Puncturing the world map

Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy

Author: Quinn Slobodian

Publisher: Metropolitan Books

Price: Rs 1,631

Pages: 337

The standard history of decolonisation runs something like this: In the middle of the last century, colonies emerged as sov­ereign nation-states, followed a “socialist” model of import substitution, recklessly mishandled the economy by relying on social welfare measures that bloated them up, and had to be disciplined by benevolent multilateral organisations through a package of reforms.
 

This narrative, how­ever, overlooks the forces that were at play already when these nations emer­ged and that would 50 years later end up draw­ing hard limits on what states could do.
 

Evidence for the exist­ence of such forces have been presented in the past 10 years by various scholars, especially those who have looked at this narrative from a Western lens.
 

For instance, historian Vanessa Ogle has documented the massive flight of cap­ital that preceded the colonisers’ exit and made its way to tax havens that protected that income from the prying hands of both the emergent nation-states and the core capitalist economies in the West, which at that time imposed high taxes.
 

The latest addition to this intellectual history of the aftermath of empire comes from historian Quinn Slobodian, whose Crack-up Capitalism looks at the liberta­rian scholars and ideologues who champ­ioned zones that levied low or no tax, unen­cumbered by the pushes and pulls of de­m­ocracy as a model that could be replicated across the world.
 

Crack-up is the second of a two-part history of the neoliberalism movement, which broadly defined privileges of the free flow of capital and goods over all else. In these books, Slobodian documents the two dominant strains within the neo­li­be­ral intellectual movement. In both books, neoliberal ideologues begin from a mom­ent of defeat — for them it was the rep­l­i­ca­tion of the welfare state across continents.
 

Slobodian’s first book, Globalists, dealt with the Austrian School, headed by Lud­wig von Mises and Friedrich Hayek, which coalesced around the Mont Pelerin Society. These scholars recognised the im­­p­ortance of states in ensuring order, but wanted to insulate the economy from democratic politics. Towards this end, they promoted multilateral financial ins­titutions that were above nation-states and propagated “independence” for the institutions charged with regulating the economy, most notably central banks.
 

Crack-up looks at the other wing of neoliberals, libertarians, who sometimes embraced secessionist tendencies, calling for a complete exit from the state to zones within and outside countries that did not adhere to national regulations, levied al­m­ost no taxes, and in some instances, allowed capitalists to make up their own rules. In some cases, these ideas also coex­isted with openly racist and white majori­t­arian tendencies. These zones were birthed dur­ing the colonial era as escape pods from uneven empires, buttressed theoretically in the post-colonial era and replicated in various forms, represented as pinpricks on the world map.
 

As Slobodian explains: “Crack-up is a label for both the way the world works and a way that spe­cific people hope to continue to change the world. It is a world that is both ever more inter­connected and ever more fragmented.”
 

In this telling of history, the anar­c­hist wing of capita­lists did not just tolerate a world of many nations, but welcomed their proliferation to ensure there were multiple zones competing aga­inst each other.
 

The result is a world not just of 200 countries competing for sca­rce capital ori­gin­ating in the West, but of 5,400 zones that must outdo each other in enti­cing an increa­sin­gly foot­loose cap­ital. The only way this seems possible is for states to allow capital as much of a free pass as possible, most often by diluting democratic and humane norms, even at the cost of losing their legitimacy in the eyes of the public.
 

Evidence for this is not far at hand. Just last month, the Tamil Nadu govern­ment decided to allow 12-hour work days by amending labour laws in a bid to attract more investments, following the example set by Karnataka, which passed a similar law two months ago. Tamil Nadu was for­ced to withdraw the law after protests from Opposition parties and trade unions.
 

In its 11 chapters, the book details the kinds of zones that have emerged: From “one nation, two systems” in the case of Hong Kong after it became a part of China, to “one nation, many systems” in the case of Dubai, where each zone has a unique set of rules. Besides, zones followed what his­torian Kojo Koram, quoting Aimé Cés­aire, calls the “boomerang effect”. Experi­men­ts begun in the peripheries of empi­res were brought back to the heartland. So, though the story begins in Hong Kong, the last major British colonial possession, it also looks at how the zone was replicated in the heart of London in Canary Wharf.
 

These zones — tax havens, special eco­nomic zones, export processing zones, et al — vary from the obvious like Singa­p­ore and Dubai, to the absurd, like the fan­tasies of “seasteads” that could be repur­posed offshore oil rigs set up beyond the juris­di­c­tions of tax collecting nation-states. Besi­des, he also finds secessionist tendencies in gated colonies of the rich.
 

To Slobodian’s credit, he shows not just the successes of the intel­lec­tual tradition, which is the standard fare in such histories, but also the spectacular failures, like the short-lived police enclave of Ciskei in Apartheid South Africa.
 

Those failures, however, do not diminish the allure of zones. As this newspaper noted in an editorial last yearabout the latest attempt to revive the zone in India: “[T]he Indian expe­r­iment failed spectacularly, princi­pa­lly because the private sector-driven SEZ developers leveraged the tax arb­i­trage to create a massive real estate play.” And yet, the government has drafted a new Bill to revive the zone.
 

Besides, where it has succeeded, the zone presents a paradox — the state must consciously curtail its po­wer to intervene, especially between cap­ital and labour, and yet it is only a strong state that can ensure the con­tinuation of the zones like in Hong Kong and Singapore, where the state wields enormous control over hous­ing and regulates who can and cannot enjoy the fruits of the economy.
 

It is a fascinating and often disturbing history, and Slobodian tells it brilliantly. The book’s greatest strength is his archival research that covers a wide array of ideo­logues from the famous ones like Milton Friedman and Peter Thiel to the obsc­ure like the former ruler of Liechtenstein.
 

Crack-up is essential reading, especi­ally since the project of reordering the state into a resource manager, a funda­mentally political project, is still under­way. In this view, citizens are one of a var­iety of resources the state must manage.

As a resource, citizens can expect some basic services, but not entitlements.