The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

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

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.”

The history of the contemporary free market—better understood as the rise of corporatism—was written in shocks.

Nazism had taken root in Germany at a time when the country was in a devastating depression, provoked by the punishing reparations imposed after the First World War and deepened by the 1929 crash. Keynes had warned early on that if the world took a laissez-faire approach to Germany’s poverty, the blowback would be ferocious:

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.

The results of the Dulleses’ ascendancy were immediate: in 1953 and 1954, the CIA staged its first two coups d’état, both against Third World governments that identified far more with Keynes than with Stalin. The first was in 1953, when a CIA plot successfully overthrew Mossadegh in Iran, replacing him with the brutal shah.

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.

Democracy had been inhospitable to the Chicago Boys in Chile; dictatorship would prove an easier fit.

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

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.”

ITT moved to a new strategy designed to ensure that he would not “make it through the next six months.” Most alarming to the Senate was the relationship between ITT executives and the U.S. government. In testimony and documents, it became clear that ITT was directly involved in shaping U.S. policy toward Chile

At one point, a senior ITT executive wrote to National Security Adviser Henry Kissinger and suggested that “without informing President Allende, all U.S. aid funds already committed to Chile should be placed in the ‘under review’ status.” The company also took the liberty of preparing an eighteenpoint strategy for the Nixon administration

In the first year of Friedman-prescribed shock therapy, Chile’s economy contracted by 15 percent, and unemployment—only 3 percent under Allende—reached 20 percent, a rate unheard of in Chile at the time.33 The country was certainly convulsing under its “treatments.” And contrary to Friedman’s sunny predictions, the unemployment crisis lasted

So deep was this betrayal that Friedman would later describe Nixon as “the most socialist of the presidents of the United States in the 20th century.”9

The legendary Argentine writer Jorge Luis Borges scathingly described the land dispute as “a fight between two bald men over a comb.”

In Britain, Thatcher parlayed her victory in the Falklands and over the miners into a major leap forward for her radical economic agenda. Between 1984 and 1988, the government privatized, among others, British Telecom, British Gas, British Airways, British Airport Authority and British Steel, while it sold its shares in British Petroleum.

Much as the terrorist attacks of September 11, 2001, would take an unpopular president and hand him an opportunity to launch a massive privatization initiative (in Bush’s case, the privatization of security, warfare and reconstruction), Thatcher used her war to launch the first mass privatization auction in a Western democracy.

Yeltsin is regarded by history more as a corrupt buffoon than a menacing strongman. Yet his economic policies, and the wars he waged in order to protect them, contributed significantly to the Chicago School crusade death toll, which has been mounting steadily since Chile in the seventies.

“There is something about Milton that when I am around him, and talking to him, I feel smarter,” Rumsfeld said of his mentor when Friedman turned ninety.

lol

Bush administration has relied so heavily on private intelligence contractors working in new structures like Rumsfeld’s secretive Office of Special Plans is that they have proven far more willing than their counterparts in governments to massage and manipulate information to meet the political goals of the administration—after all, their next contract depends on it.)

In the Bush administration, the war profiteers aren’t just clamoring to get access to government, they are the government; there is no distinction between the two.

The Bush years have, of course, been characterized by some of the seediest and most blatant corruption scandals in recent memory:

Public service is reduced to little more than a reconnaissance mission for future work in the disaster capitalism complex.

The innovation of the Bush years lies not in how quickly politicians move from one world to the other but in how many feel entitled to occupy both worlds simultaneously.

we were greeted by Michael Birmingham, an Irish peace activist who had moved to Baghdad before the invasion. I had asked if he could introduce me to a few Iraqis concerned about the plans to privatize their economy. “No one here cares about privatization,” Michael told us. “What they care about is surviving.”

Thomas Friedman was forthright about what it meant for Iraq to be selected as the model. “We are not doing nation-building in Iraq. We are doing nation-creating,” he wrote—as if shopping around for a large, oil-rich Arab nation to create from scratch was a natural, even “noble” thing to do in the twenty-first century.

friedman is a doofus

He could have learned, for instance, that before the sanctions strangled the country, Iraq had the best education system in the region, with the highest literacy rates in the Arab world—in 1985, 89 percent of Iraqis were literate. By contrast, in Agresto’s home state of New Mexico, 46 percent of the population is functionally illiterate, and 20 percent are unable do “basic math

As of July 2006, according to the most credible study, the war in Iraq had taken the lives of 655,000 Iraqis who would not have died had there been no invasion or occupation.