The Shock Doctrine: The Rise of Disaster Capitalism, by Naomi Klein. Knopf Canada, 2007
In This Changes Everything, her latest book, Naomi Klein mentions how she used to be more concerned about the political and economic aspects of global issues—in particular, the issues brought about or exacerbated by the role powerful corporations—than by more “environmental” aspects (although the deeply problematic human-nature relation is of course indissociable from political and economic considerations). Obviously, her view then shifted, and she now considers climate change the greatest challenge of our time.
After reading This Changes Everything, which I found particularly convincing (see review here), I felt hungry for more; Klein’s prose tends to be full of verve and rather passionate, to say the least, and yet the points she makes are both convincing and well-researched. So I decided to pick up The Shock Doctrine, which was published ten years ago.
“This book is a challenge to the central and most cherished claim in the official story—that the triumph of deregulated capitalism has been born of freedom, that unfettered free markets go hand in hand with democracy. Instead, I will show that this fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion, inflicted on the collective body politic as well as on countless individual bodies. The history of the contemporary free market—better understood as the rise of corporatism—was written in shocks.” (P.18)
Her core purpose is to retrace in these pages the rise of the neoliberal ideology, from its humble beginnings to its current status as a quasi-hegemonic way of thinking—and to document the extremely destructive human impacts it has had on the world, mostly under the aegis of the US government, the IMF, and the World Bank. Klein shows how, far from gaining widespread acceptance democratically, the proponents of this doctrine have consistently relied on economic, political, social and sometimes purely military “shocks” to impose it everywhere.
While this started off as a strategy aiming mostly to protect the interests of big Western (and especially, American) corporations of all kinds, after 9/11 and the start of the War on Terror, the “shock doctrine” fueled the ballooning expansion of an entire new industry that feeds on the major disasters rocking the world, be it wars or natural catastrophes: the “disaster capitalism complex.” On the social level, this ideology has also led to an extreme concentration of wealth into the hands of a small minority, mostly in cahoots with political leadership, while doing little to solve world poverty.
As a book spanning about fifty years of world history, The Shock Doctrine is a very ambitious project. The author’s attempt to unite such a vast range of events and trends within the framework of a grand narrative has forced her into occasional oversimplifications—I will try to highlight some of these less convincing passages below. But broadly speaking, as a lens through which to consider contemporary history and geopolitics, I think the book does an admirable job, and I find its core arguments still extremely relevant, ten years later.
Just like This Changes Everything, its 500 pages are very densely packed with information. I will try to extract and condensate most of its substance below.
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The book begins with what could be its most controversial feature: by drawing parallels between the covert CIA electroshock experiments on human patients in the 1950s, and the development of the neoliberal economic theories by Friedrich Hayek and Milton Friedman from the 1940s.
The CIA’s “MK-Ultra” project is now well-known (President Bill Clinton himself apologized for some of these operations in 1988). One of its objectives was to determine whether it was possible to brainwash people so thoroughly as to turn them into “blank slates,” puppets in the hands of science. Klein zooms in on one of the more infamous documented cases in that respect: throughout the 1950s, the McGill University psychiatrist Ewen Cameron (President of the World Psychiatric Organization!) was funded by the CIA to perform extreme experiments on his patients, without the consent or even the knowledge of the latter, notably using electroshocks and massive drug injections (LSD, PCP, etc.). Cameron was allegedly attempting to cure his patients by “erasing” the cause of their diseases, before exposing them to a bombardment of new information to shape their minds anew. But all he did was cause deep and permanent mental damage among hundreds of patients—and produce a complete and refined torture protocol, which the CIA integrated into the Kubark manual that became widely used, later, in overthrowing bothersome regimes around the world.
Since the book’s publication, the use of these methods by the US military in Guantánamo and elsewhere has of course been widely documented.
(As a side-note, the peaceful little town of Pont Saint-Esprit, just a few miles from where I grew up, might have also been targeted as part of the MK-Ultra project in August 1951… Was the “devil’s bread” incident a collective bad trip concocted by American agents?)
Meanwhile, at the Chicago school of economics, Milton Friedman developed the theories that would later be closely associated with his name and this school. Known as “neoliberal” or “neoconservative,” these theories extol the virtues of a free market economic system, with as little governmental influence as possible. This position, at the time, was completely at odds with the Keynesian economics implemented to put an end to the Great Depression (born in part due to laissez-faire economics), and was therefore far from mainstream.
Klein describes Friedman’s mission as equivalent to Ewen Cameron’s, in the sense that it attempted to reach back to a state of “natural” health where all was in balance, before human interferences started creating distorting patterns. And he believed that the way to achieve this was through painful shocks, “bitter medicine.” Friedman’s doctrine would be applied for the first time around South America—starting with Chile, under Augusto Pinochet.
The countries of the Southern Cone developed rapidly in the 1950s and 60s, following “developmentalist” economic principles (notably under the influence of Argentine economist Raul Prebisch)—relying largely on nationalizations, large infrastructure projects, subsidies to local businesses and high tariffs. Although none of these regimes had any Communist leanings, they were designated as such by Western business circles, which caught the ear of the CIA head, Allen Dulles. When Salvador Allende was elected as president of Chile in 1970, US corporations present in the country grew worried for their profit margin—especially the International Telephone and Telegraph Company (ITT). The latter eventually plotted with the CIA and the US State Department to prepare a military coup.
At the same time, a team of economists that had studied at the University of Chicago worked hard to prepare a completely Friedmanian plan of economic reform that would completely transform the Chilean economy. The economic coup was brewed simultaneously with the military one.
As a result, when Pinochet seized power in a deluge of violence and murder, in 1973, he accompanied his military shock with an economic one—as well as a physical one: the CIA’s manual for electroshock torture was put to extensive use on the entire population. Thus emerged the first Chicago School state.
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In the second part of the book, Klein documents how the neoliberal economic agenda was implemented throughout the Southern Cone, from Chile to Argentina, Brazil, and Uruguay, in the 1970s and 80s. Every time, systematic use was made of “shock programs” designed by Chicago School economists and carried out by dictators or military juntas, who ensured popular passivity through the systematic use of torture, assassinations and “disappearances” of hundreds of thousands of dissidents and ordinary people—and with the support of the CIA and foreign corporations.
The cost of these political and economic shocks in terms of human rights and sheer suffering is incalculable. Besides, these neoliberal policies didn’t even bring about much economic growth: on the contrary, extensive privatizations and the lowering of trade barriers brought about massive unemployment and desperate poverty (made even worse by destroyed social security nets). The much-vaunted “Chilean miracle” itself, for instance, only really started after much of the original Friedmanian programme started being rolled back and several enterprises were renationalized by Pinochet, in 1982.
The main benefactors of this bloody conservative counter-revolution—meant to completely roll back the social progress accomplished since the end of WW2—were foreign companies, cliques of speculative financiers, and the despotic governments of these now-corporatist countries. In a word, for the first time in history, neoliberalism showed its true colors as an ideology whose overwhelming impact is the massive transfer of public wealth into the hands of a small governmental and corporate elite.
“Just a decade earlier, the countries of the Southern Cone—with their exploding industrial sectors, rapidly rising middle classes and strong health and education systems—had been the hope of the developing world. Now rich and poor were hurtling into different economic worlds, with the wealthy gaining honorary citizenship in the State of Florida and the rest being pushed back into underdevelopment, a process that would deepen throughout the neoliberal ‘restructurings’ of the postdictatorship era.” (P.111)
With the strong support of the CIA, as always (but also that of such foreign corporations as Ford, General Motors, and Mercedes-Benz), South American countries engaged in intelligence collaboration—notably within the framework of the infamous Operation Condor—to track down, torture and execute all suspected “subversives.” While CIA propaganda justified such measures on the grounds that these repressive regimes were engaged in a “war” against Communists, nihilists or terrorists, the US knew very well that the vast majority of victims were in fact non-violent trade union leaders, academics, artists, economics, etc. All this political violence in fact served a very clear economic purpose. As Orlando Letelier, an economist and former Chilean ambassador to the US, wrote in 1976 (before he was assassinated), there is “an inner harmony” between the “free market” and unlimited terror—even though Friedman and the other Chicago School economists always refused to acknowledge any form of connection.
In a word, there is simply no peaceful and kind way to take away from millions of citizens what they need to live with dignity—which is what Chicago-style economics boils down to. Torture, as a means of terror and control, makes sense.
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Is an economic conversion to the neoliberal doctrine therefore impossible without a dictatorship and death camps?
Klein goes on to show how less despotic regimes also found ways to implement these principles with considerably less bloodshed, but just as much economic violence. They, too, relied on “shock-based” strategies.
“Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” (Milton Friedman, 1982)
In 1982, Margaret Thatcher reaps massive popularity from the British victory in the Falklands against Argentina. Thanks to this sudden military triumph, she gains the political mandate to start privatizing the British economy, and implement many other Friedmanite recommendations. The UK is the first Western regime to do so—but it needed a war to overcome popular opposition to such reforms.
Three years later, in Bolivia, a special “emergency team” is gathered (under the advice of the economist Jeffrey Sachs, and with the support of the US and the IMF) to prepare a radical, sweeping and sudden economic overhaul for the country. It was launched by a newly-elected president, whose program ran entirely contrary to these measures. The aim was to take the country’s powerful unions off guard. When the measures were enacted, the country went into a state of siege, and hundreds of union leaders were even kidnapped by the army and kept prisoners for months to ensure popular obedience. The program reigned in hyperinflation, but pushed millions into unemployment and poverty, and therefore encouraged the cultivation of the coca leaf—which ironically then became a major target of the US’s War on Drugs…
From a more global perspective, the 1980s were of course the decade in which neoliberal policies went mainstream, under the dual push of both Margaret Thatcher and Ronald Reagan. As a result, international institutions like the IMF and, to a lesser extent, the World Bank, turned into beacons of propaganda for this doctrine—this was the beginning of the “structural adjustments” era, in which began the so-called “Washington Consensus.” Basically, these institutions started conditioning their loans to countries in need to these countries’ application of a common neoliberal recipe: selling off their public assets, lowering corporate taxes and trade barriers, etc. This was a fundamental betrayal of the founding principles of these Keynesian institutions—created to stabilise economies and therefore prevent the resurgence of fascism, they had become ideological machines that automatically considered any crisis as the way to secure a new free-market frontier. (“Keynes would be rolling over in his grave were he to see what has happened to his child” — Joseph Stiglitz) Worst of all, deregulation overwhelmingly makes economies even more crisis-prone—which creates the conditions for even more radical implementation.
“Crisis is built into the Chicago School model. When limitless sums of money are free to travel the globe at great speed, and speculators are able to bet on the value of everything from cocoa to currencies, the result is enormous volatility. And, since free-trade policies encourage poor countries to continue to rely on the export of raw resources such as coffee, copper, oil or wheat, they are particularly vulnerable to getting trapped in a vicious circle of continuing crisis.”
In fact, those structural adjustments have always obfuscated the link between sound macroeconomic policies that maintain external balance and stable prices, and free-trade policies. This is pure packaging: free trade has never had anything to do with ending a crisis.
Friedman’s crusade thus managed to survive the transition to democracy by moving deftly from crisis to crisis — NOT by persuading people to vote for these policies.
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In the next part of the book, Naomi Klein examines the transition to neoliberalism as accomplished by several important countries: Poland, China, South Africa, and Russia. Some of these chapters felt a little wobbly to me, as if some of the historical situations presented within had been marshalled, willy-nilly, into the author’s grand narrative.
Overall, her argument is that these different countries were bullied and/or coaxed by international institutions into accepting neoliberal reforms, instead of letting them free to choose alternative systems that might have been more suited to their needs; this led to either bloodshed or mass poverty, or both.
In the case of Poland, it is undeniable that upon its rise to power in 1988, Solidarnosc, the country’s national union, was strong-armed into accepting the US Treasury- and IMF-imposed “shock therapy” (the Balcerowicz Plan: elimination of price controls, slashing subsidies, selling off state assets…) as a precondition to its receiving any kind of help and avoid economic meltdown and mass starvation—in direct contradiction with the party’s electoral program (which advocated the creation of workers’ cooperatives, and other social-democratic measures). Once again, while this helped curb inflation, it also led to mass unemployment, poverty, etc. But down the road, Poland’s transition has indeed been an economic success: continuous and fast-paced economic growth since the mid-90s, very low unemployment post-2008, and stable politics that still retain much left-wing social security—despite the rather extreme social conservatism of the Kascinzkys’ (post-Solidarnosc) party now in power, Law and Justice.
As for China’s “Reform and Opening-up” policies, the author sees them as playing a major role in the triggering of the Tian’anmen Square protests in 1989. While it is certainly true that economic concerns also motivated many protestors (due to the disappearance of job security, the growth of inequalities, the lifting of price controls, etc.), they also decried the rise of corruption, and requested political reform. Besides, far from implementing a Friedmanite “shock therapy” in a sudden and top-down approach, the Chinese government opted for a very pragmatic, gradualist and decentralized unrolling of new policies—and most of all, ensured that the state remained in control in every sector of society, through state-owned companies or otherwise. Therefore, adding the Tian’anmen Square Massacre to a list of “shocks” used to ensure the triumph of neoliberalism worldwide feels problematic to me, given the specificity of the Chinese context.
A more interesting chapter is the one about South Africa’s post-Apartheid transition. The Freedom Charter drafted in 1955 by the African National Congress (Nelson Mandela’s party), based on a democratic process of popular consultation, advocated an in-depth economic reform for the country, so as to ensure a fairer redistribution of wealth—along with the right to work, decent housing, and freedom of thought. Apartheid was seen as not only a political system, but also an economic system using racism to enforce a highly lucrative arrangement: a small white elite kept amassing enormous profits, while a black majority of people was prevented from owning land and forced to provide labor for far less than its worth—and was beaten and imprisoned if it dared to rebel. However, after Mandela was liberated in 1990, and the ANC came to power in 1994, all these economic principles were ditched. According to Klein, this happened because the ANC’s negociations with the National Party during the Transition process focused largely on political matters; key concessions were made on the economic side, unbeknownst to the public, under pressure from National Party leaders and IMF-appointed “international experts.” It became notably impossible for the ANC leaders to redistribute land, distribute cheap AIDS drugs, build houses for the poor or impose currency controls. As a result, while the ANC conquered the state, actual power remained in the hands of the white elite—to this day, banks, mines, and monopoly industries have remained in the hands of the same 4 white-owned megaconglomerates that also control 80% of the Johannesburg Stock Exchange. It became notably impossible for the ANC leaders to redistribute land, distribute cheap AIDS drugs, build houses for the poor or impose currency controls. Thereafter, for fear of scaring away foreign investments or even sparking a civil war, the ANC remained wary of renegociating the terms of their agreement with the National Party, and instead, openly embraced the Free Market. There was no going back.
“Of all the constraints on the new government, it was the market that proved most confining—and this, in a way, is the genius of unfettered capitalism: it’s self-enforcing. Once countries have opened themselves up to the global market’s temperamental moods, any departure from Chicago School orthodoxy is instantly punished by traders in New York and London who bet against the offending country’s currency, causing a deeper crisis and the need for more loans, with more conditions attached.”
All in all, the Freedom Charter has become the symbol of a “peaceful” (but ultimately mendacious) transition out of Apartheid, as the system still exists economically.
Klein devotes two interesting chapters to Russia’s transition out of Communism. After Gorbachev’s resignation and Boris Yeltsin’s rise to power in 1991, the latter agreed to the shock therapy reforms that the G7 and the FMI required as a trade-off for emergency funds. Once more, these reforms were crafted in secret, and unleashed suddenly on the unsuspecting Russians—millions lost their life savings, and a third of the populations fell below the poverty line between 1991 and 1992. The elected Parliament, however, was completely opposed to such reforms, which led to a constitutional crisis; this ended with the army bombing the Parliament buildings under Yeltsin’s orders in October 1993, leading to several hundred deaths. Thereafter, the Communist state was completely replaced by a corporatist one, as most state assets (natural resources, whole industries) were sold for a trifle to apparatchiks, who became known as the oligarchs, and often paid in public money. As a result of the “reforms,” 72 million people had fallen into poverty by the mid-90s; and from 1992 to 2006, the Russian population decreased by 6.6 million people.
While Western analysts blamed the rampant chaos and corruption on “the Russian soul,” all of this happened precisely due to the pressure exerted by the advocates of neoliberalism, who entirely supported Yeltsin.
“Once you accept that profit and greed as practiced on a mass scale create the greatest possible benefits for any society, pretty much any act of personal enrichment can be justified as a contribution to the great creative cauldron of capitalism, generating wealth and spurring economic growth—even if it’s only for yourself and your colleagues.”
The point of neoliberalism is indeed to systematically dismantle existing laws and regulations to re-create a state of “ideal lawlessness”. In the past, colonists earned record profits by seizing “waste lands for a trifle” (as Adam Smith said); nowadays, multinationals see government programs, public assets and anything for sale as terrain to be conquered and seized: post office, national parks, schools, social security, disaster relief… For Chicago-School economics, the state is the final colonial frontier, to be plundered and pillaged ruthlessly.
“Corruption has been as much a fixture on these contemporary frontiers as it was during the colonial gold rushes. Since the most significant privatization deals are always signed amid the tumult of an economic or political crisis, clear laws and effective regulations are never in place—the atmosphere is chaotic, the prices are flexible and so are the politicians. What we have been living for three decades is frontier capitalism, with the frontier constantly shifting location from crisis to crisis, moving on as soon as the law catches up.”
Interestingly, with the fall of the Communist Bloc, the IMF and US Treasury stopped even pretending that the “shock therapy” was all about the welfare of nations and progress: no more talk of steady loans, aid or debt erasure. Jeffrey Sachs himself failed to raise the billions of dollars he had pledged to Russia during the therapy, to fuel his “Marshall Plan for the ex-USSR.” Why so? Because the reason policies like the Marshall Plan (or even the New Deal) were enacted in the first place was to keep people from supporting Communism: thus, the need to soften the edges of the market with workers’ protections, pensions, public health care, etc. Keynesian politics came about due to strong mass movements pressuring governments—not just elite politicians. When the USSR collapsed, there no more Communist “loaded gun.” Absent this threat, no need to support a European “third way.”
“This liberation from all constraints is, in essence, Chicago School economics: not some new invention but capitalism stripped of its Keynesian appendages, capitalism in its monopoly phase, a system that has left itself go—that no longer has to work to keep us as customers, that can be as antisocial, antidemocratic and boorish as it wants. As long as Communism was a threat, the gentleman’s agreement that was Keynesianism would live on; once that system lost ground, all traces of compromise could finally be eradicated, thereby fulfilling the purist goal Friedman has set out for his movement a half century earlier.”
In other words, the Russian free-for-all was nothing but laissez-faire in action.
This part of the book concludes on an analysis of the Asian Financial Crisis. In 1997, Southeast Asian countries (Philippines, Indonesia, Thailand, Malaysia, and South Korea), known as the “Asian Tigers”, were economically very successful—but suddenly started falling prey to high volatility in globalized markets. The panic that spread over financial markets lead to lootings, riots, mass suicides, etc. The IMF could have stopped the mayhem with a big stabilizing loan, but it did nothing until these countries were on their knees. And when they were, the IMF requested that they dismantle all their barriers to trade, and let foreign corporation buy off their state assets and big conglomerates; it also demanded that all governments make deep budget cuts, even though overspending was totally unrelated to the crisis—the austerity policy was absolutely unwarranted. AND YET—this plan didn’t even stabilize things: the crisis worsened, bringing on mass poverty, widespread unemployment, human trafficking, and other impacts that lasted well over a decade.
“The ugly secret of ‘stabilization’ is that the vast majority never climb back aboard. They end up in slums, now home to 1 billion people; they end up in brothels or in cargo ship containers. ”
As always, the only ones to benefit from these policies were Wall Street, the multinationals, and investment banks. Successful companies all around Asia were snapped up at bargain prices—a huge number of new mergers and acquisitions took place. So of course, the crisis was hailed as “a blessing in disguise”—by the winners…
Except that this episode stoked popular furor at the IMF and other institutions of globalization, which notably led to the collapse of WTO talks in Seattle, 1999.
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Once the neoliberal doctrine had been adopted in all major “transitioning” countries during the 1980s and 90s, under the excuse that there was no other way to go (the world having reached, after all, “the end of History”), what new frontiers were left for it to conquer? Klein shows that the “shock therapy” was finally applied in the US itself, to go one step beyond Reagonomics. This way of thinking became all the more prevalent with the arrival of Donald Rumsfeld as defense secretary, with the strong ambition to bring the revolution in outsourcing and branding to the DoD—mostly meaning subcontracting as many government tasks to the private sector as possible. The 9/11 crisis, if anything, became a golden opportunity for Cheney and Rumsfeld to enact these reforms. But instead of simply selling off public companies, they made the War on Terror into a whole new politico-economic framework, which would be private from the bottom up. Thus the “disaster capitalism complex” was born: “a full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad.”
This industry, which was only in its nascent stage up to that point, immediately balooned, with the blessing of the US government, even turning into a new driver for economic growth. In 2007, over 50% of the qualified counter-intelligence experts in the field worked for contractors. This industry is, according to Klein, already larger than Hollywood or the music business.
Beyond its economic importance, this industry—“a merger of the shopping mall and the secret prison”—naturally also has a huge cultural influence, creating worldwide incentives to spy, torture and generate false information: it has already led to thousands of unwarranted arrests, sending many alleged “terrorists” to secret prisons, where they are interrogated by… private contractors (who of course have an incentive to make their prisoners provide “actionnable intelligence,” so they can get more contracts). Such factors have led to a strong decrease in intelligence quality worldwide.
More worrying still, this industry is intimately linked with governments like those of the US, in a context of egregious corporatism. While the US government has long been ordering or orchestrating coups d’état in support of US corporations (be it United Fruit in Guatemala in 1954 or ITT in Chile in 1973), US-led warfare is now the core business itself: Rumsfeld (Gilead), Cheney (Halliburton), and many other top officials have profitted massively from their stays in office thanks to the wars they helped launch. There is no longer any clear line between the state and the disaster capitalism complex, as politicians occupy both worlds simultaneously. The neocon ideology, in fact, promotes both an imperial role for the US in the world and Israel in the Middle-East—AND the interests of the disaster capitalism complex, a multibillion-dollar industry based on these same assumptions.
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Klein then goes on to describe the involvement of the US and these industries in the Iraq debacle, since the invasion started in 2003. She contends that this invasion was largely motivated by the intention to establish a beacon of free trade in the Middle East, that could then influence neighboring countries (where state-owned industries remain very present)—and in the process, make sure that US corporations would benefit massively.
This “nation-creating” exercise implied extreme levels of colonialist violence, to erase preexisting structures. While the “Shock and Awe” military campaign was swiftly won, the implementation of the economic shock therapy was a complete disaster. This “anti-Marshall Plan” (that required the immediate privatization of all state-owned companies, lowering corporate taxes and border tariffs, launching a new currency, etc.) undermined Iraqi industries and led to huge unemployment: reconstruction was to be managed overwhelmingly by Halliburton and other US contractors—as well as all governmental functions.
As a predictable result, this modernized form of pillage led to escalating resistance and counter-repression, exacerbating sectarian violence. And since the reconstruction efforts by foreign firms largely failed, notably due to rampant scamming and lack of supervision, local religious groups took things in hand and performed much better—which enabled the rise of fundamentalist militias (like that of Moqtada al-Sadr in Basra). In other words, there are very strong links between the “civil war” and the corporatist project at the heart of the invasion.
“Like Russia’s gangsterism and Bush’s cronyism, contemporary Iraq is a creation of the fifty-year crusade to privatize the world. Rather than being disowned by its creators, it deserves to be seen as the purest incarnation of the ideology that gave it birth.”
Most ironically, while the US had invaded the country in order to “bring democracy” there, Paul Bremer (head of the CPA) stifled all democratically self-organizing movements and dismantled all elected councils, which largely opposed the radical economic program; and instead of having a large constituent assembly elected, he decided to hand-pick an Iraqi Governing Council more or less at random. This also led to the empowerment of local religious leaders, further repression from the US, and the aggravation of the cycle of violence, which culminated in such prisons as Abu Ghraib.
“Bush’s in-house disaster capitalists didn’t wipe Iraq clean, they just stirred it up. Rather than a tabula rasa, purified of history, they found ancient feuds, brought to the surface to merge with fresh vendettas from each new attack…. Countries, like people, don’t reboot to zero with a good shock; they just break and keep on breaking.”
In the end, after all the public money was spent, contractors just pulled out—and the state-owned companies authorized to start working again, in 2006. But while the US troops also went home, they were increasingly replaced by private mercenaries like Blackwater, which came to form the bulk of foreign forces on the ground.
While the Iraq “reconstruction” was a massive failure for Iraqis and US taxpayers, it was an absolute windfall for the disaster capitalism complex. These companies profit “when the bombs start falling, when they stop, and when they start up again—a closed profit-loop of destruction and reconstruction.” In the case of Halliburton or the Carlyle Group, destroyers and rebuilders are different divisions of the same corporations.
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In the final part of the book, Naomi Klein takes the concepts of “Green Zone” (the area secured by the foreign military in the heart of Baghdad, with all the trappings of comfort) and “Red Zone” (the rest of Baghdad—hell on earth) as a useful dichotomy to understand the long-term effects of neoliberalism and disaster capitalism in the world.
Starting with the case of the Indian Ocean tsunami in 2005, she shows how this disaster was immediately turned into an opportunity to restructure the economy of many of the countries most badly hit so as to favour certain industries—and in particular, that of high-end tourism: instead of handing the great flows of aid money sent in from all around the world, several governments (under the advice of the IMF and other institutions) concentrated these funds to launch “a second tsunami of corporate globalization”—i.e. construct high-end resorts, while banning from the profitable seaside millions of poor people. In sum, the natural disaster was seen as an opportunity to accelerate the process of displacement and gentrification that would otherwise have taken years. In the case of Sri Lanka, these very unpopular policies might well have contributed to reignite the latent civil war.
The same year, New Orleans was hit by hurricane Katrina. Governmental response was appalling, but it was rendered all the more catastrophic by its vast reliance on private contractors (such as Halliburton’s KBR, Blackwater, Kenyon International, CH2M etc.—contracts awarded with no open bidding), which did a most inefficient and sloppy job, often subsubsubcontracting all tasks to other smaller companies. But things didn’t stop there. Katrina was thereafter explicitly viewed by Republicans as a perfect occasion to implement socially regressive policies—including privatizing the education system, rolling back labor laws, etc. Milton Friedman himself considered the hurricane “an opportunity to radically reform the educational system” in New Orleans. And just like in Iraq, both during the disaster and afterwards, a comfortable, safe, hygienic “Green Zone” (inhabited by rich people and defended by armed guards) was made to coexist with a poor, insalubrious, violent and underfunded “Red Zone”—where a majority of the population has to send their children to low-quality charter schools, and receive healthcare in rundown hospitals.
The book ends on an examination of the situation in Israel and Palestine. According to Klein, Israel’s economic reliance on its counterterrorism industry (which has flourished since the early naughts) is one of the factors that have enabled the country to put an end to the economic co-dependence that once existed between itself and Palestine—as it no longer relies as much on traditional exports, Palestinian labor is much less needed. Consequently, the closure policies (first enacted in 1993) can remain in place, to isolate as much as possible Palestinians within their assigned territories, which have grown to resemble prisons more and more. She finds this situation representative of the trend worldwide: the point is not to “win” the war on terror, but to create “security” inside fortress states bolstered by endless low-level conflict outside their walls. A gated future built and run by the disaster capitalism complex.
Israel is a case in point—an entire country turned into a gated community, surrounded by locked-out people living in permanently excluded red zones.
“This is what a society looks like when it has lost its economic incentive for peace and is heavily invested in fighting and profiting from an endless and unwinnable War on Terror. One part looks like Israel; the other part looks like Gaza….
What Israel has constructed is a system designed… to keep workers from working, a network of open holding pens for millions of people who have been categorized as surplus humanity.”
***
Ten years after its publication, it isn’t difficult to see how The Shock Doctrine is more relevant than ever—be it regarding the domination of disaster relief by international corporations (such as Monsanto and Chemonics international, and others, after the 2010 Haiti earthquake), or considering the role played by the IMF, as part of the infamous troika, against Greece since 2009… A few years later, another book by Antony Loewenstein delved deeper into the odious mechanics of disaster profiteering, and the ever-extending infiltration of the neoliberal mindset at all levels of society.
In a word—this is no perfect book, if there ever was such a thing; but it is undeniably a most important and enlightening one, and perhaps a necessary one to better understand the powers that rule us all today.