Does Naomi Klein Oversimplify the Connections Between Globalization and War?
Back in 2004, just as the insurgency was gaining traction in Iraq, I met with Naomi Klein who was then beginning to lay the intellectual foundation for her new book, Shock Doctrine: The Rise of Disaster Capitalism. In a short conversation, Klein explained that it was due to the failure of IMF and World Bank-authored free trade policies -- otherwise known as the Washington consensus -- that the United States is now forced to use military force in order to open new markets.
"The market," she said, "finds itself in a situation where its usual suppliers, its usual dealers, are cutting it off. That's what is happening in Latin America. When attempts to privatize energy and water in Bolivia are resisted, when huge popular movements are saying 'we don't want the free trade area of the Americas,' when poor countries banded together and said 'we'd rather have no deal than a bad deal.' That means that they're getting cut off."
According to Klein, the old system of using the WTO or IMF to coerce trade agreements from desperate leaders was "free trade lite." But the new framework is entirely different. It has been upgraded to one she refers to as "free trade at a barrel of a gun, or free trade supercharge."
"I believe that the goal of this war was to bomb, into being, a new free trade zone," Klein told me. "Precisely because of the enormous backlash against these economic policies by countries that have already adopted them. Capitalism functions like a drug addict. The drug is growth. It needs growth to survive. It needs growth to expand."
So, forcing regime change Iraq was conceived as a means to open a new market that could produce income for American companies. "Not just oil," Klein said, "but water, roads, schools, hospitals, private jails, anything that can be turned into a commodity and sold."
Moreover, with the supercharge model, American free traders were able to achieve in Iraq what took them three decades to engineer in Latin America, the wholesale privatization of the national economy.
"In a single day," Klein explained, "[Director of Reconstruction] Paul Bremer passed a set of policies that literally usually take three decades to get passed. Iraq's economy was protected, somewhat. In Iraq's constitution it very clearly says that there are sectors of the economy that are considered essential services and not open to privatization. Not just oil, but water and so on. And it also says that Iraqi businesses cannot be foreign-owned -- very clear rules embedded in Iraq's constitution."
"On Sept. 19, 2003, Bremer introduced Order 39, which overturned Iraq's constitution. It allowed 100 percent foreign ownership of Iraqi businesses and it put 200 Iraqi state companies up for privatization, up for sale. And it also said that companies coming into Iraq can take 100 percent of their profits out of the country. It also gave them a massive tax break. Bigger than anything Bush has been able to achieve. The top tax bracket in Iraq before Order 39 was 45 percent, which is what it is in Canada. It's now a 15 percent flat tax. So this is an economic overhaul. It is shock therapy. It has already led to 70 percent unemployment. And we're not hearing about it."
Klein pointed to the constant and extensive media coverage of the military aspect of the occupation, which generally paints the situation in a negative light. But seen in the context of the liberal economic model that has been implemented, this is a smoke screen to cover up the fact that it has been a complete success. She quoted Republican Sen. John McCain who described Iraq as a "pot of honey that's attracting a lot of flies," adding, "and we know what the honey is. And we know who the flies are: Bechtel, Halliburton and MCI. And they're having a field day."
I asked her if this new free trade supercharge is the new template for globalization.
She nodded and said something that is truly radical. "But that doesn't render the old model obsolete. Because the other countries see this, see what happens when you don't cooperate and that makes their trade negotiations a little bit easier. So I think that the free trade lite and this free trade supercharge work hand in hand."
I'd love to hear Thomas Friedman's response to that. Unfortunately we won't be treated to a debate between Friedman and Naomi Klein anytime soon. Friedman seems to ignore the young upstart, but maybe that's because she refers to him as "the White House's unofficial brand manager." So we, the ones out here in the peanut gallery, are stuck between two extremes, two mutually exclusive narratives. The problem is that, in a world that has become polarized between good and evil, Islam and Christianity, globalization and anti-globalization, most people seem to be satisfied to live with their own familiar version of the truth. This is a phenomenon that the great American economic theorist John Kenneth Galbraith elaborated in The Affluent Society.
"Because economic and social phenomena are so forbidding," he wrote, "or at least so seem, and because they yield so few hard tests of what exists and what does not, they afford to the individual a luxury not given by physical phenomena. Within a considerable range, he is permitted to believe what he pleases."
This resignation, as Galbraith put it, to "associate truth with convenience," is a trait that isn't relegated to liberals or conservatives, layman or academics. We all have a yearning to see our view of the world corroborated in the ideas of others, especially those more famous than ourselves. To describe these widely acceptable and predictable ideas, Galbraith coined the term "conventional wisdom." He likened the act of listening to conventional wisdom to a religious experience, one that grants its audience a form of "affirmation like reading aloud from the Scriptures or going to church."
I wondered how much this could be applied to writers like Noami Klein, who have had tremendous success in mining the deep discontent of their progressive audiences. According to Mark Engler, a widely published journalist and policy analyst who made waves within the anti-globalization camp with his 2004 article titled The War and Globalization: Are They Really Connected?, the left is just as vulnerable to the trappings of one-track thinking.
"Well, on the left it's an article of faith that corporate globalization and the war are connected," Engler told me during a phone conversation from his Brooklyn office. "In that sense, it's just in the water, okay? Everyone feels it. And it's not unfounded because, I think, in a deep way they're definitely connected but the way we try to talk about those connections is way too shallow and, in a lot of ways, is wrong."
While he clearly admires writers like Naomi Klein, he takes her to task for simplifying the complex relationships between members of the business class and George Bush's neoconservative advisors in order to fit the war-is-globalization thesis. "These activists risk reading causality into tangential relationships," wrote Engler, arguing that conservative groups are not monolithic co-conspirators and the war in Iraq has been as unpopular with many top global business leaders as it has with the Cindy Sheehan gang. In fact, aside from a few billion dollar contracts awarded to companies with close ties to the Bush administration, the adversarial, unilateral approach taken by the neoconservative authors of the conflict has deeply rattled the multinational consensus that is the framework and foundation for the globalization effort.
Ironically, Engler believes it is the left's own disorganization and disunity that distorts its view of the divisions within the world's financial and political elite. The activists believe that since the corporate globalizers are winning, they must have their house in order. But, Engler told me, that is simply not an accurate perception.
"We assume that capital is a monolith, it's always united, it's always a fist. The fact of the matter is that's not true. There's always competing interests among the global elite, there's always fractures within capitalism, especially at this moment, where you have that Clinton model of corporate globalization that was working very well for everyone, it was a very profitable period for everyone. And that's being trashed by these neocons in the Bush administration."
Engler insists that it's flawed logic that frames the Iraq war as something designed primarily to create a free trade bonanza to benefit Western corporations. "And this goes against what Naomi Klein is arguing when she talks about military intervention as the next stage of neoliberalism," Engler explained in a confident tone. "And I'm going to say it's not a next stage of neoliberalism."
Pushing back with the thrust of Naomi Klein's argument, I asked about the wholescale neoliberal upgrade of Iraq's economy. Citing Paul Bremer's introduction of Article 39 into the interim Iraqi constitution, Engler admitted that Klein has a valid point.
"It definitely is the case that they've implemented neoliberalism through this military arm," he said, "Now, the problem with this argument, where it runs into problems, is when we get back to the fundamental question: Did they invade Iraq in order to implement neoliberalism? And again, I would say the answer is no."
"But of all the plans we had for Iraq and reconstruction," I interjected, "the new economic system seems like the one thing that they actually followed through on."
"Look," Engler answered, "once they've taken over the country, they're going to bring in a capitalist economy. And, of course, because the people involved are total ideologues, they're going to put in a very extreme neoliberal economy. To me that was more opportunistic than anything else. But they didn't invade Iraq in order to do that. And, you see, the logical extension of [Naomi's] argument is that neoliberalism, through the I.M.F. and World Bank, has reached its limits, and therefore you need to have direct military intervention. That is the next stage of neoliberalism. So basically any recalcitrant country that will not implement neoliberalism will be invaded and will have neoliberalism forced upon them. I don't buy it."
"Why not?" I asked.
"Three reasons," he answered. "First, if you talk about the real cause of war, I think you have to take the neocons at face value."
Engler argues that instead of trying to divine some corporate-driven motive behind Bush's Iraq adventure, we should take the neoconservatives at their word. Their stated goal is to gain a foothold in a strategically important region of the Middle East. While open access to Iraqi oil is a benefit of the invasion and certainly achieves the objective of becoming less reliant on Saudi Arabian or Iranian oil, the larger vision is based on a quest to secure American economic hegemony for the next half century and beyond.
"I think that's a perfectly sensible reason for war from their perspective," Engler explained, "and it's a much deeper type of argument than just to say 'well, we did it for oil.' So in this context, that argument about war profiteering becomes a footnote. It's not the cause of war and the left's argument really falls flat."
The second reason he rejects the idea that the invasion of Iraq represents a new phase in neoliberalism is that global capital is against the war. It wasn't just European banks and traders -- whose CEOs loudly voiced their objections to Bush's Iraq strategy at the 2003 World Economic Forum in Davos a few months before the war -- that stood to lose, but also companies like Disney and Coca-Cola, which depend heavily on the quotient of goodwill that America secures from the rest of the world. Most modern corporate CEOs prefer what Bill Gates has called "frictionless capitalism," one that, in effect, says, 'let's shred hierarchies, love the environment and just all get along.' And this goes for a majority of the companies in the financial and services sectors that trade on Wall Street. As Engler explained, "These people may be very Republican in certain ways; they like Bush's tax cuts obviously. But in terms of this aggressive militarist foreign policy, do they think that's going to be good for the markets? No. Wall Street was very skeptical of Bush."
Engler asserts the occupation has had a negative effect on the globalization project. He describes the neoconservatives as a political aberration that have divided the global business community and created the potential for trade wars that could further cripple the U.S. economy. "Actually," Engler wrote in his article, "much of the business elite would prefer Clinton's multilateralist globalization to Bush's imperial version."
I cited the widely held contention that, while there may be disagreements between the neoliberals and the neoconservatives, in the end U.S. foreign policy is part of a long-term bipartisan drive to satisfy the national interest. I asked him if it mightn't just be a case of Bush sacrificing international harmony to promote and protect the interests of American corporations.
"Look, Bush is a sectoral president. He's good for Big Arms, he's good for Big Oil, he's good for the Halliburtons. But was the Iraq war a war for Disney? Was the Iraq war a war for Coca-Cola? You've got to ask yourself these questions. Look at the markets they're going after and ask yourself what they had to gain by that.
"This is where Bill Clinton is a much better capitalist than George Bush," Engler remarked, reminding me that Clinton presided over "one of the longest upswings of a business cycle in the last hundred years." That was a period when the world was generally at peace with America and no one was burning down KFC and Taco Bell.
"But now, the whole world has turned from an attitude of goodwill toward the United States to an attitude of anger and revulsion. That's very bad for the Coca-Colas and the Disneys of the world. That's why I think you'll find a schism in capital here. Especially in terms of how to manage our foreign policy." *
"But," I asked, "obviously corporate America benefits from the neocons' long-term plan for America."
"Maybe. But corporate America doesn't look at the 50-year picture. Corporate America looks at their next quarter profits. If you're telling me that your strategy for Disney is for the United States to enter into a trade war with Europe or to antagonize huge portions of the Muslim world -- which are both things the Bush administration at various times has been willing to do -- it's in direct contradiction to their corporate strategy, which is to increase market share, to create better access to those external markets, which are massive. And those can, oftentimes, conflict with the neocons' goal."
The third argument Engler makes against the Naomi Klein's war-is-globalization thesis is complicated, but significant in its verdict for the anti-globalization movement. According to Engler, even if Klein is right, and the goal of invading Iraq was to institute a so-called capitalist paradise, the unilateral invasion and subsequent quagmire and global divide it has created is simply "bad capitalism" and there is little support for doing it again. Hence it cannot be the new phase of anything. Instead, as he said, it is a throwback to an older version of imperial globalization, the kind that Thomas Friedman refers to as Globalization 1.0.
More important, however, is Engler's contention that while the Bush administration has been treating the multilateral institutions like they have exhausted their value, they are, in fact, still viable means of accomplishing neoliberal goals. As he wrote in his war and globalization article, "The more subtle mechanisms of corporate globalization -- i.e., conditions imposed by the International Monetary Fund (IMF) and World Bank -- are still functioning quietly and effectively, constraining the potentially autonomous economic policy of countries like Brazil, for example." So the danger lies in falling into the trap of the duality, of reacting so negatively to the Bush agenda that the left allows the pendulum to swing back to the old Clinton globalization model, which has never gone away.
This is a phenomenon he sees occurring. He admitted that after years of campaigning against the World Bank, IMF and WTO, suddenly the tables have turned.
"Now we have these strange bedfellows on the right who also don't believe in having these institutions make policy for us. And then we have some influential voices in the anti-globalization movement changing their position on these institutions. They're saying, 'I was wrong to be saying that we should get rid of these institutions altogether.'"
I got the sense he is implying that Bush's policies have indirectly fortified the credibility of the neoliberal institutions. By creating a false dichotomy, a good cop and bad cop as it were, people who are seeking a more just form of globalization will be tricked into believing they must choose between the two. He points to liberal strongholds like Air America radio and MoveOn.org, which are so anti-Bush that they have started to embrace Clinton-era globalization and foreign policy architects as the only viable alternative. In his article, Engler warned that "because there are many who will oppose George Bush while eagerly anticipating a return to the high times of an earlier neoliberalism, the struggle to build an alternative globalization will continue ..."
In other words, we have to be careful not to get caught in a game of lesser evils that will make the benign globalization thesis of Thomas Friedman and Bill Gates -- the "frictionless" globalization -- seem like the most attractive model. By focusing too closely on the teeth-baring wolves who have driven America into the Middle East, we are in danger of losing sight of those who have the same ferocious imperial drive, but who come in a more deceptive package.