AMY GOODMAN: As we continue to look at the issue of Iraq and the U.S. occupation, we turn to the acclaimed author and journalist Naomi Klein. Naomi Klein is a widely read columnist for The Nation magazine and the London Guardian, author of the best-selling book No Logo, more recently, Fences and Windows. She came to New York for the launch of Jeremy Scahill’s book on Blackwater and spoke at the Ethical Culture Society on the privatization of military and the state, putting it in a historical context.

NAOMI KLEIN: This drive to the privatize every aspect of the state of government is about a 35-year-old campaign. Many people date it, many historians date it to the 1973 coup in Chile, which is something that is interesting in terms of Jeremy’s research, because he talks about how Blackwater are now hiring Chileans to go to Iraq, and I’ll let him do that. But the first example of the attempt to build a fully privatized corporate utopia was in Chile in 1973 after Pinochet’s coup, when he joined up with a team of economists from the University of Chicago to engage in that experiment.

It is a different kind of colonial project. In Latin America, this project, which is often called neoliberalism, is referred to as neocolonialism. The first stage of colonialism was the opening of the veins of Latin America, as Eduardo Galeano describes it, the pillaging of raw resources, the exporting of raw resources. The second stage of colonialism — and, of course, that first stage never fully goes away — was pillaging the state. What had been constructed in the aftermath of the Great Depression and during the postwar boom years — the construction of healthcare systems, education systems, roadways, railways — but this is really what was launched in Chile with the help of the Chicago boys: the strip mining of the state itself.

The way I imagine this corporate project, this privatization project, is if we imagine the state as a kind of an octopus with all of these limbs. And for the past 30 years, and certainly in this country since Reagan, what the privatization campaign has really been doing is lopping off the limbs of the state — the phone system, the roadways, these sort of non-essential services, if you will. And after you’ve chopped off all the limbs, all you have left is the center, is what they call the core.

And what the Bush administration has really been doing is going for the core, privatizing those core essential government services that are so inherently part of what we think of as the state, that it almost seems impossible to imagine that they could be privatized, like the government itself, like cutting Social Security checks, like welfare, like prisons, like the army, which is where Blackwater fits in.

What’s so extraordinary about what has happened in Iraq — and Amy mentioned the “Baghdad Year Zero” article — is that you really have all of these layers of colonialism and neocolonialism, this quest for privatization, forming a kind of a perfect storm in that country. On the one hand, you have sort of old-school colonial pillage, which is, let’s go for the oil. And as many of you know, Iraq has a new oil law. It’s passed through cabinet, hasn’t yet passed through parliament. But, really, it legalizes pillage. It legalizes pillage. It legalizes the extraction of 100 percent of the profits from Iraq’s oil industry, which is precisely the conditions that created the wave of Arab nationalism and the reclaiming of the resources in the 1950s through the '70s. So it's an undoing of that process and a straight-up resource grab, old-school colonialism.

Layered on top of that, you have sort of colonialism 2.1, which is what I was researching when I was in Iraq, which is the looting of the Iraqi state, what was built up under the banner of Arab nationalism, the industry, the factories. The kind of rapid-fire, shock therapy-style strip-mining privatization that we saw in the former Soviet Union in the '90s, that was the idea, that was Plan A for Iraq, that the U.S. would just go in there with Blackwater guarding Paul Bremer and would sell off all of Iraq's industries. So you had the old-school colonial, then you had the new school.

And then you had the postmodern privatization, which was the idea that the U.S. military was actually going to war, the U.S. Army was going to war, to loot itself, which is a postmodern kind of innovation, right? If we remember, Thomas Friedman told us less than a decade ago that no two countries with a McDonald’s have ever gone to war. Now, we go to war with McDonald’s, Taco Bell, Burger King, in tow. And so, the process of waging war is a form of self-pillage. Not only is Iraq being pillaged, but the United States coffers of this government are being pillaged. So we have these three elements, all converging this perfect storm over this country.

And one of the things that I think is most important for progressives to challenge is the discourse that everything in Iraq is a disaster. I think we need to start asking and insisting, disaster for who, because not everybody is losing. It’s certainly a disaster for the Iraqi people. It’s certainly a disaster for U.S. taxpayers. But what we have seen — and it’s extremely clear if we track the numbers — is that the worse things get in Iraq, the more privatized this war becomes, the more profitable this war becomes for companies like Lockheed Martin, Bechtel, and certainly Blackwater. There is a steady mission creep in Iraq, where the more countries pull out, the more contractors move in, which Jeremy has documented so well and will talk more about.

The danger. These are the stakes that I think we need to understand. And I really do want to keep this brief, so that we have a fruitful discussion afterwards. What are the stakes here? The stakes could not be higher. What we are losing is the incentive, the economic incentive, for peace, the economic incentive for stability. When you can create such a booming economy around war and disaster, around destruction and reconstruction, over and over and over again, what is your peace incentive?

There was a phrase that came out of the Davos conference this year. Every year, there’s always a big idea to emerge from the World Economic Summit in Davos. This year, the big idea was the Davos dilemma. Now, what is the Davos dilemma? The Davos dilemma is this: For decades, it’s been conventional wisdom that generalized mayhem was a drain on the global economy, that you could have an individual shock or a crisis or a war that could be exploited for privatization, but on the whole — and this was the Thomas Friedman thesis — there needed to be stability in order to have steady economic growth; the Davos dilemma is that it’s no longer true. You can have generalized mayhem, you can have wars in Iraq, Afghanistan, threats of nuclear war with Iran, a worsening of the Israeli occupation, a deepening of violence against Palestinians, you can have a terror in the face of global warming, you could have increased blowback from resource wars, you can have soaring oil prices, but, lo and behold, the stock market just goes up and up and up.

In fact, there’s an index called the Guns-to-Caviar Index, which for 17 years has been measuring an inverse relationship between the sale of fighter jets and executive luxury jets. And for 17 years, this index, the Guns-to-Caviar Index — the guns are the fighter jets, the caviar are the executive jets — has found that when fighter jets go up, executive jets go down. When executive jets go up, fighter jets go down. But all of a sudden, they’re both going up, which means that there’s a lot of guns being sold, enough guns to buy a hell of a lot of caviar. And Blackwater is, of course, at the center of this economy.

The only way to combat an economy that has eliminated the peace incentive, of course, is to take away their opportunities for growth. And their opportunities for growth are ongoing climate instability and ongoing geopolitical instability. Their threats — the only thing that can challenge their economy is relative geopolitical and climatic peace and stability, so I suppose we have our work cut out for us to fight the war profiteers.

AMY GOODMAN: Naomi Klein, her forthcoming book is called The Shock Doctrine: The Rise of Disaster Capitalism.