor critics fully predicted. Together, they form the most comprehensive real-world dataset on whether libertarian governance works — and the answer depends entirely on what you mean by “works.”
Grafton: the control experiment
The story that’s become a punchline actually happened, and the details are worse than the punchline suggests. In 2004, a splinter group from the Free State Project called the Free Town Project chose Grafton, New Hampshire — population 1,138, no zoning laws, negligible property taxes — as the site for a libertarian takeover at the municipal level. Hundreds of libertarians relocated. Nearly all were men. They fashioned homes from yurts, shipping containers, trailers, and tents. At town meetings, they did exactly what they’d promised: slashed the town budget by 30 percent, defunded the senior citizens’ council, and filed lawsuits against the town to establish legal precedents for minimal governance. The single police officer stopped responding to calls because the town wouldn’t pay to repair his cruiser. Crime rates spiked. Sex offenders moved to the unregulated town. A double murder — the first in Grafton’s recorded history — occurred.
And then the bears. Grafton had always had black bears. But with garbage collection disrupted and residents refusing to purchase bear-resistant containers on libertarian principle, food became abundant and accessible. One resident — later nicknamed the “Donut Lady” — began intentionally feeding bears pastries. Others followed. The bears stopped hibernating on schedule. They lost fear of humans. They entered homes, attacked pets, and mauled residents. The town couldn’t coordinate wildlife management because doing so required collective action, and collective action looked too much like government. By 2018, the bear population in the region was 50 percent above the state’s recommended target. In 2016, a fire destroyed a 200-year-old church where a pastor who had fallen into poverty after refusing to pay taxes had taken shelter. He died in the fire. The Free Town Project quietly collapsed.
Matthew Hongoltz-Hetling, a Pulitzer-nominated journalist, documented the entire story in his 2020 book A Libertarian Walks Into a Bear. The title is funny. The content is a case study in what happens when a community’s refusal to coordinate basic services meets an adaptive predator that exploits the resulting gaps.
The Free State Project: the real operation
The Free Town Project was a sideshow. The Free State Project — the larger, more serious effort that had been running since 2001 — is the one that matters in 2026. Founded by Jason Sorens, then a Yale Ph.D. student, the FSP’s strategy was straightforward: recruit 20,000 libertarians to move to New Hampshire, a state with no income tax, no sales tax, a “Live Free or Die” motto, and the third-largest state legislature in the English-speaking world — 400 representatives for 1.4 million people, meaning the barrier to winning a seat is absurdly low. By February 2016, 20,000 people had signed the pledge. As of 2026, an estimated 6,000-plus have actually moved.
The results are measurable. In 2024, big-oil PACs like Make Liberty Win and Americans for Prosperity donated over $1 million to fund at least 130 FSP-aligned New Hampshire House candidates. The Republican House Majority Leader, Jason Osborne, is a Free Stater. In the 2025 legislative session, the House-approved budget included provisions to slash funding across most state departments and impose a budget cap on school districts — a direct FSP policy priority. In Croydon, a town of 800, Free Staters hijacked the 2022 annual town meeting and voted to halve the school budget, effectively abolishing in-person education. The townspeople organized an unprecedented second meeting and voted to restore it. The pattern — small-town takeover, budget slashing, community backlash — has repeated across multiple New Hampshire municipalities.
The FSP didn’t try to abolish the state. It captured it. That distinction is the difference between Grafton and the Free State Project — and it’s the distinction that makes the FSP one of the most effective political migration strategies in modern American history, regardless of whether you think the policies it produces are good.
Próspera: the corporate charter city
Próspera is where the libertarian governance experiment gets genuinely unprecedented. In 2013, the Honduran government — under post-coup president Juan Orlando Hernández, who is now serving a 45-year sentence in a New York federal prison for narcotrafficking — passed a law creating Zones for Employment and Economic Development, known by their Spanish acronym ZEDEs. The law had originally been ruled unconstitutional by the Honduran Supreme Court in 2012. Several justices were subsequently replaced, the constitution was amended, and the law was reintroduced and passed. ZEDEs could operate under Honduran criminal law but with their own civil code, their own administration, their own tax regime, and their own legal system — including the right to submit disputes to international arbitration rather than Honduran courts.
Próspera was established on the island of Roatán, near the village of Crawfish Rock, by a group of American investors led by Erick Brimen. The pitch was a startup nation: common-law legal code based on a blend of Texas and Dubai commercial law, 5 percent income tax, digital governance, its own arbitration center, and a 50-year operational charter that the Honduran government had contractually guaranteed. Bloomberg described it as “a mini startup nation with its own set of laws.” The Atlantic called it neo-medieval and neo-colonial. Neighbors in Crawfish Rock feared the zone would expand and expropriate their land. Community members reported that Próspera’s construction disrupted the local water supply.
In 2022, newly elected president Xiomara Castro — the wife of the president who had been deposed in the 2009 coup — repealed the ZEDE law, fulfilling a campaign promise. Próspera responded by filing an investor-state dispute settlement claim under the CAFTA-DR trade agreement at the World Bank’s International Centre for Settlement of Investment Disputes. The initial claim: up to $10.7 billion — approximately two-thirds of Honduras’s entire annual budget. In October 2025, Próspera’s damages expert valued the company’s 30-year business plan at $10.6 billion on average and up to $26.4 billion on the high end, though the company’s current claim for compensation is $1.6 billion, with restitution of its ZEDE rights as the preferred remedy. In February 2025, the ICSID tribunal rejected Honduras’s preliminary objections, allowing the case to proceed.
The structural implications are staggering. A private company, incorporated in the United States, established under a law that was initially ruled unconstitutional, operating in a zone created by a president now imprisoned for drug trafficking, is suing a sovereign nation for repealing the law that authorized the company’s existence — using an international arbitration system in which the company has rights but the country has no right of appeal. Honduras can’t counter-sue. If Honduras loses, the award is enforceable against Honduran assets in any country. If Honduras wins, Próspera can more easily hide assets or declare bankruptcy. Próspera’s general counsel told a podcast that ISDS “can be very effective to create the right incentives for good behavior” — a statement that either describes legitimate investor protection or a mechanism for private entities to override democratic governance, depending on who you ask.
Próspera’s case is one of 15 ISDS claims filed against Honduras since 2023, collectively seeking at least $12.3 billion — nearly twice Honduras’s entire public expenditures in 2022. Honduras has threatened to withdraw from ICSID entirely, though doing so wouldn’t dismiss the existing claims.
What the experiments tell you
Grafton proved that a community can’t coordinate basic services — waste management, wildlife control, road maintenance, fire response — through individual voluntarism alone. The Free State Project proved that a coordinated political migration can meaningfully shift state-level policy within two decades, especially in a low-population state with weak barriers to legislative entry. Próspera proved that a charter city backed by international investment treaties can outlive the government that created it, and that the legal architecture of free trade agreements gives private entities leverage over sovereign nations that the framers of those agreements may not have intended.
Each experiment tests a different version of the same question: what is the minimum viable state? Grafton answered zero, and the bears came. The FSP answered “captured and minimized,” and it’s working — for the capturers, if not for the captured. Próspera answered “contractually guaranteed private jurisdiction,” and the answer is currently being adjudicated in a Washington arbitration chamber where Honduras has no right of appeal.
We cover Próspera alongside NEOM, Fordlândia, Christiania, seasteading, and 19 other experiments in building new societies from scratch across our Utopian Societies course — where the question is never whether utopia is possible but what happens when someone actually tries.