The Shock Doctrine

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Chaos is Good Business

Nicholas Jahr, Brooklyn Rail, October 2007

Like many people—at least, that’s what I tell myself these days—I wrote Naomi Klein off when she first appeared on the scene in the late 90s. There were too many earnest activists toting around No Logo, her surprise million-plus bestseller on the buzzword of that bygone day: “globalization.” Who could trust any book the New York Times called “a movement bible”? And that subtitle—Taking Aim at the Brand Bullies. This hardly sounded like a staggering work of heart-racing analysis.

I had to give her a second thought when she became a columnist for The Nation. (Full disclosure: I’ve since been intermittently employed by the magazine, and worked briefly with Klein.) She started producing work like her controversial column “Bring Najaf to New York!” which highlighted the curious lack of concern within the antiwar movement about what was actually happening in Iraq. A few months later she landed another punch: an exposé of the carefully concealed and blatant conflict of interest enjoyed by former Secretary of State (and Iraq Study Group co-chair) James Baker III in his role as envoy to negotiate Iraq’s debt relief.

Now comes Klein’s book The Shock Doctrine: The Rise of Disaster Capitalism, complete with a YouTube video from Alfonso “Children of Men” Cuaron. The director lays out the book’s thesis in a series of epileptic bursts: Whether in Chile, Sri Lanka or Iraq, advancing the frontiers of the “free” market has always depended on shock, be it in the form of tanks, tsunamis or terror. This is capitalism as a form of torture. Take Naomi Klein very seriously.

There’s a famous photo from September 11th of the president stepping out of his offices, a helmet on his head, the straps dangling, armed guards flanking him as he looks up at the sky as the jets come roaring in. But this is September 11th 1973, the man in the helmet is Salvador Allende, the elected president of Chile, and the jets are the fighter planes of the Chilean air force, on their way to bomb La Moneda, the presidential palace, in a U.S.-engineered coup.

Klein examines this disturbing synchronicity, tracing the ideological roots of the current debacle in Iraq to the Chilean coup. Allende, a committed socialist, hadn’t even entered office when the Ad Hoc Committee on Chile was formed by U.S. corporations worried about their holdings in the country. Citing the report of the U.S. Senate Committee that ultimately investigated the matter, Klein writes that “the committee’s single purpose was to force Allende to back off his nationalizations ‘by confronting him with economic collapse.’” The “de facto leader of the committee” was the International Telephone and Telegraph Company (ITT), and it went a lot further than mere economic pressure, offering $1 million to Allende’s opposition and attempting to interest the CIA in a plot to manipulate the results of the 1970 presidential election.

Although Klein cites the work of Jack Anderson, the legendary reporter who dogged ITT, she doesn’t mention his reporting on the domestic side of the company’s dealings. In 1971, ITT cut a deal with Nixon’s attorney general John Mitchell: In return for a $400,000 donation to the upcoming Republican National Convention in San Diego, Mitchell would see to it that an ongoing antitrust suit (the “biggest” undertaken by the Nixon administration, according to Andersen) was settled favorably. Then as now, corporate collusion was vital to Republican rule.

Much of this was public knowledge by 1973, and ITT had little to show for its investments. The CIA was thus shopping for potential caudillos and already funding a group of economists who were imagining how to rapidly tear down Allende’s socialist state. The groundwork for this project had been laid in 1957, when the U.S. government began funding a program that provided Chilean economics students (and eventually economics students from all over Latin America) with full rides to an advanced degree in economics at the University of Chicago. At the time, Harvard and MIT’s programs had four or five Latin American students, but Chicago’s now had 40 or 50, about a third of the department’s total. It was, Klein writes, “the premier destination for Latin Americans wanting to study economics abroad.” What they studied were the ideas of Milton Friedman.

The legendary Chicago economics department of the period was built on Friedman’s work, which sprung from a single idea: in a market society, prices conveyed such complex information—about a commodity’s production and social cost—that it was impossible for any one individual to understand the entire system. But left alone, prices would gradually bring supply and demand into harmony, and society would naturally organize itself for the greatest good. It was a celestial, mathematically pure vision.

The theory also held that any attempt to interfere with prices—a minimum wage, tariffs, etc.—hopelessly distorted the system, and had to be expunged. When prices went haywire, Friedman recommended three now familiar moves: deregulation, privatization and cutting social services. And he recommended they be done all at once, as fast as possible, so that the public would understand the economic situation was under control, and before anyone could resist. He called it “shock treatment.”

Years later, Friedman noted: “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” The Chilean coup was one such manufactured crisis, and the U.S. government made sure that Friedman’s blueprint was adopted.

After the shock of the coup came the shock of the treatment: price controls were rescinded overnight, government spending was eviscerated, “almost five hundred state-owned companies and banks” were auctioned off and trade barriers dissipated. Over 177,000 industrial jobs disappeared under the onslaught. And the final element of the shock doctrine was once again delivered courtesy of the CIA.

Coincidentally, 1957 had also been the year when the CIA started funding Canadian psychiatrist Dr. Ewen Cameron’s research. Cameron was convinced that his disturbed patients needed to be rebuilt from the ground up, which required “depatterning” them. Simply put: he set about to dismantle their already fragile personalities. To “maintain a time and space image” of ourselves, Cameron believed, we depend on “(a) our continued sensory input, and (b) our memory.” Extended sensory deprivation targeted the former, and electroshock therapy zapped the latter. Two years after the CIA finished funding Cameron’s work, it published the KUBARK manual, a guide to torture that circulated throughout Latin America’s military regimes. It stated: “all of the techniques employed…are essentially ways of speeding up the process of regression.”

As Pinochet’s torturers went to work with cattle prods and other tools of the trade, his economics advisors (nicknamed the “Chicago Boys”) in Klein’s words set about “speeding up the process of regression,” working to return Chile to an imaginary “pure” market. Both shocks left the public reeling, ready to submit. This was the shock doctrine in all its glory.

Country by country, Klein methodically explodes the myth that “unfettered free markets go hand in hand with democracy,” exposing the ugly realities of the shock doctrine. Her definition of “shock” is somewhat elastic: in Argentina, it’s a coup modeled on Pinochet’s; in Britain, it’s the Falklands War (perhaps her weakest example, as the war took place far from British soil and relatively few lives were lost); in Poland, it’s near economic collapse; in South Africa, it’s a debt crisis intentionally manufactured by the outgoing apartheid government; in Sri Lanka, it’s the tsunami; and in New Orleans, it’s Katrina. The list goes on. Although the nature of the crisis may change, the way it’s incorporated into the shock doctrine is disturbingly consistent.

The aftermath of the more recent September 11th was no exception. The Bush gang manipulated public sentiment in order to justify the invasion and occupation of Iraq, which began with “Shock and Awe.” Klein’s quotes from Pentagon doctrine are almost eerie:

It is, they claim, a sophisticated psychological blueprint aimed “directly at the public will of the adversary to resist. …In crude terms…[it] would seize control of the environment and paralyze or so overload an adversary’s perceptions and understanding of events.” The goal is “rendering the adversary completely impotent.”

Klein’s critics argue that capitalism has always used shock tactics, that moments of crisis have always been seized to press the agenda of the ruling class, that she is reinventing the wheel or worse yet, just repackaging it. But we are living in the moment when “disaster capitalism” is rising into view over the smoking ruins of Baghdad. Until now, the “core” functions of the state—security and surveillance foremost among them—had always been immune to the shock doctrine. But as the Blackwater scandal so vividly demonstrates, the Bush administration has set about privatizing them at breakneck speed.

Spearheading this final charge were Vice President Dick Cheney and former Secretary of Defense Donald Rumsfeld. Rumsfeld had arrived at the Defense Department with a mission: the “transformation” of the armed forces. What this really meant in practice was privatizing every function that conceivably could be shrugged off (and more than a few that couldn’t). In this light, Klein wryly observes that Rumsfeld’s troop shortfalls look less like a strategic error and more like the work of a cost-cutting CEO.

For his part, Cheney served as Halliburton’s CEO for five years, during which the cash “the company extracted from the U.S. Treasury [went] from $1.2 to $2.3 billion.” Halliburton quickly became one of the largest logistics contractors for the U.S. military, giving it a direct financial stake in U.S. military expansion. The VP continued to receive deferred compensation from the company to the tune of $200K a year, and when he finally leaves the White House, he’ll be able to cash in company stock that’s seen a 300% leap in price during his time in office.

Klein wields the terms “neoliberal” and “neoconservative” a bit loosely, making it clear that she sees them as essentially synonymous. In the U.S., the neoliberal project has been a bipartisan one over the last two decades, if not longer. Insofar as it has a diplomatic agenda, neoliberalism calls for the use of multilateral institutions and the use of force in coalition with other states. Ideologically, neoconservatism is a moving target; the beliefs that go by that name have shifted over the years. But adherence to the neocons’ aggressively unilateralist foreign policy agenda is now deeply entrenched within the Republican Party. Given Cheney’s repeated declarations throughout the 90s that deposing Saddam would only lead to a quagmire, it’s difficult to believe that he ever actually thought the U.S. was bringing democracy to Iraq. What he and Rumsfeld wanted, to quote Klein (who’s quoting Ron Suskind), was “to create a demonstration model to guide the behavior of anyone with the temerity to acquire destructive weapons or, in any way, flout the authority of the United States.” Less than a war strategy, she observes, Iraq was thus a “global experiment in behaviorism.”

The invasion and occupation have also been a defense contractor’s wet dream. Klein notes that while Richard Perle is often introduced on news shows as an “analyst” or at best a “neoconservative,” he should be dubbed “an arms dealer with an impressive vocabulary.” Recently, the major defense contractor Lockheed Martin has been investing in healthcare companies. In Klein’s words, this is so that “in future conflicts, Lockheed is poised to profit not only from making the weapons and fighter jets but from rebuilding what they destroy, and even from treating the people injured by its own weapons.” In the era of disaster capitalism, war doesn’t worry markets, it feeds them.

The contracting frenzy recalls Brecht’s couplet in his War Primer, paired with a picture of laborers working with massive sheets of steel:

“What’s that you’re making, brothers?”

“Iron wagons.”

“And what about those great steel plates you’re lifting?”

“They’re for the guns that blast the iron to pieces.”

“And what’s it all for, brothers?”

“It’s our living.”

If Shock Doctrine has a flaw, it’s that Klein occasionally loses the plot, opening a chapter with an interview with influential economist Jeffrey Sachs or a car accident in New Orleans and then never returning to these events. Still, she never loses sight of her themes, meticulously building her argument from shock to shock. Klein sees with fresh eyes and makes all too familiar stories new. The Shock Doctrine is required reading for anyone concerned about the struggle for a better world.

More important, it’s a call to arms. The vast transfer of public wealth into private hands facilitated by the shock doctrine and disaster capitalism inaugurates what Klein refers to as a “corporatist” state. She stops short of using it, but the Old Left had a name for the collusion of the state with corporate interests to suppress labor and preserve capitalism. They called it fascism.
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