In Crack-Up Capitalism, historian Quinn Slobodian offers a compelling yet sobering analysis of a global trend that should be of interest to policymakers in Papua New Guinea and the Pacific more broadly. The book explores the rise of economic zones where capitalism is decoupled from democracy—a phenomenon increasingly visible in the developing world.

Slobodian focuses on the deliberate creation of “exceptional zones”—tax havens, special economic zones (SEZs), and digitally governed enclaves—designed to shield wealth and business operations from the regulatory frameworks of nation-states. These are not simply places of deregulation. Rather, they are carefully engineered legal environments where property rights are preserved, but democratic accountability is minimized, if not entirely absent.

The argument is provocative: capitalism is not collapsing; it is breaking away. And it is doing so through spatial fragmentation—what Slobodian calls a “crack-up” of traditional state structures. Within these fragmented zones, corporations, not governments, define the rules. Many of these spaces exist within the boundaries of sovereign states but operate as virtual sovereignties of their own.

For Papua New Guinea, this raises serious questions. The country has actively pursued Special Economic Zones (SEZs) over recent years, with support from foreign investors and development partners. These zones are intended to attract investment, create jobs, and promote export-led growth. But as Crack-Up Capitalism shows, the global history of SEZs is mixed—and the risk is real that these spaces evolve into legal enclaves that erode state authority and deliver limited benefits to host communities.

Slobodian points to Honduras’ ZEDEs (Zones for Employment and Economic Development) as a cautionary tale. These were designed as investor-run cities with their own private governance structures. In practice, they bypassed democratic processes, sparked social unrest, and raised concerns about sovereignty and land rights.

PNG’s own SEZ framework has seen similar criticisms. Questions remain over transparency, land acquisition, environmental safeguards, and the fiscal trade-offs of offering tax holidays to large investors. If the “crack-up” model takes hold, PNG could find itself hosting enclaves that are integrated into global markets but have the potential to be disconnected from national development goals.

One of the book’s strengths is its historical grounding. Slobodian traces the intellectual origins of these market experiments to libertarian thinkers who view democracy as an impediment to market freedom. This is not a conspiracy theory—it is a coherent ideology with real-world traction, particularly among tech billionaires, law firms, and multinational investors.

For PNG policymakers, the takeaway is clear. Legal design matters. SEZs, freeports, and investment enclaves must not become spaces where the rule of law is suspended in favour of capital. Transparency, social safeguards, and robust parliamentary oversight are essential. Economic growth is welcome—but not at the expense of sovereignty, inclusion, or long-term resilience.

Crack-Up Capitalism is an important and timely book. It challenges us to rethink the assumption that capitalism and democracy naturally go hand in hand. In reality, capital can thrive without democracy—but the question is whether citizens and states can. As PNG navigates its development path, this book is both a warning and a guide: how we design our economic institutions today will shape not only our markets but also our political future.