THE SHOCK DOCTRINE
New Orland after Hurricane Katrina.
Republican congressman said: “We finally cleaned up public housing in New Orleans”. Developer said: “I think we have a clean sheet to start again. And with that clean sheet we have some very big opportunities.”
Over at the shelter, Jamar could think “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.”
Older man said: “What is wrong with these people in Baton Rouge? This isn’t an opportunity. It’s a goddamned tragedy. Are they blind?” A mother said:”No, they’re not blind, they’re evil. They see just fine.”
Milton Friedman thinks “Most New Orleans schools are in ruins. 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.”
In the view of Milton Friedman, 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”.
l 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”
l Friedman articulated contemporary capitalism’s core tactical nostrum, what I have come to understand as the shock doctrine. He observed, “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”
He 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.
Awe military doctrine, to “control the adversary’s will, perceptions, and understanding and literally make an adversary impotent to act or react.”
l 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.
For us, the fear and disorder offered real promise. Fear and disorder are the catalysts for each new leap forward.
Three Trademark Demands: Privatization, Government deregulation, and Deep cuts to social spending.
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.”
l The role of the government in this unending war is not that of an administrator managing a network of contractors but of a deep-pocketed venture capitalist, both providing its seed money for the complex’s creation and becoming the biggest customer for its new services.
U.S. military is now one of the fastest-growing service economies in the world.
Corporatist: Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, and ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security.
How the shock doctrine works: the original disaster 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. Shock societies often give up things they would otherwise fiercely protect.
Nothing was left to stand in the way of a truly global free market, one in which liberated corporations were to only free in their own countries but free to travel across borders unhindered, unleashing prosperity around the world.
l This fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion, inflicted on the collective body politic as well as on countless individual bodies.
l It is eminently possible to have a market-based economy that requires no such brutality and demands no such ideological purity. A free market in consumer products can coexist with free public health care, which public schools, with a large segment of the economy held in state hands.
It was exactly that system of compromises, checks and balances that Friedman’s counterrevolution was launched to methodically dismantle in country after country.
Believers in the shock doctrine are convinced that only a great rupture 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.
THE TORTURE LAB
l I am writing a book about shock. About how countries are shocked – by wars, terror attacks coups d’etat and natural disaster. And then how they are shocked again – by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy. And then how people who dare to resist this shock politics are, if necessary, shocked for a third time – by police, soldiers and prison interrogators.
No matter how doggedly he shocked, drugged and disoriented, he never got there. The more he blasted, the more shattered his patients became.
Iraq’s shock doctors can destroy, but they can’t seem to rebuild.
THE OTHER DOCTOR SHOCK
Friedman’s mission, like Cameron’s, rested on a dream of reaching back to a state of “natural” health, when all was in balance, before human interferences created distorting patterns.
Friedman dreamed of depatterning societies, of returning them to a state of pure capitalism, cleansed of all interruptions – government regulations, trade barriers and entrenched interests.
Friedman believed that when the economy is highly distorted, the only way to reach that prelapsarian state was to deliberately inflict painful shocks: only “bitter medicine” could clear those distortions and bad patterns out of the way.
Friedman’s toll of choice was policy – the shock treatment approach he urged on bold politicians for countries in distress.
l The economic force of supply, demand, inflation and unemployment were like the forces of nature, fixed and unchanging.
Chicago School economics is, for its true believers, a closed loop. The starting premise is that the free market is a perfect scientific system, one in which individuals, acting on their own self-interested desires, create the maximum benefits for all.
Friedman promised “individual freedom,” a project that elevated atomized citizens above any collective enterprise and liberated them to express their absolute free will through their consumer choices.
Idealism combined with radicalism The Marxists had their workers’ utopia and the Chicagoans had their entrepreneurs’ utopia, both claiming that if they got their way, perfection and balance would follow.
The Chicagoans declared war on these mix-and-match economists. What they wanted was not a revolution exactly but a capitalist Reformation: a return to uncontaminated capitalism.
Developmentalist economists argued that their countries would finally escape the cycle of poverty only if they pursued an inward-oriented industrialization strategy instead of relying on the export of natural resources, whose prices had been on a declining path, to Europe and North America. They advocated regulating or even nationalizing oil, minerals and other keys industries so that a healthy share o f he proceeds fed a government-led development process.
During this dizzying period of expansion the Southern Cone began to look more like Europe and North America than the rest of Latin America or other parts of the Third World. The workers in the new factories formed powerful unions that negotiated middle-class salaries, and their children were sent off to study ant newly built public universities.
The yawning gap between the region’s polo-club elite and its peasant massed began to narrow. By the 1950s, Argentina had the largest middle class on the continent, and next-door Uruguay had a literacy rate of 95 percent and offered free health care for all citizens.
Developmentalism was so straggeringly successful for a time that the Southern Cone of Latin America Became a potent symbol for poor counties around the world: here was proof that with smart, practical policies, aggressively implemented, the class divide between the First and Third World could actually be closed.
New Deal: The programs and policies to promote economic recovery and social reform introduced during the 1930's by President Franklin D. Roosevelt.
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.
With in the three-part formula of deregulation, privatization and cutbacks, Friedman had plenty of specifics.
Taxes, when they must exist, should be low, and rich and poor should be taxed at the same flat rate.
Corporations should be free to sell their products anywhere in the world, and governments should make no effort to protect local industries or local ownership.
All prices, including the price of labor, should be determined by the market. There should be no minimum wage.
For privatization, Friedman offered up health care, the post office, education, retirement pensions even national parks.
The assets that Friedman urged government to sell were the end products of the years of investment of public money and know-how that had built them and made them valuable. All shared wealth should be transferred into private hands, on principle.
l Friedman’s vision coincided precisely with the interests of large multinationals, which by nature hanger for vast new unregulated markets. (Colonialism )
Friedman’s war on the “welfare state” and “big government” held out the promise of a new font of rapid riches – only this time, rather than conquering new territory, the state itself would be the new frontier, it public services and assets auctioned off for far less than they were worth.
Eisenhower proved eager to take swift and radical action to defeat developmentalism abroad. It was a campaign in which the University of Chicago would eventually play a pivotal role.
In 1953, Iran had a developmentalist leader in Mohammad Mossadegh, who had already nationalized the oil company, and Indonesia was in the hands of the increasingly ambitious Achmed Sukamo, 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.
At a time when large portions of the globe were turning to Stalinism and Maoism, developmentalist proposals for “import substitution” were actually quite centrist.
There was growing talk that everything from foreign-owned mines to banks could be nationalized to finance Latin America’s dream of economic independence.
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.
In 1953 and 1954, the CIA staged its first tow coups d’etat, both against Third World governments that identified far more with Keynes than with Stalin.
To be continued...