by Stephen Lendman
September 19, 2007
from
SjLendman Website
Naomi Klein is an award-winning Canadian journalist, author,
documentary filmmaker and activist.
She writes a regular column for The
Nation magazine and London Guardian that's syndicated internationally by the
New York Times Syndicate that gives people worldwide access to her work but
not its own readers at home.
In 2004, she and her husband and co-producer Avi Lewis released their
first feature documentary - "The Take."
It covered the explosion of activism
in the wake of Argentina's 2001 economic crisis. People responded with
neighborhood assemblies, barter clubs, mass movements of the unemployed and
workers taking over bankrupt companies and reopening them under their own
management.
Klein is also the author of three books.
It shows how neoliberal Washington Consensus
fundamentalism dominates the world with America its lead exponent
exploiting security threats, terror attacks, economic meltdowns, competing
ideologies, tectonic political or economic shifts, and natural disasters to
impose its will everywhere.
Klein describes a worldwide process of social
and economic engineering she calls "disaster capitalism" with torture along
for the ride to reinforce the message - no "New
World Order" alternatives are tolerated.
"Free market" triumphalism is everywhere - from Canada to Brazil, China to
Bulgaria, Russia to South Africa, Vietnam to Iraq. In all cases, the results
are the same.
People are sacrificed for profits and Margaret
Thatcher's dictum applies - "there is no alternative."
"The Shock Doctrine" is a powerful tour de force, four years of
on-the-ground research in the making and well worth the wait. In an age of
corporatism partnered with corrupted political elites, it's must reading by
an author now firmly established as a major intellectual figure on the left
and champion of social justice.
Naomi Klein is all that and more. Even
for those familiar with her topics, the book is stunning, revealing,
unforgettable and essential to know. This review will cover a healthy sample
of what's in store for readers in the full exquisitely written text. It's in
seven parts with a concluding section.
Each will be discussed below starting with a
brief introduction.
Introduction - Blank
Is Beautiful
Three Decades of Erasing and Remaking the World (into Hell)
New Orleans, post-Katrina, is a metaphor for an American-style "New World
Order" with unfettered capitalism unleashed in its most savage form. Klein
quotes Republican congressman Richard Baker telling lobbyists:
"We finally cleaned up public housing in New
Orleans. We couldn't do it but God did."
And New Orleans developer Joseph Canizaro
added:
"I think we have a clean sheet to start
again (and take advantage of) big opportunities."
Their scheme is erasing communities and
replacing them with upscale condos and other high-profit projects on choice
city real estate at the expense of the poor mother nature forced out and
government won't allow back.
Enter the "grand guru" of free-wheeling capitalism, then age 93 and in
failing health. This was conservative/libertarian economist Milton
Friedman's moment that he first articulated in his 1962 book "Capitalism
and Freedom."
His thesis:
"only a crisis - actual or perceived -
produces real change. When a crisis occurs, the actions that are taken
depend on the ideas that are lying around....our basic function (is) to
develop alternatives to existing policies (ones Friedman rejects, and
have them ready to roll out when the) the impossible becomes politically
inevitable."
Klein calls crises "democracy-free zones," and
Friedman's thesis "the shock doctrine." For New Orleans it means "permanent
reforms" like destroying public housing and issuing vouchers for privatized
schools in lieu of rebuilding public ones with government reconstruction
funds.
For Friedman, government's sole function is,
"to protect our freedom both from (outside)
enemies....and from our fellow-citizens." It's to "preserve law and
order (as well as) enforce private contracts, (and) foster competitive
markets."
In his view, anything else in public hands is
socialism that for "free market" fundamentalists like Friedman is blasphemy.
Until 1973, Friedman's radical doctrine stayed in his classroom, but all
that changed on an earlier September 11. Following General Augusto
Pinochet's bloody ascent to power, he had a real life laboratory as advisor
to the new Chilean dictator. His prescription came to be known as the
"Chicago School" revolution of rapid-fire economic transformation he called
"shock treatment," now known as "shock therapy."
It's an economic version of "destroy(ing) the
village (and country) to save it" from the Vietnam era and nearly as harsh.
Millions know its lessons, but Friedman's not their hero. It's central
tenets are structurally adjusted mass-privatizations, government
deregulation, unrestricted free market access for foreign corporations, and
deep cuts in social spending with repressive laws, harsh crackdowns and
torture along for the ride to reinforce the core tenet Reaganites call
"trickle down" and Brits call "Thatcherism."
Its recipients call it hell, and Klein explains why - in Chile, Argentina,
Uruguay, Bolivia, Brazil, China, Russia, the Falklands, Poland, South
Africa, Sri Lanka, New Orleans, Israel, and coming to a neocon-occupied
homeland neighborhood near you. It's "disaster capitalism" unleashed, and
business is booming. Klein cites insiders saying opportunities are on a par
with a thriving 'emerging market'....
"the deals are even better than the dot-com
days, and the 'the security bubble' picked up the slack when those
earlier bubbles popped."
Reaganomics adherents are today's
neoconservatives with the "full force of the US military machine (serving
their unfettered) corporate agenda" of greed writ large. Its holy policy
trinity is:
"elimination of the public sphere, total
liberation for corporations and skeletal social spending (if any at
all)."
But instead of lifting all boats as promised,
it's mirror opposite. It creates a powerful ruling corporatist class
partnered with corrupted political elites - "with hazy and ever-shifting
lines between the two groups." Russia got billionaire "oligarchs," China
"the princelings," Chile "the piranhas," and America the Bush-Cheney
"Pioneers."
Everywhere, the scheme is the same: huge public wealth transfers to private
hands, exploding public debt most often, "an ever-widening chasm between the
dazzling rich and disposable poor, and an aggressive nationalism (like
George Bush's permanent "war on terrorism" and the world) that justifies
bottomless spending on security." "Inside the bubble" is paradise.
Outside, however, is hell with "aggressive
surveillance, mass incarceration, shrinking civil liberties," a declining
standard of living, and repression and torture reinforcing the message to
non-believers.
Klein calls the harshness "a metaphor of the shock doctrine's underlying
logic." When applied, it induces a state of "deep disorientation," and shock
to force targets "to make concessions against their will." The "shock
doctrine" works the same way on a mass scale, and the 9/11 experience proved
it. It exploded the "familiar world" and created a period of disorientation
and regression the Bush administration jumped on abroad and at home.
As Klein put it:
"Suddenly we found ourselves living in a
kind of Year Zero (with) everything we knew of the world before (now)
dismissed as 'pre-9/11' thinking."
We became a "blank slate, a clean sheet of
paper," and the administration did what was impossible before. It's how the
"shock doctrine" works:
"the original disaster (terror attack, war,
hurricane, market meltdown) puts the entire population into a state of
collective shock" enabling policy manipulators to move in for the kill
to remake the world in their image and get it done before the shock
wears off.
Part 1 - Two Doctor Shocks
Torture and Chicago School Fundamentalism
Following a crisis shock, another quickly follows. The corporate piranhas
exploit disorientation with economic "shock therapy" along with "police,
soldiers and prison interrogators" with torture their method of choice "to
build a model country (by) erasing people and then trying to remake them
from scratch."
Klein reviews the history of CIA's interest in torture as a way to control
the human mind. It began with the Montreal doctor they funded to perform,
"bizarre experiments on his psychiatric
patients (by) keeping them asleep and in isolation for weeks, then
administering huge doses of electroshock (plus) experimental
(psychedelic LSD and hallucinogen PCP angel dust) drug cocktails."
The experiments were performed at McGill
University's Allan Memorial Institute by Dr. Ewen Cameron even though
they clearly violated all standards of medical ethics using human guinea
pigs without their permission with permanent damage their reward. Cameron
believed by blasting the human brain with an array of shocks, he could,
"unmake and erase faulty minds, then rebuild
(on a blank slate) new personalities" cleansed of their previous nature.
It was voodoo science, and it failed. His
patients were his victims, but CIA gained a wealth of knowledge it now
employs with no pangs of conscience or regard for ethics.
Klein traces CIA's interest in mind manipulation to a 1951 trinational
meeting of intelligence agencies and academics in Montreal when concern was
that Communists could brainwash POWs to control them. That was when the spy
agency engaged Canadian researchers to learn how, and one of them was Dr.
Donald Hebb, director of psychology at McGill, who was working on the
problem. Intelligence agencies were impressed enough with his work to fund
classified sensory-deprivation experiments on volunteer McGill students.
They proved intensive isolation interferes with clear thinking enough to
make people more receptive to suggestion.
They were also "formidable interrogation
techniques" amounting to torture that Hebb knew violated medical ethics. He
later characterized Cameron's work as "criminally stupid," but CIA got what
it wanted - a way to interrogate "resistant sources" in a "new age of
precise, refined torture, not the gory, inexact" kind from the Spanish
Inquisition or what Nazis and other tyrants often practiced.
Cameron's experiments with human guinea pigs
built on Hebb's earlier work laying the foundation for CIA's,
"two-stage psychological torture method" of
sensory deprivation followed by sensory overload. University of
Wisconsin historian Alfred McCoy in his book, 'A Question of Torture' on
CIA interrogation, called it "the first real revolution in the cruel
science of pain in more than three centuries."
Pre-9/11, these techniques were freely used
covertly as any form of abuse or torture violates the Geneva, UN and other
statutes prohibiting these practices as well as the US Army's own Uniform
Code of Military Justice barring "cruelty" and "oppression" of prisoners. No
longer, as "On
September 11, 2001, that longtime insistence on plausible
deniability went out the window" as well as any claim this nation respects
the law and rights of free people everywhere. What once was done sub rosa or
by proxy is now condoned and authorized at the highest levels of government
on the fraudulent claim of national security to hide the real aim of social
control.
Klein notes torture is still technically banned in the US, but only when
pain is the "equivalent in intensity to (what accompanies) serious physical
injury, such as organ failure."
Simply put, anything goes, but it's not put that
way. In Iraq, it was thought "shock and awe" would be so stunning, Iraqis
"would go into a kind of suspended animation."
A second makeover Chicago School
fundamentalism shock could then be imposed on a blank post-invasion
slate, and bingo, mission accomplished. Klein notes "there was no blank
slate, only rubble and shattered, angry people" who were blasted with more
shocks when they resisted.
Like Cameron and his experiments, "Iraq's shock
doctors can destroy, but they can't seem to rebuild," and the same is true
wherever these shock doctors show up.
Milton Friedman and
the Search for a Laissez-Faire Factory
The epicenter of shock ideology is the University of Chicago Economics
Department.
It came out of the 1950s "in the thrall" (of a)
man on a mission to fundamentally revolutionize his profession," and on that
score Milton Friedman succeeded mightily. Friedman, now gone,
believed, markets work efficiently and best unfettered of rules,
regulations, onerous taxes, trade barriers, entrenched interests, and human
interference.
Whereas Cameron believed electroshocks
could restore natural health, Friedman favored economic shock as
extreme and destructive to nations as Cameron and CIA's methods are to human
minds.
Friedman taught this voodoo science and believed to the end, all contrary
evidence aside, it was perfect and worked. Chicago School fundamentalism
developed at a post-war time in the 1950s when leftist ideas supporting
worker rights were gaining ground. Where they "promised (workers) freedom
from bosses, citizens from dictatorship (and) countries from colonialism,"
Friedman promised "individual freedom" to choose that appealed to owners of
capital who embraced him and his thinking.
It stood in stark contrast to what became known as "developmentalism" or
"Third World nationalism" in the post-war developing world. Economists in it
favored an "inward-oriented industrialization" strategy to break the cycle
of poverty and grow.
Like Keynesians and social democrats, they
showed it worked in Latin America's Southern Cone with leaders like Juan
Peron,
"put(ting) their ideas into practice with a
vengeance (by) pouring public money into infrastructure projects,
(providing) local businesses generous subsidies, and keeping out foreign
imports with....high tariffs."
It brought prosperity to the South and "dark
days" for Friedman, his acolytes, and free-wheeling capitalists losing out
to social progress.
It sprung corporate America to action by funding a legion of think tank and
Chicago School foot soldiers to change the message and fortunes of their
businesses. Friedman was their ideological leader preaching public wealth
should be in private hands, rules and regulations out the window,
accumulation of profits unrestrained, and social welfare programs curtailed
or abolished. In short - deregulate, privatize and get government out of the
business of everything besides providing security and enforcing contracts.
He also believed taxes were onerous and once
said he was
"in favor of cutting (them) under any
circumstances and for any excuse, for any reason, whenever it's
possible...."
He also said corporations should be exempt from
federal taxes claiming what they pay ends up in consumer prices that, in
fact, is pure nonsense as every marketing MBA (like this writer) learns
straightaway. The fundamental law of pricing is to charge what the market
will bear, no more or less. In other words, get all you can but no more than
buyers will pay. Soon enough they'd pay plenty in the developing world.
In 1953, the US declared war against "developmentalism" with CIA's first
ever coup against Mohammed Mossadegh in Iran. Another followed the
next year in Guatemala, and in both instances democratically elected leaders
were ousted because corporate interests opposed them. It was only the
beginning, and Friedman and his "Chicago Boys" soon had a real time
laboratory to prove their "capitalist utopia" worked.
Salvador Allende's Popular Unity government electoral victory
in 1970 was the opportunity. Three years later he was out giving Friedman
the chance he wanted. Klein related the results in what she called "the
first Chicago School state" with others to follow. They're all the same with
"an unstoppable hurricane of mutually reinforcing destruction and
reconstruction, erasure and creation" following the crisis. Next is
unfettered economic shock therapy with torture and disappearances awaiting
resisters and anyone guilty of bad thinking.
Friedman's brave new world was beginning
to roll.
It's devastation is everywhere including at
home.
Part 2 - The First
Test
The Bloody Birth of the Counterrevolution
Counterrevolution began 34 years ago in Chile on another September 11 that
should have been unimaginable and had to seem surreal. There were tanks in
the streets and fighter jets attacking government buildings in a scene all
too real and deadly. It played out in Santiago and around Chile and was just
the beginning of a long nightmare.
It brought General Augusto Pinochet to
power (with plenty of CIA help) who called his action "a war," not a
coup, and to reinforce his message he made it seem like one. Blood in the
streets, the presidential palace in flames, and President Salvador Allende
dead ended the most vibrant democracy in the Americas. It was a cakewalk
with "the junta's grand battle over by mid-afternoon."
A state of siege was imposed followed by mass arrests, killings and torture
in a climate of fear that enveloped the country. Allende supporters were
targeted in Chile's "Caravan of Death." Chileans paid dearly, but the
Chicago Boys had their moment of triumph, and they were ready. Rolling off
the press was their detailed economic manual for the new government called
"The Brick."
It was a 500 page Chicago School shock therapy
wish list. It was "the first Chicago School state," its first "global
counterrevolution" victory, and "a genesis of terror" in a brave new world
for Chileans.
The economic playbook was right from Milton Friedman's "Capitalism
and Freedom" that's long on free market triumphalism and void on
its effects on real people. It was pure Friedman featuring mass
privatizations, deregulation and deep social spending cuts flavored
generously with corporate-friendly tax cuts, trade unionist crackdowns,
savage repression for non-believers, and an end to Chile's social democratic
state Friedman condemned.
Pinochet bought it along with a team of Chicago School alumni called "technos."
They embarked on a free market binge with
disastrous results. In the first year, inflation hit 375%, thousands of
Chileans lost jobs, the country was flooded with cheap imports, local
businesses closed and hunger grew along with public and small business
discontent in this free market "paradise." In desperation, "it was time to
call in the big guns" with Milton Friedman coming to Santiago to
reinforce his message that for things to improve they first had to get
worse. }
It was classic shock treatment and
Chicago School baloney with Friedman preaching patience and promising an
"economic miracle" if his prescription was followed.
Pinochet agreed, and slash and burn followed with visions of paradise at the
end of the rainbow. It was pure untested fantasy, and the results showed it.
After one year of hardened shock therapy, Chile's economy contracted 15%,
unemployment rocketed to 20%, and contrary to Friedman's rosy scenario it
lasted for years with no social safety net help for desperate Chileans.
Klein notes Chile today is still cited as a model that free market "Friedmanism"
works in spite of the clear evidence it doesn't.
Growth did resume a decade later, but only after
conditions worsened. It forced Pinochet to reinstate Allende policies like
renationalizing privatized companies but not his social democratic agenda.
Chileans were left with the shambles. When the economy stabilized and rapid
growth resumed in the late 80s, poverty was 45%, but the richest 10% saw
their incomes rise by 83%.
Even today, Klein notes, Chile remains
one of the most unequal societies in the world. It's shock therapy miracle
shifted "wealth to the top and shock(ed) much of the middle class out of
existence."
It's the way it works everywhere and a glimpse of the future:
"an urban bubble of frenetic speculation and
dubious accounting fueling superprofits and frantic consumerism, ringed
by ghostly factories and rotting infrastructure of a development past;
roughly half the population (excluded); out-of-control corruption and
cronyism; (decimated) nationally owned small and medium-sized
businesses; (mass) transfer of (public) wealth (and resources) to
private hands (accompanied by) a huge (shift) of private debts into
public hands."
Inside the Chilean bubble was paradise. Outside
was "The Great Depression." Bubble-benefitters reacted with "junkie logic:
Where is the next fix?"
It was first across the border in other Latin American Southern Cone
countries where the "counterrevolution spread (and) people vanish(ed)."
Argentina, Brazil and Uruguay were targeted with similar results as in Chile
under juntas replacing democrats. Chicago School fundamentalism was on a
roll, and woe to the non-believers.
Nations that were developmentalism models became
wastelands with decades of worker gains lost almost overnight. Factories
closed, wages fell, unemployment soared, poverty grew severe, dissenters
disappeared, and ordinary people suffered to prove what pin-stripped
academics knew after Chile went sour.
Instead, it was on to the next target.
In them all, the slate was cleansed and terror unleashed, unrestrained by
national borders. Former Allende economist and diplomat turned activist
Marcos Orlando Letelier became a victim in September, 1976. While living
in Washington, he condemned Chile's "economic freedom" for the privileged
and paid with his life. Pinochet's DINA secret police killed him and his
American colleague, Ronni Moffit, by remote-detonating a bomb planted
under his driver's seat. An FBI investigation learned the assassins entered
the country under false passports with full CIA knowledge and complicity.
The purging included cleansing wrong ideas and thinkers like legendary left
wing Chilean folk singer, Victor Jara. He was seized and taken to
Chile's notorious National (killing and torture) Stadium to be reeducated.
Soldiers broke his hands so he couldn't play the guitar.
Then they shot him 44 times "to make sure he
couldn't inspire from.... the grave."
One culture was being erased and replaced by
another. As in Nazi Germany, books were burned, newspapers and magazines
shuttered, universities occupied and strikes and political meetings banned.
Trade unionists were specially targeted as threats to the new economic
order. It's leaders were rounded up, movement members viciously attacked,
and "battalions" targeted workers in factories. They were arrested,
imprisoned, tortured, and disappeared in a sweeping reign of terror designed
to crush opposition and wrong-thinking.
In Argentina, Ford Motor Company's local subsidiary was complicit. It helped
soldiers and secret police rid unionists from its factories and supplied
vehicles as well. Green Ford Falcon sedans became the feared symbol
of terror an Argentine playwright called "death-mobiles." Many thousands
kidnapped and disappeared rode off in these cars, never to return.
Farmers involved in land reform struggles also were targeted along with
anyone with "a vision of society built on values other than pure profit." It
affected community worker activists, many church-connected, who wanted
social services like health care, public housing and education the state was
erasing through shock therapy and mass repression.
Klein noted while "policies attempted to excise
collectivism from the culture, inside....prisons (the practice was to)
excise it from the mind and spirit."
The sickness was democratic socialism,
the cure pain and suffering. Wrong-thinkers were taught the hard way, and
many paid with their lives. Chicago School fundamentalism is harsh medicine.
Its grand guru, Milton Friedman, was unrepentant. He called it
"freedom" and took his mathematical model miracle to the grave amidst a hail
of undeserved eulogies.
In his memoirs before he died, his "blatant revisionism" on Chile was
shameful and disturbing. He falsely claimed Pinochet only asked for help in
1975 when, in fact, the Chicago Boys worked with the military before
the 1973 coup, and their policies were implemented on Pinochet's first day
in power. Friedman also claimed the junta's repressive years didn't undo
Chilean democracy.
In his view, it opened up,
"more room for individual initiative and for
a private sphere of life (offering a greater) chance of a return to a
democratic society."
It was classic convoluted Chicago School
thinking. It made him famous courtesy of corporate triumphalism, generous
funding and an utter disdain for human rights and dignity.
Friedman also used his 1976 Nobel lecture to argue economics was as
scientifically accurate and objective as other sciences. He failed to
mention its dark side - devastating poverty, unemployment, shuttered
factories and mass human misery and deaths in the first nation adopting his
ideology on its victimized people. Now it's everywhere and savagely enforced
in an age of corporate dominance, wars for profit and neglect of human needs
to fund them.
That's Friedman's real legacy from the barrel of
a gun and called "freedom."
Part 3 - Surviving
Democracy
Chicago School dogma became known as Thatcherism in Britain, but its prime
minister wasn't an early adherent. Margaret Thatcher thought Chilean
shock therapy wasn't possible in a democracy like the UK because voters
wouldn't buy it. Three years into her first term, her approval rating was
lower than George Bush's.
She was in danger of not being reelected and
didn't dare risk imposing bitter economic medicine that would sink her
chances. That is, until destiny intervened on April 2, 1982 when Argentina
invaded the British-held Falkland Islands off its coast that was unimportant
to either country except for the political hay to gain from war.
Thatcher jumped at the chance to regain her footing and "went into
Churchillian battle mode," even though Argentina's president, General
Leopoldo Galtieri, wasn't Adolph Hitler. But defending the British
empire was almost as good, and it paid off. Thatcher's political future was
at stake. She revived it, more than doubled her approval rating and
henceforth was known as the "Iron Lady" that for her was high praise, and
she made the most of it.
She launched a "corporatist revolution" based on Chicago School economics
she thought impossible earlier. She parlayed her new popularity to a victory
against striking coal miners in 1984 with tactics like unleashing 8000
"truncheon-wielding" riot police in a single confrontation. Before the
strike ended, thousands of workers were injured, but Thatcher stood firm
with a clear message to other unionists.
Take what you're offered or get the same
medicine.
She didn't stop there, and what followed was a radical economic agenda in a
wave of state enterprise privatizations including British Telecom, British
Gas, British Airways, British Steel and others in what Klein called "the
first mass privatization auction in a Western democracy." It proved Chicago
School fundamentalism didn't need repressive dictatorships to advance as
long as "Iron Ladies" like Thatcher were around to match the best of them,
short of all out tanks in the streets shock therapy, that is. Her eleven and
a half years in power proved it, and Britain hasn't been the same since with
Labor as committed now as the Tories.
Bolivia was soon targeted as well, but in 1985 was part a democratic wave
sweeping the world. It was an election year with two familiar figures facing
off for the presidency - former dictator Hugo Banzer and former
elected president, Victor Paz Estenssoro. It was close and Banzer
thought he won so before final returns were in he named 30 year old Harvard
economist Jeffrey Sachs to help develop an anti-inflation economic
plan for the country.
Sachs was part Keynsian but larger part Chicago School adherent that made
for a bad combination. He bought its orthodoxy in softer form by supporting
debt relief and generous aid along with the shock therapy he advised Banzer
to adopt as the only solution to hyperinflation.
As it turned out, Banzer lost and Paz won, and while no socialist, he was no
Chicago School adherent either, or so voters thought. Four days into his
term, he charged his emergency economic team to radically restructure the
economy using shock therapy with a twist. It was much harsher than Sachs
proposed with the entire state-centered structure Paz erected decades
earlier dismantled in the first 100 days before the public could react.
In its place, food subsidies were ended, price
controls lifted, wages frozen, oil prices hiked 300%, deep government
spending cuts imposed, unrestricted imports allowed, and state-owned
companies downsized as a first step to privatizing them. It cost hundreds of
thousands of full-time jobs, pensions and safety net protections.
Friedman continued to roll.
The results were predictable. The minimum wage never regained its value, and
two years later real wages were down 40% and average per capita income
dropped from $845 in 1985 to $789 in 1987. As in other shock therapy
countries, a small elite got richer while the great majority of Bolivians
lost out with campesinos faring worst. In 1987, they earned on average $140
a year, or less than one-fifth the nation's declining average income.
Bolivian misery gave Sachs star status for the country's "Miracle." It
launched his new career and brought him to Argentina, Peru, Brazil, Ecuador,
Venezuela and Russia later on plus a best-selling book and three-part PBS
"success story" series.
The only problem was it wasn't true.
President Paz had no mandate for shock therapy,
and many workers were predictably furious at his betrayal. They went on
strike and Paz's response made Margaret Thatcher's earlier action against
striking coal miners seem tame by comparison. Tanks rolled in the streets,
and riot police raided union halls, a university and factories. Hundreds of
arrests followed, including the top 200 union leaders, and oppositional
politics was banned. The siege lasted three months during the decisive shock
therapy period with more repression and Chicago School medicine later.
It showed shock therapy needs harsh authoritarian rule backing with
Bolivia's pin-stripped politicians, economists and bureaucrats administering
it, not uniformed soldiers as in Chile. Paz's democratic victory was
illusory like others when leaders renege on promises and sacrifice them on
the alter of Chicago School orthodoxy.
Argentina was another "textbook case."
In the post-Falklands War period, it was
burdened with billions in odious debt Washington insisted be serviced and
paid. It was far more onerous after the (Paul) "Volker Shock" when the US
Federal Reserve Chairman hiked interest rates up to 21% in the early-mid
1980s to fight inflation, so he said. It was painful in the US and
disastrous for developing countries turning their debt burdens into crises.
New loans were needed to pay off old ones, and the debt spiral was born
afflicting nations then and still today. That was the whole idea, or at
least one of them.
Argentina, Brazil and other countries had another option they didn't take -
defaulting on debt so great it was unrepayable.
As Klein put it:
"Understandably (new democracies were)
unwilling to go to war with Washington (and the international lending
agencies it controls so they) had little choice but to play by
Washington's rules (and) in the early eighties (they) got a great deal
stricter.... It was the dawn of the era of 'structural adjustment' -
otherwise known as the dictatorship of debt."
In the 1980s, Chicago School economists
colonized the
IMF and
World Bank to advance their corporatist
crusade. Economist John Williamson named it "the Washington Consensus" that
stuck ever since. It consisted of core economic policies both institutions
consider essential for economic health according to their orthodoxy.
We know them well:
all "state enterprises ....privatized (and)
barriers impeding entry of foreign firms.... abolished."
There was more that together was classic
Friedman dogma: privatization, deregulation, unrestricted free trade (never
called fair), and deep cuts in government spending except for security.
Indebted developing countries learned shock doctrine 101 the hard way.
Getting aid meant accepting Washington Consensus rules - the whole package.
So to save their countries, they had to "sell (them) off." Klein calls
Argentina the "model student" in the 1990s under leaders like Carlos
Menem. Appointing Domingo Cavallo economy minister signaled he bought
the corporatist package.
But as Klein points out:
"Argentina was not unique (and by 1999)
Chicago School alumni included more than twenty-five government
ministers and more than a dozen central bank presidents from Israel to
Costa Rica."
Shock therapy was on a role that in
Argentina turned into a textbook case of therapeutically induced disaster.
What Time magazine in 1992 called "Menem's Miracle" became Menem's Mirage
when the economy collapsed in 2001, and Argentina did the unthinkable with
Menem gone and a new president in power. It defaulted on an $805 million
debt to the World Bank. It should have ended the neoliberal experiment, but
instead it spread.
Economic crises fueled it, and when old ones
ebbed,
"even more cataclysmic ones appear(ed):
tsunamis, hurricanes, wars and terrorist attacks. Disaster capitalism
was taking shape" with shock therapy its tool of choice.
Part 4 - Lost in Transition
Slamming the Door on History
Before the Berlin Wall fell, Lech Walesa became a labor hero in
Poland and the West by defying the Moscow-controlled government and getting
away with it. Solidarnosc (Solidarity) spread from its Gdansk roots to the
country's mines, shipyards and factories and within a year had 10 million
members.
They won the right to bargain but wanted more.
They aspired to take over the state and institute their own alternative
economic and political program. It's radical centerpiece was to transform
huge state-run companies into worker-run cooperatives so Solidarity members
could be empowered in their own "socialized enterprise."
Walesa objected, lost the debate, and he feared what then happened.
The Jaruzelski government declared martial law,
sent tanks to the streets and rounded up thousands of Solidarity members. By
the late 80s, the crackdown subsided, the economy was in free fall, workers
again struck and Mikhail Gorbachev's reformist government was in power in
Moscow. Solidarity was legalized, a Citizens' Committee Solidarity wing was
formed, its members stood in snap elections and won effective control of the
government capturing 260 parliamentary seats.
It should have been the best of times, but with the economy in trouble,
Poland needed aid including debt relief. With Chicago School alumni running
IMF, none was offered except under Washington Consensus rules, take it or
leave it.
Enter Jeffrey Sach, the shock doc, with
an even harsher plan than imposed on Bolivia. It included an immediate end
to price controls, slashing subsidies, and privatizing mines, shipyards and
factories. It short, it ran directly counter to Solidarity's aim for
worker-run industry.
Sachs promised Solidarity Poland could become like France or Germany under
his plan. By swallowing shock therapy medicine first, taking the pain, the
patient would end up cured and healthy - if he was right. After debate, the
verdict was in and the treatment bought with predictable results. Sachs
promised "momentary dislocations" but delivered a full-blown depression.
Industrial production plummeted 30% after two years of "reforms."
Unemployment skyrocketed, and in 1993 hit 25% in
some areas. It's still chronic today with recent World Bank figures pegging
it at around 20%, the highest in the European Union. For young people, it's
even worse with 40% of workers under 24 unemployed.
Most alarming is the number of people in poverty. From a 15% level in 1989,
it rose to a startling 59% in 2003. Incredibly, the country, like Chile, is
still cited as a free market reform model. It's pure myth, angry Poles know
it, but reports in the West ignore them as they do shocked victims
everywhere.
They didn't ignore "the shock of Tiananmen Square," but didn't report it
accurately either. In the early 1980s, Deng Xiaoping was transforming his
country economically while keeping rigid political control including
iron-fisted repression when needed. Democracy was nowhere in sight nor is it
now. While many of Deng's reforms were successful and popular, others in the
late 80s weren't, and it provoked deep anger in the cities by people most
affected. Price controls were lifted, corruption and nepotism was rampant,
freedom minimal, job security eliminated, unemployment soared, and deep
inequalities grew between "winners and losers in the new China."
It came to a head with mass protests in 1989 in Tiananmen Square that
Western reports characterized as a clash between old-guard Communist
authoritarians and idealistic students wanting western-style democracy. It
was pure propaganda. The protests were massive and threatened the
government, but democracy wasn't the issue. It was popular discontent from
wrenching economic change raising prices, lowering wages, and causing "a
crisis of layoffs and unemployment."
Protesters weren't against economic reform. They
were against the Chicago School version of it, but their efforts were
costly.
Deng declared martial law May 20, tanks rolled in the square, indiscriminate
shooting took place, and when it ended thousands were dead, many more
thousands injured, and still more thousands hunted down, arrested, jailed,
some tortured, and hundreds likely executed. Shock therapy rolled in China
as in Chile - through the barrel of a gun and raw state terror. Following
the crackdown, China opened to foreign investment, joined the WTO, and
turned the country into the world's largest low wage sweatshop for
Wal-Mart's "Always Low Prices."
For foreign investors and party apparatchiks, it was a win-win arrangement
with Klein citing a 2006 study showing 90% of China's billionaires to be
Communist Party officials.
About 2900 "party scions" (called "the
princelings") control $260 billion, and Klein notes the,
"stark similarity between (China's
authoritarian rule) and Chicago School capitalism - a shared willingness
to disappear opponents, blank the slate of all resistance and begin
anew" using shock and fear to transform countries into
free market paradises for the privileged.
The Tragedy of South Africa's
"Democracy Born in Chains"
Klein quotes Nelson Mandela in January, 1990 (two weeks before he was
freed) in a note to his supporters from prison saying:
"The nationalization of the mines, banks and
monopoly industries is the policy of the ANC (and changing) our
views.... is inconceivable. Black economic empowerment is a goal we
fully support and encourage, but in our situation state control of
certain sectors of the economy is unavoidable."
That belief became ANC policy in 1955 in its
Freedom Charter. The liberation struggle wasn't just about a political
system but an economic one as well. White workers in mines earned 10 times
more than blacks, and large industrialists worked with the military to
enforce order and disappear dissenters.
Once apartheid ended, a new way was possible, and Mandela seemed poised to
lead it.
The ANC had "a unique opportunity to reject the
free market orthodoxy of the day" and choose a "third path between Communism
and capitalism." ANC candidates swept the 1994 elections and Mandela became
president at a time South Africa surpassed Brazil as the most unequal
society in the world. Negotiations were held with the ruling National Party,
and a peaceful handover was achieved but not without "prevent(ing) South
Africa's apartheid-era rulers from wreaking havoc on their way out the
door."
Negotiations took place on two parallel tracks - political and economic.
Mandela and his chief negotiator,
Cyril Ramaphosa, "won on almost every count" politically.
But along side it, economic negotiations were
held with the country's current president, Thabo Mbeki, in charge
with the outcome in the end far different. With ANC leaders preoccupied with
controlling Parliament, the former white supremacist government and
industrialists were determined to safeguard their wealth, and they succeeded
by assuring Washington Consensus policies would be instituted when political
power changed hands.
ANC economists and lawyers were outfoxed or outgunned by the opposition,
IMF, World Bank, GATT and power of big capital against inexperienced
politicians and technocrats who ended up losers. Black officials controlled
the government, but discovered the real power was elsewhere.
As Klein put it:
"The bottom line was that South Africa was
free but simultaneously captured."
The leadership mistakenly thought once firmly in
power they could undo earlier made transition compromises.
They couldn't or didn't for the same reasons other developing countries
accept free market rules. Adopt them or be punished by the market as Mandela
learned when he was freed. The South African stock market collapsed in
panic, and the country's currency (the rand) dropped by 10%.
He acknowledged the problem later on saying
it's,
"impossible for countries....to decide
economic policy without regard to the likely response of these markets."
It's too bad he didn't know how Hugo Chavez
managed after 1999 (oil aside). He achieved what Mandela reneged on, and
Venezuela's economy is booming. Had he and ANC officials stood their ground
early on, South Africa (with its mineral riches) might have done the same
thing - had a growth economy in a socially democratic state and a model for
its neighbors.
They didn't, black South Africans lost out, Mandela's legacy is tainted, and
a key factor was current president Thabo Mbeki. He spent spent years
studying in exile in England during the apartheid years during which time
"he was breathing in the fumes of Thatcherism."
He became the ANC's free market tutor, believed
in market fundamentalism, and its prescription was "growth and more growth."
It meant neoliberal shock therapy with the full Friedman package Mbeki
supported.
He later professed:
"Just call me a Thatcherite," and Mandela
told journalist John Pilger the same thing in retirement saying,
"....you can call it Thatcherite but, for this country, privatization is
the fundamental policy."
After over a decade of that agenda (1994 - 06),
Klein highlighted the toll showing conditions today much worse than under
apartheid, and ANC's leadership responsible:
-
the number of people living on less than
$1 a day doubled from two to four million
-
the unemployment rate more than doubled
to 48% from 1991 - 2002
-
only 5000 of 35 million black South
Africans earn over $60,000 a year
-
the ANC government build 1.8 million
homes while two million South Africans lost theirs
-
nearly one million South Africans were
evicted from farms in the first decade of democracy
-
as a result, the shack dweller
population grew by 50%, and in 2006, 25% of South Africans lived in
them with no running water or electricity
And there's more:
-
the HIV/AIDS infection rate is about
20%, and the Mbeki government shamefully denied the severity of the
crisis and did little to alleviate it
-
it's been a major reason why average
life expectancy in the country declined by 13 years since 1990
-
40% of schools have no electricity
-
25% of people have no access to clean
water and most who do can't afford the cost
-
60% of people have inadequate
sanitation, and 40% no telephones.
"Freedom" for these people and all black South
Africans came at a high price, and no efforts are being made to ameliorate
it. Political empowerment was traded for economic apartheid under Chicago
School fundamentalist rules.
Klein observed:
"Never before had a government-in-waiting
been so seduced by the international community."
If China, Vietnam and even Russia saw "the
neoliberal light," Mandela was told, how could South Africa resist it. The
ANC leadership might have (and Mandela had the credentials to lead them) had
they examined the wreckage around the world in Friedman-seduced countries.
Instead, they took the easy way out and
surrendered.
Russia Chooses "the
Pinochet Option"
The man who ignited political and social change in Russia wasn't around long
enough to lead it. Mikhail Gorbachev became head of the Soviet Union's
Communist Party in March, 1985, believing the economy stalled and needed
change. His solution became glasnost (liberalizing opening up) and
perestroika (reconstruction), and Soviet Russia would never be the same
again.
By the early 1990s the press was freed, the
constitutional court was independent, and elections were held for Russia's
parliament, local councils, president and vice-president. In addition,
Gorbachev favored a Scandinavian-style social democracy combining free
market capitalism with strong social safety net protections. He hoped to
build "a socialist beacon for all mankind."
He never got the chance.
While still in office at the 1991 G7 meeting in London, his fellow heads of
state delivered a free market message Chicago School-style. Later, the IMF,
World Bank and other international lending agencies reinforced it -
Soviet-era debts must be honored and aid depended on adopting strict shock
therapy rules. The Soviet Union soon dissolved, Gorbachev was out, Boris
Yeltsin became Russia's president, and Chicago School fundamentalism was
adopted as needed "reform."
Klein calls what happened next "one of the
greatest crimes committed against a democracy (in peacetime) in modern
history."
Yeltsin assembled a team of Chicago School ideologues to remake the economy.
Jeffrey Sachs showed up, too, with other US-funded transition experts to
help write privatization decrees, launch a New York-style stock exchange,
and craft a total radical economic makeover for a country long used to
central planning. Only one thing stood in the way - democracy, and a
parliament able to vote down what Yeltsin's team designed.
A clash of wills drew closer in the spring of
1993 when parliament's budget diverged from IMF demands for strict
austerity. Yeltsin reacted with the "Pinochet option." He issued decree 1400
dissolving parliament and abolishing the constitution. Two days later,
parliament voted 636 - 2 to impeach him, and battle lines were drawn.
Yeltsin sent troops to surround parliament and cut off power, heat and phone
lines. The army backed him and he pressed on. He then proceeded to dissolve
all city and regional councils in the country. Then, on October 4, 1993, he
ordered the army to storm the parliament, set it ablaze and "defend Russia's
new capitalist economy from the grave threat of democracy."
The assault took about 500 lives, wounded nearly
1000 others with the enthusiastic support from the West in headlines like
the Washington Post proclaiming "Victory Seen for Democracy" in Russia. Some
democracy...
Yeltsin now had unchecked dictatorial power, the West had its man in Moscow,
and shock therapy had an open field to inflict wreckage on Russia's people
who didn't know what him them as it unfolded. A corporatist state replaced a
communist one, and its apparatchiks were winners along with a handful of
western mutual fund managers who made "dizzying returns investing in newly
privatized Russian companies."
In addition, "a clique of nouveaux billionaires"
(17 in all called "the oligarchs") were empowered to strip mine the country
of its wealth and ship profits offshore at the rate of $2 billion a month.
As a result, Yeltsin's popularity plunged so he did what all desperate
leaders do to hold power with the next election to worry about. He began a
war in 1994 in the breakaway Chechen republic killing 100,000 civilians by
the late 90s. Elections were held in 1996, and Yeltsin won by overcoming his
low approval ratings with huge oligarch-funding and near-total control of
television coverage.
He then quietly handed power to Vladimir Putin
on December 31, 1999 without an election but with the stipulation he was
exempt from criminal prosecution. His legacy was devastating with Klein
noting "never have so many lost so much in so short a time."
When Russia's 1998 financial crisis hit:
-
80% of Russia's farmers were bankrupt
-
around 70,000 states factories had
closed
-
an "epidemic" of unemployment raged
-
before shock therapy in 1989, two
million Russians lived in poverty on less than $4 a day; by the
mid-90s, the World Bank estimated 74 million were impoverished and
by 1996 conditions for 25% (almost 37 million) Russians were
"desperate" and the country's underclass remained permanent
-
Russians drink twice as much now as
before; painkilling and hard drug use increased 900%, and HIV/AIDS
threatens to become epidemic with a 20-fold jump in infections since
1995; suicides are also rising, and violent crime increased more
than fourfold
-
Russia's population is declining by
700,000 a year with capitalism having already having killed off 10%
of it as one more example of free market-inflicted disaster. That's
the brave new world disease spreading everywhere with another
scorched-earth stop below. Friedman called it "freedom."
The Looting of Asia
In the summer of 1997, economic crisis hit Asia from no apparent cause
beyond rumors the Thai bhat was in trouble, and Thailand didn't have enough
dollars to back it.
Hot money in became an electronic stampede out with
"Asian Contagion" unleashed and heading for Indonesia, South Korea and other
so-called Asian Tiger countries that were fast-growth miracles until they
crashed together with the plight of one affecting the others.
It then got worse and spread to Latin America
and Russia with US markets also affected briefly in 1997 and then again with
a severe jolt in the summer of 1998.
The 1997 Asian panic was crippling with $600 billion in stock market wealth
taking decades to build wiped out in a year. Klein notes "a classic fear
cycle" ignited the crisis that might have been contained by the same type
"quick, decisive loan" rescue package offered Mexico in 1994 in their
so-called Tequila Crisis.
It would have been a strong signal to markets
the US Treasury and international lending agencies wouldn't let the Asian
Tigers fail. No help came, and the message instead was:
"Don't help Asia." Why? Because "Asia's
catastrophe was an opportunity (for predatory western corporations and
vulture investors) in disguise."
Asian Tigers grew by protecting their markets
and barring foreign companies from ownership of land or national firms.
They also restricted imports from the West and
Japan and instead built up their own domestic markets. Western predators
wanted unfettered entry to the region with the right to scoop up the best
Asian companies but needed a way to do it. Now they had it from an event
Klein calls "the fall of a second Berlin Wall," as important to western
capital as the first one.
Enter the IMF with crisis-struck Asian countries too sick to resist it. They
needed help, and the lending agency had plenty to offer on similar terms as
to previous crisis recipients. With economies in trouble and empty
treasuries, the Tigers got no choice.
First, they had to remove all,
"trade and investment protectionism and
activist state intervention that were the key ingredients of the Asian
miracle."
IMF also demanded big spending cuts, "flexible"
workforces (meaning mass layoffs and constrained wages and benefits),
privatized basic services, and the rest of the package they demand for
loans.
The regional toll was devastating with the International Labor Organization
estimating 24 million lost jobs along with "what was so remarkable about the
region's 'miracle' in the first place: its large and growing middle class."
In addition, 20 million people fell into the "planned misery" of poverty,
reversing an earlier trend reducing it. Women and children suffered most
with families selling daughters to human sex traffickers to survive as child
prostitution had a new growth market.
So did Wall Street as IMF structural adjustments put "pretty much everything
in Asia....up for sale" in the affected countries. The more markets
panicked, the lower asking prices became, and the more pressured hurting
companies were to sell out for what they could get or face bankruptcy. It
was a bonanza for buyers, and major deals went through in a great fire sale
at bargain prices.
Asia became hugely transformed with hundreds of
local brands replaced by western transnational ones. The New York Times
called it "the world's biggest going-out-of-business sale." It also became
an early glimpse of post-9/11 disaster capitalism - a way for corporate
predators to exploit crises in what's become common practice in the age of
"terror" creating opportunities galore and big profits for well-connected
firms.
Klein notes the Asian crisis never ended as desperation took root after 24
million people lost jobs in two years. No nation handles that, and the
fallout can be unpredictable. It led to a rise in religious extremism in
Indonesia and Thailand and "the explosive growth in the child sex trade."
Unemployment is still high and layoffs continue
with new foreign owners demanding higher profits with jobs disappearing to
provide them.
Eventually things settle down but never to where they once were. Throwing
people overboard, displacing small farmers and business owners and crushing
unions means those affected stay that way.
"They end up in slums, now home to one
billion people (and rising); they end up in brothels or in cargo ship
containers. They are the disinherited (or what) German poet Rainer Maria
Rilke (called) 'ones to whom neither the past nor the future belongs.' "
They're the human wreckage left behind by
countries swallowing Chicago School economic medicine. Its promised miracle
is people-poison but not for vulture investors thriving on it.
Disaster capitalism is on a roll, and its growth
market potential is unlimited and guaranteed to continue unless mass public
outrage stops it as one day it will.
Part 5 - The Rise of
the Disaster Capitalism Complex
Shock Therapy in the USA
Richard Nixon knew before the rest of us that Donald Rumsfeld
is "a ruthless little bastard." He also has a knack for making enemies even
inside the Pentagon he ran as Defense Secretary.
He planned to "reinvent warfare for the
twenty-first century (making it) more psychological than physical, more
spectacle than struggle, and far more profitable" than ever before. Talk
aside, he wanted to revolutionize the military by running it like the
corporate world, and that meant using methods like outsourcing and branding.
His idea was for fewer full-time troops, more
as-needed ones from the Reserves and National Guard, and a lot of backup
help from private contractors like
Blackwater USA for security and Halliburton for a range of
functions unrelated to soldiering. He wanted less staff and more tax dollars
diverted to private companies.
The Pentagon brass wasn't pleased, but Rumsfeld
was boss and Dick Cheney backed him.
Klein calls them both,
"proto-disaster capitalists" who practice
"the central tenet of the Bush regime (that) the job of government is
not to govern but to subcontract."
The privatization mania was kick-started in the
Reagan era, but Bill Clinton bought it as well. Now the feeling is anything
government can do, private business can do better so let them. That means
fire departments, prisons, public schools, public health, data management,
border control and even parts of the military.
As Klein explained:
"crisis-exploiting methods....honed over the
previous three decades would be used to (privatize) the infrastructure
of disaster creation and....response. Friedman's crisis theory was going
postmodern (to create a) privatized police state" by auctioning it off.
Then came 9/11, and the idea of hollowing out
government seemed opposite of what a frightened public wanted - a strong
central government to protect them. Bush promised it in speeches, but "his
inner circle had no intention of converting to Keynesianism."
September 11 security failures only reinforced
their belief that private firms could handle the challenge better than
government, and that meant transferring hundreds of billions of public
dollars to corporate pockets. The Bush administration exploited shock and
fear,
"to push through its radical vision of a
hollow government in which everything from war fighting to disaster
response was a for-profit venture."
Mass disorientation post-9/11 provided the
opportunity, and the "war on terror" became a "bold evolution of shock
therapy....built to be private from the start" to capitalize on it. It came
in two stages. First, policing, surveillance, detention and war-making
powers of the executive were dramatically increased though nothing in the
Constitution permits it. Then, the whole package, including occupation and
"reconstruction," was outsourced to well-connected private firms that
responded with generous campaign funds to keep the mutually reinforcing
daisy chain humming.
Using the ploy of fighting "terrorism," the
homeland disaster capitalism complex emerged as a full-blown new economy and
what Klein calls "a virtual fourth branch of government."
The Bush administration's idea of government, with security as one function,
wasn't to provide it but to buy it at cost-plus market prices with lots of
latitude for the plus. Just as the internet launched the dot-com bubble,
from 9/11 emerged the disaster capitalism one, and it was off to the races
"in an ad hoc....chaotic fashion."
Fighting "terrorism" is big business, and one of the first opportunities was
the market for surveillance cameras with 30 million of them installed in the
US, billions of hours of footage, analytic software to scan it, digital
image enhancement to help it, and information management and data mining
technology to handle all data government collects on everyone and
everything.
September 11 unlocked the potential, a huge new
growth market was created, and protection from terror became more important
than big brother watching. In six short years, an industry that barely
existed is now much larger than Hollywood or the music business, and its
potential looks limitless.
Klein calls it,
"an unprecedented convergence of unchecked
police powers and unchecked capitalism, a merger of the shopping mall
and the secret prison" in a frightening brave new world most people
barely understand or know exists.
It generates enormous wealth that creates a
powerful incentive for its winners to sell fear for more of it and
partnering with government makes it easy, especially the kind in power now.
Capitalism Becomes
Corporatism in a Corporatist State
Proto-disaster capitalism defines the Bush administration as crises, wars
and other disasters "conflate with what's good for Lockheed, Halliburton,
Carlyle and (Rumsfeld's old company) Gilead" Sciences.
Cataclysm is a growth business that in the
current climate involved "some of the seediest and most blatant corruption
scandals in recent history," war-profiteering in the hundreds of billions,
and a "whirling revolving door between government and business" taken to a
new level. The limitless homeland security and war-profiteering markets are
so alluring, hundreds of administration officials can't wait to cash in like
earlier ones did.
Klein names some noted ones like
That's the whole idea in a get rich quick
environment - get an impressive government title, stay in office long enough
in a department handing out big contracts, collect insider information with
market value, then quit and cash in. Klein calls public service now "little
more than a reconnaissance mission for future work in the disaster
capitalism complex."
She also quotes Danielle Brian, executive
director of the Project on Government Oversight (a nonprofit watchdog group)
saying:
"It's impossible to tell where the
government ends and Lockeed begins."
She also believes that corporatist economic
goals and right to limitless profit seeking lie at the heart of the most
committed neocons who talk a good game but value great wealth their top
priority. They partnered permanent war and homeland security with the
disaster capitalism complex to get it, and it's hard indeed telling where
one ends and the other begins.
But it's centerpiece project is Iraq, and its
headquarters is in Baghdad's heavily fortified Green Zone.
Part 6 - Iraq, Full
Circle - Overshock
Erasing A Country
Perhaps no country provides a greater untapped opportunity for unfettered
capitalism than Iraq. It represents the planet's last remaining low-hanging
oil resources fruit with potentially more of it than Saudi Arabia according
to some oil analysts. It's also strategically located in the heart of the
oil-rich Middle East (with two-thirds of proved reserves) Klein calls the
"crusade's....final frontier."
Iraq's potential alone is so enormous it made
war the way to crack open its market potential because peaceful methods
hadn't worked. Its conquest would then serve as "a different model in the
heart of the Arab-Muslim world" that could become a catalyst to opening the
whole region.
The potential is a giant free-trade zone, the illusion of newly created
democracies, and the freedom for unfettered capitalism "to feed off freshly
privatized states." Klein explained this as "the model theory," Iraq as the
model, with the idea not being nation-building but nation-creating. But what
of the nation already there that's known as the "cradle of civilization."
It would have to be erased, and Chicago School
fundamentalism would create a new one in its place in its own image with a
blank slate to work from.
Bush administration war planners considered the full array of possible
shocks and went with them all - blitzkrieg "shock and awe," elaborate PsyOps,
use of fear as a weapon, repressive occupation, mass detention and torture,
and,
"the fastest and most sweeping political and
economic shock therapy program attempted anywhere....From the start, the
invasion was (Washington's message) to the world....in the language of
fireballs, deafening explosions and city-shattering quakes."
It said dare challenge US authority, and you're
next. Shock and awe planners designed its strategy to deter "the public will
of the adversary to resist (to render) the adversary completely impotent"
from the effects of sensory deprivation and overload inducing disorientation
and regression.
In March, 2003, Baghdad got it on a massive scale. The ministry of
communication and four telephone exchanges was blitzed and set ablaze
cutting off millions of phones and preventing people from learning if their
family and friends were alive. Television and radio transmitters were also
destroyed along with the electrical grid plunging the city into "an awful,
endless night."
Residents were trapped in their homes unable to
speak or hear each other or see outside at night.
"LIke a prisoner destined for a CIA black
site, the entire city was shackled and hooded. Next it was stripped."
Unchecked looting did the most to erase the,
"country that was.... Gone are 80% of the
museum's 170,000 priceless objects.... the national library is a
blackened ruin.... the Ministry of Religious Affairs.... was left a
burned-out shell (and the) national heritage was lost."
Paul Bremer's senior economic advisor, Peter
McPherson, wasn't bothered. It made his job of radically downsizing the
state and selling it off easier. Cleaning the slate and erasing the nation
was proceeding fast. It "all unfolded in a matter of weeks." Baghdad was
"open for business," and the fire sale for its assets began with US firms
having first dibs on everything, except oil, and that would come later as it
has now but is stalled.
While he was there, Paul Bremer was Washington's man in Baghdad charged with
readying the launch of Iraq, Inc. He saw to it laws were passed smoothing
the way for Chicago School shock therapy. Two hundred firms were to be
privatized immediately to get "inefficient state enterprises into private
(predatory) hands...."
New economic laws followed that comprised a
"wish list....foreign investors and donor agencies dream of," according to
The Economist. The corporate tax was cut from 45% to a flat 15%; another
allowed foreign companies to own 100% of Iraqi assets and take all profits
out of the country; all restrictions on imports were removed; and investors
could sign deals and leases lasting 40 years so no future government could
change them.
Iraq became a bold new experiment with invasion, occupation and
reconstruction transforming the country into a fully privatized new market
"with a huge pot of public money" doing it. Klein called the adventure an
"anti-Marshall plan," mirror opposite the post-WW II plan, and guaranteed
"to further undermine Iraq's badly weakened industrial sector and send Iraqi
unemployment soaring."
No funds went to Iraqis or their industries nor
was anything done to build a sustainable economy, or rebuild local
infrastructure like electrical grids, schools, and hospitals. Iraqis played
no role in planning, local firms weren't even given "subsubsubcontracts,"
jobs were destroyed not created while thousands of serf-type foreign workers
were brought in and abused, and critically needed social services were
ignored.
Another goal was for a fully outsourced, hollow government with no function
so "core" a contractor couldn't handle it for profit. It was pure pillage,
but nothing went as planned.
"Each miscalculation provoked escalating
levels of resistance" with occupying forces responding with
counter-repression "sending the country into an inferno of (unending)
violence."
Everything,
"tearing Iraq apart today - rampant
corruption (and unfettered plundering), ferocious sectarianism, the
surge in religious fundamentalism and the tyranny of death squads
(including US 'Salvador option' ones) - escalated in lockstep with....
Bush's anti-Marshall Plan."
In that environment, the country became "a
cutthroat capitalist laboratory" for shameless pillage. Iraq today is a
model, a metaphor for everything wrong with Chicago School dogma showing it
to be savage, ruthless, heartless and bankrupt.
Its implementation is the core reason for resistance that continues and
grows, but it caught war planners off guard when it began. They thought the
shock and awe of attack, invasion, occupation and rapid transformation on
the ground would be disorienting.
Instead, Iraqis demanded a say from the start in
how their country would be rebuilt and transformed.
"And it was the Bush administration's
response to this unexpected turn of events that generated the most
blowback of all" that became even worse by crushing democracy and
effectively installing a puppet government in the fortified Green Zone
masquerading as a real one.
The result was predictable and so was the harsh
response - mass detentions, aggressive interrogations,
administration-sanctioned gloves off torture, and US unleashed "Salvador
option" death squads making it hard to know who's doing the killing and
blasting away at selected targets.
What is clear are the consequences:
"millions of psychologically and physically
(traumatized, angry and) shattered people, first by Saddam, (then) by
war, (then) by one another (and the occupation). Bush's in-house
disaster capitalists didn't wipe Iraq clean, they just stirred it up....
Countries, like people, don't reboot to zero with a good shock; they
just break and keep breaking.... Which.... requires more blasting -
upping the dosage...."
Slowly, it's disappearing, disintegrating,
erasing an entire country - women behind veils and doors, children from
schools, four million displaced, Iraqi industry collapsed, a new growth
industry in kidnapping for ransom, a country so unstable investment is
high-risk, and even the heavily fortified Green Zone is too unsafe for
George Bush to visit on one of his "surprise trips" to the
country.
Bremer's charge was to build a "corporate
utopia" but instead unleashed a "ghoulish dystopia," and, on an April, 2004
visit to the country, Klein thought she was witnessing a mass contractor
exodus with 1500 of them leaving in one week.
Now she's not sure.
Big investors like Wal-Mart, HSBC and Procter
and Gamble never showed up, and in December, 2006, the Pentagon announced a
new project to get state-owned factories operating with plans to buy cement
and machinery from them instead of the usual corporate suppliers. Does it
signal a change of disaster capitalism tactics? Not at all, and it's likely
this amounts to no more than tinkering and tokenism that in the end will do
little for the local economy and even less to reduce hardened anger.
The Big Oil drafted Hydrocarbon Law is still a work in progress but
already inflamed things further, and well it should. It's an anti-Marshall
Plan project at its worst, and in whatever final form is a shameless act of
theft on the grandest scale. It's a privatization blueprint for plunder
giving Big Oil a bonanza and Iraqis a mere sliver of their own resources.
In one draft, Iraq's National Oil Company got
exclusive control of just 17 of the country's 80 known oil fields with all
yet-to-be-discovered deposits set aside for foreign investors.
Even worse, Big Oil is free to expropriate all
earnings with no obligation to invest anything in Iraq's economy, partner
with Iraqi companies, hire local workers, respect union rights, or share new
technologies. In addition, foreign investors are guaranteed long-term
contracts up to 30 or more years, dispossessing Iraq and its people of their
own resources in a naked scheme to steal them and deny them the one source
of revenue able to rebuild their shattered country and lives.
The battle for Iraq continues that involves clinging to if not winning the
hearts and minds on the home front as well.
The country is a wasteland, the nation creation
project bankrupt, and the prospect for success bad and worsening. Iraq has
been a graveyard for past imperial powers, and it may just be a matter of
time until history again repeats. The Brits in the South know it, and after
four and a half futile years are tiptoeing out to the dismay of their
"coalition" partners. One day, Washington may join them, and for shocked
Iraqis it can't come too soon.
For now, though, the shock continues, and Iraq
more closely resembles hell than "the cradle of civilization."
Part 7 - The Movable
Green Zone: Blanking the Beach
"The Second Tsunami"
For coastal Sri Lankans, like those in Arugam Bay, December 26, 2004 felt
more like 1945 Hiroshima than life before that fateful day changing
everything for them. A devastating tsunami took 250,000 lives and left 2.5
million homeless throughout the region. It affected Arugam Bay, "a fishing
and faded resort village" on the island's east coast that government was
showcasing in its plans to "build back better."
Indeed, but not for the villagers hoteliers,
developers and the government wanted removed but weren't sure how until
nature did what they couldn't.
Everything was gone, and a blank slate remained
for what the tourist industry long wanted,
"a pristine beach (in a prime area),
scrubbed clean of all the messy signs of people working, a vacation
Eden. It was the same up and down the coast once rubble was cleared....
paradise."
"New rules" forbade homes on the beach and a
"buffer zone" imposed insured it. Beaches were off-limits, displaced Sri
Lankans were shoved into temporary grim barracks camps inland, and
"menacing, machine-gun-wielding soldiers" patrolled to keep them there.
Tourist operators were treated differently. They were encouraged to build
and expand on prime vacated oceanfront land. It was all in a document called
the "Arugam Bay Resource Development Plan" to transform the former fishing
village into a "high-end 'boutique tourism destination' (with) five-star
resorts, luxury....chalets, (and even a) floatplane pier and helipad."
Arugam Bay was to be a model for transforming up
to 30 similar "tourism zones" into a "South Asian Riviera." When the plan
leaked out, people in Arugam Bay and around the country were outraged.
The grand scheme to remake Sri Lanka was around two years earlier and began
when the civil war ended. It was to be the country's reentry into the world
economy as one of the last remaining uncolonized places globalization hadn't
touched, and a high-end tourism project was seen as the right option.
It would be a luxury destination for the "plutonomy
set," once a few changes were made. Government's 80% land ownership had to
be opened to private buyers, more "flexible" labor laws were needed, and
modernized infrastructure had to be developed with World Bank and IMF
providing funds on their usual shock therapy terms discussed above.
With mass public opposition to the ideas, it
wouldn't be easy, and before the tsunami hit, militant strikes and street
protests held it back.
Sri Lanka's president, Chandrika Kumaratunga, was elected on an
"overtly anti-privatization platform," but the tsunami changed everything
and helped her see "the free market light." Four days after the disaster,
her government passed a bill "pav(ing) the way for water privatization." It
also raised gasoline prices and began crafting legislation to privatize the
electricity company in pieces. It was like a second tsunami, and the same
scheme followed hurricane Mitch in October, 1998 with Honduras, Guatemala
and Nicaragua hardest hit like New Orleans discussed below.
Klein explained when the tsunami struck in 2004,
"Washington was ready to take the Mitch
model (now familiar) to the next level - aiming not just at individuals
laws but at direct corporate control over the construction."
Sri Lanka's president complied and created a new
body called the Task Force to Rebuild the Nation fully empowered to proceed.
On it were the most powerful business leaders from banking and industry
including key players from the beach tourism sector. Absent were villagers,
farmers, environmentalists or even a "disaster-reconstruction specialist."
Klein called the task force a new type corporate
coup d'etat mother nature made possible.
In ten days, then had a complete reconstruction blueprint from "housing to
highways" with aid money directed to corporate development and nothing for
disaster victims. They were destined to become permanent shantytown dwellers
similar to the kinds ringing most Global South cities and populating Global
North inner ones. Similar stories of law changes and land grabs came out of
other affected Southeast Asian countries like Indonesia, Thailand, the
Maldives and India where around 150 Tamil Nadu displaced women had to sell
their kidneys for food.
A year after the tsunami, NGO ActionAid surveyed the aftermath in five Asian
countries and found the same pattern everywhere - residents barred from
rebuilding, living in militarized temporary camps, hotels "showered with
incentives," no restoration of homes lost, and "entire ways of life"
destroyed.
In July, 2006 in Sri Lanka, the Tamil Tigers
ended their cease-fire and war resumed.
It's hard knowing if disaster capitalism had a
role because peace was always precarious, the government offered little, and
continued violence at least promised a chance for something better before
and more than ever now given the choice between disaster capitalism and
hope.
Disaster Apartheid - A
World of Green and Red Zones
On August 29, 2005, Hurricane Katrina hit the Gulf Coast and flooded
New Orleans.
The well-off left town, "checked into hotels,
and called their insurance companies." For 120,000 others without cars or
means of transportation, it was another story. They depended on the state,
waited for help and got none.
FEMA is supposed to provide it, too, but it was one of the many
government functions Bush gutted advancing savage capitalism at the expense
of public service.
Katrina was disastrous for those affected, but Milton Friedman saw "an
opportunity" in a Wall Street Journal op-ed. It was easy for him to say from
his luxury San Francisco digs as well as his like-minded ideologues who met
14 days later to plan how to pounce on the tragedy for profit.
They produced 32 Chicago School-type schemes
packaged as "hurricane relief" that was a wish list for developers and hell
for the displaced. They ranged from suspending Davis-Bacon prevailing wage
laws in disaster areas and making the whole area a flat tax free enterprise
zone to erasing public schools by giving parents vouchers for privately-run
charter ones. They also wanted environmental regulations suspended on the
Gulf Coast and permission to drill in the Arctic National Wildlife Refuge
that showed how far afield they'd go to capitalize on the shock of a local
tragedy.
Things moved fast, and within weeks "the Gulf Coast became a domestic
laboratory for the same kind of (outsourcing schemes) pioneered in Iraq."
The names were familiar with Halliburton
first in line along with Bechtel, Blackwater USA and a host of
others homing in for the kill. Billions were at stake, and no open bidding
was required, just good connections.
As Klein put it:
"within days of the storm it was as if
Baghdad's Green Zone.... lifted from.... the Tigris and landed on the
bayou.... As in Iraq, government once again played the role of a cash
machine equipped for both withdrawals and deposits."
Corporations took one and repaid with the other
in sizable campaign contributions in a pattern now familiar.
They also ignored unemployed locals and relied instead on cheap imported
undocumented labor easily exploited. The Bush administration showed its type
compassion, too, with $40 billion in budget cuts for essentials like
Medicaid, food stamps, student loans and more so funds could go to
contractors and the wars in Iraq and Afghanistan. Again, a familiar pattern.
In visiting Iraq, Klein first thought the "Green Zone phenomenon was unique
to the war in Iraq."
She then discovered it emerges wherever disaster
capitalism lands with the same stark divisions between the included and
excluded. It was evident in New Orleans with "gated green zones and raging
red" ones - not from flood damage but from predatory free market solutions
only for the privileged.
The Bush administration refused emergency funds for public sector salaries
so 3000 city workers were fired. Charity Hospital closed and still isn't
open. Public transit was gutted losing half its workers, and most public
housing is still boarded up and empty by design. Some sits on prime land
close to the French Quarter, developers want it for luxury properties, and
New Orleans is being erased for profit just like Iraq. It was all planned
with the storm the excuse to do it.
Earlier "creative destruction" opportunities generated "rust belts,"
neglected neighborhoods, and underfunded inner city public schools. Creative
neglect is at work as well as the American Society of Civil Engineers
in 2007 said it will cost $1.5 trillion over five years to bring essential
public infrastructure back to standard. Instead it continues to deteriorate
while the well-off withdraw into gated communities and luxury condos with
all their needs met by private providers. Klein calls this trend a
"state-within-a-state that is muscular" and as able as the public one is
frail.
It no longer can function without help from
contractors as government is hollowed so business can prosper.
New Orleans is a window on the future in which survival depends on the
ability to pay, and those who can't are discarded like trash. It promises a
world of protected Green Zones with those outside it neglected, abandoned,
ignored and forgotten.
Losing the Peace
Incentive - Israel As Warning
Conventional wisdom once thought economic growth and prosperity required
peace and stability. No longer. Post-9/11, the terror scare was ignited,
wars rage in Iraq and Afghanistan, more war is threatened on Iran, oil
prices touched $80 a barrel, the WTO Doha Round trade talks collapsed, and
"a golden period of broadly shared growth" prevails (at least until the
recent credit crunch).
How come?
Conflict and global instability don't just benefit arms related industries.
They help the high-tech security sector, heavy construction, private health
care companies treating soldiers and oil and gas. The business bonanza in
Iraq alone is hugely profitable with all sorts of companies cashing in. The
same goes for New Orleans and Gulf Coast overall. Terrorist attacks are good
for business.
The more destruction, the more to rebuild - a
great market for disaster capitalism it pounces on with every incentive to
assure the trend continues unchallenged, and why not when government throws
public tax dollars at it.
Today, "instability is the new stability," and Israel is its "Exhibit A."
In the post-1993 Oslo years, the Jewish state
designed its economy to expand in response to escalating violence at home at
first and now everywhere. The nation's technology firms pioneered the
homeland security industry, and they still dominate it. In addition, its
economy overall is the most "tech-dependent in the world," according to
Business Week magazine, twice as dependent as the US representing half its
exports.
Following the 2000 dot-com crash, Israel's leading tech companies needed a
new global niche, and the government encouraged expansion beyond information
and communications technologies into security and surveillance. It launched
a slew of start-ups "specializing in everything from 'search and nail,' data
mining, surveillance cameras, to terrorist profiling."
It was perfect timing for a market that exploded
post-9/11, and Israel's economy is thriving with one of the fastest growth
rates in the world. Klein calls the country "a kind of shopping mall for
homeland security technologies," and Forbes magazine says it's "the go-to
country for antiterrorism technologies." Today, the country's
counterterrorism industry is booming, and its defense-related exports make
it the fourth largest arms dealer in the world, larger than the UK.
Klein notes:
"With more and more countries turning
themselves into fortresses (with walls and high-tech fences part of it),
'security barriers' may prove to be the biggest disaster market of all."
In the case of Israel, it's also another
"Chicago School frontier marked by rapid stratification of society between
rich and poor inside the state." The security boom fueled a wave of
privatizations accompanied by social program cuts, "an epidemic of
inequality," and the virtual end of Labor Zionism. Klein notes 24.4% of
Israelis live in poverty, including 35.2% of children, compared to 8% twenty
years earlier (but she doesn't say if these figures include Arab Israeli
citizens comprising 20% of the population).
She concludes Israeli industry no longer fears
war as it thrives on it.
Today, Baghdad, New Orleans and suburban Atlanta Sandy Springs are glimpses
of a gated community future run by the disaster capitalism complex. But it's
in its most advanced state in Israel:
"an entire country (turned into) a fortified
gated community, surrounded by locked-out people living in (the)
permanently excluded red zones" of Gaza and the West Bank that aren't
just left out but are encroached on and under attack.
Disaster capitalism thrives in this environment
so it yearns to bring it to a neighborhood near you, and that's a prospect
to fear.
Hopeful Signs - Shock
Wears Off
Klein quotes Canada's National Post editor, Terence Corcoran,
wondering if the Chicago School movement Milton Friedman launched
could continue as before after his November, 2006 death.
The movement's pinnacle was capturing the
Congress in 1994 that it lost in 2006 for three reasons - public
disenchantment with the Iraq war, political corruption, and a growing class
divide unseen since the Gilded Age of the "robber barons" or roaring 20s.
Each factor related to core Chicago School economics - privatization,
deregulation and cutting government services. In the US, it created a wealth
disparity economist Paul Krugman calls unprecedented while poverty is
growing and the middle class dying in the richest country in the world
that's also the least caring one.
Everywhere Chicago School fundamentalism shows up, the results are the same.
A small elite gains hugely while most others don't.
But cracks in the ideology are visible as many
of its front line adherents got caught up,
"in an astonishing array of scandals and
criminal proceedings (from the) earliest laboratories in Latin America
to the most recent one in Iraq."
-
Before he died, Pinochet was
under house arrest.
-
In Argentina, courts stripped former
junta leaders of immunity.
-
Bolivia's de Lozada got chased
from the country and is now a wanted man.
-
In Russia, many of the oligarch
fraudsters were either in exile or jail.
-
In Canada, newspaper magnate Conrad
Black was convicted of fraud.
-
In the US, a rogue's gallery of CEOs
were charged and convicted as well, and other high level types were
caught up in scandals like lobbyist Jack Abramoff's
influence-peddling one.
Klein notes another hopeful sign as well
- shock effects were beginning to wear off, and in Argentina's 2001 economic
crisis forced out five presidents in three weeks.
It was spreading and most apparent in Latin
America where it began with opponents of Chicago School doctrine winning
elections like Hugo Chavez in Venezuela, but he wasn't alone. It
showed a renewed faith in democracy and condemnation of Washington Consensus
dogma when people made a choice at the polls in free and open elections.
Today's movements aren't replicas of the past,
and one of the differences "is an acute awareness of the need for protection
from shocks of the past" - coups, foreign shock therapists, torturers, debt
and currency shocks.
They've learned from the past and are building "shock absorbers into their
organizing models."
It's in movements less centralized, Venezuela's
grassroots community councils, Brazil's Landless Peoples Movement,
and the streets of Oaxaca, Mexico where thousands battled police
since a year ago May and still won't quit. In addition, governments are
rejecting old trade models and adopting new ones like Venezuela's ALBA
bartering system making it less vulnerable to turbulent markets.
They're also rejecting World Bank and IMF debt slavery, and the
change is dramatic.
In 2005, 80% of IMF's lending portfolio was to
Latin America. It dropped to 1% in 2007. And IMF's 2005 $81 billion dollar
portfolio shrank to $11.8 billion in three years with nearly all of it in
Turkey. The World Bank is also being rejected. Venezuela severed its
relationship, and Ecuador's Raphael Correa suspended bank loans and
declared its country representative persona non grata in an extraordinary
move the equivalent of a well-deserved slap in the face.
In addition, the Doha Round trade talks
collapsed, and some observers thought it signaled "globalization is dead,"
or if not, it's at least breathing hard.
Resistance is showing up in Europe, too, with voters in France and the
Netherlands rejecting the European Constitution the French call "savage
capitalism" and a codification of the corporatist order they reject. The
Putin era in Russia is also seen as a backlash against the shock therapy of
the 90s that impoverished millions of its people still left out and many
desperate.
The same is true in South Africa where people in
slums abandoned the ANC to protest against their broken Freedom Charter
promises. It even surfaced in China where, according to official government
sources, 87,000 large protests were held involving over four million workers
and peasants. They won major victories for new rural area spending, better
health care, and pledges to eliminate education fees.
Millions of Lebanese were in the streets as well that wasn't a show of
strength by Hezbollah as the major media characterized it. It was a
rejection of the Siniora government's willingness to accept Chicago
School reforms in exchange for billions of needed reconstruction loans
to recover from Israel's summer, 2006 blitzkrieg attack.
Klein called their actions "a poor and
working-class people's revolt."
Examples are everywhere but so far just ripples in a pond needing greater
numbers for real change. They were in tsunami-struck Thailand where, unlike
in Sri Lanka, many settlements were successfully rebuilt in months but not
by the government offering no aid. So hundreds of villagers "engaged in what
they called land 'reinvasions,' " defied their government with
direct-action, and rebuilt their communities making them better than before
the destruction.
The same thing happened in New Orleans.
In February, 2007, housing project residents
"reinvaded" their old homes and reclaimed them in another example of "people
rebuilding for themselves" and bypassing government indifferent to their
needs and rights. Klein calls this phenomenon "the antithesis of the
disaster capitalism complex's ethos." The actions are communal with people
helping each other, rebuilding rubble, and aiming to end the erasure "of
history, of culture, of memory."
It's a message of collective shock resistance replacing shock, but it's too
early to declare victory. The signs are encouraging, and with enough of them
who knows what's possible. Hopefully a better world replacing the bankrupt
notion that markets work best and government is the problem.
That's an idea for the trash bin of history
where it belongs and where it one day will be.
The Shock Doctrine
Naomi Klein