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After shock

From Poland to Iraq and from China to New Orleans, neoliberalism has risen on the back of what Naomi Klein calls 'disaster capitalism'. She spoke to Oscar Reyes about her new book, The Shock Doctrine, and new forms of resistance

October 3, 2007
11 min read

What trajectory took you from writing about brand culture and documenting the recovered factories in Argentina to the reporting of ‘disaster capitalism’ in Iraq and elsewhere?

I was living in Buenos Aires, Argentina, and we were shooting a scene on the roof of an occupied factory when the Iraq war began. This was the root of The Shock Doctrine. The analysis of the war in Argentina and many parts of Latin America was ‘this is what happened to us’ – neoliberalism came to Latin America with blood and fire and was now being brought to the Middle East by the same means. Being there in that moment and seeing the war through a Latin American lens is what drew me to this historical look at the very real use of shocks to impose shock therapy.

There was something else, too, about watching the war from Latin America. We were there because Argentina was in the midst of a very dramatic national rejection of the Washington Consensus – the economic model that promotes the policies of privatisation, the evisceration of public services and, eventually, the remaking of the state in the interests of foreign investors. At the very moment when Argentina, this former model student of neoliberalism, was rejecting this economic model, we were seeing its imposition in Iraq by brute force.

I wrote my first column about Iraq at that time, called ‘Privatisation in disguise’. It was about how the global rejection of neoliberalism had led to the ramping up of the force that was needed to impose it. Whereas WTO, IMF and World Bank meetings still displayed the veneer of consent, suddenly the approach became ‘don’t even bother asking, just seize what you want on the battlefield of pre-emptive war’.

So, when I set out to write this book I never saw it as a change of topic. I believed that I was tracking the transition from free trade light to free trade heavy, from the arm-twisting and the quasi-peaceful imposition of this model to the overtly violent imposition of what I call ‘disaster capitalism’. This use of pre-emptive war and large-scale natural disasters to build corporate states from the rubble took place in the most anti-democratic situation you could imagine – when people were scattered, disoriented, in shock.

I thought I was going to write a book about a change, but when I looked back at the history of neoliberalism, I realised that at all of the key junctures where this ideology took its leap forward – including Chile in 1973, China in 1989, Poland in 1989, Russia in 1993, and the Asian economic crisis in 1997 and 1998 – the same logic of exploiting a moment of trauma was at work.

In the introduction to The Shock Doctrine you cite Milton Friedman’s claim that ‘only a crisis – actual or perceived – produces real change’ as the core tactical nostrum of contemporary capitalism. But many Marxists have articulated similar ideas about crises as an opportunity for change. Do you think this is also dangerous, or can crises offer the potential for positive transformation?

I think it is always dangerous, whether on the left or the right, when people say that things have to get worse before they get better. That is when the left loses its core identity of being pro-humanity and starts almost delighting in loss of life, and in pain, because that will bring about the great cataclysm. Both the left and the right have suffered from this way of thinking, but the right have been in the ascendancy for at least 35 years, so they are the ones currently capitalising on crises.

Milton Friedman’s work was shaped in opposition to Keynesianism and developmentalism rather than Marxism. More specifically, he set himself against what he perceived as the Keynesians’ successful exploitation of the crisis of the Great Depression, the market crash of 1929, which led to the imposition of the New Deal and projects like it around the world.

As far as Friedman was concerned, as he wrote in a letter to Pinochet, that is where history took its wrong turn. He contested the idea that the Great Depression was caused by deregulated markets and argued that it was caused by too much regulation of markets. He also studied how the Keynesian forces were ready with their ideas for that crisis. I think the right-wing project around the world needs to be understood as an attempt to emulate that, using extremely well funded corporate think tanks as ovens to keep ideas warm for when that crisis breaks out.

Bringing this question back to the case of Argentina is also interesting, because the collapse of the economy at the end of 2001 is what opened up space for alternatives to emerge. In fact, that is what our film The Take was about, these wonderful exciting democratic experiments that were happening in factories where, instead of allowing them to shut down, the workers were putting them back to work.

While crisis was important to the Argentinean experiment, the way of thinking of the people involved was very different to that of the shock therapists and the blank-slaters who are always dreaming of the clean sheet to start over. The people whose stories we were documenting in Argentina had a completely different idea in starting from scrap, not from scratch. It was not an ideology of erasing everything and starting over, but starting from where you are, in the rusty bits of former economic projects, and piecing them together into something new. This is more of a patchwork approach that really puts human lives and dignity at the very centre.

Some of the most exciting economic alternatives at the moment have this quality of ‘starting from scrap’, which I think emerges from learning from the past mistakes of the totalitarian left.

You mention the shift from shock therapy to shock-and-awe, but there are also attempts to soften the image of neoliberalism. Jeffrey Sachs, the economist who pioneered shock therapy, wrote his latest book on The End of Poverty. Is there any more to this than a rebranding exercise?

A lot of people are under the impression that Jeffrey Sachs has renounced his past as a shock therapist and is doing penance now. But if you read The End of Poverty more closely he continues to defend these policies, but simply says there should be a greater cushion for the people at the bottom.

The real legacy of neoliberalism is the story of the income gap. It destroyed the tools that narrowed the gap between rich and poor. The very people who opened up this violent divide might now be saying that we have to do something for the people at the very bottom, but they still have nothing to say for the people in the middle who’ve lost everything.

This is really just a charity model. Jeffrey Sachs says he defines poverty as those whose lives are at risk, the people living on a dollar a day, the same people discussed in the Millennium Development Goals. Of course that needs to be addressed, but let us be clear that we’re talking here about noblesse oblige, that’s all.

Do the tools exist for reconstructing a more just society exist?

Many of them do, and we see how deliberately they’re attacked in these moments of disorientation. Look at what has happened to New Orleans in the years since Katrina struck. The city was turned into a laboratory for these right-wing, corporate-funded think-tanks. I start The Shock Doctrine by discussing an op-ed written by Milton Friedman, written three months after the levees broke in New Orleans, in which he calls for the privatisation of the city’s schools. Well, this has really happened – following a particular form of privatisation that is favoured in the US called ‘charter schools’.

Two years after Katrina, the subsidised housing projects that allowed low-income people to live in downtown New Orleans rather than be exiled to the margins are the ones slated for demolition to be turned into condos. The original idea behind the city’s largest public health facilities, like the Charity Hospital, was also one of closing the gap, although they had been allowed to decay for decades.

These are the bridges, and it is the bridges that get bombed first by this ideology – the public housing, the public health facilities, the public schools. The central message of my book is that we’ve been told that our ideas have been tried and failed but, in fact, it is the opposite. Our ideas work, but they cost. They are very good for economic growth but they really eat into super-profit, and that is why there has been such an aggressive attempt to paint them as failures.

It sounds as though you’re also talking about the degradation and closure of public spaces, but this can go wider than using traumatic events. Take the example of the preparations for the Olympics. It is not a ‘shock’, but the mega-event of the Games ends up being used to displace communities and gentrify whole neighbourhoods.

That’s a good point, and it fits into the idea of states of exception. Leszek Balcerowicz, the former finance minister who worked with Jeffrey Sachs to impose shock therapy in Poland in 1989, said that the ideology advances in moments of extraordinary politics. He listed these moments of extraordinary politics as ends of war and moments of extreme political transition. But you are absolutely right that even Games can play that role, because they are moments of exception when our cities are no longer our cities, when other rules apply. We are going through that same thing now in Vancouver in preparation for the 2010 Winter Olympics. It is interesting because there are two states of exception that are really transforming that city. One is the increasing Canadian involvement in the war in Afghanistan and the other is the Winter Olympics. It is games and guns.

What opportunities for hope do you see in today’s world?

The project kind of came full circle. It began in Argentina on the roof of an occupied factory. I looked back at these moments of extraordinary politics, when the dream of a real alternative emerges, a non-New Labour third way between totalitarian communism and savage capitalism. Looking back at those junctures, the dream that has come up again and again is this idea of cooperatives.

This idea of co-operatives did not fail – it was never tried. Solidarity never got a chance to enact its real economic programme in Poland before those dreams were betrayed with shock therapy. In Russia there was a very clear choice not to democratically remake the economy, despite the fact that 67 per cent of Russians stated that their preferred means of privatising state companies was to hand them over to the workers as workers’ cooperatives.

I find it tremendously hopeful to realise that these ideas that we have been told are impractical did not fail. The notion that our ideas are already discredited is the major source of weakness on the left. It is what makes us tentative in key moments. Pulling these lost worlds out of the narrative of our last 35 years shows that what the vast majority of people wanted in South Africa, Poland, Russia and China did not fail, but was crushed. It was crushed by military tanks and crushed by think tanks.

Knowing how shock works can help you to steal yourself against it. Once prisoners understand how shock works as an interrogation technique they can resist these methods. I think the same is true on a mass scale. Societies that have learned from their past traumas – and many Latin American societies fit into that category – are more shock resistant, and its harder to exploit them in moments of trauma.

What we witnessed in Argentina – with the collapse of its economy and citizens suddenly being locked out of their banks – was as traumatic for Argentineans as the Great Depression. The president declared a state of siege on 19 December 2001, saying ‘everybody stay in your homes, the country is under threat, trust me’. The people poured out of their homes with pots and pans and overthrew him. If you ask everyone there why, they tell you that this had happened to them before and they weren’t going to let it happen again.

Meaning: we know how shock works and we were not going to return to a state of fearful regressed acceptance of people in positions of authority. I draw my hope from that example.

The Shock Doctrine: The Rise of Disaster Capitalism is published by Penguin, price £25

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