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ISR Issue 58, March–April 2008


Investing while there’s still blood on the ground

The Shock Doctrine: The Rise of Disaster Capitalism
By Naomi Klein
Metropolitan Books, 2007
576 pages • $28

Review by BEN DALBEY

“THE GREAT struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom—and a single sustainable model for national success: freedom, democracy, and free enterprise.”

So claims the 2002 National Security Strategy of the United States, the document issued in the first term of the Bush White House, which more infamously proclaimed the legitimacy of pre-emptive war against any potential threat to U.S. global domination.

In The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein attempts to provide an urgently needed analysis of the relationship between “free enterprise” and “national success,” and an invaluable refutation of the Orwellian narrative that tells us “free societies mean free markets.” As Klein documents, the truth is that “freedom and democracy” have been, as a general rule, brutally suppressed so that “free enterprise” may flourish—from the blood-soaked regime of Augusto Pinochet in Chile and other like-minded dictatorships of the 1970s and ’80s in South America, to today’s “new free Iraq,” where, once again, U.S.-trained and -supported death squads line the roadsides with the bodies of tortured innocents in a campaign of mass terror waged at the behest of capital.

At a 2004 “Rebuilding Iraq” conference held in the Washington, D.C., suburbs for potential candidates to join in the looting of Iraq and advertised as “reconstruction,” an unwitting delegate provided Klein with a more sincere summary of the true nature of contemporary capitalism than would normally be deemed fit for public consumption: “The best time to invest is when there is still blood on the ground.”

For the recently deceased economist Milton Friedman, whom Klein and many others credit as being the ideological godfather of contemporary free-market capitalism, this truth was self-evident. Over the course of fifty years, Friedman and his co-thinkers led a movement to bring the gospel of “monetarism” or “neoliberalism”—or what many on the left now call “corporate globalization”—out of theoretical discussions within the University of Chicago economics department and into the economic plans of countries around the world. The neoliberal triumvirate of privatized production, deregulated exchange, and deep cuts to social spending is a familiar fixture of mainstream economics today. But because these changes were almost always deeply unpopular, they were often accomplished by subverting democracy during what Friedman called “a crisis—actual or perceived.” Klein writes:

Friedman first learned how to exploit a large-scale shock or crisis in the mid-seventies, when he acted as adviser to the Chilean dictator, General Augusto Pinochet. Not only were Chileans in a state of shock following Pinochet’s violent coup, but the country was also traumatized by severe hyperinflation. Friedman advised Pinochet to impose a rapid-fire transformation of the economy—tax cuts, free trade, privatized services, cuts to social spending and deregulation.… It was the most extreme capitalist makeover ever attempted anywhere…. Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that “facilitate the adjustment.” He coined a phrase for this painful tactic: economic “shock treatment.” In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or “shock therapy,” has been the method of choice.

The economic shock touted by Friedman to Pinochet did not salvage the shattered Chilean economy. In fact, it added substantially to the misery of a Chilean working class still reeling from Pinochet’s regime of torture. But it did succeed in making a small number of people, including Pinochet, fabulously wealthy. Since then, “shock treatment,” under various guises and both liberal and conservative political leaderships, has been enthusiastically adopted by the mainstream of world capitalism, not least through the institutions of the International Monetary Fund and the World Bank.

Klein documents the development of what she terms a “corporatist” economic model, its origins in crisis, its disastrous consequences, and its reach around the globe—from the economic “laboratory” of the Americas, to post-apartheid South Africa, to post-Stalinist Poland and Russia, to the “emerging market” of China, to post-tsunami Sri Lanka, to post-9/11 United States, the post-Katrina Gulf Coast, and post-Hussein Iraq.

Some of Klein’s most harrowing observations relate to the many parallels between the political philosophy of Friedman’s “shock therapy” as applied to nations, and the modern torture techniques developed by the U.S. Central Intelligence Agency and currently applied to individuals in the “Global War on Terror.”

Beginning in the 1950s, while Friedman lectured in Chicago, the CIA secretly funded the very different academic endeavors of Dr. Ewen Cameron at McGill University in Montreal. Cameron performed unprecedented experiments on his psychiatric patients, injecting them with LSD, PCP, and other drugs, keeping them in conditions of total isolation and sensory deprivation for weeks, and in some cases months, on end, and subjecting them to extreme levels of electric shock. Cameron’s disturbing goal was to “de-pattern” the brains of his patients and make them blank slates on which he could “write” a better personality. The CIA’s goal was to develop a scientifically perfected method of torture. Where Cameron failed, the CIA succeeded, and the experiments, which were abandoned in the early 1960s, provided valuable insights to supplement knowledge gained from the better-known but less scientific MKUltra “brainwashing” research program. The result was a 1963 CIA handbook, obtained after years of effort by the Baltimore Sun through a Freedom of Information Act request, titled Kubark Counterintelligence Interrogation. (“Kubark” is believed to be a CIA code word for itself.)

It is the Kubark method that has unmade José Padilla, the U.S. citizen arrested in May 2002 as an “enemy combatant” and kept for 1,307 days in isolation in a U.S. Navy prison. But “isolation” somehow seems to be an inadequate description. Padilla

was kept in a tiny cell with the windows blacked out and forbidden to have a clock or a calendar. Whenever he left the cell he was shackled, his eyes were covered with blackout goggles and sound was blocked with heavy headphones.… [For over three and a half years, Padilla was] forbidden contact with anyone but his interrogators, who, when they questioned him, blasted his starved senses with lights and pounding sounds.

Padilla, unlike the 165 prisoners currently being “de-patterned” in the steel isolation cells of Camp Six in Guantánamo, was ordered to stand trial for his alleged crimes. A psychiatrist who performed an assessment of Padilla for the hearings concluded he now “lacks the capacity to assist in his own defense.”

This is the conscious method of Friedman and those Klein calls “disaster capitalists” the world over: create a situation, or take advantage of an existing situation, where the majority of a population “lack the capacity to assist in their own defense.” While workers, peasants, and indigenous populations are locked in a day-to-day struggle to survive a desperate crisis, politicians and their financial backers must use that situation to initiate “shock treatment.” For those who may develop the capacity to resist, there is the even more personal “shock treatment” of places like Abu Ghraib.
Seen in this context, the so-called abuses of Guantánamo and Abu Ghraib appear not as particularly evil aberrations of an out-of-control “Bush regime,” but the latest and most advanced version of a decades-long international project sanctioned and administered by myriad politicians, security agencies, major media, “development” agencies, international financial institutions, and multinational corporations.

Similarly, the apparent “bungling” of the “reconstruction” of Iraq is anything but. The head of the Coalition Provisional Authority (CPA), L. Paul Bremer, knew full well that Iraqis would rebel against his decrees to disband the military and fire all state workers who had been members of the Baath Party. Before joining the CPA, Bremer had advised international corporations through his post-9/11 counter-terrorism start-up company of the volatility inherent in just such a situation. But Bremer’s stated goal in Iraq, like all accomplished disaster capitalists, was not stability, but what economists have called “creative destruction.” Bremer sought to complete the destruction of Iraq’s economy, a process begun with bombs and missiles, to create a blank national slate for the rise of a new, privatized, imported society.

Today it has become fashionable on the liberal left to explain the “failure” of the U.S. occupation to “bring democracy” to Iraq by blaming the supposed incapacity of the ungrateful Iraqis to understand and cherish democracy. But as Klein reminds us, the early days of the occupation in Iraq saw a potential flourishing of democracy—despite the desperate conditions. She writes:

Finally free of Saddam’s iron grip, neighbors were convening town hall meetings and electing leaders to represent them in this new era. In cities like Samarra, Hilla and Mosul, religious leaders, secular professionals and tribespeople worked together to set local priorities for reconstruction, defying the worst predictions about sectarianism and fundamentalism. Meetings were heated, but by many accounts they were also joyous: the challenges were enormous but freedom was becoming a reality.
The problem for the U.S. occupiers was that Iraqi self-determination did not include handing over control of the country’s vast oil reserves to U.S. or European companies, or opening the borders to a flood of McDonald’s and Wal-Mart Superstores.

The democratic enthusiasm, combined with the clear rejection of Bremer’s economic program, put the Bush administration in an extremely difficult position…. [T]hat first summer left no doubt that any relinquishing of [U.S.] power would mean abandoning the dream of turning Iraq into a model privatized economy dotted with sprawling U.S. military bases…. So Washington abandoned its democratic promises and instead ordered increases in the shock levels…. It was a decision that brought the crusade for a pure free market full circle to its roots in the Southern Cone of Latin America, when economic shock therapy was enforced by brutally suppressing democracy and by disappearing and torturing anyone who stood in the way.

U.S. orders to cancel and annul the results of local elections, to “Gitmoize” Abu Ghraib, and to form and support sectarian death squads within the Interior Ministry, were direct responses to the desires that millions of Iraqis expressed for freedom and democracy.

And, Klein argues, it has worked. In one of the most severe periods of Iraq’s national crisis, in February 2007, when Saddam Hussein had just been hanged in a barbaric display and a thousand Iraqis were dying every week in sectarian violence, the U.S. quietly pushed its laws privatizing and allowing foreign control of Iraqi oil through the puppet Iraqi cabinet.

This is no conspiracy, where the rich orchestrate attacks like 9/11 in order to reap the profits.

The truth is at once less sinister and more dangerous. An economic system that requires constant growth, while bucking almost all serious attempts at environmental regulation, generates a steady stream of disasters all on its own, whether military, ecological or financial.… All indications are that simply by staying the current course, they will keep coming with ever more ferocious intensity. Disaster generation can therefore be left to the market’s invisible hand. This is one area in which it actually delivers.

Naomi Klein is someone who does not just report on the tragedies of our world, but is actively engaged in the search for collective solutions. She is a living inspiration for many others to do the same. She is also a leading veteran of the global justice movement, a movement that, from its inception, has been hamstrung by little-to-no theoretical understanding of who or what we were fighting and why—just that they needed to be fought. Similarly, today’s antiwar movement seems to find itself rudderless in the face of the occupation of Iraq and the “Global War on Terror,” which can be summed up for too many activists as “Bush’s war.” The truth, as Klein describes, is far more dangerous.

Klein writes The Shock Doctrine in an effort to not only clarify the truth, but to provide a theoretical framework for understanding why our world is so brutal. There are some sections in her work, however, which reveal important weaknesses in her proposed framework. For example, as Klein describes, it was in post-apartheid South Africa—not during the terror of white domination—that leaders within the ANC betrayed the principles of the movement’s Freedom Charter and relinquished control of the financial sector and key industries to capital. Thus, South Africa’s Black population was not subdued by the shock of a right-wing corporate attack, but rather was betrayed by its own leadership in power.

Perhaps even more to the point, while Klein describes some of the corporate “reconstruction” efforts in New Orleans, she does not really account for the preeminent face of neoliberal economics in U.S. politics—Bill Clinton. It was the popular and democratically-elected President Clinton, not Milton Friedman, who ended “welfare as we know it” in 1996, and it was Clinton who, long before 9/11, laid the groundwork for Bush’s PATRIOT Act with the Antiterrorism and Effective Death Penalty Act. It was Clinton who campaigned for and won the North Atlantic Free Trade Agreement, which became a model for corporate globalization until the global justice movement rose up in the streets to demand an alternative.

These facts raise bigger questions about what Klein describes as “the rise of disaster capitalism.” Has capitalism really ever been anything other than “corporatist”? Can capitalism exist without violence, and is the symbiotic relationship between profit and misery really a new phenomenon? Was the mass slaughter of the last century’s two world wars between the so-called Great Powers fundamentally different from the mass violence of today’s unilateral U.S. campaigns of invasion and occupation?

I believe the answers to these questions cannot be adequately answered—nor can the problems of our world’s economic and political system be adequately solved—within the bounds of the Keynesian framework Klein seems to offer as a solution.
Nonetheless, Klein’s book should be read, discussed, and debated as a welcome and powerful effort on the part of a movement leader to provide an over-arching analysis of the nature of the brutality that governs the world we live in, as we struggle together for freedom, democracy, and a society not ruled by the force of shock.

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