The Age of Disaster Capitalism
The Age of Disaster Capitalism
The following is excerpted from Naomi Klein's recently published book, The Shock Doctrine: The Rise of Disaster Capitalism:
As George Bush and his cabinet took up their posts in January 2001, the need for new sources of growth for US corporations was an urgent matter. With the tech bubble now officially popped and the DowJones tumbling 824 points in their first two and half months in office, they found themselves staring in the face of a serious economic downturn. John Maynard Keynes had argued that governments should spend their way out of recessions, providing economic stimulus with public works. Bush's solution was for the government to deconstruct itself - hacking off great chunks of the public wealth and feeding them to corporate
For a while, that even seemed to be the case." September 11 has changed everything," said Ed Feulner, old friend of Milton Friedman, the guru of unfettered capitalism and president of the Heritage Foundation, 10 days after the attack, making him one of the first to utter the fateful phrase. Many naturally assumed that part of that change would be a re-evaluation of the radical anti-state agenda that Feulner and his ideological allies had been pushing for three decades, at home and around the world. After all, the nature of the September 11 security failures exposed the results of more than 20 years of chipping away at the public sector and outsourcing government functions to profit-driven corporations. Much as the flooding of New Orleans exposed the rotting condition of public infrastructure, the attacks pulled back the curtain on a state that had been allowed to grow dangerously weak: radio communications for the New York City police and firefighters broke down in the middle of the rescue operation, air-traffic controllers didn't notice the off-course planes in time, and the attackers had passed through airport security checkpoints staffed by contract workers, some of whom earned less than their counterparts at the food court.
The first major victory of the Friedmanite counter-revolution in the
On September 10, as long as flights were cheap and plentiful, none of that seemed to matter. But on September 12, putting $6-an-hour contract workers in charge of airport security seemed reckless. Then, in October, envelopes with white powder were sent to lawmakers and journalists, spreading panic about the possibility of a major anthrax outbreak. Once again, 90s privatisation looked very different in this new light: why did a private lab have the exclusive right to produce the vaccine against anthrax? Had the federal government signed away its responsibility to protect the public from a major public health emergency? Furthermore, if it was true, as media reports kept claiming, that anthrax, smallpox and other deadly agents could be spread through the mail, the food supply or the water systems, was it really such a good idea to be pushing ahead with Bush's plans to privatise the postal service? And what about all those laid-off food and water inspectors - could somebody bring them back?
The backlash against the pro-corporate consensus only deepened in the face of new scandals such as that of Enron. Three months after the 9/11 attacks, Enron declared bankruptcy, leading thousands of employees to lose their retirement savings while executives acting on insider knowledge cashed in. The crisis contributed to a general plummeting of faith in private industry to perform essential services, especially when it came out that it was Enron's manipulation of energy prices that had led to the massive blackouts in
While CEOs were falling from their pedestals, unionised public sector workers - the villains of Friedman's counter-revolution - were rapidly ascending in the public's estimation. Within two months of the attacks, trust in government was higher than it had been since 1968 - and that, remarked Bush to a crowd of federal employees, is "because of how you've performed your jobs". The uncontested heroes of September 11 were the blue-collar first responders - the
When Bush stood with the firefighters and rescue workers at Ground Zero on September 14 he was embracing some of the very unionised civil servants that the modern conservative movement had devoted itself to destroying. Of course, he had to do it (even Dick Cheney put on a hard hat in those days), but he didn't have to do it so convincingly. Through some combination of genuine feeling on Bush's part and the public's projected desire for a leader worthy of the moment, these were the most moving speeches of Bush's political career.
For weeks after the attacks, the president went on a grand tour of the public sector - state schools, firehouses and memorials, the Centres for Disease Control and Prevention - embracing and thanking civil servants for their contributions and humble patriotism. He praised not only emergency services personnel but teachers, postal employees and healthcare workers. At these events, he treated work done in the public interest with a level of respect and dignity that had not been seen in the
But far from shaking their determination to weaken the public sphere, the security failures of 9/11 reaffirmed in Bush and his inner circle their deepest ideological (and self-interested) beliefs - that only private firms possessed the intelligence and innovation to meet the new security challenge. Although it was true that the White House was on the verge of spending huge amounts of taxpayer money to launch a new deal, it would be exclusively with corporate
What happened in the period of mass disorientation after the attacks was, in retrospect, a domestic form of economic shock therapy. The Bush team, Friedmanite to the core, quickly moved to exploit the shock that gripped the nation to push through its radical vision of a hollow government in which everything from war fighting to disaster response was a for-profit venture.
It was a bold evolution of shock therapy. Rather than the 90s approach of selling off existing public companies, the Bush team created a whole new framework for its actions - the war on terror - built to be private from the start. This feat required two stages. First, the White House used the omnipresent sense of peril in the aftermath of 9/11 to dramatically increase the policing, surveillance, detention and war-waging powers of the executive branch - a power-grab that the military historian Andrew Bacevich has termed "a rolling coup". Then those newly enhanced and richly funded functions of security, invasion, occupation and reconstruction were immediately outsourced, handed over to the private sector to perform at a profit.
Although the stated goal was fighting terrorism, the effect was the creation of the disaster capitalism complex - a fully fledged new economy in homeland security, privatised war and disaster reconstruction tasked with nothing less than building and running a privatised security state, both at home and abroad. The economic stimulus of this sweeping initiative proved enough to pick up the slack where globalisation and the dotcom booms had left off. Just as the internet had launched the dotcom bubble, 9/11 launched the disaster capitalism bubble. "When the IT industry shut down, post-bubble, guess who had all the money? The government," said Roger Novak of Novak Biddle Venture Partners, a venture capitalism firm that invests in homeland security companies. Now, he says, "Every fund is seeing how big the trough is and asking, 'How do I get a piece of that action?'"
It was the pinnacle of the counter-revolution launched by Friedman. For decades, the market had been feeding off the appendages of the state; now it would devour the core.
Bizarrely, the most effective ideological tool in this process was the claim that economic ideology was no longer a primary motivator of
And so, in November 2001, just two months after the attacks, the department of defence brought together what it described as "a small group of venture capitalist consultants" with experience in the dotcom sector. The mission was to identify "emerging technology solutions that directly assist in the
The department of homeland security, as a brand-new arm of the state created by the Bush regime, is the clearest expression of this wholly outsourced mode of government. As Jane Alexander, deputy director of the research wing of the department of homeland security, explained, "We don't make things. If it doesn't come from industry, we are not going to be able to get it."
Another is Counterintelligence Field Activity (Cifa), a new intelligence agency created under Donald Rumsfeld that is independent of the CIA. This parallel spy agency outsources 70% of its budget to private contractors; like the department of homeland security, it was built as a hollow shell. As Ken Minihan, former director of the National Security Agency, explained, "Homeland security is too important to be left to the government." Minihan, like hundreds of other Bush administration staffers, has already left his government post to work in the burgeoning homeland security industry, which, as a top spy, he helped create.
Every aspect of the way the Bush administration has defined the parameters of the war on terror has served to maximise its profitability and sustainability as a market - from the definition of the enemy to the rules of engagement to the ever-expanding scale of the battle. The document that launched the department of homeland security declares, "Today's terrorists can strike at any place, at any time, and with virtually any weapon," which conveniently means that the security services required must protect against every imaginable risk in every conceivable place at every possible time. And it's not necessary to prove that a threat is real for it to merit a full-scale response - not with Cheney's famous "1% doctrine", which justified the invasion of
Through all its various name changes - the war on terror, the war on radical Islam, the war against Islamofascism, the third world war, the long war, the generational war - the basic shape of the conflict has remained unchanged. It is limited by neither time nor space nor target. From a military perspective, these sprawling and amorphous traits make the war on terror an unwinnable proposition. But from an economic perspective, they make it an unbeatable one: not a flash-in-the-pan war that could potentially be won but a new and permanent fixture in the global economic architecture.
That was the business prospectus that the Bush administration put before corporate
In a remarkably short time, the suburbs ringing Washington, DC became dotted with grey buildings housing security "start-ups" and "incubator" companies, hastily thrown together operations where, as in late-90s Silicon Valley, the money came in faster than the furniture could be assembled. Whereas in the 90s the goal was to develop the killer application, the "next new new thing", and sell it to Microsoft or Oracle, now it was to come up with a new "search and nail" terrorist-catching technology and sell it to the department of homeland security or the Pentagon. That is why, in addition to the start-ups and investment funds, the disaster industry also gave birth to an army of new lobby firms promising to hook up new companies with the right people on Capitol Hill - in 2001, there were two such security-oriented lobby firms, but by mid-2006 there were 543. "I've been in private equity since the early 90s," Michael Steed, managing director of the homeland security firm Paladin told Wired, "and I've never seen a sustained deal flow like this."
Like the dotcom bubble, the disaster bubble is inflating in an ad-hoc and chaotic fashion. One of the first booms for the homeland security industry was surveillance cameras, 30m of which have been installed in the
This development created another problem, because facial recognition software can really make positive IDs only if people present themselves front and centre to the cameras, which they rarely do while rushing to and from work. So another market was created for digital image enhancement. Salient Stills, a company that sells software to isolate and enhance video images, started by pitching its technology to media companies, but it turned out that there was more potential revenue from the FBI and other law-enforcement agencies. And with all the snooping going on - phone logs, wire-tapping, financial records, mail, surveillance cameras, web surfing - the government is drowning in data, which has opened up yet another massive market in information management and data mining, as well as software that claims to be able to "connect the dots" in this ocean of words and numbers and pinpoint suspicious activity.
In the 90s, tech companies endlessly trumpeted the wonders of the borderless world and the power of information technology to topple authoritarian regimes and bring down walls. Today, inside the disaster capitalism complex, the tools of the information revolution have been flipped to serve the opposite purpose. In the process, mobile phones and web surfing have been turned into powerful tools of mass state surveillance by increasingly authoritarian regimes, with the cooperation of privatised phone companies and search engines, whether it's Yahoo assisting the Chinese government to pinpoint the location of dissidents or AT&T helping the US National Security Agency to wiretap its customers without a warrant (a practice that the Bush administration claims it has discontinued). The dismantling of borders, the great symbol and promise of globalisation, has been replaced with the exploding industry of border surveillance, from optical scanning and biometric IDs to the planned hi-tech fence on the border between
As hi-tech firms have jumped from one bubble to another, the result has been a bizarre merger of security and shopping cultures. Many technologies in use today as part of the war on terror - biometric identification, video surveillance, web tracking, data mining - had been developed by the private sector before September 11 as a way to build detailed customer profiles, opening up new vistas for micromarketing. When widespread discomfort about big-brother technologies stalled many of these initiatives, it caused dismay to both marketers and retailers. September 11 loosened this log jam in the market: suddenly the fear of terror was greater than the fear of living in a surveillance society. So now, the same information collected from cash cards or "loyalty" cards can be sold not only to a travel agency or the Gap as marketing data but also to the FBI as security data, flagging a "suspicious" interest in pay-as-you-go mobile phones and Middle Eastern travel.
As an exuberant article in the business magazine Red Herring explained, one such program "tracks terrorists by figuring out if a name spelled a hundred different ways matches a name in a homeland security database. Take the name Mohammad. The software contains hundreds of possible spellings for the name, and it can search terabytes of data in a second." Impressive, unless they nail the wrong Mohammad, which often seems to happen, from
This potential for error is where the incompetence and greed that have been the hallmark of the Bush years, from
Anyone can be blocked from flying, denied an entry visa to the
If the suspect is taken, as a result, to GuantÃ¡namo, he may well end up in the new 200-person maximum-security prison constructed by Halliburton. If he is a victim of the CIA's "extraordinary rendition" programme, kidnapped off the streets of
Once the prisoners arrive at the destination, they face interrogators, some of whom will not be employed by the CIA or the military but by private contractors. According to Bill Golden, who runs the job website IntelligenceCareers.com, "Over half of the qualified counter-intelligence experts in the field work for contractors." If these freelance interrogators are to keep landing lucrative contracts, they must extract from prisoners the kind of "actionable intelligence" their employers in
Then there is the low-tech version of this application of market "solutions" to the war on terror - the willingness to pay top dollar to pretty much anyone for information about alleged terrorists. During the invasion of
Soon enough, the cells of Bagram and GuantÃ¡namo were overflowing with goat herders, cab drivers, cooks and shopkeepers - all lethally dangerous, according to the men who turned them over and collected the rewards.
According to the Pentagon's own figures, 86% of the prisoners at GuantÃ¡namo were handed over by Afghan and Pakistani fighters or agents after the bounties were announced. As of December 2006, the Pentagon had released 360 prisoners from GuantÃ¡namo (out of 759 held between 2001 and the end of 2006). The Associated Press was able to track down 245 of them; 205 had been freed or cleared of all charges when they returned to their home countries. It is a track record that is a grave indictment of the quality of intelligence produced by the administration's market-based approach to terrorist identification.
In just a few years, the homeland security industry, which barely existed before 9/11, has exploded to a size that is now significantly larger than either
When new economies emerged in the past, from the Fordist revolution to the IT boom, they sparked a flood of analysis and debate about how such seismic shifts in the production of wealth were also altering the way we as a culture worked, the way we travelled, even the way our brains process information. The new disaster economy has been subject to none of this kind of far-reaching discussion. There have been and are debates, of course - about the constitutionality of the Patriot Act, about indefinite detention, about torture and extraordinary rendition - but discussion of what it means to have these functions performed as commercial transactions has been almost completely avoided. What passes for debate is restricted to individual cases of war profiteering and corruption scandals, as well as the usual hand-wringing about the failure of government to adequately oversee private contractors - rarely about the much broader and deeper phenomenon of what it means to be engaged in a fully privatised war built to have no end.
Part of the problem is that the disaster economy sneaked up on us. In the 80s and 90s, new economies announced themselves with great pride and fanfare. The tech bubble in particular set a precedent for a new ownership class inspiring deafening levels of hype - endless media lifestyle profiles of dashing young CEOs beside their private jets, their remote-controlled yachts, their idyllic
Peter Swire, who served as the
Naomi Klein's new book, The Shock Doctrine: The Rise of Disaster Capitalism, is now available. Visit her website at www.naomiklein.org