Shock Doctrine: Interview with Naomi Klein

The Truthdig Interview With Naomi Klein

Kasia Anderson
TruthDig
Thu, 26 Jun 2008 00:07 EDT

©The Independent

Critics and challengers of Naomi Klein's work had better take a close look at her latest book, "The Shock Doctrine: The Rise of Disaster Capitalism," before launching their attacks. This is one writer whose research and documentation are so exhaustive that would-be detractors will not only find her analysis to be dauntingly watertight, even if they don't share her views about the unnatural disasters enabled by free-market capitalism, but they might also discover that some of her source material seems strangely familiar.

That's because she took a page - or several hundred pages, rather - from just the sort of think tanks, government officials, scholars and publications that would seem to oppose her ideas most forcefully. But instead of trying to explain recurring socioeconomic patterns in the wake of various global crises by using a familiar "lefty" lens to justify her claims, Klein looks to the likes of Milton Friedman, the Cato Institute, Henry Kissinger and the Financial Times to bolster her argument about how "disaster capitalism" was cooked up decades ago and how it can explain what happened following Hurricane Katrina, Augusto Pinochet's 1973 Chilean coup, and more recent events like Burma's cyclone and the floods in the American Midwest.

The inner workings and key subscribers of disaster capitalism were exposed when the book first came out last September. Klein called in just before the June 24 paperback release of "The Shock Doctrine" to discuss with Truthdig's Associate Editor Kasia Anderson this scary piece of nonfiction, as well as the resource-rich Shock Doctrine Web site, and how she believes the notion of disaster capitalism is, unfortunately, still relevant at this moment.

Kasia Anderson: So, I have read your book and was very alarmed, and I think it was a nice wake-up call for me. But let's start out by talking a little bit about disaster capitalism, which is the central idea of your book. I was reading your L.A. Times article from earlier this year and you say, "Over the last four years, I have been researching a little-explored area of economic history: the way that crises have paved the way for the march of the right-wing economic revolution across the globe. A crisis hits, panic spreads and the ideologues fill the breach, rapidly reengineering societies in the interests of large corporate players. It's a maneuver I call 'disaster capitalism.' " So that lays the groundwork a little bit.

Now, with all due respect to your keen perception, why do you think this is a "little-explored area of economic history" when you're looking at events that go back as far as five decades?

Naomi Klein: Well, I think largely because this is our contemporary history, and there hasn't been that much looking back at how ... the economic model that has been dominant since Reagan - how it has spread throughout the world, and when there is a look back, the people doing the looking back are the people who imposed the policies in the first place. It's been a victor's history, and it's been a history told by the Cato Institute and the Heritage Foundation, and there have been some important left-wing academics who have begun to provide a counter-history like David Harvey at CUNY University ... a couple of years ago [he] wrote "A Brief History of Neoliberalism," which was really the first alternative history of how these ideas swept the globe.

But, in terms of why the crisis has not been understood by popular audiences before - popular readers before - has to do with the fact that, not that this is a secret, but that it's a tactic that has been discussed exclusively in technocratic circles. So my sources on this are, you know, Washington conferences attended by central bank presidents, think tanks, the International Monetary Fund. And there is a kind of an armor that goes up around how highly technical and specialized the language is around these discussions - it's almost designed to make laypeople's eyes roll back into their heads.

So, I was fortunate to work with some wonderful researchers, graduate students, who were working in these areas of researching World Bank policies, and came across this sort of cache of literature, of technocratic literature, and we found the smoking-gun quotes like John Williamson, who was the man who coined the term the Washington consensus, a very powerful Washington economist, admitting that there had never been a case of a developing world country accepting the Washington consensus without a crisis, and he gave a name for this, he called it "The Crisis Hypothesis." And it turns out that there had been all these studies conducted by think tanks, by academic economists, studying the interrelationship between what they call deep crisis and deep reform. And once again, if you didn't know what you were looking for, you wouldn't necessarily read a paper with that title, you know?

Anderson: Yeah.

Klein: But once I knew what I was looking for, I started to see it all over the place.

Anderson: So, can you briefly walk us through how a seemingly politically unrelated disaster, like a natural disaster, creates the condition for economic shock therapy and how it plays out from there?

Klein: Yeah, I think what this comes out of is a profound understanding that the more radical pieces of the right-wing economic program like privatizing Social Security or privatizing water just don't enjoy popular support, and that creates a problem in a democracy - it doesn't create a problem in a dictatorship, because you can do it anyway in a dictatorship.

Anderson: Right.

Klein: In fact, it was only dictatorships that were willing to impose these policies for the first decade in the '70s. It was Pinochet's Chile, Videla's Argentina, Brazil and Uruguay under military regimes that experimented with Chicago-school economics. It wasn't until the '80s that democratic governments started imposing them. And that's when Milton Friedman wrote this sentence that I quote in the book: "Only a crisis, actual or perceived, produces real change, and when that crisis occurs, the change that occurs depends on the ideas that are lying around."

And I think that phrase, "ideas that are lying around," is really key to understanding how this works. Because it's essentially a mission statement for the Washington think tanks, which Friedman was tremendously instrumental in building and inspiring and supporting. And, you know, what we saw in the '70s and early '80s was an explosion of right-wing think tanks whose mission statement really was to get the ideas ready for when the next crisis hits. And in some cases, what we see from a lot of these think tanks is that they also create atmospheres of crisis.

Just for fun, I would look at the list of papers published by the Heritage Foundation and the Cato Institute and the American Enterprise Institute, looking for how many times the word crisis appears in a paper - "the coming crisis in Medicare," "the coming crisis in Social Security" - so, they really specialize in claiming that countries are just doomed unless they follow this set of unwanted reforms.

But, to answer your question about natural disasters, the think tanks are instrumental in having the ideas ready, and the best example to me is Hurricane Katrina ...

Anderson: Yeah.

Klein: ... because the levees broke, and the state - all three levels of government failed - municipal, state, federal. And really, the whole thing was an indictment of this very ideology. Everyone was saying, "Where is the government? Where's the government when you need it?" And maybe this whole idea of vilifying the state wasn't such a great idea after all. And even people like Jonah Goldberg were saying, you know, "Where's big government when you need it?"

And I think a lot of people assumed that Katrina would be a wake-up call, an ideological wake-up call. There was one writer who said it should be for the neocons, the breaking of the levees should be for the neocons what the fall of the Berlin Wall was for Communists. And you know what, it should have been, but it wasn't, and it's for two reasons: One, progressives were tentative and unwilling to really, I think, fill the breach with ideas of our own for how to reconstruct New Orleans in a completely different way, in a much more democratic way, and also to talk about global warming when there was a feeling of, you know, we don't want to be. ... You often heard people say ... "This isn't a time for politics."

Anderson: Right.

Klein: Well, meanwhile, at the Heritage Foundation, two weeks after the levees broke, they had a meeting - and we have the minutes from this meeting, which we can link to. ...

Anderson: On the Documents and Resources section?

Klein: Yeah, yeah - we definitely should link to this one. The heading on the document is. ... Well, first of all, the people who attended the meeting were from a variety of right-wing think tanks, as well as the Republican Study Group - highly placed Republican congresspeople. And they came up with 32 free-market solutions for Hurricane Katrina. And it was everything from give parents school vouchers instead of rebuilding the public schools; mixed-use housing instead of repairing the public housing; drill in ANWR [the Arctic National Wildlife Refuge] ...; build more oil refineries. I mean, it was just the wish list!

And so what you see there is just, you know, the readiness of the right - aided by these think tanks, funded by multinational corporations and the richest families in the United States - to seize on a crisis that they themselves created with their ideology to push for more of the same. I mean, Katrina was a catastrophe, the flooding of New Orleans was a catastrophe created by heavy weather linked to global warming, because the increase in category 5 hurricanes is directly linked to warming ocean temperatures, and weak infrastructure, which is linked to the systematic neglect of the public sphere as a result of the campaign to destroy the New Deal.

And what is their solution? It's more fossil fuels ... and destroying the public infrastructure altogether. And the fact is much of this has happened. The public housing in New Orleans is being destroyed. The hospitals - the public hospital in New Orleans is still not open, Charity Hospital. The school system ... has been handed over to charter schools.

Anderson: So you would say that think tanks having these ideas lying around is kind of a way of cuing each other with their inside language to potential future opportunities?

Klein: Well, I mean, the ideas are the same no matter what the crisis is. They just get rebranded to meet the crisis, right? So, suddenly privatizing Social Security is an economic stimulus to deal with the recession. And suddenly, you know, school vouchers are part of reconstructing from a hurricane. It's the same ideas. So, it's easy to have them lying around, because you've got the same answers to every problem.

And we're seeing it now with this huge push, led by [Newt] Gingrich, now picked up by Bush and McCain, to deal with the cost of high gas prices by drilling offshore, and they want to drill in ANWR - Gingrich does, and a lot of the right-wing think tanks. So whatever the crisis is, it's an opportunity to just push harder for the same old policies that they haven't been able to get through without a crisis. ... As soon as ... people started to really talk about recession, [Treasury Secretary Henry] Paulson started talking about privatizing Social Security - a huge piece of the Bush platform that they could not get through without a crisis.

Anderson: I could see how maybe some followers of Milton Friedman might say you're drumming up conspiracy theories, but it's hard to argue with the evidence that you're presenting here and in your book. So, what do you say, or what might you say, to critics who think you're making connections and seeing deliberate actions on the part of these governments that just aren't there?

Klein: Well, everything in my book is documented. And calling me a conspiracy theorist is just a political strategy. It's not actually an argument - it's a way to not have an argument. It's an argument avoidance strategy. And, you know, I'm really careful not to make any claims that I can't source. And my sources are the right-wing economists themselves, which is what I think drives them most crazy. I mean, one of my most favorite reviews for the book was a negative review in the Financial Times where he says, "The worst thing she does is quote the Financial Times to bolster her argument."

Anderson: Consider the source.

Klein: It's true! I found the Financial Times enormously [helpful]. ... And, you know, I don't quote other "lefty," you know, analysts to support my claims, much as I may enjoy reading their writing. That's not what's supporting this argument. Now, I think there is a real pushback now from the true, you know, hard-core Friedman fanatics, like the Cato Institute has published an attack paper on the book, and ... Reason [magazine] has sort of an unnatural obsession and so on.

But this is really about the Friedman legacy. ... It's not really about my book, because my book really isn't about Milton Friedman. My book talks about where Friedman fit into large historical forces. And I'm very clear in the book that if Milton Friedman hadn't played this role, somebody else would have let the counterrevolution against the New Deal, because it wasn't just his idea - it was a revolt of the elites who were tired of big trade unions, and they were tired of paying high taxes. It was a pushback after many, many victories from the left.

And the University of Chicago, for various reasons, became ground zero for that pushback, for that counterrevolution. And Milton Friedman, because he is a tremendous popularizer, really led the way and played an important historical role, meeting with many political leaders, acting as their adviser.

But this isn't about him. And, for instance, in this Cato Institute background paper, the writer talks a lot about how Milton Friedman only went to Chile once and met with Augusto Pinochet once, you know, that hardly constitutes influence. Well, first of all, I make that clear in my book that he only went there once, but the whole point of those three chapters is that there was a massive program that was started by the U.S. State Department to bring hundreds of Latin American students to the University of Chicago to study.

Anderson: Right, the exchange program.

Klein: Yeah, and then to go back to Chile and take up top positions in Pinochet's government as finance minister, head of the Central Bank. So, this is so much bigger than Friedman, and the response is only focused on Friedman. And it's only focused on redeeming his name. And ... the truth is that the far right doesn't have, or the far economic right, doesn't have a lot of gurus, right ... [they] don't have a lot of heroes like this. There's Reagan ... but intellectual heroes - there really aren't many, right?

Anderson: Right.

Klein: I mean, who - Ayn Rand? It's a thin bunch. And Friedman and his family are really quite obsessed with legacy. In one of his last interviews - I just saw a clip of it on the Cato Institute Web site - he talks about how the real test of his influence is not what people think of him now but what they'll think of him in 25 years. So, there was, you know, a great deal of consciousness about securing a place in history. And when Milton Friedman died in 2006, it seemed that his place was pretty secure, I mean, the obituaries and memorials were just across-the-board hagiography. And that's changing, you know, and that's threatening. And so now there's this pushback that I think is really not about the economic legacy of these policies but much more about a man and his fans and his family wanting to protect their version of the role he played in history.

And what's interesting is that ... the fiercest fight is actually happening right now at the University of Chicago, where it was announced three weeks ago that there's going to be a Milton Friedman Institute - a $200-million Milton Friedman Institute - to carry his legacy forward, and it was launched by Gary Becker, who was one of his students and a real disciple - a true Chicago-school ideologue who still teaches at the school. And what's interesting is that there's been a little bit of a rebellion of academics at the University of Chicago. And more than 100 of these professors, faculty members, have signed a protest letter talking about how it's already so difficult for them ... and these are not economists - they're anthropologists, they're historians, political scientists ... how difficult it is for them to travel in the global South, like in Latin America and Africa, and be associated with the Chicago School of Economics, because it is seen as having done so much damage around the world. This is really unprecedented - the idea that Milton Friedman's name would be seen as a liability at his own alma mater!

And what's striking to me is, when I read the letter, is that, you know, at the height of the Pinochet controversy in the '70s, when Orlando Letelier accused Milton Friedman of being complicit in the human rights abuses and Milton Friedman won the Nobel Prize, there was like a sort of flurry of protests, but only three professors at the time signed their names to this protest letter. So, even at the height of these huge debates about torture, only three people sign their names, but now in 2008, more than 100 faculty members at the University of Chicago are willing to sign their names.

Anderson: Do you think it was out of fear before - or maybe losing their position, at the lower end of the crisis scale?

Klein: Well, I don't know, I think it still would be risky, right?

Anderson: Yeah, sure.

Klein: I mean, especially because this is a $200-million, you know, endowed gift to the university that it's easy to fundraise for precisely because Milton Friedman's policies are so very profitable! And, you know, in this day and age, it's actually really rare for any building to be named after an academic, you know.

Anderson: Mmm-hmm.

Klein: Usually they're named after corporations or donors. So, I mean, it says something about Milton Friedman in a sense that ... I think that it's because he has been such a gift to corporate America that corporate America is willing to give back.

Anderson: In the form of a building.

Klein: Yeah.

Anderson: Now, speaking of more recent events - on your Shock Doctrine Web site I've been following updates and stories about more recent crises and catastrophes, and I thought of you yesterday because I read a headline about President Bush visiting flood-damaged Iowa and saying, "You'll come back better!" from the damage and the floodwaters. So can you talk a little bit about other events that have happened since the release of your book and contextualize them according to your ideas?

Klein: Well, first of all, always be afraid when George Bush says he's going to build back better, because we've heard that line before. What happens after disasters is that - it's not mysterious - what we need to do is look at what the pre-existing agenda was, right?

Anderson: Yeah.

Klein: And what was it that the business lobby in any given area wanted to do but couldn't because of people - because of people being there to defend their interests. And it's a pretty good bet that those ideas will immediately resurface after the crisis hits and when people are least able to organize an effective opposition. The most dramatic example of this is right now in Burma. There was recently a piece in The Washington Post about how the Burmese regime immediately started parceling out the highly fertile land of the Irrawaddy Delta, which was the hardest-hit region by the cyclone, to their cronies, and just essentially treating the disaster ... in the same way the tsunami was treated - as if it cleared the land and was now free to be parceled out. ...

Anderson: To fancy resorts.

Klein: Yeah, or more profitable agribusiness companies and industrial fishing because that area - which is Burma's rice bowl, the most fertile agricultural land - was like the coasts of Sri Lanka, was inhabited by small-scale farmers and fishing people. They were in the way. And it was an immediate shock doctrine move.

The other thing, of course, that generals did was use the disorientation and chaos to push through this constitutional referendum, which would have been, according to Burmese activists - it would've been a focal point for a new wave of protests after the protests had been so brutally repressed last September. But of course, there was no chance of that happening in the midst of the disaster. So that's a pretty classic example of what I write about in the book - a really tragic one.

You know, China is a really interesting example, because, I think. ... One of the things I write about in the book is that the crises are volatile, and they can go either way, and the right has developed this shock doctrine strategy to have their ideas ready and move immediately when a crisis hits precisely because the fear is that the left will move - that it will unleash forces that are quite damaging.

Milton Friedman developed his crisis philosophy in response to watching how progressives responded to the Great Depression. As far as Milton Friedman was concerned, everything went wrong with the response to the Great Depression, because that was what created the New Deal; it was what created all the social programs that his ideological movement has been bent on dismantling for the past half-century.

So, he was well aware that these sort of market shocks can go in progressive directions, and there's many cases of this. One example is Mexico in 1985 where there was an earthquake - terrible earthquake hit Mexico City. But what happened was that the buildings that immediately fell apart, immediately collapsed, were overwhelmingly public housing, housing for poor people. And buildings right next to those public housing buildings - privately owned or government buildings - sustained minimal damage.

So what the earthquake showed was what people suspected already, which was that the government had been cutting corners in building homes for poor people, that they hadn't respected safety codes, that they had probably taken all kinds of bribes along the way. And it launched a democracy movement in Mexico that ultimately unseated the PRI - the 60-year rule of the PRI. And there's a whole analysis in Mexico about how everything started with that earthquake, and there's a book I read while I was researching "The Shock Doctrine" called "Cracking Open Mexico" that talks about the role of the earthquake.

So, if we look at what's happening in [China's] Sichuan province, it's quite striking, because you have this same phenomenon with the schools, where many schools have collapsed - an estimated 10,000 children were killed in the earthquake. And you have all these photographs of a school that just collapsed completely right next to a building that's standing intact. And then you have the rage of the parents, and you have this added factor in China which is that the state told these parents that they could only have one child. That was a state policy. And you have these children who represent the hope for six adults - the grandparents and the parents - and now the state that forced these parents to have one child now appears to not have taken care of that child, neglected that child. And, you know, there's something extremely powerful about the rage of the parent with nothing left to lose. ...

Anderson: I've seen those photos.

Klein: Amazing, right?

Anderson: Yeah.

Klein: So, China could end up being a counter-example to the shock doctrine, where I think the predictable response is what the Chinese government has already said, you know, we're going to build back better, with even bigger factories, you know, and they've been very open about this, and we should expect nothing less. China's economic development model is extraordinarily land-hungry. Any land that is cleared they will obviously redesign, and they will put to the use of their vision of economic development. So, that wouldn't be a surprise if that happened. They pretty much do that anyway.

But what would be really interesting is if this kick-started a democracy movement in China, and I don't think it's out of the question, because China's in a really tough position right now in terms of timing with the Games. We are seeing repression and a locking down of critical coverage of the earthquake in the Chinese press, but I really feel like there's only so much they can do. I mean, the Games are in two months, and I think after the crackdown in Tibet, they're very wary of more backlash.

Anderson: What do you think about what's going to happen in the Midwest? Any prognostications?

Klein: You know, I don't have any yet. What do you think?

Anderson: Well, I think that there will be parts of big cities that might be hard-hit, and that might find themselves restructured differently later. I don't know too much about the city layouts of these places that were affected most, like Cedar Rapids, places like that. So, I'm interested, in kind of a morbid way, unfortunately, to see if something like what's gone on in New Orleans and other places that you describe in your book - if that's going to be the case. ...

Klein: Well, I think that ... what's gonna happen is that it's intersecting with the global food crisis and the fact that the price[s] of crops are at record highs right now, because of scarcity, and the agribusiness companies like Monsanto and Cargill are reporting record profits in the midst of a food crisis. And I think there will be more land grabs; I think that the few small-scale farmers, independent farmers, that are left are probably going to be gobbled up.

Anderson: Are you at all optimistic about a possible regime change in the U.S., if a Democrat in the White House would, in fact, represent this ... ?

Klein: You know, I'm optimistic about the possibility of social movements in the U.S. demanding a change in ideology. I'm optimistic because I've been blown away by the responses I've been getting from the book and just how receptive people are to talking about systems as opposed to just people. And I feel like the electoral campaigns - even though [Barack] Obama's campaign has been inspiring in many ways, it's also been a way of not talking about politics at a moment when we have so many urgent issues calling out for real policy debates. And instead we have been stuck in the political equivalent of "American Idol," right?

So, my optimism is entirely contingent on whether we can build counter-movements of the type that generated the New Deal, because I don't really think it's about the man in power. I think if we look at Obama's economic inclinations, this is not where he's prone to take risks. I think he's prone to take some risks with foreign policy much more than with domestic economic policy.

Anderson: He's been criticized for that.

Klein: Well, look at who he appointed as his chief economic adviser.

Anderson: Well, I think that just about does it for me. We will certainly direct our readers and listeners to your Shock Doctrine Web site to look at all the documents and also all the updates. ...

Klein: Great. I'm so pleased that this is happening. Thank you.

Anderson: Yeah, me too, and thanks so much for your time - I've really enjoyed talking to you.

Klein: My pleasure.

Additional links:

Klein's key resources from her book are archived and updated on The Shock Doctrine Web site.

See how disaster capitalism is still figuring into current events in the news.

Also, check out the extensive collection of Shock Doctrine documents archived on the site.

Watch "The Shock Doctrine" film by Klein and director Alfonso Cuarón: