The Shock Doctrine: the rise of disaster capitalism is a recent book written by left-wing writer, journalist and broadcaster Naomi Klein (author of No Logo).
The book’s central theme revolves around how for the past 50 years, neo-conservatives, adherents of the right-wing economist Milton Friedman, have been consciously initiating and exploiting “shock” events to bring about “free market capitalism” and to destroy the public sphere (a theme which was featured in No Logo).
By shocking and cowing populations into submission, corporations, backed up by right wing governments, have been able to penetrate into areas of a country’s economy from which the private sector were previously excluded — education, housing, health, security, prisons and the armed forces.
To back up her claim she examines major political and economic upheavals in Latin America, Iran and the Middle East, South Africa, Asia, Russia and Eastern Europe and draws attention to how Iraq has been the location for disaster-capitalism’s most recent escapade.
It is an excellent antidote for anyone who views capitalism as benign. Klein explains how Friedman believed that for complete privatisation and market liberalization to take place, authoritarian conditions would be required.
One of the first places to experience the Friedman doctrine was Indonesia, where General Suharto (1965) demonstrated that by applying massive repression pre-emptively, the country would go into a kind of shock, making it easy for resistance to be wiped out before it took place. She describes how a group of Indonesian economists, “the Berkley Mafia”, who were followers of Friedman’s ideas, helped Suharto achieve his ambitions and records how the CIA, which had been involved in the coup, regarded it as a model operation. Klein reports on how the “shock doctrine” was quickly followed up in Chile, in Russia in the 90s, in the US after September 11 2001 and in a host of other countries.
She spells out how “disaster capitalism” exploits security threats, terror attacks, economic meltdowns, political and economic crisis and natural disasters to its own advantage in order to “privatize governments” and to take control of some of the most sensitive core governmental functions. Many Latin American countries, with the return to some resemblance to democracy, found themselves saddled with the debts of the former dictatorships — a fact that was eagerly seized on by Friedman’s adherents to bring about further privatisation and liberalization policies.
Disaffected Friedmanites stated that Friedman’s economic policies, which included the privatisation of Chile’s social security system, were so wrenching that they could not “be imposed or carried out without the twin elements that underlie them all: military force and political terror”. Klein critizes the human rights movements for regarding the mass imprisonment, killing and torture of those who disagreed with Friedman’s economic medicine as narrow “human rights abuses”, rather than as tools that served clear political and economic ends.
Klein claims that Chile was transformed into a corporatist state, which she defines as a “supporting alliance between a police state and large corporations”. Its features: exploding debt, ever widening gap between the rich and poor, aggressive nationalism that justifies bottomless spending on security, shrinking civil liberties and torture.
As free market philosophies have spread so have the features identified by Klein.
In a recent radio interview for Democracy Now, Klein goes one step further to suggest that the US is close to becoming a fascist state.
She fails to elaborate further on how the adoption of a “corporatist” analysis would inform a fight back, influence the political strategies that would need to be adopted.
Indeed, the last chapter, “The shock wears off”, which deals with how the measures are being resisted and fought against, is the most disappointing.
Focusing again on Latin America she describes the governmental changes that have taken place resulting in economic reforms and partial re-nationalizations, and details how the IMF and World Bank have both come under concerted attack for their privatisation policies.
She also cites a number of examples of grassroots fightbacks, for example in Lebanon and in Thailand. However, the chapter appears unconvincing. Because Klein fails to spell out a strategy for concerted working class action, she is left backing up “left wing” governments and pointing to the heroic activities of isolated groups of trade unionists and community activists in Lebanon and the Philippines. Considered in the context of the march towards worldwide privatisation and liberalization, this hardly provides a worked out political strategy as to how working class activity can be revived and mobilized.
Environmental disasters, she writes, have been exploited by corporations intent on dismantling public sector provision in every sphere. At a time when the effects of global warming are just beginning to be felt, a section of capital is waiting eagerly for the next disaster!
Klein reports how in Sri Lanka, after the devastation of the 2004 tsunami, foreign investors and international lenders used the atmosphere of panic to hand the coastline over to property developers and to dispossess thousands of fishing people who wanted to rebuild their villages near the water front.
In New Orleans, the flood was regarded by capitalists as a golden opportunity for radical social engineering; Klein describes how they went about privatising the school system and destroying any vestiges of public housing.
But in her chapter on South Africa, Klein sees the inability of the ANC to improve the conditions of the South African working class as being exclusively due to the international financial markets. She fails to analyse the politics of the ANC, portraying them as being victims of finance capital. The ANC were trained by international finance capital not to implement the “Freedom Charter”. Any sign that they were about to renege was met with economic shock tactics by the markets. Nelson Mandela said at the ANC’s 1997 national conference that “it was impossible for countries to decide national economic policy without regard to the likely response of the markets”; he cited the debt burden as the single obstacle to keeping the promises of the Freedom Charter.
On Iraq, Klein quotes from Rumsfeld’s forgotten speech “that the job of government is not to govern but to subcontract that task to the more efficient and generally superior private sector”. That vision of a hollow government was applied to Iraq, in which . “Everything from war fighting to disaster response was a for-profit venture”. The role of the state was not to provide security, but to purchase it at a market price.
In Bremer’s Iraq the Friedman dream become a reality, with the “public sector reduced to a minimal number of employees, mostly contract workers, living in a Halliburton city state, tasked with signing corporate-friendly laws drafted by KPMG and handing out duffle bags of cash to Western contractors protected by mercenary soldiers, themselves shielded by full legal immunity.”
In relation to Iraq that Klein spells out further how she sees “disaster capitalism” as being different from liberal capitalism. In the past companies in capitalist economies wanted stable, profitable environments in which to make profits. Coups and military interventions were a means to that end, not the goal itself. In disaster capitalism wars and other disasters are ends in themselves for sectors such as military industries, security and privatised health; wars, epidemics, natural disasters and resource shortages translate into booming profits. Klein believes that the “war on terror” has provided for corporate America an even more effective way of making money by providing avenues for endless war abroad and a security state at home.
This book is well researched; particularly well worth a read are the chapters on Russia and South Africa. However, because the main focus of the book is on the development and implementation of “disaster capitalism” throughout the world, without any critical analysis of left political movements, the reader comes away with the depressing impression that workers and the left are always destined to be victims, and not architects of our own destiny.