The Shock Doctrine - Naomi Klein

Among Ms. Klein's talents as a journalist is an uncanny ability to find connections between seemingly unrelated events - the Chilean coup of 1973 - the Tiananmen Square Massacre of 1989 -the tsunami of 2005 - 9/11 - Hurricane Katrina and most recently, the American invasion of Iraq. In The Shock Doctrine she documents the deliberate imposition of unpopular economic measures by right wing governments and dictatorships in the aftermath of such disasters, natural or man-made, relating them directly to the 1950's neo-liberal economic philosophy of the University of Chicago School of Economics and its best known advocate, Milton Friedman.

"The core of such sacred Chicago teachings was that the econmic forces of supply, demand, inflation and unemployment were like the forces of nature, fixed and unchanging. In the truly free market imagined in Chicago classes and texts, these forces exist in perfect equilibrium, supply communicating with demand the way the moon pulls the tides. If economies suffered from high inflation, it was, according to Friedman's strict theory of monetarism, invariably because misguided policy makers had allowed too much money to enter the system, rather than letting the market find its balance. Just as ecosystems self regulate, the market, if left to its own devices, would create just the right number of products at precisely the right prices, produced by workers at just the right wages to buy those products - an Eden of plentyful employment, boundless creativity and zero inflation." - Klein

Under the "free market" or laissez faire economic policies of the "Chicago School" all government regulation of industry, working conditions and the professions would be abolished. Schools, highways, federal parks, the post office and publicly operated services such as water supply and transportation would be privatized. The welfare system including social security would end. All government efforts to stabilize the economy through fiscal and monetary policies, public works or other means would be terminated.

Friedman and his associates were well aware that these policies were unlikely to be adopted democratically even in countries with the most conservative administrations. However, the strategy they developed for new administrations, elected or imposed, was simplicity itself. Wait for a major crisis. Sell off state-owned assets to private interests while citizens are still trying to recover. Then quickly write the changes into law.

The psychological roots of this strategy can be found in the infamous (and highly unethical) experiments conducted at McGill University by Ewen Cameron under the sponsorship of the C.I.A. and the Canadian Government. Patients, suffering from mental disorders, were subjected to electroshock treatment and a variety of drugs as well as sensory deprivation techniques with the object of reducing them to a "blank state" of infantile helplessness after which they could be reprogrammed minus their mental disorders. The experiments were singularly unsuccessful in achieving the desired results, succeeding only in destroying the lives of the unfortunate subjects. Cameron's methods, however, were identified as torture techniques in the Kubark Counterintelligence Interrogation handbook and were disseminated throughout Latin America by the C.I.A.

Thus, in Chile in 1973, the first test of Chicago School economics, citizens were subjected to a three pronged attack - The military coup against the Socialist government of Salvador Allende by General Augosto Pinochet - the implementation of economic reform with the aid of the Chicago Boys, and for anyone foolish enough to protest - the threat of torture and death. Disappearances were common.

The success of the Chilean coup was followed by similar events in Uruguay (also 1973) and Argentina (1976).

Klein documents the implementation of Chicago School economics in Latin America , with particular emphasis on the resultant devastating social impact, ranging from massive unemployment as employers were allowed to fire workers at will, increased food costs as price controls were lifted, the loss of state owned businesses to the private sector, the transfer of wealth from public to private hands and the transfer of private debt to public hands. Throughout the Southern Cone torture and "disappearance" remained the de rigeur methods to discourage protest.

Since the seventies attempts have been made to emulate the initial "success" of free market economics in the wake of disaster by a number of governments around the world including Poland, Russia, Korea, Malaysia, Sri Lanka and, oddly enough, communist China. Elements can be found in the economic policies of Margaret Thatcher who, along with Ronald Reagan, was a great admirer of Milton Friedman. (Thatcher was also an admirer of Augosto Pinochet.)

Klein is most effective in the latter chapters of her book wherein she describes contemporary situations of which she has first-hand knowledge: Iraq and New Orleans.

In Iraq, she exposes the rush by the Bush administration to privatize two hundred essential state-owned companies as new laws were passed to attract foreign investors. At the same time, reconstruction of the country was contracted solely to American corporations -Blackwater, Bechtel, Parsons and, most famously, Halliburton. Iraqis were excluded and stood by helplessly as foreign workers were imported at low wages. Resistance to the occupation continues to be suppressed by increasingly brutal methods.

Within three weeks of Katrina, George W. Bush announced several new "hurricane relief" measures as proposed by the Heritage Foundation, among them: "automatically suspend Davis-Bacon wage laws in disaster areas," - "make the entire affected area a flat tax free-enterprise zone," - "make the entire region an economic competitiveness zone" (tax incentives and waiving of regulations.) Parents were given vouchers for use at newly founded charter schools.

The reconstruction of New Orleans was contracted by the Bush administration to - wait for it - Blackwater, Bechtel, Parsons and Halliburton all of whom, as in Iraq, were reluctant to hire local workers.

Again, to quote Klein:"The Chicago Boys' first adventure in the seventies should have served as a warning to humanity: theirs are dangerous ideas. By failing to hold the ideology accountable for the crimes committed in its first laboratory, this subculture of unrepentant ideologues was given immunity, freed to scour the world for its next conquest. These days, we are once again living in an era of corporate massacres, with countries suffering tremendous military violence alongside organized attempts to remake them into model "free market" economies; disappearances and torture are back with a vengeance. And once again the goals of building free markets, and the need for such brutality, are treated as entirely unrelated."

Klein sees mounting world-wide opposition to neo-liberalism, much of it coming, appropriately, from Latin America. Leading this movement is thrice democratically elected Venezuelan president Hugo Chavez. With its high oil revenues, Venezuela has become a lender to other developing countries allowing them to avoid entering into agreements with the International Monetary Fund and the World Bank both of which demand draconian economic reform in exchange for loans.

My initial impression of The Shock Doctrine was "What we have here is a 500 page recipe for paranoia." However, Klein connects the dots in her thesis so carefully that one cannot avoid the conclusion that some governments are indeed utilizing Friedmanite methods to enrich themselves and their friends by deliberately destroying the economic welfare of their respective citizenry. That being the case, perhaps the most important lesson to be drawn from The Shock Doctrine is that, without vigilance, our freedom and quality of life can be quickly compromised by rampant, uncontrolled government imposed greed in the guise of free market capitalism.

Future crises will no doubt emerge. We must learn to recognize them calmly and the possible dangers lurking in their aftermath.


Kilgore Trout said...

Thanks for the kind words. Unfortunately I'm about to be logging off for the weekend so I'll try to remember to stop through on monday to check this out, from a super quick skip it looks like a way better review than mine. Thanks and I'll try to be back!


Anonymous said...

You can read more about Dr. Ewen Cameron's CIA-funded experiments and all the MKULTRA subprojects in the MKULTRA Briefing Book, which was prepared by the CIA in 1976. The CIA Inspector General wrote in 1958 of MKULTRA: "Precautions must be taken not only to protect operations from exposure to enemy forces but also to conceal these activities from the American public in general. The knowledge that the agency is engaging in unethical and illicit activities would have serious repercussions in political and diplomatic circles."

Anonymous said...

Fantastic book - should be on everyone's bookshelf