Reviewing Quinn Slobodian's Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy (June 2023)

Quinn Slobodian is a Canadian historian of modern European and international history who is at present the Marion Butler McLean Associate Professor of the History of Ideas at Wellesley College. He co-edits Contemporary European History and co-directs the History and Political Economy Project. In his latest book, Crack-Up Capitalism (2023), Slobodian continues the broad theme of Globalists: The End of Empire and the Birth of Neoliberalism (2018), which is to expose the ongoing existential threat of the pervasive ethos of the market to democratic political systems. In Globalists, Slobodian reports a detailed biographical history of selected prominent neoliberal thinkers dating back to the end of continental European empires post-World War I in order to weave a narrative of the evolution of neoliberal economic thought. Crack-Up Capitalism focuses on libertarianism, an extreme form of neoliberalism, and gives significant space to anarcho-capitalism, a radical vision of libertarianism, where laissez-faire is irrelevant because there is no longer to be a state.

In Globalists, Slobodian speaks of social justice being intentionally left out of the political economy of neoliberals dating back to the Austrian School and its apologists, notably Ludwig von Mises and Friedrich August von Hayek. It is a given that there is no room for social justice to creep back into the ideas and practices of those Slobodian labels as market radicals "who dream of a world without democracy"—an ideal even for mainstream neoliberals, e.g., Milton Friedman and others from or sympathetic to the Chicago School, the archrival of everything Keynesian in North America. The principal tenet of neoliberalism is that the highest goal of social organization is economic freedom. Political freedom is a legitimate social goal as long as it facilitates commerce and does not conflict with or impede economic freedom. Life, liberty and property as Locke wrote in tumultuous 17th century England.

Market radicals are indeed 'radical' arriving at the extreme conclusion that the state is no longer necessary in theory—a bizarre point of agreement with Marx albeit for different reasons—because the state politicizes decision-making (i.e., makes it accessible from the masses below) and interferes with the efficient ordering produced by market forces. For this radical camp, even creating and maintaining the preconditions for markets—grudgingly accepted by neoliberals—are no longer acknowledged to be essential state functions. For the anarcho-capitalist, the laws of capitalism are so fundamental to human nature that they can develop organically. What is required is that they be given the space (strategic geographical location), time (open-ended), and freedom (non-intervention by the state) to germinate. In other words, the state would spin off, say, a special economic zone with a host of exemptions for tariffs, labour laws, environmental laws, etc. Theoretically, a zone could mature into a sovereign corporate entity unencumbered by the inefficiencies of democratic conflict and freed to be governed by the priorities of profitability and wealth accumulation.

What is different in Slobodian's account is his presentation of the challenge to democratic capitalism coming not only from illiberal capitalist nation-states (China in particular as it offers an increasingly viable alternative to the Western model of democratic capitalism) but also from special economic zones:

[T]he modern world is pockmarked, perforated, tattered and jagged, ripped up and pinpricked. Inside the containers of nations are unusual legal spaces, anomalous territories, and peculiar jurisdictions. There are city-states, havens, enclaves, free ports, high-tech parks, duty-free districts, and innovation hubs. The world of nations is riddled with zones. 

It is within these zones that the neoliberal experiment can more easily be controlled. State regulation of markets and intervention to mitigate the effects of market failure can be limited to a greater degree in special economic zones than in the state economy as a whole. Breaking with purist laissez-faire political economy, opportunities for state aid, in the form of subsidies, tax incentives, and preferential market access can continue to be solicited to underwrite the competitive positions of a state's zones.

Crack-Up Capitalism is an enlightening read for those who may think that globalization and international relations are just about the interaction of nation-states. The world is vastly more complicated than that, and Slobodian, to demonstrate the point, illustrates with in-depth coverage of the 'microworlds' of Hong Kong, Singapore, London (Canary Wharf), South Africa (the Bantustan of Ciskei), Liechtenstein, Somalia, Dubai, and Honduras.

Slobodian believes that democratic capitalism is being hollowed out from the inside as much as nation-states are reverting to illiberal political systems. This is part of his central thesis—the crack-up or fragmentation of the capitalist state into myriad special economic zones where economic freedom flies its flag of allegiance.

However, after describing special economic zones and the danger they represent for democracy, Slobodian returns to the state reminding the reader that it is states that create and can dismantle zones. "No matter the rhetoric, zones are tools of the state, not liberation from it." Then, more generally, Slobodian acknowledges that

Good capitalists know the real game is capturing the existing state, not going through the hassle of creating a new one. Thiel [Peter Thiel, venture capitalist] seemed to agree that a world of one thousand new state contracts was preferable to one of a thousand nations.

Slobodian's closing does not appear to be particularly optimistic as he reviews the rise China's autocratic state capitalism and its growing imperialist ambitions (an inversion of its 'century of humiliation') rivaling those of the US:

By the 2010s, it was also creating zones far from its own territory. Under the Belt and Road Initiative, launched in 2013, China funded infrastructure stretching from its own borders through chains of zones, reaching out to Turkey, Kenya, and beyond.... China follows well-worn tracks, retracing the network of coaling stations and free ports that upheld the British Empire in the nineteenth century. 

Nor is Slobodian sanguine about the future of the US, observing that the US is becoming a nation-state version of a special economic zone, arguably the ultimate prize for neoliberals:

[T]he United States itself looks more like a zone all the time. In 2022, it edged out Switzerland, Singapore, and the Cayman Islands to take the top spot in an index of financial secrecy, crowned as the best place in the world to illegally hide or launder assets. Its own status as a democracy has been called into question. It was briefly downgraded by a well-respected index to a so-called anocracy, a system mixing features of democratic and autocratic rule. Soon, Americans may no longer need to go elsewhere to realize the perfect zone. 

Like Wolfgang Streeck (How Will Capitalism End?: Essays on a Failing System, 2016), Wolfgang Merkel ('Is Capitalism Compatible with Democracy?, 2014), Martin Wolf (The Crisis of Democratic Capitalism, 2023), and Katharina Pistor (The Code of Capital: How the Law Creates Wealth and Inequality, 2019), Slobodian exposes the adversarial challenge of contemporary anti-democratic thought not to suggest shrinking back or giving in to resignation but to support pro-democracy forces in an complex ideological struggle that is not dialectical (the synthesis and progression of ideas are not guaranteed), does not fit the simplistic formula of former US Supreme Court Justice Oliver Wendell Holmes' metaphor of the marketplace of ideas, and, as history seems to have confirmed, does not render a permanent verdict in the history of human thought.

By now the 'end of history' has become fiction. For Pistor, nation-states are continually faced with

A choice not only between democracy and autocracy, parliamentarian and presidential systems, constitutional powers or the voting system; it is also a choice about creating and allocating wealth, and this includes the legal tools for coding [i.e., creating the legal framework for] capital. 

For those opposed to the political economy of neoliberalism and its offshoots, what is fundamental to that choice is how economic and political freedoms are to be re-balanced so that democracy does not disappear from 'democratic capitalism.' 

First published in Arts & Opinion, Vol. 22, No. 4, 2023.