Naomi Klein on Latin America, particularly Venezuela (2007)

Today I’d like to transcribe portions from Naomi Klein’s book The Shock Doctrine: The Rise of Disaster Capitalism (2007). The reason being that I was introduced to this book by a close friend back in 2008 during my more “radical” years which involved both feminism and my 4-year stint volunteering within the local peace community (i.e. Left-leaning political circles). Libertarian-leaning as I’ve always been, still I too was attracted to various messages advanced by the Political Left during my 20s, so here’s one example of information I was presented with back then.

Beginning on page 446:


Despite the attempts of everyone from Pinochet to Cavallo to Berezovsky to Black to portray himself as a victim of baseless political persecution, this list, by no means complete, represents a radical departure from the neoliberal creation myth. The economic crusade managed to cling to a veneer of respectability and lawfulness as it progressed. Now that veneer was being very publicly stripped away to reveal a system of gross wealth inequalities, often opened with the aid of grotesque criminality.

Besides legal trouble, there was another cloud on the horizon. The effects of the shocks that had been so integral to creating the illusion of ideological consensus were beginning to wear off. Rodolfo Walsh, another early casualty, had regarded the Chicago School ascendancy in Argentina as a setback, not a lasting defeat. The terror tactics used by the junta had put his country into a state of shock, but Walsh knew that shock, by its very nature, is a temporary state. Before he was gunned down on the streets of Buenos Aires, Walsh estimated that it would take twenty to thirty years until the effects of the terror receded and Argentines regained their footing, courage and confidence, ready once again to fight for economic and social equity. It was in 2001, twenty-four years later, that Argentina erupted in protest against IMF-prescribed austerity measures and then proceeded to force out five presidents in only three weeks.

I was living in Buenos Aires in that period, and people kept exclaiming, “The dictatorship just ended!” At the time I didn’t understand the meaning behind the jubilation, since the dictatorship had been over for seventeen years. Now I think I do: the state of shock had finally worn off, just as Walsh had predicted.

In the years since, that wide-awake shock resistance has spread to many other former shock labs—Chile, Bolivia, China, Lebanon. And as people shed the collective fear that was first instilled with tanks and cattle prods, with sudden flights of capital and brutal cutbacks, many are demanding more democracy and more control over markets. These demands represent the greatest threat of all to Friedman’s legacy because they challenge his most central claim: that capitalism and freedom are part of the same indivisible project.

The Bush administration remains so committed to perpetuating this false union that, in 2002, it embedded it in the National Security Strategy of the United States of America. “The great struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom—a single sustainable model for national success: freedom, democracy and free enterprise.” This assertion, made with the full force of the U.S. military arsenal behind it, was not enough to hold back the tide of citizens using their various freedoms to reject free-market orthodoxy—even in the United States. As a headline in the Miami Herald after the 2006 midterm elections put it, “Democrats won big by opposing free-trade agreements.” A New York Times/CBS poll a few months later found that 64 percent of U.S. citizens believed the government should guarantee health care coverage to all and “showed a striking willingness . . . to make tradeoffs” to achieve that goal, including paying up to $500 a year more in taxes.

On the international stage, the staunchest opponents of neoliberal economics were winning election after election. The Venezuelan president Hugo Chavez, running on a platform of “21st Century Socialism,” was re-elected in 2006 for a third term with 63 percent of the vote. Despite attempts by the Bush administration to paint Venezuela as a pseudodemocracy, a poll that same year recorded that 57 percent of Venezuelans were happy with the state of their democracy, an approval rating on the continent second only to Uruguay’s, where the left-wing coalition party Frente Amplio had been elected to government and where a series of referendums had blocked major privatizations. In other words, in the two Latin American states where voting had resulted in real challenges to the Washington Consensus, citizens had renewed their faith in the power of democracy to improve their lives. In stark contrast to this enthusiasm, in countries where economic policies remain largely unchanged regardless of the promises made during election campaigns, polls consistently track and eroding faith in democracy, reflected in dwindling turnout for elections, deep cynicism toward politicians and a rise in religious fundamentalism.


Pausing there on page 448 and picking back up again on page 453:


In December 2006, a month after Friedman’s death, Latin America’s leaders gathered for a historic summit in Bolivia, held in the city of Cochabamba, where a popular uprising against water privatization had forced Bechtel out of the country several years earlier. Morales began the proceedings with a vow to close “the open veins of Latin America.” It was a reference to Eduardo Galeano’s book Open Veins of Latin America: Five Centuries of the Pillage of a Continent, a lyrical accounting of the violent plunder that had turned a rich continent into a poor one. The book was first published in 1971, two years before Allende was overthrown for daring to try to close those open veins by nationalizing his country’s copper mines. That event ushered in a new era of furious pillage, during which the structures built by the continent’s developmentalist movements were sacked, stripped and sold off.

Today Latin Americans are picking up the project that was brutally interrupted all those years ago. Many of the policies cropping up are familiar: nationalization of key sectors of the economy, land reform, major new investments in education, literacy and health care. These are not revolutionary ideas, but in their unapologetic vision of a government that helps reach for equality, they are certainly a rebuke to Friedman’s 1975 assertion to Pinochet that “the major error, in my opinion, was . . . to believe that it is possible to do good with other people’s money.”

Though clearly drawing on a long militant history, Latin America’s contemporary movements are not direct replicas of their predecessors. Of all the differences, the most striking is an acute awareness of the need for protection from the shocks of the past—the coups, the foreign shock therapists, the U.S.-trained torturers, as well as the debt shocks and currency collapses of the eighties and nineties. Latin America’s mass movements, which have powered the wave of election victories for the left-wing candidates, are learning how to build shock absorbers into their organizing models. They are, for example, less centralized than in the sixties, making it harder to demobilize whole movements by eliminating a few leaders. Despite the overwhelming cult of personality surrounding Chavez, and his moves to centralize power at the state level, the progressive networks in Venezuela are at the same time highly decentralized, with power dispersed at the grass roots and community level, through thousands of neighborhood councils and co-ops. In Bolivia, the indigenous people’s movements that put Morales in office function similarly and have made it clear that Morales does not have their unconditional support: the barrios will back him as long as he stays true to his democratic mandate, and not a moment longer. This kind of network approach is what allowed Chavez to survive the 2002 coup attempt: when their revolution was threatened, his supporters poured down from the shantytowns surrounding Caracas to demand his reinstatement, a kind of popular mobilization that did not happen during the coups of the seventies.

Latin America’s new leaders are also taking bold measures to block any future U.S.-backed coups that could attempt to undermine their democratic victories. The governments of Venezuela, Costa Rica, Argentina and Uruguay have all announced that they will no longer send students to the School of the Americas (now called the Western Hemisphere Institute for Security Cooperation)—the infamous police and military training center in Fort Benning, Georgia, where so many of the continent’s notorious killers learned the latest in “counterterrorism” techniques, then promptly directed them against farmers in El Salvador and auto workers in Argentina. Bolivia looks set to cut its ties with the school, as does Ecuador. Chavez has let it be known that if an extremist right-wing element in Bolivia’s Santa Cruz province makes good on its threats against the government of Evo Morales, Venezuelan troops will help defend Bolivia’s democracy. Rafael Correa is set to take the most radical step of all. The Ecuadorean port city of Manta currently hosts the largest U.S. military base in South America, which serves as a staging area for the “war on drugs,” largely fought in Colombia. Correa’s government has announced that when the agreement for the base expires in 2009, it will not be renewed. “Ecuador is a sovereign nation,” said the minister of foreign relations, Maria Fernanda Espinosa. “We do not need any foreign troops in our country.” If the U.S. military does not have bases or training programs, its power to inflict shocks will be greatly eroded.

The new leaders in Latin America are also becoming better prepared for the kinds of shocks inflicted by volatile markets. One of the most destabilizing forces of recent decades has been the speed with which capital can pick up and move, or how a sudden drop in commodity prices can devastate an entire agricultural sector. But in much of Latin America these shocks have already happened, leaving behind ghostly industrial suburbs and huge stretches of fallow farmland. The task of the region’s new left, therefore, has become a matter of taking the detritus of globalization and putting it back to work. In Brazil, the phenomenon is best seen in the million and a half farmers of the Landless People Movement (MST) who have formed hundreds of cooperatives to reclaim unused land. In Argentina, it is clearest in the movement of “recovered companies,” two hundred bankrupt businesses that have been resuscitated by their workers, who have turned them into democratically run cooperatives. For the cooperatives, there is no fear of facing an economic shock of investors leaving, because the investors have already left. In a way, the reclamation experiments are a new kind of post-disaster reconstruction—reconstruction from the slow-motion disaster of neoliberalism. In sharp contrast to the model offered by the disaster capitalism complex in Iraq, Afghanistan and the Gulf Coast, the leaders of Latin America’s rebuilding efforts are the people most affected by the devastation. And unsurprisingly, their spontaneous solutions look very much like the real third way that had been so effectively shocked out of the way by the Chicago School campaign around the world—democracy in daily life.

In Venezuela, Chavez has made the co-ops a top political priority, giving them first refusal on government contracts and offering them economic incentives to trade with one another. By 2006, there were roughly 100,000 cooperatives in the country, employing more than 700,000 workers. Many are pieces of state infrastructure—toll booths, highway maintenance, health clinics—handed over to the communities to run. It’s a reverse of the logic of large corporations and losing democratic control, the people who use the resources are given the power to manage them, creating, at least in theory, both jobs and more responsive public services. Chavez’s many critics have derided these initiatives as handouts and unfair subsidies, of course. Yet in an era when Halliburton treats the U.S. government as its personal ATM for six years, withdraws upward of $20 billion in Iraq contracts alone, refuses to hire local workers either on the Gulf Coast or in Iraq, then expresses its gratitude to U.S. taxpayers by moving its corporate headquarters to Dubai (with all the attendant tax and legal benefits), Chavez’s direct subsidies to regular people look significantly less radical.

Latin America’s most significant protection from future shocks (and therefore from the shock doctrine) flows from the continent’s emerging independence from Washington’s financial institutions, the result of greater integration among regional governments. The Bolivian Alternative for the Americas (ALBA) is the continent’s retort to the Free Trade Area of the Americas, the now buried corporatist dream of a free-trade zone stretching from Alaska to Tierra del Fuego. Though ALBA is still in its early stages, Emir Sader, the Brazil-based sociologist, describes its promise as “a perfect example of genuinely fair trade: each country provides what it is best placed to produce, in return for what it most needs, independent of global market prices.” So Bolivia provides gas at stable discounted prices; Venezuela offers heavily subsidized oil to poorer countries and shares expertise in developing reserves; and Cuba sends thousands of doctors to deliver free health care all over the continent, while training students from other countries at its medical schools. This is a very different model from the kind of academic exchange that began at the University of Chicago in the mid-fifties, when Latin American students learned a single rigid ideology and were sent home to impose it with uniformity across the continent. The major benefit is that ALBA is essentially a barter system, in which countries decide for themselves what any given commodity or service is worth, rather than letting traders in New York, Chicago or London set the prices for them. That makes trade far less vulnerable to the kind of sudden price fluctuations that devastated Latin American economies in the past. Surrounded by turbulent financial waters, Latin America is creating a zone of relative economic calm and predictability, a feat presumed impossible in the globalization era.

When one country does face a financial shortfall, this increased integration means that it does not need to turn to the IMF or the U.S. Treasury for a bailout. That’s fortunate because the 2006 U.S. National Security Strategy makes it clear that for Washington, the shock doctrine is still very much alive: “If crises occur, the IMF’s response must reinforce each country’s responsibility for its own economic choices,” the document states. “A refocused IMF will strengthen market institutions and market discipline over financial decisions.” This kind of “market discipline” can only be enforced if governments actually go to Washington for help—as Stanley Fischer explained during the Asian financial crisis, the IMF can help only if it is asked, “but when [a country is] out of money, it hasn’t got many places to turn.” That is no longer the case. Thanks to high oil prices, Venezuela has emerged as a major lender to other developing countries, allowing them to do an end run around Washington.

The results have been dramatic. Brazil, so long shackled to Washington by its enormous debt, is refusing to enter into a new agreement with the IMF. Nicaragua is negotiating to quit the fund, Venezuela has withdrawn from both the IMF and the World Bank, and even Argentina, Washington’s former “model pupil,” has been part of the trend. In his 2007 State of the Union address, President Nestor Kirchner said that the country’s foreign creditors had told him,” “‘You must have an agreement with the International Fund to be able to pay the debt.’ We say to them, ‘Sirs, we are sovereign. We want to pay the debt, but no way in hell are we going to make an agreement again with the IMF.'” As a result, the IMF, supremely powerful in the eighties and nineties, is no longer a force on the continent. In 2005, Latin America made up 80 percent of the IMF’s total lending portfolio; in 2007, the continent represented just 1 percent—a sea change in only two years. “There is life after the IMF,” Kirchner declared, “and it’s a good life.”


Stopping on page 457.

My thoughts follow. To start off with, I continue to have mixed feelings over such material, more so now than ever before, because I do take issue with the policies of the IMF and am aware and critical of Big Corporate excesses. There remains truth in concerns over externalized costs and the ongoing pursuit of cheap labor and cheap resources extracted from nations where few alternatives are available. One could argue, as my stepdad and others do, that these examples of corporate outsourcing for production of products brings much-needed money to these communities and provides more opportunities than they otherwise would have. Yes, but what is to become of them when these plants up and leave, headed for other locations where even cheaper labor pools and/or resources can be had? Appears to leave economic devastation in their wake, which we can also see in the U.S. where communities depended on businesses that moved their operations to China or Mexico (as occurred in my own hometown down South). Sufficient alternatives don’t tend to spring up in the vacuum left behind, leading to a rise in economic and social problems in those areas, which can then turn political. I remain perplexed over what can be done about this, though I grasp that simply shrugging our shoulders and expecting people to make do with what little is left isn’t much of an answer. But neither is trying to implement a communistic/socialistic model instead since that too will prove unstable, and likely even more so.

This conundrum has left me frustrated since either way we turn it appears we’re damned. Though capitalism offers the most promise out of the modern models we’re presented with, corporatism that has arisen out of it is proving extremely alienating and inhuman. As in it forces humans to adapt to it, yet it cannot adapt to serve the needs of humans. Globalized corporatism adheres to a different set of values than do most human beings, which then stokes strife that often enough does result in political upheaval on down the road. Somehow this matter must be addressed, yet neither leaders on the political Left or Right are willing (or able) to do so. What Naomi Klein refers to as “neoliberalism” is often enough used interchangeably with the term “neoconservatism” and is embraced by both major political parties in the U.S. For whatever differences may be ascribed to these two terms, what they each fundamentally share in common is political fusion with global (multinational) corporate and banking agendas. And it’s that unto itself a lot of us out here continue to take issue with.

Now, was Naomi Klein’s book biased? Yes it was. She put her own political spin on events based on her Leftist political outlook. Certainly can’t claim her to be politically neutral, independent, or nonpartisan in her delivery there. And I understand that nowadays in a way I didn’t 10 years ago. Everybody’s got an agenda, or so it seems. So let’s look at a current news stories on how Venezuela is faring these days.

An article from The Guardian (Jan. 21, 2018) titled “‘We loot or we die of hunger’: food shortages fuel unrest in Venezuela“:

Angry about empty supermarket shelves and soaring prices, some people are breaking into warehouses, ransacking food trucks and invading outlying farms.

During the first 11 days of January the Venezuelan Observatory for Social Conflict, a Caracas rights group, recorded 107 episodes of looting and several deaths in 19 of Venezuela’s 23 states.


There have been previous incidents of looting but analysts fear that the current wave could linger amid the Venezuela’s economic freefall.

President Nicolás Maduro blames the country’s woes on an “economic war” against his government by rightwingers and foreign interests.

But his critics say his government has disrupted domestic food production by expropriating farms and factories. Meanwhile, price controls designed to make food more widely available to poorer people have had the opposite effect: many prices have been set below the cost of production, forcing food producers out of business.

Meanwhile the government has less cash to import food because of its mismanagement of the oil sector, where production has fallen to a 29-year low. Hyperinflation and the collapse of the currency have put the prices of foodstuffs available on the black market beyond the reach of many families.

But rather than reforming the economy, the government has resorted to handouts and far-fetched schemes.

So somewhere along the way that experiment obviously failed, and within a mere decade of when Naomi Klein’s book hit shelves. What are we to make of this? Seems to me that while relying on the IMF indeed proved problematic, so did switching over instead to a socialist scheme.

To be delved in deeper at a later date…