The Shock Doctrine: The Rise of Disaster Capitalism
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ALSO BY NAOMI KLEIN
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Fences and Windows: Dispatches from the Front Lines of the Globalization Debate
THE SHOCK DOCTRINE
THE SHOCK DOCTRINE
THE RISE OF DISASTER CAPITALISM
NAOMI KLEIN
METROPOLITAN BOOKS HENRY HOLT AND COMPANY
NEW YORK
Metropolitan Books
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trademarks of Henry Holt and Company, LLC.
Copyright © 2007 by Naomi Klein
All rights reserved.
Library of Congress Cataloging-in-Publication Data
Klein, Naomi, 1970–
The shock doctrine : the rise of disaster capitalism / Naomi Klein.—1st ed.
p. cm.
Includes bibliographical references and index.
ISBN: 978-1-4299-1948-7
1. Free enterprise. 2. Financial crises. 3. Capitalism. I. Title.
HB95.K54 2007
330.12'2—dc22 2007018652
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premiums. For details contact: Director, Special Markets.
For Avi, again
Any change is a change in the topic.
—César Aira, Argentine novelist,
Cumpleaños, 2001
CONTENTS
INTRODUCTION
Blank Is Beautiful: Three Decades of Erasing and Remaking the World
PART 1
Two Doctor Shocks: Research and Development
1. The Torture Lab: Ewen Cameron, the CIA and the Maniacal Quest to Erase and Remake the Human Mind
2. The Other Doctor Shock: Milton Friedman and the Search for a Laissez-Faire Laboratory
PART 2
The First Test: Birth Pangs
3. States of Shock: The Bloody Birth of the Counterrevolution
4. Cleaning the Slate: Terror Does Its Work
5. “Entirely Unrelated”: How an Ideology Was Cleansed of Its Crimes
PART 3
Surviving Democracy: Bombs Made of Laws
6. Saved by a War: Thatcherism and Its Useful Enemies
7. The New Doctor Shock: Economic Warfare Replaces Dictatorship
8. Crisis Works: The Packaging of Shock Therapy
PART 4
Lost in Transition: While We Wept, While We Trembled, While We Danced
9. Slamming the Door on History: A Crisis in Poland, a Massacre in China
10. Democracy Born in Chains: South Africa’s Constricted Freedom
11. Bonfire of a Young Democracy: Russia Chooses “The Pinochet Option”
12. The Capitalist Id: Russia and the New Era of the Boor Market
13. Let It Burn: The Looting of Asia and “The Fall of a Second Berlin Wall”
PART 5
Shocking Times: The Rise of the Disaster Capitalism Complex
14. Shock Therapy in the U.S.A.: The Homeland Security Bubble
15. A Corporatist State: Removing the Revolving Door, Putting in an Archway
PART 6
Iraq, Full Circle: Overshock
16. Erasing Iraq: In Search of a “Model” for the Middle East
17. Ideological Blowback: A Very Capitalist Disaster
18. Full Circle: From Blank Slate to Scorched Earth
PART 7
The Movable Green Zone: Buffer Zones and Blast Walls
19. Blanking the Beach: “The Second Tsunami”
20. Disaster Apartheid: A World of Green Zones and Red Zones
21. Losing the Peace Incentive: Israel as Warning
CONCLUSION Shock Wears Off: The Rise of People’s Reconstruction
Notes
Acknowledgments
Index
THE SHOCK DOCTRINE
INTRODUCTION
BLANK IS BEAUTIFUL
THREE DECADES OF ERASING AND REMAKING THE WORLD
Now the earth was corrupt in God’s sight, and the earth was filled with violence. And God saw that the earth was corrupt; for all flesh had corrupted its ways upon the earth. And God said to Noah, “I have determined to make an end of all flesh, for the earth is filled with violence because of them; now I am going to destroy them along with the earth.”
—Genesis 6:11 (NRSV)
Shock and Awe are actions that create fears, dangers, and destruction that are incomprehensible to the people at large, specific elements/sectors of the threat society, or the leadership. Nature in the form of tornadoes, hurricanes, earthquakes, floods, uncontrolled fires, famine, and disease can engender Shock and Awe.
—Shock and Awe: Achieving Rapid Dominance, the military doctrine for the U.S. war on Iraq1
I met Jamar Perry in September 2005, at the big Red Cross shelter in Baton Rouge, Louisiana. Dinner was being doled out by grinning young Scientologists, and he was standing in line. I had just been busted for talking to evacuees without a media escort and was now doing my best to blend in, a white Canadian in a sea of African-American Southerners. I dodged into the food line behind Perry and asked him to talk to me as if we were old friends, which he kindly did.
Born and raised in New Orleans, he’d been out of the flooded city for a week. He looked about seventeen but told me he was twenty-three. He and his family had waited forever for the evacuation buses; when they didn’t arrive, they had walked out in the baking sun. Finally they ended up here, a sprawling convention center, normally home to pharmaceutical trade shows and “Capital City Carnage: The Ultimate in Steel Cage Fighting,” now jammed with two thousand cots and a mess of angry, exhausted people being patrolled by edgy National Guard soldiers just back from Iraq.
The news racing around the shelter that day was that Richard Baker, a prominent Republican congressman from this city, had told a group of lobbyists, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.”2 Joseph Canizaro, one of New Orleans’ wealthiest developers, had just expressed a similar sentiment: “I think we have a clean sheet to start again. And with that clean sheet we have some very big opportunities.”3 All that week the Louisiana State Legislature in Baton Rouge had been crawling with corporate lobbyists helping to lock in those big opportunities: lower taxes, fewer regulations, cheaper workers and a “smaller, safer city”—which in practice meant plans to level the public housing projects and replace them with condos. Hearing all the talk of “fresh starts” and “clean sheets,” you could almost forget the toxic stew of rubble, chemical outflows and human remains just a few miles down the highway.
Over at the shelter, Jamar could think of nothing else. “I really don’t see it as cleaning up the city. What I see is that a lot of people got killed uptown. People who shouldn’t have died.”
He was speaking quietly, but an older man in line in front of us overheard and whipped around. “What is wrong with these people in Baton Rouge? This isn’t an opportunity. It’s a goddamned tragedy. Are they blind?”
A mother with two kids chimed in. “No, they’re not blind, they’re evil. They see just fine.”
One of those who saw opportunity in the floodwaters of New Orleans was Milton Friedman, grand guru of the movement for unfettered capitalism and the man credited with writing the rulebook for the contemporary, hypermobile global economy. Ninety-three years old and in failing health, “Uncle Miltie,” as he was known to his followers, nonetheless found the strength to write an op-ed for The Wall Street Journal three months after the
levees broke. “Most New Orleans schools are in ruins,” Friedman observed, “as are the homes of the children who have attended them. The children are now scattered all over the country. This is a tragedy. It is also an opportunity to radically reform the educational system.”4
Friedman’s radical idea was that instead of spending a portion of the billions of dollars in reconstruction money on rebuilding and improving New Orleans’ existing public school system, the government should provide families with vouchers, which they could spend at private institutions, many run at a profit, that would be subsidized by the state. It was crucial, Friedman wrote, that this fundamental change not be a stopgap but rather “a permanent reform.”5
A network of right-wing think tanks seized on Friedman’s proposal and descended on the city after the storm. The administration of George W. Bush backed up their plans with tens of millions of dollars to convert New Orleans schools into “charter schools,” publicly funded institutions run by private entities according to their own rules. Charter schools are deeply polarizing in the United States, and nowhere more than in New Orleans, where they are seen by many African-American parents as a way of reversing the gains of the civil rights movement, which guaranteed all children the same standard of education. For Milton Friedman, however, the entire concept of a state-run school system reeked of socialism. In his view, the state’s sole functions were “to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets.”6 In other words, to supply the police and the soldiers—anything else, including providing free education, was an unfair interference in the market.
In sharp contrast to the glacial pace with which the levees were repaired and the electricity grid was brought back online, the auctioning off of New Orleans’ school system took place with military speed and precision. Within nineteen months, with most of the city’s poor residents still in exile, New Orleans’ public school system had been almost completely replaced by privately run charter schools. Before Hurricane Katrina, the school board had run 123 public schools; now it ran just 4. Before that storm, there had been 7 charter schools in the city; now there were 31.7 New Orleans teachers used to be represented by a strong union; now the union’s contract had been shredded, and its forty-seven hundred members had all been fired.8 Some of the younger teachers were rehired by the charters, at reduced salaries; most were not.
New Orleans was now, according to The New York Times, “the nation’s preeminent laboratory for the widespread use of charter schools,” while the American Enterprise Institute, a Friedmanite think tank, enthused that “Katrina accomplished in a day…what Louisiana school reformers couldn’t do after years of trying.”9 Public school teachers, meanwhile, watching money allocated for the victims of the flood being diverted to erase a public system and replace it with a private one, were calling Friedman’s plan “an educational land grab.”10
I call these orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, “disaster capitalism.”
Friedman’s New Orleans op-ed ended up being his last public policy recommendation; he died less than a year later, on November 16, 2006, at age ninety-four. Privatizing the school system of a midsize American city may seem like a modest preoccupation for the man hailed as the most influential economist of the past half century, one who counted among his disciples several U.S. presidents, British prime ministers, Russian oligarchs, Polish finance ministers, Third World dictators, Chinese Communist Party secretaries, International Monetary Fund directors and the past three chiefs of the U.S. Federal Reserve. Yet his determination to exploit the crisis in New Orleans to advance a fundamentalist version of capitalism was also an oddly fitting farewell from the boundlessly energetic five-foot-two-inch professor who, in his prime, described himself as “an old-fashioned preacher delivering a Sunday sermon.”11
For more than three decades, Friedman and his powerful followers had been perfecting this very strategy: waiting for a major crisis, then selling off pieces of the state to private players while citizens were still reeling from the shock, then quickly making the “reforms” permanent.
In one of his most influential essays, Friedman articulated contemporary capitalism’s core tactical nostrum, what I have come to understand as the shock doctrine. He observed that “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.”12 Some people stockpile canned goods and water in preparation for major disasters; Friedmanites stockpile free-market ideas. And once a crisis has struck, the University of Chicago professor was convinced that it was crucial to act swiftly, to impose rapid and irreversible change before the crisis-racked society slipped back into the “tyranny of the status quo.” He estimated that “a new administration has some six to nine months in which to achieve major changes; if it does not seize the opportunity to act decisively during that period, it will not have another such opportunity.”13 A variation on Machiavelli’s advice that injuries should be inflicted “all at once,” this proved to be one of Friedman’s most lasting strategic legacies.
Friedman first learned how to exploit a large-scale shock or crisis in the mid-seventies, when he acted as adviser to the Chilean dictator, General Augusto Pinochet. Not only were Chileans in a state of shock following Pinochet’s violent coup, but the country was also traumatized by severe hyperinflation. Friedman advised Pinochet to impose a 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.”14 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.
Pinochet also facilitated the adjustment with his own shock treatments; these were performed in the regime’s many torture cells, inflicted on the writhing bodies of those deemed most likely to stand in the way of the capitalist transformation. Many in Latin America saw a direct connection between the economic shocks that impoverished millions and the epidemic of torture that punished hundreds of thousands of people who believed in a different kind of society. As the Uruguayan writer Eduardo Galeano asked, “How can this inequality be maintained if not through jolts of electric shock?”15
Exactly thirty years after these three distinct forms of shock descended on Chile, the formula reemerged, with far greater violence, in Iraq. First came the war, designed, according to the authors of the Shock and Awe military doctrine, to “control the adversary’s will, perceptions, and understanding and literally make an adversary impotent to act or react.”16 Next came the radical economic shock therapy, imposed, while the country was still in flames, by the U.S. chief envoy L. Paul Bremer—mass privatization, complete free trade, a 15 percent flat tax, a dramatically downsized government. Iraq’s interim trade minister, Ali Abdul-Amir Allawi, said at the time that his countrymen were “sick and tired of being the subjects of experiments. There have been enough shocks to the system, so we don’t need this shock therapy in the economy.”17 When Iraqis resisted, they were rounded up and taken to jails where bodies and minds were met with more shocks, these ones distinctly less metaphorical.
&n
bsp; I started researching the free market’s dependence on the power of shock four years ago, during the early days of the occupation of Iraq. After reporting from Baghdad on Washington’s failed attempts to follow Shock and Awe with shock therapy, I traveled to Sri Lanka, several months after the devastating 2004 tsunami, and witnessed another version of the same maneuver: foreign investors and international lenders had teamed up to use the atmosphere of panic to hand the entire beautiful coastline over to entrepreneurs who quickly built large resorts, blocking hundreds of thousands of fishing people from rebuilding their villages near the water. “In a cruel twist of fate, nature has presented Sri Lanka with a unique opportunity, and out of this great tragedy will come a world class tourism destination,” the Sri Lankan government announced.18 By the time Hurricane Katrina hit New Orleans, and the nexus of Republican politicians, think tanks and land developers started talking about “clean sheets” and exciting opportunities, it was clear that this was now the preferred method of advancing corporate goals: using moments of collective trauma to engage in radical social and economic engineering.