REVIEW: Globalists and Crack-up Capitalism by Quinn Slobodian
What do left-wing critics of neoliberalism want?
An iron glove for the invisible hand
In his book Exit, Voice, and Loyalty (1970), left-wing development economist Albert O. Hirschman argues that there are two main categories of response to decline in firms, organisations, and states: ‘Exit’ (i.e., leaving), and ‘Voice’ (i.e., remaining, but attempting to influence it in the right direction). Historically, the neoliberals have heavily relied upon the former in order to get their way, seeking to force the state to allow the easiest possible ‘Exit’ from the clutches of an undesirable government, usually via emigration and/or capital flight. Naturally, their left-wing critics want to put a stop to this ‘Exit’, as it can discipline left-wing regimes that the market has judged undesirable.
But how did the neoliberals go about enshrining the right of ‘Exit’ as near-inviolable in the first place? ‘Neoliberals hate the state. Or do they?’, begins the blurb for Quinn Slobodian’s Globalists. What Slobodian means is that the original neoliberal project was not an attempt to create a ‘self-regulating market [wholly] liberated from the state’, but rather an attempt to ‘encase’ the market – primarily by legal (and thus statist) means – thereby protecting it from the twin vagaries of nationalism and democracy; the law, both domestic and international, would act as ‘an iron glove for the invisible hand of the market’.
As neoliberal pioneer (and gentile anti-Nazi émigré) Wilhelm Röpke wrote to Marcel van Zeeland:
It is possible that in my opinion of the ‘strong state’ [le gouvernment qui gouverne] I am even ‘more fascist’ [faschistischer] than you yourself, because I would indeed like to see all economic policy decisions concentrated in the hands of a fully independent and vigorous state weakened by no pluralist authorities of a corporatist kind… I seek the strength of the state in the intensity, not the extensiveness, of its economic policies. How the constitutional legal structure of such a state should be designed is a question in and of itself for which I have no patent recipe to offer. I share your opinion that the old formulas of parliamentary democracy have proven themselves useless. People must get used to the fact that there is also presidential, authoritarian, yes even – horribile dictum [horrible to say] – dictatorial democracy.
Slobodian shifts the narrative away from Chicago, and towards Geneva – where many of the most prominent neoliberals lived and worked – by focusing primarily on figures such as Wilhelm Röpke (German), Michael Heilperin (Polish), Lionel Robbins (British), and Ludwig von Mises, F.A. Hayek, and Gottfried Haberler (all Austrian), rather than Americans like Milton Friedman. The massive overrepresentation of Austrians in this group of intellectuals was no accident: all had been personally affected by the Great War, the collapse of the Hapsburg Empire, and its replacement by new or expanded nation-states which were often ruled by increasingly corporatist (if not outright fascist or socialist) governments – all of which led to the proliferation of ‘walls’, for goods, capital, and people in a once-unified market. Their priority was to knock down these walls, and to stop them ever being built back up again.
Although at first some neoliberals genuinely dreamed of removing these walls via a kind of ‘world government’, most soon rejected this as impractical, particularly because this would lead to a direct collision with the most potent ideological force in the world – nationalism.
Instead, they focused their efforts upon limiting national sovereignty, especially in the economic sphere. The forces of both nationalism and democracy were to be bound. To satisfy the masses, nations, they thought, could maintain all of the traditional accoutrements of sovereignty, ‘including flags, anthems, postage stamps, and… coins with the national emblem’; borders would continue to be mostly demarcated according to ethnic divides. But this would be a hollow sovereignty: in exchange for indulging such petty national sentiments, in one proposal, Mises demanded ‘a rigid limitation of sovereign rights of every country… measures which affect debts, the money systems, taxations, and other important matters [will] be administered by international tribunals, and without an international police force such a plan could not be carried out… force must be used to make debtors pay’. Above all, Slobodian writes, ‘the ever-present threat of capital flight would curb campaigns of expansionary social policy… economic actors voting with their feet – and their assets – would be the surest corrective on projects of building domestic welfare states’.
For the protection of the free movement of goods and capital, what the neoliberals wanted seems quite clear: investment treaties, prohibitions against capital controls, international courts, most-favoured-nation clauses, et cetera. But what of the free movement of people?
Neoliberalism and mass migration: not the midwife, not the enemy
To what extent is ‘neoliberalism’ responsible for – or at least heavily associated with – mass migration? On the assumption that neoliberals are responsible for mass migration, there are many, such as Steve Bannon, who advocate building bridges with left-wing opponents of neoliberalism. Some, such as many of the ‘post-liberals’ at Compact and UnHerd, go further still, and entirely abandon right-wing economics, instead attempting to forge a new political movement founded upon ‘cultural conservatism’ and centre-left economics.
Many of these movements soon discredit themselves: anyone still involved with ‘Blue Labour’ is surely a masochist, and it is increasingly obvious that a principled opposition to mass migration is one of the first things to go for most of such movements, as Left-Peronism in Argentina has demonstrated. The same has been equally true for Adrian Vermeule and friends, who, despairing of the decline of religion in America, have increasingly defended immigration, and have sometimes gone as far as openly stating that they want to flood the United States with immigrants, replacing ‘atomised’ and ‘atheistic’ white Americans with ‘Christian’ and ‘pro-family’ Africans and Latinos.
Slobodian is keen to disassociate neoliberalism (which he dislikes) from mass migration (which he likes) as much he possibly can – there are no bones thrown here to the Bannonists – though he does not entirely succeed. It is a simple fact that the neoliberals made many references to potential efficiency gains from globally mobile labour, and also repeatedly emphasised that mass migration had the potential to destroy what they saw as economic distortions at home, such as trade unionism and the welfare state. However, Slobodian does succeed at showing that, for the neoliberals, of the big three freedoms of movement – of goods, capital, and labour – there was a clear hierarchy: goods were most important, followed by capital, and then – and only then – labour, in a distant third place.
The neoliberals were significantly more interested in the rights of emigrants than they were of immigrants. Slobodian shows how the early neoliberals – such as the Romanian-born Philip Cortney (born Philippe Cotnareanu), who settled in America and became a successful and highly influential businessman – co-opted the fashionable post-war language of ‘human rights’ for their own purposes. Cortney creatively argued that ‘the right to emigrate…’ – note the use of the word emigrate not migrate – ‘…[was] the “basis of all his other human rights”, noting that it [was] included in the Universal Declaration of Human Rights (Article 13)’ – Article 13 being the right to leave a country and to migrate internally. Cortney suggested that ‘this should have gone further by linking [Article 13] to its necessary prerequisite: the right of free capital movement’. In effect, then, ‘Cortney was… proposing the human right of capital flight’, as ‘exchange control can “effectively destroy” the right to emigrate’. And capital flight was, of course, highly useful in disciplining socialistic, high-taxing regimes.
It seems to naturally follow that neoliberals would be equally likely to use immigrants as emigrants in order to achieve their goals. However, some neoliberals believed that their goals could be mostly or entirely achieved by means of freedom of movement for goods and capital alone. Free movement for labour was, strictly speaking, needlessly politically contentious.
Certain neoliberals – including Hayek and Mises – feared that unrestricted migration could lead to ‘racialised resentment’, which ultimately risked a political backlash destroying the institutions that protected free markets. They were therefore willing to compromise on the matter. Markets were perfect, but people were not.
Others went further. Slobodian cites Gottfried Haberler, another neoliberal pioneer and an influential colleague of Hayek and Mises at the Vienna Chamber of Commerce in the 1920s, who, in a discussion concerning wages (which the neoliberals were convinced were far too high for interwar Austria to maintain its international competitiveness), made the following argument:
…“freedom of migration does not exist, has never existed and probably never will exist… It would not be desirable even if it were possible. The Ruhr Valley would become unbelievably crowded, and the Alps would empty out entirely”… [But] Haberler proposed that he could prove that “free trade is beneficial for all even when there is no freedom of migration and the peoples remain firmly rooted in their countries”… workers did not need to be mobile over national borders as long as prices were. If prices accurately reflected the relative supply and demand on markets, then these would guide entrepreneurs to the most efficient use of their resources…
With mass migration deemed impractical, the easiest solution, then, was to destroy price distortions internationally (i.e., quotas and tariffs) and wage distortions at home (i.e., trade unions and the welfare state) – and then to allow capital to freely flow to wherever it was most needed. If all this was achieved, the free movement of people was unnecessary.
Slobodian thus concludes the chapter with the following:
Novel in Haberler’s theory was the rescue of the nation-state as a container for labour. His theory of comparative costs suggested that free trade could compensate for the absence of international labour migration as long as internal barriers established by unions were struck down… The walls between nations were to fall for goods but not for people.
The right of ‘Exit’, then, was to be protected at all costs. The right of ‘Entry’? Not so much.
Exit no more: what do left-wing critics of neoliberalism want?
In Crack-up Capitalism, Slobodian shifts his focus away from the older neoliberalism of the early post-war era, now instead analysing a newer (and somewhat mutated) form of ‘neoliberalism’ that greatly increased in prominence after the collapse of the Soviet Union.
Slobodian justifies this by insisting that neoliberalism is a ‘living’ ideology, but he is already risking falling into the trap that led other intellectuals to abandon the term entirely – on the basis that the term is ‘slippery’ and ‘incoherent’, with ‘multiple and contradictory meanings’. After all, while Globalists tells us that neoliberalism is about using the state to legally encase the market, Crack-up Capitalism tells us that neoliberalism is actually about radical libertarians who want to escape the (nation-)state entirely and ‘shatter the map’, creating in its place a new constellation of competing and overlapping sovereignties. Nonetheless, there is clearly a common thread that can be found here: both the ‘old’ neoliberalism and the ‘new’ neoliberalism lean very heavily upon ‘Exit’ in order to achieve their goals.
In Crack-up Capitalism – which is considerably less academic in tone than Globalists – Slobodian takes us on a whistle-stop tour through the numerous projects upon which the ‘market radicals’ have pinned their hopes. The usual suspects – Hong Kong, Singapore (a particularly weak chapter), Dubai, and tax havens such as Lichtenstein and the Cayman Islands – all feature. Slobodian also usefully draws our attention to the existence of at least 5400 ‘zones’ within otherwise sovereign nation-states. These ‘zones’ often offer not only tax benefits, but also frequently disapply the standard democratic and/or regulatory oversights found elsewhere in the nation at large. Some ‘zones’ are ‘no bigger than a factory or a warehouse’; others are ‘urban mega-projects’, like New Songdo City in South Korea and Neom in Saudi Arabia.
Slobodian also examines some of the more eccentric projects of his ‘market radicals’. One libertarian marketed ‘Hayek Island’, which was ‘effectively a steel pole stuck into the bed of the Caribbean Ocean topped by a steel womb-like enclosure (“sea pod”)’; this was claimed to be a practical method of escape for the super-rich from the rising tide of global socialism. David D. Friedman (son of Milton), a passionate LARPer, looked to the competing and overlapping sovereignties of mediæval Europe for inspiration. Dutchman Michael van Notten, a former EEC competition lawyer, found his personal Ancapistan in 1990s Somalia. For him, ‘the traditional Somali system of law and order… resembled the anarcho-capitalist constructions of the mediæval system… crimes were dealt with through restitution and compensation… families functioned as insurance pools… Somali customary law seemed to offer a coherent form of social order without a state’. He voted with his feet, trading a stable middle-class life in the Low Countries for the Horn of Africa, where he was soon remarried to a Somali woman called Flory Barnabas Warsame. In his discussions with Somali elders, he received the helpful suggestion that he and his business partners could found a new clan: ‘the elders even suggested a name – Soomaali ‘Ad, or the “White Somalis”’.
What was the motive for all of this frenetic – indeed, often downright deluded – activity? The shared aim of the various market radicals – ‘shattering the map’ – had both a moral and a practical purpose. In 2009, Peter Thiel wrote the following:
…I no longer believe that freedom and democracy are compatible. The great task for libertarians is to find an escape from politics in all its forms… If we want to increase freedom, we want to increase the number of countries.
More countries logically seemed to mean more competition between different institutional structures, and more places to choose to emigrate to. And, ultimately, more Exit seemed to mean more undermining of taxation at home, and, eventually – so they hoped – the gradual withering of the big state altogether, one individual Exit at a time.
As we have seen, the main political aim of the ‘neoliberals’ is to enable ‘Exit’. We can also equally say that one of the main political aims of their left-wing critics is to prevent ‘Exit’. How should we respond?
In a few respects, some elements of the left-wing critique are not wholly out of step with certain contemporary right-wing priorities, both mainstream and radical. Even those who have very little sympathy with taxes are unlikely to be friendly to the existence of tax havens like the Cayman Islands or Liechtenstein, which have tax rates so low — clearly artificial, and only sustainable by sucking in wealth created elsewhere — that no ordinary nation-state could possibly compete with them. Most right-wingers are supportive of attempts to bind our political and economic elites more closely to the nation-state, rather than to the so-called ‘global economy’, in which they will inevitably find some bolthole to stash their wealth and escape from the mess they created at home. And it is surely not fair that the ability of the super-rich to leave Britain on a whim — taking their money with them — has increasingly strongly tilted our tax burden towards anti-meritocratic income taxes, which mostly fall on successful professionals who are inherently economically tied to Britain, and thus have no choice but to pay up.
But Slobodian’s opposition to Exit is far bolder, far more extensive than a mere opposition to the existence of the most opaque tax havens and democratically unaccountable ‘zones’, or a boilerplate condemnation of how globally mobile capital has enabled kleptocracy. Indeed, it is so extensive that it often goes beyond even the issue of money itself. Slobodian is also interested in condemning those who, in response to rampant crime and disorder, choose to retreat to gated communities, even those that seem to have (at least outwardly) fairly innocuous purposes. Unsurprisingly, Slobodian has little time for Orania — an attempt to create an exclusively Afrikaner community in the Western Cape — but he also condemns the many ordinary suburbanites across the world who try to protect themselves ‘urban nuisance’ with private security, restrictive covenants, or poor public transport connectivity. This is a vision of the world where rights of ‘Entry’ (unlimited migration from the third world) are nearly infinite — excluding only the Boers and the Jewish settlers in the West Bank, apparently — and rights of ‘Exit’ (taking measures to leave the hellscape that this will inevitably create), at least in the developed world, are completely non-existent.
For Slobodian, then, it is not enough for you to work hard and meekly pay your taxes to support the teeming, ever-expanding, unproductive masses, even if these taxes are undeniably extortionary. On top of all this, me, you, and everyone else must — no exceptions — also have our noses smeared into that which is has now become ‘part and parcel of living in a global city’, as Sadiq Khan puts it. Unsurprisingly, we can dimly detect Slobodian’s excitement for the prospect of the third world taking it upon itself, with or without the state, to avenge itself against ‘privileged’ whites in a few of his stray comments.
So we can now finally answer the question: what is it that left-wing critics of neoliberalism want? They want you, the metaphorical sheep, to remain stuck in place, glassy-eyed, quiescent, industrious; to keep on working, to keep on producing, to keep on allowing yourself to be sheared on behalf of the ‘Global South’. Of course, they also want the golden sheep, our economic elites, to be sheared too — and perhaps some of them richly deserve it. But it would be deeply foolish for any right-winger to throw their lot in with such a political vision out of pure ressentiment: these are extremely dangerous allies, and once the Peronist ball gets enough momentum, it can be almost impossible for anyone to stop. The tragedy of Argentina should thus be a warning to us all of the future if this cursed alliance ever comes to pass. Better the neoliberal allies we do know than the leftist allies we don’t.
Image rights: Public domain.
This article was written by Nigel Forrester, our editor-in-chief. Have a pitch? Send it to pimlicojournal@substack.com.
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Incredible and Insightful!