Rise of Disaster Capitalism Complex

excerpted from the book

The Shock Doctrine

The Rise of Disaster Capitalism

by Naomi Klein

Picador, 2007, paperback

Michael Ledeen, The War Against the Terror Masters, 2002

Creative destruction is our middle name, both within our own society and abroad. We tear down the old order every day, from business to science, literature, art, architecture, and cinema to politics and the law .... They must attack us in order to survive, just as we must destroy them to advance our historic mission.

Laura Bush, White House Correspondents' Association Dinner, April 30, 2005

George's answer to any problem at the ranch is to cut it down with a chain saw - which I think is why he and Cheney and Rumsfeld get along so well.

... following the corporatist principles of the counterrevolution, in which Big Government joins forces with Big Business to redistribute funds upward, [Secretary of State Donald Rumsfeld] wanted less spent on staff and far more public money transferred directly into the coffers of private companies. And with that, Rumsfeld launched his "war."

... He even went after the sacred cow of the military establishment: health care for soldiers. Why were there so many doctors? Rumsfeld wanted to know. "Some of those needs, especially where they may involve general practice or specialties unrelated to combat, might be more efficiently delivered by the private sector." And how about the houses for soldiers and their families-surely these could be done through "public-private partnerships."

The Defense Department should focus on its core competency: warfighting ... But in all other cases, we should seek suppliers who can provide these non-core activities efficiently and effectively."

... the central tenet of the Bush regime: that the job of government is not to govern but to subcontract the task to the more efficient and generally superior private sector. As Rumsfeld made clear, this task was about nothing as prosaic as trimming the budget, but was, for its advocates, a world-changing crusade on a par with defeating Communism.

By the time the Bush team took office, the privatization mania of the eighties and nineties (fully embraced by the Clinton administration, as well as state and local governments) had successfully sold off or outsourced the large, publicly owned companies in several sectors, from water and electricity to highway management and garbage collection. After these limbs of the state had been lopped off, what was left was "the core"-those functions so intrinsic to the concept of governing that the idea of handing them to private corporations challenged what it meant to be a nation-state: the military, police, fire departments, prisons, border control, covert intelligence, disease control, the public school system and the administering of government bureaucracies. The earlier stages of the privatization wave had been so profitable, however, that many of the companies that had devoured the appendages of the state were greedily eyeing these essential functions as the next source of instant riches.

At the vanguard of the push to create what can only be described as a privatized police state were the most powerful figures in the future Bush administration: Dick Cheney, Donald Rumsfeld and George W. Bush himself.

For Rumsfeld, the idea of applying "market logic" to the U.S. military was a project that dated back four decades. It began in the early sixties, when he used to attend seminars at the University of Chicago's Economics Department.

... As CEO of the international drug and chemical company Searle Pharmaceuticals, he used his political connections to secure the controversial and extraordinarily lucrative Food and Drug Administration (FDA) approval for aspartame (marketed as NutraSweet); and when Rumsfeld brokered the deal to sell Searle to Monsanto, he personally earned an estimated $12 million.

The patenting of drugs and vaccines to treat public health emergencies remains a controversial subject. The U.S. has been epidemic-free for several decades, but when the polio outbreak was at its peak in the mid-fifties, the ethics of disease profiteering were hotly debated. With close to sixty thousand known cases of polio, and parents terrified that their children were going to contract the crippling, often fatal, disease, the search for a cure was frantic. When Jonas Salk, a scientist at the University of Pittsburgh, found it and developed the first polio vaccine in 1952, he did not patent the lifesaving treatment. "There is no patent," Salk told the broadcaster Edward R. Murrow: "Could you patent the sun?"

It's safe to say that if you could patent the sun, Donald Rumsfeld would have long since put in an application with the U.S. Patent and Trademark Office. His former company Gilead Sciences, which also owns the patents on four AIDS treatments, spends a great deal of energy trying to block the distribution of cheaper generic versions of its lifesaving drugs in the developing world.

Gilead [Sciences]... sees epidemics as a growth market.

Dick Cheney, a protégé of Rumsfeld's in the Ford administration has also built a fortune based on the profitable prospect of a grim future, though where Rumsfeld saw a boom market in plagues, Cheney was banking on a future of war. As secretary of defense under Bush, Sr., Cheney scaled down the number of active troops and dramatically increased reliance on private contractors.

Cheney saw no reason why war shouldn't be a thriving part of America's highly profitable service economy-invasion with a smile.

Before taking office as vice president, Cheney "valued his net worth at between $18 million and $81.9 million, including between $6 million and $30 million worth of stock in Halliburton Co..

The first major victory of the Friedmanite counterrevolution in the United States had been Ronald Reagan's attack on the air traffic controllers' union and his deregulation of the airlines. Twenty years later, the entire air transit system had been privatized, deregulated and downsized, with the vast majority of airport security work performed by underpaid, poorly trained, nonunion contractors.

What happened in the period of mass disorientation after the attacks [9-11] 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 nineties 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 full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad.

U.S. foreign or domestic policy. The mantra "September 11 changed everything" neatly disguised the fact that for free-market ideologues and the corporations whose interests they serve, the only thing that changed was the ease with which they could pursue their ambitious agenda. Now, rather than subjecting new policies to fractious public debate in Congress or bitter conflict with public sector unions, the Bush White House could use the patriotic alignment behind the president and the free pass handed out by the press to stop talking and start doing. As The New York Times observed in February 2007, "Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government.

The Department of Homeland Security, as a brand-new arm 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 Rumsfeld that is independent of the CIA. This parallel spy agency outsources 70 percent 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."

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.

One of the first booms for the homeland security industry was surveillance cameras, 4.2 million of which have been installed in Britain, one for every fourteen people, and 30 million in the U.S..

During the invasion of Afghanistan, U.S. intelligence agents let it be known that they would pay anywhere from $3,000 to $25,000 for al Qaeda or Taliban fighters handed over to them. "Get wealth and power beyond your dreams," stated a typical flyer handed out by the U.S. in Afghanistan, introduced as evidence in a 2002 U.S. federal court filing on behalf of several Guantánamo prisoners. "You can receive millions of dollars helping the anti-Taleban forces .... This is enough money to take care of your family, your village, your tribe for the rest of your life."

Soon enough, the cells of Bagram and Guantánamo were overflowing with goatherds, cabdrivers, cooks and shopkeepers-all lethally dangerous according to the men who turned them over and collected the rewards.

"Do you have any theories about why the government and the Pakistani intel folks would sell you out and turn you over to the Americans?" a member of a military tribunal asked an Egyptian prisoner held in the Guantánamo prison.

In the declassified transcript, the prisoner appears incredulous. "Come on, man," he replied, "you know what happened. In Pakistan you can buy people for $10. So what about $5,000?"

"So they sold you?" the tribunal member asked, as if the thought had never before occurred to him.


According to the Pentagon's own figures, 86 percent of the prisoners at Guantánamo were handed over by Afghan and Pakistani fighters or agents after the bounties were announced.

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 Hollywood or the music business. Yet what is most striking is how little the security boom is analyzed and discussed as an economy, as an unprecedented convergence of unchecked police powers and unchecked capitalism, a merger of the shopping mall Land the secret prison.

Peter Swire, who served as the U.S. government's privacy counselor during the Clinton administration, describes the convergence of forces behind the War on Terror bubble like this: "You have government on a holy mission to ramp up information gathering and you have an information technology industry desperate for new markets." In other words, you have corporatism: big business and big government combining their formidable powers to regulate and control the citizenry.

George H. W. Bush in response to an accusation that his son invaded Iraq to open up new markets for U.S. companies

I think that's weird and it's nuts. To suggest that everything we do is because we're hungry for money. I think that's crazy. I think you need to go back to school.

David M. Walker, comptroller general of the United States, February 2007

There's something civil servants have that the private-sector doesn't. And that is the duty of loyalty to the greater good - the duty of loyalty to the collective best interest of all rather than the interest of a few. Companies have duties of loyalty to their shareholders, not to the country.

Sam Gardiner, retired U.S. Air Force colonel, on Dick Cheney, February 2004

He doesn't see the difference between public and private interests.

In the heat of the midterm elections in 2006 ... George W. Bush signed the Defense Authorization Act in a private Oval Office ceremony. Tucked into its fourteen hundred pages is a rider that went almost completely unnoticed at the time. It gave the president the power to declare martial law and "employ the armed forces, including the National Guard," overriding the wishes of state governors, in the event of a "public emergency" in order to "restore public order" and "suppress" the disorder. That emergency could be a hurricane, a mass protest or a "public health emergency," in which case the army could be used to impose quarantines and to safeguard vaccine supplies. Before this act, the president had these martial law powers only in the face of an insurrection.

In his 2006 book Overthrow, the former New York Times correspondent Stephen Kinzer tries to get to the bottom of what has motivated the U.S. politicians who have ordered and orchestrated foreign coups d'etat over the past century. Studying U.S. involvement in regime change operations from Hawaii in 1893 to Iraq in 2003, he observes that there is often a clear three-stage process that takes place. First, a U.S.-based multinational corporation faces some kind of threat to its bottom line by the actions of a foreign government demanding that the company "pay taxes or that it observe labor laws or environmental laws. Sometimes that company is nationalized or is somehow required to sell some of its land or its assets," Kinzer says. Second, U.S. politicians hear of this corporate setback and reinterpret it as an attack on the United States: "They transform the motivation from an economic one into a political or geo-strategic one. They make the assumption that any regime that would bother an American company or harass an American company must be anti-American, repressive, dictatorial, and probably the tool of some foreign power or interest that wants to undermine the United States." The third stage happens when the politicians have to sell the need for intervention to the public, at which point it becomes a broadly drawn struggle of good versus evil, "a chance to free a poor oppressed nation from the brutality of a regime that we assume is a dictatorship, because what other kind of a regime would be bothering an American company?" Much of U.S. foreign policy, in other words, is an exercise in mass projection, in which a tiny self-interested elite conflates its needs and desires with those of the entire world.

As proto-disaster capitalists, the architects of the War on Terror are part of a different breed of corporate-politicians from their predecessors, one for whom wars and other disasters are indeed ends in themselves. When Dick Cheney and Donald Rumsfeld conflate what is good for Lockheed, Halliburton, Carlyle and Gilead with what is good for the United States and indeed the world, it is a form of projection with uniquely dangerous consequences. That's because what is unquestionably good for the bottom line of these companies is cataclysm-wars, epidemics, natural disasters and resource shortages-which is why all their fortunes have improved dramatically since Bush took office.

During the Second World War, President Franklin D. Roosevelt spoke out strongly against war profiteers, saying, "I don't want to see a single war millionaire created in the United States as a result of this world disaster. One wonders what he would have made of Cheney, whose millions in war profits accumulated while he was a sitting vice president. Or Rumsfeld, who, in 2004, couldn't resist cashing in a few Gilead stocks, making an easy $5 million, according to his annual disclosure report, while he was defense secretary-a small taste of the profits that awaited him when he left office. In the Bush administration, the war profiteers aren't just clamoring to get access to government they are the government; there is no distinction between the two.

The innovation of the Bush years lies not in how quickly politicians move from one world to the other but in how many feel entitled to occupy both worlds simultaneously. People like Richard Perle and James Baker make policy, offer top-level advice and speak in the press as disinterested experts and statesmen when they are at the same time utterly embedded in the business of privatized war and reconstruction. They embody the ultimate fulfillment of the corporatist mission: a total merger of political and corporate elites in the name of security, with the state playing the role of chair of the business guild - as well as the largest source of business opportunities, thanks to the contract economy.

Wherever it has emerged over the past thirty-five years, from Santiago to Moscow to Beijing to Bush's Washington, the alliance between a small corporate elite and a right-wing government has been written off as some sort of aberration -mafia capitalism, oligarchy capitalism and now, under Bush, "crony capitalism." But it's not an aberration; it is where the entire Chicago School crusade-with its triple obsessions - privatization, deregulation and union-busting-has been leading.

Rumsfeld's and Cheney's dogged refusals to choose between their disaster-connected holdings and their public duties were the first sign that a genuine corporatist state had arrived.

The right to limitless profit-seeking has always been at the center of neocon ideology.

Washington hawks are committed to an imperial role for the United States in the world and for Israel in the Middle East. It is impossible, however, to separate that military project - endless war abroad, and a security state at home - from the interests of the disaster capitalism complex, which has built a multibillion-dollar industry based on these very assumptions.


The Shock Doctrine

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