Shock wave troopers
Naomi Klein exposes the economic ambulance chasers who take advantage of natural and economic disasters worldwide.
Milton Friedman, the Nobel-laureate economist and champion of unfettered global markets, was a great believer in preparing for disaster. As he wrote in the opening of his 1962 manifesto, Capitalism and Freedom , "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." And Friedman worked his long career to ensure that the economic ideas lying closest to powerful politicians and bureaucrats in times of trouble were the ones he espoused most fervently: deregulation of industry, privatization of state-owned companies and resources, the shrinking of government to its barest essentials, and the complete freedom of capital to move according to its whims.
Friedman's success in this lifelong campaign can be gauged by the glowing eulogies he received from politicians, economists, and pundits around the globe when he died last year at the age of 94. But the true mark of his influence, according to Canadian writer and activist Naomi Klein, is in the cynical opportunism of those committed to laissez faire capitalism. As she argues in her wide-ranging, caustic new book, The Shock Doctrine: The Rise of Disaster Capitalism (Knopf Canada, $36.95), Friedman's followers have learned to take swift advantage of public disorientation in the wake of large-scale catastrophes in order to perform what Friedman himself called economic "shock therapy".
In an extended interview with the Georgia Straight , Klein explains that she first noticed this pattern during a trip to Sri Lanka in the summer of 2005 to report on the devastation the Asian tsunami had wreaked on that country's shores six months before. What she saw there, she says by phone from Toronto, was "a sort of amping up of a corporate agenda from free-trade light to free-trade heavy, with no veneer of consent–just exploiting people in their deepest moment of vulnerability and disorganization, when there's no possibility of democratic participation".
Within mere days of the disaster, Klein says, the Sri Lankan government passed a bill opening the way for the privatization of water and began creating legislation to sell off the national electricity company. Moreover, by the time she arrived in the battered country, government officials had set up a "buffer zone" that stretched the length of the island's east coast, preventing traditional fishing communities from returning to the waterfront to rebuild their shattered homes. The ruling was ostensibly for the sake of public safety, in case of another monstrous wave. But, as Klein argues in detail in her book, the motives behind it seemed questionable, given that the tourism industry was exempted from such restrictions. Resort owners in Sri Lanka had long sought to have the fishing villages removed from the otherwise pristine beaches; in fact, they had increased the pressure in early 2003, when the government began touting an economic-growth program, formulated in part by the World Bank, that singled out high-end tourism as the key to the country's future prosperity in the global marketplace.
"The force of that natural disaster," Klein tells the Straight , "was immediately harnessed by international lenders”¦and the need for tremendous aid was used as leverage to make many of the countries hit by the tsunami, including Sri Lanka, submit to what used to be called 'structural adjustment'–privatization and deregulation."
All of this was, in her view, eerily similar to the sweeping economic program imposed on war-ravaged Iraq in 2003. In the direct aftermath of the U.S.–led invasion and its vaunted campaign of "shock and awe", the Coalition Provisional Authority supervised a massive selloff of state-owned industries, at the same time establishing a 15 percent flat tax and laws that allowed foreign owners to remove 100 percent of their profits from the country. This was textbook Friedmanism, Klein argues, and all set down at a moment when Iraqis themselves were reeling, unable to object or to offer alternatives about how their economy should be run.
Yet it was the official response to another 2005 disaster, one much closer to home, that led Klein to write The Shock Doctrine , convincing her that what she had detected in the earlier catastrophes were not isolated examples of large-scale exploitation but rather a strategy being refined by free-market ideologues.
"When [Hurricane] Katrina hit New Orleans," she says, "we started to see this very same pattern emerge instantly, and we started to hear immediately from the think tanks in Washington that this is really an opportunity to get rid of the public-school system and have a charter-school system, or to get rid of all those housing projects and turn them into mixed-use housing, which really means condos. Then I thought, 'Okay, this is the thesis.' But when I started to write, I realized that what I had thought was a new tactic–this use of disaster and crisis and trauma to impose these economic policies–has actually been in play now for 35 years. And so I sort of traced the roots of this chapter of economic history."
According to Klein, the roots go back to 1973, when the U.S.–backed toppling of Chile's elected, left-leaning president, Salvador Allende, brought right-wing dictator Augusto Pinochet to power. As Shock Doctrine recounts, the coup had been planned along two parallel lines, with the military plot linked to a program for a drastic neoliberal overhaul of the country's economy. The resemblance of this program to Friedman's theories was no accident: most of its authors belonged to a group of economists known as the Chicago Boys, trained by Friedman and his colleagues at the University of Chicago. In fact, not long after the coup, Friedman himself acted as Pinochet's personal economic adviser, helping implement the free-market plan even as the junta kidnapped, jailed, tortured, and executed thousands who opposed the reforms.
Here, Klein tells the Straight , we have "the first laboratory for Chicago School, radical, free-market policies"–policies that, she says, are so corrosive to economic justice and social safety nets, and thus so consistently unpopular with average citizens, that they can only be "imposed violently”¦only with some kind of shock".
The jolts always come in waves, Klein says. There is a vast initial crisis, either planned or accidental: Chile's coup, or Poland's crumbling economy when Solidarity took power in 1988, or Southeast Asia's currency meltdowns of the late '90s, to name just a few of the nation-sized calamities examined in Shock Doctrine 's 500-plus pages. Then, quickly, while the populace is distracted–often by the straightforward problem of survival–the economic shock therapy is applied, pillaging the public sector and sweeping aside any rival ideas about how the country's wealth should be apportioned and used. These, Klein claims, are the greed-driven mechanics of globalization, a process celebrated for years by its proponents as one through which economic liberalization fosters social liberation, but depicted in Shock Doctrine as the work of innately antidemocratic forces.
"It's not actually a radical analysis," Klein says of her book's theme. "It only feels radical here. It doesn't feel radical if you say this in Argentina or Chile or Poland or Russia, where people lived it–they know it. They know there's a relationship between the fact that [former Russian president Boris] Yeltsin had to burn down the parliament [in 1993] and the fact that their whole country was sold off in the next year. It's obvious."