http://www.wsws.org/articles/2008/feb2008/kle1-f27.shtml
The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein, Allen
Lane: 2007Part 1 By Nick Beams
27 February 2008
This is the first of a two-part review of Naomi Kleins The Shock Doctrine: The
Rise of Disaster Capitalism. Part two will be posted on February 28.
Since its release last September, Naomi Kleins latest book has been climbing
best seller lists around the world. This response is the product, not merely of
an undoubtedly well-organised promotional campaign along with significant
exposure in the mass media, but of a significant shift to the left in broad
sections of the worlds population.
In every country there is widening and deepening hostility to the free market
program that has prevailed over the past two decades, and growing opposition to
the official political establishment that has promoted it.
According to Klein, her book is a challenge to the central and most cherished
claim in the official storythat the triumph of deregulated capitalism has been
born of freedom, that unfettered markets go hand in hand with democracy.
Instead, I will show that this fundamental form of capitalism has consistently
been midwifed by the most brutal forms of coercion [p. 18].
This theme has undoubtedly struck a chord. But escalating opposition to the
prevailing order inevitably raises the question: What is to be done? How can
anger at the depredations of the free market be translated into an
alternative program?
Herein lies the political significance of Kleins book. Her central argument is
that it is not necessary to overturn the capitalist profit systemindeed that
would represent simply another version of the fundamentalism that
characterises free market doctrines. On the contrary, another way can be
found, based on returning to the so-called Keynesian measuresgovernment
intervention and regulationthat were employed during the post-World War II
boom.
I am not arguing that all forms of market systems are inherently violent, she
writes in the introduction. It is eminently possible to have a market-based
economy that requires no such brutality and demands no such ideological purity.
A free market in consumer products can coexist with free public health care,
with public schools, with a large segment of the economylike a national oil
companyheld in state hands. It is possible to require corporations to pay
decent wages, to respect the rights of workers to form unions, and for
governments to tax and redistribute wealth so that the sharp inequalities that
mark the corporatist state are reduced. Markets need not be fundamentalist.
Keynes proposed exactly that kind of mixed, regulated economy after the Great
Depression, a revolution in public policy that created the New Deal and
transformations like it round the world. It was exactly that system of
compromises, checks and balances that Friedmans counterrevolution was launched
to methodically dismantle in country after country [p. 20].
Just as Keynes saw himself as a saviour of capitalismhe famously advised
President Roosevelt in 1933 to take up his policies lest orthodoxy (the free
market) and revolution fight it outso Kleins critique is not aimed at
overturning the capitalist profit system. Like Keynes, she wants to save it
from itself, by curbing its worst excesses.
Klein, of course, has the right to adopt any political stand she chooses. But
her opposition to Marxism and its method of analysis means that she continually
holds back from a deeper analysis of the global economy, lest it raise
questions that would challenge her political standpoint, and the social
interests it represents.
Klein begins by pointing to what she maintains is contemporary capitalisms
core tactical nostrumwhat she calls the shock doctrine, as articulated by
Milton Friedman. Friedman observed that only a crisisactual or
perceivedproduces real change. When that crisis occurs, the actions that are
taken depend on the ideas that are lying around. That, I believe, is our basic
function: to develop alternatives to existing policies, to keep them alive and
available until the politically impossible becomes politically inevitable [p.
6].
But Klein can provide no real explanation as to how the free market doctrines
of Friedman and his Chicago School, regarded as the writings of near-cranks in
the 1950s and 1960s, were elevated in the 1970s, leading to Friedman being
awarded the Nobel Prize for Economics in 1976.
For Klein, the application of Friedmans shock doctrines is the outcome of a
50-year campaign for total corporate liberation. Though always cloaked in the
language of math and science, Friedmans vision coincided precisely with the
interests of large multinationals, which by nature hungered for vast new
unregulated markets [p. 57].
In fact, this is far from the case. During the war, and in its immediate
aftermath, there was a significant shift by large sections of big business
towards supporting government intervention and economic regulation. Not only
did they accommodate themselves to regulatory mechanisms, they often played a
key role in setting them up.
The attitude of key sections of American business was summed up in a speech by
William Benton, founder of a business lobby group, the Committee for Economic
Development (CED), delivered in 1949:
The historic attitude of business has been to use government if it could, and
abuse it if it couldnt. Philosophically, business was committed to the
doctrine that, the government is best which governs least. The emerging CED
attitude has been that government has a positive and permanent role in
achieving the common objectives of high employment and production and high and
rising standards of living for people in all walks of life. ... The greatest
single achievement of CED ... may turn out to be the clarification it has been
developing on the role of government in the economy. ... This is our present
answer to the European brands of socialism. Long may it thrive [cited in
Robert M. Collins, The Business Response to Keynes, 1929-1964, Columbia
University Press, 1981, p. 206].
Twenty years later, Nixon summed up the attitude of large sections of the
corporate elite with his famous remark that were all Keynesians now. As far
as Friedman was concerned, however, Nixon had carried out socialist measures.
Furthermore, even if it were the case that the imposition of Friedmanite
measures was the culmination of a 50-year corporate campaign, one would still
have to explain why this campaign was successful. One would need to detail the
changes in the economic situation that rendered yesterdays crank writings
todays official wisdom.
Klein does not provide such an explanation because it would make all too clear
that the rise of Friedmanism was associated with objective processes within
the capitalist economy, leading to the end of the post-war boom and the world
economic crisis of the 1970sprocesses that Keynesian measures proved incapable
of reversing.
The free market and state repression
The economic boom following World War II was not the product of Keynesian
measures but of the restructuring of the world economy organised by the United
States, especially via the Marshall Plan. This restructuring made possible the
extension to the rest of the world of the more productive methods associated
with assembly-line production that had been developed in the United States. It
engendered an increase in the rate of profit throughout the world capitalist
economy, which became the primary factor leading to the boom, making possible
the increased wages and social concessions of this period. In other words,
Keynesian measures were the product, not the cause, of the post-war boom.
That is why, when profit rates began to turn down by the end of the 1960s and
early 1970s, Keynesian measures were unable to restore the previous expansion.
In fact, rather than alleviating economic problems, these policies, based on
increased public spending, tended to exacerbate them.
Under condition where profits were falling, Keynesian reflationary measures saw
major corporations increase their prices to try to counter the trend, rather
than increasing output and employment, leading to stagflationthe combination
of high and persistent unemployment and high levels of price inflation.
As a consequence, the application of Keynesian measures played a not
inconsiderable role in providing the social base in sections of the middle
class upon which Thatcher and Reagantwo of the chief proponents of the free
marketbased their respective successful election campaigns of 1979 and 1980.
Throughout her book, Klein establishes the connection between the imposition of
the free market agenda and the use of violent methods of state repression,
from Latin America, to China and the shock of the Tiananmen Square massacre, to
Boris Yeltsins decision to use tanks to fire on the parliament building in
1993, and to the NATO attack on Belgrade in 1999.
In the case of Latin America, where the Freidman agenda was first imposed in
the 1970s, Klein emphasises the relationship between state violence and the
economic agenda it served by criticising the human rights lobby for its refusal
to examine the reasons behind the repression it was denouncing.
Acts of terror in Chile and Argentina were framed narrowly as human rights
abuses rather than as tools which served clear political and economic ends.
[B]y by focusing purely on the crimes and not on the reasons behind them, the
human rights movement also helped the Chicago School ideology to escape from
the first bloody laboratory virtually unscathed.
Amnesty Internationals report on Argentina, detailing the military juntas
atrocities, was a breakthrough worthy of its Nobel Prize. Yet for all its
thoroughness, the report sheds no light on why the abuses were occurring. The
92-page report made no mention of the fact that the junta was in the process
of remaking the country along radical capitalist lines. It offered no comment
on the deepening poverty or the dramatic reversal of programs to redistribute
wealth, though these were the policy centerpieces of junta rule.
If the juntas economic project had been examined, she continues, it would have
been clear why such extraordinary repression was necessary and why so many of
Amnestys prisoners of conscience were trade unionists and social workers.
In another major omission, Amnesty presented the conflict as one restricted to
the local military and left-wing extremists. No other players are mentionednot
the US government or the CIA; not local landowners; not multinational
corporations. Without an examination of the larger plan to impose pure
capitalism on Latin America, and the powerful interests behind that project,
the acts of sadism documented in the report made no sense at allthey were just
random, free-floating bad events, drifting in the political ether, to be
condemned by all people of conscience but impossible to understand
[pp.118-120].
These points are well made. But they can be extended to Klein herself. She goes
further than Amnesty, but like the human rights organisation calls a halt right
at the point where further investigation should begin. If the acts of violence
were not random events but were bound up with a definite economic agenda, then
the question immediately arises: why then, in the mid 1970s? Why not earlier?
Klein does not choose to even pose the question, let alone probe the connection
between the crisis of the world capitalist economy that erupted in the 1970s,
the end of the post-war boom and the breakdown of the Keynesian program of
economic reforms. And yet the connection is clearly visible. In September 1976,
as the juntas repression was being unleashed in Argentina and Milton Friedman
was receiving the Nobel Prize, British Prime Minister James Callaghan was
explaining to the Labour Party that the days of Keynesian spending to boost the
economy were over.
According to Klein, the refusal of the human rights lobby to connect the
apparatus of state terror to the ideological project it served can be seen, in
the case of Amnesty, as an attempt to remain impartial amid Cold War
tensions. In the case of many other groups it was a question of money, given
the significance of the Ford Foundation in providing funds for human rights
organisations.
One is obliged, however, to pose the same question in relation to Klein: why
does she refuse to examine the underlying processes of the capitalist economy
that give rise to the state terror and violence she condemns?
To be continued
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