Book Review: The Shock Doctrine and the Rise of Disaster Capitalism
The second of the Political Cartel book reviews is The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein (Henry and Holt Company: September 2007).
The Shock Doctrine is a highly informative and alarmingly revealing read that discusses the destructive component of capitalism, with special regard to neo-liberal reforms. This book is an excellent read for anyone who wishes to understand the backwards logic of neo-liberal idealist, the destructiveness of neo-liberal reforms in developing countries, and the privatization of the U.S. government and the Iraq War. The Shock Doctrine has been, for me, a complete paradigm shifter and a new way to look at the spread of capitalism.
The Disaster Capitalism Complex is a a political and economic theory/paradigm coin-phrased by Noami Klein in her latest book The Shock Doctrine: The Rise of Disaster Capitalism. Klein illustrates, most convincingly, how free-market capitalist ideologues find means to implement their radical free-market policies, set forth by renowned (or infamous) University of Chicago Economists Fredrich Hayek and his protégé Milton Friedman, during times of “shock and awe” that follow particularly disastrous events.
With the neoliberal mantra “the economy will fix itself” kept in mind, Klein portrays the many failed experiments in pure, unregulated capitalism. She gives a case-by-case study of the many countries that have experienced some sort of economic, political, or social shock that paralyzes the populace into an incoherent state of mind, at which time intervention by Friedmanites — such groups as Chile’s Chicago Boys, Indonesia’s Berkeley Mafia , IOs such as the IMF and the World Bank, and individuals such as Friedrich Hayek, Jeffery Sachs, or Paul Bremer (the director of the CPA in Iraq) — bring about complete economic reform, such as mass privatization, business deregulation, government subsidiary cuts, and a massive push for foreign investment. The result is as or more disastrous than the original incident which sparked the reform.
The now completely free-market country lay in ruins to do gross industrial inefficiency, environmental and health decay, and ethnic strife. The middle class is completely destroyed, unemployment sky rockets, and the income gap widens at exponential rates. Decline and political disorder come as a consequence to the resulting neglect of education, public health — and freedom, because dissidents are marginalized, tortured, and many times executed. Friedman and his fanatically followers perceive these reform induced ramifications as simply part of the process, something that will blow-over once the economy is truly “free,” and the market is capable of correcting itself. Human lives, homes, families, and generations are simply a means to an end.
Klein also discusses, with great insight, Donald Rumsfeld’s “war on the bureaucracy” and the Neo-Conservative privatization binge. This massive privatization campaign lead by men like Donald Rumsfeld, Elliot Abrams, Dick Cheney, and Paul Bremer lead the way towards privatizing everything from levy inspections, Iraqi reconstruction projects, Green Zone construction and employment, and even the Iraqi interim government (the CPA). The privatization campaign has costs America billions in dollars and a multitude of failed projects, all with little oversight or quality control.
Despite her primary source work and keen writing skills, Klein is not an academic and she cannot be judge like one. Often times she will make sweeping generalizations about a certain phenomenon, event, or policy. However, as guilty as she is of certain generalizations, so are ideologues like Milton Friedman, Jeffery Sachs, and Donald Rumsfeld for believing in the “hidden hand” of market systems void of government interference.
Klein’s deft insight into some of the most complex and controversial issues comes from her expertise in the field of journalism. She is able to provide the readers with a firsthand account of the privatization of Iraq, and the awful living conditions in countries that are suffering from the affects of neo-liberal policies. It is certain that some readers may feel Naomi Klein’s book is nothing but conspiratorial rhetoric and anti-Bush propaganda. However, it would be rather difficult to support such a claim in the face of desecrated economies and a country riveted by civil strife and a failing government.
By the end of the book, the reader will see world events through a new prism; a perhaps less trusting, less submissive view will be given the government and its leaders. The Shock Doctrine will shock the mind into believing that everything isn’t always as it seems and sometimes people with the power make the wrong decisions.
The problem I have with your argumentation is I see a fallacy of division at work here. There the overall working of every economic component which worked together for disastrous effects. But you assume that because that whole didn’t work, every component of the economic structure is at fault.
I do make the same argument with regard to MNC’s. We are on the same page there. What you continue to not address is the influence that monopoly had on low growth. In your last post, you mention how the low growth required massive amounts of loans which eventually lead to globalization and MNCs. I’m with you there but what if he growth did happen so that loans were not required? I argue that had the privatization process been carried out the way I prescribed, you might not have had that problem in the first place.
Chris McNeal
26 Mar 08 at 6:31 pm
“you assume that because that whole didn’t work, every component of the economic structure is at fault.”
I agree that it may come across as a fallacy of division, but the individual components need not all be discredited. Although I think Naomi Klein (and many others who’ve spoke out against neo-liberalism) make a strong case that its an arcane and wholly quixotic economic model. The erasure of all protectionist measure (tariffs, subsidies, nationalized industries) and the promotion of direct foreign investment from MNCs is anything but vague or general in scope. All of these individual components “combined” were “at fault.” When evaluating something you must address the “whole” and determine whether or structure used worked or not.
This fallacy of division could be applied to just about anything. The Nationalist Socialist Movement, as a whole, didn’t work. Not every component of the structure was at fault for the execution of 6 million Jews and one of the worst wars to ever ravage our planet, but, overall, the structure was damaging, to say the least. So we say National Socialism didn’t work, regardless of any redeeming components.
Neo-liberalism, as a whole, is awful for developing economies (period), regardless of any “components” that may not be at fault for its “awfulness.” Because, to be frank, if you substituted any number of neo-liberal ideas, would it still be neo-liberalism? Maybe, maybe not. But when evaluating a given period of economic reform, you must look at the maro-policy, or the whole, and how it effected the micro-realm.
“What you continue to not address is the influence that monopoly had on low growth.”
What do you want me to say? That government run monopolies were bad, and the economies had stagnated? I’ll concede that fact, fine. The point still stands, though, that the “Washington Consensus,” which adopted the neo-liberal reform model as the official policy of the IMF/SAPs, was disastrous for the nations that suffered the wrath neo-liberalism.
“I argue that had the privatization process been carried out the way I prescribed, you might not have had that problem in the first place.”
If it had been possible, sure. But people like Milton Friedman, Frederich Hayek, and the “Chicago Boys” made sure nothing of the sort happened.
Chris, I highly recommend you read this book.
S.C. Denney
27 Mar 08 at 12:08 am
just keep in mind that what naomi calls capitalism often, just like many on the left, is mercantilism and financialization, even fascism.
true/ pure capitalism is none of those things.
as charles featherstone points out :
“What Klein describes in her essay is a very ugly industry, a worldwide cadre of well-educated professional planners and managers in and out of government and the military “devoted to perpetual pre-emptive deconstruction” now running a “standing office of perpetual pre-emptive reconstruction”
[this neocolonialism is not a product of capitalism, but government policy]
Jesse
20 May 08 at 3:20 pm
What’s the “Washington Consensus” if not the closest thing to modern day economic liberalism?
S.C. Denney
20 May 08 at 3:56 pm
“official policy of the IMF/SAPs, was disastrous for the nations ”
exactly. they are all about control, not free markets.
in contrast….hayek is not advocating controls by such over arching bodies….
“The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity–or rather that local prices are connected in a manner determined by the cost of transport, etc.–brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.”
http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html
Jesse
20 May 08 at 3:56 pm