Shock Doctrine

 Although still widely ignored by American corporate media, “Shock Doctrine – The Rise of Disaster Capitalism,” Naomi Klein’s brilliant new expose and evolutionary study of corporatist dominion is swiftly reframing international debate on vital issuess like security, drugs and war. The self-fulfilling power of a corporate/state complex that prospers from catastrophes is too manifest to ignore, but she also shows a telling pattern in its exercise. The paired juvenilization of a population with shock or chronic insecurity, and the easy grabbing of public rights and resources when the citizenry is subdued or stunned. Media irregulars can learn powerful lessons from this analysis and amazing film synopsis below. – Ed

Cheney and Rumsfeld: Proto-Disaster Capitalists

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.

By the late nineties, a powerful move was afoot to break the taboos pro­tecting “the core” from privatization. It was, in many ways, merely a logical extension of the status quo. Just as Russia’s oil fields, Latin America’s tele­coms, and Asia’s industry had supplied the stock market with superprofits in the nineties, now it would be the U.S. government itself that would play that central economic role—all the more crucial because the backlash against privatization and free trade was spreading rapidly through the developing world, closing off other avenues for growth.

It was a move that brought the shock doctrine to a new, self-referential phase: until that point, disasters and crises had been harnessed to push through radical privatization plans after the fact, but the institutions that had the power both to create and respond to cataclysmic events — the military, the CIA, the Red Cross, the UN, emergency “first responders” —had been some of the last bastions of public control. Now, with the core set to be devoured, the crisis-exploiting methods that had been honed over the previous three decades would be used to leverage the privatization of the infrastructure of disaster creation arid disaster response. Friedman’s crisis theory was going postmodern.

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…

A Corporate New Deal

Far from shaking their determination to weaken the public sphere, the security failures of 9/il reaf­firmed 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 stimulate the econ­omy, it most certainly was not going to he on the model of FDR. Rather, Bush’s New Deal would be exclusively with corporate America, a straight-tip transfer of hundreds of billions of public dollars a year into private hands. It would take the form of contracts, many offered secretively, with no competition and scarcely any oversight, to a sprawling network of indus­tries: technology, media, communications, incarceration, engineering, edu­cation, health care.

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 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…

(The lack of competition in awarding contracts has been one of the distinguishing features of the Bush years. A New York Times analysis in February 2007 found that fewer than half of all contract actions—new contracts and payments against existing contracts—are now sub­ject to full and open competition. Just 48 percent were competitive in 2005. down from 79 percent in 2001.)

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. The economic stimulus of this sweeping initiative proved enough to pick up the slack where globalization and the dot-corn booms had left off. Just as the Internet had launched the dot-com bubble, 9/11 launched the disaster capitalism bubble…

It was the pinnacle of the counterrevolution 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 innovator of 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.”

Every aspect of the way the Bush administration has defined the parame­ters of the War on Terror has served to maximize its profitability and sustain-ability as a market—from the definition of the enemy to the rules of engagement to the ever-expanding scale of the baffle. 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 percent doctrine,” which justified the invasion of Iraq on the grounds that if there is a 1 percent chance that something is a threat, it requires that the U.S. respond as if the threat is a 100 percent certainty. This logic has been a particular boon for the makers of various high-tech detection devices: for instance, because we can conceive of a smallpox attack, the Department of Homeland Security has handed out half a billion dollars to private companies to develop and install detection equipment to guard against this unproven threat.

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 America after September 11. The revenue stream was a seemingly bottomless supply of tax dollars to be funneled from the Pentagon ($270 bil­lion a year to private contractors, a $137 billion increase since Bush took office); U.S. intelligence agencies ($42 billion a year to contractors for out­sourced intelligence, more than double 1995 levels); and the newest arrival, ~ the Department of Homeland Security. Between September 11, 2001, and 2006, the Department of Homeland Security handed out $130 billion to pri­vate contractors—money that was not in the economy before and that is more than the GDP of Chile or the Czech Republic. In 2003, the Bush ad­ministration spent $327 billion on contracts to private companies—nearly 40 cents of every discretionary dollar…“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.”

A Market for Terrorism

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., shooting about 4 billion hours of footage a year. That created a problem: Who’s going to watch 4 billion hours of footage? So a new market emerged for “analytic software” that scans the tapes and creates matches with images already on file (networking various security systems has been the source of some of the most lucrative contacts, such as $9 billion from the air force to a consor­tium of companies including Booz Allen Hamilton, one of the oldest strat­egy consulting firms, and some of the largest defense contractors).⁴⁹

In the nineties, 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, cell phones and Web surfing have been turned into powerful tools of mass state surveillance by increasingly authoritarian regimes, with the full cooperation of privatized phone companies and search engines, whether it’s Yahoo collaborating with the Chinese government to pinpoint the location of dissidents or AT&T helping the U.S. National Security Agency to wiretap its customers without a warrant…

As high-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, sold by companies like Verint Systems and Seisint, Accenture and ChoicePoint—had been developed by the private sector before September 11 as a way to build detailed customer profiles, opening up new vistas for micrornarketing. They also promised to reduce the number of retail workers at supermarkets and shopping malls, be­cause biometric IDs, combined with cash cards, would eliminate the need for tellers. When widespread discomfort about big-brother technologies stalled many of these initiatives, it caused dismay to both marketers and re­tailers. September 11 loosened this logjam in the market: suddenly the fear of terror was greater than the fear of living in a surveillance society…

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 and the secret prison. When information about who is or is not a security threat is a product to be sold as readily as information about who buys Harry Potter books on Amazon or who has taken a Caribbean cruise and might enjoy one in Alaska, it changes the values of a culture. Not only does it create an incentive to spy, torture and generate false information but it creates a powerful impetus to perpetuate the fear and sense of peril that created the industry in the first place.

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 traveled, 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 privatized war built to have no end…

According to a 2006 study, “Since the ‘War on Terror’ began, the CEOs of the top 34 defense contractors have enjoyed average pay levels that are double the amounts they received during the four years leading up to 9/li:’ While these CEOs saw their compensation go up an average of 108 percent between 2001 and 2005, chief executives at other large American companies averaged only 6 percent over the same period.^..

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…

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. What makes their acts of projection even more perilous is the fact that, to an unprecedented degree, key Bush officials have maintained their interests in the disaster capitalism complex even as they have ushered in a new era of privatized war and disaster response, allowing them to simultaneously profit from the disasters they help unleash…

Both Rumsfeld and Cheney could have taken simple measures to divest themselves completely of their disaster-related holdings, thereby eliminating any doubt about what role profit has played in their enthusiasm for disaster-producing situations. But then they would have missed the boom years in their own industries. Asked to choose between private profit and public life, again and again they chose profit, forcing the government ethics committees to adapt to their defiant stance.

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…

Then there is the whirling revolving door between government and in­dustry. It has always been there, but for the most part political figures used to wait until their administration was out of office before cashing in on govern­ment connections. Under Bush, the nonstop homeland security market bo­nanza has proved too tempting for many administration officials to resist. So, rather than wait until the end of their terms, hundreds, from a wide range of government agencies, have already charged for the door. According to Eric Lipton, who has tracked this phenomenon in the Department of Homeland Security for The New York Times, “veteran Washington lobbyists and watch­dog groups say the exodus of such a sizable share of an agency’s senior management before the end of an administration has few modern parallels.” Lipton identified ninety-four examples of civil servants who had been working on domestic security and who are now working in some aspect of the home­land security industry.²²

There are far too many such cases to detail here, hut a few stand out, since they involve the key architects of the War on Terror. John Ashcroft, for­mer attorney general and prune mover behind the Patriot Act, now heads up the Ashcroft Group, specializing in helping homeland security firms pro­cure federal contracts. Tom Ridge, the first head of the Department of Homeland Security, is now at Ridge Global and an adviser to the communi­cation technology company Lucent, which is active in the security sector. Rudy Giuliani, the former New York mayor and hero of the September 11 re­sponse, started Giuliani Partners four months later to sell his services as a cri­sis consultant. Richard Clarke, counterterrorism czar under Clinton and Bush and an outspoken critic of the administration, is now chairman of Good Harbor Consulting, specializing in homeland security and counterter­rorism. James Woolsey, head of the CIA until 1995, is now at Paladin Capi­tal Group, a private equity firm that invests in homeland security companies, and a vice president at Booz Allen, one of the leaders in the homeland secu­rity industry. Joe Allbaugh, head of FEMA on September 11, cashed out just eighteen months later to start New Bridge Strategies, promising to be the “bridge” between business and the lucrative world of government contracts and investment opportunities in Iraq. He was replaced by Michael Brown, who bolted after only two years to start Michael D. Brown LLC, specializing in disaster preparedness.²

“Can I quit now?” Brown wrote in an infamous e-mail to a fellow FEMA staffer in the middle of the Hurricane Katrina disaster.That is pretty much the philosophy: stay in government lust long enough to get an impressive ti­tle in a department handing out big contracts and to collect inside informa­tion on what will sell, then quit and sell access to your former colleagues. Public service is reduced to little more than a reconnaissance mission for fu­ture work in the disaster capitalism complex.

In some ways, however, the stories about corruption and revolving doors leave a false impression. They imply that there is still a clear line between the state and the complex, when in fact that line disappeared long ago. 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 tile corporatist mission: a total merger of political and corporate elites in the name of security…

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 corporatist state had arrived.