Saturday, April 02, 2011

Disaster Capitalism Downunder



Capitalist disasters

The common broad left response to disasters such as the recent Christchurch 6.3 ‘quake’ that has wrecked many buildings and will probably have a death toll of over 200 people, is that of ‘Disaster Capitalism’ as popularised by Naomi Klein in The Shock Doctrine. (download)

This argues that today capitalism survives by using shocks to subdue the populations and impose controls which allow it to grab larger and larger shares of scarce resources and increase its share of income. Usually it it is traced back to the onset of the free-market ‘neo-liberal project’ led by the US from the 1970s using aggressive methods of imposing tough conditions on developing countries forcing them to deregulate and sell their assets to predatory global corporates.

The extreme expression of neo-liberal ‘globalisation’ was the military invasion beginning with Indonesia and Vietnam in the 1960s right through to Iraq and Afghanistan today, and the use of similar methods to impose military rule to deal with ‘natural disasters’ such as that of Hurricane Katrina.

While neo-liberalism is a set of policies imposed often by military interventions, it is not a ‘project’ that implies any real change in the way capitalism operates. Capitalism creates the disasters that it then uses to its own advantage. Millions were killed in Indonesia and Vietnam between 1965 and 1975, and more millions in Iraq and the Af/Pak wars today. 

Moreover these disasters go way back to capitalism’s origins. Haiti’s recent earthquake was the same size as Christchurch 7.1 in September last year, but while no-one died in Christchurch, it killed thousands in Haiti because of the extreme poverty due to its long history of colonial and neo-colonial occupation.
So the neo-liberal project is not a new ‘project’ but the response of global capitalism to grab resources cheaply to counter its falling profits. The regimes that imposed neo-liberal policies were responding to to need to boost their profits by any means necessary so that their capitalist system could survive.

The problem is capitalism 

The problem is capitalism and its global crises not some aberration caused by elite greed. Neo-liberalism is no more than the response of the international ruling class to the end of the period of accumulation called the post-war boom. A long boom that itself was the product of the massive disasters of the Great Depression of the 1930s and the Second World War. Depression and War was the response of capitalism to the crisis of falling profits following the First World War. 

Since the 1970s international capitalism has imposed a neo-liberal combination of depressions and wars on the ‘developing’ world to try to restore the rate of profit globally. NZ has moved in this direction since 1984. The end of the post war boom also meant the end to the protected local economy sustained by booming export prices. NZ capitalism also suffered a decline in profitability. Neo-liberalism in NZ was driven by the Labour Party and the National Party in the interests of a new capitalist landowning gentry, speculators and banksters – all parasites on the backs of the working class – to monopolise land, water and cheap labour, in an attempt to restore profitability. 

‘Disaster capitalism’ is simply the parasitic ruling class applying the logic of capital to devalue, destroy and revalue capital to raise profits. Part of the devaluing and destruction is the underfunding of urban growth and the failure to plan for the aftermath of natural disasters such as earthquakes. So instead of minimising the harm of natural disasters capitalism exploits them to con workers into letting them grab what is left of cheap labour and natural resources while they, the workers, are supposed to feel good about it. So as with everything to do with capitalism, it is the capitalists who survive while the workers pay the price of the ‘disasters’. [see article on the Japan’s ‘natural’ disaster].

The Christchurch quake

The Christchurch earthquake needs to be seen in this context. Calling it a ‘national disaster’ and imposing a ‘national emergency’ is to cynically exploit peoples’ humanity so that the working poor pay for the aftermath of this disaster. Of course people want to help, it is instinctive to pull together in an emergency as a matter of self-preservation. But this becomes exploited by the ruling class to con workers into offering their free labour in the re-building of Christchurch for the benefit of capitalism. 

Sam Mahon’s partner had it right. “If Christchurch had been flattened, I wonder what they’d build first. A church or a bank?” ['The Broken Pieces of our Hearts', Sunday Star-Times, 27 Feb 11]. A special tax to pay for the rebuilding is a regressive move to get us all to pay for this disaster and soften us up to pay for all the other coming disasters that are caused by capitalism’s drive to exploit our labour and the resources of nature to the limit.

The Christchurch ‘quake’ is part of this process of the struggle over capitalism’s survival, as the capitalist class will benefit from the rebuilding of Christchurch, witness the “support rebuilding Christchurch business campaign”, while the poor will suffer big losses in living standards, jobs, education, and be hounded by the managers in WINZ [Work and Income NZ] to move around the country into low paid shitty jobs or be judged as welfare scroungers. 

A National Emergency that rescues the NACT regime

The earthquake is good news for the NACT regime all round. It concentrates capitalism’s destructive forces under the guise of ‘nature’ and speeds up the regime’s plans to monopolise land and labour in NZ. The regime can use it to build support for their policies of concentrating and centralising NZ assets in the hands of international corporate capital.

PM John Key has estimated that it may take $20 billion to rebuild Christchurch. The cost of the rebuilding will cut 6% from economic growth. What he really means is that physical and human capital will be destroyed on a huge scale. But while the workers will suffer a major destruction of their living standards, monopoly capital will liquidate and restructure, i.e., buy up devalued physical assets and labor cheaply and pocket huge profits.

Liquefaction liquidates labour and capital values

The estimated 125,000 jobs losses in Christchurch means a big outflow of unemployed into the national floating reserve pool of labour. Thousands are already relocating without any instruction from WINZ. Welfare Razor Gang policies will force thousands more onto the job market. So that’s a huge increase in the supply of labor that will force a downward pressure on wages that no existing bureaucratised union can fight.

As for recapitalising the land and buildings of Christchurch, $15 billion will come from national and local body disaster insurance and $5 billion from extra taxes, all of which are, in the last analysis, deducted from the value produced by workers at the expense of their income share. Christchurch will revert to a service centre for agriculture, tourism and heritage. Other industry will migrate north and across the Tasman to Australia or Asia as it has been doing for years. 

NACT regime will speed up privatisation

Key will use the cost or rebuilding to justify speeding up the privatising of state assets and services. The first target will be the part sale of the SOE (State Owned Enterprises) power generators that currently provide a big dividend to the government. 

But privatisation is not about economic efficiency, it’s about the extraction of monopoly rent. Privatising farm land, water, foreshore and seabed (Maori will fail to get any sort economic benefit except a small elite that buys shares in monopoly capital), SOE’s, and social services etc., will benefit the NACT regime’s international capitalist class backers who will extract big chunks of monopoly rent from NZ’s land and labor into their increasingly tax free pockets.

All of this vindicates the Marxist theory that as capitalism gets more crisis-ridden it can only survive by scavenging – the increased destruction of the value of physical and human capital to facilitate the international concentration and relocation of capital to take advantage of cheap resources and labor. The growing gap between rich and poor internationally is but a surface symptom of this process.

Christchurch is a microcosm of capital liquidation and restructuring

Years of underfunding and deregulation has led to much destruction of physical and human capital. The official enquiries set in motion after the earthquake will reveal how much the inadequate earthquake standards and building on reclaimed land contributed to the destruction. But it affords a perfect opportunity for capital to devalue and restructure rapidly. Working class housing stock is destroyed and workers thrown onto the scrap heap. Old substandard building stock is destroyed and its insurance value becomes a liquid fund for reinvestment and relocation.

Thus the NACT regime as the party of international corporate capital intervenes with emergency regulations to enforce a rapid liquidation and restructuring of physical and human capital. It rationalises the recovery and rebuilding to suit the now corporatised Canterbury and hinterland economy in the interests of the 21st century landed gentry, and the wider NZ economy in the interests of international capital. 

What about the workers?

What has the Labour Party to offer the workers whose jobs, houses and lives in Christchurch have been destroyed? Labour was the party of class reconciliation in the age of national capital. The reconciliation only worked while protectionism allowed high profits to pay high wages. The end of the boom in the 1970 ended all that and saw NZ sink into a rapid economic decline as a semi-colony of Australia.

In 1984 Labour had no choice but to switch from serving national to international capital. After deregulation class reconciliation became a dream. So Labour has no answers for workers today.


As Christchurch workers are liquidated into the reserve army of labor and get pushed around by the state agencies they will become more class conscious and self-reliant. They will look to their own organisations and leaders. So welcome to the new age of labour struggles that match those of the Red Fed a century ago when Christchurch was one of the hotbeds of working class militancy.

Workers reply to disaster

To pay for this disaster we have to kick out the NACT [National Party and ACT Party coalition] regime, take back the $15 billion tax cuts to the rich, impose a capital gains tax on all the speculators, and borrow to compensate the victims of the quake fully, set in motion a public works building program to rebuild Christchurch around the needs of its working class community, in particular its health and safety, and not the interests of the capitalist class. But neither party of the ruling class, National or Labour, will do this. Only a government that represents the interests of the working class can do this.

The Christchurch working class needs to organise around its union base to build its own response to the quake and challenge the top-down ruling class management of this disaster. Maybe that way there will be a groundswell of a different sort that builds a working class social movement capable of ending NZ’s capitalist disaster story and putting working people into power.
Post a Comment
There was an error in this gadget