Blank Is Beautiful,

Research and Development

excerpted from the book

The Shock Doctrine

The Rise of Disaster Capitalism

by Naomi Klein

Picador, 2007, paperback

Richard Baker, a Republican congressman from New Orleans, told a group of lobbyists,

We finally cleaned up public housing in New Orleans. We couldn't do it, but God did.

Joseph Canizaro, a New Orleans' developer, after Hurricane Katrina

I think we have a clean sheet to start again. And with that clean sheet we have some very big opportunities.

a New Orleans mother after Hurricane Katrina, about Louisiana state politicians

They're not blind, they're evil. They see just fine.

For Milton Friedman ... the entire concept of a state-run school system reeked of socialism. In his view, the state's sole functions were "to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive market."

In sharp contrast to the glacial pace with which the levees were repaired and the electricity grid was brought back online, the auctioning off of New Orleans' school system took place with military speed and precision. Within nineteen months, with most of the city's poor residents still in exile, New Orleans' public school system had been almost completely replaced by privately run charter schools. Before Hurricane Katrina, the school board had run 123 public schools; now it ran just 4.

I call ... orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, "disaster capitalism."

In one of his most influential essays, Friedman articulated contemporary capitalism's core tactical nostrum what I have come to understand as the shock doctrine. He observed that "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 policies, to keep them alive and available until the politically impossible becomes politically inevitable."

For economic shock therapy to be applied without restraint - as it was in Chile in the seventies, China in the late eighties, Russia in the nineties and the U.S. after September 11, 2001 - some sort of additional major collective trauma has always been required, one that either temporarily suspended democratic practices or blocked them entirely. This ideological crusade was born in the authoritarian regimes of South America ...

David Frum, neoconservative, 1995

Here's how I think we should do it. Instead of cutting incrementally - a little here, a little there - I would say that on a single day this summer we eliminate three hundred programs, each one costing a billion dollars or less. Maybe these cuts won't make a big deal of difference, but, boy, they make a point. And you can do them right away.

When the September 11 [2001] attacks hit, the White House was packed with [Milton] Friedman's disciples, including his close friend Donald Rumsfeld. The Bush team seized the moment of collective vertigo with chilling speed ... because the key figures of the administration, veterans of earlier disaster capitalism experiments in Latin America and Eastern Europe, were part of a movement that prays for crisis the way drought-struck farmers pray for rain, and the way Christian-Zionist end-timers pray for the Rapture. When the long-awaited disaster strikes, they know instantly that their moment has come at last.

The ultimate goal for the corporations at the center of the complex [disaster capitalism] is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary and day-to-day functioning of the state - in effect, to privatize the government.

In 2003, the U.S. government handed out 3,512 contracts to companies to perform security functions; in the twenty-two-month period ending in August 2006, the Department of Homeland Security had issued more than 115,000 such contracts. The global "homeland security industry" - economically insignificant before 2001 - is now a $200 billion sector. In 2006, U.S. government spending on homeland security averaged $545 per household .

New York Times columnist Thomas Friedman in December 1996

"No two countries that both have a McDonald's have ever fought a war against each other.

The primary economic role of wars [pre-9-11] was as a means to open new markets that had been sealed off and to generate postwar peacetime booms. Now wars and disaster responses are so fully privatized that they are themselves the new market; there is no need to wait until after the war for the boom.

Amid the weapons trade, the private soldiers, for-profit reconstruction and the homeland security industry, what has emerged as a result of the Bush administration's particular brand of post-September 11 shock therapy is a fully articulated new economy. It was built in the Bush era, but it now exists quite apart from any one administration and will remain entrenched until the corporate supremacist ideology that underpins it is identified, isolated and challenged.

the neoconservative policy trinity - the elimination of the public sphere, total liberation for corporations and skeletal social spending

In every country where Chicago School policies have been applied over the past three decades, what has emerged is a powerful ruling alliance between a few very large corporations and a class of mostly wealthy politicians.

A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies bottomless spending on security... other features of the corporatist state tend to include aggressive surveillance ... mass incarceration, shrinking civil liberties and often, though not always, torture.

In 1988, The New York Times ran a groundbreaking investigation into U.S. involvement in torture and assassinations in Honduras. Florencio Caballero, an interrogator with Honduras's notoriously brutal Battalion 3-16, told the Times that he and twenty-four of his colleagues were taken to Texas and trained by the CIA. "They taught us psychological methods-to study the fears and weaknesses of a prisoner. Make him stand up, don't let him sleep, keep him naked and isolated, put rats and cockroaches in his cell, give him bad food, serve him dead animals, throw cold water on him, change the temperature." There was one technique he failed to mention: electroshock. Ines Murillo, a twenty-four-year-old prisoner who was "interrogated" by Caballero and his colleagues, told the Times that she was electrocuted so many times that she "screamed and fell down from the shock. The screams just escape you," she said. "I smelled smoke and realized I was burning from the singes of the shocks. They said they would torture me until I went mad. I didn't believe them. But then they spread my legs and stuck the wires on my genitals.

The CIA produced a handbook called Kubark Counterintelligence Interrogation. The title was in code: "Kubark" is, according to The New York Times, "a cryptonym, KU a random diptych and BARK the agency's code word for itself at that time." More recent reports have speculated that the "ku" referred to "a country or a specific clandestine or covert activity." The handbook is a l28-page secret manual on the "interrogation of resistant sources" that is heavily based on the research commissioned by MKUltra - and Ewen Cameron's and Donald Hebb's experiments have left their marks all over it. Methods range from sensory deprivation to stress positions, from hooding to pair!. (The manual acknowledges early on that many of these tactics are illegal and instructs interrogators to seek "prior Headquarters approval ... under any of the following circumstances: 1. If bodily harm is to be inflicted. 2. If medical, chemical, or electrical methods or materials are to be used to induce acquiescence ."

The manual is dated 1963, the final year of the MKUltra program and two years after Cameron's CIA-funded experiments came to a close. The handbook claims that if the techniques are used properly, they will take a resistant source and "destroy his capacity. for resistance." This, it turns out, was the true purpose of MKUltra: not to research brainwashing (that was a mere side project), but to design a scientifically based system for extracting information from "resistant sources In other words, torture.

What most captured the imagination of Kubark's authors, more than any individual technique, was Cameron's focus on regression - the idea that by depriving people of their sense of who they are and where they are in time and space, adults can be converted into dependent children whose minds are a blank slate of suggestibility.

Alfred W. McCoy, a historian at the University of Wisconsin who documented the evolution of torture techniques since the Inquisition in his book A Question of Torture - CIA Interrogation from the Cold War to the War on Terror, describes the Kubark manual's shock- inducing formula of sensory deprivation followed by sensory overload as "the first real revolution in the cruel science of pain in more than three centuries."

From the seventies on, the role favored by American agents was that of mentor or trainer-not direct interrogator. Testimony from Central American torture survivors in the seventies and eighties is littered with references to mysterious English-speaking men walking in and out of cells, proposing questions or offering tips. Dianna Ortiz, an American nun who was abducted and jailed in Guatemala in 1989, has testified that the men who raped and burned her with cigarettes deferred to a man who spoke Spanish with a heavy American accent, whom they referred to as their "boss." Jennifer Harbury, whose husband was tortured and killed by a Guatemalan officer on the CIA payroll, has documented many of these cases in her important book, Truth, Torture and the American Way.

Though sanctioned by successive administrations in Washington, the U.S. role in these dirty wars had to be covert, for obvious reasons. Torture, whether physical or psychological, clearly violates the Geneva Conventions' blanket ban on "any form of torture or cruelty," as well as the U.S. Army's own Uniform Code of Military Justice barring "cruelty" and "oppression" of prisoners. The Kubark manual warns readers on page 2 that its techniques carry "the grave risk of later lawsuits," and the 1983 version is even more blunt: "Use of force, mental torture, threats, insults, or exposure to unpleasant and inhumane treatment of any kind as an aid to interrogation is prohibited by law, both international and domestic." Simply put, what they were teaching was illegal, covert by its very nature. If anyone asked, U.S. agents were tutoring their developing-world students in modern, professional policing methods-they couldn't be responsible for "excesses" that happened outside their classes.

General Peter W. Chiarelli, commander of the U.S. Army's First Cavalry Division in Iraq

We're really good at going out and breaking things. But the day I get to spend more time here working on construction rather than combat, that will be a very good day,

By the 1950s, the developmentalists, like the Keynesians and social t democrats in rich countries, were able to boast a series of impressive success stories. The most advanced laboratory of developmentalism was the southern tip of Latin America, known as the Southern Cone: Chile, Argentina, Uruguay and parts of Brazil. The epicenter was the United Nations' Economic Commission for Latin America, based in Santiago, Chile, and headed by the economist RA Prebisch from 1950 to 1963. Prebisch trained teams of economists in developmentalist theory and dispatched them to act as policy advisers for governments across the continent. Nationalist politicians like Argentina's Juan Perón put their ideas into practice with a vengeance, pouring public money into infrastructure projects such as highways and steel plants, giving local businesses generous subsidies to build their new factories, churning out cars and washing machines, and keeping out foreign imports with forbiddingly high tariffs.

During this dizzying period of expansion, the Southern Cone began to look more like Europe and North America than the rest of Latin America or other parts of the Third World. The workers in the new factories formed powerful unions that negotiated middle-class salaries, and their children were sent off to study at newly built public universities. The yawning gap between the region's polo-club elite and its peasant masses began to narrow. By the 1950s, Argentina had the largest middle class on the continent, and next-door Uruguay had a literacy rate of 95 percent and offered free health care for all citizens. Developmentalism was so staggeringly successful for a time that the Southern Cone of Latin America became a potent symbol for poor countries around the world: here was proof that with smart, practical policies, aggressively implemented, the class divide between the First and Third World could actually be closed.

For the heads of U.S. multinational corporations, contending with a distinctly less hospitable developing world and with stronger, more demanding unions at home, the postwar boom years were unsettling times. The economy was growing fast, enormous wealth was being created, but owners and shareholders were forced to redistribute a great deal of that wealth through corporate taxes and workers' salaries. Everyone was doing well, but with a return to the pre-New Deal rules, a few people could have been doing a lot better.

The Keynesian revolution against laissez-faire was costing the corporate sector dearly. Clearly what was needed to regain lost ground was a counterrevolution against Keynesianism, a return to a form of capitalism even less regulated than before the Depression.

... The enormous benefit of having corporate views funneled through academic, or quasi-academic, institutions not only kept the Chicago School flush with donations but, in short order, spawned the global network of right-wing think tanks that would churn out the counterrevolution's foot soldiers worldwide.

... Friedman, in his first popular book, Capitalism and Freedom, laid out what would become the global free-market rulebook and, in the U.S., would form the economic agenda of the neoconservative movement.

First, governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that corporations could be running at a profit. And third, they should dramatically cut back funding of social programs. Within the three-part formula of deregulation, privatization and cutbacks, Friedman had plenty of specifics. Taxes, when they must exist, should be low, and rich and poor should be taxed at the same flat rate. Corporations should be free to sell their products anywhere in the world, and governments should make no effort to protect local industries or local ownership. All prices, including the price of labor, should be determined by the market. There should be no minimum wage. For privatization, Friedman offered up health care, the post office, education, retirement pensions, even national parks. In short, and quite unabashedly, he was calling for the breaking of the New Deal-that uneasy truce between the state, corporations and labor that had prevented popular revolt after the Great Depression. Whatever protections workers had managed to win, whatever services the state now provided to soften the edges of the market, the Chicago School counterrevolution wanted them back.

And it wanted more than that-it wanted to expropriate what workers and governments had built during those decades of frenetic public works. The assets that Friedman urged government to sell were the end products of the years of investment of public money and know-how that had built them and made them valuable. As far as Friedman was concerned, all this shared wealth should be transferred into private hands, on principle.

Though always cloaked in the language of math and science, Friedman's vision coincided precisely with the interests of large multinationals, which by nature hunger for vast new unregulated markets. In the first stage of capitalist expansion, that kind of ravenous growth was provided by colonialism-by "discovering" new territories and grabbing land without paying for it, then extracting riches from the earth without compensating local populations. Friedman's war on the "welfare state" and "big government" held out the promise of a new font of rapid riches-only this time, rather than conquering
new territory, the state itself would be the new frontier, its public vices and assets auctioned off for far less than they were worth.

In March 1972 ... Jack Anderson, a syndicated newspaper columnist, published an explosive series of articles based on documents that showed that the telephone company had secretly plotted with the CIA and the State Department to block Allende from being inaugurated two years earlier. In the face of these allegations, and with Allende still in power, the U.S. Senate, controlled by Democrats, launched an investigation and uncovered a far-reaching conspiracy in which ITT' had offered $1 million in bribes to Chilean opposition forces and "sought to engage the CIA in a plan covertly to manipulate the outcome of the Chilean presidential election.

The Senate report, released in June 1973, also found that when the plan failed and Allende took power, ITT moved to a new strategy designed to ensure that he would not "make it through the next six months." Most alarming to the Senate was the relationship between ITT executives and the U.S. government. In testimony and documents, it became clear that ITT was directly involved in shaping U.S. policy toward Chile at the highest level. At one point, a senior ITT executive wrote to National Security Adviser Henry Kissinger and suggested that "without informing President Allende, all U.S. aid funds already committed to Chile should be placed in the 'under review' status." The company also took the liberty of preparing an eighteen-point strategy for the Nixon administration that contained a clear call for a military coup: "Get to reliable sources within the Chilean military," it stated". . . build up their planned discontent against Allende, thus, bring about necessity of his removal.

Indonesia's 1965 coup followed a very different trajectory. Since the Second World War, [Indonesia] had been led by President Sukarno, the Hugo Chavez of his day (though minus Chavez's appetite for elections). Sukarno enraged the rich countries by protecting Indonesia's economy, redistributing wealth and throwing out the International Monetary Fund and the World Bank, which he accused of being facades for the interests of Western multinationals. While Sukarno was a nationalist, not a Communist, he worked closely with the Communist Party, which had 3 million active members. The U.S. and British governments were determined to end Sukarno's rule, and declassified documents show that the CIA had received high-level directions to "liquidate President Sukarno, depending upon the situation and available opportunities.

After several false starts, the opportunity came in October 1965, when General Suharto, backed by the CIA, began the process of seizing power and eradicating the left. The CIA had been quietly compiling a list of the country's leading leftists, a document that fell into Suharto's hands, while the Pentagon helped out by supplying extra weapons and field radios so Indonesian forces could communicate in the remotest parts of the archipelago. Suharto then sent out his soldiers to hunt down the four to five thousand leftists on his "shooting lists," as the CIA referred to them; the U.S. embassy received regular reports on their progress. As the information came in, the CIA crossed names off their lists until they were satisfied that the Indonesian left had been annihilated. One of the people involved in the operation was Robert J. Martens, who worked for the U.S. embassy in Jakarta. "It really was a big help to the army," he told the journalist Kathy Kadane twenty-five years later. "They probably killed a lot of people, and I probably have a lot of blood on my hands, but that's not all bad. There's a time when you have to strike hard at a decisive moment. "

Shortly after [Salvador] Allende was elected, his opponents inside Chile began to imitate the Indonesia approach with eerie precision. The Catholic University, home of the Chicago Boys, became ground zero for the creation of what the CIA called "a coup climate." Many students joined the fascist Patria y Libertad and goose-stepped through the streets in open imitation of Hitler Youth. In September 1971, a year into Allende's mandate, the top business leaders in Chile held an emergency meeting in the seaside city of Vina del Mar to develop a coherent regime-change strategy. According to Orlando Sáenz, president of the National Association of Manufacturers (generously funded by the CIA and many of the same foreign multinationals doing their own plotting in Washington), the gathering decided that "Allende's government was incompatible with freedom in Chile and with the existence of private enterprise, and that the only way to avoid the end was to overthrow the government."

Although the overthrow of Allende was universally described as a military coup, Orlando Letelier, Allende's Washington ambassador, saw it as an equal partnership between the army and the economists. "The 'Chicago boys,' as they are known in Chile," Letelier wrote, "convinced the generals that they were prepared to supplement the brutality, which the military possessed, with the intellectual assets it lacked. "

Chile's coup, when it finally came, would feature three distinct forms of shock, a recipe that would be duplicated in neighboring countries and would reemerge, three decades later, in Iraq. The shock of the coup itself was immediately followed by two additional forms of shock. One was Milton Friedman's capitalist "shock treatment," a technique in which hundreds of Latin American economists had by now been trained at the University of Chicago and its various franchise institutions. The other was Ewen Cameron's shock, drug and sensory deprivation research, now codified as torture techniques in the Kubark manual and disseminated through extensive CIA training programs for Latin American police and military.

These three forms of shock converged on the bodies of Latin Americans and the body politic of the region, creating an unstoppable hurricane of mutually reinforcing destruction and reconstruction, erasure and creation. The shock of the coup prepared the ground for economic shock therapy; the shock of the torture chamber terrorized anyone thinking of standing in the way of the economic shocks. Out of this live laboratory emerged the first Chicago School state, and the first victory in its global counterrevolution.

The Shock Doctrine

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