A dishonest investigation into “disaster capitalism” in the world, from Chile and Russia to Iraq, Lebanon and South Africa
<this article was written for an Iraqi public and translated into Arabic for newsabah.com>
The economic policies of Paul Bremer, the American governor of Iraq during the occupation, were of a cruel simplicity: open the borders, privatize or close down all state companies, make uncontrolled use of state funds to pay for reconstruction. Bremer could do this, or at least try to do this, because the people of Iraq were in shock and trying to recover from the war and the dictatorship that preceded the American occupation.
Bremer did a lot more to create a legal base favorable to American-style capitalism in Iraq. The new investment law was only one of dozens of laws to re-create the Iraqi economy, as if the war had created a kind of ground zero. There was hardly any opposition to this avalanche of laws, despite the fact that Bremer’s laws went far beyond what is allowed under international law. Under the Hague Convention, an occupier can introduce some laws “necessary” only for the occupation itself, certainly not laws to remake a country from scratch.
According to Naomi Klein, one of the best known intellectuals of the worldwide anti-globalization movement, these policies follow the method of the “Shock Doctrine”, developed by the famous rightwing economist Milton Friedman and his “Chicago School” of economic science.
Friedman is best known for his almost religious belief in the blessings of free markets and unfettered, deregulated capitalism. His ideology is a declared enemy of communism in all its forms but also of “mixed economies” such as in Europe where free markets are combined with state intervention in the form of state companies producing cheap vaccins, state monopolies, state institutions such as housing organizations for the low income groups, state hospitals and state railways, social benefits for workers, regulation of various sectors, government control on exports and imports, etcetera.
Friedman is less known, writes Naomi Klein, for the methods he has recommended over and over again to destroy mixed economies and socialist forms of state capitalism. The basic idea of Friedman and the Chicago School is that economic reforms should be immediately introduced during or after some disaster, when the people are still disoriented, helpless, vulnerable and disorganized. The reason why is simple: if the people are strong and confident, they would never agree with the extreme capitalist reforms. Friedman himself put it more nobly: ‘Only a crisis – actual or perceived – produces real change.’
Erasing the past
Naomi Klein compares throughout her book the economic “Shock doctrine” to the aims of the CIA’s methods of torture: these aims are to wipe out a prisoner’s memories and identity, or less: to disorient a prisoner temporarily, so that a person hardly knows where he is, which day it is, what support from the outside he might have. Klein quotes heavily from the wellknown CIA’s medical experiments in the past to wipe out people’s identities, in which drugs and electroshocks were used. For her these torture methods and the Shock Doctrine reflect a more general American mentality, a deep belief in the “blank slate”, a belief that “wrong” individuals and “wrong” societies can be forced to go blank and let others write their future. “Blank is beautiful”, she writes ironically. She thinks that the aim of the Bush administration in Iraq has been to “erase” its existing culture and turn the country into a “model” for the Middle East.
Disaster capitalism
Klein groups wildly different things under the “disasters” that temporarily can disorient entire nations: coups d’etat like in Chile, change of regime like in South Africa when the apartheid system was brought down, the falling apart of the Soviet Union, natural disasters such as the tsunami that struck Asia and the flood that destroyed the poor neighborhoods of New Orleans, economic measures imposed by the International Monetary Fund such as getting rid of fuel and food subsidies, wars like in Iraq and Afghanistan and reforms by communist parties such as in China. Unfortunately, the “shock” becomes a sweeping metaphor in Klein’s book, a metaphor so wide that everything can be part of it.
In all these examples mentioned above, according to Klein, investors and other representatives of capitalism descended on disoriented people with their recipes for total freedom for big business. And while in Chile in 1973 extreme freemarket capitalism was introduced against the democratic will of the people, in other cases it was introduced through more or less democratic systems, during crisis situations. The cruel results for ordinary people became only obvious when it was too late, when the reforms had already been cemented into laws and constitutions.
Hey!
Of course Klein doesn’t defend the former racist regime in South Africa (although in her chapter on Iraq, life was much better under Saddam Hussein). But the South African whites managed to give the blacks the political power while keeping economic power firmly in their own hands. Black leaders told Klein that they didn’t see or understand the consequences at the time, of for example having an independent central bank. “When the new government came to power and tried to move freely, to give its voters the tangible benefits of liberation they expected and thought they had voted for… the administration discovered that its powers were tightly bound…” In those years the joke in president Nelson Mandela’s office was “Hey, we’ve got the state, where is the power?” Many reforms the black leaders wanted later proved impossible because they had been declared illegal.
Naomi Klein: “Want to distribute land? Impossible – at the last minute, the negotiators agreed to add a clause to the new constitution that protects all private property, making land reform virtually impossible. Want to create jobs for millions of unemployed workers? Can’t – hundreds of factories were actually about to close because Nelson Mandela’s party had signed an international agreement which made it illegal to subsidize the autoplants and textile factories… Free water for all? Not likely. The World Bank, with its large in-country contingent of economists, researchers and trainers…. is making partnerships with the private sector the service norm. Want to impose currency controls to guard against wild speculation? That would violate the $ 850 million IMF deal, signed, conveniently enough, before the elections. Raise the minimum wage to close the income gap from the time of apartheid? Nope. The IMF deal promises ‘wage restraint’…”
Iraqi opposition
Klein uses the example of Iraq to show that the “Shock Doctrine” and “disaster capitalism” applied here too can be totally out of touch with reality, and thus how they can fail. Several adherents to Friedman’s extreme freemarket ideology have been active in Iraq, while the Pentagon has done everything to keep the Iraqis actually in a kind of permanent form of shock or “overshock” as Klein puts it.
But the Iraqis have been a much tougher nut to crack than president George Bush and his Friedmanite friends thought. Iraq is for Klein not the first example of disaster capitalism being defeated by its own stupidity and the resistance of others, but she thinks it is an example of seeing it come full circle, while in other countries this stage has never or not yet been reached.
Inaccuracies
If one would judge Klein’s book solely on the basis of the chapter on Iraq, the country we know best, the judgement wouldn’t be positive. Klein presents herself as an investigative journalist but the chapter on Iraq contains quite a lot of inaccuracies, just convenient facts, and the kind of exaggerations you expect from a driven, missionary writer. She was in Iraq but she saw only what she wanted to see. Things in Iraq always get worse, and it is the worst country for this and that. It is enough for her to take the moral high ground to condemn American actions such as introducing the new banknotes, without investigating whether this was a good thing or not. Everyone who says something that fits her argument, is quoted without restraint. Klein explains the rise of Moqtada al-Sadr’s militia only as a response to “the failure of American corporations” to create jobs. She claims this militia is fighting “for true majority rule”.
Scape goat
Such explanations don’t come from true investigation but from a burning desire to blame the enemy she has discovered – disaster capitalism – for everything going wrong in Iraq. In the past we called this “looking for a scapegoat”. Scapegoats are an elegant way for society to get rid of its own evil, to excise it. But scapegoats are an illusion, they leave whatever evils it is sent away for, intact. It is a dangerous thought that American capitalism would have been much more social, without Friedman and friends. If so, well, let’s imprison these cruel economists then, or kill them – the world would be a better place immediately. Or not? Actually, Naomi Klein would like to have a real trial against these economist thinkers, because of the often cruel results of their shock doctrine. She says that many books have been written about the cruel consequences of communist ideology, so why not do the same for capitalism, she asks? As if such books don’t exist! Only me, I have dozens of them in my library.
Iraqi complexities
Part of her analyses and descriptions are right but others might disgust the reader who has lived through the miseries of the last five years in Iraq, because there are other countries – and greedy or religious misled individuals plus the Baathis – to blame too for what is and has been happening in Iraq, not just the Americans. How would Iraq have looked like if Iranian, Saudi and Syrian leaders had chosen other ways to get rid of the American troops in Iraq instead of giving them more excuses to stay? What about a Saudi and Iranian oil boycott for example or the Syrians accepting the defeat of their own occupation in Lebanon and giving an example to the Americans? What if Iraqi leaders had not missed virtually every opportunity to turn Iraq into a normal, liveable country?
But no such questions are coming from Naomi Klein: yankees bad, Iraqis good.
Naomi Klein commits some of the same errors as she blames Friedman and friends for: to reduce our complicated world to a simplified theater, where Americans try to play out their Disaster Capitalism, with victims all over the stage. This disaster capitalism does exist, although it is certainly not the dominant form of capitalism. The dominant forms make awful lots of money in peaceful countries with no shock events at all. Klein offers no explanation why American capitalists are so different.
Also, disaster capitalism is simply not the only important nasty reality in Iraq and this is not because Americans have been unable to erase the other realities in and around the country. These locally made realities were there, long before the Cheneys and Rumsfelds came along (although once upon a time Americans did play a role in developing them, such as when they imposed the Shah on Iran).
Three decades of dictatorship and anti-Americanism in Iraq, four wars and thirteen years of embargo have left such deep scars in Iraqis that the last thing they could become is model citizens in a model Iraq made in America’s image.
Alternatives
In interviews Klein has said that she wanted above all to show that in many situations “there were alternatives” to the recipes of Friedman and friends. Well, of course there were, everyone knows them or could invent them. And we didn’t need Naomi Klein to tell us that. That’s no news at all.
And it is not the true aim of the book. The aim was to put the madness of professors in Chicago and their field experts abroad central stage. This is allright, why not, it was really the first time I had the Shock Doctrine spelled out to me in such a clear way.
But unfortunately, Klein on every page underestimates the evil in others: in non-American presidents, generals, politicians, business men, religious leaders, cynical middle class people and very desperate poor – who can be most ready to compromise the future of their nation for a fistful of dollars. And they are what they are exactly because of what happened before the Americans came. Those South African leaders who say they didn’t see it coming, are they telling the truth? Or were they selfishly busy to safeguard only their own interests?
Americans feel as the famous fish in the water among people hating their past life. It creates that illusion of a blank slate, while no such thing exists. In the worst case scenario – as in Iraq – people only want to have the freedom to do to others what has been done to them. The past, in other words, is overwhelmingly present, unerasable – and alternatives, for that reason, limited in number.
Klein fails to see that in such circumstances people want to replace the extremism of the past with some other extremism such as unfettered, freemarket capitalism. When, for God’s sake, did these people learn to be moderate, tolerant, practical, cooperative, social, ethical, real team players? Politics for them means having power, not sharing it or using it for society as a whole. By chance, this fits exactly America’s bad democrats, the disaster capitalists.
In the first years after the fall of the communist regimes in Eastern Europe, many European speakers found it impossible during lectures and discussions to defend their mixed economies with a high degree of state intervention. The ex-communist public would hear nothing of it. Even when this was probably partly the result of strong American propaganda for Friedman-like ideas, the negative reaction to a powerful role for the state was all too understandable.
And of course, the East Europeans are now demanding much more government intervention in housing, health care, job creation and so forth, and a little less generosity for contractors and subscontractors – like what is happening now in Iraq and especially in Kurdistan, where the poor people had more time to witness the good and the ghastly results of a freemarket government.
Friedman and friends have already been defeated in the last elections in Chile and Bolivia, while the Chinese – four hundred strikes and demonstrations and other protests per day against communist capitalism – are holding their breath.
Naomi Klein, the scapegoat-lover, is not telling us how the people are taking back what the shock capitalists tried to take away from them forever, which puts her in a long tradition of leftist writers that love mankind only as a helpless victim.
annekevanammelrooy 