This episode explores the tension between democracy and capitalist markets. How could the fragmentation of national sovereignty offer a “solution” in the neoliberal imagination? What can experiment in special economic zones—from China to South Africa and Somalia—teach us about the far-right’s dismantling of democratic institutions in Europe and the U.S.? Tune in to hear Quinn Slobodian unravel the global circulation of market-driven governance and its consequences for democracy.
Our guest: Quinn Slobodian
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GLOSSARY
Bantustan
A Bantustan was one of ten territories designated by South Africa's apartheid government as "homelands" for Black African populations. Established during the mid-20th century, these areas were intended to segregate Black South Africans from political and economic life in the rest of the country. Each Bantustan was associated with a specific ethnic or linguistic group, such as the Zulu, Xhosa, or Tswana peoples. Although some were nominally granted "independence," none were recognized internationally, and they were largely dependent on the South African state for funding and security. Life in Bantustans was often marked by poverty, underdevelopment, and limited political rights, with residents stripped of South African citizenship to reinforce segregation. The Bantustan system was widely criticized as a tool of racial exclusion, designed to legitimize apartheid while maintaining white political and economic dominance. source
Shalini Randeria (SR): Welcome to a new episode of Democracy in Question, the podcast series that explores the challenges democracies are facing around the world. I'm Shalini Randeria at the Central European University Vienna, and the Albert Hirschmann Center on Democracy at the Graduate Institute Geneva. This is the second episode of season 11 of Democracy in Question.
I'm really pleased to welcome today Quinn Slobodian, Professor of International History at the Pardee School of Global Studies at Boston University. This year, he's been awarded the highly prestigious Guggenheim Fellowship. One of the most exciting historians of economic ideas today, Quinn Slobodian is the author of several award-winning books, many of which have been translated into several languages.
Let me mention the three books that we'll discuss on the podcast today and in a month's time: "Globalists: The End of Empire and the Birth of Neoliberalism,"[i] which he published in 2018, and "Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy"[ii], published in 2023, will be the subject of our conversation today. Most recently, he's published "Hayek’s Bastards: Race, Gold, IQ, and the Capitalism of the Far Right."[iii] That's the book we'll discuss in our next episode. He's published, of course, numerous articles in academic journals, but he's been a contributing writer to New Statesmen, The Guardian, The New York Times, Boston Review, Dissent, and The Nation. His new book on Elon Musk is due to be published early next year.
Today's episode is the first part of a two-part conversation of mine with Quinn Slobodian. We’ll focus primarily on his fascinating book, “Crack-Up Capitalism”. I'll begin by asking him to elaborate on the central contradiction between democracy and capitalist markets, which was dealt with extensively also in his preceding book “Globalists”.
Then we'll discuss the main thesis of “Crack-Up Capitalism”, namely that the fragmentation of national sovereignty could represent a potential solution to this contradiction between capitalism and democracy, both in the neoliberal imagination and its actual realizations in practice. I'll ask him to explain this logic of subnational secession in terms of what he describes as zones governed by the logic of the market, although these subunits are highly dependent on the logics of statehood, which they negate. We'll briefly talk about these emergent cartographies based on secession that feed into experimentation in locales, primarily in the Global South, which is then imported back to Europe and the U.S. What mediating role do western ideologues play in the transcontinental traffic of these ideas? How was the Chinese model of special economic zones instrumental for the apparent success of state capitalism without democracy in China? And how do these Chinese zones compare with those in the Indian political economy?
It'll then turn to two African cases of the pseudo-independent Bantustan in South Africa during apartheid, and Somalia. Do these cases reveal plausible histories of the future written in the post colony? What do elective clan-based solidarities and patterns of economically justified segregation tell us about the visions of paleo-libertarians and anarcho-capitalists in America and elsewhere. How can these seemingly exotic experiments help us to better understand the dismantling of democracy by the far right in Europe and in the U.S. today? These are some of the questions that I'll pose to my guest, Quinn Slobodian.
Quinn, welcome to the podcast. It's a real pleasure to have you as a guest and thank you so much for joining me today.
Quinn Slobodian (QS): I'm happy to be here.
SR: I'd like to begin our conversation with a crucial point you made at the conclusion of your earlier book “Globalists” where you say that insofar as, and I quote you here, “democracy is a potential threat to the functioning of the market order; safeguards against the disruptive capacity of democracy are necessary”. This isn't your view, but this is the view of the strand of neoliberalism that you examined in the book, you call it the auto-globalism of the Geneva School. Could you say something about this particular strategic neoliberal view about how states permanently compete both for citizens and for mobile capital, and that, in your view, makes all projects of social justice redistribution or equality unthinkable?
QS: So that book “Globalists” is a historical account of the emergence and then rise to brief hegemonic control globally of the idea of neoliberal globalism. What I mean by that is legal and institutional infrastructural framework that constrains the capacity of states to act in ways that are fundamentally disruptive to the stability of the capitalist order, to the sanctity of the principle of private property and the prerogative of goods and money to flow over borders.
And I start that book in the 1920s and 1930s because it was the loss of the unity of the world that proceeded the First World War that really impelled liberals and neoliberals to try to reassemble what they saw as a lost, unitary world economy. So, I give the reader a field guide to potential institutions that could serve this role as the guardian of the world economy from the League of Nations between the wars to the United Nations and forms of international investment law, and then finally with the creation of the World Trade Organization in the 1990s. And the goal of the book sort of politically and intellectually was related to the quote that you just offered there, which is that neoliberalism is often falsely understood as being a purely negative project, a project of unfettering markets or just setting markets or capitalism free. But in fact, it's been a very intensive institution building project and a very intensive legal project across the decades. And by the 1990s, you have this field of international economic law that absolutely blankets the global economic landscape with all kinds of contractual obligations, reciprocal treaties, and frameworks that, as I say, encase the market rather than liberate or unfetter the market.
And the tension there between democracy and capitalism is that in many ways, this network of laws is designed to prevent democracies from doing things that would be problematic for the greater unity of the whole. So the laws against expropriation, laws against redistribution, laws against the expansion of social services, things that are either legally sanctioned and prevented, or else informally sanctioned by a loss of credit worthiness in global financial markets.
What I was trying to describe in that book was how we got to this predicament by the end of the 20th century that nations felt that they were caught somehow in the vice grip of a global market that existed somewhere beyond their control and had no option but to act in ways that will conform to the needs and desires of mobile investors.
SR: The next book of yours, “Crack-Up Capitalism”, picks up some of these themes and it traces some more recent changes. The argument in very short being that capital, wealth and profits, as you just described, could escape from the shackles of nation states only through the fractal fragmentation of sovereignty through secessions, which would carve out new geopolitical spaces, either on land or on water.
These are rapidly proliferating, sort of quasi-extraterritorial zones of exception. They're freed from all national regulation, no labor laws, no environmental laws and of course very favorable taxation rules. And you describe this to be sort of the parallel or the twin dynamic of neoliberal expansion, the political economy of the last four decades, which results in a radically new cartography. So could you explain the need to rethink this neoliberal globalization as this kind of a dual contradictory process?
QS: Yeah, absolutely. The first book was designed to act as a kind of a revision to a commonplace belief that globalization was simply the unfettering of markets. The book that followed, “Crack-Up Capitalism” was designed to take on another erroneous commonplace, which is the idea that the era, especially after the end of the Cold War in the 1990s, was one simply of scaling up and integration. So that period of the 90s is often thought of as a time of big multilateral trade agreements, NAFTA, the WTO, the European Community turning into the European Union. And that was certainly part of the story. But by paying attention to these special economic zones, I want to also show that neoliberal, globalism in practice worked by scaling up, but also by scaling down. And there was functional fragmentation of the political geography of the world in the 1990s and 2000s by which a whole mosaic of these sub-national jurisdictions were created, as you say, that were designed to be more hospitable and customized to the needs of a global investor class.
So this was an attempt to kind of undermine a false binary that we'd been offered since the 1990s, but then also perhaps even more markedly since 2016. And the rise of right-wing populism as it's often described in the figure of people like Trump and Boris Johnson and the Brexit vote, varieties across the rest of the world from Modi to Duterte to Bolsonaro. Often the narrative was one of the pendulum swinging from globalization back to nationalism, as if these were the only two options and the only two gears that the world economy operated by. By introducing the zone beneath the nation as an important part of the operating system of economic globalization, I was able to show how many of these supposed nationalists were also making quite intense use of the toolkit of high 90s globalization. So people like Orban love special economic zones. People like Matteo Salvini of the Lega, or Giorgia Meloni of Fratelli d’Italia. Trump loves special economic zones. The British after Brexit and the Conservative Party also made extensive use of ports. So often what is being presented as a kind of shielding of the people through the warm envelope of the national border against global forces is often anything but it's actually in deepening the interpolation of national economies into global competition through the perforations of these subnational jurisdictional spaces.
So that was not just a kind of a descriptive intervention to say we could think better about globalization. In fact, following the pioneering work of a lot of your fellow social anthropologists and cultural anthropologists from Aihwa Ong to James Ferguson to Jamie Cross. But also a kind of intervention into the discourse about the rise of the right to say that the zone also helps us see the right differently.
SR: I think you're absolutely right to point to this dynamic, that it's not a sort of Russian doll model from the transnational to the national to the regional, but often these global dynamics just bypass the nation state, cut directly into regional or local dynamics in the way in which the nation state carves up its own territory.
But the question which then arises for me is the people for whom this is an ideal state of affairs, how do they think the state would be transformed by these processes of carving out these kinds of zones by decomposing the nation state? And what kinds of borders for these new entities, both sub-state and for the newly restructured nation state, do they envisage?
QS: That is exactly the terrain that I think I try to explore in the “Crack-Up Capitalism” book, but also in some ways in the book that follows that, the “Hayek's Bastards”, because the zone becomes quite an interesting site of conversation for people from different walks of politics, you could say. So concretely, that means that someone like Trump can look at the zone and see sites for real estate deals, sites to escape the control of often democratic city governments. So his vision of Freedom Cities, that he's proposed as sort of creating these greenfield places that have none of the burden of the social state or the regulations that have built up over the years.
But someone like Peter Thiel or Elon Musk can look at the zone and see the possibility of new company towns where they can write municipal laws from scratch that give them much more impunity to, let's say, workplace grievances and more favorable tax and environmental regulations. And then people on the further more traditional Christian right, can see zones as places where they can educate their children in ways that accord with their values and can be freed from what they see as the expropriation of their income for social security dedicated to people that they don't feel any social sympathy with or solidarity with in other parts of the state or the country.
So this proposal of a decentralization can actually satisfy many constituencies interestingly. And those kinds of conversations were quite open in the 1990s and 2000s. There were meetings of people who were on the libertarian side who were primarily interested in economic freedom with people who were conservatives and primarily interested in restoring moral virtue at a local level. And one of the things they agreed on was the idea that you could do more what they call contractual communities. So more variation really in the kinds of laws that would govern daily life and economic exchange and social reproduction functions like education and healthcare and so on.
So that was certainly a strong strand of thinking that maybe not many people had pointed out before brought together the special economic zone, which has of course been much discussed and much narrated and analyzed, but often as a kind of bloodless policy tool was rolled out by the United Nations Development Program that was part of the toolkit for UNIDO or McKinsey or any number of other development consultants in the era of the 1990s and 2000s. Suggestion would be to small Sub-Saharan African country that you can make investors more confident if you can ringfence a small area and say, hey, you'll have rule of law inside of this space and you can have your own privatized security force, even if you might be less sure or confident in stability outside of the barbed wire fence of the factory complex. So that was the special economic zone discourse also in the Caribbean, in Central America and elsewhere on the globe.
But the sort of counterintuitive point I was trying to make in “Crack-Up Capitalism” was to say that spatial reorganization could also be given a political content that was specifically anti progressive and attempt to roll back the gains of the 20th century really from the New Deal to the great societal programs in the United States, or the expansion of the build-out of the welfare state in other parts of the world.
The version of society that one gets at the end of that is not so different from the enclave model of a place like Brazil or South Africa, where you do have a lot of privatization of basic services and basic utilities and the amount of revenue available for the redistribution and the survival functions of the rest of the population is always under strain and pressure.
And there's a kind of a push and pull between a privileged class which seeks to further erode how much is available to the rest of the society. And then a small kind of secessionist class. And in the United States there's this lovely dynamic where even people who are not wealthy and will likely never be wealthy, nevertheless imagine that they will be wealthy. They will often take policy positions that accord with their optimistic fantasy of where they will end up in a few years. So, designing a world for the super-rich can actually be mass politics in the United States in a way that continues to undermine the quality of life for everyone in this country.
SR: “Crack-Up Capitalism” zooms in on the histories of South Africa, which you just mentioned, Singapore, Somalia interestingly, and Dubai for example to tell two mutually reinforcing stories of experiments of economic governance by private actors who are of course seeking profit and economic security, but with governments as their willing enablers.
And secondly, what it does is to tell the story of the utopian dreams of a series of ideologues. What struck me while reading it was that most of these new zones, which have been carved out are in Asia, Latin America, Africa, but their more ardent ideological supporters are in the West, primarily in the U.S.
It would be good to hear from you something about this history that brings together extremely distant locales with Western, primarily U.S. American advocates of capitalism without democracy, something which they want to practice in far out spaces. So, are they experimenting with it there in order to then reimport it back home?
QS: That's a good question. I suppose the kind of meta interventions of the book was to try to give us big kind of global history stories that account better for the importance of the rise of East Asian capitalism. So, the 1990s era narrative of neoliberalism and I suppose the progressive political economic framing of the post 1945 period that tended to dominate it was certainly the one that you had after 1945 the build out of a social democratic consensus in the welfare state in Western Europe and North America embodied by Keynesianism, which was seen as a kind of inverse of neoliberalism. This framing of Keynes versus Hayek often suggested that Keynes wanted a plan mixed economy, and Hayek wanted an absolutely free economy. And he was in the minority and defeated in the 1940s. So, you got the glorious 30 years of post-war mixed economies, social democracy. And in the meantime, the processes of decolonization were taking place and there was effectively a demand from the Global South for the thing that the Global North was enjoying.
So there was an attempt to globalize this Fordist compromise, this social democratic compromise sometimes in more radical forms, whether that was African socialism or Latin American versions of Cuban socialism. But anyway, there was a push to make prosperity available to all. That was sometimes violently, sometimes legalistically, sometimes financially crushed in the course of the 1980s and 1990s, especially through the debt mechanism. So the global debt crisis meant the end to certain fantasies of global evenness and the fantasy of the welfare state made into a welfare world.
And in a lot of the narratives that in some ways still circulate, the third world approach to international law field finds a constant return back to the new International Economic Order Declaration by the UN in 1974 as a pivotal moment from which a high point perhaps of demands from the Global South to which we need to continually appeal and return and try to restore the spirit of, and it's still now an era ofU.S. empire somehow in its latest form, with its boot on the knack of the rest of the world.
That's a pretty common narrative, and it has its validity, certainly. But I think that one of the things that sits awkwardly especially since 2001, when China entered the World Trade Organization we've witnessed the most extraordinary economic success story in world history. The incredibly rapid industrialization of China. Its huge chomp taken out of global industrial capacity, its emergence to effectively appear to the United States as an export economy and as a domestic economy is something that I think a lot of big picture political economy global histories is still trying to fit into the story. And one of the interesting things about the libertarians and the neoliberals is many of them were very laser focused on this new twist to the story from the early 2000s onward.
And so what you're pointing out, which is that a lot of these interesting sites of experimentation and innovation in matters of governance from Singapore to Dubai were on the radar of libertarians, neoliberals, arguably in a way that they weren't for maybe a lot of leftists who were maybe still thinking in terms of this titanic battle of north vs. south, first vs. third world, when there were a lot of things that were going to be very consequential happening sometimes kind of in the margins or in the cracks of the world system, in an old port like Singapore, or a place that until recently was just a pearl diving spot and a gold smuggling spot like Dubai. And now is an extraordinary juggernaut of real estate, finance, luxury sporting. So by following the curiosity of my libertarian and neoliberal subjects what I'm trying to do is show this alternative big picture, global history storyline where the East Asian model as pioneered by Japan and then the dragon economies of South Korea, Taiwan, Singapore, and Hong Kong, and later emulated by China at a grand scale is really arguably the big story of the last 25 years. And the neoliberals and libertarians who were fascinated in it were, I think, asking the same question that you asked me, which is just like, what do we do with this? What do we do with the fact that China is working by zonefying itself, by turning itself into this honeycomb of peculiar, customized jurisdictions.
What does that mean? Should we just find places offshore that we can do similar things? And some of the people that I study certainly take that approach, They are excited about doing a zone in Prospera, in Honduras, and have ideas for other so-called charter cities or free private cities around Sub-Saharan Africa or off the western coast of Africa. These things are all underway. But I think that the more consequential libertarians, especially those coming out of the Silicon Valley world, are the ones who have tried to figure out ways to bring the zone home, as it were. And someone like Peter Thiel, who I mentioned before, is an important kind of indicator species for this.
I begin “Crack-Up Capitalism” with him in 2009 saying, democracy and capitalism don't have a working relationship anymore. We need to exit politics in all its forms. And he proposed the great proliferation of polities. If we want more freedom, we want to make more countries and put his money into things like seasteading and supported these speculative zone projects in different parts of the world. But the arc of the book goes that by 2016, he's speaking at the Republican National Convention having found, I would say an easier way to his version of economic freedom, which is rather than create a new country, just take over an existing one.
So a lot of the approach that's being taken now with United States, slash taxes, regardless of what that does to the deficit, eliminate all environmental regulations, in fact, perhaps just eliminate the Environmental Protection Agency altogether. I mean, these are the realization of fantasies that were once thought only realizable in small, discreet spaces. But hey, if you can do it across the whole zone of the United States, then why not do that? Why not go for the big score? And I think that's what is making people like Thiel, Andreessen and Alexander Carp salivate right now about their access to an apparent carte blanche control over the AI policy and the energy policy of the current administration.
SR: When, as you very rightly point out, China is the big surprise, and that's what I have a couple of questions on. What struck me while reading the book was that it was actually already in the 1970s that Hong Kong was seen as a favorite model for an insular nation that resembled a joint stock corporation more than a state where administrative absolutism, as you call it, is coupled with continued colonial status.
And ironically, it's China where this model succeeded with a gradual transition to state capitalism without democracy. So, there are three questions here that I'd like to talk to you about. You talk about the fragmented authoritarianism of China since the 1980s with the rapid spread of special economic zones, which are enclaves and that's the point I think I'd like you to comment on with what the Chinese government called an alternative Confucian path to capitalist prosperity. So, do you take this civilizational culturalist narrative seriously or is it something which really doesn't matter?
The second question I have for you is on the contrast between India and China, because if I understood the Chinese material data correctly, the recipe underlying the success of Chinese special economic zones, especially in the early decades, was that it relied on Chinese diasporic capital. And by way of contrast, especially economic zones that I was examining in India are still part of the country's crony capitalism. They didn't succeed in attracting Indian diaspora capital or multinational investors, but they were enabled by the state acquiring for these powerful Indian industrial houses large tracks of land, to establish extraterritorial zones which were freed from taxation and regulation. So could you comment on those two aspects which make China probably quite special.
QS: Yeah, absolutely. Both are really good questions. On the culture point, I think that certainly something that I'm treating at arm's length rather than endorsing, I think what's interesting about the 1990s, again, in the spirit of people on the right and neoliberals being more attentive in some ways to the rise of East Asia than people on the left, is that there was a real discourse in the nineties about Asian values.
There was something special about East Asian relationship to the family that was conducive to work ethic and frugality, good management investment and multi-intergenerational upward mobility. There was version of this, of course, in the United States with the idea of South Asians as sort of a model minority, hardworking investing in education, et cetera, that was embodied by someone like Lee Kuan Yew in Singapore, who then absorbed that discourse from abroad and propagated it internally to make it into a kind of state ideology, this was not just materialism, but it was overlaid by something intangible and grounded in essence of Confucian Chinese-derived culture.
That was an interesting discourse for the right, because it posed the question of how much this model could be replicated elsewhere. So could white people in short act in that way if taught the correct way themselves, right? You could import policies, you can import forms of taxation, but can you import values?
And we saw this reemerge in the heated conflict between Vivek Ramaswami and Elon Musk posing a challenge to Stephen Bannon and Laura Loomer and other people on the more nativist right in the United States late last year on immigration. Musk and Ramaswami were saying we need to have temporary workers in the United States, especially in Silicon Valley because of skill deficit and the need for specific kinds of programmers, et cetera.
And Loomer and Bannon were saying, no, these are American jobs for Americans. By which implicitly they meant ethnically white Americans. And Ramaswami at some point in the middle of this, went on a kind of nineties style Asian values rant about the way that he was raised that is different from the way that white people raised their children. And it had to do with praising accomplishment and being attentive to schoolwork and homework. And it was just kind of like, pull up your pants personalized bootstrapping discourse that I guess he absorbed from his mentor, Amy Chua at Yale Law School, who was also associated with this Tiger Mom Asianist discourse in the United States on the conservative right. So I think it's actually pretty interesting and underrated how vexed the U.S. right has been in its engagement with the rise of Chinese capitalism. And one thing I've spoken about and written about elsewhere is how Silicon Valley, too has a kind of distorted understanding of how China works but then they're trying to replicate their distorted techno orientalist understanding of China at home.
So they think that China works by a couple of handpicked tech leaders acting as tight advisors to the CCP leadership and they want to replicate that in the U.S. hence the Musk or Sacks tightness with Trump. But in fact, there's a lot of fierce competition at the provincial level and not a lot of coddling actually for the tech sector in China. There's the equivalent of fierce antitrust and the especially early stages when new sectors are breaking out. And then a few do make it out. But I think that a lot of this has been misdirected. And this is what you're getting to with your second question, which is that often this focus on culture or values or leadership styles is aligning what actually makes the difference in one country versus another. And usually that's a question of geography and history. And in the case of China, the size of the country is obviously important, but then also it's its own diaspora as you say. And this is something Aihwa Ong writes well about, in Singapore, in Taiwan, in Hong Kong, clearly ties that exist by virtue of proximity and sometimes even wartime imperial links to Japan also meant that when it came time to get foreign direct investment, there was a lot of people, there's a woman named Tao Joe who's writing about this, who had sometimes actually fled southern China to Hong Kong and then decades later could come back as early investors in special economic zones in places like Shenzhen.
So there was all kinds of reasons why they were perfectly placed in the global trading system and with a lot of adjacent investors in a way that arguably India never was, which is what you're saying too. And the way that zones worked as Michael Levine writes as just new forms of dispossession that resembled actually quite a bit the same forms of dispossession that had happened under Nehruvian big state industrialization was now just happening under state-led zonification and just being handed off to private actors instead of held in state hands is pretty striking and is pretty good evidence of why that whole thing stalled out and met so much domestic resistance as well. So, the interesting thing I'm watching though on the Indian case is the effort now to extend zones beyond India's borders because for a long time that the doing things like managing deep water harbors and ports was the preserve of Hutchinson, which is the Hong Kong based, former British Imperial, now Chinese port operator and DP World, which is the Dubai ports state owned company and also Singapore based company dominated this. But now Adani Ports and Special Economic Zone is getting in on the act and among other things is now managing maybe other people wouldn't managing, the port and Haifa showing a close sort of geopolitical use of zones between two right-wing governments that is suggestive to me also of how zones can be used to forge alliances in this new era of whatever we're calling this geo-economic moment.
SR: Let me turn to your two African cases, which I really found fascinating because I thought in a way one could say they reveal that a plausible history of the future was being written decades ago in the post-colony. In South Africa, you sketch two parallel processes, the unfolding crisis of apartheid, which set in motion decentralization instead of democratization as its territory was broken up into pseudo-independent Bantustans on the one hand and in parallel, on the other hand, white Afrikaner libertarians who embrace the idea of “voluntary racial segregation”. They set up separatist enclaves such as Orania, which would become a model for white supremacist groups the world over. So could you draw on your experience of Lesotho, for example, to explain how, what you call, and I quote you here, “voluntary racial segregation from below permits the persistence of patterns of racialized economic power without the stigma of formal apartheid”. And then you tell a really remarkable little-known story of how a Dutch lawyer, a formal Brussels bureaucrat partnered together with the Somali warlord to illustrate how what little remained of sovereign African states by the 1990s was also up for grabs. So here you have a case in Somalia of governance without government of what you call commodified warlordism in Africa, which seems to have a large place in the libertarian imagination. And in a sense, what did this tell us about threat to democracy in the West as well?
QS: Yeah, well maybe I'll start with the Somali case. Definitely one of the more surprising anecdotes in the book, or it really takes up a whole chapter. But the fact that this Dutch Libertarian, Michiel van Notten ended up in Somalia at the outbreak of the Civil War in the 1990s, led him to feel excited about the fact that he'd found a place where he could actually try out or play out some of his more extreme hopes for stateless order and stateless economies, ends up working as an advisor to one of the warlords, ends up writing a book, which is a kind of underground libertarian classic called “The Law of the Somalis”, which proposes a fusion of customary Somali law with commercial law in a way that would allow for enforceable contracts and sanctions without appeal to any kind of elected authorities. So he calls it a businessman's clan and suggests ways that people could be creating, presences inside of the stateless space of Somalia and coordinating exchanges in ways that would bypass the existence of governments altogether. And it's a pretty wild story in its own right.
And one of the things that makes it more interesting, I guess, is the fact that Somalia then actually does become a fascinating case in point of a place where in some ways the economy does function without a state. So, it’s long taken for granted that that's naive that markets require states. And so it's a question of how much state, not just being able to get rid of it. And yet effectively, you have no state in Somali in the 1990s. And, and the World Bank goes in there and realizes it's actually doing better. The imports and exports are up. The Somali shilling is actually increasing in value and circulating beyond the territory of Somalia. So it turns out that having a very, very bad government, which is what they had before, can actually be worse than having no governments at all. So there's certain ways that it actually surprisingly validate some of the stronger claims of these libertarians. But then as I describe in the book, that's also its own kind of smokescreen because Somaliland in the north, which is a kind of breakaway province that has more formal state-like qualities, is actually the place where this stuff is concentrated.
So it has some twists and turns, but I do think that one is an interesting sort of limit case of economy without states. The South African example is one that I think has a little bit broader relevance, because looking into it, I was surprised to find that there was this political bestseller in the 1980s before the move to one person, one vote rule under Mandela, and this bestseller proposed a very different solution for the South African quandary, and that was to shatter the unitary nation state of South Africa into many, many small cantons as they were called. So they used the Swiss term on purpose. And these cantons would be designed according to the preferences of the people who were residents there and who would then perhaps have to pay a certain fee to enter. So it was not that different from a kind of model of gated communities. But the idea was that if you made this all happen through the market, rather than dictated from above, as was very much the model of Grand Apartheid, it was very centrally organized, and populations were moved around the country like chess pieces and Bantustans were artificially created as places to expatriate black South Africans to when not required as labor forces. So that centralized top-down political model was supposed to be replaced by a bottom-up market driven economic model. And what I remark on in that chapter, which is close to the quote that you offered was that what they were really just trying to do was to get to America. So, they wanted to get to something more like the United States where you say have extreme levels of racial and socioeconomic segregation. There is a very uneven provision of social services, most importantly public education, which is funded by local property taxes, meaning that the quality of education varies enormously, sometimes even from one neighborhood to another neighborhood. So they wanted to figure out how to do that. How can you get this inequality that is considered legitimate because it's just the market doing it. And the Lesotho example came in, not just because I had happened to live there as a child, so it had this personal resonance for me and it was something that impacted me a lot when I was young. But also similar to the way that again, anthropologist James Ferguson, who's recently passed away sadly was a great influence on me in one of his books that I discovered quite late in the process of writing, had similarly made a comparison between the Bantustan of Transkei, which was this fake country and nobody believed it was real, it was really a zone and then the legitimate nation state of Lesotho, which arguably was just as reliant on South African economic power as Transkei was. And so, he suggests that putting the zone next to the nation is a good way to ask what the difference is.
How much difference does sovereignty actually make under conditions of open borders and competition for scarce resources and especially extractive labor-intensive economies of the kind that South Africa relies on. So I think that's the other thing that the Zone does, and it does this again for other scholars as well, Keller Easterling and others. But it offers a kind of an A/B potential to put next to the nation and ask whether or not we're being too idealistic about what we assume a nation can do and whether or not, in fact, we are all sort of zone-like in our limited sovereignty in the end.
SR: So I want to ask you a little more about one point which you just made, which is the elective affinity between the far right especially in the United States and the African examples of the clan as the basic unit of socioeconomic governance in Somalia, or voluntary segregation of Orania in South Africa, which epitomize the trend, if you like, towards self-sorting secession. Your chapter on the paleo-libertarian fringe in the United States charts the vision of American anarcho-capitalists who are explicitly advocating the breakdown of democratic society along the lines of race, class, gender, and even in some cases political preferences. And they found in a way common cause with the kinds of advocates of the models we've just been discussing from Africa. Now, you make a very interesting argument in this context when you say that we should not read this idea of nations by consent through the lens of ethno-racial politics alone, because their agenda of exiting from, and even shattering the state, is underpinned by a deep hostility towards social democracy, which they deemed to be I reconcilable with capitalism. So could you discuss the convergence of these paleo-libertarian ideologies with the political far right in the United States?
QS: The paleo-libertarian thing is really interesting because the term is coined in the early 1990s by people who were annoyed with other libertarians, who they saw as being too permissive, as embracing individual freedom in ways they didn't like, and they called themselves paleo-libertarians to partner with another group that was called paleoconservatives.
The paleoconservatives in turn, didn't like the neoconservatives because they believed, and in some ways, they were right, that conservatives who had spent 40 years fighting the Cold War, won the Cold War, arguably, end of the Berlin Wall, end of the Soviet Union. And then instead of saying, well, I guess now we have victory, and we can rest, they transformed their Cold War anti-communism into other forms of mandates for intervention globally. So democracy promotion, human rights protection, making the world safe, for capitalism and American style elections from, of course, Somalia itself to the Balkan Wars, to the invasions of Iraq and Afghanistan in the early two thousands. So, the paleoconservatives wanted Americans to “come home”.
And we see actually there, interestingly, I think the roots of the sort of JD Vance approach to foreign policy, the idea that America has no role to play in Europe or really anywhere and should just defend its own borders at whatever cost. The paleo-libertarians agree that the state should shrink, that the military industrial complex should go away. That should no longer be a form of no graft and mutual interdependency for the private sector and the public sector, and they want to scale down. So, in the 1990s, you have this rather surprising spectacle of people who are mostly just interested in economic freedom now sitting down and breaking bread with white nationalists and neo-confederates, people who want to bring back the old South. They're also interested in working with people who are seeking secession in Europe. So neo-nationalists like the Lega Lombarda, which later became Lega Nord and later just became Lega, who wanted to separate the richer parts of Northern Italy from the rest and especially the poor south.
These were sites of inspiration for the paleo-libertarians who believed that one way to get outfrom under the oppressive taxation burden and redistributive burden of the post 1960 state was to just exit. And indeed, they started finding hope in places like Orania, this totally strange little all white, all boer enclave in South Africa, which in some cases they would go and have libertarian conferences on the spot saying like, hey, here's an example we can drop out. You just need your own security force. You can even make your own currency. You can organize your enclave on the model of joint stock corporation. And everyone has shares in it.
And incidentally, this Orania and the kind of boer victimology that it's associated with is exactly the source of the discourse of so-called white genocide that Elon Musk has platformed and that had made its way all the way to the Oval Office and led to the welcoming of a small number of Afrikaner asylum seekers into the United States, right at a time when no other asylum seekers are being welcomed in this country. So you can see there in action, I would say a convergence of this long brewing connection between people who were angry about socialism, angry about the mixed economy, angry about the social state, angry about tax as such making alliances with that have become actually quite effective in many cases over time. People who are primarily interested in racial and ethnic purity, but in their united embrace of the zone, in the form, their embrace of the perforation and the shredding of the post-war social safety net, they found to themselves to be productive bad fellows together.
SR: Thanks Quinn, for this wide ranging and fascinating conversation on the fragmentation of the world, which we thought was actually integrating very, very fast under neoliberal globalization.
QS: It was my pleasure.
SR: Modern democracy and capitalism have been historically co-constitutive and closely intertwined in many ways. But Quinn Slobodian's work reminds us that by the late 20th century, nation states were increasingly at odds with the legal and economic framework of neoliberal globalization. His recent book titled “Crack-Up Capitalism” serves as a corrective to the commonplace view of neoliberalism as ever closer supranational integration. It documents on the contrary in rich detail, a complimentary process of subnational fragmentation and secession, which is equally a threat to democracy. He's argued compellingly that many far-right political actors reassert the sovereignty of national borders against global forces but they also use these very forces to dismantle welfare states, carving out zones of exception, where democratic accountability and the rule of law are both suspended. Special economic zones are often invoked by development experts and also by international development institutions as a model to be emulated.
But the idea of spatial reorganization through zones with their own laws and contractual arrangements can and also has been filled with anti-progressive political content as Quinn insists. An important aspect of this reactionary turn in political economy is considerable experimentation and innovation in governance in these zones in the Global South, but it was Western libertarians and neoliberals who invoked these experiments as ideological templates to be emulated elsewhere.
Fascinated by the spectacular economic success of China, as well as the rapid rise of Singapore and Dubai, some of them dismissed democracy and politics altogether. Instead, they called for the proliferation of small, fragmented polities, built solely on contractual and transactional interests. Perhaps the most alarming recent development in this context is the shift from such political fragmentation to a more ambitious bid to take over the state altogether with tech tycoons extending their influence in the Trump administration, for example.
Ironically, this gambit is also influenced by what Quinn describes as a techno-orientalist fantasy of Chinese state capitalism replete with essentialist tropes about culture, which occlude the actual sources of economic growth. Those zones cannot and should not be used as readily transposable blueprints; even the most outlandish cases that Quinn examines such as Somalia or South Africa, raise uncomfortable questions about the zone-like limits of sovereignty in our own societies. As Quinn argues, it's crucial to understand the elective affinity of the resurgent, ethno-racist, ultra-conservative right for zonification and the breaking up of sovereign democracies. We'll come back to this unholy alliance between neoliberals and the extreme right in the second part of our conversation in the next episode of the podcast.
This was the second episode of Season 11 of Democracy in Question. Thank you very much for listening and join me again in a month for the second part of my conversation with Quinn Slobodian. We'll trace the history of right-wing libertarian thought in the U.S. and in Europe, and the ways in which it's transforming American democracy today. We'll examine its anti-immigration stance and its emphasis on eugenics and genetics to counter egalitarianism and redistribution.
Please go back and listen to any episode that you might have missed and do let your friends know about the podcast if you're enjoying it. You can stay in touch with the work of the CEU at www.ceu.edu and the Albert Hirschman Centre on Democracy at www.graduateinstitute.ch\democracy.
[i] Slobodian, Q. (2018). Globalists: The end of empire and the birth of neoliberalism. Harvard University Press.
[ii] Slobodian, Q. (2023). Crack-Up capitalism: Market radicals and the dream of a world without democracy. Metropolitan Books.
[iii] Slobodian, Q. (2025). Hayek’s bastards: Race, gold, IQ, and the capitalism of the far right. Zone Books.