(Book Review) The Shock Doctrine: The Rise of Disaster Capitalism

Summary

Author Naomi Klein defines disaster capitalism as "orchestrated raids on the public sphere in the wake of catastrophic events combined with the treatment of disasters as exciting market opportunities" and "using moments of collective trauma to engage in radical social and economic engineering." The circumstances in which populations are shocked vary but there is one clear pattern that emerges from the chaos - privatization and capitalization of what were once considered public goods. While defining clear instances of historical events as such, she draws a disturbing parallel between this social and economic shock doctrine of whole communities to the psychological disruption of physical torture on the individual. "Fear and disorder are the catalysts for each new leap forward" for both the shocked community and the tortured individual.

Chapter 1 opens with "the CIA and the maniacal quest to erase and remake the human mind" in which Klein examines the CIA funding of mind control experiments and the role of electroshock therapy in brainwashing. Shock and awe treatments depattern and disorient individuals in order to prime them for reception toward desired stimuli. When shocking mechanisms are applied to large populations it can make them more receptive to desired policy changes.

Klein identifies the origins of the modern disaster capitalism doctrines as having originated with Milton Friedman and his Chicago School of economics. Their economic philosophy embraces a purist form of laissez-faire as undebatable and sacred. Klein cites a passage Friedman wrote in 1982 that best summarizes the shock doctrine - "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."

Friedman himself can be linked to many of the political reformations in the aftermath of shocking phenomena, and his students are linked to several more through their powerful roles in financial and government institutions. The most prominent example is Washington DC's intervention in Latin American affairs. The Chile Project, launched in 1956, aimed to produce ideological warriors that battled against socialist leaning democratic economic policies by educating hundreds of students from South America at the Chicago School with funding from US taxpayers. Releasing these economic ideological warriors back into their home countries to enact radical transformations resulted in the what the CIA called a "coup climate."

On September 11, 1973 government buildings in Santiago, Chile crumbled under the assault of tanks, rockets, and fighter jets. General Augusto Pinochet seized control of the army, navy, marines, and police on his way to killing President Salvador Allende in the presidential palace. "For the Chicago Boys, September 11 was a day of giddy anticipation...[they] camped out at the printing presses..." and frantically rushed out a document for the junta's first propaganda publication that closely resembled Milton Friedman's "Capitalism and Freedom." Pinochet's economic reforms included much of what the disaster capitalists desired - neoliberal economic policies that cut government spending, discarded social safeguards, and privatized public goods. The results were awful. Rapid inflation, increased unemployment, and untenable prices for basic necessities followed. By 1975 Friedman himself was invited to save what was left of the coup d'etat experiment and flew to Santiago to meet with General Pinochet. Friedman assured the general of success in this extreme capitalist adventure if only he doubled down and followed sage advice, to which Pinochet acquiesced. "In the first year of Friedman-prescribed shock therapy, Chile's economy contracted by 15 percent" and unemployment skyrocketed to 20 percent.

The military juntas executing these savage economic shock therapies with force were "savvy enough to publicly deny [they were] using massive violence in order to achieve those economic goals." If their tactics were dirty, it was because their enemy was monstrous. They were fighting against economic terrorists. "In the run up to Chile's coup, the CIA bankrolled a massive propaganda campaign to paint Salvador Allende as a dictator in disguise, a Machiavellian schemer who had used constitutional democracy to gain power..." In Argentina and Uruguay rival political groups were described as threats to national security. Terrorism was used as a smokescreen to assassinate political dissidents. "The targeted killings served a dual purpose. First, they removed real obstacles to the project - the people most likely to fight back. Second, the fact that everyone witnessed the 'troublemakers' being disappeared sent an unmistakable warning to those who might be thinking of resisting, thereby eliminating future obstacles." Dissidents that survived assassinations were sent to prisons to be antagonized physically and mentally. The torturers understood the importance of solidarity in the socialist doctrines, and their actions were designed to "do irreparable damage to that part of themselves that believed in helping others above all else" by forcing acts of betrayal towards their peers.

Economic shock therapy and disaster capitalism slashed it's way into other South American countries such as Bolivia and Argentina throughout the next few decades enabled by the Chicago Boys infiltration of governments and institutions such as the International Monetary Fund, the World Bank, and private international banks like JP Morgan and Citibank. Shock therapy preceded each revolution followed by privatization of the economy and natural resources, reduced government spending, and crushing debt.

South America was not the only playground for the disaster capitalists. The impending collapse of eastern European communist and socialist regimes provided ample opportunity for shock therapy. "Poland became a textbook example of Friedman's crisis theory: the disorientation of rapid political change combined with the collective fear generated by an economic meltdown" made the promise of a quick and magical capitalist cure too seductive to resist.

In 1988 Friedman was invited to visit China to meet with the general secretary of the communist party and the future Chinese president. In Friedman's own words, he "gave the same advice to both Chile and China." The changes enacted by the Chinese government became the catalyst for the 1989 social mobilization culminating in the protests at Tiananmen Square where the People's Republic of China declared martial law and sent tanks to indiscriminately fire into the crowds killing thousands, injuring tens of thousands, and arresting some forty thousand more. Five days after the slaughter Deng, known as the "Butcher of Beijing," clarified that it was not communism that he was protecting with his crackdown, it was capitalism. "Just as Pinochet's terror had cleared the streets for revolutionary change, so Tiananmen paved the way for a radical transformation free from fear of rebellion."

In 1990 Nelson Mandela wrote his supporters from a prison compound stating, "The nationalization of the mines, banks, and monopoly industries is the policy of the ANC....state control of certain sectors of the economy is unavoidable." By 1993 Chicago School ideologues had infiltrated the movement advocating for an independent bank influenced by international powers that would stifle much of the ANC goals. "What happened in those negotiations is that the ANC found itself caught in a new kind of web...all designed to confine and constrain the power of elected leaders. As the web descended on the country, only a few people even noticed it was there, but when the new government came to power and tried to move freely, to give its voters the tangible benefits of liberation they expected and thought they had voted for, the strands of the web tightened and the administration discovered that its powers were tightly bound." In the first couple of years of ANC control they tried to make good on their promises of redistribution by utilizing public infrastructure investments to increase access to water, electricity, and communication lines. "But, in a familiar story, weighed down by debt and under international pressure to to privatize these services, the government soon began raising prices" cutting off millions of people who couldn't pay their bills. By 1996 inflation ran rampant, and neoliberal shock therapy was enacted; "more privatization, cutbacks to government control, labor 'flexibility,' freer trade and even looser controls on money flows."

In 1991 President of the Soviet Union Mikhail Gorbachev flew to London to attend his first G7 summit. He had just led his country through a remarkable process of democratization. Gorbachev may have expected his fellow heads of state to embrace a move towards a mixture of free markets and strong safety nets, something like the Scandinavian model, but the message received was as unexpected as it was clear. "If he did not embrace radical economic shock therapy immediately, they would sever the rope and let him fall." "After the meeting Gorbachev got the same marching orders from the IMF, the World Bank, and every other major lending institution." What followed was Yeltsin's eclipse of Gorbachev, the dissolution of the Soviet Union, and "the tumultuous course of economic shock therapy in Russia." Russia was forced to choose between a Chicago School economic program and authentic democratic revolution. When China was faced with this choice they attacked their own people to "prevent democracy from disturbing their free market plans." Gorbachev knew the only way to impose the type of shock therapy advocated by the IMF and G7 was with force. A western journal "The Economist" encouraged him to adopt "strong man rule...to smash the resistance that has blocked serious economic reform." The Washington Post advocated "Pinochet's Chile as a Pragmatic Model for Soviet Economy." When Gorbachev proved an ineffectual Pinochet, a different threat emerged. Boris Yeltsin organized a political coup resulting in the dissolution of the Soviet Union and Gorbachev's resignation, the first of many traumatic shocks to the psyche of the Russian people. "Russia's conversion to capitalism had much in common with the corrupt approach that had sparked the Tiananmen Square protests" and it's authoritarian leaders had much in common with authoritarian leaders worldwide. "Their identification of themselves with God, which flowed naturally from their belief in their all-round superiority, was, unfortunately, typical of our reformers." "Following the coup, Russia was under unchecked dictatorial rule: its elected bodies were dissolved, the Constitutional Court was suspended, as was the constitution; tanks patrolled the streets, a curfew was in effect, and the press faced pervasive censorship..." The Chicago Boys and their western advisers used the opportunity to go on a law making binge - "huge budget cuts, the removal of price controls on basic food items..." and increased privatization that caused so much instant misery they required a police state to stave off rebellion. The communist state was replaced by a corporate one. Riches were seized from the land and then they were stripped from the state. Government programs, public assets, and everything else that was not for sale was terrain to be conquered for the disaster capitalists.

As shock doctrine and disaster capitalism accumulated more victories, its proponents grew more confident and aggressive. This attitude was expressed in a lecture by powerful economist John Williamson who said, "One will have to ask whether it could conceivably make sense to think of deliberately provoking a crisis so as to remove the political logjam to reform."

On September 11, 2001 a terrorist attack in the United States handed the military industrial complex a blank check to fight an endless war on terror. To Chicago Boys and disaster capitalists such as Donald Rumsfeld, this indefinite global war presented a golden opportunity to push forward privatization of military operations and supplemental industries. The US Secretary of Defense had declared war on the Pentagon's bureaucracy only a day before and in the aftermath of the shocking terrorist attack he pushed forward reforms that included outsourcing management of military operations to private contractors – something that President Bush would later label Rumsfeld’s greatest accomplishment. Vice President Dick Cheney's former company Kellogg Brown and Root, a subsidiary of Halliburton, was a primary benefactor of outsourced military contracting and related nation building projects. "According to the Bush vision, the role of government is merely to raise the money necessary to launch the new war market...and the private sector supplies all manner of solutions - a booming economy in homeland security and twenty-first century warfare entirely underwritten by taxpayer dollars." From a military perspective the undefined global war on terror was an unwinnable proposition but from an economic perspective it's an unbeatable one - "a permanent fixture in the global economic architecture." The economic boom facilitated by government demand created multiple new industries catering to military and intelligence needs such as facial recognition technology and artificial intelligence. These new industries depend on endless conflict to continue churning out profits. "If a venture capital firm that was set up to invest in security and defense companies managed not to gain from a war, it would surely be failing its investors."

As Klein ventured into the "shock and awe" opening act of the 2003 Iraq War she questioned the commonly accepted explanations for the conflict. "There was little interest in the idea that war was a rational policy choice, that the architects of the invasion had unleashed ferocious violence because they could not crack open the closed economies of the Middle East by peaceful means, that the level of terror was proportional to what was at stake." Subsequently the Bush administration would take important measures to institutionalize the privatized warfare model forged after the September 11 attacks and sharpened by the Iraq war.

When Hurricane Katrina hit New Orleans the federal government was woefully unprepared to provide relief. The story was typical of a lopsided government that emerged under Bush. When it comes to publicly funded services, the coffers are empty, but when it comes to paying corporate funded private contractors, the sky is the limit. Fourteen days after the levees were breached the Heritage Foundation hosted a meeting to provide free market ideas for responding to the hurricane...”thirty-two policies in all, each one straight out of the Chicago School playbook, and all of them packaged as hurricane relief.” Within weeks the Gulf Coast would become a laboratory of the for-profit private contractor run government that was pioneered in Iraq with familiar faces leading the charge. Halliburton’s KBR unit was awarded $60 million to build military bases along the coast and Blackwater was hired by FEMA as protection from looters. Private contractors such as Kenyon were hired to remove dead bodies while “emergency workers and local volunteer morticians were forbidden to step in to help because handling the bodies impinged on Kenyon’s commercial territory.” Instead of a robust rebuilding of public school infrastructure, vouchers were handed out for private schools.

Once a disaster market economy is created its profits must be protected. If the disaster bubble bursts the profiteers will be left holding the bags. The parallel corporate state foreshadows “a collective future of disaster apartheid in which survival is determined by who can afford to pay for escape.” This may also explain why so many Bush supporters are Christian Armageddon worshipers. The Rapture is a parable for what they are building - “a system that invites destruction and disaster, then swoops in with private helicopters and airlifts them and their friends to divine safety.” The point of this recipe for endless war, such as the conflict between Israel and Palestine, is to offer a “business prospectus to the nascent disaster capitalism complex.” The goal is a secure fortress buttressed by unscalable walls with a permanent security state funded by constant low level conflict on the outside. “The disaster capitalism complex thrives in conditions of low intensity grinding conflict.”

Cogitation

Klein credits much of the modern economic shock doctrine to neoliberal Milton Friedman, his Chicago School of economics, and it's conservative followers including recent United States Presidents, but the core social engineering concepts in the shock doctrine can be found in earlier political philosophies. Klein specifically mentions Machiavellian tactics more than once but the book does not contain a reference to the problem-reaction-solution of the Hegelian Dialectic. A thesis is presented that provokes a reaction and produces an antithesis then a solution is presented. In the context of shock doctrine and disaster capitalism, a disaster provokes a response from government which is under prepared to deal with the crisis sufficiently so the solution presented is laissez-faire privatization of public goods.

For the individual, the shocking sensory overload that is capitalized upon is similar to the emotional and psychological manipulation (gaslighting) utilized by serial domestic abusers to confuse their victims and force them into compliance. These are also methods known to law enforcement when soliciting false confessions from victims that are willing to say or do anything to find relief from aggression. A shocked and bewildered population is receptive to radical policy changes immediately following a disaster.

The fingerprints of shock doctrine and disaster capitalism can be seen throughout many of the revolutionary government changes in the last few decades. Currently Venezuela is in crisis after years of hyper-inflation and a second major electricity malfunction, for which the socialist regime blames outside forces, has crippled their infrastructure and forced electricity rations. The western powers have elevated an alternate head of state for the country - a patsy that will end socialist programs to enact neoliberal shock doctrine and disaster capitalism beginning with privatization of their oil fields.

Author

Naomi Klein was born in 1970 to a consumption conscious family but like many teenagers she spent much of her youth rebelling against her parents and embracing consumerism. Her growth into critique of corporate culture and globalization reached a milestone in 1999 with the publication of her book "No Logo: Taking Aim at the Brand Bullies." Klein's work has evolved into a healthy examination of capitalism and it's relationship to atmospheric degradation and climate change. She published her 4th book "This Changes Everything: Capitalism vs. the Climate " in 2014. Klein contributes to contemporary journals include The Nation and The Intercept.