Disaster Capitalism: Profit and Privatisation during the Contagion
By Yameena Z.
In June 2019 trade unions, civil society and opposition parties questioned the government about the possible privatisation of railways, following which, the Union Minister for Railways, Piyush Goyal, ascertained that there were no plans of railway privatisation. One year later, as the world battled a pandemic, the government announced that it was accepting proposals from private companies to run 151 trains over 109 routes for a period of 35 years.
This phenomenon was not restricted to railways; bills and policies pertaining to privatisation of education, dilution of labour laws, restrictions on union activities, removal of safety nets for farmers, all of which had been strongly opposed by citizens before the COVID-19 pandemic, were hurriedly passed in the Parliament. This was done while the majority of the Indian population battled a looming economic crisis, a health crisis, and a crisis of unemployment.
Author and activist Naomi Klein calls this “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities” or simply “disaster capitalism.”
Chicago School, A Chilean Dictator and the Psychology of Shock and Awe
Klein’s book The Shock Doctrine: The Rise of Disaster Capitalism traces the expansion of the free market through the process of the introduction of neoliberal policies following shock-inducing events in various countries. From the introduction of charter schools in New Orleans post-Hurricane Katrina, to using land cleared by the 2004 Tsunami for tourism in Sri Lanka, the book interrogates the formulation and execution of the theory of disaster capitalism.
Milton Friedman of the Chicago School is claimed to have written an op-ed following Katrina which stated, “This is a tragedy. It is also an opportunity to radically reform the educational system.” Soon enough, think tanks, backed by George W. Bush’s millions, privatised the New Orleans education system. “Within nineteen months,” Klein writes, “with most of the city’s poor residents still in exile, New Orleans’ public school system had been almost completely replaced by privately run charter schools,” an endeavour considered impossible under normal circumstances due to the unpopularity of charter schools amongst residents.
Years before the hurricane and the tsunami, Friedman had utilised the shock of the 1973 coup in Chile (which Klein claims was itself the result of the Chicago School) that deposed the socialist leader Salvador Allende and installed the dictatorship of General Augusto Pinochet. In the years following the coup, Friedman and other economists trained at the School advised Pinochet on matters of economics hoping to create unfettered capitalism.
The book refers to a CIA manual on torture that notes:
“There is an interval-which may be extremely brief-of suspended animation, a kind of psychological shock or paralysis. It is caused by a traumatic or sub-traumatic experience which explodes … Experienced interrogators recognize this effect when it appears and know that at this moment the source is far more open to suggestion, far likelier to comply.”
Using this psychological understanding, states use the shock caused by the ‘original disaster’ which could range from a natural calamity to a politically motivated one, for example, a coup or terror attack, to push forth policies that would otherwise be strongly opposed. Klein claims that this method of shock therapy was also used during the invasion of Iraq which was aptly named the tactic of “shock and awe” by American forces and commentators.
India and the Pandemic
In her article about India’s COVID-19 response, scholar Manasi Karthik holds the dual processes of undermining State capacity (defined as the state’s responsibilities to provide for welfare, imposition of limits on private sector, etc.) and the resultant centralisation of State power responsible for disaster capitalism under the Modi administration:
Modi’s approach to the lockdown has been characterized as mere ineptitude, but this fails to appreciate how Modi’s response evinces a lack of state capacity that lends itself to these shock therapy style interventions. Modi’s lockdown was not only imposed suddenly but was also accompanied by a hollowed-out State that had failed to establish safety nets for its vulnerable populations. Together, these two factors have ensured that Modi’s regime has had its citizens living from one crisis to the next.
However, it has increasingly become clear that India did have certain safety nets and institutions which were guided by policies of welfare. These handful of safeguards which Milton Friedman, if alive, would perhaps have termed as ‘hindrances to “pure” free market’ were subsequently diluted in the months following the pandemic.
For the purpose of this article, we shall look at four bills and policies which herald a change in the economy, namely — the New Education Policy (NEP 2020), dilution of labour laws at state and central level, the Farm Bills, and the efforts to privatise Indian Railways.
Years before the pandemic, the draft New Education Policy (NEP 2020) had received criticism from educators and was charged as being an effort to privatise education. The month of July 2020 saw a 65% increase in COVID-19 cases in India. Amid the crisis, the controversial NEP was approved by the Union Cabinet on 29th July.
While the NEP was hailed by the administration for being interdisciplinary, progressive and inclusive, certain aspects of the policy are capable of harming public education and students from underserved communities.
In an effort to promote multilingualism, the policy effectively prohibits the teaching of the English language, which has been deemed an important resource for social mobility for marginalised castes, tribes and other minority communities, until class fifth (or eighth). This is particularly surprising given the fact that the policy recognises that “a significant proportion of enrolled students drop out after Grade 5 and especially after Grade 8”. This means that students forced to drop out between Grades 5–8 will have little to no knowledge of the English language. Furthermore, the “3 language formula” proposed by the policy has made states like Tamil Nadu apprehensive due to anxieties that it will inevitably result in Hindi language imposition in non-Hindi states.
Efforts to introduce vocational training and compulsory internships during schooling have also been criticised for diverting educational institutions away from pedagogy and towards labour.
The word ‘vocation’ is mentioned 80 times in the policy document indicating an increased focus on developing ‘employability’ of students. Jeff Noonan and Mireille Coral in their paper about neoliberal schooling, which they term as “de-schooling”, identify the indoctrinating influence of employability-focused education:
Of all the alienating effects school produces, none is more damaging to the formation of individual and collective agency than the belief that making oneself marketable to potential employers is both a primary duty of social life and a natural necessity. Once that idea has been instilled, fear of compromising one’s marketability to potential employers strongly impedes the formation of desires for fundamental social changes necessary to abolish alienated labour.
92% of India’s workforce consists of informal labourers who lack job security 8and social security. Periodic Labour Force Survey conducted in 2017–2018 found that 71% of regular wage workers had no formal job contracts. This means that the majority of Indian workforce does not enjoy labour laws. The Indian government, instead of undertaking efforts to make labour laws more expansive and beneficial for workers in the face of the pandemic, did the opposite. The last six months have witnessed a systematic dilution of protections provided to workers in India.
The earliest sign of this was the dilution of labour laws in the state of Uttar Pradesh. The Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020 passed by the State cabinet suspended all labour laws, except four acts and Section 5 of the Payment of Wages Act (1936), for the next three years. Madhya Pradesh, Gujarat and Karnataka followed suit. The labour laws suspended include the Trade Union Act and the Factories Act. Former Supreme Court judge, V Gopala Gowda has pointed out that State governments are only empowered to suspend the Factories Act in case of ‘public emergency’ i.e in case of internal or external security threat, thereby making this ordinance unconstitutional.
After state-wise amendments to labour laws came the Industrial Relations Code Act, passed by the Parliament in September. The Act, in addition to two other labour codes, was passed whilst the opposition was absent from the parliament due to an ongoing boycott.
The code introduced a fresh restriction on strikes and trade union activity and eroded the limited cover provided to workers.
In the parliamentary session held in September, the government passed the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill — collectively known as the Farm Bills.
In her book, Klein highlights the fact that disasters allowed for democratic governments to get away with undemocratic use of power for the benefit of the free market:
Many of these countries were democracies, but the radical free-market transformations were not imposed democratically. Quite the opposite: as Friedman understood, the atmosphere of large-scale crisis provided the necessary pretext to overrule the expressed wishes of voters and to hand the country over to economic “technocrats.”
In no other example is this undemocratic overrule of wishes as visible as that of the Farm Laws. Two of the three farm bills were passed in the Rajya Sabha with a voice vote which was strongly opposed by the opposition. Eight opposition MPs were suspended, other MPs of the four opposition parties walked out in protest. As the boycott by the opposition continued, seven bills (including the third Farm Bill) were passed within four hours, in the absence of opposition parties. All the while, farmers across the country waged protests against the Laws.
The Produce Trade and Commerce Bill opens up the market outside the APMC (Agricultural Produce Market Committees) mandis thereby allowing private players to buy produce from farmers. This means that costs would be dictated by market forces in place of the Minimum Support Price which was previously assured to the farmers. While the government has claimed that MSP would continue, farmers have questioned this claim as the MSP assurance is not mentioned in the bill itself.
The second bill is a national framework for contract farming. 85% of Indian farmers are categorised as marginal or small. Provisions of this bill are likely to make these small farmers vulnerable to large, international companies. The imbalance of power would put the majority of Indian farmers at a disadvantage during contract farming negotiation. Private players would dictate what and how these small farmers cultivate.
The Essential Commodities Bill is only four pages long, and deregulates some of the most commonly used food items, thereby limiting the government’s ability to produce, supply, and distribute the aforementioned commodities to certain situations of war, famine and extreme inflation. Deregulation is likely to increase private investments, private hoarding and subsequent price rise.
The three Farm Laws, in totality, are reforms that aim to deregulate and liberalise farm produce, open the agriculture industry to market forces and leave India’s 85% marginal and small farmers with limited safety nets.
Despite repeated assurances over the years where they stated otherwise, during the pandemic, the government called for applications from potential private investors for the first round of railway privatisation. The current plan aims to hand over 150 trains to private train operators (PTOs). These companies would operate trains alongside the public trains but would have complete “ autonomy to determine and levy fares.” Private players were also assured that there would be no price ceilings imposed by the government. They hope “market competition in the transport system” and lack of monopoly will prevent steep fare rise.
In addition to this, PTOs will be given “freedom to choose halt stations for the trains they operate.” Private companies have also been called to invest and develop in goods-sheds at railway stations.
The All India Central Council of Trade Unions, All India Railway Federation and National Federation of Indian Railwaymen have raised questions about this railway privatisation which is expected to not only increase fare prices in these select trains but also result in the replacement of government employment with contractual work.
Privatisation of Public Sector Undertakings (PSUs) is not limited to Railways. Since 2019, the Adani Enterprise has successfully bid and won the rights over airports in Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati. The last six months have also seen the invitation of private investments for Air India.
Shock Resistance
In addition to the psychological shock of the pandemic and the complete restructuring of life, the pandemic-induced shock limited people’s ability to protest in a very literal way. Countries went into lockdown, work and education were shifted from public spaces to private spaces. The shock of the pandemic was also accompanied by the shock of unemployment, poverty and homelessness. Civil society and trade union activity faced challenges of mobilisation in ways they never had before.
However, shocks by their very definition are temporary and populations exploited via economic shock therapy inevitably develop resistance. From the farmers’ protests across the country to the worker’s strike against the privatisation of the PVVNL power company in UP, it is evident that people are coming out of shock. The Shock Doctrine notes:
“Prisoners should be segregated immediately,” the 1983 [CIA] manual states. “Isolation, both physical and psychological, must be maintained from the moment of apprehension.” The interrogators know that prisoners talk. They warn each other about what’s to come; they pass notes between the bars. Once that happens, the captors lose their edge. They still have the power to inflict bodily pain, but they have lost their most effective psychological tools to manipulate and “break” their prisoners: confusion, disorientation and surprise. Without those elements, there is no shock.”
Perhaps the answer to why people came out of the shock of the pandemic and began to resist disaster capitalism lies within capitalism itself. The State and capitalists alike repeatedly told workers and students that the world cannot come to a halt just because of the pandemic — life must go on. People were forced to re-join factories and offices, they were invited back to consume goods and services so profits would not fall. It was inevitable that farmers and workers would come to realise that the risk of the contagion fell short in the face of the risks of capitalism.
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Originally published at http://lighthousemh.wordpress.com on December 13, 2020.
