The Shock Doctrine: The Rise of Disaster Capitalism
Page 77
holds Poland’s economy at ransom
powers within and over
USAID
USA Today,
USIS
Valdés, Juan Gabriel
Varley, John
Vasiliev, Dimitry
Vdovin, Yuri
Velasco Portillo, Susan
Veneroso, Frank
Venezuela
Verint Systems
surveillance equipment by
Videla, Jorge
Vietnam, torture in
Villani, Mario
Vinnell
violence, post-disaster risks of
Vivendi
Volcker, Paul
“Volcker Shock,”. See also debt shock; interest rates, a key trigger for disaster capitalism
Volvo
voting rights, as a threat to unfettered capitalist
Wade, Robert
wages
declines in
See also minimum wage; poverty; wealth
Wagner, Billy
Walesa, Lech
Walker, David M.
Wall Street, its profits from the Asia crisis
Wall Street Journal,
Wal-Mart
Walsh, Rodolfo
Walsh, Vicki
Walter Reed Medical Center (U.S.)
Walters, Barbara
Wang Hui
war
corporate profits from
as mass torture
as a performance piece
privatization of
prosecution of (see military activity)
as a “rational policy”
“War on Terror,”
market forces affecting
Washington, Viola
“Washington Consensus” (economic policies)
Washington Post
“water-boarding”
Waxman, Henry
wealth
among disaster capitalists
greed and
increasing inequalities of
marked disparities in
redistribution of
reduction of disparities in
See also poverty; wages
weapons of mass destruction (WMDs)
Webb, Jim
Weinstein, Harvey
welfare services, privatization of
Weschler, Lawrence
Westcoast Energy
Western Hemisphere Institute for Security Cooperation
Wielgosz, Przemyslaw
Willett, Sabin
Williams, Gloria
Williamson, John
Willis, Frank
Wills, Garry
Winfrey, Oprah
Wired,
Wolf, Martin
Wolfe, Michael
Wolfowitz, Paul
Woodward, Bob
Woolsey, James
World Bank
economic shock therapy demanded by
founding principles of
government debts owed to
in Iraq
mandate of ignored
neoconservatives working at
state opposition to
World Economic Forum (Davos)
World Trade Organization (WTO)
economic shock therapy demanded by
opposition to and within
World Vision
Wriston, Walter
Wujec, Henryk
Wyllie, Andrew M.
X-ray security machines
Yahoo
Yamaichi Securities
Yee, James
Yeltsin, Boris
declares a state of emergency
replaced by Putin
Yukos (oil company)
Zakaria, Fareed
Zañartu, Mario
Zhao Ziyang
Zikode, S’bu
Zondag, Cornelius
ABOUT THE AUTHOR
Naomi Klein is the award-winning author of the bestselling books No Logo and Fences and Windows and cocreator of the documentary film The Take. Her books have been translated into twenty-eight languages and received awards. Her column for The Guardian and The Nation is syndicated around the world.
* These include Anne Collins’s Governor General’s Award-winning In the Sleep Room, John Marks’s The Search for the Manchurian Candidate, Alan Scheflin and Edward Option Jr.’s The Mind Manipulators, Walter Bowart’s Operation Mind Control, Gordon Thomas’s Journey into Madness and Harvey Weinstein’s A Father, a Son and the CIA, written by the psychiatrist son of one of Cameron’s patients.
* Even today, when ECT, much refined and including procedures to ensure the safety and comfort of patients, has become a respectable and often effective treatment of psychosis, temporary short-term memory loss remains a side effect. Some patients still report that their long-term memories have also been impacted.
* If Cameron had been slightly less powerful in his field, his “psychic driving” tapes would surely have been dismissed as a cheap joke. The entire idea came to him from an advertisement for the Cerebrophone, a bedside phonograph with pillow speakers that claimed to be “a revolutionary way to learn a foreign language while you sleep.”
* The 1983 version is clearly geared to classroom use, complete with pop quizzes and friendly reminders (“Always start each session with fresh batteries”).
* Under pressure from lawmakers in Congress and the Senate, as well as the Supreme Court, the Bush administration was forced to moderate its position somewhat when Congress approved the Military Commissions Act of 2006. But although the White House used the new bill to claim that it had renounced all use of torture, it left huge holes allowing CIA agents and contractors to continue to use Kubark-style sensory deprivation and overload, as well as other “creative” techniques including simulated drowning (“water-boarding”). Before signing the act, Bush attached a “signing statement” asserting his right “to interpret the meaning and application of the Geneva Conventions” as he sees fit. The New York Times described this as the “unilateral rewriting of more than 200 years of tradition and law.”
* Walter Heller, the famed Kennedy-government economist, once mocked the cultishness of Friedman’s followers by dividing them into categories: “Some are Friedmanly, some Friedmanian, some Friedmanesque, some Friedmanic and some Friedmaniacs.”
* Not all the U.S. professors sent under the program were comfortable with this role. “I felt that the University should not be involved in what essentially was becoming a rebellion against the government,” said Len Doyle, the Berkeley professor appointed to head Ford’s Indonesian economics program. That point of view got Doyle recalled to California and replaced.
* Interestingly, Arnold Harberger was hired as a consultant to Suharto’s finance ministry in 1975.
* Allende was found with his head blown apart. Debates continue over whether he was shot by one of the bullets fired into La Moneda or he shot himself rather than give Chileans the lasting image of their elected president surrendering to an insurrectionary army. The second theory is the more credible.
* Some Chicago School economists claim that the first experiment in shock therapy took place in West Germany on June 20, 1948. That’s when Finance Minister Ludwig Erhard eliminated most price controls and introduced a new currency. The moves were sudden and without warning, a tremendous shock to the German economy, leading to widespread unemployment. But that is where the parallels end: Erhard’s reforms were restricted to price and monetary policy, they were not accompanied by cuts to social programs or by rapid introduction of free trade, and many measures were taken to protect citizens from these shocks, including increasing wages. Even post-shock, West Germany easily met Friedman’s definition of a quasi-socialist welfare state: it provided subsidized housing, government pensions, public health care and a state-run education system, while the government ran, and subsidized, everything from the phone company to aluminum plants. Crediting Erhard with inventing shock therapy makes for a palatable narrative, since his experiment took place after West Germany was libe
rated from tyranny. Erhard’s shock, however, bears little resemblance to the sweeping transformations currently understood as economic shock therapy—that method was pioneered by Friedman and Pinochet, in a country that had just lost its liberty.
* The junta was so eager to auction off the country to investors that it advertised “a 10 percent discount on the price of land for ground-breaking within 60 days.”
* The Latin American operation was modeled on Hitler’s “Night and Fog.” In 1941, Hitler decreed that resistance fighters in Nazi-occupied countries would be brought to Germany to “vanish in the night and fog.” Several high-profile Nazis took refuge in Chile and Argentina, and there is some speculation that they may have trained the Southern Cone intelligence agencies in these tactics.
* The episode was the basis for Costa-Gavras’s superb 1972 film, State of Siege.
* The prison administration at Libertad worked closely with behavioral psychologists to design torture techniques tailored to each individual’s psychological profile—a method now used at Guantánamo Bay.
* The Montoneros were formed as a response to the previous dictatorship. Peronism was banned, and Juan Perón, from exile, called on his young supporters to arm themselves and fight for a return to democracy. They did, and the Montoneros—though they engaged in armed attacks and kidnappings—played a significant part in forcing democratic elections with a Peronist candidate in 1973. But when Perón returned to power, he was threatened by the Montoneros’ popular support and encouraged right-wing death squads to go after them, which is why the group—the subject of much controversy—was already significantly weakened by the time of the 1976 coup.
* The criminal codes of many countries, including Portugal, Peru and Costa Rica, bar acts of genocide, with definitions that clearly include political groupings or “social groups.” French law is even broader, defining genocide as a plan intended to destroy in whole or in part “a group determined by any arbitrary criteria.”
* This brought electroshock therapy full circle to its earliest incarnation as an exorcism technique. The first recorded use of medical electrocution was by a Swiss doctor practicing in the 1700s. Believing that mental illness was caused by the devil, he had a patient hold on to a wire that he powered with a static electricity machine; one jolt of electricity was given for each demon. The patient was then pronounced cured.
* The contemporary expression of this personality-breaking process is found in the way Islam is used as a weapon against Muslim prisoners in U.S.-run jails. In the mountain of evidence that has cascaded out of Abu Ghraib and Guantánamo Bay, two forms of prisoner abuse come up again and again: nudity and the deliberate interference with Islamic practice, whether by forcing prisoners to shave their beards, kicking the Koran, wrapping prisoners in Israeli flags, forcing men into homosexual poses, even touching men with simulated menstrual blood. Moazzam Begg, a former prisoner at Guantánamo, says he was frequently forcibly shaved and a guard would say, “This is the part that really gets to you Muslims, isn’t it?” Islam is desecrated not because it is hated by the guards (though it may well be) but because it is loved by the prisoners. Since the goal of torture is to unmake personalities, everything that comprises a prisoner’s personality must be systematically stolen—from his clothes to his cherished beliefs. In the seventies that meant attacking social solidarity; today it means assaulting Islam.
* After the end of dictatorship, the Madres became some of the fiercest critics of the new economic order in Argentina, as they still are today.
* Even with these precautions, human rights activists were not safe from the terror. Chile’s jails were filled with human rights lawyers, and in Argentina the junta sent one of its top torturers to infiltrate the Madres, posing as a grieving relative. In December 1977, the group was raided; twelve mothers were permanently disappeared, including the leader of the Madres, Azucena de Vicenti, along with two French nuns.
* In the 1950s, the Ford Foundation often served as a front organization for the CIA, allowing the agency to channel funds to anti-Marxist academics and artists who did not know where the money was coming from, a process extensively documented in The Cultural Cold War by Frances Stonor Saunders. Amnesty was not funded by the Ford Foundation; nor were the most radical of Latin America’s human rights defenders, the Mothers of the Plaza de Mayo.
* For this account I am indebted to Marguerite Feitlowitz’s inspiring book, A Lexicon of Terror.
* Beating hyperinflation had not saved Germany from depression and then fascism, a contradiction Sachs has never addressed in his persistent use of this analogy.
* For two decades, Bolivians did not know how their shock therapy program had been devised. In August 2005, twenty years after the drafting of the original decree, the Bolivian journalist Susan Velasco Portillo interviewed the original members of the emergency economic team, and several of them shared information about the clandestine operation. This account is primarily based on those memories.
* It may well have been at the time, but the century was not over—Russia’s Chicago School experiment was to come.
* Loser was fired after Argentina’s 2001 collapse. The consensus was that the IMF under his watch was so enamored of free-market policies that, as long as countries kept cutting spending and privatizing their economies, it continued to lavish loans on them, overlooking glaring weaknesses in their economies, such as mass unemployment and rampant corruption—not to mention unsustainable debt to the IMF.
* In January 2006, long after Cavallo and Menem were out of office, Argentines received some surprising news. It turned out that the Cavallo Plan wasn’t Cavallo’s at all, nor was it the IMF’s: Argentina’s entire early-nineties shock therapy program was written in secret by JP Morgan and Citibank, two of Argentina’s largest private creditors. In the course of a lawsuit against the Argentine government, the noted historian Alejandro Olmos Gaona uncovered a jaw-dropping 1,400-page document written by the two U.S. banks for Cavallo in which “the policies carried out by the government from ’92 on are drawn up…the privatization of utilities, the labour law reform, the privatization of the pension system. It is all laid out with great attention to detail…. Everyone believes that the economic plan pursued since 1992 was Domingo Cavallo’s creation, but that’s not the way it is.”
* One of the popular Solidarity slogans in 1980 was “Socialism—YES, Its distortions—NO” (which no doubt works better in Polish).
* The elections, while a breakthrough, were still rigged: from the outset, the Communist Party was guaranteed 65 percent of the seats in parliament’s lower house, and Solidarity was allowed to contest only the remaining ones. Nevertheless, the win was so sweeping that Solidarity gained effective control of the government.
* Michnik later observed bitterly that “the worst thing about Communism is what comes after.”
* The lecture formed the foundation for Fukuyama’s book The End of History and the Last Man, published three years later.
* Deng had some notable defenders. After the massacre, Henry Kissinger wrote an op-ed arguing that the party had no choice. “No government in the world would have tolerated having the main square of its capital occupied for eight weeks by tens of thousands of demonstrators…. A crackdown was therefore inevitable.”
* As the New York University anthropologist David Harvey notes, it was only after Tiananmen, when Deng went on his famous “southern tour” of China, “that the full force of the central government was put behind the opening to foreign trade and foreign direct investment.”
* Milton Friedman often joked that if he had his way, central banks would be based so purely on “economic science” that they would be run by giant computers—no humans required.
* It was the Chicago Boys in Chile, fittingly, who pioneered this process of democracy-proofing capitalism, or building what they called “new democracy.” In Chile, before handing over power to an elected government after seventeen years of junta rule, the Chicago Boys rigged the constitution
and the courts so it was legally next to impossible to reverse their revolutionary laws. They had many names for this process: building a “technified democracy,” a “protected democracy,” or, as Pinochet’s young minister José Piñera put it, ensuring “insulation from politics.” Alvaro Bardón, Pinochet’s undersecretary of the economy, explained the classic Chicago School reasoning: “If we acknowledge economics as a science, this immediately implies less power for government or the political structure, since both lose responsibility for making such decisions.”