Are You Shocked?

“The Shock Doctrine” – The Rise of Disaster Capitalism, by Naomi Klein, 2007 

Naomi Klein is a left critic of the Democratic Party and neo-liberalism. She herself seems not to be a through-going socialist, and implies that a ‘non-disaster’ capitalism might just succeed. “It is eminently possible to have a market-based economy that requires no such brutality and no such ideological purity.” (p.24, SD)

This book is a work of research and journalism, and gathers the economic threads of Milton Friedman Thought into one historical basket It shows how Freidman’s ideas have played out over the last 30 years in history, at the World Bank & IMF, and in torture regimes. The oddest fillip here is Klein’s use of the metaphors of modern psychological ‘medicine’ and torture – sensory deprivation, the destruction of personality and memory, the breaking of all social bonds and violence – and equate them with what neo-liberalism uses to break down a … society. Psychological methods which developed into the CIA torture regime of MKUltra were then used in Iraq in Abu Grahib, after being used on the Iraqi people themselves. This is how Klein links electroshock therapy and … Shock and Awe.

I think Klein is on to something here. The key point is that capitalism can no longer create sufficient wealth itself, and must severely loot the public sectors and working classes all over the world to maintain profits. It is the twists of a decaying system, much like the move toward financialization in the 70s in the U.S. was a result of a failure to make adequate profits the old-fashioned way. These two developments actually go together – Friedmanite “privatization, deregulation and cuts to social services” are at the bottom of our own financial meltdown here in the United States in several ways. And the fact that disasters – which were at one time avoided by prudent capitalists – are now eagerly sought as new profit opportunities by many major corporations – shows the capitalist system is at an even lower economic and historical point. During World War II, war-profiteering was a dirty word. During Iraq War II, war-profiteering was standard operating procedure. Capitalism has not changed, but the perception of it has.

Much of this history will be familiar to leftists. The operations of the “Berkeley School” in Indonesia in the 60s, which lead to the fascist crackdown by Sukarno. The counter-revolution in Chile, lead by Pinochet, which gave Friedman’s Chicago School and it’s homegrown acolytes their first chance to destroy an economy for the greater good of the comprador bourgeoisie and international capital. Similar events in Bolivia and Argentina followed, the latter leading to years of dictatorship and disappearances. Friedmanism spread to the UK after the Falklands War, when Thatcher seized upon that war to bring it ‘home’ against the Miners Union. It was used in South Africa after the defeat of apartheid. And the climactic moment - the massive destruction of the economies of the USSR and Poland, and other former workers’ states, through Friedmanite methods championed by people like Jeffrey Sachs. All this has started to come to an end – especially in Latin America where the ideology of Friedmanism and neo-liberalism has been defeated by bourgeois ‘developmentalists’ and leftists. They both oppose making their nations nothing but raw material suppliers and passive debt payers for U.S. capital.

Kleins’ thesis is that many times ‘changes’ and ‘reforms’ have to be accompanied by physical and cultural violence – in fact violence is an almost necessary part of neo-liberalism. Much as torture and some ‘therapies’ use the same methods. Chile, Indonesia and Argentina come to mind. But even in Bolivia, where the U.S. used ‘liberals’ like Victor ‘Paz’ Estenssoro to institute a draconian Friedmanite plan, they had to declare martial law and round up protest leaders.

The wrecking behavior of the IMF and World Bank, which were, and still are, stocked with Friedmanites, came to a glorious conclusion in the USSR, when U.S capital intentionally drove the former USSR’s economy over a cliff in the early 90s. These entities saw no contradiction in their so-called love of ‘democracy when they praised Boris Yeltsin's use of tanks and soldiers to break up a democratically-elected parliament, killing many in the parliament. Jeffrey Sachs, the U.S. ‘man on the spot,’ had promised Yeltsin IMF/WB aid in exchange for drastic measures to privatize, deregulate and remove social programs in Russia. When this aid didn’t come through, even Sachs has now realized that the U.S. had no intention of ‘helping” Russia. Russia, and much of eastern Europe, fell into a depression that lasted many years, with productivity, health and every other factor dropping like a stone. The social gains of the revolutions were nearly all destroyed or sold off for pennies on the dollar. George Soros, another buccaneer of the time, realized (after making millions off of neo-liberalism in eastern Europe), that something was wrong with the formula.

Even the ostensibly leftist Solidarnosc leadership in Poland bought into the neo-liberal agenda, and instead of getting workers self-management, they got plant closures and poverty. Recently, the Polish government sold the historic Gdansk shipyard to a Dutch off-shore company, UIT, for L82M. The EU Commission forced the sale when it determined that 'state' aid gave the shipyards an unfair competitive advantage. This sale was protested by the 9,000 employees and by the Polish shipyard union.

Friedman also made a visit to the Chinese bureaucracy before the Tiananmen Square massacres. He encouraged the bureaucracy to integrate more fully with the world capitalist system, and one way to do that was not to coddle the population. While some analysts think only students opposed the regime at Tiananmen and in other cities, many workers were actually part of the protest. Some students left before the crackdown. Klein points out that workers were the main target of the assault by the bureaucracy, in dead and arrested. This makes perfect sense if the point was to discipline the class in order to provide a cheap, quiet place for imperialist factories to re-locate.

The most astounding story is still playing out – in South Africa. Klein carefully dissects the mistakes of the ANC, which focused almost exclusively on the political, and ignored the economic, at the moment of victory over apartheid. This guaranteed that the economy would continue to be controlled by the white apartheid bourgeoisie. The economic conditions for black workers in South Africa since apartheid was overthrown have barely improved, if not gotten worse. And that is because the economic aspects of the Freedom Charter – which guaranteed nationalized control over major industries and banks – were dumped by the ANC leadership. There is no way the black proletariat in South Africa can better their situation now without seizing economic power. The moment was lost when apartheid was defeated – and apartheid economics remained. This is presently the struggle we are seeing now within the ANC and the South African workers movement - the realization that the Freedom Charter, whatever its limitations, was not instituted. In retrospect, the 'stagist' theory of the ANC leadership and the South African CP has resulted only in the prolongation of the masses' misery.

Klein looks at how the Friedmanite approach worked in the Asian financial crisis in the early 90s, the tsunami several years ago, and of course, Iraq and Katrina – using disaster to enrich a large, well-connected segment of international capital. For instance, the tsunami lead international resort owners to seize beach land that had been lived on by fisherman for hundreds of years, all in the name of ‘reform’ and ‘aid,’ and then turn it over to paying western tourists to enjoy.

Is there an essential link between Friedmanite theory and disaster? No, but in reality, it has played out that way. In theory, Friedmanism is such a vicious assault on the working class that it needed an opening in society to institute its methods. And collapses helped it take hold. What is most interesting here is to apply Klein’s thesis to the U.S. now. How is capital taking advantage of the present financial crisis to INCREASE their control of the government and society?

And I bought it at May Day Books!
05/19/2009
Red Frog