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