The Shock Doctrine: The Rise of Disaster Capitalism

The Shock Doctrine: The Rise of Disaster Capitalism

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Overview

In her ground-breaking reporting Naomi Klein introduced the term "disaster capitalism." Whether covering Baghdad after the U.S. occupation, Sri Lanka in the wake of the tsunami, or New Orleans post-Katrina, she witnessed something remarkably similar. People still reeling from catastrophe were being hit again, this time with economic "shock treatment", losing their land and homes to rapid-fire corporate makeovers.

The Shock Doctrine retells the story of the most dominant ideology of our time, Milton Friedman's free market economic revolution. In contrast to the popular myth of this movement's peaceful global victory, Klein shows how it has exploited moments of shock and extreme violence in order to implement its economic policies in so many parts of the world from Latin America and Eastern Europe to South Africa, Russia and Iraq.
At the core of disaster capitalism is the use of cataclysmic events to advance radical privatization combined with the privatization of the disaster response itself. Klein argues that by capitalizing on crises, created by nature or war, the disaster capitalism complex now exists as a booming new economy, and is the violent culmination of a radical economic project that has been incubating for fifty years.

Product Details

ISBN-13: 9781427200884
Publisher: Macmillan Audio
Publication date: 09/01/2007
Edition description: Abridged
Product dimensions: 6.41(w) x 5.87(h) x 1.07(d)

About the Author

Naomi Klein is the award-winning author of the acclaimed international bestseller No Logo and the essay collection Fences and Windows. An internationally syndicated columnist, with Avi Lewis she co-created the documentary film The Take.

Read an Excerpt

I met Jamar Perry in September 2005, at the big Red Cross shelter in Baton Rouge, Louisiana. Dinner was being doled out by grinning young Scientologists, and he was standing in line. I had just been busted for talking to evacuees without a media escort and was now doing my best to blend in, a white Canadian in a sea of African- American southerners. I dodged into the food line behind Perry and asked him to talk to me as if we were old friends, which he kindly did.

Born and raised in New Orleans, he'd been out of the flooded city for a week. He and his family had waited forever for the evacuation buses; when they didn't arrive, they had walked out in the baking sun. Finally they ended up here, a sprawling convention centre now jammed with 2,000 cots and a mess of angry, exhausted people being patrolled by edgy National Guard soldiers just back from Iraq.
The news racing around the shelter that day was that the Republican Congressman Richard Baker had told a group of lobbyists, "We finally cleaned up public housing in New Orleans. We couldn't do it, but God did." 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." All that week Baton Rouge had been crawling with corporate lobbyists helping to lock in those big opportunities: lower taxes, fewer regulations, cheaper workers and a "smaller, safer city" - which in practice meant plans to level the public housing projects. Hearing all the talk of "fresh starts" and "clean sheets", you could almost forget the toxic stew of rubble, chemical outflows and human remains just a few miles down the highway.
Over at the shelter, Jamar could think of nothing else. "I really don't see it as cleaning up the city. What I see is that a lot of people got killed uptown. People who shouldn't have died."
He was speaking quietly, but an older man in line in front of us overheard and whipped around. "What is wrong with these people in Baton Rouge? This isn't an opportunity. It's a goddamned tragedy. Are they blind?" A mother with two kids chimed in. "No, they're not blind, they're evil. They see just fine."
One of those who saw opportunity in the floodwaters of New Orleans was the late Milton Friedman, grand guru of unfettered capitalism and credited with writing the rulebook for the contemporary, hyper-mobile global economy. Ninety-three years old and in failing health, "Uncle Miltie", as he was known to his followers, 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."
Friedman's radical idea was that instead of spending a portion of the billions of dollars in reconstruction money on rebuilding and improving New Orleans' existing public school system, the government should provide families with vouchers, which they could spend at private institutions.
In sharp contrast to the glacial pace with which the levees were repaired and the electricity grid brought back online, the auctioning-off of New Orleans' school system took place with military speed and precision. Within 19 months, with most of the city's poor residents still in exile, New Orleans' public school system had been almost completely replaced by privately run charter schools.
The Friedmanite American Enterprise Institute enthused that "Katrina accomplished in a day ... what Louisiana school reformers couldn't do after years of trying". Public school teachers, meanwhile, were calling Friedman's plan "an educational land grab". 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".
Privatising the school system of a mid-size American city may seem a modest preoccupation for the man hailed as the most influential economist of the past half century. Yet his determination to exploit the crisis in New Orleans to advance a fundamentalist version of capitalism was also an oddly fitting farewell. 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.
In one of his most influential essays, Friedman articulated contemporary capitalism's core tactical nostrum, what I have come to understand as "the shock doctrine". He observed that "only a crisis - actual or perceived - produces real change". When that crisis occurs, the actions taken depend on the ideas that are lying around. Some people stockpile canned goods and water in preparation for major disasters; Friedmanites stockpile free-market ideas. And once a crisis has struck, the University of Chicago professor was convinced that it was crucial to act swiftly, to impose rapid and irreversible change before the crisis-racked society slipped back into the "tyranny of the status quo". A variation on Machiavelli's advice that "injuries" should be inflicted "all at once", this is one of Friedman's most lasting legacies.
Friedman first learned how to exploit a shock or crisis in the mid-70s, when he advised the dictator General Augusto Pinochet. Not only were Chileans in a state of shock after Pinochet's violent coup, but the country was also traumatised by hyperinflation. Friedman advised Pinochet to impose a rapid-fire transformation of the economy - tax cuts, free trade, privatised services, cuts to social spending and deregulation.
It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a "Chicago School" revolution, as so many of Pinochet's economists had studied under Friedman there. Friedman coined a phrase for this painful tactic: economic "shock treatment". In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or "shock therapy", has been the method of choice.
I started researching the free market's dependence on the power of shock four years ago, during the early days of the occupation of Iraq. I reported from Baghdad on Washington's failed attempts to follow "shock and awe" with shock therapy - mass privatisation, complete free trade, a 15% flat tax, a dramatically downsized government. Afterwards I travelled to Sri Lanka, several months after the devastating 2004 tsunami, and witnessed another version of the same manoeuvre: foreign investors and international lenders had teamed up to use the atmosphere of panic to hand the entire beautiful coastline over to entrepreneurs who quickly built large resorts, blocking hundreds of thousands of fishing people from rebuilding their villages. By the time Hurricane Katrina hit New Orleans, it was clear that this was now the preferred method of advancing corporate goals: using moments of collective trauma to engage in radical social and economic engineering.
Most people who survive a disaster want the opposite of a clean slate: they want to salvage whatever they can and begin repairing what was not destroyed. "When I rebuild the city I feel like I'm rebuilding myself," said Cassandra Andrews, a resident of New Orleans' heavily damaged Lower Ninth Ward, as she cleared away debris after the storm. But disaster capitalists have no interest in repairing what once was. 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.
When I began this research into the intersection between super-profits and mega-disasters, I thought I was witnessing a fundamental change in the way the drive to "liberate" markets was advancing around the world. Having been part of the movement against ballooning corporate power that made its global debut in Seattle in 1999, I was accustomed to seeing business-friendly policies imposed through arm-twisting at WTO summits, or as the conditions attached to loans from the IMF.
As I dug deeper into the history of how this market model had swept the globe, I discovered that the idea of exploiting crisis and disaster has been the modus operandi of Friedman's movement from the very beginning - this fundamentalist form of capitalism has always needed disasters to advance. What was happening in Iraq and New Orleans was not a post-September 11 invention. Rather, these bold experiments in crisis exploitation were the culmination of three decades of strict adherence to the shock doctrine.
Seen through the lens of this doctrine, the past 35 years look very different. Some of the most infamous human rights violations of this era, which have tended to be viewed as sadistic acts carried out by anti-democratic regimes, were in fact either committed with the intent of terrorising the public or actively harnessed to prepare the ground for radical free-market "reforms". In China in 1989, it was the shock of the Tiananmen Square massacre and the arrests of tens of thousands that freed the Communist party to convert much of the country into a sprawling export zone, staffed with workers too terrified to demand their rights. The Falklands war in 1982 served a similar purpose for Margaret Thatcher: the disorder resulting from the war allowed her to crush the striking miners and to launch the first privatisation frenzy in a western democracy.
The bottom line is that, for economic shock therapy to be applied without restraint, some sort of additional collective trauma has always been required. Friedman's economic model is capable of being partially imposed under democracy - the US under Reagan being the best example - but for the vision to be implemented in its complete form, authoritarian or quasi-authoritarian conditions are required.
Until recently, these conditions did not exist in the US. What happened on September 11 2001 is that an ideology hatched in American universities and fortified in Washington institutions finally had its chance to come home. The Bush administration, packed with Friedman's disciples, including his close friend Donald Rumsfeld, seized upon the fear generated to launch the "war on terror" and to ensure that it is an almost completely for-profit venture, a booming new industry that has breathed new life into the faltering US economy. Best understood as a "disaster capitalism complex", it is a global war fought on every level by private companies whose involvement is paid for with public money, with the unending mandate of protecting the US homeland in perpetuity while eliminating all "evil" abroad.
In a few short years, the complex has already expanded its market reach from fighting terrorism to international peacekeeping, to municipal policing, to responding to increasingly frequent natural disasters. The ultimate goal for the corporations at the centre of the complex is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary functioning of the state - in effect, to privatise the government.
In scale, the disaster capitalism complex is on a par with the "emerging market" and IT booms of the 90s. It is dominated by US firms, but is global, with British companies bringing their experience in security cameras, Israeli firms their expertise in building hi-tech fences and walls. Combined with soaring insurance industry profits as well as super profits for the oil industry, the disaster economy may well have saved the world market from the full-blown recession it was facing on the eve of 9/11.
In the torrent of words written in eulogy to Milton Friedman, the role of shocks and crises to advance his world view received barely a mention. Instead, the economist's passing, in November 2006, provided an occasion for a retelling of the official story of how his brand of radical capitalism became government orthodoxy in almost every corner of the globe. It is a fairytale history, scrubbed clean of the violence so intimately entwined with this crusade.
It is time for this to change. Since the collapse of the Soviet Union, there has been a powerful reckoning with the crimes committed in the name of communism. But what of the crusade to liberate world markets?
I am not arguing that all forms of market systems require large-scale violence. It is eminently possible to have a market-based economy that demands no such brutality or ideological purity. A free market in consumer products can coexist with free public health care, with public schools, with a large segment of the economy - such as a national oil company - held in state hands. It's equally possible to require corporations to pay decent wages, to respect the right of workers to form unions, and for governments to tax and redistribute wealth so that the sharp inequalities that mark the corporatist state are reduced. Markets need not be fundamentalist.
John Maynard Keynes proposed just that kind of mixed, regulated economy after the Great Depression. It was that system of compromises, checks and balances that Friedman's counter-revolution was launched to dismantle in country after country. Seen in that light, Chicago School capitalism has something in common with other fundamentalist ideologies: the signature desire for unattainable purity.
This desire for godlike powers of creation is precisely why free-market ideologues are so drawn to crises and disasters. Non-apocalyptic reality is simply not hospitable to their ambitions. For 35 years, what has animated Friedman's counter-revolution is an attraction to a kind of freedom available only in times of cataclysmic change - when people, with their stubborn habits and insistent demands, are blasted out of the way - moments when democracy seems a practical impossibility. Believers in the shock doctrine are convinced that only a great rupture - a flood, a war, a terrorist attack - can generate the kind of vast, clean canvases they crave. It is in these malleable moments, when we are psychologically unmoored and physically uprooted, that these artists of the real plunge in their hands and begin their work of remaking the world.
Torture: the other shock treatment
From Chile to China to Iraq, torture has been a silent partner in the global free-market crusade. Chile's coup featured three distinct forms of shock, a recipe that would re-emerge three decades later in Iraq. The shock of the coup prepared the ground for economic shock therapy; the shock of the torture chamber terrorized anyone thinking of standing in the way of the economic shocks.
But torture is more than a tool used to enforce unwanted policies on rebellious peoples; it is also a metaphor of the shock doctrine's underlying logic. Torture, or in CIA parlance, "coercive interrogation", is a set of techniques developed by scientists and designed to put prisoners into a state of deep disorientation.
Declassified CIA manuals explain how to break "resistant sources": create violent ruptures between prisoners and their ability to make sense of the world around them. First, the senses are starved (with hoods, earplugs, shackles), then the body is bombarded with overwhelming stimulation (strobe lights, blaring music, beatings). The goal of this "softening-up" stage is to provoke a kind of hurricane in the mind, and it is in that state of shock that most prisoners give their interrogators whatever they want.
The shock doctrine mimics this process precisely. The original disaster - the coup, the terrorist attack, the market meltdown - puts the entire population into a state of collective shock. The falling bombs, the bursts of terror, the pounding winds serve to soften up whole societies. Like the terrorised prisoner who gives up the names of comrades and renounces his faith, shocked societies often give up things they would otherwise fiercely protect.

Table of Contents


Introduction: Blank Is Beautiful: Three Decades of Erasing and Remaking the World     3
Two Doctor Shocks: Research and Development     27
The Torture Lab: Ewen Cameron, the CIA and the Maniacal Quest to Erase and Remake the Human Mind     29
The Other Doctor Shock: Milton Friedman and the Search for a Laissez-Faire Laboratory     59
The First Test: Birth Pangs     89
States of Shock: The Bloody Birth of the Counterrevolution     91
Cleaning the Slate: Terror Does Its Work     121
"Entirely Unrelated": How an Ideology Was Cleansed of Its Crimes     144
Surviving Democracy: Bombs Made of Laws     161
Saved by a War: Thatcherism and Its Useful Enemies     163
The New Doctor Shock: Economic Warfare Replaces Dictatorship     177
Crisis Works: The Packaging of Shock Therapy     194
Lost in Transition: While We Wept, While We Trembled, While We Danced     213
Slamming the Door on History: A Crisis in Poland, a Massacre in China     215
Democracy Born in Chains: South Africa's Constricted Freedom     245
Bonfire of a Young Democracy: Russia Chooses "The Pinochet Option"     275
The Capitalist Id: Russia and the New Era of the Boor Market     310
Let It Burn: The Looting of Asia and "The Fall of a Second Berlin Wall"     332
Shocking Times: The Rise of the Disaster Capitalism Complex     355
Shock Therapy in the U.S.A.: The Homeland Security Bubble     357
A Corporatist State: Removing the Revolving Door, Putting in an Archway     389
Iraq, Full Circle: Overshock     409
Erasing Iraq: In Search of a "Model" for the Middle East     411
Ideological Blowback: A Very Capitalist Disaster     431
Full Circle: From Blank Slate to Scorched Earth     456
The Movable Green Zone: Buffer Zones and Blast Walls     485
Blanking the Beach: "The Second Tsunami"     487
Disaster Apartheid: A World of Green Zones and Red Zones     513
Losing the Peace Incentive: Israel as Warning     535
Conclusion: Shock Wears Off: The Rise of People's Reconstruction     560
Notes     591
Acknowledgments     667
Index     677

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The Shock Doctrine: The Rise of Disaster Capitalism 4.8 out of 5 based on 0 ratings. 6 reviews.
deargreenplace on LibraryThing More than 1 year ago
Everyone should read this book, one of the most important of the 21st century, and shocking indeed for those of us with more socialist leanings.I'm not going to give it a proper review as I'm sure many have already done so. I'd say it would be required reading for politicians but I don't want them to get any worse ideas than they already have.The UK government is also guilty of implementing policies that favour their rich friends. Privatising the police, for instance, is mentioned in Klein's book, and is in the UK news this week. Sadly, I can't see the #occupy movement being able to do much about this by camping.
carlosemferreira on LibraryThing More than 1 year ago
Naomi Klein's book is an impeccably researched, immensely informative and beautifully written punch to the stomach. It is possibly one of the most scary and irritating books I have read in a long time; one whose argument I don't want to believe, but one that I can't really disagree with. Tried checking some of the facts the author documents; they were correct. And that makes it, in a way, worse: this is a book which clearly deserves its "non-fiction" label, and is, as such, a cry for action.It is perhaps easy to criticise that the author conflates what happened in Chile with what went on in the first years after the Iraq war under the banner of "disaster capitalism", associated with the "shock doctrine" and the search for "blank slates" and "clean canvas". She admits herself that the phenomena are different and the result of evolving processes; but, as is often the case, discourse analysis reveals that the underlying devices that produce these phenomena are indeed common.What will irritate you when reading The Shock Doctrine is the cognitive dissonance it produces: if this is such, and the responsibles are still out there and up to the same old tricks, why are we not up in arms demanding real change?
abclaret on LibraryThing More than 1 year ago
The central tenant of the book is to refute that Friedman style economics lead to any definable liberty in the modern world. Klein argues how 'The Chicago Boys' (Friedman's followers) have worked hand-in-hand with military coups, subverted democracies, endorsed mass repression, brought about 19th century levels of inequality and ratcheted up jingoism to an all time high. Going one further than the 'military industrial complex' she argues 'disaster capitalism' is the pinnacle of Friedman-esque politics, which is a series of right-wing leaning corporations and bodies which have exploited (or in the case of Iraq engineered) disasters, man-made and natural, to push through their very unpopular economic model. The books sweeping style narrative helps show how 'free market' politics has developed from its early unpopular perception to now becoming a sinister cabal of think tanks and the grey area where the political class and corporations seem to inhabit. The books analogy with psychiatric shock treatment I thought was taken too far to be of any help, Klein has a habit of concluding a point twice (as if once wasn't enough) and the book is probably fifty plus pages too long. That said the book helps give enough cause for concern and the chapters on South Africa, China, Iraq and Russia are written so well they will make you want to wet your appetite further.
ennui2342 on LibraryThing More than 1 year ago
A long book to get through but well worth the read. Genuinely changed my view of the world.Naomi Klein looks back at the major conflicts of the last fifty or so years, and paints a picture of the hidden neocon economic agenda behind these 'shocks'. More importantly it exposes the lie behind the free-market ideology, examining how neocon principles have left a trail of destruction behind them, making a small corporatist few rich at the expense of the many. A frightening but enlightening book.
minifig on LibraryThing More than 1 year ago
This is a scary book, but well worth reading. If you're trying to work out what's been happening over the last 10 or so years, then this book sets out the patterns of privitisations, wars and IMF meddling in stark light. It doesn't make for a pleasant read, but if you want to know what's going on, this is for you.
Anonymous More than 1 year ago