THE SHOCK DOCTRINE: THE RISE OF DISASTER CAPITALISM
BY NAOMI KLEIN
Naomi Klein is my hero. She is beautiful and brilliant and can look at the sick world in which we are trying to exist, diagnose it, and give a prognosis for the future. If you want to understand how we got from there—-middle class security and prosperity—-to here—-the death of the middle class, then read Naomi Klein. Start with No Logo and then continue to The Shock Doctrine and you will come away feeling disgusted, discouraged and sadly enlightened. As Naomi Klein said this morning on the MSNBC program Up w/Chris Hays, “The system is broken.” How true.
The Shock Doctrine is a harrowing account of how a particular economic theory, popularized by economist Milton Friedman and spread by his Ayn Rand-dazed acolytes to many helpless nations, has created vast wealth for corporations and vast misery for the people who live in these countries. Briefly and perhaps crudely, one can explain this economic doctrine as “free market capitalism,” or the myth of the free market which translates in reality to corporate monopolies over the lives of people—not just their economic lives, as in what kind of products they are forced to buy at non-competitive prices—but their social and political lives.
The Shock Doctrine is a phrase coined by Klein referring to the Milton Friedman doctrine of crisis. Private business interests should take advantage of a public or social crisis in a nation and force radical change quickly, set these changes in place before the population can recover and then sit back and reap the economic rewards. This cultural monopoly imposed by corporate interests must be all-encompassing because the political system needs to be co-opted in order to create a machine that delivers money to the business interests. Government money, otherwise known as taxes paid by the citizens that should be returned to the people as part of a social contract, is used to subsidize the moneyed class to assist them in making profits without interference of inconveniences such as financial or environmental regulations.
The Shock Doctrine begins with the reaction of the Bush Administration to the flooding of New Orleans by the epic hurricane Katrina. Although Klein is not making a new observation—many other commentators remarked at how quickly the African-American refugees were driven out of state, dumped and abandoned, leaving Louisiana a much whiter state, she analyzes the post-Katrina situation in terms of “disaster capitalism.” This doctrine, which originated with Milton Friedman, urges the conservative government to rush in when a population is in shock and to upend existing structures and to replace them with private interests in the service of free market capitalism.
Klein remarks upon how quickly the Administration swooped down upon New Orleans and swept away the public school system as efficiently as Katrina had swept through the Ninth Ward. The goal was to whiten the city by not rebuilding the African-American neighborhoods where people who traditionally voted for the Democrats once lived. Lest any of these displaced persons think of returning, steps were taken to not rebuild their neighborhoods and to make education economically beyond their means. The replacement for free public education? Charter schools, a privatized mode of education, accountable to no one, even its customer base, parents and children.
A public system was replace by a private one: this is what happened to the school system in New Orleans. Instead of having a public system of education that we all pay into because we all benefit from an educated society, this city now has charter schools. For those who are well-to-do, a private school, excuse me a charter school, can be as expensive and as exclusive (and as segregated) as it wishes, out of reach of government supervision. Such schools can teach what they wish, again with very limited government oversight. Through the back door, separate but equal comes on little cat feet and steal the American dream.
For Milton Friedman, public schools are nothing short of socialism. As the late guru once stated, “The preservation of freedom is the protective reason for limiting and decentralizing governmental power. But there is also a constructive reason. The great advances of civilization, whether in architecture or painting, in science or in literature, in industry or agriculture, have never come from centralized government.”
That statement is astoundingly ignorant, especially for a university professor. As an art historian, I would like to waft a few names heavenward to Dr. Friedman (if he is in heaven) Egyptian pyramids, Jacques Louis David, Joseph Awkwright, Werner von Braum—-all these accomplishment, from architecture to art to invention to the “advance” of rocketry—came from centralized governments. I can only suppose that his students were too intimidated to try to inform him of the facts.
However, Friedman, when speaking against public education asserted,
“…It isn’t the public purpose to build brick schools and have students taught there. The public purpose is to provide education. Think of it this way: If you want to subsidize the production of a product, there are two ways you can do it. You can subsidize the producer or you can subsidize the consumer. In education, we subsidize the producer—the school. If you subsidize the student instead—the consumer—you will have competition. The student could choose the school he attends and that would force schools to improve and to meet the demands of their students.”
Sounds good, but the flaw in the argument is that charter schools actually lower competition and prevent intervention of the “consumers,” by limiting the alternatives. With public school, all the officials, from the governor, the mayor, the superintendent, the teachers, etc. are accountable to the public who can elect those who represent them. Neighborhood schools can respond to the needs of the community, while a charter school reacts to the desire for profit.
Certainly the profit motive and selfishness—virtues praised by Friedman—are great motivators—but certain public services are public goods paid for by the public and provided by the government, which does not have and should not have a profit motive. Friedman and his followers, called Neo-Conservatives (those lovely people who drove the American public into the Iraq War to the lasting profit of contractors), think the government should be run like a business. This philosophy, the neo-conservative ideals, is at odds with the founding ideals of the American government, expressed in the Declaration of Independence and the Constitution and the Bill of Rights.
America is a nation built on the philosophy of the Enlightenment and is, therefore, is based upon The Social Contract. The Social Contract is an idea based upon Jean-Jacques Rousseau’s The Social Contract, written in 1762. Rousseau was contemplating the end point of the logic of the Enlightenment philosophy, which proposed individual freedom and individual responsibility as opposed to the divine right of Kings and Queens. If human beings are not governed by a central authority ordained by God, then how are we to govern ourselves? His answer was that people came together freely and gave their consent to govern and to be governed and guided by the foundational idea of mutual respect and mutual rights and mutual aid.
The American government was not founded on the ideal of the profit motive.
The American government was founded on the ideal of mutual consent.
The problem of privatization of government services is that privatization removes mutual consent and removes accountability as privatization “gets government out of the way.”
Once the government is out of the way, the corporations have free reign over the citizens who are their captive customers.
The Chicago School, or the economic philosophy of Milton Friedman, thinks about the role of government in terms of not-government or not-governing. In other words, less government means more corporate control and more profits for the wealthy at the top. When the government is shrunk, its withdrawal creates a space and power vacuum, and the corporations rush in and fill up the open territory. The citizens become consumers without a vote. Neoconservativism is a form of public policy that is set on disenfranchising the public and reshaping society for the benefits of private profit.
Klein begins with an early experiment with the Shock Doctrine in Chile by Augusto Pinochet who overthrew the legitimate government by a coup-d’êtat and was advised in the conduct of his economic policy by Friedman himself. As Klein described, the experiment in Chile would be repeated elsewhere. The formula was simple, find a country in which an event has put the population in a traumatized state, “shock” the people, and seize the system and reshape it to your own ends. According to Klein, Friedman advised Pinochet to implement
“…rapid-fire transformation of the economy—tax cuts, free trade, privatized services, cuts to social spending and deregulation. Eventually, Chileans even saw their public schools replaced with voucher-funded private ones. It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a “Chicago School” revolution, since so many of Pinochet’s economists had studied under Friedman at the University of Chicago. Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that “facilitate the adjustment.” He coined a phrase for this painful tactic: economic “shock treatment.” In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or “shock therapy,” has been the method of choice.
The United States (the CIA) supported the 1973 coup but Pinochet quickly revealed himself to be a particularly ugly bedfellow. Nevertheless, the dictator, who wrecked Chile and killed and tortured its people, was preferable to any socialist politician, such as the socialist Allende, who had nationalized industry. As Klein pointed out, the citizens are always opposed to the economic theories of the Chicago School, because these theories do not benefit them, only the corporations. Indeed when Pinochet died in 2006, the Chilean government probed the financial corruption of almost thirty years of misrule. According to The Washington Post, Pinochet, though dead, had amassed ten tons of gold or $160 million dollars.
Imagine what $160 million could have done for the people of Chile.
Although Klein goes through a number of case studies of the Chicago School intervening with foreign nations that have dictators eager to emulate Pinochet, she concentrates on the “event” in America that unleashed our own Shock Doctrine within our nation: September 11th. It is perhaps a coincidence that Pinochet seized power on September 11th, 1973 and that his coup was a dress rehearsal for the immediate reaction of the Chicago School neo-conservatives embedded in the Bush Administration. After 911, the astonishing leap from Afghanistan to Iraq may have surprised those of logical mind was in fact a long planned campaign into Iraq, site of massive oil fields. Klein states,
The Bush team seized the moment of collective vertigo with chilling speed—not, as some have claimed, because the administration deviously plotted the crisis but because the key figures of the administration, veterans of earlier disaster capitalism experiments in Latin America and Eastern Europe, were part of a movement that prays for crisis the way drought-struck farmers pray for rain, and the way Christian-Zionist end-timers pray for the Rapture. When the long-awaited disaster strikes, they know instantly that their moment has come at last.
Klein correctly points out that the doctrines of the Chicago School had never been popular or desired by the American people. That said, many of the ideas and principles were implemented by the Reagan Administration’s program of what George H. W. Bush called “voodoo economics,” also known as the “trickle down theory.” The concept that, if taxes were cut for the wealthy, then the benefits would trickle down to the lower classes, was disproved by the fact that 1. The incomes of the middle class have stopped rising (and have stayed static to this day) and 2. Taxes had to be raised by Reagan eleven times to offset a growing deficit. However, the great success of Ronald Reagan was that he introduced the idea that the “government is the problem.”
If that was the case during the Reagan Administration, during the Bush administration, the “government is the solution” to enriching corporations. For the first time in the history of America, the nation went to war on a credit card. The nation was urged to shop, not sacrifice, as the government conducted an endless “war on terror.” Except that it was not the government that was waging this war. The “military” or the “troops” in the field that the American people heard about were something of a screen for what was really going on in Iraq. As Klein explained it,
“…the Bush administration outsourced, with no public debate, many of the most sensitive and core functions of government—from providing health care to soldiers, to interrogating prisoners, to gathering and “data mining” information on all of us. The role of the government in this unending war is not that of an administrator managing a network of contractors but of a deep-pocketed venture capitalist, both providing its seed money for the complex’s creation and becoming the biggest customer for its new services. To cite just three statistics that show the scope of the transformation, in 2003, the U.S. government handed out 3,512 contracts to companies to perform security functions; in the twenty-two-month period ending in August 2006, the Department of Homeland Security had issued more than 115,000 such contracts.”
Furthermore in the best tradition of the Chicago School, the huge cost increases incurred by privatizing the military and outsourcing fighting to contractors were hidden “off the books” and not put into the deficit until the Obama Administration. As Klein pointed out, while the American people were improvised by this for-profit war of choice, Halliburton earned a $20 million profit. The Iraq was an experiment in large-scale privatization of war waged by corporate interests and their stockholders. Secretary of Defense, Donald Rumsfeld, put forward the idea of a small army, which hid the subtext of a large force of private contractors, who would fight in “our” name with taxpayer dollars but without accountability. This hidden army was never counted in the number of people who were fighting in Iraq but they doubled the number of military personnel fighting for American interests in Iraq. The result was a ten-year trillion-dollar war that started with a lie and will end in resignation.
Klein points out that the Shock Doctrine of the Chicago School calls its followers by a number of names: neoconservatives in America, living in so-called “Think Tanks,” such as the American Enterprise Institute and the Hoover Institution, and “neoliberals” in Europe, indicating the interest in Macroeconomics or in corporate globalization. The author decides upon a more descriptive term,
A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. But because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, though not always, torture.
By making an analogy to “torture,” Klein explains that the victim/nation is “softened up” through terrible events, which make human beings temporarily defenseless and susceptible to doing whatever it takes to remedy the crisis. As she says,
That is how the shock doctrine works: the original disaster—the coup, the terrorist attack, the market meltdown, the war, the tsunami, the hurricane—puts the entire population into a state of collective shock. The falling bombs, the bursts of terror, the pounding winds serve to soften up whole societies much as the blaring music and blows in the torture cells soften up prisoners. Like the terrorized prisoner who gives up the names of comrades and renounces his faith, shocked societies often give up things they would otherwise fiercely protect.
The Chicago School, according to Klein, long though of itself as a School of Thought or a philosophy, rather than an economic theory. Just as the American military sought a city that had not been bombed upon which to drop the atom bomb the better to ascertain the results, the Chicago School economists sought a “clean slate” upon which to write their doctrines the better to ascertain the results. These economists imagined that the capitalist system was faultless, endlessly flexible and endlessly self-correcting, and, hence, infallible. This is typical Enlightenment thinking, based upon an idealized model, generated by math, and based upon a hypothesis.
The problem begins when the elegant model meets the real world. The economic system works only for corporations; the populations hate how they are disenfranchised and become restive. In order to control the experiment, the government must increase surveillance on its own citizens who are constantly signaling their discontent. The disconnect is caused by a conceptual misfit: the government is now for the benefit of the corporations but is masquerading, as in America, as a democracy and allows a charade of elections which are financed and manipulated by corporations in a viscous circle. Caught in the middle, “We the People” become more and more angry and, eventually, a rebellion ensues to put things right again, as in Chile.
The fact that while the Shock Doctrine may work, the Chicago School economic ideas do not has not given the Neoconservatives pause. Instead, they simply double down and repeat their assertions, for years, in the fact of facts and documentation, all of which point to the contrary. As Klein points out, the Neoconservatives are “purist” thinkers, meaning that they think in theory and feel the need to wipe away any pollutants that sully or interfere with what they think of as the “free market.” One can understand the insistence of the Republican Party that the Environmental Protection Agency prevents jobs from being created by realizing that regulation per se is “impure.” The problem is, that many have pointed out, the logical outcome of Enlightenment thinking: such a stance of “purity” would end regulations totally and we would not be able to drink the water and the Cuyahoga River will be ablaze once again.
Klein mentions that the Neoconservatives of the Chicago School were in the intellectual wilderness for decades, and, indeed, even today, orthodox economics and mainstream economists have pointed out that the government has to take a role in regulating and directing the economy. Today, as we are mired in neo-Depression, these economists are calling for Keynesian economic policies to prime the job market and to stimulate the economy. And the neoconservative politicians stand firm for a policy of purity and refuse to help any element of society, except the wealthy. Their philosophy is in line with that of Milton Friedman who decided that the nation went off the rails with the New Deal and created a “welfare state.” For nearly a century, it has been the goal of these anti-Keynesians to dismantle the role of government in society, from social safety nets to regulations that promote public health and safety.
Because of the popularity of the New Deal and its programs and the success of post-war government intervention in building a prosperous middle class through public policies, the “Chicago Boys” had to practice overseas, mostly in South American nations. Despite the fact that some of the students at the University of Chicago protested the corrupt and brutal killing regimes brought into being by Chicago style politics, Milton Friedman won a Nobel Prize for Economics in 1976 and apparently he never apologized for or agonized over all the horrible injustices done under his policies. As Klein explained it,
This intellectual firewall went up not only because Chicago School economists refused to acknowledge any connection between their policies and the use of terror. Contributing to the problem was the particular way that these acts of terror were framed as narrow “human rights abuses” rather than as tools that served clear political and economic ends. That is partly because the Southern Cone in the seventies was not just a laboratory for a new economic model. It was also a laboratory for a relatively new activist model: the grassroots international human rights movement. That movement unquestionably played a decisive role in forcing an end to the junta’s worst abuses. But by focusing purely on the crimes and not on the reasons behind them, the human rights.
Somehow the Chicago School escaped being discredited on moral and ethical grounds and politicians realized that those economic policies were bad for the people who still casts votes in free nations. Therefore, Milton Friedman was disappointed in the performance of Richard Nixon who understood that a contented population would reelect him. As James Carville said, “It’s the economy, stupid.” But later politicians would be bolder. Despite the undeniable truth of the terror and torture implemented by the Pinochet regime, free market politicians looked upon his work in Chile with favor. Klein states,
When Friedrich Hayek, patron saint of the Chicago School, returned from a visit to Chile in 1981, he was so impressed by Augusto Pinochet and the Chicago Boys that he sat down and wrote a letter to his friend Margaret Thatcher, prime minister of Britain. He urged her to use the South American country as a model for transforming Britain’s Keynesian economy. Thatcher and Pinochet would later become firm friends, with Thatcher famously visiting the aging general under house arrest in England as he faced charges of genocide, torture and terrorism. The British prime minister was well acquainted with what she called “the remarkable success of the Chilean economy,” describing it as “a striking example of economic reform from which we can learn many lessons.”
Klein studied Margaret Thatcher’s implementation of Milton Friedman’s doctrines which worked so badly that her position as Prime Minister of Great Britain was saved by a strange and unnecessary war, the Falklands War of 1982, fought on behalf of less that three thousand people and an almost equal number of sheep. Friedman would have preferred an economic crisis, a depression, a currency meltdown, or something like we have today, a global collapse of the economic system. But Margaret Thatcher, the Iron Lady, went to war to cloak her failures. England was a difficult site for Chicago School politics to flourish, and, as Klein continues, the former Soviet Union and China were more successful in following the “purity” of the free market philosophy of Milton Friedman who unapologetically advised China at the moment of Tiananmen Square. But then Freidman always maintained that the ends always justify the means. He said,
A common objection to totalitarian societies is that they regard the end as justifying the means. Taken literally, this objection is clearly illogical. If the end does not justify the means, what does? But this easy answer does not dispose of the objection; it simply shows that the objection is not well put. To deny that the end justifies the means is indirectly to assert that the end in question is not the ultimate end, that the ultimate end is itself the use of the proper means. Desirable or not, any end that can be attained only by the use of bad means must give way to the more basic end of the use of acceptable means.
As Klein points out, the former Soviet Union, now known as Russia, was an ideal proving ground for a doctrine that had continually failed. She chronicles the psychological impact of the theories-come-home-to-roost as practice of the Chicago School: alcoholism and AIDS and prostitution and drug addiction and wealth concentrated in the hands of the few. Such is the lament of the hopeless under a doctrine of “planned misery.” She states,
Russia’s population is indeed in dramatic decline—the country is losing roughly 700,000 people a year. Between 1992, the first full year of shock therapy, and 2006, Russia’s population shrank by 6.6 million.83 Three decades ago, André Gunder Frank, the dissident Chicago economist, wrote a letter to Milton Friedman accusing him of “economic genocide.” Many Russians describe the slow disappearance of their fellow citizens in similar terms today. This planned misery is made all the more grotesque because the wealth accumulated by the elite is flaunted in Moscow as nowhere else outside of a handful of oil emirates. In Russia today, wealth is so stratified that the rich and the poor seem to be living not only in different countries but in different centuries. One time zone is downtown Moscow, transformed in fast-forward into a futuristic twenty-first-century sin city, where oligarchs race around in black Mercedes convoys, guarded by top-of-the-line mercenary soldiers, and where Western money managers are seduced by the open investment rules by day and by on-the-house prostitutes by night.
One might wonder why, with the many manifold and manifest failures of the Shock Doctrine and the Chicago School philosophy, the Neoconservatives continued to be fruitful and multiply. The only answer that I could come up with is that the corporations like the policies because, once implemented, they become vastly enriched, even when the Chicago Boys can get only part of their agenda through, as in America. To return to the Rumsfeld idea of “transforming” the military into a corporation by outsourcing fighting to contractors Klein recounts how unpopular this idea was to the generals who would watch the military double in size with half of the personnel beyond their control. As she pointes out, the role of the government is to subcontract services to private businesses (which inevitably charge two or three times more), which cause the cost of any “government” service to spiral.
The philosophy of Milton Friedman made corporations and businesses profitable beyond their wildest dreams. Thanks to Presidents Bill Clinton and George W. Bush, more and more areas traditionally reserved for government professionals, who were often unionized, were turned over the corporations. The result was a gutting of unionized labor (which started with Ronald Reagan) and the disenfranchising of the voter who could not confront a corporation in a town hall. Klein points out that Bush had energetically privatized the prisons in Texas and then went on to privatize the War on Terror. What Bush wanted to do, she asserts is to “hollow out the government.” With what seems like a preternatural patience, the neoconservatives who had been waiting and practicing for years came into own, thanks to the calamity and trauma of September 11th. She states,
September 11 has changed everything,” said Ed Feulner, Milton Friedman’s old friend and president of the Heritage Foundation, ten days after the attack, making him one of the first to utter the fateful phrase. Many naturally assumed that part of that change would be a reevaluation of the radical antistate agenda that Feulner and his ideological allies had been pushing for three decades, at home and around the world.
911 allowed for the collapse Enron to happen with less notice than it would have otherwise have subjected to. But Enron and its mode of doing business was a harbinger of things to come: total economic collapse through one of the maladies that has plagued the Chicago School since the experiments began in the 1970s: corruption. The problem of outside contractors happily ripping off the government had been going on for years but under the Friedman style government of George Bush, the process accelerated to the extent that we still do not have a complete accounting of taxpayer money that was misspent or simply lost. Vast sums of money went, not to stimulate the American economy, which remained stagnant, but to corporations. As Klein recounts,
New Deal would be exclusively with corporate America, a straight-up transfer of hundreds of billions of public dollars a year into private hands. It would take the form of contracts, many offered secretively, with no competition and scarcely any oversight, to a sprawling network of industries: technology, media, communications, incarceration, engineering, education, health care.ax What happened in the period of mass disorientation after the attacks was, in retrospect, a domestic form of economic shock therapy. The Bush team, Friedmanite to the core, quickly moved to exploit the shock that gripped the nation to push through its radical vision of a hollow government in which everything from war fighting to disaster response was a for-profit venture.
The economic doctrine of the Bush Administration, expressed by Bush’s Budget Director, Mitch Daniels and others, was that the government did not provide services but purchased them from an outside contractor and resold them to the American public who was then forced to pay for these services at two or three times the market value. The result was a guaranteed deficit, draining the government surplus created under Bill Clinton and the future of the nation, which was not floating off on a sea of endless and unmentionable debt. The War on Terror made contractors and corporations rich, and the nation poor.
For decades, America has been fighting one war after another and has been existing in a low level state of Total War, flying low under the public radar. In the same way, the War on Terror was fought by corporations and by a small group of beleaguered American soldiers who were used as window-dressing. These soldiers were isolated from the mainstream, which allowed the War to be fought globally without much scrutiny or without inconveniencing the American people who were busy “shopping” for homes and commodities. The best part of the War was that it could conceptually go on as long as American could borrow money from China. As Klein says,
From a military perspective, these sprawling and amorphous traits make the War on Terror an unwinnable proposition. But from an economic perspective, they make it an unbeatable one: not a flash-in-the-pan war that could potentially be won but a new and permanent fixture in the global economic architecture.
What Naomi Klein calls the “disaster industry” was based on high tech venture capital businesses ideally suited to hunting “terrorists” with sophisticated technology. Such technology is superbly expensive and is ideally suited to endless improvement, or to put it another way, an endless revenue stream. An entire corporate structure sprung up, designed to fight a war that could not be won—by definition—and, therefore, a war that could never end—like the profits. Klein points out the vast fortunes some fortunate individuals amassed following 911, predicting and causing the current inequities between the very rich and the stalled and suffering middle class. She says,
From a military perspective, these sprawling and amorphous traits make the War on Terror an unwinnable proposition. But from an economic perspective, they make it an unbeatable one: not a flash-in-the-pan war that could potentially be won but a new and permanent fixture in the global economic architecture.
The problem is that once government services are auctioned off to no-bid contractors, the nation has been given to corporations whose motive is profit, not democracy and not public service and not the public good. Corporations answer to stockholders, not to voters. For example, insurance companies are motivated to make money not to make people healthy. A corporation could be providing any sort of good and a health care company or a military contractor is simply filling in a blank corporate space, providing a good or a service, not because it is dedicated to public service but because the business wants to make a profit. For those who have wondered why America invaded Iraq or for those who charged that the war was waged to enrich Vice President Dick Cheney’s company, Halliburton, Klein offers this succulent explanation:
Saddam did not pose a threat to U.S. security, but he did pose a threat to U.S. energy companies, since he had recently signed contracts with a Russian oil giant and was in negotiations with France’s Total, leaving U.S. and British oil firms with nothing; the third-largest proven oil reserves in the world were slipping out of the Anglo-American grasp. Saddam’s removal from power has opened vistas of opportunities for the oil giants, including ExxonMobil, Chevron, Shell and BP, all of whom have been laying the groundwork for new deals in Iraq, as well as for Halliburton, which, with its move to Dubai, is perfectly positioned to sell its energy services to all these companies. Already the war itself has been the single most profitable event in Halliburton’s history.
When Klein went to Iraq to investigate this economic story, she, of course, could find few people to talk with her about the underlying cause and effect of the war for profit in Iraq. There was enough public scrutiny on the war and the amount of money that was wasted, the toll of American lives in the service of Halliburton and the cost of the war on American honor so that the Bush Administration was forced to scale back its occupation forever dream and agreed to begin withdrawal and scale back—of the military, not the contractors. It is still unclear what kind of or extent of an American presence will remain in Iraq. Klein discusses her trip to Iraq,
The fact that it was hard to find people in Baghdad who were interested in talking about economics was not surprising. The architects of this invasion were firm believers in the shock doctrine—they knew that while Iraqis were consumed with daily emergencies, the country could be auctioned off discreetly and the results announced as a done deal. As for journalists and activists, we seemed to be exhausting our attention on the spectacular physical attacks, forgetting that the parties with the most to gain never show up on the battlefield. And in Iraq there was plenty to gain: not just the world’s third-largest proven oil reserves but territory that was one of the last remaining holdouts from the drive to build a global market based on Friedman’s vision of unfettered capitalism. After the crusade had conquered Latin America, Africa, Eastern Europe and Asia, the Arab world called out as its final frontier.
It was clear from the start that Iraq was considered to be, not a nation, but a site of corporate exploitation on a scale that made nineteenth century imperialism look tame and lame. Iraq was to be a staging ground for extraction and profit while the compliant and grateful population looked on in “shock and awe.” As often happens with these best-laid plans of the Chicago Boys (who seem perennially divorced from reality), those very pesky people caused problems from the start: looting, complaining, and forming insurrectionary groups. As Klein recounts, because the “planners” did not plan for the Iraqi people, the occupation was a disaster from the start:
The Bush cabinet had in fact launched an anti-Marshall Plan, its mirror opposite in nearly every conceivable way. It was a plan guaranteed from the start to further undermine Iraq’s badly weakened industrial sector and to send Iraqi unemployment soaring. Where the post-Second World War plan had barred foreign firms from investing, to avoid the perception that they were taking advantage of countries in a weakened state, this scheme did everything possible to entice corporate America (with a few bones tossed to corporations based in countries that joined the “Coalition of the Willing”). It was this theft of Iraq’s reconstruction funds from Iraqis, justified by unquestioned, racist assumptions about U.S. superiority and Iraqi inferiority—and not merely the generic demons of “corruption” and “inefficiency”—that doomed the project from the start. None of the money went to Iraqi factories so they could reopen and form the foundation of a sustainable economy, create local jobs and fund a social safety net. Iraqis had virtually no role in this plan at all.
Predictably, the Iraqis were angry with the Bush Administration and reacted appropriately and reactively. Instead of working with the people they had invaded and conquered, the government treated the innocent Iraqis ruthlessly, disenfranchising them from their own country and offering them no choice but insurrection. The worst elements in Iraqi society floated to the top, while the very people who could rebuild the country simply left. Unable to work with the occupation government, which was intent on sucking the natural resources dry, the best and the brightest, the educated and the trained sectors of the society fled the conditions created by the ineptness and greed of the Bush Administration. But Klein insists that the real cause of the disaster was deeper than mere inexperience:
Iraq’s current state of disaster cannot be reduced either to the incompetence and cronyism of the Bush White House or to the sectarianism or tribalism of Iraqis. It is a very capitalist disaster, a nightmare of unfettered greed unleashed in the wake of war. The “fiasco” of Iraq is one created by a careful and faithful application of unrestrained Chicago School ideology.
The occupation forces viewed local Iraqi businesses as elements to be purchased by international corporations that would then proceed to “downsize” the employees and globalize the assets. While the Iraqis rebelled against their livelihoods being wrested from them by global corporate interests, Klein points to another aspect of the Occupation—the reluctance of the Neoconservatives to allow a government to be built for the people. The Neoconservatives did not believe in government and it would be hard to imagine a contingent of the American population more ill suited to putting a shocked and defeated people on the road to democracy. The followers of Milton Friedman believe, not in democracy, not in the Social Contract, but in an everyman-for-himself philosophy.
Every person has to compete within an economic zone where everything is for sale. If you fail to compete on this narrow and specialized field, it is your fault. The government’s only role is to stage and facilitate economic warfare, the Darwinian survival of the fittest scenario. It has been remarked on over and over, especially in Rajiv Chandrasekaran’s excellent 2006 book, Imperial Life in the Emerald City: Inside Iraq’s Green Zone, that the people hired to undertake the delicate and difficult task of reconstructing Iraq were young and inexperienced and given their jobs based, not on their understanding of nation building, but on having the “correct” positions on conservative “values,” such as abortion. Klein makes it clear that such litmus tests that so puzzled me when I read Chandraskekaran’s book were probably just proofs of philosophical positions. As she explains of the young people,
…they were frontline warriors from America’s counterrevolution against all relics of Keynesianism, many of them linked to the Heritage Foundation, ground zero of Friedmanism since it was launched in 1973. So whether they were twenty-two-year-old Dick Cheney interns or sixty-something university presidents, they shared a cultural antipathy to government and governing that, while invaluable for the dismantling of social security and the public education system back home, had little use when the job was actually to build up public institutions that had been destroyed.
Thanks to this army of neoconservatives, there was a vacuum where a government should have been. Klein points out that the Iraqis who remained in their country had no government to coalesce around. There was no government, only an army of corporate occupiers, determined to loot and leave. With few Iraqis allowed to be public presences or to have roles or jobs in the new corporate state, the people turned to the one element of society that had not been abolished, looted or corrupted: the fundamentalist Islam. The Muslim religion in what had been a secular state under Sadaam became the only unifying force for the Iraqis. A nation that had not allowed terrorists to disturb the dictator was now in the hands of terrorists and small fires of resistance broke out everywhere. Soon the Green Zone was under siege and under fire, interrupting the contractors in their systematic looting of the nation’s resources.
The corporations were interested in taking money for not rebuilding Iraq, bombed into submission by its “liberators.” In activities still incomprehensible, corporations such as Halliburton and Kellogg, Brown, and Root spend billions of borrowed money to “construct” facilities and buildings so bad and so dangerous that one has to wonder how such atrocities are actually carried out. If anyone should be so bold as to sue, the corporations were beyond accountability: we paid them but we could not control them—the perfect situation for global looters. As Klein says,
In March 2006, a federal jury in Virginia ruled against the company, finding it guilty of fraud, and forced it to pay $10 million in damages. The company then asked the judge to overturn the verdict, with a revealing defense. It claimed that the CPA was not part of the U.S. government, and therefore not subject to its laws, including the False Claims Act. The implications of this defense were enormous: the Bush administration had indemnified U.S. corporations working in Iraq from any liability under Iraqi laws; if the CPA wasn’t subject to U.S. law either, it meant that the contractors weren’t subject to any law at all—U.S. or Iraqi.
At the end of the book, Klein circles around from her long analysis of the looting of Iraq and returns to New Orleans after Katrina. It seems that the Iraq model could be used in New Orleans to the benefit of tourist industries and developers. This time, the disaster allowed the government to transport any citizens who might protest and ship them out of state so that the dismantling of entire neighborhoods and school districts could proceed unopposed. As in Sri Lanka after the tsunami, the “abandoned” territory was privatized and gentrified. The model of privatization has become so stealthily and systematically insinuated into the fabric of the American way of life that the private contractors have become stronger and less accountable. As Klein expresses it,
The emergence of this parallel privatized infrastructure reaches far beyond policing. When the contractor infrastructure built up during the Bush years is looked at as a whole, what is seen is a fully articulated state-within-a-state that is as muscular and capable as the actual state is frail and feeble. This corporate shadow state has been built almost exclusively with public resources (90 percent of Blackwater’s revenues come from state contracts), including the training of its staff (overwhelmingly former civil servants, politicians and soldiers). Yet the vast infrastructure is all privately owned and controlled. The citizens who have funded it have absolutely no claim to this parallel economy or its resources.
That these private corporations have the fate of the nation in their unaccountable hands is made clear when one looks at the banking industry. Nowhere is the idea of public money and private gain truer than in the world of finance. It is the public who risks and looses and the private that is saved and rewarded. Klein’s thesis of “disaster capitalism” is playing out across America where we are seeing what she calls “disaster apartheid.” The rich become richer and isolate themselves from the increasingly alienated lower classes, the middle and working and unemployed and underemployed classes.
It is not just the gated communities that withdraw from the Social Contract, such as one that Klein describes in Georgia; it is the gated minds that withdraw from the American promise: that we are one people and one nation. Today, we are nation divided between the rich and protected who reap the rewards of a tax code rigged to make them rich and everyone else poor. They are protected by powerful interests who are less interested in a single wealthy person on a Long Island estate in the Hamptons than in the “slippery slope” that the attentions of the citizens might turn to the corporations who also do not pay taxes. Klein points out that Israel, like America has become a divided society, profiting from the “threats” of “terrorism” coming from tribes people who are living in a seventeenth century society.
The absurdity that twenty first century nations should establish an economic system dedicated to arming themselves against people who would leave us alone if we just left them alone has created a huge gulf between privatized wealth and public poverty. Klein states that the American governments under the spell of Milton Friedman fear democratic socialism more than they fear any outside threat. Any hints of “income redistribution” or “economic fairness” bring about instant assaults from the conservative media, which howls with charges of “Marxism” and “Nazism.” Either these people are uneducated and don’t know the difference between the theories of Marx and the practices of Hitler or they simply hurl word grenades indiscriminately.
“Socialism” or a government that actually governs is a dire threat to the followers of Milton Friedman. The people who run as conservatives run for office, not to govern, but to un-govern. Their role is that of moles; to “hollow out” the government, leave it an empty tunnel under the crumbling sod of a nation that was once called “America.” Running this brave new world will be a handful of corporations, those “people” who cannot vote but can buy elections.
As I write, there are protestors on Wall Street, “occupying” Zuccotti Park. The protests against the implementation of the Shock Doctrine upon Americans have been going on for years, ever since the Wall Street Bail Outs. In another post, on Inside Job (2010) I wrote of the complicity of now-discredited economists and economic doctrines in causing a global economic crisis from which it will take us years to recover. I say “us,” but most of “us” will never regain our strides or places in a once-thriving society that was looted by the rich and powerful who are affronted when “we” demand “economic justice.” “We” are “Marxists” and “unpatriotic.” The Shock Doctrine ends on a hopeful note as Naomi Klein sees signs that people are trying to take their country back. Our future hangs in the balance and some of us wonder if this is our last chance before we all become “America, Inc.”
Dr. Jeanne S. M. Willette
The Arts Blogger
Tags: "Disaster Capitalism", "trickle down theory", American Enterprise Institute, Augusto Pinochet, Charter Schools in New Orleans, Chris Hays, Dick Cheney, Donald Rumsfeld, Friedrich Hayek, George H. W. Bush, George W. Bush, government contractors, Hoover Institution, Jean-Jacques Rousseau’s The Social Contract, Margaret Thatcher, Milton Friedman, Mitch Daniels. "Disaster Industry", Naomi Klein, outsourcing, privatizing government, Ronald Reagan, The Chicago School