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Philosophy Book Report The Shock Doctrine: The Rise of Disaster Capitalism By: Naomi Klein 1) What do you understand to be the general philosophical argument of the author 2) Do you find this argument persuasive? 3) Explain and defend your position Introduction – Blank is Beautiful: Three Decades of Erasing and Remaking the World Milton Friedman (Chicago School of Economics) – after a massive shock, impose tax cuts, deregulation, free trade and privatize all services, cut social spending o Ex. George W. Bush backed plans with tens of millions of dollars to convert New Orleans schools into “charter schools”, publicly funded institutions run by private entities according to their own rules. o Ex. 2004 tsunami Sri Lanka; foreign investors and international lenders teamed up to use the atmosphere of panic to hand the coastline to build large resorts, blocking fishing people from rebuilding their villages near water. o Not always does the complex need shock; democratic examples include elections of Ronald Reagan and France’s Nicolas Sarkozy Share a commitment to the policy trinity o The elimination of the public sphere, total liberation for corporations and skeletal social spending This book is a challenge that the triumph of deregulated capitalism has been born of freedom, that infettered free markets go hand in hand with democracy Part 1 – Two Doctor Shocks: Research and Development Chapter 1: The Torture Lab: Ewen Cameron, The CIA and the Maniacal Quest to Erase and Remake the Human Mind “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 the first shock to push through economic shock therap. And then how people who dare to resist these shock politics are shocked a third time by police, soldiers and prison interrogators.” Dr. Ewen Cameron (McGill University) believed the only way to teach his patients healthy new behaviors was to break up old pathological patterns. Return the mind to a state when it was as Aristotle claimed a tabula rasa. Then reteach them. “Shock and awe” warfare on the mind Dr. Cameron’s experiments, building upon Dr. Hebb’s earlier breakthrough, laid the scientific foundation for the CIA’s two-stage psychological torture method What makes the Bush regime different: after 9/11, it dared to demand the right to torture without shame – they changed the rules to avoid criminal prosecution –instead of labeling them as POW’s they named them enemy combatants so they had no rights (deprived sensory stimulation, use phobias (fear of dogs), depravation (kept in tiny cell) Chapter 2: The Other Doctor Shock; Milton Friedman and the search for a Laissez-Faire Laboratory The Chicago School economics 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. If something is wrong within a free-market economy – high inflation or unemployment – it has to be that the market is not truly free (too much governmental intervention) Developmentalists in the southern cone of Latin America o With nationalist left wing ideology becoming popular, the Chicago school set up a program with a Catholic University in Chile, where their economic students would come to the Chicago school to pick up their ideology on the Ford scholarship, return to Chile and transform the government a laissez-faire free market and practice the Chicago School ideas on that economy. It didn’t work out, the Chicago boys were so marginal that they did not even register on the Chilean electoral spectrum; the country was turning more nationalist, CIA finally formed coup to overthrown Allende after he threatened to nationalize American businesses CIA helped overthrow Iran, influenced Indonesian leader President Sukarno o He killed all the left wing leaders in the country and then before people could recover from the initial shock appointed the “Berkeley mafia”, to change the economic system o Same thing in Brazil but waited too long to implement system, citizens rebelled due to high unemployment and blamed the Chicago school ideology, lead to total shutdown of democracy, more killings Chapter 3: States of Shock: The Bloody Birth of the Counterrevolution Chilean revolution lead by General Augusto Pinochett took over the Chilean government by force, killing or “disappearing many citizens” o They implemented the Chicago school ideology, inflation rose 375 percent, unemployment went from 3 to 20 percent o Foreign companies and small clique of financiers know as the “piranhas” made a killing o 1982 – Chile’s economy crashed and debt exploded, faced hyperinflation and unemployment hit 30 percent o Pinochet had to nationalize many companies, investigations of fraud, only thing that protected Chile was the state still owned a copper mining company which accounted for 85 percent of Chile’s export revenues Spread to Brazil, Argentina, Uruguay; coups all backed by the CIA o Countries all used torture similar to techniques used by US; depriving the senses, electroshock Chapter 4: Cleaning the Slate: Terror Does it Work Although Pinonchet died before he could be taken to court for his crimes; Osvaldo Etchecolatz (police commissioner of Buenos Aires) was convicted for homicide, unlawful imprisonment, torture o With that sentence, the judge played his part in the rewriting of Argentine history: the killings of leftists in the seventies were not part of a “dirty war” in which two sides clashed……explained that the killings were part of a system, planned far in advance, duplicated in identical fashion across the country and committed with clear intent not of attacking individual person but of destroying the parts of society that those people represented..commitment of genocide In Chile, Argentina and Uruguay, the juntas staged massive ideological cleanup operations, burning books by Freud, Marx, and Neruda, closing hundreds of newspapers and magazines, occupying universities, banning strikes, and political meetings It wasn’t only unionists who faced preemptive attack – it was anyone who represented a vision of society built on values other than pure profit The pattern of these disappearance was clear: while the shock therapists were trying to remove all relics of collectivism from the economy, the shock troops were removing the representatives of that ethos from the streets, the universities and the factory floors 500 babies were born inside Argentine torture centers, immediately enlisted in the plan to reengineer society, given to the couples who shared the same ideology of the dictatorship Chapter 5: “Entirely Unrelated”: How an ideology was cleansed of its crimes With the two Nobel prizes, the most prestigious jury in the world had issued its verdict: the shock of the torture chamber was to be forcefully condemned, but economic shock treatments were to be applauded – and the two forms of shock were, “entirely unrelated” Without an examination of the larger plan to impose “pure” capitalism on Latin America and the powerful interests behind that project, the acts of sadism documented in the Amnesty (Nobel PP) report made no sense at all – they were just random, free-floating bad events, drifting in the political ether, to be condemned by all people of conscience but impossible to understand Is neoliberalism an inherently violent ideology, and is there something about its goals that demands this cycle of brutal political cleansing, followed by human rights cleanup operations? By failing to hold the ideology accountable for the crimes committed in its first laboratory, this subculture of unrepentant ideologues was given immunity, freed to scour the world for its next conquest. Chapter 6: Saved by a War: Thatcherism and its Useful Enemies Margaret Thatcher (PM of Britain) had very poor ratings; Argentina invaded the British owned Falklands; Thatcher recognized it as a last-ditch hope to turn around her political fortunes and immediately went into battle mode; ratings went from 25 percent to 59 percent; won the next election; implemented in a democratic society, shock therapy, by breaking up the biggest union (coal miners) just after Reagan fired 11,400 air traffic controllers; between 1984 and 1988 the British government privatized British Telecom, British Gas, British Airways, British Airport Authority, and British Steel, while it sold shares in British Petroleum 1982, Milton Friedman wrote, “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 polices, to keep them alive and available until the politically impossible becomes politically inevitable” Friedman and his corporate underwriters attempted to mimic this process with their unique brand of intellectual disaster preparedness. Built right-wing think tanks, like Heritage and Cato and PBS miniseries “Free to Choose” Chapter 7: The New Doctor Shock: Economic Warfare Replaces Dictatorship “Bolivia’s situation could well be compared with the case of a person who has cancer. He knows he faces that most dangerous and painful operation which monetary stabilization and a number of other measures will undoubtedly be. Yet he has no alternative. “– Cornelius Zondag, U.S. economic adviser to Boliva, 1956 1985, Bolivia was part of the democratic wave, had been run by dictatorship for past 18 years, choose former president Paz Estenssoro (former nationalist president), he appointed secret economic cabinet that redrafted new economic plan to help with inflation of 14,000 percent, Consulted Jeffrey Sachs (Harvard Economics) mix between neoliberalism and Keynes (power of economics to fight poverty), President Paz implemented new plan shockingly to country, inflation did drop to 10 percent but unemployment went up, salaries went down, government disappeared labor executives until strikes were uplifted, NY Times described Sachs as “evangelist for democratic capitalism” Chapter 8: Crisis Works: The Packaging of Shock Therapy Much of Latin America was spiraling in hyperinflation, the crisis was the result of two main factors, both with roots in Washington financial institutions. The first was passing on illegitimate debts accumulated under dictatorships to new democracies, the second was the Friedman-inspired decision at the Federal Reserve to allow interest rates to soar, which increased the size of those debts overnight Volcker Shock – raised interest rates as high as 21 percent, led to wave of bankruptcies and tripled number of people who defaulted on mortgages The more the global economy followed his prescriptions, with floating interest rates, deregulated prices and export oriented economies, the more crisis prone the system become producing more meltdowns which governments would take more of his radical advice Uruguay and Philippines were hit with a perfect storm of financial shocks – debt shocks, price shocks and currency shocks -- created by the increasingly volatile, deregulated global economy Chapter 9: Slamming the Door on History: A Crisis in Poland, A Massacre in China Poland was under control of Moscow government; Lech Walesa created union Solidarity with members from the mines, shipyards and factories. Won right for elections, won 260 seats out of 261 from communists and took control of government, group wanted to put an end to the state’s viselike grip on the economy but not sure how; country needed debt relief and some aid; worked with Sachs, who got 3 billion in support from IMF (Friedmans clan); sold off state mines, shipyards and factories to the private sector Both countries had needed to exploit shock and fear to push through a free-market transformation. In China, where the state used the gloves-off methods of terror, torture and assignation, the result was, from a market perspective an unqualified success. In Poland, where only the shock of economic crisis and rapid change were harnessed –and there was no overt violence – the effects of the shock eventually wore off, and the results were far more ambiguous In Poland, democracy was used as a weapon against “free markets” on the streets and at the polls. Meanwhile in China, where the drive for free-wheeling capitalism rolled over democracy in Tinanmen Square, shock and terror unleashed one of the most lucrative and sustained investor booms in modern history. Chapter 10: Democracy Born in Chains: South Africa’s Constricted Freedom South Africa under the apartheid, was run by the minority whites who controlled much and the majority blacks were repressed; huge gap between white economic status and blacks Ended the apartheid, the ANC (Mandela) took over on notion to nationalize the gold mines South Africa under the ANC looked uniquely positioned to turn that persistent dream into reality., during the transition new government worked on political where the white old government worked to keep economy separate from political reform; economy went toward privatization and free market w/o regulation ANC adopted policies that exploded both inequality and crime to such a degree that South Africa’s divide is now closer to Beverly Hills and Baghdad Couldn’t redistrube land, get free aids drugs, Signed on WTO (made it illegal to subsidize the auto plants and textile factories), budget was being used up to service the massive debt Chapter 11: Bonfire of a Young Democracy: Russia Chooses “The Pinochet Option” Gorbachev had led the Soviet Union through a process of democratization; the press had been freed, parliament, local councils, presidents and v.p.’s had been elected, and the constitutional court was independent; Gorbachev was moving toward a mixture of free market and a strong safety net with key industries under public control Russia was the democratic revolution was already under way - in order to push through a Chicago School economic program that peaceful and hopeful process that Gorbachev began had to violently interrupted, then radically reversed Reformers waited only a week after Gorbachev resigned to launch economic shock therapy; free-trade polices, rapid fire privatization, lifted price controls Yeltsin pulled a Pinchoet; burned down parliamentary, all to defend Russia’s new capitalist economy from the grave threat of democracy But Russia wasn’t a repeat of Chile – it was Chile in the reverse order; Yeltsin imposed shock therapy in a democracy, then could defend it by dissolving democracy and staging a coup; both scenarios were supported by the west Lawrence Summers (helping shape Russia policy from Clinton administration); privatization, stabilization and liberalization Important question about free-market ideologues: Are they “true believers,” driven by ideology and faith that free markets will cure underdevelopment, as is often asserted, or do the ideas and theories frequently serve as an elaborate rationale to istic motive? All ideologues are corruptible The point of shock therapy is to open up a window for enormous profits to be made very quickly – not despite the lawlessness but precisely because of it What we have been living for is three decades is frontier capitalism, with the frontier constantly shifting location from crisis to crisis, moving on as soon as the law catches up. Chapter 13: Let it Burn: The Looting of Asia and “The Fall of a Second Berlin Wall” Asia countries of South Korea, Thailand, Indonesia and others were victims of pure panic, made lethal by the speed and volatility of globalized markets As for the IMF, the world body created to prevent crashes, took the do-nothing approach that had become the trademark since Russia. Jose Pinera, saw the fall of the Tigers as the “second fall of Berlin Wall” and the collapse of “the notion that there is a ‘Third Way’ between free-market democratic capitalism and socialist statism. After IMF’s new rules and loans; 20 million Asians were thrown into poverty, “planned misery” The IMF tried to help; it didn’t work; Internal IMF audit came in with saying “crisis should not be used as an opportunity to seek a long agenda of reforms just because leverage is high, irrespective of how justifiable they may be on merits” Became a business-buying bazaar, “World biggest going out of business sale”; Sold government assets to private foreign companies for less than company was worth Seattle WTO talks broke down in 1999, anti-globalization movement; rising opposition would not slow the determination to advance this extraordinarily profitable agenda; its advocates would simply ride the waves of fear and disorientation created by bigger shocks than ever before Chapter 14: Shock Therapy in the U.S.A. – The Homeland Security Bubble When Rumsfeld joined W. Bush in 2001, mission to reinvent warfare – turning it into something more psychological than physical, and far more profitable than it had ever been before Cheney and Rumsfeld had strong private relations with Halliburton and pharmaceutical companies. Halliburton was given task to find things US troops were doing that a private company could do for profit Although stated goal was fighting terrorism, the effect was the creation of the disaster capitalism complex – new economy in homeland security, privatized war and disaster reconstruction both at home and abroad Every aspect of war was to maximize profitability and sustainability In 2003, Bush administration spent $327 billion on contracts to private companies – nearly 40 cents of every discretionary dollar If these freelance interrogators are to keep landing lucrative contracts they must extract from prisoner the kind of “actionable intelligence” their employers in Washington are looking for. It’s a dynamic ripe for abuse: just as prisoners under torture will usually say anything to make the pain stop, contractors have a powerful economic incentive to use whatever techniques are necessary to produce the sought after information Not only does it create an incentive to spy, torture and generate false information but it creates a powerful impetus to perpetuate the fear and sense of peril that created the industry in the first place Chapter 15: A Corporatist State: Removing the Revolving Door, Putting in an Archway NYT’s Stephen Kinzer explored the coflating corporate interests with the national interest o A U.S.-based multinational corporation faces some kind of threat to its bottom line by the actions of a foreign government demanding the company pay taxes or observe labor laws or environmental laws. Company is somthings nationalized o U.S. politicians hear of this corporate setback and reinterpret it as an attack on the U.S. o Happens when the politicians have to sell the need for intervention to the public, at which point it becomes a broadly drawn struggle of good versus evil “A chance to free a poor oppressed nation from the brutality of a regime that we assume is a dictatorship because what other kind of regime would be bothering an American Company?” Because what is unquestionably good for the bottom line of these companies is cataclysmwarm, epidemics, natural disasters, and resource shortages. They have a need to impress their shareholders and not an interest to the country Many Bush administration (Rumsfeld, Cheney) refused to completely cut their ties from the homeland security private sector The right to limitless profit seeking has always been at the center of the neocon ideology Chapter 16: Erasing Iraq: In Search of a “Model” for the Middle East George W. Bush “spreading freedom in a troubled region” The use of ultimate shock to forcibly wipe out and erase all obstacles to the construction of model corporatist states free from all interference Became a global experiment in behaviorism Washington’s game plan for Iraq: shock and terrorize the entire country, deliberately ruin its infrastructure, do nothing while its culture and history are ransacked, then make it all okay with an unlimited supply of cheap household appliances and imported junk food. In Iraq, this cycle of culture erasing and culture replacing was not theoretical; it all unfolded in a matter of weeks Chapter 17: Ideological Blowback: A Very Capitalist Disaster Iraq’s economy had been anchored by its national oil company and 200 state-owned companies; Bremer privatized immediately 200 companies all to foreign investors; fired 500,000 state employees (De-Bath) All the forces tearing Iraq apart today – rampant corruption, ferocious sectarianism, the surge in religious fundamentalism and the tyranny of death squads – escalated in lockstep with the implementation of Bush’s anti-Marshall Plan That ideological blindness had three concrete effects: it damaged the possibility of reconstruction by removing skilled people from their posts, it weakened the voice of secular Iraqis, and it fed the resistance with angry people Chapter 18: Full Circle: From Blank Slate to Scorched Earth Iraqis demanded a say in the transformation of their country and when Brenner and Bush ignored them, unexpected blowback was generated Many who were posted in Iraq in the early months draw a direct link between the various decisions to delay and defang democracy and the ferocious rise of the armed resistance Keeping the promise to hand over power quickly to an elected Iraq government would have sacrificed the economic agenda behind the war and that just wasn’t going to happen Chapter 19: Blanking the Beach: “The Second Tsunami” After a tsunami in Sri Lanka in 2004, a civil war torn country with massive debt, opened up beaches that had been homes to fisherman to five star resorts and started to privatize the state controlled 80 percent of the economy; black lashed in sued and civil war began again Chicago school policies had been blocked by the normal rules of democracy Chapter 21: Losing the Peace Incentive: Israel as Warning “Guns to Caviar” index: index track the sales of fighter jets (guns) and executive jets (caviar). Executive jet sales always went down when fighter jets went up until 2003-since; the world is becoming less peaceful while accumulating significantly more profit The more panicked our societies become convinced that terrorist are everywhere, the more high tech fences it builds If the dream of the open, borderless “small planet” was the ticket to profits in the nineties, the nightmare of the menacing fortressed Western continents, under siege from jihadists and illegal immigrants, plays the same role in the new millenium