The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

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

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.

September 11 appeared to have provided Washington with the green light to stop asking countries if they wanted the U.S. version of “free trade and democracy” and to start imposing it with Shock and Awe military

The ultimate goal for the corporations at the center of the complex is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary and day-to-day functioning of the state—in effect, to privatize the government.

In 1992, Gail and Jacob happened to pass by a newsstand with a large, sensational headline: “Brainwashing Experiments: Victims to Be Compensated.” Kastner started skimming the article, and several phrases immediately leaped out: “baby talk,” “memory loss,” “incontinence.” “I said, ‘Jacob, buy this paper.’” Sitting in a nearby coffee shop, the couple read an incredible story about how, in the 1950s, the United States Central Intelligence Agency had funded a Montreal doctor to perform bizarre experiments on his psychiatric patients, keeping them asleep and in isolation for weeks, then administering huge doses of electroshock as well as experimental drug cocktails including the psychedelic LSD and the hallucinogen PCP, commonly known as angel dust. The experiments—which reduced patients to preverbal, infantile states—had been performed at McGill University’s Allan Memorial Institute under the supervision of its director, Dr. Ewen Cameron. The CIA’s funding of Cameron had been revealed in the late seventies through a Freedom of Information Act request, sparking hearings in the U.S. Senate.

There are several strong indications that Cameron was well aware he was simulating torture conditions and that, as a staunch anti-Communist, he relished the idea that his patients were part of a Cold War effort. In an interview with a popular magazine in 1955, he openly compared his patients to POWs facing interrogation, saying that they, “like prisoners of the Communists, tended to resist [treatment] and had to be broken down.”38 A year later, he wrote that the purpose of depatterning was “the actual ‘wearing down’ of defenses” and noted that “analogous to this is the breakdown of the individual under continuous interrogation.”

The manual is dated 1963, the final year of the MKUltra program and two years after Cameron’s CIA-funded experiments came to a close. The handbook claims that if the techniques are used properly, they will take a resistant source and “destroy his capacity for resistance.” This, it turns out, was the true purpose of MKUltra: not to research brainwashing (that was a mere side project), but to design a scientifically based system for extracting information from “resistant sources.”49 In other words, torture.

But hard scientists could point to the behavior of the elements to prove their theories. Friedman could not point to any living economy that proved that if all “distortions” were stripped away, what would be left would be a society in perfect health and bounteous, since no country in the world met the criteria for perfect laissez-faire. Unable to test their theories in central banks and ministries of trade, Friedman and his colleagues had to settle for elaborate and ingenious mathematical equations and computer models mapped out in the basement workshops of the social sciences building.

“The violation of human rights, the system of institutionalized brutality, the drastic control and suppression of every form of meaningful dissent is discussed (and often condemned) as a phenomenon only indirectly linked, or indeed entirely unrelated, to the classical unrestrained ‘free market’ policies that have been enforced by the military junta,” Letelier wrote in a searing essay for The Nation. He pointed out that “this particularly convenient concept of a social system, in which ‘economic freedom’ and political terror coexist without touching each other, allows these financial spokesmen to support their concept of ‘freedom’ while exercising their verbal muscles in defense of human rights.”

that meant that hyperinflation was not a problem to be solved, as Sachs believed, but a golden opportunity to be seized. There was no shortage of such opportunities in the eighties. In fact, much of the developing world, but particularly Latin America, was at that very moment spiraling into hyperinflation. The crisis was the result of two main factors, both with roots in Washington financial institutions. The first was their insistence on passing on illegitimate debts accumulated under dictatorships to new democracies. The second was the Friedman-inspired decision at the U.S. Federal Reserve to allow interest rates to soar, which massively increased

“The socialized enterprise,” the program stated, “should be the basic organizational unit in the economy. It should be controlled by the workers council representing

It was this wave of reforms that turned China into the sweatshop of the world, the preferred location for contract factories for virtually every multinational on the planet. No country offered more lucrative conditions than China: low taxes and tariffs, corruptible officials and, most of all, a plentiful low-wage workforce that, for many years, would be unwilling to risk demanding decent salaries or the most basic workplace protections for fear of the most violent reprisals.

Despite the Bush administration’s claim that the twentieth century ended with a “decisive victory” for free markets over all forms of socialism, many Latin Americans understand perfectly well that it was authoritarian communism that failed in Eastern Europe and parts of Asia. Democratic socialism, meaning not only socialist parties brought to power through elections but also democratically run workplaces and land holdings, has worked in many regions, from Scandinavia to the thriving and historic cooperative economy in Italy’s Emilia-Romagna region. It was a version of this combination of democracy and socialism that Allende was attempting to bring to Chile between 1970 and 1973. Gorbachev had a similar, though less radical, vision to turn the Soviet Union into a “socialist beacon” on the Scandinavian model. South Africa’s Freedom Charter, the dream that animated the long liberation struggle, was a version of this same third way: not state communism, but markets existing alongside the nationalization of the banks and mines, with the income used to build comfortable neighborhoods and decent schools—economic as well as political democracy.

A stark example of this strategy comes from the early days of the Chicago crusade, deep inside the declassified Chile documents. Despite the CIA-funded propaganda campaign painting Allende as a Soviet-style dictator, Washington’s real concerns about the Allende election victory were relayed by Henry Kissinger in a 1970 memo to Nixon: “The example of a successful elected Marxist government in Chile would surely have an impact on—and even precedent value for—other parts of the world, especially in Italy; the imitative spread of similar phenomena elsewhere would in turn significantly affect the world balance and our own position in it.”21 In other words, Allende needed to be taken out before his democratic third way spread.

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 universal experience of living through a great shock is the feeling of being completely powerless: in the face of awesome forces, parents lose the ability to save their children, spouses are separated, homes—places of protection—become death traps. The best way to recover from helplessness turns out to be helping—having the right to be part of a communal recovery. “Reopening our school says this is a very special community, tied together by more than location but by spirituality, by bloodlines and by a desire to come home,” said the assistant principal of Dr. Martin Luther King Jr. Elementary School in the Lower Ninth Ward of New Orleans. 52