Book Review: Naomi Klein "The Shock Doctrine"

The Shock Doctrine - The Rise of Disaster Capitalism
By Naomi Klein

Metropolitan Books (September 18, 2007)

In late 2007, I read an article in Harper's Magazine, titled “Disaster Capitalism” which, well written, vividly argued, left an impression. I Googled for the author, Naomi Klein, and was lead to her website announcing the new book, on which the Harper's article had offered a glimpse. I watched a truly appalling promotional video, and reminded myself that the author probably wasn't responsible for the advertisements before ordering the book.

Summary

In “The Shock Doctrine” Naomi Klein puts forward the thesis that worldwide and over decades shocks have been used to push through unpopular free market decisions, mostly privatization and deregulation, generally against the will of the people but always to the advantage of large corporations, the wealthy upper class, and corrupt governments. Shocks might be natural disasters, wars, terrorist attacks, or economic turmoils. The book is a collection of well researched and documented examples, from Bolivia over Chile, Poland, Iraq, China, the UK, Russia, again Iraq, Israel, South Africa, Sri Lanka, the Maldives to New Orleans.

The book begins with drawing parallels to shock therapy in the 50s and 60s, the attempt to reset the human mind by whatever means into an infantile state, a “clean slate” on which there could be imprinted a new beginning. Klein reports how these insights were later used for purposes of torture all over the world.

Throughout the book, Klein traces the actions of Milton Friedman, and his “Chicago Boys” who provided the ideological and allegedly scientific backup for operations in the course of which hundreds of thousands of people were murdered, died, or committed suicide. (Jeffrey Sachs makes an appearance in several instances.) If her claim of a shocked nation being a desirable state to perform unpopular free market reforms feels far fetched to you as it did to me, this is actually quite well documented in many instances, and one doesn't have to look very far to find this option was considered quite appropriate as means for what some considered progress.

Over the decades, Naomi argues, the ideology spread, packed into the wrapper that a free market maximizes social welfare, filled with a creamy myth of tricke-down. Extreme measures were more easily put into place in tyrannies, but found their way into democratic systems as well, through cloak and dagger operations, through exerting economic pressure, or just by corruption, all in the midst of states of confusion and shock:

“And that is how the crusade that Friedman began managed to survive the dreaded transition to democracy - not by its proponents persuading electorates of the wisdom of their world view, but by moving deftly from crisis to crisis, expertly exploiting the desperation of economic emergencies to push through policies that would tie the hands of fragile new democracies. Once the tactic was perfected, opportunities just seemed to multiply.”

Particularly shocking for me has been to learn about the role of the International Monetary Fund (IMF) in these doings. In many cases, support has been tied to requests for privatization and deregulation, clearly interferences with nations' autonomy and often with their political landscape.

Naomi Klein traces traces the historical route to our present days, when a large and increasing sector of our global economy has specialized in disaster help and security, up to the point that devastating news actually score as good news on the stock market. Her account of which private companies made billions after billions with the war in Iraq and Hurricane Katrina, all with taxpayers' money (resp. by increasing the government's debt) is sobering, especially in the face of how incompetent these tasks were performed (or paid for but not performed at all).

She finishes the book with examples of where shock has worn off, especially in South America were social democracy has put a halt to selling off countries and destroying communities, and established a new autonomy of these nations independent on the IMF. The main message I think she wants to get across is to be prepared for when a shock hits, for we can most easily be exploited when taken by surprise.

Comments

The book is an interesting read and an impressive collection of facts, quotations, and data. I can't help however to find Klein's account very single sided. As meticulously as she has collected evidence in favour of her thesis, I did not get the impression she has as carefully looked for evidence against her thesis. I feel like her narrative is compelling in its simplicity and has certainly some truth to it, but lacks many qualifiers.

Most importantly, her arguments are directly and by name targeted at recommendations out of the pocketbook of neoclassical economics. But what she actually is criticising is not a free market or the drawbacks of particular regulations, but corporatism and corruption (not to mention torture). In fact, in the introduction she writes:

“A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever widening chasm between the dazzling rich and the disposable poor, and an aggressive nationalism that justifies bottomless spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society.”

She then however fails to explain why privatization and deregulation must necessarily be tied to these circumstances she is bemoaning, and thus why her constant stabbing at Friedman and the Chicago School. Instead of providing an argument on why this connection would be, she just offers example after example. I don't find this very insightful, as I would have wanted to know what could have been done better and why.

The book was recently turned into a documentary by directors Michael Winterbottom and Matt Whitecross, who make an effort pointing out it is not a conspiracy theory. Indeed, it is not. There is no sense in which Klein raises the impression these events were deliberately planned. Instead, the picture she paints is one in which ideological convictions have gone awry and people in power neglected to pay attention to reality - or just did not live up to their expectations. As she writes repeatedly, there is no way in which the human mind or a country can be cleaned of its history and provide the perfect platform to build on it from scratch a flawless utopia. This strive for perfection is an illusion, and one in whose pursuit comes suffering. To add my own perspective on that, it is less a conspiracy and more a system failure. Most importantly, the system fails to correct its own problems since those who hold the power have no incentives to do so.

Besides this, the book is nicely written and reads very well. It is however very repetitive, and fuzzy in articulating the main claims and conclusions. As far as I am concerned, I would have been fine with the first 100 pages and then a collection of facts and data. I really don't need to be told the story of the evil Friedmanians fifty times. And for my taste, she gives way too much room to the history of shock therapy treatment and its applications for torture. I don't even doubt that these concepts were picked up by economists. Such cross-fertilization between different fields is interesting (the concept of a 'landscape' being picked up by physicists is a similar example), but I didn't want to buy a book on torture or electroshock treatments and would have appreciated less details on that matter.

All together, if this was an amazon review, I'd give three points.