The Shock Doctrine - Book Snapshots

I've been reading "The Shock Doctrine" by Naomi Klein, and I am enjoying it so far. I wasn't a big fan of "Government Controlled Economy" or "Planned Economy", not because I am an expert in Economics myself, but I just don't feel like having a government that controls anything. Call me an Anarchist or whatever you want, but I always felt that whenever the government controls anything it ruins it.

"Klein compares some psychological experiments (torture by any reasonable definition of the word) carried out in the 1950s in Canada (funded by the CIA off US soil so they could plausibly deny they were researching torture) in which patients were blasted back to virtually a blank slate by sensory depravation and electric shock treatment to US foreign policy in countries such as Chile in the 1970s and Iraq today. If you had forgotten just how evil unconstrained capitalism is – it is time to read this book. If you are concerned that the world seems to believe democracy = free markets – it is time to read this book".
A review by Trevor on GoodReads.

Anyway, I am not sure if I am gonna change this point of view after finishing Klein's book or not. But away from the book's main theme, I also love how it shed the light on historical incidents I never knew about before. In this, Klein's writing are somehow similar to Noam Chomsky, and by the way, I am considering reading the third chapter of Chomsky's "What We Say Goes", which is called "Latin America: Stirrings in the Servant's Quarters" after finishing the second part of Klein's book, than I'll get back to her book later.

So, as I wrote in the title of this post, I am not going to write a book review here, what I want to do is to take some snapshots of the book and put them here. It's like taking notes of the incidents, people, and places mentioned in the book. The notes may not make a real sense on their own, but they are a way for me to keep track of what I am currently reading. Some of the notes may also be about stuff not mentioned in the book, but I stumbled upon them while searching for more info about something here or there in the book.

Salvador Allende (June 26, 1908 – September 11, 1973), Chilean physician and is generally considered the first democratically elected Marxist to become president of a country in the Americas.
Photo taken by Sebastian Baryli under Creative Commons License.

Chile, and the earlier September 11

Salvador Allende: He was born in on June 26, 1908 in Valparaíso. In 1970, he won the presidency to become the first democratically elected Marxist president of a country in the Americas. He adopted the policy of nationalization of industries and collectivization.

The United States and Allende: The possibility of Allende winning Chile's 1970 election was deemed a disaster by a US government who wanted to protect US business interests and prevent any spread of communism during the Cold War. In September 1970, President Nixon informed the CIA that an Allende government in Chile would not be acceptable and authorized $10 million to stop Allende from coming to power or unseat him.

Covert United States involvement in Chile in the decade between 1963 and 1973 was extensive and continuous. The Central Intelligence Agency spent three million dollars in an effort to influence the outcome of the 1964 Chilean presidential elections. Eight million dollars was spent, covertly, in the three years between 1970 and the military coup in September 1973, with over three million dollars expended in fiscal year 1972 alone.

Following the September 14 meeting of the 40 Committee and President Nixon's September 15 instruction to the CIA, U.S. Government efforts to prevent Allende from assuming office proceeded on two tracks. Track I comprised all covert activities approved by the 40 Committee, including political, economic and propaganda activities. These activities were designed to induce Allende's opponents in Chile to prevent his assumption of power, either through political or military means. Track II activities in Chile were undertaken in response to President Nixon's September 15 order and were directed toward actively promoting and encouraging the Chilean military to move against Allende.

1973 Chilean coup d'état: I am not trying to say here that Allende was a Saint, and the United States is the Devil. From what I've read in Klein's book, I had the feeling that the Chilean economy was at it best during Allende's rule, and the post-Allende - i.e. during Augusto Pinochet's rule - was the worse they can get. But the truth is that the the coup d'état was due to economical reasons.

In 1972, the monetary policies increasing the amount of circulating currency, adopted by economics minister Pedro Vuskovic, devalued the escudo, provoking inflation to 140 percent in 1972 and engendering a black market economy. The Allende Government acted against the black market with organised distribution of basic products. In October 1972, Chile suffered the first of many socially confrontational strikes — led by the Chilean rich — openly supported by U.S. President Richard Nixon via the CIA.

Milton Friedman and The Chicago Boys

According to Wikipedia, The Chicago Boys were a group of young Chilean economists who were trained at the University of Chicago under Milton Friedman and Arnold Harberger, or at its effective offshoot in the economics department at the Catholic University of Chile (Universidad Catolica de Chile). The training was the result of a "Chile Project" organised in the 1950s by the US State Department and funded by the Ford Foundation, which aimed at influencing Chilean economic thinking. The Chicago Boys are somehow the Chilean version of the Indonesian Berkeley Mafia.

Juan Gabriel Valdés, Chilean foreign minister in the 1990s, described the Chile Project as "a striking example of an organized transfer of ideology from the United States to a country within its direct sphere of influence... the education of these Chileans derived from a specific project designed in the 1950s to influence the development of Chilean economic thinking." He emphasised that "they introduced into Chilean society ideas that were completely new, concepts entirely absent from the 'ideas market'".

Friedman who rejected the use of fiscal policy as a tool of demand management; and he held that the government's role in the guidance of the economy should be restricted severely, was - from the American point of view - the best cure to the leftist ideologies taking place in Chile at that time.

By the way, Friedman was originally a Keynesian supporter of the New Deal and advocate of government intervention in the economy. However, his 1950s reinterpretation of the Keynesian consumption function challenged the basic Keynesian model. At the University of Chicago, Friedman became the main advocate for opposing Keynesianism.

"The theories of Milton Friedman gave him the Nobel Prize; they gave Chile General Pinochet", "Días y Noches de Amor y de Guerra", by Eduardo Galeano.

Brazil, Argentina, and Uruguay
According to Klein, the Chicago School counter-revolution spread in Latin America Southern Cone, and U.S.-supported junta took control of Argentina, Brazil, and Uruguay.

An un-organized listing of some figures in those countries mentioned - or not mentioned - in the book:

Adolfo César Diz (March 12, 1931 — October 12, 2008) was an Argentine economist who served as President of the Central Bank of Argentina from 2 April 1976 until 27 March 1981. Diz earned a bachelor in Economics from the University of Buenos Aires. He was then accepted at the University of Chicago, where he earned his master in 1957 and a PhD in Economics in 1966. A pupil of Milton Friedman, Diz was the precursor of the influential "Chicago Boys" in Latin America, where he cultivated relationships with other Chicago School graduates such as Ernesto Fontaine, Roque Fernández, Carlos Rodríguez, Fernando de Santibañes, and other well known Argentine economists trained by Arnold Harberger. Diz was recommended to the post by the new Economy Minister (José Alfredo Martínez de Hoz).

Rodolfo Jorge Walsh (born on January 9, 1927 in Lamarque*) was an Argentine writer, considered the founder of investigative journalism in Argentina. He was murdered on March 25, 1977. In 1960 he went to Cuba, where, together with Jorge Masetti, he founded the Prensa Latina press agency. He was then close to the CGT de los Argentinos. While in Cuba, It's claimed that he decrypted a CIA telex referring to the upcoming Bay of Pigs invasion, helping Castro prepare for the supposedly-secret operation. Towards the middle of 1970, Walsh began to associate with the militant Montoneros, and by 1973 he was an important official in the organization. His first nom de guerre was "Esteban", and later he was known as "El Capitán", "Profesor Neurus" or just "Neurus".

José Piñera Echenique (@pinerajose and @JosePinera) is the architect of Chile's private pension system based on personal retirement accounts. Piñera has been called "the world's foremost advocate of privatizing public pension systems". He has three younger brothers: Sebastián Piñera, a businessman-politician and the current President of Chile; Pablo Piñera, a former member of the Board of the Central Bank; and Miguel Piñera, a musician. He also has two sisters, Guadalupe and Magdalena.

Ewen Cameron: Donald Ewen Cameron (24 December 1901(1901-12-24)–8 September 1967) was a twentieth-century Scottish-American psychiatrist. He was most famous for his involvement in the Project MKULTRA of the U.S. Central Intelligence Agency. Cameron lived and worked in Albany, New York, and was involved in experiments in Canada for Project MKULTRA, a United States based CIA-directed mind control program which eventually led to the publication of the KUBARK Counterintelligence Interrogation manual. Naomi Klein states in her book "The Shock Doctrine" that Dr Cameron's research and his contribution to the MKUltra project was actually not about mind control and brainwashing, but about "to design a scientifically based system for extracting information from 'resistant sources.' In other words, torture".

George Akerlof: Akerlof is perhaps best known for his article, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in Quarterly Journal of Economics in 1970, in which he identified certain severe problems that afflict markets characterized by asymmetrical information, the paper for which he was awarded the Nobel Prize. He won the 2001 Nobel Prize in Economics shared with Michael Spence and Joseph E. Stiglitz.


Sources and Acknowledgements:
Wikipedia: Salvador Allende
Wikipedia: Collective Farming
US Department of State: Covert Action in Chile 1963-1973
Dollars & Sense: Is Chile a Neoliberal Success?
The Shock Doctrine Resources, Part 1, Chapter 2: The Other Doctor Shock
Times Online: Brainwash victims win cash claims
Chile: The Laboratory Test
The New Your Books Review: Who Was Milton Friedman? By Paul Krugman