Klein-Disaster Capitalism-Harpers 2007

Individual shocks and crises could be harnessed as

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Unformatted text preview: ut on standby for the next disaster. A master of privatizing the core functions of the state during extraordinary circumstances, the company was now doing the same under ordinary ones. lf disasters had served as laboratories of extreme privatization, the testing phase was clearly over. or decades, the conventional wisdom was that generalized mayhem was a drain on the global economy. Individual shocks and crises could be harnessed as leverage to force open new markets, of course, but after the initial shock had done its work, relative peace and stability were required for sustained economic growth. That was the accepted explanation for why the Nineties had been such prosperous years: with the Cold War over, economies were liberated to concentrate on trade and investment, and as countries became more enmeshed and interdependent, they were far less likely to bomb one another. At the 2007 World Economic Forum in Davos, Switzerland, however, political and corporate leaders were scratching their heads over a state of affairs that seemed to flout this conventional wisdom. It was being called the "Davos Dilemma," which Financial Times columnist Martin Wolf described as "the contrast between the world's favourable economics and troublesome politics." As Wolf put it, the economy had faced "a series of shocks: the stock market crash after 2000; the terrorist outrages of September 11, 2001; wars in Afghanistan and Iraq; friction over US policies; a jump in real oil prices to levels not seen since the 1970s; the cessation of negotiations in the Doha round [ofWTO talks]; and the confrontation over Iran's nuclear ambitions"-and yet it found itself in "a golden period of broadly shared growth." Put bluntly, the world was going to hell, there was no stability in sight, and the global economy was roaring its approval. This puzzling trend has also been observed through an economic indicator called "the guns-to-caviar index." The index tracks the sales of fighter jets (guns) and executive jets (caviar). For seventeen years, it generally found that when fighter jets were selling briskly, sales of luxury executive jets went down, and vice versa: when executive-jet sales were on the rise, fighter-jet sales dipped. Of course, a handful of war profiteers always managed to get rich from selling guns, but they were economically insignificant. It was a truism of the contemporary market that you couldn't have booming economic growth in the midst of violence and instability. Except that the truism is no longer true. Since 2003, the year of the Iraq invasion, the index has found that spending has been going up on both fighter jets and executive jets rapidly and simultaneously, which means that the world is becoming less peaceful while accumulating significantly more profit. The galloping economic growth in China and India has played a part in the increased demand for luxury items, but so has the expansion of the narrow military-industrial complex into the spr...
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This note was uploaded on 04/19/2011 for the course AMST 150 taught by Professor Perkinson during the Fall '10 term at University of Hawaii, Manoa.

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