by Naomi Klein
In December 2006, a month after Friedman’s death, Latin America’s leaders gathered for a historic summit in Bolivia, held in the city of Cochabamba, where a popular uprising against water privatization had forced Bechtel out of the country several years earlier. Morales began the proceedings with a vow to close “the open veins of Latin America.”25 It was a reference to Eduardo Galeano’s book Open Veins of Latin America: Five Centuries of the Pillage of a Continent, a lyrical accounting of the violent plunder that had turned a rich continent into a poor one. The book was first published in 1971, two years before Allende was overthrown for daring to try to close those open veins by nationalizing his country’s copper mines. That event ushered in a new era of furious pillage, during which the structures built by the continent’s developmentalist movements were sacked, stripped and sold off.
Today Latin Americans are picking up the project that was so brutally interrupted all those years ago. Many of the policies cropping up are familiar: nationalization of key sectors of the economy, land reform, major new investments in education, literacy and health care. These are not revolutionary ideas, but in their unapologetic vision of a government that helps reach for equality, they are certainly a rebuke to Friedman’s 1975 assertion to Pinochet that “the major error, in my opinion, was…to believe that it is possible to do good with other people’s money.”
Though clearly drawing on a long militant history, Latin America’s contemporary movements are not direct replicas of their predecessors. Of all the differences, the most striking is an acute awareness of the need for protection from the shocks of the past—the coups, the foreign shock therapists, the U.S.-trained torturers, as well as the debt shocks and currency collapses of the eighties and nineties. Latin America’s mass movements, which have powered the wave of election victories for left-wing candidates, are learning how to build shock absorbers into their organizing models. They are, for example, less centralized than in the sixties, making it harder to demobilize whole movements by eliminating a few leaders. Despite the overwhelming cult of personality surrounding Chávez, and his moves to centralize power at the state level, the progressive networks in Venezuela are at the same time highly decentralized, with power dispersed at the grass roots and community level, through thousands of neighborhood councils and co-ops. In Bolivia, the indigenous people’s movements that put Morales in office function similarly and have made it clear that Morales does not have their unconditional support: the barrios will back him as long as he stays true to his democratic mandate, and not a moment longer. This kind of network approach is what allowed Chávez to survive the 2002 coup attempt: when their revolution was threatened, his supporters poured down from the shantytowns surrounding Caracas to demand his reinstatement, a kind of popular mobilization that did not happen during the coups of the seventies.
Latin America’s new leaders are also taking bold measures to block any future U.S.-backed coups that could attempt to undermine their democratic victories. The governments of Venezuela, Costa Rica, Argentina and Uruguay have all announced that they will no longer send students to the School of the Americas (now called the Western Hemisphere Institute for Security Cooperation)—the infamous police and military training center in Fort Benning, Georgia, where so many of the continent’s notorious killers learned the latest in “counterterrorism” techniques, then promptly directed them against farmers in El Salvador and auto workers in Argentina.26 Bolivia looks set to cut its ties with the school, as does Ecuador. Chávez has let it be known that if an extremist right-wing element in Bolivia’s Santa Cruz province makes good on its threats against the government of Evo Morales, Venezuelan troops will help defend Bolivia’s democracy. Rafael Correa is set to take the most radical step of all. The Ecuadorean port city of Manta currently hosts the largest U.S. military base in South America, which serves as a staging area for the “war on drugs,” largely fought in Colombia. Correa’s government has announced that when the agreement for the base expires in 2009, it will not be renewed. “Ecuador is a sovereign nation,” said the minister of foreign relations, María Fernanda Espinosa. “We do not need any foreign troops in our country.”27 If the U.S. military does not have bases or training programs, its power to inflict shocks will be greatly eroded.
The new leaders in Latin America are also becoming better prepared for the kinds of shocks inflicted by volatile markets. One of the most destabilizing forces of recent decades has been the speed with which capital can pick up and move, or how a sudden drop in commodity prices can devastate an entire agricultural sector. But in much of Latin America these shocks have already happened, leaving behind ghostly industrial suburbs and huge stretches of fallow farmland. The task of the region’s new left, therefore, has become a matter of taking the detritus of globalization and putting it back to work. In Brazil, the phenomenon is best seen in the million and a half farmers of the Landless Peoples Movement (MST) who have formed hundreds of cooperatives to reclaim unused land. In Argentina, it is clearest in the movement of “recovered companies,” two hundred bankrupt businesses that have been resuscitated by their workers, who have turned them into democratically run cooperatives. For the cooperatives, there is no fear of facing an economic shock of investors leaving, because the investors have already left. In a way, the reclamation experiments are a new kind of post-disaster reconstruction—reconstruction from the slow-motion disaster of neoliberalism. In sharp contrast to the model offered by the disaster capitalism complex in Iraq, Afghanistan and the Gulf Coast, the leaders of Latin America’s rebuilding efforts are the people most affected by the devastation. And unsurprisingly, their spontaneous solutions look very much like the real third way that had been so effectively shocked out of the way by the Chicago School campaign around the world—democracy in daily life.
In Venezuela, Chávez has made the co-ops a top political priority, giving them first refusal on government contracts and offering them economic incentives to trade with one another. By 2006, there were roughly 100,000 cooperatives in the country, employing more than 700,000 workers.28 Many are pieces of state infrastructure—toll booths, highway maintenance, health clinics—handed over to the communities to run. It’s a reverse of the logic of government outsourcing—rather than auctioning off pieces of the state to large corporations and losing democratic control, the people who use the resources are given the power to manage them, creating, at least in theory, both jobs and more responsive public services. Chávez’s many critics have derided these initiatives as handouts and unfair subsidies, of course. Yet in an era when Halliburton treats the U.S. government as its personal ATM for six years, withdraws upward of $20 billion in Iraq contracts alone, refuses to hire local workers either on the Gulf Coast or in Iraq, then expresses its gratitude to U.S. taxpayers by moving its corporate headquarters to Dubai (with all the attendant tax and legal benefits), Chávez’s direct subsidies to regular people look significantly less radical.
Latin America’s most significant protection from future shocks (and therefore from the shock doctrine) flows from the continent’s emerging independence from Washington’s financial institutions, the result of greater integration among regional governments. The Bolivian Alternative for the Americas (ALBA) is the continent’s retort to the Free Trade Area of the Americas, the now buried corporatist dream of a free-trade zone stretching from Alaska to Tierra del Fuego. Though ALBA is still in its early stages, Emir Sader, the Brazil-based sociologist, describes its promise as “a perfect example of genuinely fair trade: each country provides what it is best placed to produce, in return for what it most needs, independent of global market prices.”29 So Bolivia provides gas at stable discounted prices; Venezuela offers heavily subsidized oil to poorer countries and shares expertise in developing reserves; and Cuba sends thousands of doctors to deliver free health care all over the continent, while training students from other countries at its medical schools. This is a very different model from the kind of academic exchange that began at the University of Chicago i
n the mid-fifties, when Latin American students learned a single rigid ideology and were sent home to impose it with uniformity across the continent. The major benefit is that ALBA is essentially a barter system, in which countries decide for themselves what any given commodity or service is worth, rather than letting traders in New York, Chicago or London set the prices for them. That makes trade far less vulnerable to the kind of sudden price fluctuations that devastated Latin American economies in the recent past. Surrounded by turbulent financial waters, Latin America is creating a zone of relative economic calm and predictability, a feat presumed impossible in the globalization era.
When one country does face a financial shortfall, this increased integration means that it does not need to turn to the IMF or the U.S. Treasury for a bailout. That’s fortunate because the 2006 U.S. National Security Strategy makes it clear that for Washington, the shock doctrine is still very much alive: “If crises occur, the IMF’s response must reinforce each country’s responsibility for its own economic choices,” the document states. “A refocused IMF will strengthen market institutions and market discipline over financial decisions.” This kind of “market discipline” can only be enforced if governments actually go to Washington for help—as Stanley Fischer explained during the Asian financial crisis, the IMF can help only if it is asked, “but when [a country is] out of money, it hasn’t got many places to turn.”30 That is no longer the case. Thanks to high oil prices, Venezuela has emerged as a major lender to other developing countries, allowing them to do an end run around Washington.
The results have been dramatic. Brazil, so long shackled to Washington by its enormous debt, is refusing to enter into a new agreement with the IMF. Nicaragua is negotiating to quit the fund, Venezuela has withdrawn from both the IMF and the World Bank, and even Argentina, Washington’s former “model pupil,” has been part of the trend. In his 2007 State of the Union address, President Néstor Kirchner said that the country’s foreign creditors had told him, “‘You must have an agreement with the International Fund to be able to pay the debt.’ We say to them, ‘Sirs, we are sovereign. We want to pay the debt, but no way in hell are we going to make an agreement again with the IMF.’” As a result, the IMF, supremely powerful in the eighties and nineties, is no longer a force on the continent. In 2005, Latin America made up 80 percent of the IMF’s total lending portfolio; in 2007, the continent represented just 1 percent—a sea change in only two years. “There is life after the IMF,” Kirchner declared, “and it’s a good life.”31
The transformation reaches beyond Latin America. In just three years, the IMF’s worldwide lending portfolio had shrunk from $81 billion to $11.8 billion, with almost all of that going to Turkey. The IMF, a pariah in so many countries where it has treated crises as profit-making opportunities, is starting to wither away. The World Bank faces an equally grim future. In April 2007, Ecuador’s president, Rafael Correa, revealed that he had suspended all loans from the bank and declared the institution’s representative in Ecuador persona non grata—an extraordinary step. Two years earlier, Correa explained, the World Bank had used a $100-million loan to defeat economic legislation that would have redistributed oil revenues to the country’s poor. “Ecuador is a sovereign country, and we will not stand for extortion from this international bureaucracy,” he said. At the same time, Evo Morales announced that Bolivia would quit the World Bank’s arbitration court, the body that allows multinational corporations to sue national governments for measures that cost them profits. “The governments of Latin America, and I think the world, never win the cases. The multinationals always win,” Morales said. When Paul Wolfowitz was forced to announce his resignation as president of the World Bank in May 2007, it was clear that the institution needed to take desperate measures to rescue itself from its profound crisis of credibility. In the midst of the Wolfowitz affair, The Financial Times reported that when World Bank managers dispensed advice in the developing world, “they were now laughed at.”32 Add the collapse of the World Trade Organization talks in 2006 (prompting declarations that “globalization is dead”), and the futures of the three main institutions that had imposed the Chicago School ideology under the guise of economic inevitability are at risk of extinction.
It stands to reason that the revolt against neoliberalism would be in its most advanced stage in Latin America—as inhabitants of the first shock lab, Latin Americans have had the most time to recover their bearings. Years of street protests have created new political groupings, eventually gaining the strength not just to take state power but to begin to change the power structures of the state. There are signs that other former shock laboratories are on the same path. In South Africa, 2005 and 2006 were the years that the long-neglected slums decisively abandoned their party loyalty to the ANC and began protesting against the broken promises of the Freedom Charter. Foreign journalists commented that this kind of upheaval had not been seen since the townships rose up against apartheid. But the most remarkable mood change is taking place in China. For many years, the raw terror of the Tiananmen Square massacre succeeded in supressing popular anger at the erosion of workers’ rights and deepening rural poverty. Not anymore. According to official government sources, in 2005 there were a staggering eighty-seven thousand large protests in China, involving more than 4 million workers and peasants.*33 China’s activist wave has been met with the most extreme state repression since 1989, but it has also resulted in several concrete victories: major new spending in rural areas, better health care, pledges to eliminate education fees. China too is coming out of shock.
Any strategy based on exploiting the window of opportunity opened by a traumatic shock relies heavily on the element of surprise. A state of shock, by definition, is a moment when there is a gap between fast-moving events and the information that exists to explain them. The late French theorist Jean Baudrillard described terrorist events as an “excess of reality”; in this sense, in North America, the September 11 attacks were, at first, pure event, raw reality, unprocessed by story, narrative or anything that could bridge the gap between reality and understanding.34 Without a story, we are, as many of us were after September 11, intensely vulnerable to those people who are ready to take advantage of the chaos for their own ends. As soon as we have a new narrative that offers a perspective on the shocking events, we become reoriented and the world begins to make sense once again.
Prison interrogators intent on inducing shock and regression understand this process well. It is the reason the CIA’s manuals stress the importance of cutting detainees off from anything that will help them establish a new narrative—their own sensory input, other prisoners, even communication with guards. “Prisoners should be segregated immediately,” the 1983 manual states. “Isolation, both physical and psychological, must be maintained from the moment of apprehension.”35 The interrogators know that prisoners talk. They warn each other about what’s to come; they pass notes between the bars. Once that happens, the captors lose their edge. They still have the power to inflict bodily pain, but they have lost their most effective psychological tools to manipulate and “break” their prisoners: confusion, disorientation and surprise. Without those elements, there is no shock.
The same is true for wider societies. Once the mechanics of the shock doctrine are deeply and collectively understood, whole communities become harder to take by surprise, more difficult to confuse—shock resistant. The intensely violent brand of disaster capitalism that has dominated since September 11 emerged in part because lesser shocks—debt crises, currency crashes, the threat of being left behind “in history”—were already losing much of their potency, largely because of overuse. Yet today, even the cataclysmic shocks of wars and natural disasters do not always provoke the level of disorientation required to impose unwanted economic shock therapy. There are just too many people in the world who have had direct experience with the shock doctrine: they know how it works, have talked to other prisoners, passed notes between the bars; the crucial element of sur
prise is missing.
A striking example is the response of millions of Lebanese to attempts by international lenders to impose free-market “reforms” as a condition of reconstruction aid after the Israeli attacks in 2006. By all rights, that scheme should have worked: the country could not have been more desperate for funds. Even before the war, Lebanon had one of the heaviest debts in the world, while the new losses from attacks on roads, bridges and airport runways were estimated at $9 billion. So when delegates from thirty wealthy nations got together in Paris in January 2007 to pledge $7.6 billion in reconstruction loans and grants, they naturally assumed that Lebanon’s government would accept whatever strings they attached to the aid. The conditions were the usual ones: phone and electricity privatizations, price increases on fuel, cuts to the public service and an increase to an already controversial tax on consumer purchases. Kamal Hamdan, a Lebanese economist, estimated that, as a result, “household bills [would] increase by 15 percent because of increased taxes and adjusted prices”—a classic peace penalty. As for the reconstruction itself, the jobs would of course go to the giants of disaster capitalism, with no requirement to hire or subcontract locally.36
The U.S. secretary of state, Condoleezza Rice, was questioned about whether such sweeping demands constituted foreign interference in Lebanon’s affairs. She replied, “Lebanon is a democracy. That said, Lebanon is also undertaking some important economic reforms that are critical to making any of this work.” Fouad Siniora, Lebanon’s prime minister, backed by the West, easily agreed to the terms, shrugging and saying that “Lebanon did not invent privatization.” Further demonstrating his willingness to play ball, he hired the Bush-connected surveillance giant Booz Allen Hamilton to broker Lebanon’s telecom privatization.37