Though he is the first Hindu prime minister by faith, Rishi Sunak is a spiritual child of Silicon Valley. By his own account, his time there “changed [his] life”, “living and breathing that entrepreneurial culture”. He described his approach to being chancellor of the Exchequer as a “start-up Treasury mentality”. Some have described him as the “first Californian prime minister”.
Sunak had to travel some distance to arrive at his tech-bro futurist Mecca, but he grew up at the right time for it to happen. Born in Southampton in 1980, he attended Stroud and Winchester schools then went to Lincoln College, Oxford to study philosophy, politics and economics (PPE) as the dot-com boom was cresting. After Oxford, he did a stint at Goldman Sachs before moving to Palo Alto around the same time as Mark Zuckerberg. At Stanford University, he had his greatest stroke of fortune meeting Akshata Murty, daughter of Indian tech billionaire NR Narayana Murthy, and later marrying her. After finishing his MBA in 2006, Sunak returned to the UK and worked for two hedge funds before entering politics as the MP for Richmond, Yorkshire, in 2015.
The Stanford professor whom Sunak remembered best was Paul Romer, known in recent years for winning the Nobel Prize in 2018, but who made headlines in the late 2000s for his idea of “charter cities”. These are patches of territory that nations would relinquish to foreign countries for investment and development, in the hope of creating replicas of financial centres such as Hong Kong. (The only place charter cities have come close to happening is under an authoritarian government in Honduras.)
Sunak namechecked Romer in his speech as chancellor in early 2022, but did not mention his old professor’s attraction to the idea of ring-fencing territory and introducing different laws and fewer regulations to attract mobile capital. This was curious because Sunak had written a major report in 2016 on so-called freeports, which became a core part of the Conservative Party’s recent levelling up agenda.
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Sunak’s admirers were quick to remind him of the charms of the extraterritorial zone. A think tanker at the right-wing Policy Exchange – where Sunak worked in 2014 as the inaugural head of the Black and Ethnic Minority Unit – wrote that the chancellor should return to the idea of charter cities. In the Times, the economics journalist Ed Conway proposed that Sunak should reduce his proposals to a few big ideas, including the creation of “autonomous city states”.
The freeports that have been central to Sunak’s vision were hardly new, nor were they the invention of his old professor Paul Romer. Their lineage stretches back to the early Thatcher years. But both Sunak’s attraction to fragmenting territory in order to kickstart a more dynamic capitalism and his fanboyish enthusiasm for Silicon Valley has led some critics to make dire predictions about his plans for the country.
It is unlikely that Sunak will be able to realise his dreams of special economic zones and autonomous city states even as the Prime Minister. But he will face the consequences of the UK’s general political and economic dissolution since the vote to leave the European Union in 2016.
What territorial fragmentation might look like was previewed in March this year when 800 members of staff at P&O Ferries were sacked overnight. The owner of P&O, the Dubai-based DP World, was a major prospective partner for Britain in its post-EU ventures. The mass termination was legally possible because the ferries, though sailing from British waters, were flagged offshore, in Bermuda, the Bahamas, and Cyprus. Even if independent city-states springing up in the English Midlands are a fantasy, these forms of deepening economic insecurity and exposure to risk are all too real in this era of what I call crack-up capitalism.
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It was in 1997 that James Dale Davidson, an American venture capitalist, and William Rees-Mogg, a businessman and former editor of the Times, published The Sovereign Individual, a book that has had a long afterlife. It had a mercenary subtitle: How to Survive and Thrive During the Collapse of the Welfare State.
The book earned middling reviews on publication, including digs at Rees-Mogg’s previous failed prophecies. “Rees-Mogg is famous for many things,” wrote the Guardian, “but an unfortunate feature of his more recent career as a columnist is that he famously gets things wrong.” These included his predictions that Colin Powell would become America’s first black president, and that Margaret Thatcher would survive the 1990 coup against her. The Telegraph quipped that the only consolation for Rees-Mogg was that it would be “some years” before his “attempt at soothsaying” in The Sovereign Individual could be disproved.
But the book found a cult following. It is regularly cited by tech leaders as one of their favourite titles and has remained in print for decades. In 2020, an anniversary edition was published with a preface by one of its most ardent fans, Peter Thiel, who said its approach to “megapolitical” long trends continued to inform his thinking. The book has been read as a way to decode the thought-world of Big Tech barons such as Thiel and libertarian Brexiteers like its Rees-Mogg’s son Jacob, who was, until recently, the UK business secretary.
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The Sovereign Individual was an early example of business book radicalism, merging apocalypticism with appeals to investor savvy in a way now familiar in the era of neoliberal populist politics. It pioneered an early appeal to scientific difference that anticipated the fusion of libertarianism and racism that would come to be called the alt-right. It also foresaw the rise of super-rich couples such as Sunak and Murty, who are able to live beyond the constraint of individual nation states and can pick and choose laws based on preference and the bottom line. Until recently, Murty enjoyed non-domiciled status in the UK, keeping her fortune sheltered from British tax law.
In 1997, the Dow Jones had just cleared 6,000 points (it’s now over 30,000). Google did not yet exist and Zuckerberg was a pre-teen. The tech bubble was starting to inflate but the index that listed tech stocks, the Nasdaq, would still quadruple in value before collapsing three years later. In the UK Tony Blair’s New Labour won a landslide general election victory, while in the US Bill Clinton was beginning his second term as president.
Commentary on the internet at the time was dominated by the boosterish optimism of Wired magazine. In 1992, its founding editor Kevin Kelly wrote a defining book of the era. Out of Control: The New Biology of Machines, Social Systems, and the Economic World praised the wonders of complexity and the adaptability, creativity and resilience of the “hive mind” emerging online.
Like other futurist reflections at the end of the millennium, The Sovereign Individual foresaw the disruptive effects of new information communication technologies. It anticipated the continuing rise of east Asian enclaves like Singapore and Taiwan, which were producing the components at the heart of new computers, such as microchips and semiconductors. In their book, Davidson and Rees-Mogg emphasised human capital and the need for education to catch up with the shifting demands of high-tech production and the service economy.
In other words, The Sovereign Individual was almost a perfect Clinton-era tract, at home among the paeans to the New Economy. In 1997, the West was at the beginning of what Wired called the Long Boom. The magazine featured a globe on its cover fashioned as a CGI smiley face with a flower drooping from its mouth. “We’re facing 25 years of prosperity, freedom and a better environment for the whole world,” the lead article boasted.
Wired propagated versions of what could be called the commune story of the internet. Best told by the communications scholar Fred Turner, it finds the origins of Silicon Valley in the failure of the hippie settlements of the 1970s, after which people such as Stewart Brand, publisher of the counterculture Whole Earth Catalog, opted to build their utopias in the clean space of computer code rather than the stubborn muck of the outdoors. A foundational text of the commune story was “A Declaration of the Independence of Cyberspace”, written by the former Grateful Dead lyricist John Perry Barlow and released at the World Economic Forum in Davos in 1996. Barlow praised Cyberspace as the “new home of the Mind”.
Casting the internet as a kind of psychedelic dreamland, Barlow warned that “legal concepts of property, expression, identity, movement and context do not apply to us. They are all based on matter, and there is no matter here.” But libertarians further to the right distrusted the commune story. They made the common-sense observation that matter did still apply in the creation of a digitally mediated world and that property would, too. In fact, if you could ensure property was beyond the control of the regulating state, it could be even more inviolable online than off.
In The Sovereign Individual, Davidson and Rees-Mogg were frank that the rewards of the new paradigm would be distributed unevenly. The internet would not realise the egalitarian dream of the 1960s counter- cultural generation but harden into a new hierarchy based on merit.
The book professed no faith that the internet would make life better for all or even for most people. On the contrary, the digital possibilities of escape for the wealthy and the talented into cyberspace would undercut the very conditions of the welfare state. “You can’t tax those you can’t catch,” as Rees-Mogg argued in a Times column of 1995.
The Long Boom in the West was not going to lift all boats up with the rising tide. It was going to propel a few wealthy exceptions into the stratosphere as the majority of humanity sank and drowned.
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The Sovereign Individual was not the duo’s first collaboration. A decade earlier Davidson and Rees-Mogg published Blood in the Streets: Investment Profits in a World Gone Mad and, four years later, The Great Reckoning: How the World Will Change in the Depression of the 1990s. The books were an outgrowth from their monthly newsletter, “Strategic Investment”. They also ran a 24-hour investment-advice phone service called Goldline.
Investment newsletters were big money in the 1980s. Long before founding the leading anti-immigration website VDare, the nativist Peter Brimelow wrote his first book on the “Wall Street gurus” promising to reveal “how you can profit from investment newsletters”. Rees-Mogg and Davidson were writing in this slipstream. Both came from right-wing politics, though of different persuasions. Rees-Mogg, then 69, was an establishment grandee who had recently challenged the legality of the Maastricht Treaty through a 1993 court case backed by the Eurosceptic billionaire James Goldsmith. Rees-Mogg and Goldsmith were business partners and non-executive directors of the investment company St James’s Place.
Months before The Sovereign Individual was published, Goldsmith entered UK politics directly, donating £20m to the Referendum Party, launched in October 1994. It was a single-issue anti-EU party with little formal structure or organisation beyond its billionaire backing and the conviction that, as one journalist put it, “British democracy could be destroyed by European bureaucracy.” Its most high-profile candidate was Margaret Thatcher’s former economic adviser, the academic Alan Walters, and among its young volunteers was Priti Patel, later home secretary in the Boris Johnson government.
Goldsmith was the archetype of the plutocratic populist. Even as he railed against free trade and denounced Europe, he relied on a series of havens to protect his own wealth from taxation. As he launched the Referendum Party, he was living in a grand London home at Ham Common that was owned by a company in the Cayman Islands. One of the party’s other candidates, Lord McAlpine, lived in the tax haven of Monaco.
Rees-Mogg’s vision for Britain outside of Europe was to place it alongside such destinations. In the coming “age of tax havens”, he wrote in 1995, Great Britain as an island would find its competitors in “Switzerland, Lichtenstein, Luxembourg, Bermuda, the Channel Islands, Singapore or Hong Kong”. Britain should “see herself as an emerging market”, he wrote, meaning it needed light regulation, low state spending and low taxes.
The Sovereign Individual supercharged this vision by taking it further into the future and combining it with an appeal to natural hierarchies and social Darwinism. Some of the book’s would-be scientific twist came courtesy of Rees-Mogg’s co-author, James Dale Davidson, a long-time libertarian who started the magazine The Individualist in 1970 and who lobbied Washington as the head of the National Taxpayers Union (NTU). In 1971, the NTU ran a full-page ad in the Washington Post comparing Richard Nixon to Mussolini for introducing price controls.
Alongside a vision of the fragmenting nation state, Davidson appealed to what would later be described as culture-war issues. He urged libertarians not to join “the agitation against nature” and warned especially of the “assault” on “heterosexual love”. “The mounting militancy of homosexuals, especially in the women’s movement,” he wrote, “testifies to this effort to reduce mankind to an indifferent, amorphous mass”. He wrote that “biological reality, and not ‘brainwashing’ or environmental control, is the prime factor informing man’s existence”.
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The authors of The Sovereign Individual enthused about the internet’s potential to enable exit from states for those with the means and the hardwired intelligence to do so. Davidson and Rees-Mogg began with amateur sociobiology in the language of epigenetics. Evolution could happen more quickly because humans could deploy their intelligence to make choices, they wrote: “culture changes human society as genes change other species”. People acquired attachment to one another within the nation, which commanded the “emotional loyalty” that kinship once did. The problem with the nation state was that it worked against the dictates of evolutionary advance and survival.
“Unlike the situation faced by hunter-gatherers in the Stone Age,” they wrote, “the main parasite and predator upon the individual at the end of the 20th century was not likely to be the ‘outsider,’ the foreign enemy, but rather the presumed embodiment of the ‘in-group,’ the local nation state itself.” In an era of hypermobility, it served evolutionary interests to escape the constraints of the nation. The advances of “the cybereconomy” – digital money, anonymised transactions over the internet – made it possible for humans “to express our most novel genetic inheritance – the intelligence that comes along with our outsized brains”.
Digitisation allowed for exit by the chosen few. “In the next century,” they predicted, “we shall witness the creation of a world superclass, perhaps of 500 million very rich people, with 100 million being rich enough to emerge as sovereign individuals.”
The authors picked up the category of the “cognitive elite” from the authors Charles Murray and Richard Herrnstein whose 845-page treatise on intelligence and class structure in the United States, The Bell Curve, spent 15 weeks on the New York Times bestseller list in 1994, peaking at number two. This new cognitive elite would operate the world remotely, spatially distanced from the low-IQ masses now considered dead weight.
At its heart, The Sovereign Individual was a paean to this special gifted class. As a Rees-Mogg column in the Times was titled, “it’s the elite who matter”. In the appeal to evolutionary psychology and IQ, the authors anticipated the rising popularity of thinkers such as Richard Dawkins, Steven Pinker and Jordan Peterson, whose ideas dribbled out into the algae bloom of podcasts, YouTube rants and diverse social media posts in the “manosphere” and elsewhere in the 2010s.
What does it mean that a tract about naturalised inequality was presented in The Sovereign Individual as an investment advice guide? Investment advice is a peculiar genre. It is premised on the idea that your access to privileged information must make you special. By definition, it cannot be democratised. If everyone has the edge, the edge vanishes. And yet, when selling a book, one wants as wide an audience as possible. At some point, the sign of success is that everyone would be granted the previously secret knowledge – the One Weird Trick of spam internet ads. The only ones left would be the rubes whose money was waiting to be taken, alternatively defined as the piglets attached to the teats of the welfare state.
Rees-Mogg and Davidson were pioneers of investment advice as a full spectrum world-view and theory of history. The baton was taken up later by the Bridgewater hedge fund manager Ray Dalio in bestselling broad-brush portraits of the rise and fall of nations, alongside cable and internet prophets such as American shock jocks Glenn Beck and Alex Jones, who delivered theories of history interspersed with advertisements for gold bars and survival kits. The standard disclaimer with such material reads: this is not investment advice. It can’t be if it is a theory of God, the universe, and everything.
As an ideology, investment guides offer a satisfying form of materialism because they cash out as real, countable gains – or losses. This is a political philosophy with a dashboard. Where speculation and playing the market was once the province of a small group of society, the rise of retail investment apps such as Robinhood and the mainstreaming of cryptocurrency has spread the obsession out to ever broader circles. How much are you up? As holders of cryptocurrency ask each other as a greeting, “How’s your bag?”
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On 25 October, Britain got a “two-fer”, as they say in America: both its first Silicon Valley prime minister and its first hedge fund prime minister. During the global financial crisis of 2008, Rishi Sunak had been working for the Children’s Investment Fund (TCI), a multibillion-pound firm that made a fortune on the tumult in the market, qualifying him for inclusion in the ranks of sovereign individuals. Sunak and his wife are placed at 222 on the Sunday Times Rich List, with declared assets of £730m – around twice as much as the Queen on her death.
Yet his profiteering in a moment of peril did nothing to erode Sunak’s legitimacy in the eyes of the electorate, nor did his wife’s avoidance of UK taxes – a poll on 26 October suggested half of voters trusted him with the economy.
This is the nature of the world three decades after the publication of The Sovereign Individual : lift-off and escape by a chosen few hundred thousand, yes, but, more importantly, the sovereign individual as mass politics. The swarm not as collective intelligence but as individual investment play. Sovereign individuals are no longer exceptions or aberrations, they are simply the horizon of the political imagination.
The zeitgeist has caught up with the cynicism of James Dale Davidson and William Rees-Mogg. Nobody now thinks the Long Boom will lift all ships. The best hope is to cling to the side of the nearest lifeboat.
Quinn Slobodian is a professor of the history of ideas at Wellesley College and author of the forthcoming book “Crack-Up Capitalism: Market Radicals and the Dream of a World Without Democracy” (Penguin)
This article was originally published on 2 November 2022.
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This article appears in the 02 Nov 2022 issue of the New Statesman, The Meaning of Rishi Sunak