Hello disaster capitalism?

Posted on April 18, 2019

It is twelve years since Naomi Klein first coined the term ‘disaster capitalism’ (1). She was describing   the way corporations and the politicians linked to them, especially but not exclusively in the USA, used disasters, whether they be climate-related, military interventions or coups, major terrorist attacks, or other moments of crisis as opportunities to drastically re-shape capitalism to their own ends rapidly, decisively and irreversibly, when populations were too shocked to respond let alone resist; the ‘shock doctrine’.  There has been quite a lot of discussion in the media about the potential disruption that a ‘No Deal’ Brexit would cause, and the likely consequences of such an outcome – still possible at the time of writing.  Certainly food and medicine shortages, public disorder, troops on the streets and a state of emergency, hard to imagine outside wartime until they happen, would probably constitute a societal rupture of the kind described by Klein. She argues that ‘Believers in the shock doctrine are convinced that only a great rupture can generate the kind of vast clean canvass that they crave. It is in these malleable moments when we are psychologically unmoored and physically uprooted that these artists of the real plunge in their hands and begin their work of remaking the world.’ There isn’t too much doubt that ‘dark money’ and influence had a profound impact on the referendum in 2016 and that as Peter Geoghegan and Jenna Corderoy in their Open Democracy report (2) amongst others, has revealed the disruption of a’ No deal’ or a ‘clean break’ Brexit is seen a as major opportunity to wipe the slate clean, tear down decades of regulations relating to environmental, social, and consumer protections and recreate the UK as George Monbiot puts it into ‘.. a giant export processing zone exempt for the laws that govern other rich nations…. a huge potential prize that could begin to reconfigure the global relationship between capital and governments.’(3)

This is a scenario that a small group of very wealthy and influential people would dearly like to see come about and  the fact that the European Union (EU) has stood in its way for such a long time  explains a great deal of the antipathy towards the EU. However whether or not such a Brexit scenario, or something very similar to it actually comes about isn’t entirely in their hands. The EU itself remains a significant actor and the fact that it is, isn’t necessarily in the UK’s interests either.

The Institute for Public Policy Research’s Director Tom Kibasi who has been leading a series of research strands on what a ‘progressive Brexit’ might look like for the UK has argued (4) that the fears of a ‘no deal’ Brexit are not just exaggerated, but wrong and that ‘the short term impact of a no-deal Brexit will not be nearly as bad as predicted, but the long term impact will be much worse than feared’. Perhaps a counter-intuitive argument to Klein. Essentially he reckons that the EU will not place the UK under some kind of medieval siege in the event of no-deal Brexit, and troops won’t be deployed on the streets. Instead  the EU’s response ‘ will be strategic; opening up advantage sector by sector, calmly and patiently dismantling the UK’s leading  industries over the course of a decade.’ Far from a short term rupture ‘they will eat the elephant one bite at a time.’ Even if only partly true this has huge implications for the British economy, its industrial base and the nature of the society we all end up living in, exactly the concerns of the planning profession. The process seems to be under way already. Honda having announced that they would need the largest building in the world to maintain a  stock of parts to make their cars at Swindon in the event of just-in-time production being jeopardised, simply announced in February that they would close the plant entirely in 2021, the first plant they have ever shut in their 71 year history. Brexit was hardly mentioned except by implication, a new Japan-EU trade deal having come into force on 1 February which abolishes tariffs over a seven year period.  This decision and that of Nissan not to build their new model in Sunderland are evidence that fixed capital investment in a free market economy is more mobile than many had imagined. Kabasi argues that the process already under way, will involve the EU setting out a timeline over which it would introduce compliance and rules of origin checks on the UK’s  most competitive exporting sectors, suggesting automotive parts from 2021, pharmaceuticals from 2022 and aerospace from 2023 ‘alongside constantly shifting sands of equivalence for financial services.’ The results would not be the avalanche of bad news and lost jobs that many fear as the result of a disorderly Brexit, but rather but rather an orderly departure by firms from the UK to the European single market.

One of the ironies of this is that the UK economy is heavily reliant on foreign investment – one of Mrs Thatcher’s triumphs in establishing the Single Market and making the UK the go-to destination within it, especially for Japanese companies seeking a European foothold. Without that foreign investment, the UK lacks the industrial base to switch from foreign to domestic production, thanks in large part to the 1980’s shock therapy applied to the UK economy by the very same disaster capitalists now leading the charge towards a no-deal Brexit. Klein’s scenario is scary and has precedents, dramatically portrayed in the film ‘Vice’ about the life and times of Vice-President Dick Cheney, facilitator of disaster capitalism in Iraq and New Orleans after Hurricane Katrina. But Kabasi has a more plausible scenario for a post-Brexit Britain. It is one of  almost imperceptible decline over a couple of decades into a kind of gilded poverty where memories of former greatness and the tourist and cultural economy that go with them become the mainstays of  the economic base of the country, along with some low wage  export processing of the kind Monbiot envisages. Time will tell but the warnings are clear enough.

1.       Klein, Naomi: The shock doctrine: the rise of disaster capitalism. Allen Lane 2007

2.       https://www.opendemocracy.net/uk/brexitinc/peter-geoghegan-jenna-corderoy/revealed-how-dark-money-is-winning-brexit-influencing-ga

3.       https://www.theguardian.com/commentisfree/2019/feb/07/disaster-capitalists-no-deal-brexit-environment

4.       https://www.theguardian.com/commentisfree/2019/feb/07/no-deal-brexit-medieval-siege-eu-britain-industries

This article first appeared in the April/May 2019 edition of Town and Country Planning