THE SHOCK DOCTRINE
Summary & Links Written/Provided By Dick Atlee

Have you heard of "Year Zero." It's essentially the idea of a totally fresh start. But it has shown up in grotesquely twisted form referring to the creation a harsh free-market economic mechanism in a society that would otherwise reject it, but has been damaged or destroyed by natural disaster or military attack? The more destruction, the easier the makeover.

Did you know that the night Chile's socialist President Allende was overthrown and killed, there were University-of-Chicago-Milton-Friedman-trained Chilean economists (the Chicago Boys) preparing the briefing for the generals on how to turn Chile from a "socialist" economy to an utterly free-market economy, and that Friedman was Pinochet's economic advisor?

Did you ever wonder why American forces stood by in Iraq during the looting of everything except the Oil Ministry -- not so much why that Ministry was spared, but why everything else was permitted (encouraged?) to be trashed? Or why the original short-lived pragmatic head of the Iraq occupation was removed to make way for Paul Bremer, backed by Donald Rumsfeld -- Year-Zero zealots whose every action was designed to gut Iraqi society, to soften it up for free-market privatization?

I first heard of Naomi Klein and her book, "The Shock Doctrine -- The Rise of Disaster Capitalism," on Democracy Now several weeks ago.

It was one of those "blue-pill" experiences ala The Matrix -- the sudden Aha! as many seemingly-random pieces of known reality suddenly fall into a rational pattern. I wanted to tell you about it at the time, but there was so much startling information in that interview that I was afraid you'd be overwhelmed, and I've been tongue-tied since then.

However, a chance encounter with a NY Times review of the book linked me to a wealth of quick-access information on the concept -- the harsh softening up of a society so that free-market economic ideas considered an anathema by its citizens can be forced upon it.

The main location for understanding this (short of reading the book) is a subsite on Naomi Klein's website:

http://shockdoctrine.com

Among other things, it contains a link to The Guardian (UK)'s excellent Shock Doctrine site, with excerpts from and commentary about the book:

http://books.guardian.co.uk/shockdoctrine

and a link to an intense 6-minute summary video on shock doctrine (made by a producer who turned Ms. Klein down on the idea of making a video until he read the book and then insisted that he HAD to make it).


The site also has a video of a fascinating speech on the topic by Ms. Klein.

The original New York Times article I saw, a detailed review entitled "Bleakonomics" of the book by a Nobel-prize-winning economist and expert on globalization, is here.

and an earlier, perhaps more superficial but more "popular" look at the video and the concept, can be found here.

[Both of the articles cited above are included below. -- DS]

I strongly recommend learning about this, and if you're interested, I think the quickest way to do that is the following:

1. Watch the video to get gripped

2. Listen to her speech

3. Read the Democracy Now transcript (especially the part starting with the "Chicago Boys"):

I've ordered the book for our local library....

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BLEAKONOMICS
By Joseph E. Stiglitz
New York Times
September 30, 2007

THE SHOCK DOCTRINE
The Rise of Disaster Capitalism.
By Naomi Klein
558 pp. Metropolitan Books. $28.

Original Link

There are no accidents in the world as seen by Naomi Klein. The destruction of New Orleans by Hurricane Katrina expelled many poor black residents and allowed most of the city’s public schools to be replaced by privately run charter schools. The torture and killings under Gen. Augusto Pinochet in Chile and during Argentina’s military dictatorship were a way of breaking down resistance to the free market. The instability in Poland and Russia after the collapse of Communism and in Bolivia after the hyperinflation of the 1980s allowed the governments there to foist unpopular economic “shock therapy” on a resistant population. And then there is “Washington’s game plan for Iraq”: “Shock and terrorize the entire country, deliberately ruin its infrastructure, do nothing while its culture and history are ransacked, then make it all O.K. with an unlimited supply of cheap household appliances and imported junk food,” not to mention a strong stock market and private sector.

“The Shock Doctrine” is Klein’s ambitious look at the economic history of the last 50 years and the rise of free-market fundamentalism around the world. “Disaster capitalism,” as she calls it, is a violent system that sometimes requires terror to do its job. Like Pol Pot proclaiming that Cambodia under the Khmer Rouge was in Year Zero, extreme capitalism loves a blank slate, often finding its opening after crises or “shocks.” For example, Klein argues, the Asian crisis of 1997 paved the way for the International Monetary Fund to establish programs in the region and for a sell-off of many state-owned enterprises to Western banks and multinationals. The 2004 tsunami enabled the government of Sri Lanka to force the fishermen off beachfront property so it could be sold to hotel developers. The destruction of 9/11 allowed George W. Bush to launch a war aimed at producing a free-market Iraq.

In an early chapter, Klein compares radical capitalist economic policy to shock therapy administered by psychiatrists. She interviews Gail Kastner, a victim of covert C.I.A. experiments in interrogation techniques that were carried out by the scientist Ewen Cameron in the 1950s. His idea was to use electroshock therapy to break down patients. Once “complete depatterning” had been achieved, the patients could be reprogrammed. But after breaking down his “patients,” Cameron was never able to build them back up again. The connection with a rogue C.I.A. scientist is overdramatic and unconvincing, but for Klein the larger lessons are clear: “Countries are shocked -- by wars, terror attacks, coups d’état and natural disasters.” Then “they are shocked again -- by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy.” People who “dare to resist” are shocked for a third time, “by police, soldiers and prison interrogators.”

In another introductory chapter, Klein offers an account of Milton Friedman -- she calls him “the other doctor shock” -- and his battle for the hearts and minds of Latin American economists and economies. In the 1950s, as Cameron was conducting his experiments, the Chicago School was developing the ideas that would eclipse the theories of Raul Prebisch, an advocate of what today would be called the third way, and of other economists fashionable in Latin America at the time. She quotes the Chilean economist Orlando Letelier on the “inner harmony” between the terror of the Pinochet regime and its free-market policies. Letelier said that Milton Friedman shared responsibility for the regime’s crimes, rejecting his argument that he was only offering “technical” advice. Letelier was killed in 1976 by a car bomb planted in Washington by Pinochet’s secret police. For Klein, he was another victim of the “Chicago Boys” who wanted to impose free-market capitalism on the region. “In the Southern Cone, where contemporary capitalism was born, the ‘war on terror’ was a war against all obstacles to the new order,” she writes.

One of the world’s most famous antiglobalization activists and the author of the best seller “No Logo: Taking Aim at the Brand Bullies,” Klein provides a rich description of the political machinations required to force unsavory economic policies on resisting countries, and of the human toll. She paints a disturbing portrait of hubris, not only on the part of Friedman but also of those who adopted his doctrines, sometimes to pursue more corporatist objectives. It is striking to be reminded how many of the people involved in the Iraq war were involved earlier in other shameful episodes in United States foreign policy history. She draws a clear line from the torture in Latin America in the 1970s to that at Abu Ghraib and Guantánamo Bay.

Klein is not an academic and cannot be judged as one. There are many places in her book where she oversimplifies. But Friedman and the other shock therapists were also guilty of oversimplification, basing their belief in the perfection of market economies on models that assumed perfect information, perfect competition, perfect risk markets. Indeed, the case against these policies is even stronger than the one Klein makes. They were never based on solid empirical and theoretical foundations, and even as many of these policies were being pushed, academic economists were explaining the limitations of markets -- for instance, whenever information is imperfect, which is to say always.

Klein isn’t an economist but a journalist, and she travels the world to find out firsthand what really happened on the ground during the privatization of Iraq, the aftermath of the Asian tsunami, the continuing Polish transition to capitalism and the years after the African National Congress took power in South Africa, when it failed to pursue the redistributionist policies enshrined in the Freedom Charter, its statement of core principles. These chapters are the least exciting parts of the book, but they are also the most convincing. In the case of South Africa, she interviews activists and others, only to find there is no one answer. Busy trying to stave off civil war in the early years after the end of apartheid, the A.N.C. didn’t fully understand how important economic policy was. Afraid of scaring off foreign investors, it took the advice of the I.M.F. and the World Bank and instituted a policy of privatization, spending cutbacks, labor flexibility and so on. This didn’t stop two of South Africa’s own major companies, South African Breweries and Anglo-American, from relocating their global headquarters to London. The average growth rate has been a disappointing 5 percent (much lower than in countries in East Asia, which followed a different route); unemployment for the black majority is 48 percent; and the number of people living on less than $1 a day has doubled to four million from two million since 1994, the year the A.N.C. took over.

Some readers may see Klein’s findings as evidence of a giant conspiracy, a conclusion she explicitly disavows. It’s not the conspiracies that wreck the world but the series of wrong turns, failed policies, and little and big unfairnesses that add up. Still, those decisions are guided by larger mind-sets. Market fundamentalists never really appreciated the institutions required to make an economy function well, let alone the broader social fabric that civilizations require to prosper and flourish. Klein ends on a hopeful note, describing nongovernmental organizations and activists around the world who are trying to make a difference. After 500 pages of “The Shock Doctrine,” it’s clear they have their work cut out for them.

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Joseph E. Stiglitz, a university professor at Columbia, was awarded the Nobel in economic science in 2001. His latest book is “Making Globalization Work.”

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FREE-MARKET MISCHIEF IN HOT SPOTS OF DISASTER
By Patricia Cohen
New York Times
September 10, 2007

Original Link

Festivalgoers in Venice and Toronto who attended the premieres this weekend of “The Shock Doctrine,” a six-minute film written by the author Naomi Klein and the director Alfonso Cuarón, saw images of electroshock treatments from the 1950s, animated pages from a C.I.A. torture manual and footage of the 9/11 attacks and the 2004 tsunami. The brief movie encapsulates the thesis of a new book of the same title by Ms. Klein: That unconstrained free-market policies go hand in hand with undemocratic political policies.

While Mr. Cuarón’s political passions can be glimpsed in his dystopian 2006 thriller “Children of Men” (Ms. Klein is a commentator on the DVD), most Hollywood directors don’t end up making promotional videos for thick texts about global economics. “When she asked if I was interested in doing a trailer,” he said from Italy, “my answer was, ‘I’m sorry, I can’t do it.’ ”

Then Mr. Cuarón read the book: “I had to call her back. I said, “Naomi, please don’t drop this. You -- we -- have to do this.” He drafted his son Jonás to direct. (The film can be seen on her Web site, naomiklein.org.)

While perhaps not quite as powerful a marketing tool as having Victoria Beckham photographed reading “Skinny Bitch,” it’s not bad. Yet this sort of fortuitous event seems regularly to happen to the 37-year-old Ms. Klein.

Her book “No Logo” was at the printer just as young demonstrators rioted in Seattle in 1999 to protest the World Trade Organization meeting there. Overnight Ms. Klein, with her dark eyebrows and youthful intensity, became both a spokeswoman for and analyst of the anti-globalization movement that caught fire around the world. That book sold more than 1 million copies worldwide.

“The Take,” her 2004 documentary about a workers’ cooperative in Argentina produced with her husband, Avi Lewis, was being filmed when Carlos Saúl Menem, the former president who had presided over that county’s economic collapse, unsuccessfully attempted a dramatic comeback. Argentina was where Ms. Klein began to formulate her argument in “The Shock Doctrine: The Rise of Disaster Capitalism,” being released in the United States on Sept. 18.

“I felt it emotionally before I understood it factually,” Ms. Klein said during a recent visit to New York from her home in Canada. It was “blindingly obvious” to everyone there, she said, that there was a “connection between violence, the military coup and these economic policies that people didn’t want.”

In her book she argues that the shock therapy prescribed by Western economists during the last 30 years could not have been imposed without political shock therapy, namely brutal repression and a suspension of democratic rights. Western countries, along with the International Monetary Fund and the World Bank, essentially exploited disasters -- hyperinflation, the tsunami, the war in Iraq -- to force through radical changes like privatization, deregulation and severe cuts in social spending. These policies, imposed by foreign and American disciples of the laissez-faire economist Milton Friedman, she maintains, caused grinding poverty and hardship for millions while often permitting multinationals to buy up a country’s most valuable assets for going-out-of-business prices.

Even the shock of 9/11, she said in an interview, was “harnessed by leaders to end the discussion of global justice.”

Nor are democratic governments exempt. Solidarity in Poland in 1989, she writes, was forced to reverse positions on which it was elected -- i.e., backing worker cooperatives -- and impose a state of emergency after being strong-armed by the I.M.F. and other lenders that refused to extend aid and credit unless Poland adopted a radical free-market program.

“We did not lose the battle of ideas,” Ms. Klein likes to say. Alternatives to the free market were “crushed by army tanks and think tanks.”

Her unconventional take is sure to stir criticism. Yet holding politically unpopular views is something of a family tradition for Ms. Klein. Her parents went to Canada, where she was born in 1970, so her father could avoid the Vietnam draft. Her family later moved back to the United States but returned to Canada when her father, a doctor, decided he wanted to work in a public health system. Her mother belonged to a feminist filmmaking collective.

Ms. Klein wrote for the campus newspaper while at the University of Toronto in the mid-1990s, but was dispirited by the left’s seeming malaise. There was a “smallness to our politics,” she said of the preoccupation with race, gender and ethnicity. When she returned to school a few years later, she met a group of younger activists who were excitedly organizing around globalization.

As Ms. Klein talks about protests, one can see her enthusiasm about the power of mass mobilization. In her public speeches, like one she gave at the American Sociological Association conference this summer in Manhattan, she seems as interested in promoting activism as in promoting her book.

“We are missing movement power,” she complained. “Fixing the world’s problems has become an increasingly elite affair -- a matter between C.E.O.’s and celebrities. It’s noblesse oblige on a large scale.”

That comment is a pointed jab at the globe-trotting economist Jeffrey D. Sachs, who has recently enlisted Bono in an ambitious campaign to end global poverty. In her book Ms. Klein partly blames Mr. Sachs for the disastrous results in Russia and wrenching deprivation in Poland and Bolivia, where he was an adviser.

“There’s a theme which I broadly agree with that the extreme free-market reform ideology of the 1980s and onward really got out of hand,” said Mr. Sachs, who is director of the Earth Institute at Columbia University. But “she didn’t really understand a lot of things that happened in the places I was involved.”

The zeal of the free-marketers is so great, Ms. Klein declares, that if a natural or financial disaster fails to materialize, economists and policy officials help precipitate one. In her book she quotes a speech delivered by the economist John Williamson in 1993: “One will have to ask whether it could conceivably make sense to think of deliberately provoking a crisis so as to remove the political logjam to reform.”

She points out that the International Monetary Fund’s own auditing arm criticized the fund’s approach after it forced Asian governments to accept shock therapy during the 1997-98 financial crisis. More than 24 million people across Asia lost their jobs.

The demands were “ill-advised” and “broader than seemed necessary,” Ms. Klein writes, citing the audit, which concluded that “crisis should not be used as an opportunity to seek a long agenda of reforms just because leverage is high, irrespective of how justifiable they may be on merits.”

Mr. Williamson, a senior fellow at the Peterson Institute for International Economics, has not read the book, but after a brief description said, “It doesn’t sound like she has a full appreciation of my position.”

Anders Aslund, also at the Peterson Institute and the author of a forthcoming book, “Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed,” labeled a description of Ms. Klein’s argument as “complete nonsense.”

“If you don’t do anything, you have the state managers take over,” he said, citing Uzbekistan and Belarus as places where halfway economic measures were tried and resulted in dictatorships. Political scientists are at fault, he said, because they haven’t “got a clue about how to build a democracy.”

Ms. Klein, who was heartily attacked for “No Logo,” is not unaccustomed to criticism. But she added that then, “I had a movement on my side.” This time, she said, “I think this will be a lot lonelier.”