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.
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
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.
People are sacrificed for profits and Margaret
Thatcher's dictum applies - "there is no alternative."
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
Three Decades of Erasing and Remaking the World (into Hell)
And New Orleans developer Joseph Canizaro added:
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.
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
In his view, anything else in public hands is
socialism that for "free market" fundamentalists like Friedman is blasphemy.
It's an economic version of "destroy(ing) the
village (and country) to save it" from the Vietnam era and nearly as harsh.
Klein cites insiders saying opportunities are on a par with a thriving 'emerging market'....
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:
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
"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
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:
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:
Part 1 - Two Doctor Shocks
Torture and Chicago School Fundamentalism
It began with the Montreal doctor they funded to perform,
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,
It was voodoo science, and it failed.
patients were his victims, but CIA gained a wealth of knowledge it now
employs with no pangs of conscience or regard for ethics.
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 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,
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.
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
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.
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
Like Keynesians and social democrats, they showed it worked in Latin America's Southern Cone with leaders like Juan Peron,
It brought prosperity to the South and "dark
days" for Friedman, his acolytes, and free-wheeling capitalists losing out
to social progress.
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
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.
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
The Bloody Birth of the Counterrevolution
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."
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
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.
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.
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
Inside the Chilean bubble was paradise. Outside was "The Great Depression."
Bubble-benefitters reacted with "junkie logic:
Where is the next fix?"
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.
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.
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.
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 view, it opened up,
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.
That's Friedman's real legacy from the barrel of
a gun and called "freedom."
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.
Take what you're offered or get the same
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.
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 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.
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.
As Klein put it:
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:
There was more that together was classic Friedman dogma:
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:
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,
Part 4 - Lost in Transition
Slamming the Door on History
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."
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.
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
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.
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."
Protesters weren't against economic reform. They
were against the Chicago School version of it, but their efforts were
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."
About 2900 "party scions" (called "the princelings") control $260 billion, and Klein notes the,
The Tragedy of South Africa's
"Democracy Born in Chains"
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.
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
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.
As Klein put it:
The leadership mistakenly thought once firmly in
power they could undo earlier made transition compromises.
He acknowledged the problem later on saying it's,
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
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:
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:
And there's more:
"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.
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
Russia Chooses "the
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.
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
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.
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
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.
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:
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.
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:
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.
First, they had to remove all,
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
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
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'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.
Shock Therapy in the USA
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.
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:
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,
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."
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.
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.
Corporatism in a Corporatist State
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:
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.
Erasing A Country
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
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.
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
Residents were trapped in their homes unable to speak or hear each other or see outside at night.
Unchecked looting did the most to erase the,
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.
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
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
It was pure pillage, but nothing went as planned.
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.
Instead, Iraqis demanded a say from the start in how their country would be rebuilt and transformed.
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:
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.
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.
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 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."
"The Second Tsunami"
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,
"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.
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.
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.
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.
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.
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.
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
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.
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
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:
Corporations took one and repaid with the other
in sizable campaign contributions in a pattern now familiar.
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.
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.
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).
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.
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
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,
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.
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.
But it's in its most advanced state in Israel:
Disaster capitalism thrives in this environment
so it yearns to bring it to a neighborhood near you, and that's a prospect
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.
But cracks in the ideology are visible as many of its front line adherents got caught up,
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.
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.
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.
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.
Klein called their actions "a poor and
working-class people's revolt."
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."
That's an idea for the trash bin of history where it belongs and where it one day will be.