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The Shocking Disaster of Capitalism

The Shocking Disaster of Capitalism

by Susan Rosenthal

Book Review: Naomi Klein, 2007, The Shock Doctrine: The Rise of Disaster Capitalism. Metropolitan Books, 576 pages.

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 The Shock Doctrine: The Rise of Disaster Capitalism, she reveals how “radical capitalists” use shock tactics to impose anti-human policies on unwilling populations.

Under normal conditions, most people reject “free market” 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. 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 process 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 major portion of the world’s 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, instead of the inevitable 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 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.

Surprisingly, 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 anything but reasonable.

Klein compares capitalism to a drug addict, where the drug is profit. By definition, addiction is not 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.

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 was removed, the drive for profit resumed. 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 states,

“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 reveals capitalism to be the enemy of democracy. 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

The book tries to end on an optimistic note, with stories of people who bravely reconstruct their lives after the shocks wear off. Unfortunately, the resilience of those who rebuild, while immensely admirable, is no match for the growing power of capitalism to destroy.

Klein favourably 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 American 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 to tame it. So she sidesteps the potential of the working class to liberate humanity from capitalism. And, by doing so, she reinforces the liberal belief that capitalism can be reformed through peaceful persuasion.

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. Her chilling description of Chile’s military coup proves that a Constitution presents no barrier to determined profit-seekers. The working class could have stopped the coup, but when 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 voluntarily give that up, no matter how many people sign a petition.

The Shock Doctrine is essential reading for a new generation of activists. Klein shows us a world that 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. Klein reveals the three forces that can defeat capitalism: the organized working class, the politics of marxism and the principles of solidarity. Her final message is right on. It’s time to organize.

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- who has written 152 posts on SusanRosenthal.com – Socialism is the Best Medicine.


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5 Comments For This Post

  1. Grant Cassidy Says:

    October 28/07

    So absolutely in agreement with your thoughts.

    Klein is an intelligent individual, yet she does not realize that a capitalist, like a leopard, cannot change its spots.

    Socialism is the answer to the many problems that plague this world. These problems are not caused by individuals, ideologies, terrorists or whatever else might be blamed. It is Capitalism!

  2. Antifa Says:

    November 1/07

    It’s a hell of a book, that’s for sure. It describes the capitalist python perfectly, and the way it tightens its grip after every jolt unto the populace.

    This little round spaceship we call Earth needs new management.

  3. Deadbeat Says:

    November 17/07

    I disagree that the war in Iraq was a war for oil. The oil interests were not interested in an invasion of Iraq. In fact they wanted to do business with Saddam and were prevented from doing so.

    This was a war for Zionism. Unfortunately many analyses on the left, especially the white left, tend to ignore the role of racism and Zionism especially to imperialism. Imperialism is not always about acquisition it is also about “bombing one back into the stone age” — read: destruction of one’s rivals.

    What is happening in Iraq is not different from when whites bombed Tulsa, OK and thus destroyed what was know as “black wallstreet”. Zionists want to eliminate all rivals to Israel and they did so with Iraq as well as Lebanon. Now they have their sights set on Iran.

    Racism/Zionism is the ideology that ties what is going on in the Middle East together much more so than oil.

  4. Susan Rosenthal Says:

    November 17/07

    Deadbeat: I strongly disagree. Follow the money.

    Israel exists only because of US funding. The U.S. pays and arms Israel to function as its military base in the Middle East. Whoever controls Middle East oil can dominate all who need that oil. America gives Israel a free hand as a way of strengthening its own power over this vitally strategic region.

    And, no surprise here, a portion of the wealth that flows from America to Israel comes back to the U.S. in the form of intense lobbying efforts to keep money and political support flowing to Israel.

    However, to believe that Israel directs U.S. foreign policy, and not the other way around, is to misunderstand the nature of modern imperialism and how to combat it.

    Racism and Zionism are tools that are used to divide and rule us. While we must oppose these tools, we must not confuse the tools with the masters who wield them, the capitalist class.

  5. Lloyd Rowsey Says:

    October 30, 2007

    Two months or so ago, Dissident Voice printed an excerpt from the Introduction to The Shock Doctrine, and in reaction to it I posted, “We are all Kleinists now.” After reading the book, I am less enthusiastic, and I share Rosenthal’s reservations. Especially her reservations about Klein’s compulsive liberalism.

    Still, I have great admiration for The Shock Doctrine, and I was enchanted by the author’s prose as well as by her astounding synthesis of so many elements of a truly radical critique of contemporary capitalism. We have sorely lacked such a critique.

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