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12 May 2023

Making democracy safe from capitalism

Market radicals have established economic spaces free of democratic constraint. What would a politics of the zone look like if pursued from the left?

By Mathew Lawrence

How to make capitalism safe from democracy? The intellectual historian Quinn Slobodian has shown how the architects of neoliberal governance have strived to answer that question since the 19th century. In Globalists (2018) he examined how a coalition of politicians, academics and lawyers sought to legally encase and protect capital from democratic reordering. In his latest work, Crack-Up Capitalism, his focus is on the politics of the zone. It is a story of how a quixotic alliance of libertarian ideologues, anti-democratic entrepreneurs and Thatcherite acolytes have carved out states of exception to insulate capitalism from the constraints of the state and its rules. These enclaves are diverse in geography and nature, from colonial-era Hong Kong and apartheid South Africa, to free ports and special economic zones, to cryptocurrencies and visions of start-up “network states”. But, however different the form, zonal politics share the same political content: the effort to establish spaces in the global economy that operate by self-defined laws and regulations, with democratic oversight suspended and market rule unimpeded. In this vision the zone is an accessory and escape hatch to a world of capitalism without democracy.

A political movement focused on punching holes in the nation-state and undermining the legal and territorial integrity of the global economy has historically been the province of the libertarian right. As Slobodian shows, the effect of “crack-up capitalism” was to create zones where normal practices of taxation were suspended, investors dictated their own rules, and organised labour was crushed, often violently. But what went on in the zone did not remain in the zone. From coercive restrictions on organised labour to tax arbitrage that undermines state capacity to the insulation of corporate power from regulation by public authority, these anti-democratic enclaves prefigured the policies that define much of the contemporary global economy.

If Crack-Up Capitalism charts a project that created enclaves of market radicalism to leverage wider systemic change, it raises an important set of questions: what would a politics of the zone look like pursued from the left? What would it mean to build enclaves of democracy-against-capitalism? Is it possible to carve out and sustain collective space free from capitalist governance? Would such a politics be capable of prefiguring and driving deeper economic and social transformation or would it remain episodic and incidental to the wider operation of society?

A libertarian vision of the zone is clear: a space of capitalism without democracy. The contours of its inversion – a zone of democracy without capitalism – can be similarly traced: the suspension of market rule in place of a social economy, of the sovereignty of producers over production, and of democratic control over investment to meet collective and environmental needs and expand human capability and freedom.

What could this look like? In some areas, it could be active support for democratic forms of enterprise as part of a wider effort to expand ownership of local assets and resources. In others, the development of the built environment through conscious planning to meet community needs instead of market-led co-ordination. It might involve experimenting with new special economic zones that discipline capital in pro-labour, pro-climate directions by imposing stringent conditions on public support. Or it could prioritise an agenda of restless experimentation – institutional and digital – to build communities where meaningful decision-making is genuinely democratic and inclusive.

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This is not just speculation about a future agenda. From the Greater London Council’s efforts to forge a distinct form of municipal socialism in the 1980s to the enduring achievements of the labour movement in building social and cultural institutions and traditions within and against capitalism, there is a deep history that can be drawn on for inspiration. But neither is this only backward-looking. Across the world, an embryonic, democratic vision of the zone is being built: the Preston Model’s efforts to scale and retain community wealth through the deployment of tools of public procurement and social licensing, adapted by cities around the world; the solidarity economies that thrive from the Basque Country to Cleveland; and experiments by organisations such as the Collective Intelligence Project to use digital tools to aggregate public opinion on how we should regulate technologies. Perhaps the oldest version of the left zone is the co-operative movement, which emerged in the 1840s in response to the disruptions of the Industrial Revolution, and associated forms of mutual aid and non-capitalist exchange that seek to build different practices, institutions and relationships.

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These examples share a common thread: the conscious effort to reshape for collective benefit the organisation of space and materials through democratic forms of ownership and governance. They are vanguards of experimentation and engines of progress; we need many Prestons. But we should also be clear: “zone politics” hits three strategic limits that make it inadequate to act as the locus of the left’s response to our age of compounding and interconnected crisis.

Examples of progressive exception are usually distinct from libertarian zones in that however much they seek to encourage alternative forms of economic organisation, and do create distinct ecosystems, they still work within the legal and fiscal frameworks of the status quo. They do not typically – and often cannot – act outside them. Unlike the right’s enclaves they are exceptions from within, not breaches outwards, lacking the equivalent power or resources to force genuine separation. 

An agenda defined by enclaves and exit also risks being trapped on the defensive and geographically bounded. Here it shares similarities with its libertarian counterparts, which, as Slobodian shows, also emerged as a defensive response to the prevailing conditions of the global economy. In the 1950s through to the 1970s, as the anti-colonial struggle advanced, and the power of the organised working class waxed, it seemed to many that capitalism’s eventual eclipse was inevitable. The libertarian zone was an attempt to forestall that, but also to create escape routes for its possible eventuality. Similarly, to take one example, community wealth building emerged as a defensive reaction to the relentless upward extraction and hollowing out of place caused by austerity and finance-led growth. Its power is clear, but so are its limits; recognising that does not diminish its achievements and potential but underscores the need for the left to expand the horizon of its ambition.

This links to another point where a progressive politics of the zone runs aground. The crises we face are systemic and so their resolution will depend on systemic transformation. That in turn requires action to transform at the appropriate scale. A zone-based approach risks leaving untouched the institutions we need to reimagine: using the law as a social technology to encode inclusive and sustainable behaviours; rethinking the terms of economic co-ordination, from central banking and capital markets to the corporation and collective bargaining, so as to reorganise production and distribution; and fostering a new internationalism that can resist the extraordinary wave of global austerity. This is the institutional scale that our age of overlapping emergency demands. Progressive zones of exception might be necessary forms of resistance that build collective strength to achieve scale, but on their own they cannot transform economies built on financial extraction nor justly and rapidly decarbonise.

What political agenda could form the basis of a politics that addresses the challenges of an insecure society, where economic stagnation is the hallmark, and the harms of our unequal present are so cruelly evident? Three interlocking goals stand out: democratise production, decommodify provision, decarbonise society.

Democratise, because too few people have a genuine stake and say in how they work, what is produced, and for what purpose. Whether it is in our workplaces, where most lack meaningful participation rights in the private government of the firm, or in our communities, where decisions are often taken for us not by us, our economy is marked by a striking and undemocratic concentration of power and reward. This is most evident in the control of investment. The investment function is so important because it is fundamental to shaping how a society develops. Yet this extraordinary power is privatised and shielded from democratic influence, driven by the narrow goal of maximising investor returns. Taken together, this ensures production is unjust, unfree and undemocratic.

Decommodify, as it is only by rethinking the provision of goods and services that we can overcome the endemic insecurity that many people endure. This insecurity reflects the terms on which we organise access to the fundamentals we all need to live securely and well. Currently, that is through financialised forms of unequal market dependency. But by reorganising these fundamentals – from shelter to care, energy to mobility – as part of a social guarantee we can begin to build the foundations of genuine abundance: ensuring that everyone has access to the things we need to thrive as a right, doing so in ways that do not rely on the exploitation of other people and places.

Decarbonisation, because reaching net zero is not just a technical challenge but an opportunity for collective reimagination. We are in the foothills of a civilisational challenge – to build a post-carbon future that ends the double extraction of the fossil fuel age: of the upward redistribution of value from both labour and nature, appropriated from working people and communities the world over. That will require more than electrifying heating, transport and power, but nurturing new ways of living, producing and consuming.

Democratise. Decommodify. Decarbonise. These are the watchwords for a secure and thriving future that leaves behind the indignities and violence of our class-dominated societies. The tools: democratic co-ordination of production and provision, macro-financial planning of a just transition led by public investment, a deep democratisation of the ownership and governance of the productive resources of society, and valorising the role of care in all its dimension.

How could this agenda translate to politics? What could a policy pledge card look like? Transformative and popular ideas abound. A Living Income to guarantee a minimum living standard for all and attack economic insecurity. A new settlement for workers that resets power to secure rising wages and good conditions. Democratic public ownership of life’s essentials, from affordable housing to free at point of use care systems. An energy democracy that delivers clean and affordable power as a right. Innovative governance of AI so that we fairly share in its benefits. Taxes on wealth and capital income to build a stronger, fairer society. We can sketch the ideas and debate the priorities. What is more pressing is building power. 

In a recent essay in New Left Review, the political economist Aaron Benanav rightly noted that investment is not just a technical question – of where to invest, what amount, expecting what return, and so on – but fundamentally and irreducibly a political issue. It is about how society’s surplus is allocated, toward what goals and visions of a good life for all. These questions are necessarily political, and so progressives should push for decisions which directly impact us to as far as possible as far as possible. Yet exactly because an agenda of democratisation and decommodification challenges those who benefit from their control of investment and production, securing that future will involve intense struggle and the mobilisation of a popular majority against entrenched power.

Does this agenda have support in British politics, capable of mounting the sustained social, cultural and political effort to dislodge the beneficiaries of our rentierised economy? Absolutely. From civil society unified behind the call for a minimum living standard, to the labour movement fighting for a new deal for working people, to the climate movement pushing for a Green New Deal, this coalition is growing in size and ambition – and critically, much of this agenda has widespread public support. In Westminster there are glimmers of potential, such as Labour’s Fair Pay Agreement plan for work, or Great British Energy, a proposal for a new publicly owned green energy company, though the full extent of the party’s ambition is still to be determined. Regardless, the challenge is to mobilise the commitment of countless millions, the myriad points of leverage in the system, to force those in power to adopt an agenda of democracy, decommodification, and just decarbonisation. Transformative agendas are won, never simply conceded. That work is what is now required. 

We live in the world that crack-up capitalism has made. That world is one defined by institutions that undermine justice, freedom, and genuine democracy. It is also a world that is itself cracking up. Out of that crisis, we have the potential, however fragile, to build something new. The right’s vision of the zone cannot be our guide. Instead it must be a wider vision based on the expansion of the scope and power of democracy to organise a richer, more secure life for all that animates us. We owe it to ourselves to seize that opportunity. In the process, that is how we keep democracy safe from capitalism.

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