In the 1980s, South African libertarians set up a deregulated zone that they sold to the world as ‘Africa’s Switzerland’. It was a sham, but with its clusters of sweatshops, it was very modern – and in some ways it anticipated the world we live in today
A standard globe shows an uneven mosaic of colours, pixelated more densely in Europe and Africa, easing out to broader stretches across Asia and North America. This is a familiar vision of the world, the one we have been taught since childhood: each patch of land with its own flag, its own anthem, its own national costume and cuisine.
But we make a mistake if we see the world only in this jigsaw of nations. In fact, within each nation are numerous unusual legal spaces, anomalous territories and peculiar jurisdictions. The world of nations is riddled with zones – city states, havens, enclaves, freeports, hi-tech parks, duty-free districts and innovation hubs – and they define the politics of the present in ways we are only starting to understand.
At its most basic, a zone is an enclave carved out of a nation and freed from ordinary forms of regulation. The usual powers of taxation are often suspended within its borders, letting those who invest in the zone effectively make their own rules. Zones come in a bewildering range of varieties – at least 82, by one official reckoning. At one end of the socioeconomic spectrum, zones can form part of networks of cross-border manufacturing. Often ringed by barbed wire, these are sites for low-wage production. At the other end, we can see a version of the zone in the tax havens where transnational corporations secrete away their earnings.
In an interview in 1988, libertarian economist Milton Friedman declared that “a relatively free economy is a necessary condition for a democratic society”. But then he added: “I also believe there is evidence that a democratic society, once established, destroys a free economy.”
Beginning in the 70s, the zone offered an alternative to the messiness of mass democracy, and therefore a way of preventing the destruction of a free economy that Friedman feared. Today the zone also holds out a promise cherished by much of the contemporary political right – that capitalism can exist without democracy.
The success of capitalism without democracy over the last 50 years is best captured in a lens-flared montage of skylines spiked with sparkling skyscrapers. Hong Kong, Singapore, Shenzhen, Shanghai, Dubai: all profited from the suppression or elimination of internal dissent to become vessels for the global flow of mobile capital. They also sparked deep envy among the erstwhile leaders in the global economic race.
Inspired by Hong Kong, Margaret Thatcher’s chancellor of the exchequer Geoffrey Howe included measures to create a string of freeports and enterprise zones in her first budget. The only success was Canary Wharf, achieved in part by creating a new development corporation to work over the head of local government while also eliminating the Greater London Council, which had a different vision for the former docks. By 2012, Canary Wharf housed more bankers than the City of London, but it was also a privatised space where the usual rights of assembly and protest did not apply and was completely reliant on investor interest from undemocratic states like Qatar and China.(Little has changed in the half-century since Thatcher’s first budget. In mid-March, Britain’s chancellor announced a budget that included freeports and a series of new “investment zones”, which he spoke of optimistically as “12 potential Canary Wharfs”.)
Every financial zone has its distant doubles. If metropolises such as Hong Kong and Canary Wharf were at one end of the global value chain by the 80s, rural South Africa was at the other. Its buildings were low-slung, made from cinder blocks patterned for ventilation, decoration and economy. The few urban areas featured a smattering of multistorey towers in reinforced concrete. Dirt roads wound down to collections of rondavels, round mud huts topped with thatched roofs, or to rectangular dwellings capped with sheets of corrugated iron. Yet unlikely as it sounds, in the 1980s this place was just as much a site of neoliberal experimentation as Hong Kong, London and Singapore.
When Friedman visited the University of Cape Town in 1976, he gave a speech to an audience of 2,000 in which he declared that the market was a much surer route to liberty than democracy; voting by dollars was better than voting by ballots. The key to freedom was not free elections but decentralisation of state power itself. A few years later, South African libertarians followed this line – but with a version of radical capitalism that was entirely dependent on the disciplining (and subsidising) hand of the state. The creation of the Black “homeland” of Ciskei as a would-be libertarian zone in white-ruled South Africa shows how certain kinds of economic freedom depend on political disfranchisement.
Source: The Guardian