Monday, December 29, 2008

Layer 107 Shock and Awe, and the Shock Doctrine

The ITN reporter actually used the phrase, when reporting on the continuing Israeli air attacks on Gaza this morning - “shock and awe”. Blasting the shit out of Baghdad using ‘shock and awe’ tactics was assumed to be a good thing, We’re therefore encouraged to believe that the people of Gaza had it coming to them. 240 targets were said to have been hit in the first hour of ‘operations’, which have now been going on for four days.

By this morning more than 300 people were said to have died, with more than 1,000 seriously injured. Mortuaries are filled and hospitals unable to cope, given the shortage of drugs and equipment brought about by the Israeli blockade of Gaza, which has been turned into what is essentially a massive prison camp.

The people of Gaza clearly made the ‘wrong’ choice when they voted Hamas into power, to be their government, and they must continue to suffer the consequences . . .

The deputy Israeli ambassador to Britain was on R4 Today, speaking about the situation, in a voice whose tone and delivery were bordering on hysterical, clearly in the grip of a shedload of destructive emotions.

Yesterday’s Observer reported Gordon Brown as expressing “deep concern”. He apparently said the only way to reach a lasting solution was through peaceful means, no doubt recalling events in Northern Ireland.

"I understand the Israeli government's sense of obligation to its population. Israel needs to meet its humanitarian obligations, act in a way to further the long-term vision of a two-state solution, and do everything in its power to avoid civilian casualties," he said.

In other words, Israel is not meeting its humanitarian obligations, is not acting in a way to further long-term solutions, and is not trying to avoid civilian casualties.

Our Foreign Secretary has at least condemned the Israeli action on the grounds that it’s disproportionate and it will fuel Palestinian militancy. But disproportionality is what ‘shock and awe’ is all about. And perpetual war is what keeps American funds flowing into Israel.

In order to remain financially and politically viable, and remain in power, the Israeli hawks need to maintain the status quo whereby their people are perceived to be seriously threatened by Hamas, amongst others, and require political leaders who are prepared to use shock and awe tactics, and so on.

The Guardian editorial , meanwhile, says that this carnage is being inflicted on Gaza “in reply to hundreds of rockets from Hamas militants which have killed one Israeli in six months”.

The editorial ends by saying, “Shock and awe, Israeli-style, have done nothing more than paralyse the very processes which both Israelis and Palestinians need in order to survive in peace”.

Precisely. That’s what it’s meant to do.


The Shock Doctrine

I’ve now read the first six chapters of Naomi Klein’s masterpiece, and I’m awe-struck by her ability to write such a well-researched narrative that puts so much of the history of the world since the sixties into proper perspective.

I thought I was reasonably well-informed, and had a pretty in-depth knowledge about Friedmanite (‘Chicago-School’) economics, CIA involvement in the military juntas that crushed democracy in places like Chile, Brazil, Argentina and Indonesia, and the spread of ‘globalisation’, but clearly I didn’t understand the half of it.

Her introductory chapter is called “Three Decades of Erasing and Remaking the World”, and this is clearly what went on, thanks to tens of millions of US dollars being channelled through the CIA in order to subvert and overthrow, in the first instance, democratically elected governments in South America and Indonesia that were successfully implementing economic and social policies that benefitted their people but displeased the US government and US corporations with huge financial interests in the region.

As far as the CIA were concerned, they were fighting the spread of socialism and communism, ‘by whatever means necessary’.

Also in this chapter Klein describes the way in which big business saw the New Orleans disaster as “an exciting business opportunity”- since the shock of what had happened enabled the authorities to replace huge areas of social housing with middle class apartment blocks, and enabled the business community to cash in on huge construction projects, including rebuilding and renovating schools, business premises, public buildings, etc.

“One of those who saw opportunity in the floodwaters of New Orleans was Milton Friedman, grand guru of unfettered capitalism and the man credited with writing the rulebook for the contemporary, hypermobile global economy.”

Three quotes from the people of New Orleans:

“I don’t see it as cleaning up the city. What I see is that a lot of people got killed uptown. People who shouldn’t have died.”

(Levees had not been repaired and upgraded. There weren’t enough evacuation buses.)

“What is wrong with these people in Baton Rouge? This isn’t an opportunity. It’s a goddamned tragedy. Are they blind?”

“No, they’re not blind, they’re evil. They see just fine.”


Evil seems a pretty good description.

“In sharp contrast to the glacial pace with which the levees were repaired and the electricity grid brought back on line, the auctioning off of New Orleans’ school system took place with military speed and precision. Within nineteen months, with most of the city’s poor residents still in exile, New Orleans’ public school system had been almost completely replaced by privately run charter schools. Before Hurricane Katrina, the school board had run 123 public schools; now it ran just 4. Before that storm, there had been 7 charter schools in the city; now there were 31. New Orleans teachers used to be represented by a strong union; now the union’s contract had been shredded, and its 4,700 members had all been fired. Some of the younger teachers had been rehired by the charters, at reduced salaries; most were not.”

“I call these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, ‘disaster capitalism’.”

“Friedman first learned how to exploit a large-scale shock or crisis in the mid-seventies, when he acted as adviser to the Chilean dictator, General Augusto Pinochet. Not only were Chileans in a state of shock following Pinochet’s violent coup, but the country was also traumatised by severe hyperinflation. Friedman advised Pinochet to impose a rapid-fire transformation of the economy - tax cuts, free trade, privatised services, cuts to social spending, and deregulation. Eventually, Chileans even saw their public schools replaced with voucher-funded private ones. It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a “Chicago School” revolution, since so many of Pinochet’s economists had studied under Friedman at the University of Chicago. Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that “facilitate the adjustment”. He coined a phrase for this painful tactic: economic “shock treatment”. In the decades since, whenever governments have imposed sweeping free-market programmes, the all-at-once shock treatment, or “shock therapy”, has been the method of choice.

Pinochet also facilitated the adjustment with his own shock treatments; these were performed in the regime’s many torture cells, inflicted on the writhing bodies of those deemed most likely to stand in the way of the capitalist transformation.

Exactly thirty years after these distinct forms of shock descended on Chile, the formula re-emerged, with far greater violence, in Iraq. First came the war, designed, according to the authors of the Shock and Awe military doctrine, to “control the adversary’s will, perceptions, and understanding and literally make an adversary impotent to act or react”. Next came the radical economic shock therapy, imposed, while the country was still in flames, by the US chief envoy, L. Paul Bremer - mass privatisation, complete free trade, a 15 percent flat tax, a dramatically downsized government. . . . When Iraqis resisted, they were rounded up and taken to jails where bodies and minds were met with more shocks, these ones distinctly less metaphorical.”

September 11 appeared to have provided Washington with the green light to stop asking countries if they wanted the US version of “free trade and democracy” and to start imposing it with Shock and Awe military force.

As I dug deeper into the history of how this market model had swept the globe, however, I discovered that the idea of exploiting crisis and disaster has been the modus operandi of Milton Friedman’s movement from the very beginning - this fundamentalist form of capitalism has always needed disaster to advance.

It was certainly the case that the facilitating disasters were getting bigger and more shocking, but what was happening in Iraq and New Orleans was not a new, post-September 11 invention. Rather, these bold experiments in crisis exploitation were the culmination of three decades of strict adherence to the shock doctrine.

The Falklands War in 1982 served a similar purpose for Margaret Thatcher in the UK: the disorder and nationalist excitement resulting from the war allowed her to use tremendous force to crush the striking coal miners and to launch the first privatisation frenzy in a Western democracy.

When the September 11 attacks hit, the White House was packed with Friedman’s disciples, including his close friend Donald Rumsfeld. The Bush team seized the moment of collective vertigo with chilling speed . . . seized upon the fear generated by the attacks not only to launch the “War on Terror” but to ensure that it is an almost completely for-profit venture, a booming new industry that breathed new life into the faltering US economy.

The ultimate goal for the corporations at the centre of the [disaster capitalism] complex is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary and day-to-day functioning of the state - in effect, to privatise the government.

To kick-start the disaster capitalism complex, the Bush administration outsourced, with no public debate, many of the most sensitive and core functions of government - from providing health care to soldiers, to interrogating prisoners, to gathering and “data-mining” information on all of us.


More on interrogation techniques in the next blog.


"What of the contemporary crusade to liberate world markets? The coups, wars and slaughters to install and maintain pro-corporate regimes have never been treated as capitalist crimes but have instead been written off as the excesses of over-zealous dictators, as hot fronts of the Cold War, and now of the War on Terror. If the most committed opponents of the corporatist economic model are systematically eliminated, whether in Argentina in the seventies or in Iraq today, that suppression is explained as part of the dirty fight against Communism or terrorism - almost never as the fight for the advancement of pure capitalism."


"This book is a challenge to the central and most cherished claim in the official story - that the triumph of deregulated capitalism has been born of freedom, that unfettered free markets go hand in hand with democracy. Instead, I will show that this fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion, inflicted on the collective body politic as well as on countless individual bodies. The history of the free market - better understood as the rise of corporatism - was written in shocks."


“The bankers responsible must be held to account.”

Will Hutton was in good form, writing in yesterday’s Observer:

Could there be a greater corporate disaster in British history than the humbling of the Royal Bank of Scotland? Without £20bn of taxpayer support, the bank, with assets of £1.7 trillion, more than Britain's GDP, would now be bankrupt. Its mutation from bank to de facto giant hedge fund, cheerleader for casino capitalism with a portfolio of £500bn in derivatives and £100bn of takeovers in its wake, perfectly sums up our times.

The financial wreckage it has induced explains why the wider economy is in such trouble. There were many other asinine banks, but RBS was leader of the pack. News that it had lent the hedge funds of the now disgraced American fraudster Bernie Madoff £400m with insufficient due diligence was symptomatic of the failure of every aspect of RBS's corporate strategy.

Sir Fred Goodwin, the now deposed CEO, and his team should be asked hard questions by both shareholders and the police. So should the outgoing management at sister Scottish bank HBOS, whose incompetence rivals Goodwin's. The former RBS chief has rightly been dubbed the world's worst banker by Slate magazine's Daniel Gross.


Labour's philosophy in favour of government activism, never wholly abandoned, was right for new times. It could not be clearer that markets were inefficient, made horrendous mistakes and needed governments; the philosophy that argued otherwise was bust. The public noticed and Labour's opinion poll ratings climbed out of the abyss.

The criticism of Brown and Darling should be not that they are Keynesian, it is that they are not radically Keynesian enough. They only understood the severity of the crisis too late, disbelieving that markets could make such enormous mistakes. They were too slow to nationalise Northern Rock. They should have introduced the package of schemes to make lending less risky not next month but last spring, as I and others argued. They have allowed the governor of the Bank of England to be too conservative and restrictive on the terms the Bank supplies cash. They have not urged police investigations into senior bankers, so vital for our collective sense that justice is being done, nor quickly introduced the tougher regulatory regime for which many seasoned bankers (privately) beg. They do not propose root-and-branch reform of the City. The terms of the bank rescue plan were far too penal. As a result, Britain is much less well placed than it should be.

If the government moves to radical Keynesianism - reconstructing and restructuring the financial system - it is possible that it might avert the need for [printing] money. It needs to develop policies that will assure us all that capitalism will be arranged more fairly in future. That would be crucial to lifting depressed expectations. There are many civil servants and senior financiers who are desperate that we are still in mainstream Keynesianism, however well-intentioned and even aggressive it is. This is a time for outside-the-box thinking.

For in one respect, the arguments made by the Archbishop of Canterbury are right. People everywhere are taking stock. The last decade and its values have ended in disaster, in potential depression. Everybody knows that we cannot go back. The bankers responsible must be held to account. Capitalism has to be done differently, both here and abroad. It has to be fairer. It has to comprehend that enterprise is a collective as much as an individual endeavour. It cannot just be based on "fairy money". Recovery will require radical Keynesianism. It also needs a moral vision.

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