Disaster capitalism: how corporations profit from crises

Sarah Jacob in conversation with Antony Loewenstein

Antony Loewenstein has spent the past decade following corporations around the world, examining how they cash in on crises by securing lucrative government contracts, often with little scrutiny of their activities. Last month at Virtual Progress 2020, he joined a panel of experts to discuss the rising phenomenon of disaster capitalism. I spoke with him after the event.

You’ve defined disaster capitalism as “People and corporations making money from misery” – can you give an example of what that looks like in practical terms? 

In the last 30 years or so since the 1980s, under Reagan in the US and Thatcher in the UK, there’s been a massive acceleration of this disturbing trend of selling off of public assets and reduction in regulation. What you find in 2020 is an economic system in many western countries – and you could argue it exists in much of the rest of the world – where the largest corporations are not just making obscene amounts of money but doing it largely with no accountability. Particularly if they’re operating in a development space: a war zone like Afghanistan; a disaster zone after an earthquake in Haiti; if they’re managing immigration in Australia and Nauru. That to me is disturbing and should be called out and challenged.

Have you seen any evidence of poorer outcomes as a result of this?

I’ve spent the last 10 years travelling the world, and Australia, investigating what this means practically, and the short answer is yes. I’ll give an example – the war in Afghanistan in its current version has been going since 2001. Although wars in part have been privatised before 9/11, the Bush administration saw an opportunity to firstly, rewards its friends, who wanted to go to war and make a fortune. But secondly what they liked – and of course this was never said, but it’s the reality in practice – was the idea that private corporations and mercenaries can essentially operate outside the bounds of not just local law, but also international law. So in Afghanistan, the US and many of its allies were hiring private security firms, both local and global, who committed huge numbers of abuses. I spent time in Afghanistan twice in the last decade, speaking to Afghans who personally suffered from this: whose family members were killed by private mercenaries who were funded often by the US government. The impact of this is obvious on the personal level, but in the broader context, it’s fueling the insurgency. Although disaster capitalism wasn’t the sole reason why America lost [the war], it partly explains why so many Afghans are pissed off with the way America and its allies performed in that war. 

What do you think has driven this trend?

The main factor leading people like Reagan and Thatcher, and their disciples in many parts of the world, is an ideological belief that the role of government should be as limited as possible. It’s a belief that the private sector – which has far less accountability – should be leading the way in managing society. The underlying principle of that is that the most vulnerable miss out – that’s the point. I don’t say that because a system that’s government run is perfect. Not at all. In the case of Australia’s immigration system – we are the only country that has outsourced its entire immigration system. Yes, it’s ultimately government officials who decide whether person X or person Y enters the country, but the facilities themselves are solely run by private companies. The results speak for themselves – two and half decades of unbelievable human rights abuses both on- and off-shore. It’s also important to know that this is quite bipartisan. There are differences of course, but the conservative side of politics very much idealises the role of governments shrinking even more. With regards to immigration in Australia, one of the most shameful examples of bipartisanship in the past 20 years is that both major sides of politics basically agree with each other. They’re really just disagreeing about how cruel we should be. And finally, both sides of politics like that fact that they have less responsibility. They know that the system is designed to break people, that’s what the system is for. When something goes wrong – when someone is injured, or dies, or there’s a sexual assault – and it’s committed by a private security guard, [the government] can say “It’s not our fault – speak to the company.” And I’ve done this as a journalist – you go to the company and they say “It’s not our fault, speak to the government.” It’s designed to have no accountability. 

With regard to your recent story in The Saturday Paper on the Aspen Medical company contract to build a coronavirus treatment facility in the ACT, you’ve noted that some spectators will point to the fact that these operators are not actually doing anything illegal and are simply being opportunistic. Why should people take an interest in cases like this?

People should care because too often, taxpayer money is being given to people with little or no accountability. In this case, no-one was dying, because thankfully in Australia we haven’t been overwhelmed like other parts of the world with coronavirus. I spoke to a doctor recently and she said that although Australia’s preparation had been very good, if Australia has a surge of cases, we would be overwhelmed. So Aspen Medical was contracted to essentially build a pop-up hospital, in case something went wrong. But the problem is, because over decades, the public service has been ground down so much, that private companies can step up and say ‘we can deliver this for you.’ Companies like that often replace the public services, and accountability both here and around the world, is rarely given the transparency that’s required. They don’t need to, for example, appear before a parliamentary enquiry: they can be called, they can be subpoenaed if it’s a court case. But it’s not like a government department which has to front an enquiry. Now this doesn’t mean that the people at Aspen Medical are evil. But the lack of transparency on why a company like Aspen was hired… Does it have something to do with the fact that they have been large donors to both major political parties? Probably. I don’t think it’s the sole reason. There is a belief that the private sector is more efficient. A good example is when they were contracted by the Australian government for its response to the Ebola crisis in West Africa about six years ago. They saved some people’s lives but the government gave them an insanely massive contract, and sources who spoke to me were questioning – was that value for money? As the government said a few months ago: they have this experience around the world, therefore we hire them. Okay, but where’s the transparency around the amount of money? Where is that money going? All of those questions are rarely asked.