Saturday, December 01, 2007

Disaster Capitalism and Democracy: Not Exactly Perfect Together

For those of you who have not gotten around to reading Naomi Klein's new book, The Shock Doctrine: The Rise of Disaster Capitalism (which includes me), Nicole Belle has a short piece about it over at Crooks and Liars.

The book's premise is that the Bush administration's decision to exploit the chaos and public fear after 9/11 to sneak in policies that could not have gotten off the drawing board before that catastrophic event is an example of a phenomenon that is far from new in history:

Naomi Klein's The Shock Doctrine advances a truly unnerving argument: historically, while people were reeling from natural disasters, wars and economic upheavals, savvy politicians and industry leaders nefariously implemented policies that would never have passed during less muddled times. As Klein demonstrates, this reprehensible game of bait-and-switch isn't just some relic from the bad old days. It's alive and well in contemporary society, and coming soon to a disaster area near you.

"At the most chaotic juncture in Iraq'' civil war, a new law is unveiled that will allow Shell and BP to claim the country's vast oil reserves… Immediately following September 11, the Bush Administration quietly outsources the running of the 'War on Terror' to Halliburton and Blackwater… After a tsunami wipes out the coasts of Southeast Asia, the pristine beaches are auctioned off to tourist resorts… New Orleans residents, scattered from Hurricane Katrina, discover that their public housing, hospitals and schools will never be re-opened." Klein not only kicks butt, she names names, notably economist Milton Friedman and his radical Chicago School of the 1950s and 60s which she notes "produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today." Stand up and take a bow, Donald Rumsfeld.

And now, Klein tells us, the Bush administration has taken steps to institutionalize the disaster capitalism model:
Last summer, in the lull of the August media doze, the Bush Administration's doctrine of preventive war took a major leap forward. On August 5, 2004, the White House created the Office of the Coordinator for Reconstruction and Stabilization, headed by former US Ambassador to Ukraine Carlos Pascual. Its mandate is to draw up elaborate "post-conflict" plans for up to twenty-five countries that are not, as of yet, in conflict. According to Pascual, it will also be able to coordinate three full-scale reconstruction operations in different countries "at the same time," each lasting "five to seven years."

Fittingly, a government devoted to perpetual pre-emptive deconstruction now has a standing office of perpetual pre-emptive reconstruction.

Gone are the days of waiting for wars to break out and then drawing up ad hoc plans to pick up the pieces. In close cooperation with the National Intelligence Council, Pascual's office keeps "high risk" countries on a "watch list" and assembles rapid-response teams ready to engage in prewar planning and to "mobilize and deploy quickly" after a conflict has gone down. The teams are made up of private companies, nongovernmental organizations and members of think tanks--some, Pascual told an audience at the Center for Strategic and International Studies in October, will have "pre-completed" contracts to rebuild countries that are not yet broken. Doing this paperwork in advance could "cut off three to six months in your response time."

Needless to say, there's a lot of money in this:
... Rapid response to wars and natural disasters has traditionally been the domain of United Nations agencies, which worked with NGOs to provide emergency aid, build temporary housing and the like. But now reconstruction work has been revealed as a tremendously lucrative industry, too important to be left to the do-gooders at the UN. So today it is the World Bank, already devoted to the principle of poverty-alleviation through profit-making, that leads the charge.

And there is no doubt that there are profits to be made in the reconstruction business. There are massive engineering and supplies contracts ($10 billion to Halliburton in Iraq and Afghanistan alone); "democracy building" has exploded into a $2 billion industry; and times have never been better for public-sector consultants--the private firms that advise governments on selling off their assets, often running government services themselves as subcontractors. (Bearing Point, the favored of these firms in the United States, reported that the revenues for its "public services" division "had quadrupled in just five years," and the profits are huge: $342 million in 2002--a profit margin of 35 percent.)

But shattered countries are attractive to the World Bank for another reason: They take orders well. After a cataclysmic event, governments will usually do whatever it takes to get aid dollars--even if it means racking up huge debts and agreeing to sweeping policy reforms. And with the local population struggling to find shelter and food, political organizing against privatization can seem like an unimaginable luxury.

It's not exactly rocket science that the combination Klein describes -- massive regional or national disasters, and pure Friedmanian free market capitalism -- does not produce democracy. It can't. The kind of value system that exploits the potential for profit in circumstances where human beings are at their most fragile, confused, and vulnerable is antithetical to democratic values:
... I promise you, [Klein's book] will change how you look at government policy and responses. It also finally sealed forever, for me at least, the coffin of the utter bollocks of Friedman economics. Listen to me carefully, you free market fanatics: FRIEDMAN. POLICIES. DO. NOT. WORK. PERIOD. His version of ‘free market economics’ STIFLES democracy. They create an oligarchy that is the opposite of democracy.

Here's a thought: Maybe an oligarchy is exactly what free market fanatics want.


gator80 said...

Actually a free market is what the free market fanatics want.

Kathy said...

Of course; why wouldn't they? Everyone wants something for nothing. But taking something without paying for it is called stealing. And it upsets the people who are being stolen from.

The "free" market is only free for the people doing the stealing.

gator80 said...

I'm not sure what definition of "free market" you're using. Mine does not involve getting something for nothing, nor does it involve stealing. If you don't even understand what proponents of free markets actually believe, how can you have an opinion as to whether they are desirable?

Kathy said...

Gator, you addressed your initial comment as a response specifically to my post on disaster capitalism, which involves taking advantage of catastrophic events like natural disasters and war to create markets and money-making opportunities for American corporate interests and investments on terms vastly more advantageous than they would be in less chaotic and tragic conditions, with people at their most vulnerable.

It's happening in Iraq right now. American investors and business interests get the most favorable terms and the most lucrative opportunities to make money off of a war that the U.S. started, and that has killed, directly and indirectly, hundreds of thousands of Iraqis and turned 4.2 million Iraqis into refugees. It's not Iraqis getting those huge reconstruction projects; it's already wealthy Americans. Iraqis get the invasion and the death; Americans get the billions of dollars of profit.

And the reason the U.S. can negotiate such favorable terms for its corporate interests is because Maliki is so absolutely, abjectly *desperate* to keep U.S. troops in his country to babysit his government and keep it from being overthrown.

If that's not the worst kind of extortion and theft, I don't know what is.

gator80 said...


Actually I was specifically addressing your closing comment that "Maybe an oligarchy is exactly what free market fanatics want," a statement that I believe is not true.

Your most recent response, while passionate, does not address my question of how you define a free market. I think you are confusing politics with economics. The examples you cite would not be considered free markets by any rational observer.

Free market economics are truly free and voluntary exchanges. They are the reason the standard of living of humanity has increased so dramatically. Look around you. Virtually everything you see – your PC, your furniture, the clothes you wear, the food you eat – is the result of your uncoerced decision to purchase them from suppliers who generally have no guarantee that anyone will do so. They have to make them attractive enough to survive the competitive process. That is a good thing!

Of course it is not a perfect system. Milton Friedman, who is trashed unfairly in Klein’s book, was above all things intellectually honest. He recognized the strengths and weaknesses of free markets (as well as alternative economics systems). To me that is an example to follow – to be intellectually honest enough to have a reasonable discussion.