The Shock Doctrine: Coming Home to Roost
New in Ceasefire, Special Reports - Posted on Saturday, February 19, 2011 0:00 - 6 Comments
“How Can We Resist?” – Public meeting on 18-02-2011 with Lowkey MC, Jody Mcintyre, Karma Nabulsi and others (Photo: Widad Neiroukh)
By Teodora Todorova
When Naomi Klein’s Shock Doctrine first appeared in 2007 many of its readers proceeded, in relative shock, through page after page of top journalistic documentation of how disaster-stricken post-Apartheid South Africa, post-Soviet Russia, and numerous developing post-colonial states’ national assets were being robbed (privatised) by greedy capitalist corporations at a time when these vulnerable nations were barely recovering from environmental and political catastrophes.
The Noughties witnessed the proliferation of critical scholarship on the subject of “Development” that lambasted The IMF and World Bank’s 1980s structural adjustment policies, and which saw the growing impoverishment and underdevelopment of nations across Africa, Asia, The Middle East, South America and South-East Europe.
Many of these wretched and (many were convinced) discredited measures, characterised by cutting investment in public services and the privatisation of healthcare, education, gas, water and electricity supply, closely mirror contemporary austerity measures and cuts being implemented in the UK, USA and across Europe.
In short, the Shock Doctrine has come home to roost. And what is the disaster that has stricken us and led us to it? No, it is not a savage war or military invasion; it is not a Tsunami or Hurricane; neither is it decades of political repression and state sanctioned gangsterism. It is a theoretical economic and fiscal crisis that demands that, for us to recover from it, we must give up and get rid of very real and concrete national assets such as publicly funded education, health care, welfare and who knows what else.
This theoretical catastrophe was once correctly reported by the mainstream media as the work of greedy and incompetent bankers who promoted a culture of conspicuous consumption while gambling with imaginary money, and who are now asking us to sell our children and grand children’s future so that they can pay their debts and earn their bonuses.
“We Are All In This Together” chimes our coalition government of multimillionaires, as the rest of us live under threat of unemployment, possibly even homelessness, which will become a bigger possibility for many citizens if or, dare I write, when welfare is dispensed with by the CON-DEM government. And of course, dare I lay some blame at our own feet? we, the citizens or consumers, as we are fondly known across the corporate-state sector?
Many of us not only buy into this imagined crisis of capital but have, for years, bought into the conspicuous consumption made possible by borrowing fake money, also known as “credit” but more recently as “debt”. Easy Credit has created the illusion that a majority of the population has “never had it so good” and that “people want it all for free”, while masking people’s diminishing income in real terms. More recently, the extortionate bank rates being charged on loans have left many in a more impoverished state than they had been to begin with.
Does taking responsibility for messing up mean that we must make our children (and their children) pay for our theoretical crisis? The simple answer is no and it doesn’t have to be this way. The alternative begins with concrete attempts to formulate an alternative response to the ongoing shock doctrine rampaging through Europe and the UK.
In the last months of 2010, students in the UK and across Europe showed one way of articulating opposition to the “Austerity Measures” rolled out by our right-wing, pro-corporate governments. The large-scale protests and student occupations against cuts to HE funding and increases to university tuition fees were a powerful precedent for mass public mobilisation, albeit they were marred by the violence and destructiveness of a small minority, the actions of which were amplified and exaggerated by mainstream media which simultaneously ignored and even defended growing police violence and brutality.
I would like to suggest that in order to build a bigger public coalition to oppose the austerity cuts in 2011, it is necessary for the student movement to reappraise its own commitment to non-violence. I do not believe in centralised structures, therefore such a reappraisal of the commitment to non-violent action would have to take place in the mind and actions of each individual person who joins the growing movement against Public Service Cuts.
The students have been the first to rise up and demonstrate civil society opposition to the unfair punishment being meted out against the average citizen for the misdeeds of an elite, which is not together with us in this crisis, and is in fact doing very well while we pay (just look at the bonuses being picked up in the financial sector as even moderate broadcasts project rising unemployment figures in 2011).
Many people are unhappy, and word on the street is that many more people feel like getting out on the streets to protest in 2011, but for many of them it takes a little more than for a committed social activist to get out on a demonstration and those of us who are already active need to lead by example and be the change we wish to see.
Otherwise, we risk playing into the hands of those who are trying to persuade the population that the correct thing to do is to quietly walk to the CON-DEM chopping board. A new strategy for 2011 is necessary in order to mobilise the kind of grassroots opposition to “Austerity Measures” that will defeat them.
Teodora Todorova is a PhD candidate working on the civil society answer to the official Israeli-Palestinian peace process. The rest of her time is spend on the struggle for refugee, migrant and women’s rights.
6 Comments
Bobby
Teodora
Thanks for the comment Bobby, but I have not relied on “mainstream” media for my opinions or information for many years. I was present at the protest and witnessed both what you consider to be “proportional” negative behaviour (to the cuts) by some protesters, *and* a far greater deal of, what appeared to be officially sanctioned, police brutality. I personally experienced police violence on the day, as well as saw my friends being hit and smashed by shields and batons for trying to leave the kettle peacefully. Having said that, Ceasefire has already published a piece which dealt with refuting mainstream media bias and misrepresentation of protester “violence”, and rather than reproducing this, my piece attempted to suggest that instead of playing a defensive game, trying to justify our (collective) alleged actions; we (as a collective) should reconsider our tactics in order to build momentum and broaden the alliance for future action against the cuts. And we are already seeing this happening, on Saturday over a 1,000 people marched in the quiet little suburb of Beeston, Nottingham to protest against the privatisation of the Post Office, and I believe we will continue to see more actions of this sort.
TomK
I’d feel a lot happier about protesting against austerity measures if we weren’t paying £50-60 billion in interest a year (or soon will be). Yes I fear that the government does aim to cut public spending in a more permanent and ideological way than just for good economic sense (spending money that wasn’t there was a big contributor to this whole crisis). Yes I fear that they will use the reduced public sector spend and recovering economy to cut taxes just before the next election. I fear this because a) I agree our public sector needs to be protected fundamentally b) more specifically because as we head further into an ongoing environmental and societal crisis, taxes and the public sector have to be used to counter-act the consequences of our economic system (which itself contributes a great deal to both crises).
But how can I support the spending of more money when there is no more to spend?
I suppose what I am asking is, when “Austerity measures” are defeated, what exactly is the victor that takes their place? Bearing in mind those interest levels, what is the alternative for the immediate future?
“I would like to suggest that in order to build a bigger public coalition to oppose the austerity cuts in 2011” – give your cause an economic argument that counters what you say is CON-DEM propaganda
Teodora
Thank you Tom, a very good point indeed. There are two very simple alternatives that of course will be very unpopular with the friends of the CoN-DeM government, one is the proposal by UKUncut: http://www.ukuncut.org.uk/ and it relates to unpaid corporate tax. The other is perhaps a little lost at this point, but in my opinion, for what it’s worth, the banking crisis bailout of £38 billion should have been conditional on repayment. Thus, rather than Mr Cameron asking his friends in the financial sector to curb their enthusiasm and bonuses now that the financial, or banking sector at least, appears to have recovered, while the rest of us live in austerity, they should begin to pay back the loan. Of course it wasn’t a loan, it was a gift and it is now the poorest members in society who are pay for it.
Sam Jam
Hey teo–great article–enjoyed it a lot
@TomK
I admit its confusing
The ConDem argument is one that is intuitively compelling. It tallies with both the form of economic reasoning and virtues of self-discipline, that we as individuals and households have to abide.
The trouble is however–that it is an entirely false analogy. and it is false for at least 3 reasons.
i) The state was not living beyond its means.
Government spending under labour prior to the economic crash had tracked the levels of the previous conservative governments (as a percentage of GDP). The reason for the debt was quite simply the sudden contraction in the private sector in the 2008 economic crisis which a) cut government revenue (in the form of taxes b) increased expenditure on benefits (from the rise in unemployment etc and c) the fiscal stimulus package that was needed to stop the recession turning into a depression.
In short the failure wasn’t big government. It was the free market. This is why the shock doctrine analogy is so apt and … well… shocking. As Teo points out–its not a natural disaster that the free market is exploiting. its the free market itself. Of course if it will succeed then there has to be a pretext. the order from on high is that our current plight is over spending. its simply not true.
ii) States aren’t households
This is I admit is counterintuitive. households–it is true shouldn’t spend beyond their means (and those living on credit are experiencing the consequences, nevermind those that took out unpayable mortgages). However states not only can live beyond their means (in the aforementioned sense), but routinely do. In fact in a time of recession you are supposed to be running a high deficit (this is basic keynesian economics). The point is you need to get liquidity back into the system, people back to work and the economy running again. Reviving economic growth is the most effective way to reduce the deficit. (NB: The money the state uses doesnt come from shares, or cavelier financial packages–it comes from the bonds–a form of investment an individual makes to the government with a fixed rate of interest and are just about risk free). Cutting spending on the other hand is very likely to have the opposite effect of what is intended. Namely by bringing about a crisis in the public sector that the private sector will not be able to sort out–the deficit is actually quite likely to be increased.
This is commonly referred to as the “deficit hoax” and has traditionally been a trick played on developing countries so as to lock them into unfair free trade and bilateral agreements. What is unusal therefore is that it is a trick now being played at home by a government against its own population.
(I would check out Ha Joon Chang an economist from Cambridge. He is very accessible and explains these issues quite clearly.)
iii) The debt crisis is not a debt crisis
The ConDem government keep harping on about this being the biggest deficit in British history. However they mean in cash terms (which means what they are saying is less than meaningless). To put things in perspective we have the second lowest national debt in the G7 (thats lower than Italy, France, Germany Japan and the USA) none of which are attempting the cuts being proposed in this country. Furthermore (aside from the lunacy of coming up with a timetable for cutting spending on the basis of calendar dates) there is absolutely no urgent need to pay back the debt now. Only 20% of the debt matures in the next 3 years. In short this is a manufactured crisis
I hope this has been helpful
TomK
Teodora and Sam Jam – Thankyou both for your posts. Teodora that link to the tax avoidance website was great, it is a detestable practice. I’ll have to think long and hard about renewing my Vodafone contract and this issue would absolutely change my buying habits (if there was a list of the worst offenders – play.com are registered in jersey and i’ve stopped buying from them). From the governments point of view, i guess tax avoidance is an international issue? tough to crack down on, private tax avoidance advisor services will always be miles ahead of any government funded efforts. A legal requirement to include a tax report in CSR reporting would be something the government could do. Consumers need to champion those companies that shout about paying their taxes in full, the only way to influence it i feel.
Sam Jam, Great response, very well explained and yes it was helpful – I have heard those arguments before and certainly the keynesian one is sound. I understand the risks associated with cutting too fast, but after the stimulus package has prevented a depression then we have to be sensible – i agree that the coalition is going too far. However, there are a few holes which perhaps you can answer me on: The level of private and household debt in the UK is much much higher than Italy, France and Germany…Japan is hardly a model we want to emulate and USA cannot be used for comparison because their economic standing is pretty unique. This is significant on a number of levels, one perspective from a book i’ve read but since lent to my sister (therefore this is a rather cobbled together explanation from memory) posed there were three ‘legs’ which make economies stable: public, private and household finance. For us, our low public debt was our saving grace because our private and household debts were so high, much higher than others in the G7. Now our public debt is rising too, we are at greater risk. We are not an invulnerable economy, anyone buying bonds has to be sure of our ability to pay back…higher risk means we pay higher interest levels. The level of foreign money buying our government’s bonds is high because we have such a low level of domestic saving and the ease of access to foreign money from the City. Foreign finance means we leak our interest payments out of our economy, opposed to Germany where most bonds are bought from within the economy therefore the leakage is low. I’ve tried to find illustrations outside of the book, but don’t have much time at work, but heres one for household debt – its three years old and you can imagine how our debt has grown further since then.
http://www.finfacts.ie/irishfinancenews/article_1019787.shtml
also can you clarify what you mean by: “Furthermore there is absolutely no urgent need to pay back the debt now. Only 20% of the debt matures in the next 3 years.” surely we pay interest yearly on these? if not then what you are suggesting is to pile up more debt for the future us’s to pay back? will we not have to refinance that 20% at higher interest rates?
As I said, I agree with much of your post, but do not believe that is the whole story. one dimensional comparisons to other economies is not sufficient, and the conspiracy that this is a manufactured crisis is too strong. Manipulated and exaggerated maybe, but not as simple as you are suggesting – that increasing public debt would be just rosy, without risks.
Personally, if we’re talking about economic recovery, then stimulating a sustainable, socio-environmental focused economy is preferable for investment and if we were to borrow more that is the most cost-effective place to put public money. through subsidy and financial support we need to create an economy ripe for innovation, entrepreneurship and job creation in cleantech, renewables, social-entrepreneurship etc. We have surely relied far too heavily on the financial sector for tax receipts and the public sector for job creation. The only way to solve that problem is to build a robust economy that can support a large public sector, but avoid the model we’ve had for the last 10 years. At the same time we can address peaking oil, rising energy prices, and the carbon-based energy grid. It may be more painful now, but in 5-10 years we will be much much better off.
Apologies for getting so off-topic, and for going way out of my comfort zone in terms of formal economic theory. feel free to call me out on my BS…i’m just trying to challenge and play devil’s advocate.
Thanks for the article, indeed during the protests the slogan “No Shock Doctrine for the UK” was echoed.
I think it’s unfair to buy into the media rhetoric that the protests “were marred by the violence and destructiveness of a small minority”. The acts of resistance by many young people were perfectly legitimate and simply represent the damage these cuts are bringing.