The Ciskei experiment: a libertarian fantasy in apartheid South Africa – The Guardian

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.

* * *

In the 1970s, apartheid South Africa was in the midst of a legitimation crisis. Since the late 1950s, new flags had risen one by one across the African continent. Where once flew union jacks and the blue-white-and-red of the French Tricolore now waved the Maasai shield of Kenya, the crane of Uganda and the black star of Ghana. When Portugal finally quit Africa in the late 70s, Angola put a machete on its flag, and Mozambique chose another symbol of armed struggle: the AK-47. Rhodesia became Zimbabwe in 1980, making South Africa’s white minority rule an even more striking aberration. Digging in at the southern end of the landmass, the apartheid establishment was alone and embattled.

As a solution to the puzzle of preserving white minority rule in an age of national liberation, the government chose a version of what Friedman was recommending: decentralisation instead of democracy. It created a series of “homelands” on the baseless notion, derived from colonial anthropology, that certain populations rightfully belonged in certain territories. Many homelands were noncontiguous: one was split into seven scraps of land scattered across central and northern South Africa. Anti-apartheid activists dubbed the homelands “Bantustans” – combining an umbrella term for peoples in central and south Africa, with a nod to Pakistan, which was split by colonial powers into West and East Pakistan (later Bangladesh) on opposite sides of independent India.

Extending the technique of “divide and rule”, South Africa even made some Bantustans into pseudo-independent nations unrecognised by any other states. The first to gain this nominal independence was the Republic of Transkei in the Eastern Cape in 1976, followed by Bophuthatswana in 1977, Venda in 1979, and Ciskei in 1981. Under Bantustan policy, Black South Africans lost their South African citizenship and were made into citizens of homelands that many had never set foot in. Upwards of 3.5 million people were relocated by force, especially elderly people, women, the unemployed and opponents of the regime. The idea was to make South Africa itself progressively whiter while retaining access to an itinerant labour force concentrated in balkanised territories. It was a vision where only a minority of the population were citizens and the rest guest workers. Anti-apartheid activist Steve Biko described the homelands as “sophisticated concentration camps” and “the greatest single fraud ever invented by the white man”.

The pseudo-nation of Ciskei was on the Eastern Cape, in the south-east of South Africa. It had its own airline and its own national stamps showcasing handmade carpets, pineapple canneries and bicycle factories. In a grimly symbolic episode, when its flag was raised on 4 December 1981, the flagpole fell over and had to be held up by South African soldiers.

While Ciskei was known mostly as an open-air prison for South Africa’s “surplus people”, it also became the unlikely site of what one neoliberal economist called a “laboratory experiment” designed according to the principles of “economists who believe in the power of markets, prices and incentives”. South African libertarians wanted to figure out how to make use of the Bantustan system while being less explicitly racist. They hoped that the homeland could work as a kind of zone, inviting in foreign capital while encouraging voluntary segregation on the part of South Africans.

These libertarians were given their opening when Ciskei’s leader for life, Chief Lennox Sebe, assembled a commission of what the Financial Times called the “supply siders of Ciskei” to design the new homeland’s economic policy. At its head was Leon Louw. Born in 1948 into a conservative Afrikaner family, Louw had helped found the Free Market Foundation, a thinktank that saw South Africa’s “tragedy” as the mismatch between its rhetoric of pro-capitalism and anti-communism, and the reality of what they saw as “creeping socialism”. To them, apartheid was just another taxpayer-funded social programme reliant on a high degree of intervention, incorporating colour bars in the labour market, welfare for the white population and state ownership of many companies.

The commission praised the suppressed “free market spirit” of the Black community and hoped that Ciskei would be a showcase of a non-racial form of capitalism to influence the rest of the nation. Yet what came into existence bore little resemblance to the cultivation of an indigenous entrepreneurial class. The homeland that sold itself as “Africa’s Switzerland” was a caricature case of corporate welfare, overseen by state-funded union-busting security forces willing to murder.

* * *

The Ciskei experiment was made possible by turning this patch of land into an export processing zone, or EPZ. This zone was a patch of territory that was legally designated as outside the host country: an offshore space without leaving home soil, with a different set of regulations, rules and oversight, inevitably more favourable to investors. “Fantasy islands for intensifying corporate profits” is how one American labour leader described an EPZ he encountered in Taiwan in the early 1980s.

Libertarians aimed to construct such a fantasy island in Ciskei. The South African government sent agents abroad to solicit foreign investors for what they euphemistically called “decentralisation areas”. In Taiwan and Hong Kong, the agents found a receptive audience. They presented Ciskei as an opportunity for investors to undercut what had started off as low-wage zones in Taiwan and Hong Kong but which now paid middle-income wages. The pitch worked. By 1988, there were 80 small Taiwanese factories in Ciskei producing “everything from doll heads to fishing rods”, according to one contemporaneous report. One Taiwanese investor praised the situation. “This is like Taiwan 30 or 40 years ago,” he said. “No competition, cheap labour.”

As in the majority of EPZs which focus on the so-called light industry of textiles, apparel and consumer electronics, the workforce was mostly female. Reporting on the “bonanza” for Asian companies, the Boston Globe featured a picture of women in headscarves at Ciskei’s China Garments. Another textile factory was staffed entirely by women, who sat side by side on benches or sacks of fabric. These were typical sweatshop scenes: low-ceilinged factories crowded with scores of workers in hairnets labouring at sewing machines alongside piles of clothing under fluorescent lights.

Reports hailed an “economic boom” of rapid industrialisation and rising employment, but this relied on increasing aid flows from the South African government, with transfers of 120m rand (about £16.3m today) in 1984 alone. A rise in the price of gold – one of the nation’s key exports – filled state coffers and allowed it to set up some of the world’s best investor incentives in the Bantustans. In the supposed “laboratory experiment” of free markets in Ciskei, investors were offered a deal too good to pass up, as the state paid the wages of their employees, subsidised 80% of the cost of their factory rentals and billed them for no corporate taxes.

While investors were lured to Ciskei by the carrot of state subsidies, they also profited from the apartheid state’s liberal use of the stick. The would-be libertarian utopia operated hand in glove with the South African security forces, which punished everyday civilian acts of resistance and actively enforced the prohibition on trade unions. One activist, Priscilla Maxongo, described how women in the labour movement were routinely arrested, interrogated and tortured. She recounted having a rubber tube tied around her neck to cut off her air supply until she divulged information about the groups organising for workers’ rights.

In 1983, police killed 15 protesters when they shot into crowds demonstrating against a bus fare increase. The New York Times called Ciskei an “ugly little police state”. Thozamile Gqweta, the secretary of the South African Allied Workers, had his house set on fire with the front door wired shut; his mother and uncle died when their houses were similarly set on fire; his girlfriend was shot by police as they left his mother’s funeral; and he was himself detained for three months and tortured with electric shock. In the same year that the American libertarian magazine Reason celebrated Ciskei as a “haven of prosperity and peace in South Africa’s back yard”, security forces entered a Ciskei church commemorating the 10th anniversary of the Soweto uprising and beat the congregation with whips made of rhinoceros hide, hospitalising 35 and killing a 15-year-old boy.

The tragedy of the libertarian partnership with the police state was starkest in 1987. That year, Louw travelled to Dakar to meet members of the African National Congress (ANC) in exile. He hoped to persuade the socialist ANC that privatisation was a better way to reform South Africa. Months later, the Black civil rights lawyer who had organised the meeting was found in the back seat of his own car bound and beaten to death by the Ciskei security forces. Louw’s partners in building a libertarian utopia were actively exterminating the democratic anti-apartheid opposition.

Ciskei was a “Trojan horse to topple apartheid”, claimed a British neoliberal thinktanker on the front page of the Wall Street Journal. But it was no such thing. Rather, as a South African libertarian economist conceded with resignation after praising the results of Louw’s experiment: “If the ANC came into power in South Africa, they would conquer Ciskei and integrate it again into South Africa at large. So the continued success of Ciskei depends upon the continued survival of the South African government.”

The libertarian Bantustan was not a lever to weaken the grip of the apartheid state. Rather, it served a role in the public relations strategy of the apartheid state as a Potemkin village of supposed Black self-determination and economic liberalism, which needed the apartheid state to live.

But libertarians around the world refused to recognise this. At a time when the truth of violent state repression in Ciskei could be easily read about in major newspapers, an American neoliberal thinktanker called for Ciskei to be recognised as a separate country, even though nobody but South African elites bought the idea of Bantustan independence.

“I think [Ciskei] is a beacon for all of us on South Africa, and I am very happy with what’s going on there,” he said. “Can we have a Ciskei here?” he asked of the United States. Like many other libertarians, he saw the height of economic freedom in the form of a state unburdened by representative democracy, stripped of its capacity to tax and redistribute, and trained by the threat of capital flight to always put investors’ needs first.

* * *

Even as the Ciskei experiment showed troubling results for those who claimed to believe in freedom, Leon Louw sought to scale up the model of the business-friendly zone to a reform plan for the whole nation. In 1986 he published South Africa: The Solution, written with his wife, Frances Kendall. The book was one of South Africa’s most successful political titles at the time, selling close to 40,000 copies.

In their book, the couple proposed that South Africa and the Bantustans be fractured into a checkerboard of “cantons” where residents could “vote with their feet” by leaving with their capital whenever they desired. The central government would control no major revenue sources, make no major transfers between cantons and be constitutionally bound to respect private property rights. All education and land would be privatised.

The outcome would be what Louw and Kendall called a “marketplace in politics”. They believed that most cantons would be multiracial – but a key feature of their proposal was that “people of a particular race or ideology can cluster together in ‘national’ or ‘ethnic’ cantons to satisfy their particular preferences and escape the kind of governments they reject”. The freedom of movement would be constitutionally secured but, crucially, the right to settle would not be. In other words, you might take a job in a segregated canton but might not be allowed to live there.

This was precisely how the existing labour market worked in apartheid South Africa, as Black workers moved in and out of white areas for employment but had limited rights of residence, let alone property ownership. For Louw and Kendall, the freedom to privately discriminate was central. They hoped the division of land into many cantons and the decentralisation of control over natural resources would safeguard against policies of racialised revenge by ensuring that no Black government would be able to seize and redistribute resources from the centre. Louw left no doubt about this implication when he told Time magazine: “We want to make it possible to let the tiger – the Black majority – out of the cage without whites being eaten.”

The libertarian solution to government-imposed apartheid was voluntary racial segregation. Louw and Kendall illustrated this in the epilogue to their book, which imagined a near future where their solution had been realised. They prophesied a variety of coexisting political forms, including a canton called Workers Paradise where “everyone was issued with a copy of Mao’s little red book” and racial segregation was reinstituted because Black and white leftist radicals “refused to mix with each other socially”. Another canton was imagined as a “mini Monaco” in which pot, prostitution and pornography were legal, everything was deregulated and traditional land was privatised. A last speculative canton was dubbed Witwaterberg, “South Africa’s radical white separatist canton”, where automation and white labour replaced Black labour altogether and racial covenants ensured that residents remained white only.

In the event, it was only the last one that came to be. In 1990, a group known as the Afrikaner Freedom Front bought a patch of land and buildings in central South Africa, evicted its mixed-race residents and opened the white Boer enclave of Orania the following year. Designs for the settlement dated back to the early 1980s, when Carel Boshoff, head of the thinktank South African Bureau for Racial Affairs, had pitched the so-called Plan Oranje for the establishment of a white homeland. As Boshoff described it at the time, because “white supremacy” was doomed in the long run in a majority Black environment, the best thing to do was withdraw to a white redoubt while continuing economic relations with the surrounding non-white communities. In the 1990s, with Boshoff in residence, Orania took as its logo a small white boy rolling up his sleeves, a gesture signalling a willingness to work – but also, unmistakably, a willingness to fight.

Before Orania was founded, Louw and Kendall wrote that “people laugh at the proposal of Afrikaner separatists … to establish an independent homeland” in the near-desert. But the lack of natural resources should be no problem, they said. An “Afrikaner homeland” just needed a “low-tax or no-tax policy to attract hi-tech, skills-intensive business to the region”. The miniature ethno-state need only become a zone.

Today Orania counts more than 2,000 residents. At the annual meeting of the South African Libertarian Society, which was held there in 2015, Louw jokingly referred to the town as an adaptation of the homeland model to create an “Afrikanerstan”. According to libertarians, the foremost attraction is less its racial segregation than its structure as a private corporation in which residents buy shares. Rather than a mayor, Orania’s leader is a chief executive. Orania also issues its own currency, the ora, and has moved into cryptocurrency and blockchain technology to further insulate itself from the central government.

Orania has gained traction worldwide. In 2019, Australian far right groups were using Orania as a template for creating “Anglo-European enclaves” as bases for a coming race war. In the US, the white nationalist group American Renaissance praised Orania as a place where Afrikaners “could keep white and where they could preserve their language and culture” and “set up a private corporation to run it, with the power to grant residency only to certain approved Afrikaners”.

* * *

On 11 February 1990, footage of Nelson Mandela walking out of the front gates of Victor Verster prison after 27 years of incarceration appeared on television screens across the world. When Mandela spoke from a balcony in Cape Town partially covered with a red Soviet flag, people pressing in and lifted up on shoulders and arms to see him, his message was clear and unambiguous: “Universal suffrage on a common voters roll in a united, democratic and non-racial South Africa is the only way to peace and racial harmony.” The next month, the Ciskei government of Lennox Sebe was overthrown in a coup, with a crowd chanting: “Viva ANC! Viva the South African Communist party!”

The events of the early 90s looked like a refutation of the canton schemes and their fantasy of fragmentation. There would be no drastic redrawing of the maps. The inherited borders of the South African state remained as they were, and the artificial homelands rejoined the unitary nation in 1994. When Mandela won in a free and fair election, he spoke of South Africa as a “rainbow nation at peace with itself and the world”. Historians mark the election as the 20th century’s last act of decolonisation, proof that empire had passed from the world stage in a triumph of the nation state.

But there were signs that the dream of the zone was not going quietly. What had happened in the hinterland of the Eastern Cape, with its clusters of sweatshops, was very modern, and in some ways the future. In 1986 there were only 176 zones globally. Today there are more than 5,400. One of the biggest sites of recent growth? Sub-Saharan Africa, where there are already 200, with 73 more announced for completion. Just north of South Africa, libertarians are consulting on a “charter city” for Zambia. There is always a new fantasy island just over the horizon.

This is an edited extract from Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy, published by Allen Lane on 4 April.

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