A shock to the system

ECONOMICS:Naomi Klein thought Sovereign Deed was a hoax when she first heard about it. The company offers VIP rescue missions to people unlucky enough to be caught up in a disaster; a Katrina, perhaps, or a Californian wildfire.

Only with joining fees of $50,000 (€34,000), Sovereign Deed's customers are actually the lucky ones - they can afford to pay to be saved by the privatised rescue services that thrive on what Klein terms "disaster capitalism".

Klein is only a little incredulous though. Companies like Sovereign Deed are unnerving evidence of the conclusion to her new book, The Shock Doctrine, that the final frontier for free market capitalism is the privatisation of disaster rescue.

To be airlifted out of the Apocalypse, it doesn't do to be on the wrong side of the "disaster apartheid", because the state - or at least the hollowed-out US government - won't be there to answer the call.

"I don't actually want to be right," she says. The Canadian cultural commentator and No Logo author has a habit of seeing her pronouncements coming true. In 2000, that book became a bible for the anti-globalisation movement. But its timely attack on sweatshop-dependent brand names such as Nike was only part of the story. Klein was also interested in the brutality of capitalism "beyond the brand".

The Shock Doctrine is, in itself, shocking. It documents how natural disasters, wars and economic jolts, such as market meltdowns, have been used in countries from Chile to Poland to Iraq to wipe the slate clean for "economic shock therapy". This invariably means the pushing through of free market policies - or "Reaganomics", as it was known in the 1980s.

There is no such thing as "trickle down" here. Klein argues that free market policies are against the interests of the majority and their introduction depends on people being in a state of shock, disorientation or sensory deprivation. Sometimes, in the case of victims of state-sanctioned electroshock torture, the shock is a literal one.

The chief villain in Klein's "alternative history" is not Dick Cheney or Donald Rumsfeld - although they certainly loom large - but the economist Milton Friedman, the University of Chicago professor who believed in a free market completely unfettered by the state: so much so that even the continued existence of a social security safety net and a public schools system under his disciple Reagan felt offensively socialist to him.

Friedman wrote that "only a crisis - actual or perceived - produces real change".

He first put this theory into practice in the mid-1970s by acting as an adviser to the Chilean dictator Pinochet, recommending a heady cocktail of cuts in tax and social spending, privatisation and deregulation while Chileans were still recovering from Pinochet's violent coup and severe hyperinflation.

The New Orleans education system was Friedman's final target, before he died in 2006.

After the levees broke, he wrote in the Wall Street Journal that here was the "opportunity" to replace the public school system with privately-run ones - a proposal adopted with glee by the Bush administration. Klein describes the poll-denting failure of the US government to do much for Katrina's victims with the same chilling detail as she tackles the tourism industry's behaviour after the Asian tsunami.

But Klein has a broader story to tell, one that aims to redress a perceived imbalance: while communism's body count is often tallied, the human cost of remodelling social democracies into rabidly free market ones doesn't show up in the accounts.

What really upsets Klein is that many of the same contractors riding Katrina's tailwind of profit are the same companies - "the Blackwaters and the Halliburtons and the Bechtels" - who have used Iraq as "a shock lab". With the incentive of lucrative cost-plus contracts that guarantee a profit margin, theirs is a parallel economy of privatised war, death and torture that is subsidised by US taxpayers. As the contractors become synonymous with the state, the financial incentive for peace is lost in the rubble.

Klein has been to Baghdad's Green Zone, or "the bubble" as she calls it.

"You get inside the gates and everything works. There's electricity, water, it's relatively safe and it's all privatised and all run by Halliburton. We talk about it as if it's American-run, but it's actually an experiment in this corporate city-state. I left Iraq with this sense that I was seeing a vision of the future, this Mad Max dystopian future."

And then the little Green Zones started popping up everywhere. Sandy Springs, an affluent white suburb near Atlanta, wanted to incorporate as a city to keep its taxes local. Enter CH2M Hill, one of the US government's "primes" in Iraq.

"They said, let us do it for you, the whole thing. So it became America's first contract city - a city entirely run by one contractor. And all of the city's employees work not for the people of Sandy Springs, but for CH2M Hill," says Klein, with obvious distaste.

As a phenomenon, it makes the conversion of public high streets to private shopping centres seem lacking in ambition. But it didn't stop there. Sandy Springs led to "a little explosion" of contract cities around Atlanta, decimating the tax base of the poorer areas. It is a privatised white flight.

Meanwhile, Blackwater, the army of mercenaries accused of killing Iraqi civilians, later took to the streets of New Orleans as security contractors and now plans to offer full-scale humanitarian aid services for a price.

Lockheed Martin, she notes, has gone the furthest along a "morbid vertical integration" strategy: not only does it benefit from "a closed profit-loop of destruction and reconstruction" in Iraq, but thanks to the privatisation of army healthcare, it can also earn money treating the people injured by its own weapons.

"The war in Iraq, from an economic perspective, couldn't lose," says Klein. The hoped-for Wal-Mart invasion may not have materialised, but part of Iraq's shock therapy has been draft legislation that places no limits on the amount of profits that foreign companies can take out of the country. This "attempted resource grab" during a period of national disintegration is, Klein believes, "disaster capitalism at its most shameless".

With a business address in Clontarf, Irish company Petrel Resources is one of the foreign firms at the forefront of the entry to Iraq, having won a $197 million (€134 million) development contract from its Ministry of Oil. Klein's book quotes Petrel's managing director, David Horgan, describing Iraq as "the last great frontier in the Middle East".

But if Irish companies are participating in Iraq's corporate makeover, it is not difficult to see how Friedmanite ideas are growing on the home front. Under Mary Harney's health service, the public outcry over A&E trolley deaths has been met by plans to open a string of private hospitals, with the argument that the private sector can solve the crisis with greater efficiency often cited.

The story of Susie Long, who died from bowel cancer last month after a seven-month wait for a colonoscopy, cuts to the heart of where Ireland's neoliberal logic will lead, says Klein, who says she was moved by Long's conviction that she wouldn't have bought health insurance even if she could have afforded it because she believed people of all incomes should be entitled to good care. "I think the Susie Long story and the way in which it captivated the nation you can see that there is questioning going on about where this logic leads."

Although she grew up with Canada's public health system, Klein got first-hand experience of the extremes of two-tier healthcare when she was involved in a car crash in New Orleans where she had been filming a documentary.

Klein had a mild concussion and her neck was cut and bleeding from a shattered window. But as the ambulance arrived, she was adamant. She didn't want to be taken to the flooded hospitals or makeshift clinics she had visited earlier in the day, where electricity had been cut off and elderly evacuees had slumped, unattended, in their wheelchairs.

"I was arguing with the ambulance guys. 'Drop me off, I'm fine' Then I passed out. And I woke up in, from what I could tell, a spa.

"This is New Orleans and it's still flooded. It's in the middle of the largest public health emergency in recent American history and here I am in this glistening private hospital that, from what I can tell, has about three or four patients and is staffed to the hilt. I'm getting escorted by three nurses to get an X-ray within five minutes of being there."

It's easy to dismiss this as just "sci-fi American stuff", she says. "But once you go there, once you say that these people deserve to be saved and these people don't and you can live with it in slow motion, then you will be able to live with it in fast forward."

It is hard to know if Klein is optimistic or not. On the one hand, she sees a re-emergence of class consciousness in America and a growing failure to indulge in the cult of chief executive celebrity. A crisis can produce more rather than less democracy, she admits.

But on the other hand, she is cynical about the Democrats' ability to untangle the web of subcontractors feeding off the $200 billion (€136 billion) Homeland Security industry, even if that is what they want to do.

"The nature of this economy generates a huge amount of fear," she says. "I think we're in a state of denial about what it means to read every day in the news about wire-tapping, monitoring of e-mails, high-tech surveillance devices and legalised torture. It actually does get to you after a while."

Klein is more of a moderate than a hardline leftist - she believes in a free market in consumer goods and thinks disaster capitalism can be averted through higher public spending and proper state regulation.

"The Irish economy has gotten a pretty radical neoliberal makeover of privatisation and deregulation without a major shock. But it hasn't gone all the way." Klein's theory suggests we should be wary that a downturn in our economic fortunes could be used as a cloak for even more Friedman-friendly policy changes.

Response to The Shock Doctrine has been mixed, with reviewers divided into predictable ideological camps. The most contentious element has been her use of torture as a metaphor for economic change. "That has been really misrepresented, willfully, the way I use that. I don't say Milton Friedman was a torturer." While her writing is certainly, as one hostile reviewer phrased it, "button-pushing", the word that crops up most in relation to Klein is "emotional". With distinct misogynistic overtones, this implies that her journalism, despite its 60 pages of end notes, is nothing but hysterical polemic and is not to be taken seriously.

Even sympathetic commentaries label her "Miss Angry". (Klein is 37.)

She is not surprised by the smears, though, in fact she seems both relieved by their mildness - "compared to the stuff that Michael Moore gets" - and pleased to have attracted the attention of "the official guardians" of the free market success story.

"This is a battle. If everyone gave me a pat on the head and said you did a great job, especially if they happen to be editors of the Financial Times or economics columnists at the New York Times, then I think I would be doing something wrong."