The Shocking Disaster of Capitalism

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

Correction: The original version of this review incorrectly identified Naomi Klein as a co-flounder of the American Freedom Campaign. This was a mistake. Naomi Wolf is the co-founder. The text has been revised accordingly. My apologies to Ms. Klein and to my readers.

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.

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 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 these 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 socialist, retired physician, union member, and the author of Sick and Sicker: Essays on Class, Health and Health Care (2010), and Power and Powerlessness (2006). She recently launched ReMarx Publishing. She can be reached through her web site or by email: susan@susanrosenthal.com. Read other articles by Susan.

10 comments on this article so far ...

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  1. AJ Nasreddin said on October 29th, 2007 at 10:23am #

    Alija Izetbegović wrote in his work “Islam Between East and West” that the bottom line is that communist or socialist economic systems and capitalism are the same – degrading to humanity.

    If anyone is trying to find humanity in a system which meant to deal with material objects, then humanity will become nothing more than an object. The answer cannot lie in how we buy and sell, but in moral principles about how we do everything in life, including buying and selling. Self worth cannot come from how much money we make or how much we produce for the company – self worth cannot be measured in money.

    If America and other capitalist or communist countries steal and kill for money, we cannot blame the economic system for it. What book on economics or business says “Thou shalt kill for profit!”? If you want to counter the ill effects of capitalism – get religion.

  2. Lloyd Rowsey said on October 30th, 2007 at 8:11am #

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

    Plus I have an additional reservation or two of my own.

    Klein repeatedly indulges in historical superficiality and oversimplifications, both of which alert the reader to her lack of specific knowledge or her lack of a concern for it. For example, on page 58 of The Shock Doctrine, Klein writes: “In 1953….when large portions of the globe were turning to Stalinism and Maoism…” Now, if Klein is referring just to the USSR and China, Stalin was dead and so the statement is meaningless; if she is referring to the “large” portions of the world outside of the USSR and China, the statement is patently false. Another example is on page 56, where Klein characterizes Milton Freidman as “a brilliant mathematician.” In fact, the hallmark of Freidman’s brilliance (if there ever was one) could only have been his Nobel Prize, and it was for Economics. There is no Nobel Prize for Mathematics; the Economics Nobel has long been a source of controversy if not outright embarrassment to the Swedes and to the world; and no Economics Nobel Prize has ever gone to a brilliant mathematician.

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

  3. Kishore Kumar said on October 30th, 2007 at 4:31pm #

    Current economic systems are rooted in materialism. Materialism comes from man’s identification with body and mind, while man’s spiritual component is ignored. Economic systems, in fact all institutions created by man, should serve the whole man.

    If man identifies with the soul, and the spiritual side of man is catered to, then institutions will no longer be designed to encourage exploitation of others. Institutions will then be in line with man’s real nature, of spiritual beings, to serve the entire mankind.

    I disagree with Klien’s “revelations”, “there are three forces that can defeat capitalism: the organized working class, the politics of marxism and the principles of solidarity.”

    The working class is indeed the exploited class but it is also dependent on capitalism. Marxism has already proven to be a failure. Even China is embracing capitalism. Solidarity of a group can be both used and abused. Solidarity of a group does not inherently mean that it is for the good of other groups.

    “Defeating” capitalism need not be a goal. After all, it has brought unparalleled benefits to man. It is just the unbridled greed of capitalism that needs to be tempered.

    Mass media, controlled by capitalism, won’t organize man to temper capitalism. It has been doing just the opposite. But, in the new age of information, an uncontrolled and free media, like the internet, can. Maybe, the internet will, indeed, become the independent media that a majority of people will utilize to get organized in, on a world-wide basis, to usher in a new age of enlightenment that will help man to identify with man’s inherently spiritual nature, to eliminate and resolve conflicts caused by material or economic disparities.

  4. Deadbeat said on October 30th, 2007 at 10:01pm #

    Mass media, controlled by capitalism, won’t organize man to temper capitalism. It has been doing just the opposite. But, in the new age of information, an uncontrolled and free media, like the internet, can.

    Unfortunately the prior poster argument are fallacious. While the Internet is currently open it may not remain that way. Take a look at the history of radio. The Telecommunication Act of 1996 was the start of the privatization of the Internet and the Internet itself was NOT develop to serve the public but is an artifact of the Cold War.

    What the prior poster ignores is that working class is divided and split and lacks solidarity. Unbridled “greed” benefits the ruling class and as resource become difficult to obtain will lead to barbarism that also benefits the powerful.

    Right now from my perspective racism, Zionism, and identity politics maintain division and distrust much less ignorance and other media distractions. However there are some bright spots. Right now the resistance by other countries resisting U.S. (and Israeli) aggression provides hope. The trends in Latin America also provides hope.

    There is an arrogance within Marxism that the workers from the predominately white countries would lead the world to socialism. Apparently during this epoch it is not so. I think the trend is that the rest of the world will lead the west and white countries toward a better way and just way to organize economies cooperatively and democratically.

  5. Eddie said on October 31st, 2007 at 7:15am #

    Why did someone’s comment get removed? A woman posted here yesterday pointing out that Naomi WOLF not Naomi Klein is a founder of American Freedom Campaign. That’s a BIG POINT. Deleting that comment is ridiculous. The author is wrong. Naomi Klein isn’t in AFC. Instead of deleting comments gently pointing that out, Dissident Voice needs to run a correction. In fact, if I remember right from last night, the woman’s comment had links in it so Dissident Voice should have already verified the woman’s points. Naomi Klein is not in AFC. Correct the mistake. Restore the comment.

  6. Hue Longer said on October 31st, 2007 at 3:38pm #

    Hello Eddie,

    Interesting…please email that to the editors and if the letter was as you say, I believe they would restore it.

  7. Susan Rosenthal said on November 1st, 2007 at 4:09am #

    Eddie is correct.
    The error is mine.
    Naomi Wolf, not Naomi Klein, is the co-rounder of the AFC.
    Apologies to all
    Susan Rosenthal

  8. Susan Rosenthal said on November 1st, 2007 at 5:20am #

    Eddie,
    Thank you for pointing out my mistake in identifying Naomi Klein as the co-founder of the American Freedom Campaign.
    I deeply appreciate your effort to safeguard the accuracy of what is posted on Dissident Voice.
    I have sent a revised review to Dissident Voice that contains a correction notice, an apology and approporate text changes.
    And, again, I apologize to all concerned.

  9. Martha said on November 1st, 2007 at 10:20pm #

    I’m the woman who got removed. It was just a mistake. Eddie was more offended that my comment was removed than he was about the mistake. I probably will not post again because I have no idea why my comment was removed. Thank you to Eddie for sticking up for me. To Dr. Rosenthal, as my original comment pointed out, this was an easy mistake to make. People do confuse the two and they both have new books out. I wasn’t offended by the mistake. I noticed it when a blog pointed out. The blogger wasn’t offended by it either. Maybe the fact that I noted the blog is why my post was removed? I won’t risk giving due credit this time in the hope that this my comment (my last here ever) gets posted. Thank you to Eddie. Thank you to Dr. Rosenthal for correcting the honest error.

  10. Susan Rosenthal said on November 3rd, 2007 at 2:54pm #

    Martha,
    I checked with the editors of Dissident Voice, and no one knows why or how your comment was removed.
    So there was no bad will here.
    It may be moot, at this point, to resubmit your comment, which is what the editor recommended.
    Susan