In order to help understand how neoliberalism generates new forms of localized governing and social control, this article investigates the major differences between the Peruvian government's 1995 Land Law legislation, and how the state actually implemented the new policy. The article argues that, contrary to the letter of the Law, the shape of the institutions set up to implement it uniquely served the interests of local elites and made them the proxies of the neoliberal state. Moreover, by incorporating rural villages in an essentialized way, the Law enables and pushes these new state agents to govern in a more overtly coercive and authoritarian manner.