The Shock Doctrine: The Rise of Disaster Capitalism

Chapter 20 describes the Chicago School approaches used in the aftermath of Hurricane Katrina in August 2005 in New Orleans. In September 2005, Klein was in New Orleans to report on the aftermath. The Bush administration was criticized for its slow response to provide assistance to the mostly poor, Black population who had been unable to evacuate the city. The Heritage Foundation, a right-wing think tank, proposed a series of neoliberal measures to rebuild the city, including abolishing taxes, waiving regulations, and transforming all public schools into charter schools. These measures were all adopted.

At this time, the US program in Iraq was pivoting away from using contractors to employing local Iraqis. Many of those contractors, including Halliburton, were awarded contracts in New Orleans instead. Klein argues there were other parallels between Iraq and New Orleans. For instance, as in Iraq, the government fired thousands of public workers. The state has shrunk to the point where it requires contractors to provide key services. 

Klein warns that this state of affairs will leave many people vulnerable if they cannot afford those now-privatized services during “coming disasters, ecological and political” (419). Wealthy people will be able to pay for security, evacuations, and other services in gated communities, while the poor and working people will be left behind.

Historically, conventional wisdom held that crises and conflict were bad for the economy, while peacetime led to economic growth. However, by 2007, this trend had begun to change as the United States and other governments poured billions of dollars into military contractors, creating a robust wartime economy.

No Conspiracies Required

Many people believe that governments or institutions create crises and catastrophes so that they can have an excuse to pursue their economic and political goals. Klein acknowledges this is occasionally true, as in the case of Iraq. She argues that more typically, however, their economic policies simply create the conditions for deeper and more frequent crises, which they then seek to solve by imposing more drastic Chicago School policies, which in turn create more crises, leading to a vicious circle.

Israel and the Standing Apartheid State

Israel is a key example of an economy that expands during times of war. In 1994, the Israeli and Palestinian leaders signed the Oslo Accords as the first step to a solution to the ongoing Israel-Palestine conflict. Three weeks later, Boris Yeltsin’s troops burned down the Russian Parliament building and the Russian government began to enforce brutal shock doctrine economic policies. As a result, over a million Russian Jews left Russia and emigrated to Israel. Klein argues that the sudden influx of labor meant that the Israelis no longer required Palestinian laborers, upon whom their economy formerly depended. When the Oslo Accords broke down for a variety of reasons, Israel sealed the borders with the Palestinian territories and reduced their demand for Palestinian labor.

The Israeli economy was, and is, heavily focused on information technologies and tech more generally. In 2000, the dot-com crash sent the economy into a freefall. After the September 11th, 2001 attacks, the Israeli economy pivoted to providing “homeland security” services and technology. By 2004, the economy had recovered and was booming. Israel became a massive exporter internationally of “counter terrorism-related products and services” (436). As a result, the Israeli economy improves during times of conflict and war, even as the Palestinian territories face extremely high unemployment in their “open holding pens” (442).