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Subject: [DEBATE] : (Fwd) Klein in New Orleans, Chile
Date: Sun, 16 Sep 2007 12:14:09 +0200
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The shock doctrine
Her explosive new book exposes the lie that free markets thrive on
freedom. In our first exclusive extract, the No Logo author reveals the
business of exploiting disaster
Naomi Klein
Saturday September 8, 2007
The Guardian
I met Jamar Perry in September 2005, at the big Red Cross shelter in
Baton Rouge, Louisiana. Dinner was being doled out by grinning young
Scientologists, and he was standing in line. I had just been busted for
talking to evacuees without a media escort and was now doing my best to
blend in, a white Canadian in a sea of African- American southerners. I
dodged into the food line behind Perry and asked him to talk to me as if
we were old friends, which he kindly did.
Born and raised in New Orleans, he'd been out of the flooded city for a
week. He and his family had waited forever for the evacuation buses;
when they didn't arrive, they had walked out in the baking sun. Finally
they ended up here, a sprawling convention centre now jammed with 2,000
cots and a mess of angry, exhausted people being patrolled by edgy
National Guard soldiers just back from Iraq.
The news racing around the shelter that day was that the Republican
Congressman Richard Baker had told a group of lobbyists, "We finally
cleaned up public housing in New Orleans. We couldn't do it, but God
did." Joseph Canizaro, one of New Orleans' wealthiest developers, had
just expressed a similar sentiment: "I think we have a clean sheet to
start again. And with that clean sheet we have some very big
opportunities." All that week Baton Rouge had been crawling with
corporate lobbyists helping to lock in those big opportunities: lower
taxes, fewer regulations, cheaper workers and a "smaller, safer city" -
which in practice meant plans to level the public housing projects.
Hearing all the talk of "fresh starts" and "clean sheets", you could
almost forget the toxic stew of rubble, chemical outflows and human
remains just a few miles down the highway.
Over at the shelter, Jamar could think of nothing else. "I really don't
see it as cleaning up the city. What I see is that a lot of people got
killed uptown. People who shouldn't have died."
He was speaking quietly, but an older man in line in front of us
overheard and whipped around. "What is wrong with these people in Baton
Rouge? This isn't an opportunity. It's a goddamned tragedy. Are they
blind?" A mother with two kids chimed in. "No, they're not blind,
they're evil. They see just fine."
One of those who saw opportunity in the floodwaters of New Orleans was
the late Milton Friedman, grand guru of unfettered capitalism and
credited with writing the rulebook for the contemporary, hyper-mobile
global economy. Ninety-three years old and in failing health, "Uncle
Miltie", as he was known to his followers, found the strength to write
an op-ed for the Wall Street Journal three months after the levees
broke. "Most New Orleans schools are in ruins," Friedman observed, "as
are the homes of the children who have attended them. The children are
now scattered all over the country. This is a tragedy. It is also an
opportunity."
Friedman's radical idea was that instead of spending a portion of the
billions of dollars in reconstruction money on rebuilding and improving
New Orleans' existing public school system, the government should
provide families with vouchers, which they could spend at private
institutions.
In sharp contrast to the glacial pace with which the levees were
repaired and the electricity grid brought back online, the
auctioning-off of New Orleans' school system took place with military
speed and precision. Within 19 months, with most of the city's poor
residents still in exile, New Orleans' public school system had been
almost completely replaced by privately run charter schools.
The Friedmanite American Enterprise Institute enthused that "Katrina
accomplished in a day ... what Louisiana school reformers couldn't do
after years of trying". Public school teachers, meanwhile, were calling
Friedman's plan "an educational land grab". I call these orchestrated
raids on the public sphere in the wake of catastrophic events, combined
with the treatment of disasters as exciting market opportunities,
"disaster capitalism".
Privatising the school system of a mid-size American city may seem a
modest preoccupation for the man hailed as the most influential
economist of the past half century. Yet his determination to exploit the
crisis in New Orleans to advance a fundamentalist version of capitalism
was also an oddly fitting farewell. For more than three decades,
Friedman and his powerful followers had been perfecting this very
strategy: waiting for a major crisis, then selling off pieces of the
state to private players while citizens were still reeling from the shock.
In one of his most influential essays, Friedman articulated contemporary
capitalism's core tactical nostrum, what I have come to understand as
"the shock doctrine". He observed that "only a crisis - actual or
perceived - produces real change". When that crisis occurs, the actions
taken depend on the ideas that are lying around. Some people stockpile
canned goods and water in preparation for major disasters; Friedmanites
stockpile free-market ideas. And once a crisis has struck, the
University of Chicago professor was convinced that it was crucial to act
swiftly, to impose rapid and irreversible change before the
crisis-racked society slipped back into the "tyranny of the status quo".
A variation on Machiavelli's advice that "injuries" should be inflicted
"all at once", this is one of Friedman's most lasting legacies.
Friedman first learned how to exploit a shock or crisis in the mid-70s,
when he advised the dictator General Augusto Pinochet. Not only were
Chileans in a state of shock after Pinochet's violent coup, but the
country was also traumatised by hyperinflation. Friedman advised
Pinochet to impose a rapid-fire transformation of the economy - tax
cuts, free trade, privatised services, cuts to social spending and
deregulation.
It was the most extreme capitalist makeover ever attempted anywhere, and
it became known as a "Chicago School" revolution, as so many of
Pinochet's economists had studied under Friedman there. Friedman 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.
I started researching the free market's dependence on the power of shock
four years ago, during the early days of the occupation of Iraq. I
reported from Baghdad on Washington's failed attempts to follow "shock
and awe" with shock therapy - mass privatisation, complete free trade, a
15% flat tax, a dramatically downsized government. Afterwards I
travelled to Sri Lanka, several months after the devastating 2004
tsunami, and witnessed another version of the same manoeuvre: foreign
investors and international lenders had teamed up to use the atmosphere
of panic to hand the entire beautiful coastline over to entrepreneurs
who quickly built large resorts, blocking hundreds of thousands of
fishing people from rebuilding their villages. By the time Hurricane
Katrina hit New Orleans, it was clear that this was now the preferred
method of advancing corporate goals: using moments of collective trauma
to engage in radical social and economic engineering.
Most people who survive a disaster want the opposite of a clean slate:
they want to salvage whatever they can and begin repairing what was not
destroyed. "When I rebuild the city I feel like I'm rebuilding myself,"
said Cassandra Andrews, a resident of New Orleans' heavily damaged Lower
Ninth Ward, as she cleared away debris after the storm. But disaster
capitalists have no interest in repairing what once was. In Iraq, Sri
Lanka and New Orleans, the process deceptively called "reconstruction"
began with finishing the job of the original disaster by erasing what
was left of the public sphere.
When I began this research into the intersection between super-profits
and mega-disasters, I thought I was witnessing a fundamental change in
the way the drive to "liberate" markets was advancing around the world.
Having been part of the movement against ballooning corporate power that
made its global debut in Seattle in 1999, I was accustomed to seeing
business-friendly policies imposed through arm-twisting at WTO summits,
or as the conditions attached to loans from the IMF.
As I dug deeper into the history of how this market model had swept the
globe, I discovered that the idea of exploiting crisis and disaster has
been the modus operandi of Friedman's movement from the very beginning -
this fundamentalist form of capitalism has always needed disasters to
advance. What was happening in Iraq and New Orleans was not a
post-September 11 invention. Rather, these bold experiments in crisis
exploitation were the culmination of three decades of strict adherence
to the shock doctrine.
Seen through the lens of this doctrine, the past 35 years look very
different. Some of the most infamous human rights violations of this
era, which have tended to be viewed as sadistic acts carried out by
anti-democratic regimes, were in fact either committed with the intent
of terrorising the public or actively harnessed to prepare the ground
for radical free-market "reforms". In China in 1989, it was the shock of
the Tiananmen Square massacre and the arrests of tens of thousands that
freed the Communist party to convert much of the country into a
sprawling export zone, staffed with workers too terrified to demand
their rights. The Falklands war in 1982 served a similar purpose for
Margaret Thatcher: the disorder resulting from the war allowed her to
crush the striking miners and to launch the first privatisation frenzy
in a western democracy.
The bottom line is that, for economic shock therapy to be applied
without restraint, some sort of additional collective trauma has always
been required. Friedman's economic model is capable of being partially
imposed under democracy - the US under Reagan being the best example -
but for the vision to be implemented in its complete form, authoritarian
or quasi-authoritarian conditions are required.
Until recently, these conditions did not exist in the US. What happened
on September 11 2001 is that an ideology hatched in American
universities and fortified in Washington institutions finally had its
chance to come home. The Bush administration, packed with Friedman's
disciples, including his close friend Donald Rumsfeld, seized upon the
fear generated to launch the "war on terror" and to ensure that it is an
almost completely for-profit venture, a booming new industry that has
breathed new life into the faltering US economy. Best understood as a
"disaster capitalism complex", it is a global war fought on every level
by private companies whose involvement is paid for with public money,
with the unending mandate of protecting the US homeland in perpetuity
while eliminating all "evil" abroad.
In a few short years, the complex has already expanded its market reach
from fighting terrorism to international peacekeeping, to municipal
policing, to responding to increasingly frequent natural disasters. The
ultimate goal for the corporations at the centre of the complex is to
bring the model of for-profit government, which advances so rapidly in
extraordinary circumstances, into the ordinary functioning of the state
- in effect, to privatise the government.
In scale, the disaster capitalism complex is on a par with the "emerging
market" and IT booms of the 90s. It is dominated by US firms, but is
global, with British companies bringing their experience in security
cameras, Israeli firms their expertise in building hi-tech fences and
walls. Combined with soaring insurance industry profits as well as super
profits for the oil industry, the disaster economy may well have saved
the world market from the full-blown recession it was facing on the eve
of 9/11.
In the torrent of words written in eulogy to Milton Friedman, the role
of shocks and crises to advance his world view received barely a
mention. Instead, the economist's passing, in November 2006, provided an
occasion for a retelling of the official story of how his brand of
radical capitalism became government orthodoxy in almost every corner of
the globe. It is a fairytale history, scrubbed clean of the violence so
intimately entwined with this crusade.
It is time for this to change. Since the collapse of the Soviet Union,
there has been a powerful reckoning with the crimes committed in the
name of communism. But what of the crusade to liberate world markets?
I am not arguing that all forms of market systems require large-scale
violence. It is eminently possible to have a market-based economy that
demands no such brutality or ideological purity. A free market in
consumer products can coexist with free public health care, with public
schools, with a large segment of the economy - such as a national oil
company - held in state hands. It's equally possible to require
corporations to pay decent wages, to respect the right of workers to
form unions, and for governments to tax and redistribute wealth so that
the sharp inequalities that mark the corporatist state are reduced.
Markets need not be fundamentalist.
John Maynard Keynes proposed just that kind of mixed, regulated economy
after the Great Depression. It was that system of compromises, checks
and balances that Friedman's counter-revolution was launched to
dismantle in country after country. Seen in that light, Chicago School
capitalism has something in common with other fundamentalist ideologies:
the signature desire for unattainable purity.
This desire for godlike powers of creation is precisely why free-market
ideologues are so drawn to crises and disasters. Non-apocalyptic reality
is simply not hospitable to their ambitions. For 35 years, what has
animated Friedman's counter-revolution is an attraction to a kind of
freedom available only in times of cataclysmic change - when people,
with their stubborn habits and insistent demands, are blasted out of the
way - moments when democracy seems a practical impossibility. Believers
in the shock doctrine are convinced that only a great rupture - a flood,
a war, a terrorist attack - can generate the kind of vast, clean
canvases they crave. It is in these malleable moments, when we are
psychologically unmoored and physically uprooted, that these artists of
the real plunge in their hands and begin their work of remaking the world.
Torture: the other shock treatment
From Chile to China to Iraq, torture has been a silent partner in the
global free-market crusade. Chile's coup featured three distinct forms
of shock, a recipe that would re-emerge three decades later in Iraq. The
shock of the coup prepared the ground for economic shock therapy; the
shock of the torture chamber terrorized anyone thinking of standing in
the way of the economic shocks.
But torture is more than a tool used to enforce unwanted policies on
rebellious peoples; it is also a metaphor of the shock doctrine's
underlying logic. Torture, or in CIA parlance, "coercive interrogation",
is a set of techniques developed by scientists and designed to put
prisoners into a state of deep disorientation.
Declassified CIA manuals explain how to break "resistant sources":
create violent ruptures between prisoners and their ability to make
sense of the world around them. First, the senses are starved (with
hoods, earplugs, shackles), then the body is bombarded with overwhelming
stimulation (strobe lights, blaring music, beatings). The goal of this
"softening-up" stage is to provoke a kind of hurricane in the mind, and
it is in that state of shock that most prisoners give their
interrogators whatever they want.
The shock doctrine mimics this process precisely. The original disaster
- the coup, the terrorist attack, the market meltdown - puts the entire
population into a state of collective shock. The falling bombs, the
bursts of terror, the pounding winds serve to soften up whole societies.
Like the terrorised prisoner who gives up the names of comrades and
renounces his faith, shocked societies often give up things they would
otherwise fiercely protect.
ยท This is an edited extract from The Shock Doctrine: The Rise of
Disaster Capitalism by Naomi Klein, published by Allen Lane
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