Naomi Klein

The Shock Doctrine
The Rise of Disaster Capitalism
Around the world in Britain, the United States, Asia and the Middle East, there are people with power who are cashing in on chaos; exploiting bloodshed and catastrophe to brutally remake our world in their image. They are the shock doctors. Thrilling and revelatory, The Shock Doctrine cracks open the secret history of our era. Exposing these global profiteers, Naomi Klein discovered information and connections that shocked even her about how comprehensively the shock doctors' beliefs now dominate our world - and how this domination has been achieved. Raking in billions out of the tsunami, plundering Russia, exploiting Iraq - this is the chilling tale of how a few are making a killing while more are getting killed.
The Shock Doctrine: The Rise of Disaster Capitalism
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A System Built on Crisis and Violence

Anthony Arnove, Socialist Worker, December 14, 2007

When you look at how the disaster of the U.S. occupation of Iraq is portrayed these days, the emphasis now is always on the mistakes the Bush administration made and its incompetence in planning for the occupation. In The Shock Doctrine and your essay “Baghdad Year Zero,” you paint a very different picture of the underlying reasons for the invasion and occupation. Why do you think that the framework of “mistakes” and “mismanagement” is still the primary way people analyze the war, despite the evidence?

When you push people about what they believe the broader mission is, they don't really have an answer, because all of the “official” stories have fallen away.

Nobody really believes it's about “bringing democracy,” and we know there were no WMDs and no 9/11 link. So the idea that economic ambitions for the region could have been an essential motivating force and the centerpiece of the postwar plan seems to be a logical conclusion to draw, based on the evidence we have.

It's not a secret plan. So an effort has been made on the part of analysts to downplay this in the face of overwhelming evidence that this was a priority.

I think the reasons for this are complex, and they include a need to believe in American goodness around the world--Gary Wills talks about the myth of “original sinlessness.”

I've been struck in my interviews with the liberal press in this country about the need to believe in the good intentions of even those American politicians who, in every other arena, are treated as truly sinister--people like Dick Cheney or Paul Wolfowitz, who are the butt of every late-night joke.

The point of those jokes is usually that these are really scary characters, especially Dick Cheney. But if you draw a conclusion from this that he might also be capable of being motivated by self-interest and greed, both personally and for his circle of friends, this is seen as completely conspiratorial, and then we revert to the narrative of American “good intentions.”

So it's allowable to criticize the execution and criticize the management, and you can say it was ill advised. But you can't say that the intentions were bad.

I should add that I believe the major players have their own narratives that disguise and rationalize those intentions--the benefits of trickle-down economics, the need to protect Israel and so on.

But even if we accept the idea that Paul Wolfowitz had this so-called “good intention” of spreading democracy through the Middle East and turning Iraq into a model free-market liberal democracy in the heart of the Arab world, that's not idealism--that's imperialism. That is an inherently violent idea.

I'm coming up against this same narrative in my critiques of Milton Friedman. People say to me, “Can't you concede that these radical right-wing economists really believed that they were doing good?” And I won't concede that. I have seen no reason to concede that. I see the ideology as a rationale, not a prime motivating force.

But it's this same impulse--that we can criticize, but we have to start from the premise that everybody is really just trying to make the world a better place.

What I find really amazing about this is that the centerpiece of free-market theory is that self-interest and greed are the most powerful motivating impulses in the world. So I find it interesting that the same people who believe that self-interest and greed should be the motivating forces of all of our interactions and the running of society, somehow believe that they themselves are exempt from these impulses--that they could never be motivated by self-interest, only altruism.

Then we get this counter-narrative--that what's going wrong in Iraq is corruption--in other words, an excess of self-interest. So we hear that there's something about those Iraqis--they're just inherently corrupt. Just like we heard that there's something about those Russians, and there's something about those Chinese, and so on.

Whenever these super-capitalist laboratories go bad and do what they were actually designed to--which is to facilitate the rapid accumulation of profits for a small elite--then suddenly, the people who believe that self-interest is the most powerful motivating force in the world “discover” the ills of corruption, which is really just liberated greed. In other words, neoliberalism.

You've said in your talks recently that the challenge for the left is not a crisis of ideas, but a crisis of confidence in the alternatives we put forward to neoliberalism.

What I'm looking at in the book are all the roads not taken, and they are various combinations of democracy and socialism.

Some of it would be a more classic Scandinavian-style social democracy, and some of it would be much more radical--like the economic platform of Solidarity, Poland's workers party, which they adopted democratically as a movement, putting democratically run workplaces at the center of their economic program. Their economic program was to transform the state-controlled factories being run by Communist Party bureaucrats into genuinely democratic, worker-run factories.

That idea never failed. That idea never got a chance to fail, because when Solidarity won the 1989 elections with an overwhelming electoral victory, Jeffrey Sachs and the IMF were on the scene to prescribe economic “shock therapy” in exchange for foreign aid. Shock therapy was sold to the Poles in the same way it's been sold in many parts of the world--as a short cut to a “normal” European country.

And I think what's interesting is that for most people, when they think of a “normal” European country, they think about a social democratic Western European country like Germany. They aren't thinking about totally deregulated, neoliberal states, which is what they got.

This sleight of hand is evident in Alan Greenspan's book, which I did have to read. He's telling the official story of the rise of neoliberal economics, the spread of markets around the world and this drive to privatize and deregulate, and his vision of an economic formula where the role of the state is just the enabler for corporate profits.

What's interesting is that he says that the “breakthrough” moment was the fall of the Berlin Wall--because the Wall fell, and the world saw two models, and the West German model was clearly superior to the East German model. The world saw all of the East Germans wanting to move to West Germany, and that ended the argument.

That's a tidy narrative--except when you remember that West Germany was by no means a neoliberal state in 1989. It had generous social welfare programs, public health care, very strong trade unions and all kinds of social protections--it hadn't begun the neoliberal privatization project.

There aren't any successful neoliberal economies. There's successful growth--like Ireland right now. But Ireland's per-capita spending on education is one of the lowest among the developed countries, and it's in the midst of a national crisis because it has so dramatically underfunded the health care system.

At the same time, the economic alternatives that embody any attempt to combine socialism and democracy are smeared as if their track record shows that they are completely non-viable. So the starting premise of any debate is that we have to accept that our ideas have been tried and failed.

And the fact is that most of us do accept it. We believe that there's something “tainted” about our economic alternatives. There's a sheepishness in those crucial moments--most notably after 9/11--that require we have great confidence.

We can be terribly outspoken when it comes to naming the failures of a hollowed-out government and a privatized state. New Orleans is, to me, the most heartbreaking example of this, because it was such an unmistakable indictment of neoliberal theory and the legacy of neoliberalism. The real disaster was the collision between heavy weather and weak state infrastructure.

In the book, I quote a sort of repentant neocon who says that the fall of New Orleans' levees should be for their movement what the fall of the Berlin Wall was for “socialism”--by which he meant state Communism. And it should have been, but it wasn't.

There was the underfunded and eroded public transit system that couldn't handle an evacuation, and a booster mayor who knew how to make deals but didn't know how to handle an evacuation. And FEMA, which had been turned into an empty shell, unable to find the disaster zone. You had this unbelievably harrowing vision of a state that still has all the trappings of a government, but no one's home.

There were prominent liberal commentators like Paul Krugman and Frank Rich doing a great job of naming this and linking it to the conservative ideological project.

But when it comes to taking the extra step of saying that this is about defending a public sphere--defending the fact that public housing is a good idea, and public education is a good idea, and public health care is a good idea--the confidence in those ideas wasn't there.

I think that part of the problem is that any system requires constant renewal, and state public schools, public housing and public health care have been allowed to erode so much that they're often seen as indefensible by the people who use them. And the language of defending the principles of universality has been lost.

There's been a spate of headlines recently saying that, well, it turns out a lot of the critics of the IMF and World Bank were right about the impact of some of their programs in producing growing global inequality. When someone like you said that five years ago, it was attacked and dismissed as a “conspiracy theory.” And now, when the evidence is in that you were actually right on many of your arguments, then they say, “Let's move on.” What's your reading on the situation right now?

I think people on the left are used to that easy jump of being discredited to having our ideas stolen. I don't even really notice it anymore.

But I think this has been going on for quite some time. For some years now, these institutions have changed the way they talk to accommodate the crisis that neoliberalism is facing around the world.

You haven't been able to get anybody at the World Bank to use the term “privatization” now for a good five years. It's only “public-private partnerships.” And the words “structural adjustment” have also been stricken from the lexicon.

I think this is a sign of desperation in the sense that it's an attempt to regain some credibility in the face of the IMF losing its hold--most dramatically, in Latin America--because there are now other lenders of last resort. Quite literally, they're losing their market monopoly, which is great and should be encouraged.

I think the danger is in believing this sort of mea culpa rhetoric and thinking that there's a real change at either institution.

Robert Zoellick is actually pushing in the World Bank for much more private-sector involvement, and also for more risk trading--to act more like a hedge fund. So the privatization doctrine is accelerating at the World Bank, not decelerating. The World Bank itself is becoming a really important international market. It always was, but it's becoming even more so.

The real issue with both institutions is that they're unreformable and unredeemable. This idea that there should be Washington-based institutions that dictate policy to the rest of the world--there's no reason for it.

There's no reason why there can't be regional banks, and that's happening now in Latin America. The response to the Asian financial crisis in 1997-98 from Japan was that a regional bank was needed. That was successfully shut down for a time, but these ideas are going to keep coming up, and there are more meaningful ones out there, too.

The subtitle of your book is “The rise of disaster capitalism,” Can you could talk about how you characterize “disaster capitalism” historically? Are we talking about old wine in new bottles, are we talking about a new mode of capitalism, are we talking about a new period in capitalism? How do you think about what came before disaster capitalism?

I think it's both old and new. It would be absurd to claim that this is a new analysis--to emphasize the use of crises and the violence of capitalism.

In many ways, the point that capitalism relies on crisis and violence is a pretty classic Marxist analysis--drawing particularly on Rosa Luxemburg. At the same time, it's clear that we're in a new phase. Yet as I tour with the book, I'm always coming up against “old school” Marxist-Leninists at speeches who just don't want to admit that neoliberalism is a new phase of capitalism that requires a new--or at least updated--analysis.

This book is an attempt to understand the present. For the past three decades, we've been in a distinct phase that I think can be properly understood as a revolt of the elites--as a counterrevolution against the gains of workers' movements around the world in the period from the Great Depression through the post-war boom.

Those gains took different forms in different parts of the world: economic nationalism, developmentalism, democratic socialism, Keynesianism.

This is why I focus on Friedman, because Friedman understood his movement as a counterrevolution. I quote this letter that he wrote to the Chilean dictator Augusto Pinochet in 1975 where he says that society “took a wrong turn in your country and mine” in response to the Great Depression.

In the U.S., for Friedman, it was the New Deal--that's when everything went wrong. In Latin America, it was developmentalism and import substitution.

The way neoliberals saw it, the left was ready for the crisis of the Great Depression. Their ideas were the ones that were proposed with confidence when the world gasped in horror at the sight of the brutality of an unregulated market. In some cases, they got something closer to socialism--in other cases, they got something closer to Keynesianism.

But it was a global response to a global event, and it was responsible for some of the most important gains for workers around the world--the most progressive social programs around the world.

Neoliberalism is a dismantling of those gains and a feeding off of the public infrastructure that was built up. This is David Harvey's analysis, which I think is very accurate.

You have an earlier stage of capitalism that fed off the wealth of the land, from the first enclosures to colonial pillage. That stage of capitalism is always with us. We are still feeding off of the land, with all of the violence inherent in that project, even as it goes into ever more remote parts of the world.

What becomes complicated about the discussion is that the earlier stage of capitalism doesn't disappear, so it isn't like a neat line. You still have, in many parts of the world, a very classic colonial violence--Colombia being a really clear example of resource extraction, and the tremendous violence used to guarantee that extraction.

Iraq is another example, but in Iraq, you have a layering of different kinds of colonialism and capitalist violence. You also have what Paul Bremer was trying to do, which is the classic neoliberal project. Within a couple weeks of his arrival in Iraq, he announced the privatization of Iraq's 200 state-owned companies, which are the product of economic nationalism.

That's what neoliberalism is. It's feeding off of the infrastructure that was built under these various mixed economic models--in the context of a new colonial frontier, which is why it has to be lawless.

The privatization frenzies are built to have that same characteristic. That's the essence of shock therapy and what's so appealing about it--you do it so quickly, all at once, so that it's impossible to regulate.

That was true in Russia, it's true in China, and it's true in Iraq. And then, after the fact, you say, “Oops, sorry, we need to do institution building before privatization next time.” But that would be no fun, because if you have institution building before privatization and anti-corruption measures, then you're really not going to make nearly as much money.

What these privatization frenzies do is they mint billionaires. You saw it in Mexico, you saw it in Argentina, you saw it in Russia. There's nothing more profitable. This relates to the first thing we were talking about--the narrative of incompetence. After each one of these extremely competent and successful feeding frenzies, the narrative is that it was done poorly: We didn't mean to create 21 new billionaires--that was just an accounting error.

In your book, you discuss the beginnings of a counter-narrative that might allow people to put the pieces back together after the shocks of Iraq, New Orleans, and so on. What do you see as some of the places where this piecing together of an alternative is happening?

One of the most interesting places to present the book was Spain. They were just handing down the verdicts in the March 11, 2004, bombings. But they're also in the middle of debating a really controversial law called the law of historical memory, which has to do with whether the country is ready to confront the Franco-era past.

What Spain shows is that how you respond to shock is a choice--you can either choose to fall apart, or you can choose to come together.

I think in the U.S., people fell apart and delegated huge amounts of power to people they now regret they delegated power to--like Rudolph Giuliani and Dick Cheney.

In Spain, you had a really different reaction to the March 11 bombings. People immediately recognized President José María Aznar's opportunism in the way he was using the bombings to blame the Basque separatists and to simultaneously justify Spain's unpopular presence in Iraq and win the elections for his party.

In the face of this, there was an immediate desire among people to gather. Rather than turning to their leaders, they really turned to each other and had these amazing marches against fear.

I think there were two things that allowed that to take place. One was having learned from the experience of the U.S.--having watched that process after September 11.

And the other was the collective memory of the Franco years--understanding how the language of security was so crucial in the loss of democracy previously. That experience really does show how history is such a powerful shock absorber.

This is what makes North Americans so uniquely vulnerable--the amazing collective amnesia. What makes countries resilient is not just knowing history, but actually having confronted an uglier side of their own national psyche. It's not just remembering that Franco was a bad guy. It's remembering that people welcomed the security and remembering collective complicity in a sinister regime.

The first event I had for the book was in New Orleans, and there was this really fantastic exchange of tsunami survivors from India and New Orleans community organizers. It felt like the beginning not just of an alternative story, but of a new civil rights movement--or a survivors' rights movement.

In an era of climate change, wars, terrorist attacks, this idea of a survivors' rights movement will, I think, become more and more important. And at this conference, it was the beginning of thinking about what the demands of such a movement would be.

In the book, I draw comparisons between prison interrogation and the effects of disaster capitalism. One of the things that all the prison interrogation manuals talk about is the importance of keeping prisoners isolated, because if they're allowed to talk or pass notes to each other between the bars, then they'll be able to anticipate the tactics that are used against them, and the tactics won't work. If you know what's coming, you can steel yourself against it.

It really felt like in that moment in New Orleans--with that exchange--this was a sort of global process of people passing notes to each other through the bars.

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