Us Politics & Economy

Powerful Narrative but Shame About the Theory

Book Review by Tina Purcell

The Shock Doctrine: the Rise of Disaster Capitalism

By Naomi Klein

Picador, 2007

Naomi Klein’s latest book, The Shock Doctrine, available in paperback, is a powerful indictment of the devastating effect of free market capitalism. Ambitious in its scope, it takes the reader on a tour of the ruins of neo-liberal capitalism, exploding the myth that unfettered free markets go hand in hand with democracy.

Klein attempts to show how crises or shocks, such as war, terror attacks, economic crisis and natural disasters, have allowed the free marketeers to swoop on a traumatized and disoriented population, too dazed to resist. In Klein’s model, the neoliberals both take advantage of “shock” to impose their own economic therapy on the distraught masses, while those that are composed enough to resist are repressed.

Klein begins her story in New Orleans in the aftermath of Hurricane Katrina in 2005. Whilst the poor, overwhelmingly Black, working class of New Orleans crowded into the convention center, lacking the means to flee with their richer, overwhelmingly white neighbors, right wing congressmen and lobbyists were already making plans to exploit the “clean sheet” that Katrina presented them with.

What followed was savage capitalism unleashed. Social housing gave way to private developments and state schooling was subject to an “educational land grab.” With state schools in ruins, and New Orleans school children scattered around the U.S., Milton Friedman, high priest of neoliberalism, laid bare his plans to radically restructure the New Orleans schooling system by setting up charter schools—public funded institutions run by profit-making private entities. Within a year and a half, the state schools had almost completely disappeared and New Orleans had become a “laboratory for the widespread use of charter schools.”

While the survivors of Hurricane Katrina were taking in the full extent of the disaster, the neo-cons were positively gloating, enthusing that “Katrina accomplished in a day . . . what Louisiana school reformers couldn’t do after years of trying.” For Klein, the events in New Orleans provide a classic example of “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities.” Klein calls this “disaster capitalism.”

To trace the evolution and history of “disaster capitalism,” Klein takes us back to McGill University in the 1950s. Dr Ewen Cameron is conducting experiments on his psychiatric patients. His patients have not consented to be human guinea pigs and his research is well beyond anything permitted by medical ethics committees. Cameron is interested in “rebuilding” the faulty minds of his patients by first wiping them clean through sleep deprivation, electroshock treatments and administrating hallucinogenic drugs. This research was funded by the CIA, which was interested in using torture as a way of controlling the mind. Klein draws a clear line connecting Cameron’s CIA-backed experiments in the 1950s and the use of similar techniques in Abu Ghraib and Guantanamo Bay today.

Klein evokes the violence of the systematic torture pioneered by Cameron’s experiments as a powerful metaphor for the violence of economic shock therapy. Like Cameron, Friedman wanted a clean slate in New Orleans on which he could inscribe his “pure” version of capitalism. However, the connection between torture and fundamentalist capitalism goes even further, since in order to impose such a radically regressive restructuring of society, free market governments have to invoke the full force of state repression, including torture, thus rendering a people already shocked by economic “shock therapy” even more shocked. To illustrate this Klein presents a history of the savage repression used against the working class and peasantry in Latin America during the 1970s.

While the CIA’s and Friedman’s Chicago School’s involvement with repression and coups in Latin America goes as far back as the 1953 coup in Guatamala, it was in Chile that Friedman was able to put his ideas into action. Prior to the 1973 coup that overthrew Salvador Allende, the democratically elected president, the Ford Foundation, which was dominated by Chicago School economists, had spent large amounts of money “educating” economics students from Chile and other Latin American countries in the marvels of free market politics.

They were waiting in the wings for General Pinochet’s army to brutally overthrow the socialist government. Klein presents a graphic description of a brutal coup. First, thousands of trade unionists and activists are rounded up and shot in the stadium of Santiago, the full force of the state unleashed on the rest. Then follows the economic slash and burn policies: privatization, deregulation and savage cuts to social spending which left population with no social safety net. Then more repression to stall any sustained resistance: communists, socialists, trade unionists, community activists, artists and musicians were rounded up and disappeared. Within a year unemployment rocketed, while poverty and inequality soared.

Klein evokes this tragic episode in Chile’s history, to great effect. She conjures up the devastating consequences the Pinochet’s regime had on both Chile’s workers and the left intelligentsia. However, none of this is new, it is a history that has been well documented. What is new is Klein’s analysis of what it says about a “new chapter” in capitalism opened up by these events. Klein’s analysis is based on two premises.

First, in this new stage of unfettered capitalism, terror and the economy are intimately linked. Terror is a central tool of free market transformation. Klein takes up the arguments of Orlando Letelier, a Chilean economist turned U.S.-based activist who exposed the human rights violations of the Pinochet regime until he was assassinated by Pinochet’s henchmen, aided by the CIA. For Letelier there was an “inner harmony” between the free market and “unlimited terror.”

Secondly, Klein’s model of the global expansion of neo-liberal fundamentalism is based on the central role of shock. Shock operates on various levels. For the economy, it is the only way to treat a “sick” economic system. In Klein’s view of the world, torture is both a “metaphor of the shock doctrine’s underlying logic,” and a major way of inducing shock. Torture becomes a way of wiping the “slate clean” and to “reboot the nation.” A common theme amongst the juntas that spread throughout Latin America was the desire to “cleanse” the nation of the “filth” of subversive, left wing, atheistic forces and return to a “normal,” “sanitized” state.

From Bolivia to Poland, from China to South Africa, Klein demonstrates the devastating effects of the economic policy prescriptions of neo-liberalism. In doing so, she attempts to demonstrate how the shock doctrine model can be applied to the very diverse national contexts in which this economic counter-revolution has triumphed. But her search for a generalizing theory of “shock” doctrine is unconvincing.

Her first example, Thatcherism in the UK, is a strange choice to begin with, since anyone old enough to remember Thatcher’s Britain would have a hard job identifying a major shock or crisis of the type experienced by the Chilean masses. The shock that Klein identifies is the 1982 war with Argentina for the Malvinas Islands. By entering into a “Churchillian battle mode,” Thatcher was able to reverse her status as the most unpopular Prime Minister in Britain and win a second term:

“Thatcher’s successful harnessing of the Falkland’s War was the first definitive evidence that a Chicago School economic program did not need military dictatorships and torture chambers in order to advance. She had proved that with a large enough political crisis to rally around, a limited version of shock therapy could be imposed in a democracy.”

Klein is missing the point. Imperialist states have always used war to unite the “nation” against a foreign “enemy.” Argentina’s “invasion” of the Malvinas Islands was hardly a crisis for the government or the population of the UK. Yes, the Malvinas War enabled Thatcher to win a crucial second term, but it was during this second term that the subsequent history of the UK was decided, not by shock but by class struggle. Thatcher had to first defeat the miners, (the “enemy within”) the vanguard of the British working class, before she could impose her anti-working class program on the rest of society. Klein does of course acknowledge the miners’ strike. Indeed, she uses the brutal repression of the miners to strengthen her shock and terror thesis. However, this major outbreak of intense class struggle is of secondary importance. The main factor for Klein is the war, the “crisis” (or shock) that allowed Thatcher to rally a significant section of the population under her banner.

This lack of focus on the working class, its organization and level of political consciousness as an analytical framework for understanding the triumph of neo-liberalism is evident throughout the book: workers, it appears, suffer defeats due to a collective psychological state of disorientation.

The chapter on South Africa is the most telling in this respect. Klein struggles to understand how the ANC came to abandon its redistributionist economic policies, outlined in the Freedom Charter after they won office in 1994. The South African mass movement was “on a roll,” having engineered, largely through a wave of mass strikes, the dissolution of the racist apartheid state. The ANC had a “unique opportunity to reject the free market orthodoxy of the day.” How then did the leaders of the ANC come to negotiate away South Africa’s economic sovereignty and adopt a radical neo-liberal program, and why did the grassroots activists allow them to do it?

Klein concludes that after 1990 South Africans were in a “constant state of crisis, ricocheting between the intense exuberance of watching Mandela walk free and the rage of learning that Chris Hani, the younger militant many hoped would succeed Mandela as leader, had been shot dead by a racist assassin.” An explanation that borders on the bizarre. The real reason for the ANC’s timidity before the IMF is clear—it is located in the liberation movement’s reformist program. However, for Klein the ANC is an innocent party in the subsequent betrayal of the Black majority. It is “outmaneuvered,” tricked almost, into abandoning its own reformist program, constantly bombarded with constitutional impediments to its economic reforms.

This patronizing nonsense begs the question of why the leadership of the ANC did not turn to the mass, vibrant and militant movement that had brought it to power, a movement that had the potential to sweep away the bourgeois institutions that blocked the path to economic progress, institutions in which white minority power was entrenched. This is because the class struggle gets reduced to psychological state of mind, ranging from “confusion” to “disorientation.” The issue of leadership is ignored and the reformists are absolved of any responsibility.

The fact is the ANC leaders accepted the “argument” that social justice (housing, jobs, land reform, a living wage) had to wait while South Africa’s government balanced the books, stabilized its currency and so did not frighten off foreign western investors. In return the country saw the creation of a whole new, small, Black business class (out of ANC cadre), often corrupt, always self-serving, that was richly rewarded for its loyalty to the big mining conglomerates. The Black elite were not so much in shock, as in awe.

The “constant crisis” that Klein refers to is none other than the dynamic of class society prone as it is to class struggle in its various forms. For the larger part of the book Klein argues that crises (shocks) lead to disorientation. However, history has shown that crises can also lead to clarity, exposing the real nature of the capitalist system. The First World War was a crisis of global proportions. Admittedly it led to “disorientation” when the leaders of the workers’ movements in Europe voted to support the war aims of their respective bourgeoisie. However, the reality of the war also exposed the destructive nature of capitalism. The Russian Revolution was born in the very midst of the shock of war, and revolutionary movements flourished in the immediate post-war period.

This is also in partly true of the tragedy of Hurricane Katrina which exposed the racist nature of the U.S. federal government to the working class of New Orleans. What was lacking was a political alternative in which to channel the anger felt by the Black victims of Katrina.

At the heart of The Shock Doctrine lies a misunderstanding of the nature of capitalist society and the capitalist state. The brutal repression and economic avarice that the book so powerfully describes is not the sole preserve of the followers of Milton Friedman. It is a feature of any society in which contending classes struggle over the distribution of resources and power. Capitalism has always been brutal. The erasing of whole populations that Klein refers to in order to underpin her references to “cleansing” and “clean slates,” have precedents in history ranging from the mass clearances of agricultural communities across England, Scotland and Wales throughout the eighteenth century, to the wiping out of indigenous populations by the European settlers in the “New World.”

Dictatorship and torture can co-exist with both the free market and with state control of production. The “systematic torture” employed by the CIA may be more sophisticated than the “crude” torture of the Third Reich, but that is more to do with the development of modern technique and psychiatry than any fundamental difference with the goal, that of repressing resistance and defending a state which cannot reconcile its existence with the democratic aspirations of its citizens.

In the same way, repression or “shock” is a tool that has been invoked by all capitalist governments, including democratic ones, throughout the twentieth century, when the interests of the ruling class have been threatened. France, for example, employed brutal tactics during the Algerian war of independence, both in Algeria and in mainland France. One of the bloodiest acts of state repression in Western Europe took place on the streets of Paris in 1961, when Algerian demonstrators were bludgeoned to death and thrown into the Seine, or tortured before being sent back to Algeria. Conversely, neo-liberalism has been implemented in many countries without the need for “shock,” in many cases by those who promote the idea of the market with a “social face.” Klein’s model also fails to account for this.

For Klein, the enemy is not the capitalist system, but rather capitalism at its most extreme, where corporatist economic goals determine the right to limitless profit-seeking, making war a profit-seeking activity in itself, rather than a means to making a profit. The alternative? A nice, social democratic capitalism without all these nasty “shocks”—perhaps Sweden maybe?

The war on Iraq encapsulates all the elements of her model: the “shock and awe” of the bombardment; the shock of occupation and torture; economic “shock therapy.” The reconstruction of Iraq becomes an anti-Marshall plan and the looting of museums, a metaphor for the “erasure” of the Iraqi nation. And the invasion of Iraq itself is a consequence of the shock and disorientation caused by the attack on the twin towers, an attack that paved the way for the war on terror and the acceleration of corporate avarice.

It’s not all bad news though. After her rollercoaster tale of whole populations too traumatized to resist neo-liberalism, Klein ends on a note of hope for the future. First, Latin America appears to be waking up from its shock and is challenging the Washington consensus. Second, it seems that we do not always respond to shock with regression—this despite the entire thrust of The Shock Doctrine being the opposite. Klein notes that in Spain, the shock of the ten bombs that exploded in Madrid in March 2004, resulted in the defeat of the conservative Aznar, the U.S.’s ally, at the subsequent elections. Similarly, Thai coastal villagers were not as dazed and disoriented as their Sri Lankan counterparts. Despite the best intentions of the Thai government, villagers engaged in “land re-invasions” to ensure that their villages were rebuilt rather than being sold off to private developers.

So what’s the key? How do we avoid the paralyzing effect of “shock?” Klein doesn’t give an answer beyond pointing to these positive examples. That’s because she doesn’t have an answer, other than speculating that shock relies on an element of surprise, therefore the effect may be wearing off, as it is in Latin America. She doesn’t recognize that Aznar’s defeat following the Madrid bombings was down to the strength of the antiwar movement, but locates it rather in the experience of living under the Franco dictatorship. This minor but highly symbolic victory for the antiwar movement points to what is absent from The Shock Doctrine—the crisis of political leadership, which the fall of Stalinism accentuated. Aznar’s government was brought down not by decontextualized and anachronistic memories of Franco, but by the antiwar consciousness of the Spanish working class and its relative strength, reflected in the antiwar rhetoric of PSOE (Partido Socialista Obrero EspaƱol.)

Notwithstanding these criticisms, the book is a well-researched exposé of capitalism at its most savage and deserves to be read, as long as you can ignore the over-reliance on exaggerated metaphor—more literary device than political analysis. While it is unlikely to repeat the success of No Logo, The Shock Doctrine certainly has the power to shock.

Permanent Revolution, March 3, 2008