Capitalism,Democracy,and Territorial Forms of Exception: Quinn Slobodian,Crack-Up Capitalism

Quinn Slobodian Crack-Up Capitalism: Market Radicals and the Dream of a World without Democracy London: Allen Lane, 2023, 336pp.ISBN: 978-0241-46024-5

Through the course of the early 2000s, Ulrich Beck advanced a critique of what he called ‘methodological nationalism’: ‘a situation where the social sciences – not only sociology but also political science, law, history, economics and so on – are to some extent still prisoners of the nation-state’ (Beck in Gane, 2004: 143). In opposition to such nationalism, Beck advocated, first, theoretical attention to different types of flow that cut across nation-state boundaries (‘flows of capital, cultural flows, flows of information and risks’) (Beck in Gane, 2004: 144); and second, a new programme of empirical research that could redefine the basic concepts of the social sciences ‘from transnational and cosmopolitan perspectives’ (Beck in Gane, 2004: 146). Beck developed this position against the backdrop of an emergent literature on globalization, which, for the most part, saw capitalism as something that had become increasingly mobile and flexible, and which, following the collapse of the Soviet Union, could no longer be mapped neatly onto nation-state borders and boundaries. In the face of this challenge, the task, for Beck and other sociologists of globalization, was to think of new ways of conceptualizing and studying capitalism – along with associated properties such as power, class, and identity – without reducing them either to analysis of the internal structures and dynamics of nation-states, or to external, international relations between them.

This new book by Quinn Slobodian – Crack-Up Capitalism – does not draw upon or engage with the work of Beck, but both extends and radicalizes its attempt to rethink the relationship between capitalism and the nation-state. To begin with, Slobodian (2023) adopts a position that is familiar from Beck: that ‘we make a mistake if we see the world only’ as a ‘jigsaw of nations’ (p. 2). But Slobodian, in fact, develops a quite different position as his analysis focuses instead on spaces of exception that have long existed within the territorial boundaries of the nation-state, and which have been designed to enable capitalism to escape the regulatory powers of political democracy. Slobodian (2023) calls this process ‘perforation’, for it involves ‘punching holes in the territory of the nation-state, creating zones of exception with different laws and often no democratic oversight’ (p. 3). Slobodian identifies and analyses a number of territorial forms that are central to this process: ‘Islands’ (Part One); ‘Phyles’ (Part Two); and ‘Franchise Nations’ (Part Three). These new geographies of capitalism, he says, ‘shatter the map’, as they exist beneath, across and outside the nation-state, and, more often than not, are premised upon alternative forms of law and sovereignty. Slobodian advances the metaphor of ‘crack-up capitalism’ to capture this new world: one ‘that is both ever more interconnected and ever more fragmented’ (Slobodian, 2023: 4), and which, at the same time, is driven by a politics of exit that seeks to ‘pierce holes in the social fabric, to opt out, secede, and defect from the collective’ (Slobodian, 2023: 6).

Slobodian begins with the territorial form that has been central to the libertarian and neoliberal restructuring of the world map: the zone. He observes that ‘The world of nations is riddled with zones’ (over 5,400 in total) (Slobodian, 2023: 2–3), the vast majority of which exist outside of Europe, in Asia, Latin America, and Africa, with nearly half of them located in China. Given this, Slobodian’s first case-study – Hong Kong – is well chosen. He recalls that Hong Kong was Milton Friedman’s ‘favourite example’ (Slobodian, 2023: 14) of a state that sought to separate capitalist freedom from political democracy by modelling government on the power of corporations. Friedman filmed the first episode of his television series Free to Choose in Hong Kong, in which he embraced its low tax rates and weak trade barriers, light touch regulation, and protection of private property. Slobodian (2023) argues that the Hong Kong ‘experiment’ proved so successful that, for Friedman and other members of the Mont Pelerin Society, it became a model that could be exported to the rest of the world; a model in which free markets should take priority over free elections, government to be replaced by management, and an elected leader replaced by a CEO (p. 34). It was not just Friedman and his followers, however, who embraced the Hong Kong experiment, as China also viewed it as a model of success. Slobodian (2023) observes that ‘China’s rise to global economic power would happen, in part, by turning the country into a galaxy of miniature Hong Kongs’ (p. 26). He points, in particular, to the introduction of a zone of low corporation tax in Shenzhen. The transformation that followed was unprecedented, for while in 1980 the aim was to bring 300,000 people to this area, by 2020 the population had reached 20 million, ‘with a GDP greater than Singapore or Hong Kong’ (Slobodian, 2023: 29).

Slobodian turns next to London, and recalls that ‘At the beginning of the 1980s, market radicals had set out to turn London into a miniature Hong Kong’ (Slobodian, 2023: 52). Again, the idea of the zone features prominently as Slobodian (2023) describes the City of London, from its inception onwards, as ‘a primal zone, carved out from its surrounding political space and governed by different rules’ (p. 40). This model of the zone as a space of exception was central to Thatcher’s neoliberal restructuring of Britain, and, in her first budget, she introduced 11 enterprise zones that ‘were exempted from requirements for local planning approval, freed from local taxes for 10 years, and provided capital allowances for commercial buildings’ (Slobodian, 2023: 44). Docklands was a jewel in Thatcher’s crown, as it was designed to attract finance capital to the City by promising state investment and discounted land to developers. Such state-led initiatives, coupled with an assault on leftist bulwarks of local government such as the Greater London Council, triggered a property boom, as London became a safe haven for global wealth. The investment that followed was extraordinary, not least from other zones of exception. Slobodian (2023) observes that ‘From 2009 to 2011, £8 billion of London real estate was purchased through the British Virgin Islands alone; by 2015, an astonishing £100 billion had been purchased from offshore’ (p. 50). But as the rich moved in, predictably, the poor were pushed out, and Britain followed Hong Kong in another way: it became a ‘tycoon nation’ in which ‘one-quarter of the richest people have property as their main source of wealth’ (Slobodian, 2023: 52; on Hong Kong as the model of a ‘tycoon city’, see Wissink et al., 2017).

Slobodian’s final ‘island’ is Singapore. Again, there are similarities to the preceding case studies. In 1819 Stamford Raffles – a British East India Company officer – signed a treaty with the Malay sultan that enabled Singapore to be established as a free-trade port with no duties, and, over time, it became an offshore financial centre with only ‘a thin commitment to democracy’ (Slobodian, 2023: 64). But there are important differences between the governance of Hong Kong and Singapore. Slobodian (2023) points, in particular, to the role of the state, for whereas ‘private interests shaped Hong Kong with the government in a supporting role, in Singapore, the state took centre stage’ (p. 62). And while Hong Kong produced ‘zone fever’, Singapore fed what Slobodian (2023) calls ‘culture fever’ as intellectuals debated ‘the relative merits of Western versus Chinese traditions’ (p. 70), and what might be called ‘Confucian capitalism’. Again, a key question, for Slobodian, is how Singapore became a model for reform elsewhere. He argues that ‘mini-Singapores’ were implanted in China that ‘had their own sets of laws, regulations, and even welfare systems, consistent with the atmosphere of subnational experimentation that characterized the period of reform and opening up’ (Slobodian, 2023: 71). And while Singapore followed the City of London in developing its financial sector (see Slobodian, 2023: 67), it, in turn, became an icon of Conservative, exit-based politics in the UK. Slobodian recalls that Thatcher believed that ‘Britain should turn away from Europe to become “a kind of free-trade and non-interventionist ‘Singapore’”’ (Slobodian, 2023: 61), and, more recently, that Owen Paterson, a former Eurosceptic Conservative MP, declared in the aftermath of the Brexit vote: ‘Let Singapore be our model’ (Slobodian, 2023: 61). The attraction of Singapore for Thatcher and her followers was simple: ‘Along with opposition to socialized health care, it implied low taxes, deregulation, and the erosion of worker rights, a combination of the offshore tax haven and the sweatshop’ (Slobodian, 2023: 74). For these reasons, Slobodian (2023) describes Singapore as ‘a hero in the pantheon of crack-up capitalism’, and concludes, in light of the huge inequalities produced by this model, that ‘Singapore, in the end, is not an island – it’s everywhere’ (p. 78).

These opening chapters provide a frame of reference for the rest of the book. In Part Two, Slobodian turns his attention from zones to ‘phyles’. He draws this term from the novelist Neal Stephenson, who uses it to describe ‘privately owned, privately governed’ territories that, in reality, lead to new geographies of segregation based on ideas of the ‘tribe’ or ‘clan’ (see Slobodian, 2023: 96–7). Slobodian’s (2023) analysis of this territorial form begins in post-apartheid South Africa, which he describes as ‘just as much a site of neoliberal experimentation as Hong Kong, London, and Singapore’ (p. 82). Again, Milton Friedman features prominently, as in 1976 he told a South African audience that ‘democracy was overrated’ as the ‘market was a much surer route to liberty’ (Slobodian, 2023: 82). Slobodian argues, however, that, in practice, the neoliberalisation of South Africa was achieved not just by market forces but by the actions and continued powers of the state. Slobodian points, first, to Ciskei on the Eastern Cape, as an example. This ‘pseudo-nation’ lured prospective investors by creating new export processing zones and offering state subsidies, while at the same time operating ‘hand in glove with the South African security forces’ (Slobodian, 2023: 87). In practice, this meant that trade unions were prohibited, and civilian acts of resistance punished with violence. Another phyle located in South Africa is the ‘libertarian enclave’ of Orania, which has its own currency, a chief executive as a leader, and residents who are its shareholders. For Slobodian (2023), both Ciskei and Orania are ‘phyles’ because they are enclaves based on segregation that are designed to avoid the ‘stigma of formal apartheid’ and instead advocate ‘voluntary racial segregation from below’ (pp. 92–3).

This theme of segregation runs through Slobodian’s other examples of phyles: from the break-up of the USSR and the associated re-birth of nation-states (Chapter 5) to gated communities in the US (Chapter 6) and the tax-haven of Liechtenstein (Chapter 7). Together, these chapters show that contemporary capitalism is not characterized simply by transnational social forms or connectivity, but by privatization through social exclusion and gating. Slobodian observes that for libertarian thinkers such as Murray Rothbard, the task is to splinter or disintegrate the state from within by creating private enclaves and zones that escape the reach of political power. For such ‘market radicals’, the resurgent ‘neo-nationalism’ that accompanied globalization through the 1990s was something to embrace, for ‘Each state spawned by secession was a new jurisdiction, a start-up territory that might offer itself as a refuge for flight capital or a site of unregulated business or research’ (Slobodian, 2023: 100). Slobodian’s focus, here, is not globalization on a grand scale, but rather the birth of micro-nations small enough to act as economic experiments, and the creation of phyles even at the level of the household. In terms of the former, there is no better example than Liechtenstein; a tax haven that sold citizenship to the superrich in the 1930s and which for many years afterwards shielded wealth through anonymous banking. And in terms of the latter, Slobodian (2023) theorizes gated communities as ‘neo-medieval’ projects that offer ‘social separation and new walls’ against the forces of globalization, and within which forms of ‘alternative private government’ are able to ‘take root’ (pp. 115–18).

The final part of this book addresses what Slobodian calls ‘franchise nations’. The first of these is Somalia, which inspired anarcho-capitalists and libertarians not least because, after 1991, in the aftermath of civil war, it was left with no functioning government. Slobodian argues: ‘This apparent catastrophe was a stirring vision of hope for the most radical capitalist. Rather than a humanitarian nightmare, Somalia offered a preview of the world to come and a chance to combine “postindustrial tribal anarchy” with sovereignty for sale’ (Slobodian, 2023: 152). A key figure in Somalia was the libertarian Dutch lawyer and Mont Pelerin Society member Michael von Notten, who took Hong Kong as a ‘prototype’ for introducing deregulated tax-free or ‘T-zones’ that could stimulate ‘jealousy’ by pushing towns and regions to compete with low-tax enclaves (see Slobodian, 2023: 153). This, for van Notten, was to be the blueprint for post-colonial freedom, as ‘In his view, it was only by abandoning both democracy and the idea of the central state itself that Somalia could overcome its colonial legacy’ (Slobodian, 2023: 157). This was consistent with von Notten’s libertarian project more generally, which included building a ‘dream zone’ with ‘all state functions privatized and taxes eliminated altogether’ (Slobodian, 2023: 154).

The concluding chapters of this book analyse libertarian conceptions of sovereignty. Slobodian (2023) treats Dubai as a ‘case study in capitalism without democracy’ (p. 170); one in which authoritarianism is combined with a particular model of corporate governance. For libertarian, neo-reactionary thinkers such as Curtis Yarvin (Mencius Moldbug) (see Smith and Burrows, 2021), Dubai is a model of success not simply because it has a free trade zone, but because it is run like a business and is made up of a ‘patchwork’ of privatized sovereignties that embrace ‘radical legal pluralism’ and a ‘willingness to design bespoke jurisdictions to satisfy investors’ (Slobodian, 2023: 172). This is important because whereas nations are generally conceived as unified legal spaces (‘one territory inhabited by citizens under one set of rules’), Dubai demonstrates that this is not necessarily the case as zones and enclaves can operate effectively as ‘states within states’. Slobodian (2023) explains: ‘What was special about Dubai is that it took this reality of legal diversity and turned it into an organizing principle for the whole emirate’ (p. 176). More than this, Dubai also sought to replicate itself overseas by building franchise zones and investing, through state-owned subsidiaries, in flagship entities such as the London Stock Exchange and London Eye. This is telling, for where there is a shortage of land, Slobodian (2023) argues that there is a new dictum: ‘Just add territory’ (p. 179) – be this, in the case of Dubai, either through the creation of offshore ‘palms’ or through strategic investments overseas.

This dictum returns in a shocking way in Slobodian’s analysis of what he calls ‘Silicon Valley’ colonialism. One libertarian solution to the question of sovereignty is that it should be marketized and, with this, turned into something that can be bought and sold. Slobodian (2023) points to Paul Romer’s conception of ‘charter cities’ to describe this new ‘formula’, which works on the ground by persuading ‘poor nations to surrender patches of uninhabited territory to be managed by richer ones’ (p. 188). He provides two striking examples of this development, through which national sovereignty is passed over to ‘external management’: Madagascar, where a dairy tycoon proposed leasing 1.2 million hectares of land free of charge to a South Korean conglomerate, and Honduras, which was an ‘enclave economy’ in the 19th century when its plantations were run by companies based overseas (see Slobodian, 2023: 189), and where, in the 2000s, a ‘special development region’ was created as an ‘extraterritorial entity to be managed by a foreign partner country’ (Slobodian, 2023: 190). Slobodian explains that such experiments appealed to far-right libertarians and neo-reactionary conservatives for two main reasons. First, they showed that colonies can exist within the nation-state through the creation of special zones or regions of exception that have their own juridical standing. And second, for more extreme figures such as Yarvin, colonialism is something that should be revived and celebrated, for ‘non-European populations’ do better when ‘ruled by Europeans’, and, thus, what is needed is ‘a colonialism for the 21st century’ (Slobodian, 2023: 193), with corporate governance as its model.

Finally, Slobodian considers alternative territorial imaginaries that underpin libertarian attempts to splinter capitalism from both democracy and the nation-state. One is the online space of the ‘metaverse’, in which seemingly banal gaming worlds and social media technologies become experiments in virtual exit. He also points to political projects of exit that are designed into urban environments by architects who have an ‘anarcho-capitalist’ vision of the world. Slobodian (2023) cites, in particular, the architect Patrik Schumacher, who believes the way forward is for governments to abolish all things social and, instead, privatize ‘all streets, squares, public spaces, and parks’ (p. 226). Slobodian (2023) observes that Thatcher and Reagan initiated this political project, but, for the libertarians and neo-reactionaries that followed them, they did not go far enough as they ‘clung to the nation-state form’ and, as a result, their ‘reforms were too tentative’ (p. 228). In the world of crack-up capitalism that has followed, ‘fragmented authoritarianism’ has become the underlying model. Simply put, this means that, increasingly, capitalism and democracy have diverged as new forms of ‘undemocratic capitalism’ have become ‘the winning brand’ (Slobodian, 2023: 232). This development has brought with it extreme political and economic polarization and, one might add, heightened suffering and cruelty. For while the super-rich plan their exit and flight to safety, others, put bluntly, are left to die, including those living in ‘sacrifice zones’ where, in the face of global heating, populations are abandoned to rising sea-levels (see Slobodian, 2023: 235).

In the face of this impending humanitarian crisis, Slobodian states three ‘truths’. The first is that the zones described in this book are not territorial forms that exist outside of the state; rather they are ‘tools’ of states that have been captured by exit-based libertarian and/or neoliberal politics. This, by implication, means that these can, potentially, be reclaimed by a different kind of politics, although exactly how is not altogether clear. The second is that the fantasies of neoliberal and/or libertarian politics are indeed just that – fantasies, as in reality there can be no escape from the earth. And the third is that zones, while designed as spaces of exception from the traditional reach of the nation-state, nonetheless are still territorial forms that have ‘inhabitants’. Slobodian (2023) says that, of the three, this observation is the ‘most banal and yet consequential’ (p. 236). This, presumably, is because opposition to crack-up capitalism starts with people on the ground, and, here, Slobodian (2023) points to Hong Kong, where activists have demanded ‘democracy and self-determination’ in the face of ‘ever-harsher repression from the police’ (p. 238). However, Slobodian gives little indication of what this politics of opposition might look like, and where it might lead. Indeed, he reflects, rather ambiguously, that ‘What this means might only be discovered in the process of becoming’ (Slobodian, 2023: 239).

This book, then, is by no means a political manifesto. Instead, it is a detailed analysis of the roll-out of territorial forms that have been designed to enable the extraction, accumulation and protection of capital to the benefit of the super-rich. While they start from a similar position – that capitalism is no longer contained within nation-state borders and boundaries – Slobodian moves well beyond the work of Beck as he analyses the relation of capitalism, democracy and the nation-state as a political rather than methodological problem. Unlike Beck, Slobodian drills straight into specific histories of places that have reinvented the relation of the nation-state and democracy through the introduction of capitalist zones of exception that, while located within the geographical boundaries of the nation-state, have their own legal jurisdictions and claims to sovereignty that ‘shatter the map’.

This is an important project as it complicates existing histories of neoliberalism that centre mainly on Europe and the US, not least because it addresses the use of former colonies as testing grounds for neoliberal and libertarian ideas. Without stating it, Slobodian also problematizes Foucauldian definitions of neoliberalism that centre on the marketization and/or the reprogramming of the state to support the market in the last instance. Slobodian’s account details the many ways in which zones evade the regulatory and democratic reach of the state but, at the same time, continue to benefit from state intervention and support. On one hand, then, he shares a similar view of neoliberal and libertarian politics to that of Foucault; that the task is not simply to exit the state but to capture it and take it over (see Slobodian, 2023: 221). But, unlike Foucault, there is no attention to ‘the market’ as such, except that now even the nation-state and its sovereignty are things that are up for sale. By focusing on states of exception, Slobodian moves beyond the neoliberal fantasy of the ‘free’ market by addressing instead the remodelling of lived spaces and places by the raw financial power of corporations – institutions that, aided by government and state investment, are increasingly free to circumnavigate the market for their own ends.

This book, without doubt, is a major contribution to the field. Slobodian does a remarkable job of documenting the territorial spaces of a new world of ‘crack-up capitalism’; one within which raw money power is able to escape and, in some cases, subvert the regulatory powers of the nation-state and political democracy. This said, however, there are limits to Slobodian’s analysis. One concerns the relation of different positions on the political right, as throughout this book a range of key figures appear and then sit largely in the background, most notably: Friedman, Thiel, Hayek, Mises, van Notten, and Yarvin. While these thinkers are referred to as neoliberal, libertarian or neo-reactionary, Slobodian does not explain the principles that define these schools of right-wing political and economic thought, and where differences between them lie. These differences are important, as Brexit (which Slobodian considers in Chapter 2) has shown in the UK. To take Thiel as an example, whereas neoliberalism is, in principle, defined by a commitment to free market competition, he argues, instead, that there is no problem with monopoly power as ‘competition is for losers’ (see Thiel, 2014). Similarly, whereas van Notten and Yarvin have no problem with colonialism, it is not clear that Friedman, Hayek, or von Mises would share this view. What is missing here is a detailed articulation of the differences and points of convergence between neoliberal, libertarian, and neo-conservative/reactionary thought, and how these have translated into concrete political projects on the ground

After reading this book, one wonders whether, for those on the political right, neoliberalism has now done its job (see Davies and Gane, 2021). For once the state has been captured and political democracy subverted, what is left but to ensure that the super-rich keep winning at all costs, regardless of the consequences? In the new world of crack-up capitalism, it would seem, government is no longer needed to ensure the fairness of the economic game (as argued by Friedman in the 1980s); as for figures such as Yarvin, government should be run, quite simply, as a business and, with this, the nation replaced by a ‘sovcorp’ or ‘sovereign corporate republic’ (Slobodian, 2023: 213) that should embrace the colonial past. In this respect, this book does more than document different territorial forms of exception; rather it points to the emergence of a new form of capitalism in which, seemingly, there are no moral or political limits to economic power.

This, however, points to a further problem, for while this book has the title Crack-up Capitalism, Slobodian does not advance a theory of either capitalism or capital to accompany his – otherwise excellent – analysis of zones and phyles of exception. Again, as with the use of terms such as neoliberal, libertarian and neo-reactionary, the conceptual framework of Slobodian’s project sits very much in the background. While the case studies that weave through this book are in themselves strong, it is a pity that Slobodian does not engage with contemporary literature on capitalism and its relation to democracy from fields such as political geography and sociology, as this, along with a more detailed conceptualization of both exception and sovereignty, would bolster his analysis of the places and spaces in question. Wendy Brown, for example, addresses precisely these questions in Undoing the Demos (Brown, 2015; Gane, 2016; Burgum et al., 2017). And on the logic and trajectory of contemporary capitalism, a source that immediately comes to mind, alongside work by figures such as David Harvey, is Bhattacharyya’s (2018) Rethinking Racial Capitalism, which centres on the role of racism in enabling key moments of capitalist development and addresses the ways in which racial capitalism is ‘intimately intertwined with the processes precipitating ecological crisis’ (p. x). Read through the lens of such work, it is no surprise that figures such as Yarvin treat the future of capitalism as a neo-colonial project, and that this future will have ‘sacrifice zones’ based on what Bhattacharyya (2018: 26–8) calls the ‘myth of expendability’ of ‘edge populations’ deemed surplus to requirements. This book by Slobodian, then, is to be commended for its close study of capitalist zones of exception, but it still leaves us with work to do. Indeed, one task is to conceptualize the basis of ‘crack-up capitalism’ in further detail by addressing questions of power, class and identity, as argued by Beck, and, at the same time, by paying close attention, like Slobodian, to the political and territorial transformations that have led us to the present.