Crack-Up Capitalism Chapter 7: Your Own Private Liechtenstein
There is a saying that if you light a cigarette as you enter Liechtenstein from Switzerland, you will still be smoking it when you cross into Austria. That is how small this place is. About the length of Manhattan. A green valley along the Rhine river. And yet, for certain libertarians and market radicals, this tiny country is a model for the future of civilization.
In Chapter 7 of Crack-Up Capitalism by Quinn Slobodian (ISBN: 9781250753908), we learn how Liechtenstein became the ultimate tax haven, how its prince turned it into a libertarian experiment, and why people keep dreaming about “a world of a thousand Liechtensteins.”
A Country That Was Bought With Cash
Here’s the thing about Liechtenstein: it started as a purchase. In the early 1700s, a Viennese court member bought two stretches of land from a bankrupt dynasty and merged them into one principality. He renamed the territory after himself. The buyers never even lived there. Until 1842, none of the owners even visited. They sat in Vienna, four hundred miles away.
When the Habsburg Empire collapsed after World War I, Liechtenstein tied itself to Switzerland and adopted the Swiss franc. The royal family lost more than half its land when Czechoslovakia took their properties.
So this tiny place had to figure out how to survive. Ideas came and went. A lottery. Horse betting. A currency called the “globo.” An alpine Monte Carlo. None worked out. What did work? Becoming a tax haven.
The World’s Largest Safe
The key institution was the trust, a medieval English invention from the Crusades era. Trusts let people hand their property to a confidant to keep it safe from tax collectors. Liechtenstein took this old idea and ran with it.
In 1926, the micro-state passed a law letting foreign companies pretend they were based in this mountain valley. All you needed was a local lawyer as your agent. Registered companies hit twelve hundred by 1932. By the twenty-first century, seventy-five thousand. Accounts were anonymous. Registration in any language. Shares in any currency. A corporation could be a single person, their identity vanishing inside a legal black box.
A journalist wrote in 1938: “Considered as a country, Liechtenstein is much too small to be independent. But considered as a safe, it is a very large one, practically the largest one ever built.”
The capital Vaduz, population a few thousand, was lined with offices of IG Farben, Thyssen, Standard Oil. Liechtenstein also started selling citizenship for $5,500, roughly $110,000 in today’s money. Most new citizens drove in, took the oath, and drove away.
The Client List Gets Interesting
By the late 1970s, Liechtenstein had more companies than citizens and a GDP per capita second only to Kuwait. But here’s the problem: the client list was not exactly clean.
The CIA registered front organizations there during the Congo civil war. Companies used it to dodge sanctions on apartheid South Africa. Nigerian dictator Sani Abacha, newspaper tycoon Robert Maxwell, drug lord Pablo Escobar, dictator Mobutu Sese Seko. All linked to Liechtenstein.
The best story? Ferdinand and Imelda Marcos used Liechtenstein trusts to stash $1 to $5 billion in stolen money. When they needed cash, they sent the phrase “Happy Birthday” to their Swiss banker, who pulled funds from Liechtenstein and routed them through Hong Kong to Manila.
Meanwhile, the country itself was thriving. Tax revenue from shell companies funded industrialization. By the 1980s, Liechtenstein made everything from fake teeth to heating systems. Workers came from neighboring countries but had zero chance of citizenship.
The Prince With a Business Plan
So here’s what happened. The real story of Liechtenstein is not just about money. It is about ideology. And the man behind the ideology was Prince Hans-Adam II.
Born in 1945, Hans-Adam was the first monarch actually raised in the territory. He worked at a London bank, interned at US Congress, went to business school. His father was so short on cash he sold a Leonardo da Vinci painting to pay for the prince’s wedding.
When Hans-Adam took over the country’s finances in 1970, he ran it like a CEO. Banks went from three to fifteen. Branch offices in Zurich, Frankfurt, New York. But he was not just a manager. He was a thinker with a radical idea.
In 1990, he got Liechtenstein into the United Nations. His first speech there was wild. Instead of talking about cooperation and peace, he argued that all nations are temporary. States have “life cycles similar to the human beings who created them,” he said. Trying to keep them alive too long can cause more violence than just letting them die. Borders are arbitrary. People should be allowed to leave.
This was basically anarcho-capitalism delivered from the floor of the UN General Assembly.
The State as Service Provider
Hans-Adam proposed that communities should be able to split off from their countries through referendums. The state should be a “service provider” where citizens are “shareholders.” Everything except defense could go to private companies.
He was not just talking. In 2000, every citizen got a red booklet with his proposed new constitution. It gave the prince massive new powers. But it also included a nuclear option: the people could vote to abolish the monarchy. Any of Liechtenstein’s eleven communes could vote to secede.
When parliament resisted, Hans-Adam threatened to sell the country to Bill Gates and rename it Microsoft. “My ancestors bailed out Liechtenstein when it was bankrupt,” he told the New York Times. “They would have to find someone else rich enough to take our place.”
The revision passed in 2003. Hans-Adam became Europe’s only absolute monarch, but also the only one who built a constitutional exit from both the monarchy and the country itself. The Economist called it “democratic feudalism.”
Why Libertarians Love This Model
For libertarians, Liechtenstein was the perfect argument against the European Union. This tiny place thrived outside the EU with free trade but without free movement of people. Why did anyone need Brussels?
Hans-Adam showed up alongside Euroskeptics. He appeared with the founder of Alternative for Germany (AfD) in 2013. He joined the Hayek Society. At the Ludwig von Mises Institute, he presented ideas alongside people calling for the breakup of Switzerland and the EU.
When the OECD cracked down on tax havens and Liechtenstein got blacklisted for money laundering in 2000, the prince fought back. He called the OECD a “global tax cartel.” He claimed bank secrecy was about saving Jews from the Nazis, which is hard to believe given that IG Farben and Thyssen had operations there during the Nazi era. He compared tax havens to the Underground Railroad. He called Germany the “Fourth Reich” when it investigated his banks.
A 2008 data leak revealed that among Liechtenstein account holders was a German dog named Gunter. That is not a joke.
The Dream That Will Not Stop
Even after crackdowns and leaks, the model kept inspiring people. Hans-Adam funded the Liechtenstein Institute on Self-Determination at Princeton with $12 million, plus a foundation to spread the model worldwide.
One person who took it literally was Daniel Model, a Swiss packaging tycoon and former curling champion. He moved to Liechtenstein, then went further. He issued a “declaration of sovereignty” rejecting membership in any collective he had not personally agreed to. He called democracy “organized theft.” He declared his own state called Avalon, named after a fantasy novel. In 2021, he hosted a conference called Liberty in Our Lifetime, dedicated to finding places to escape the state.
The question at the heart of this chapter is simple: “Are there possibilities to opt out?”
That question keeps pulling people from London to the Alps to Dubai. The search for a personal Liechtenstein never stops.