The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

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.”

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.

Some people stockpile canned goods and water in preparation for major disasters; Friedmanites stockpile free-market ideas.

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.

using moments of collective trauma to engage in radical social and economic engineering.

In Iraq, Sri Lanka and New Orleans, the process deceptively called “reconstruction” began with finishing the job of the original disaster by erasing what was left of the public sphere and rooted communities, then quickly moving to replace them with a kind of corporate New Jerusalem—all before the victims of war or natural disaster were able to regroup and stake their claims to what was theirs.

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 force.

Many of these countries were democracies, but the radical free-market transformations were not imposed democratically. Quite the opposite: as Friedman understood, the atmosphere of large-scale crisis provided the necessary pretext to overrule the expressed wishes of voters and to hand the country over to economic “technocrats.”

The bottom line is that while Friedman’s economic model is capable of being partially imposed under democracy, authoritarian conditions are required for the implementation of its true vision.

Certainly Reagan had made headway, but the U.S. retained a welfare system, social security and public schools, where parents clung, in Friedman’s words, to their “irrational attachment to a socialist system.”

The Bush administration immediately seized upon the fear generated by the attacks not only to launch the “War on Terror” but to ensure that it is an almost completely for-profit venture, a booming new industry that has breathed new life into the faltering U.S. economy. Best understood as a “disaster capitalism complex,” it has much farther-reaching tentacles than the military-industrial complex that Dwight Eisenhower warned against at the end of his presidency: this is global war fought on every level by private companies whose involvement is paid for with public money, with the unending mandate of protecting the United States homeland in perpetuity while eliminating all “evil” abroad.

maintaining the U.S. military is now one of the fastest-growing service economies in the world

responding to emergencies is simply too hot an emerging market to be left to the nonprofits—why should UNICEF rebuild schools when it can be done by Bechtel, one of the largest engineering firms in the U.S.? Why put displaced people from Mississippi in subsidized empty apartments when they can be housed on Carnival cruise ships? Why deploy UN peacekeepers to Darfur when private security companies like Blackwater are looking for new clients?

One distinct advantage of this postmodern approach is that in market terms, it cannot fail. As a market analyst remarked of a particularly good quarter for the earnings of the energy services company Halliburton, “Iraq was better than expected.”31 That was in October 2006, then the most violent month of the war on record, with 3,709 Iraqi civilian casualties.32 Still, few shareholders could fail to be impressed by a war that had generated $20 billion in revenues for this one company.

Only since the midnineties has the intellectual movement, led by the right-wing think tanks with which Friedman had long associations—Heritage Foundation, Cato Institute and the American Enterprise Institute—called itself “neoconservative,” a worldview that has harnessed the full force of the U.S. military machine in the service of a corporate agenda.

In every country where Chicago School policies have been applied over the past three decades, what has emerged is a powerful ruling alliance between a few very large corporations and a class of mostly wealthy politicians—with hazy and ever-shifting lines between the two groups.

Far from freeing the market from the state, these political and corporate elites have simply merged, trading favors to secure the right to appropriate precious resources previously held in the public domain—from Russia’s oil fields, to China’s collective lands, to the no-bid reconstruction contracts for work in Iraq.

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.

This desire for godlike powers of total creation is precisely why free-market ideologues are so drawn to crises and disasters. Nonapocalyptic reality is simply not hospitable to their ambitions.

Like the free-market economists who are convinced that only a large-scale disaster—a great unmaking—can prepare the ground for their “reforms,” Cameron believed that by inflicting an array of shocks to the human brain, he could unmake and erase faulty minds, then rebuild new personalities on that ever-elusive clean slate.

Like pro-war hawks who call for the bombing of countries “back to the stone age,” Cameron saw shock therapy as a means to blast his patients back into their infancy, to regress them completely.

First code-named Project Bluebird, then Project Artichoke, it was finally renamed MKUltra in 1953. Over the next decade, MKUltra would spend $25 million on research in a quest to find new ways to break prisoners suspected of being Communists and double agents.

for the experiments finally came out in Senate hearings and then in the patients’ groundbreaking class-action lawsuit against the agency, journalists and legislators tended to accept the CIA’s version of events—that it was conducting research into brainwashing techniques in order to protect captured U.S. soldiers. Most of the press attention focused on the sensational detail that the government had been funding acid trips. In fact, a large part of the scandal, when it finally broke, was that the CIA and Ewen Cameron had recklessly shattered lives with their experiments for no good reason—the research appeared useless:

When the hearings asked Sidney Gottlieb, former director of MKUltra, to explain why he had ordered all the files destroyed from the $25 million program, he replied that “the project MKUltra had not yielded any results of real positive value to the Agency.”43 In the exposés of MKUltra from the eighties, both in investigative accounts in the mainstream press and in books, the experiments are consistently described as “mind control” and “brainwashing.” The word “torture” is almost never used.

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.

For U.S. intelligence officials, that kind of hands-on approach was rare. From the seventies on, the role favored by American agents was that of mentor or trainer—not direct interrogator.

Rather, the significant shift was that what had previously been performed by proxy, with enough distance to deny knowledge, would now be performed directly and openly defended.

Cameron’s theories were based on the idea that shocking his patients into a chaotic regressed state would create the preconditions for him to “rebirth” healthy model citizens. It’s little comfort to Gail, with her fractured spine and shattered memories, but in his own writings Cameron envisioned his acts of destruction as creation, a gift to his fortunate patients who were, under his relentless repatterning, going to be born again.

Like Cameron, Iraq’s shock doctors can destroy, but they can’t seem to rebuild.

First, governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that corporations could be running at a profit. And third, they should dramatically cut back funding of social programs.

Achmed Sukarno, who was talking about linking up all the nationalist governments of the Third World into a superpower on par with the West and the Soviet Bloc.

Still, the idea that Latin America deserved its own New Deal had powerful enemies. The continent’s feudal landowners had been happy with the old status quo, which supplied them with steep profits and a limitless pool of poor peasants to work in the fields and mines.

Under pressure from these corporate interests, a movement took hold in American and British foreign policy circles that attempted to pull developmentalist governments into the binary logic of the Cold War. Don’t be fooled by the moderate, democratic veneer, these hawks warned: Third World nationalism was the first step on the road to totalitarian Communism and should be nipped in the bud.

Before taking public posts, both had worked at the legendary New York law firm Sullivan & Cromwell, where they represented many of the companies that had the most to lose from developmentalism, among them J. P. Morgan & Company, the International Nickel Company, the Cuban Sugar Cane Corporation and the United Fruit Company.

This objective coincided with Schultz’s own belief that the U.S. government wasn’t doing enough to fight the intellectual war with Marxism. “The United States must take stock of its economic programs abroad … we want [the poor countries] to work out their economic salvation by relating themselves to us and by using our way of achieving their economic development,”

the U.S. government would pay to send Chilean students to study economics at what pretty much everyone recognized was the most rabidly anti-“pink” school in the world—the University of Chicago.

effectively telling Chileans that the U.S. government had decided what ideas their elite students should and should not learn.

“We came here to compete, not to collaborate,” said Schultz of the University of Chicago, explaining why the program would be closed to all Chilean students but the few selected.22 This combative stance was explicit from the start: the goal of the Chile Project was to produce ideological warriors who would win the battle of ideas against Latin America’s “pink” economists.

When the first group of Chileans returned home from Chicago, they were “even more Friedmanite than Friedman himself,” in the words of Mario Zañartu, an economist at Santiago’s Catholic University. f28 Many took up posts as economics professors in the Catholic University Economics Department, rapidly turning it into their own little Chicago School in the middle of Santiago—the same curriculum, the same English-language texts, the same unyielding claim to “pure” and “scientific” knowledge.

In 1962, Brazil moved decisively in this direction under the presidency of João Goulart, an economic nationalist committed to land redistribution, higher salaries and a daring plan to force foreign multinationals to reinvest a percentage of their profits back into the Brazilian economy rather than spiriting them out of the country and distributing them to shareholders in New York and London.

It was in Chile—the epicenter of the Chicago experiment—that defeat in the battle of ideas was most evident. By Chile’s historic 1970 elections, the country had moved so far left that all three major political parties were in favor of nationalizing the country’s largest source of revenue: the copper mines then controlled by U.S. mining giants.33 The Chile Project, in other words, was an expensive bust.

Salvador Allende’s Popular Unity government won Chile’s 1970 elections on a platform promising to put into government hands large sectors of the economy that were being run by foreign and local corporations. Allende was a new breed of Latin American revolutionary: like Che Guevara, he was a doctor, but unlike Che, he looked the part of the tweedy academic, not the romantic guerrilla.

When Nixon heard that Allende had been elected president, he famously ordered the CIA director, Richard Helms, to “make the economy scream.”

By 1968, 20 percent of total U.S. foreign investment was tied up in Latin America, and U.S. firms had 5,436 subsidiaries in the region. The profits that these investments were able to produce were staggering. Mining companies had invested $1 billion over the previous fifty years in Chile’s copper mining industry—the largest in the world—but they had sent $7.2 billion home.

In the face of these allegations, and with Allende still in power, the U.S. Senate, controlled by Democrats, launched an investigation and uncovered a far-reaching conspiracy in which ITT had offered $1 million in bribes to Chilean opposition forces and “sought to engage the CIA in a plan covertly to manipulate the outcome of the Chilean presidential election.”

The company also took the liberty of preparing an eighteenpoint strategy for the Nixon administration that contained a clear call for a military coup: “Get to reliable sources within the Chilean military,” it stated “ … build up their planned discontent against Allende, thus, bring about necessity of his removal.”

When grilled by the Senate committee about his brazen attempts to harness the force of the U.S. government to subvert Chile’s constitutional process in order to further ITT’s own economic interests, the company’s vice president, Ned Gerrity, seemed genuinely confused. “What’s wrong with taking care of No. 1?” he asked.

Clearly, the desire for a different economic model had taken deep root in Chile, and support for a socialist alternative was growing. For Allende’s opponents, who had been plotting his overthrow since the day the 1970 election results came in, that meant their problems would not be solved by simply getting rid of him—someone else would just come along and replace him. A more radical plan was needed.

Sukarno enraged the rich countries by protecting Indonesia’s economy, redistributing wealth and throwing out the International Monetary Fund and the World Bank, which he accused of being facades for the interests of Western multinationals.

The U.S. and British governments were determined to end Sukarno’s rule, and declassified documents show that the CIA had received high-level directions to “liquidate President Sukarno, depending upon the situation and available opportunities.”