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The Shock Doctrine: The Rise of Disaster Capitalism

In her new book, The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein shocks you with the correlation she draws between electroshock therapy and the way the United States has imposed the Chicago School of Economics ‘shock’ theories around the world. The books begins in New Orleans, after Katrina, the victims in shock, seeing nothing but destruction; but the in the ruins Milton Freedman, of the Chicago School of Economics, saw an opportunity to impose fair market values that would allow a few elite to amass fortunes. Already in the destruction, you can see orchestrated raids on the public sphere and the arising market opportunities of disaster capitalism. Klein tells us that, “Some people stockpile canned goods and water in preparation for disaster; Friedmanites (followers of Milton Freedman’s theories of economics) stockpile free market ideas.” Klein quotes Freidman’s influential essay Capitalism and Freedom, “Only a crisis—actual or perceived---produces real change. When the crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” Friedman would first have the opportunity to test these ideas as an advisor to Chilean dictator, General Augusto Pinochet. The application of his economic shock treatments would lead not only to the impoverishment of millions, but an epidemic of torture that punished those who believed in a different kind of society. Whether it is the 9/11 terrorist attack, the Iraq War, tsunamis or hurricanes, Milton Freidman’s movement would exploit the crisis to further their fundamentalist form of capitalism.

In the 1950’s the United States Central Intelligence Agency (CIA) would fund research in Brainwashing. The information gathered from these experiments would become the science behind modern day fear and torture practices. The goal of the electro-shock treatment was to erase the mind, leaving a blank slate on which new ideas and values could be imprinted. But the end result of these treatments was not a blank slate, but a shattered mind, with fragmented memories. Klein, discussing Dr. Cameron’s research for the CIA, asserts that, “The problem obvious in retrospect, was the premise on which his entire theory rested: the idea that before healing can happen, everything that existed before needs to be wiped out. Cameron was sure that if he blasted away at the habits, patterns, and memories, of his patients, he would eventually arrive at a pristine blank slate. But no matter how doggedly he shocked, drugged and disoriented, he never got there. The opposite proved true: their minds weren’t “clean”; rather, they were a mess, their memories fractured, their trust betrayed. Disaster capitalist share this same inability to distinguish between destruction and creation, between hurting and healing.” Klein tells us she had the same feeling in Iraq as she waited for the next explosion. She states that, “Fervent believers in the redemptive powers of shock, the architects of the American-British invasion imagined that their use of force would be so stunning, so overwhelming, that Iraqis would go into a kind of suspended animation…In that window of opportunity, Iraq’s invaders would slip in another set of shocks—these one economic—which would create a model free-market democracy on the blank slate that was post invasion Iraq. But there was no blank slate, only rubble and shattered angry people—who, when they resisted, were blasted with more shocks…Like Cameron, Iraq’s shock doctors can destroy, but they can’t seem to rebuild.”

Friedman’s ideas would first be tested in South America. In a country that had known one hundred and sixty years of peaceful democratic rule, the past forty-one years uninterrupted, Pinochet would come to power on a wave of violence. Three thousand, two hundred would disappear or be executed, eighty thousand were imprisioned, and two hundred thousand would flee the country for political reasons. Following the advice of the ‘Chicago Boys,’ Pinochet would withdraw government support in a privatization wave. Klein reports that, “the public school was replaced by vouchers and charter schools, health care became pay-as-you-go, and kindergartens and cemeteries were privatized. Most radical of all they privatized Chile’s social security system.” They turned Chileans into an ‘ownership society,’ but these new owners found under the resulting inflation that seventy-four percent of their income went simply to buying bread. Luxuries such as milk and bus fare to get to work had to be foregone. Chile would become not a capitalist society, but a corporatist one, “a mutually supporting alliance between a police state and large corporations, joining forces to wage all-out war on the third power sector—the workers—thereby dramatically increasing the alliance’s share of the national wealth.” Klein suggests that maybe the shock treatment were never about jolting the economy to health, but doing exactly what it did do, hoovering the wealth to the top and shocking the middle class out of existence. History would replay this story, over and over, in country after country as dictators came to power in the southern cone of South America. Each time the results would be the same.

Fully developed, Friedman’s idea would be taught to young economist who would then spread them throughout the world with the aid of the World Bank and International Monetary Fund (IMF). These ideas would be fully developed by the time they put them to work in Iraq. We have seen the disaster wrought by their economic policies and privatization of the war. As Klein notes, “The war in Iraq did create a model economy—it was just not the Tiger on the Tigris that the neo-cons advertised. Instead, it was a model for privatized war and reconstruction—a model that quickly became export-ready. Until Iraq, the frontiers of the Chicago crusade had been bound by geography: Russia, Argentina, South Korea. Now a new frontier can open up wherever the next disaster strikes.” Klein begins her look at the role disaster capitalism played in Sri Lanka’s tsunami with a Seth Mydan’s International Herald Tribune quote, “The tsunami that cleared the shoreline like a giant bulldozer has presented developers with an undreamed-of opportunity, and they have moved quickly to seize it.” One week after the tsunami leveled the coast, Sri Lanka’s president created The Task Force to Rebuild the Nation. This body, and not the parliament, would have full power to develop and implement a master plan for Sri Lanka’s redevelopment. No elected officials, no farmers, no fishermen, not a single environmentalist, or even a disaster reconstruction specialist, the force would be made up solely of banking and tourism industry executives. The only direct U.S. government for the fishermen would be a one million dollar grant to improve the temporary housing of the refugee camps, making them permanent shanty towns. The rest of the aid would go to the tourism industry. No boats for the fishermen, and no land for the farmers.

But the shock eventually wears off and in South America we have begun to see the dismantling of the policies of the Chicago boys. Klein reports that, “Latin America’s mass movements, which have powered the wave of election victories for left-wing candidates, are learning to build shock absorbers into their organizing models. They are, for example, less centralized than in the sixties, making it harder to demobilize whole movements by eliminating a few leaders…Once the mechanics of the shock doctrine are deeply and collectively understood, whole communities become harder to take by surprise, more difficult to confuse—shock resistant.” In Thailand, victims of the tsunami did not wait in refugee camps, in a land ‘reinvasion,’ they marched past the armed guards of the developers and reclaimed their land. Klein reveals that, “The key to their success, community leaders say, is that ‘people negotiate for their land rights from a position of being in occupation.” They asked for aid, not in form of handouts, but in tools to carry out their own reconstruction. February 2007, New Orleans, residents who had lived in public housing before the hurricane, public housing now slated by the Bush administration for demolition, reinvaded their homes, cleaning, repairing, buying generators and solar panels--for now they have escaped the bulldozer called reconstruction. Klein declares that, “Unlike the fantasy of the Rapture, the apocalyptic erasure that allows the ethereal escape of true believers, local people’s renewal movements begin from the premise that there is no escape from the substantial messes we have created and that there has already been enough erasure—of history, of culture, of memory. These are movements that do not seek to start from scratch but rather from the rubble that is all around…Radical only in their intense practicality, rooted in the community where they live, these men and women see themselves as mere repair people, taking what is there and fixing it, reinforcing it, making it better and more equal. Most of all, they are building in resilience—for when the next shock hits.”

Naomi Klein reframes globalism, providing us a frame work in which seemingly disconnected events fall into place. Her trip through history and around the globe provides a unifying theory for the economic woes that have faced our world.

The Shock Doctrine by Alfonso Cuarón and Naomi Klein

Naomi Klein on C-Span: Triple Privatization in the Iraq War


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