Book Review: ‘Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy’, by Quinn Slobodian

Recently reviewed here, Martin Wolf’s The Crisis of Democratic Capitalism charts the symbiotic rise of capitalism and democracy, despite their being in tension with each other. Of course, capitalism can and does exist in the absence of universal suffrage. It always has.

*** A version of this book review was first published in The Irish Times on 17 May 2023 ***

In Crack-up Capitalism, historian Quinn Slobodian offers an intriguing new slant on this tension. Early on, we are introduced to PayPal-founding billionaire and Trump backer Peter Thiel, who calls on fellow libertarians “to find an escape from politics in all its forms”. Thiel and his ilk are recurring bogeymen in this story. They see democracy as a constraint on their freedom to pursue profit. And, they want out.

Slobodian’s core argument is that parallel to the universalization – and globalization – of capitalism since WWII has been the fragmentation of political jurisdictions: not just more countries, but more special regimes within countries. This is the story of the “special economic zone”, or SEZ. These are geographic areas of varying size, often with their own tax, regulatory, and even legal regimes.

An Irish example is instructive. As advances in aviation technology rendered redundant the Shannon stopover for Transatlantic flights, the region needed an alternative motor for economic development. Thus was born the Shannon Free Zone in 1959, “becoming a trailblazer of tax-free manufacturing”. Slobodian concentrates on how reform-minded Chinese policymakers closely modeled their own SEZ’s on nearby Hong Kong, but they also made pilgrimages to Co. Clare.

The author cites the example of London’s Canary Wharf, which became a template for Ireland’s own International Financial Services Centre with the added benefit of a 10% corporation tax rate. Just as he notes towards the end of the book that “the United States itself looks more like a zone all the time”, so arguably did Ireland become an SEZ for global capital with the nationwide rollout of our 12.5% corporation tax rate in 2003.

The author’s early focus is not on the Celtic Tiger, but two of the Asian Tigers: Hong Kong and Singapore. Both have long drawn the admiration of economic libertarians; often because of, and not despite, their relatively authoritarian political regimes. Right-wing Brexiteers trumpeted a growth-through-deregulation agenda, a ‘Singapore-on-Thames”. Even in that supposed capitalist paradise, however, all is not as it seems. The author points out that four in five in Singapore live in social housing while all land is government owned. One lesson to be drawn is that intensive state involvement in housing is perfectly consistent with a thriving market economy.

From the Asian tigers, readers are taken on a tour of quirky proto-‘zones’ and their often eccentric promoters. The story takes us to Liechtenstein, South Africa, Honduras, Somalia and Dubai. Even gated communities are conceived as precursors to autonomous zones. Sometimes, they are more or less thinly-veiled attempts to ensure racial homogeneity.

Slobodian paints a dystopian future of thousands of such CEO-managed sovereign entities, reminiscent of medieval European city-states. But, this sweeping narrative fails to convince. In some ways, the book’s sub-title is most telling. This is less a diagnosis of the fragmentation of capitalism than a compendium of anarcho-capitalists’ fever dreams for a post-democratic order.

Whether in China, Dubai or elsewhere, there are valid concerns about the rise of authoritarian capitalism. In our democracies, one can critique the priority given to corporate agendas. But, it seems far-fetched to see the Shannon Free Zone as precursor to tyranny.

In a sense, the analysis feels slightly out-of-date. The relentless march of globalization appears to have stalled since the global financial crisis. If capitalism is ‘cracking up’, then it has less to do with fringe socio-political experiments than with the reassertion of the nation state. If anything, this tendency has accelerated post-Covid. For example, States are cooperating to crack down on tax evasion and aggressive tax avoidance. For the largest corporations, Ireland’s tax rate will rise to 15% from 2024.

In his conclusion, even the author seems to concede the point, noting that “no matter the rhetoric, zones are tools of the state, not liberation from it.” Rather than “turning the world into a patchwork of a thousand private polities in dynamic competition”, he goes on to say, special economic zones “are strengthening the position of a handful of state capitalist superpowers.”

The overarching sense is not of some sinister cabal of anarcho-capitalists banding together to overthrow democracy, but of a succession of fringe fantasists frustrated by their inability to make dreams a reality. The story comes full circle with Hong Kong billionaire Ivan Ko’s answer to rising tensions with mainland China, proposing a new city – Nextpolis – for 50,000 of his compatriots on the M1 corridor between Dublin and Belfast. Dreamers will always dream. They don’t necessarily have to become a nightmare for the rest of us.

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