The Shock Doctrine

There are few heroes in Naomi Klein’s “The Shock Doctrine.” But those singular individuals provide a moral example that will raise the hair on your neck. Like the Argentina writer Rudolpho Walsh, who one year into Argentina’s junta-led counter revolution, spoke openly about the poverty forced upon his people:

Without hope of being listened to, with the certainty of being prosecuted, but true to the commitment I took up long ago, I will bear witness in difficult times.

After denouncing the deteriorating living conditions in Buenos Aires, he was shot dead, his body was burned and his remains were dumped into the La Plata River.

Or Salvador Allende, Chile’s socialist President, who was killed in the CIA-backed coup which brought Augusto Pinochet to power, and who addressed his people in a final radio address as the troops were attacking his residence:

I am certain that the seed we planted in the worthy conscience of thousands and thousands of Chileans cannot be uprooted. History is ours and the people make it.

He was dead within hours, killed by his own bullet.

These are Ms. Klein’s martyrs and they will die for the belief that wealth, at least some wealth, should be shared among the people. For forty years, the so-called Washington Consensus has steered intellectual life in the opposite direction. In broad contours, the Washington Consensus is something of an intellectual rationale for freeing up markets by privatizing state-owned companies and eliminating trade barriers. It’s an economic philosophy grounded in the assumption that human self-interest is the best organizing principle for society’s relations.

As the thinking goes, let self interest rule and you will  produce the most wealth for the most people. The challenge is the transition–old norms must be uprooted and the new ones installed in their place. Most of the time, a great upheaval (Klein’s shock) is needed to establish the new order.

The main proponent of the Washington Consensus was the late Milton Friedman, a Chicago school economist. He was famous for his mild poetic aphorisms usually seasoned with a measure of economic calculus: “It’s impossible to do good with other’s peoples money.” He and his followers abhorred the government; anything that might should be done by free markets and free people. For this reason, he called himself a liberal.

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The 2008-09 financial crisis has exposed the weaknesses in so-called neo-liberal or conservative economic theory. Human self interest can do just as much harm as good. No relevant economist today would argue that the state has no role in reigning in its excesses.

Ms. Klein would like that role to be greater. She argues for the creation and maintenance of a “public space” where the needs of the people are met by a broad range of government services. Certain functions, such as managing city hall or fighting a war, are not only better done by governments but are the basic functions of a state. If done  away with, she asks, then what remains?

Corporations who would like to do the government’s work aren’t accountable to elected representatives and the profit-motive can lead to entrenched interest. The most conspicuous example Klein returns to time and again: the market for private security services created during the Iraq war.

Ms. Klein’s 450 pp monograph gains a healthy momentum by the sneaker wear she accrues globe-trotting to talk to both the victims of global capitalism and the proponents of a middle ground. For her extraordinary effort *process* gives her 8 out of 10. She doesn’t go easy on Jeffery Sachs, a Columbia economist, whom she accuses of a grave naivety in thinking that the USA, fresh from victory in the cold war, would fund a “Marshall Plan” for Russia. When the billions in aid failed to materialize, “crony capitalism” in Russia produced a few billionaires and a few million more poor people.

She argues that if civil society is weak, than in the aftermath of the “shock,” wealth is transferred unwittingly from the many to the few: “Russians fronted the money for the looting of their own country, in an elaborate shell game where one paper company was used to buy another.”

Ms. Klein dances between polemical prose and sympathetic advocacy. To my mind, the uncommon strength in her book derives from its moral force, though at times she declines into petty repetition, and paints the Chicago school as a breeding ground for economic fascism: “Like all fundamentalist faiths, Chicago School Economics is for its true believers a closed loop.”

What she means is that if neo-liberal theory is the only way, than anyone who differs is by definition wrong A middle ground between would have won her skeptics, and given many a centrist republican second thoughts about the merits of cable television’s Extreme Makeover applied to foreign policy.

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Shocks–financial, economic or political–are used to re-write a nation’s laws without the consent of the people. This is her tabula rasa thesis, and to find support for it, she describes closed door, late-night cram sessions to get a liberalization agenda passed in Chile, and similar clandestine efforts by the Sri-Lankan government to strip fisherman of their coastal land after the tsunami. In both cases, a shocked populous was in fear for their lives; distant law-making mattered little.

In South Africa, it was the pure inexperience of the ruling party in the wake of apartheid. In exchange for political power the ANC gave up economic control. She is most strident talking about Iraq where she explains how the neo-liberal agenda used the domestic turmoil–in 2006 when things were falling apart–to pass an oil law that transfered wealth from the nation to a few multi-national corporations. Klein is most convincing when she opens a chapter with a personal account, as she did in the chapter titled Erasing Iraq: “I had been in the country for less than three hours and it wasn’t going well.”

There are weaknesses in her thesis, and they come not from what she argues but from what she avoids. She gives no mention to the roll-back of democratic freedoms in socialist countries such as Hugo Chavez’s Venezuela. For such a strident defender of democracy, it’s unusual that she avoids criticism of these certain socialists gone wild. In her history, Evo Morales is an inspired populist reclaiming Bolivia’s treasures for his people.

For a journalist whose commitment is leftist, and who describes her parents as communist activists, she’s most likely to be attacked for her “go workers, go!” cheer leading. Contrary to what her critics have written, her sources are drawn widely from both academic sources and the partisan popular press–the NY Times, Washington Post and USA Today are all given their due–and she quotes at length from agencies who do their own “reporting”, ie. the World Bank, IMF and CIA.

An improved thesis would account for shock and tyranny across the political spectrum. Hugo Chavez in particular needs painted in less flattering prose. The shock therapies of both right-wing juntas and left leaning dictators should equally be condemned. Excess is the mother of tyranny, no matter what color the flag.

Ms. Klein’s take home lesson? Beware of anyone who utters the three words, ”Everything has changed.” If you hear that, it’s about to.