The Shocking Disaster of Capitalism

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BY SUSAN ROSENTHAL
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Naomi Klein plowing through her research notes while writing The Shock Doctrine, an important book, but one that, as our reviewer shows, is marred in some significant respects. Klein, in the manner of so many liberals (“left-liberal” in her case)–is a far better diagnostician of the horrors and cynicism of capitalism than a therapist. Her curative recommendations fall way short of what needs to be done.

Book Review: Naomi Klein, The Shock Doctrine: the Rise of Disaster Capitalism, Metropolitan Books, September 18, 2007, 576 pages, $28 (US)

It’s often been said that we are the majority, and they can’t put us all in jail. Naomi Klein proves otherwise. It’s true, they can’t put us all in jail, but they don’t need to. Klein is the anti-globalization author of No Logo: Taking Aim at the Brand Bullies. In her bold new book, The Shock Doctrine: The Rise of Disaster Capitalism, she explains how “radical capitalists” use shock treatment to impose anti-human policies on unwilling populations.

Under normal conditions, most people reject plans to raise profits by waging wars, depressing living standards, deepening inequality and decimating civil rights. Nor do they choose to abolish government regulations, minimize corporate taxes, privatize government functions and eliminate social services. Yet that is what the “free market” demands. In essence, free people don’t choose wars and free markets, they choose peace and government services, like universal health care.

Because democracy is the enemy of the free market, free-market fundamentalists must use force to get their way. “Countries are shocked — by wars, terror attacks, coups d’état and natural disasters.” Then, “they are shocked again — by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy.” A third shock is delivered “by police, soldiers and prison interrogators” against those who resist. A succession of “aftershocks” provide more opportunities for profit.

While populations are reeling and disoriented, their economies are pillaged in a capitalist feeding frenzy. Public wealth is handed to the private sector, and private debt is transferred to the public sector. A few become fabulously wealthy, and the majority are impoverished. Whether this happens quickly, as it did in Chile 30 years ago, or more gradually, as in America today, Klein describes the outcome as “extraordinarily violent armed robbery.” By the time the population recovers its bearings, the economy has been looted and the theft sanctioned by law.

This may sound way over the top, but it isn’t science fiction. Klein’s research is meticulous, and she provides many examples to make her case: Latin America, South Africa, Poland, Russia, Asia and the Middle East.

In Iraq, the U.S. invasion (Shock and Awe) was followed by economic shock. American bureaucrats rewrote Iraq’s laws to permit 100 percent foreign ownership of Iraqi businesses and to let foreign companies take all their profits out of the country, tax free. All 200 of Iraq’s state companies were offered for sale, and the central bank was prohibited from financing state-owned businesses. A continuing military occupation, mass incarceration and torture force compliance with these policies.

In the United States, the shock of September 11 was used to privatize sections of the state that were previously off-limits, including disaster response, national security and the military. As Klein puts it, “For decades, the market had been feeding off the appendages of the state; now it would devour the core.” She describes the result as a “hollow government” that subcontracts state functions to the private sector and, in the process, transfers public funds into private coffers. “In 2003, the Bush administration spent $327 billion on contracts to private companies — nearly 40 cents of every discretionary dollar.” This process has been accompanied by mass detentions, secret prisons, extensive spying, elimination of due process, and torture.

Klein insists that the use of torture is not an aberration but a necessary display of the state’s determination to crush all opposition. Neither individual pain nor mass misery can be allowed to block the road to power and profit. Torture is “a foolproof indication” that “a regime is engaged in a deeply anti-democratic project, even if that regime happens to have come to power through elections.”

The impact of The Shock Doctrine cannot be captured in a short review. You must read it to appreciate the full significance of what Klein has uncovered. As an added bonus, it reads like a fast-moving detective story, unmasking the individuals and forces that are pushing our world into barbarism. Until the last few chapters, I couldn’t put it down.

The chicken and the egg

Despite her keen observations, Klein confuses the chicken of power with the egg of profit. She states, “I believe that the goal of the Iraq war was to bomb into being a new free trade zone.” This is mistaken.

Washington invaded Iraq to obtain a military base in a strategically important region of the Middle East. From this position, America can secure its global dominance by controlling a large portion of the world oil supply. Of course, enormous profits are being made in the process. But power comes first.

American companies could never claim Iraqi oil without the U.S. military. As Thomas Friedman observed,

The hidden hand of the market will never work without a hidden fist. McDonald’s cannot flourish without McDonnell Douglas, the designer of the F-15, and the hidden fist that keeps the world safe for Silicon valley’s technology is called the U.S. Army, Air Force, Navy and Marine Corps.

Confusion concerning the relation between power and profit leads Klein to view the rise of disaster capitalism as something new. In fact, it is the logical outcome of a system that has always sought profit at any price.

The British Empire was built on savage colonialism. America grew wealthy off the labor of African slaves. The displacement of poor people after disasters like Katrina and the Asian tsunami is an extension of the displacement of aboriginals and everyone else who has ever stood in the way of profit. What’s new is the astonishing efficiency with which human lives and the environment are being destroyed.

However, Klein doesn’t hate capitalism. Her target is the ruthless free-market doctrine preached by Milton Friedman and the Chicago School of Economics. Klein advocates a mixed capitalist economy, with “a free market in consumer products” and generous social services provided by a class-neutral state that serves everyone’s needs. How reasonable! Yet Klein provides more than 500 pages of evidence that the capitalist system is fundamentally unreasonable.

Klein compares capitalism to a drug addict, where the drug is profit. By definition, addiction is not a reasonable behavior. As Bob Dylan sang in Highway 61 Revisited, a capitalist will sell tickets to World War III if he could profit by doing so.

Moreover, Klein’s “third way,” which she describes as a mix of capitalism and socialism, is an historical oddity that developed as a temporary response to social crisis. Examples include the American New Deal in response to the Great Depression and the post-war European welfare states. Once the threat of revolution is removed, the drive for profit resumes. The New Deal has been dismantled, and European states are privatizing their economies. Vulture capitalists are devouring Britain’s welfare state, and Canada continues to privatize social services, despite annual government budget surpluses.

Klein takes the classic liberal position of compromise, the belief that capitalism can be made to suit everyone’s needs. As she puts it, “I am not saying that all forms of market capitalism are inherently violent. It is imminently possible to have a market-based economy that requires no such brutality.” The experience of ordinary people says otherwise.

Workers’ lives are brutalized every day by systemic disrespect, lack of control, overwork and unemployment, financial stress and fear for the future. Capitalism needs profit, profit requires worker exploitation, and exploitation is inherently violent. As Klein herself puts it,

An economic system that requires constant growth, while bucking almost all serious attempts at environmental regulation, generates a steady stream of disasters all on its own, whether military, ecological or financial. The appetite for easy, short-term profits offered by purely speculative investment has turned the stock, currency and real estate markets into crisis-creation machines, as the Asian financial crisis, the Mexican peso crisis and the dotcom collapse all demonstrate.

Klein shows us that capitalism is the enemy of democracy, so that any form of collectivism is seen as a threat to the system. That’s why President Bush rejected government-funded health care for low-income children. For business to triumph, everything that defines us as human must be swept away.

Three forces that CAN win

Klein tries to end this book on an optimistic note. She describes how people bravely reconstruct their lives after the shocks wear off. However, the resilience of people who rebuild, while immensely admirable, cannot counter the power of capitalism to keep on destroying. Klein also mentions the Bolivarian revolutions in Latin America and the worker cooperatives that she and her husband document in their must-see film, The Take. Oddly, Klein does not call for activists to rebuild the vibrant anti-globalization movement that was knocked off its feet after 9/11.

In the opening chapters, Klein names the forces that can defeat capitalism. In every nation they have targeted, free-market capitalists have identified three threats to their privatization agenda: organized workers (who could take the economy away from them); marxists (who encourage workers to do just that); and the principle of solidarity (which is incompatible with free-market individualism).

While Klein is passionate about solidarity, she is not a marxist. She doesn’t want to replace capitalism, she wants only to tame it. So she sidesteps the potential of the working class to liberate us from the disaster that is capitalism. And by doing so, she reinforces the fundamental error of liberalism.

Naomi Wolf (no relation to Naomi Klein) co-founded the American Freedom Campaign, whose goal is “to reverse the abuse of executive power and restore our system of checks and balances.” The Campaign has gathered millions of signatures on a petition to defend the Constitution.

Wolf should read Klein’s book. The chilling description of Chile’s military coup proves that a Constitution presents no barrier to determined profit-seekers. Only the working class could have stopped that horror. But while workers begged for arms to defend their elected government, Chile’s president placed his faith in the Constitution. It was a disastrous and fatal mistake.

Real democracy and real freedom mean the power to control the economy. Capitalism will never choose to give that up, no matter how many people sign a petition.

Despite its weaknesses, The Shock Doctrine is essential reading for a new generation of activists. Few books help us to understand the world. Even fewer do it in an accessible form. Klein connects the dots to reveal the deepening conflict between what most people want and where capitalism is taking us. She tells us that the world is descending into barbarism, not because of human nature, not because people don’t care, not because we lost any argument, but because we have not yet organized in sufficient numbers to prevent it.

The good news is that human beings not only suffer, we also rebel, and we can learn to rebel more effectively. As Klein reveals, there are three forces that can defeat capitalism: the organized working class, the politics of marxism and the principles of solidarity. Her final message is absolutely right. It’s time to organize.

Susan Rosenthal is a practicing physician and the author of Market Madness and Mental Illness (1998) and POWER and Powerlessness (2006). She is a contributing editor to Cyrano’s Journal Online and a member of the National Writers Union, UAW Local 1981. She can be reached through her web site: www.powerandpowerlessness.com her blog: www.powerandpowerlessness.typepad.com or by email: susanRosenthal@bestcyrano.org

*Read an excerpt of THE SHOCK DOCTRINE by Naomi Klein->

12 comments on “The Shocking Disaster of Capitalism
  1. Ms. Rosenthal aptly sums up our predicament in this prescient para, which should be reflected upon by many, and which explains quite convincingly the nature of mass privatized & government propaganda in so called “free societies”:

    “Nor do they choose to abolish government regulations, minimize corporate taxes, privatize government functions and eliminate social services. Yet that is what the “free market” demands. In essence, free people don’t choose wars and free markets, they choose peace and government services, like universal health care.”

    Obviously, at least for most of those who care to think about daily and world events, such choices would be not only unpalatable but actively resisted. Bravo for casting such a lucid eye on the disease. Now the question is how to spread this kind of communication to the farthest corners…

  2. Naomi Klein has received a huge amount of attention for addressing the real constant and present danger–capitalism–in our midst, but like most people who, as the reviewer notes, are clearly NOT Marxists, she comes to the table fatally lame, with an analysis that is out of sync with her own descriptions, and therefore ludicrously inadequate to tame, let alone kill the monster.

    What often galls me about well-meaning liberals like Klein is that immersed in their bourgeois consciousness they act as if they just discovered “the great truths about capitalism,” while in reality such features of the system, not to mention the inevitability of its descent into the lethal global mess we see today, have been well formulated and foreseen since the days of Marx & Lenin–by the so-called “hard left”, for at least one hundred years…but who listens to Marxists, right?

  3. I wish Rosenthal had written the book rather than Klein. She seems to know far more what this is all about than Naomi.

  4. “As Klein reveals, there are three forces that can defeat capitalism: the organized working class, the politics of marxism and the principles of solidarity. Her final message is absolutely right. It’s time to organize.”

    Not to detract one iota from Klein’s valuable work but it’s interesting to see that while she admits that Marxism is one of the 3 forces that can defeat capitalism she remains outside that infuential current of thought and action, as evidenced by her own book’s social democratic proposals that reek of centrist melioralism.

  5. Lost in the shuffle of these discussions & comments is the fact that the system’s most effective defense is now the corporate media in its infinite and inescapable manifestations. Repression in the manner dished out to populations that have reached their limit under capitalism is not necessary in America–NOT YET–because most people haven’t felt the full force of capitalism’s barbarities, and the media is therefore able to lie about their true condition. The remaining fat of the land allows for this criminal imposture to go on, coupled with the fact that the US is notoriously devoid of mass popular organizations. America has long been the ideal nation for capitalist and plutocrats to sink their claws in; in its confusion, passivity, sheer stupidity, this society is an answer to the most fervent prayer of any insatiable plutocrat.

  6. The majority of Americans go about their individual business daily without much care about political matters or organizing, and such apathy and stupid indifference to the seriousness of the issues confronting the world is what defines “Americanness” and the “American way of life.” There is no parallel in history for such massive dereliction of duty. Americans have learned nothing. As Gore Vidal says, we live in the United States of Amnesia. Worse than that, Americans remind me of the mad man who keeps doing something that always results in failure believing that the next time it won’t…That’s why they continue to vote for the Democrats as an “alternative” to the overtly criminal Republicans. (They’re both criminal, of course, as they represnet only one class, the superirch.)

    The squandering of progressive votes and political solutions will continue until theDemocratic party is utterly reshuffled or disposed of…Meanwhile, I see with revulsion that Hillary is in the lead to win the nomination…

  7. Does the author have any suggestions as to priorities for political activists? The anti-globalization/antiwar areas need to be beefed up and decoupled from Democratic party contamination, but I think we need to look at the immediate replacement of the Democratic party with a new movement capable of fielding political action in many areas that go way beyond the narrow electioneering that so many “progressives” seem beholden to. Elections in any bourgeois democracy are something of a fraud, anyhow, the only question is how big a fraud.

  8. He who says capitalism says tyranny, albeit a very seductive and underhanded one, but with terrible results for humans and the rest of the planet. One of the strengths of capitalism is indeed its ability to fool so many people in its allegiance to liberty. The only liberty it cares about–some of us know well–is the market’s. Everything is else is expendable.

  9. Why did Niagara Falls New York fail? Why did the city of Buffalo New York fail? ….capitalism. The wall street big wigs determined to move manufacturing offshore for several obvious reasons. Cheap labor, environmental destruction, lack of concern for the death of America. Manufacturing replaced by colleges, and financial business all based on lies and theft. Liberal education, pointless and wasteful. Young peoples prescious effort spent seeking A’s, B’s, andC’s to satisfy a pencil necked creep who gives them a report card worth it’s weight in gold. All Wasted. American high finance shifting money and insurance forms like leaves in a storm. In reality, theft of workers earnings from other nations. I guess we transferred our manufacturing offshore and then stole the profits by borrowing the money back. How long can this last? Certainly not forever. America’s real productioin is prisons, government buildings, ticky tacky high density condos, and killing machines. Poppinjay veterans strutting around demanding gratitude for our ‘freedom’. More BS on the hoof. Those who steal our freedom demand we pay to repurchase it. Oh, and propoganda from Hollywierd. Don’t forget pornography, another big american export. There’s not a dimes worth of difference between pure communism and pure capitalism. A machine gun is just a tool with a working man at both ends. The nations of the world and jealousy of national identity prevent capitalism and communism from complete hegemony. Look at Putin. He seems to have successfully driven the jewish oligarchs from Russia. They have been ‘exiled’ to britain. His Nationalism stands in defiance of american One World Governance. Hugo Chavez and Fidel Castro likewise. If america attacks Iran We believe Russia has the power to destroy all american forces in the Middle East without the use of nuclear weapons. If America responds with nuclear weapons, it will be it’s last mistake. God help us all. Iran seems to be the lynchpin of world peace. Answer: cut america’s military budget in half twice. Support Ron Paul with your last dollar. When Him lose, we all lose. Wall Street is unAmerican. It is the Anti-Christ. “Greed is Good?” I don’t think so. Get back under your rock new york wall street scum. Make way for America’s working class. It is time for democratic blue collar rule. Everyone should get a chance. Rebuild Niagara Fall’s industry. Let wall street suffer urban blight. The future of the planet is in the balance. Vote George Bush, and die.

  10. Because I’m only on the second chapter of “Shock Doctrine”, I have to concede I’ve not yet read the later chapters the reviewer took offense to. But this review left me confused; chicken/egg, power/capitalism, vague examples of “failed” social democracies. Are these the issues we should be concerned with? (Quoting Thomas Friedman was a big clue re: the reviewer’s position on the left-right spectrum.)
    Naomi Klein’s book is important for it’s basic message. If you must nit-pick, start with “The Olive Tree and the Lexus”.

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