Excerpt: How Apartheid South Africa Tried to Create a Libertarian Utopia

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.