October 01, 2007

Shock Doctrine

In 2005, the ex-German Chancellor, Gerhard Schroeder surprised his countrymen by taking a job with the Russian giant, Gazprom. The Washington Post at the time noted that "It's the sort of behavior we have -- sadly -- come to expect from some in Congress" whilst condemning the way that Schroeder's last few days in office had enabled deals for the company he was now a director of. For Naomi Klein the news would not have come as a surprise at all.

Klein's Thesis

In her latest book, Klein argues that there is a fundamental contradiction between service to the state and service to a corporation and furthermore that the Wild West capitalism of Milton Freidman and others is incompatible with democracy. She charts a story which in her view runs from the torture chambers of the Latin American dictatorships, particularly Chile, but also Argentina and Bolivia in the seventies, through the reconstruction of Eastern Europe and Russia in the nineties and into the war in Iraq and the aftermath of the tsunami in the early part of this century. She suggests that all the events of the last forty years have something in common. A massive shock, whether by natural disaster, war or even internal coup becomes the prelude to massive economic reforms, which in the normal course of events noone in that society would ever endorse.

Klein's thesis is historical and charts the evolution of the way that these shocks form a starting point for massive structural reform. From Pinochet's torture in the 1970s, which she argues psychologically damaged the Chilean population and made them unwilling to revolt, right up until Tianamen Square, she suggests that dictatorships have used the pressure of torture to prepare the way for in-egalitarian economic reform. That isn't the only part of her story though. For she attempts to demonstrate that the same dynamic works in democracies. In the aftermath of the Falklands War, she suggests that the UK came together and that Margaret Thatcher was able to introduce reforms she never would have attempted before. The same thing happened in 1990 after the fall of the Soviet Union. Eastern European states faced for the first time the explosion of democracy and they too resorted to economic reform, against the wishes of their electorates, at great speed. Economists like Jeffrey Sacks advised them to go very fast in reforming their countries- such dislocations meant that the reform in Sacks's thinking would become embedded and also that the population would be too cowered to object.

Shocks whether external or internal create for Klein a moment outside of the normal process of every day politics. A moment of dictatorship for a democratic regime- you might say that the Bush administration faced just such a moment on September 11th. She suggests that corporate capitalism now runs on the basis of such shocks. That the major companies of the world now invest in disaster prevention, they have in her words hollowed out the state, and present solutions to the problems of war or disaster which enable them to profit out of it. She argues that this establishes a disaster complex that in economies like Israel, make the economic logic of the situation lead to further wars. Furthermore these companies then agitate against policies that would lead to fewer disasters- the classic example in her mind being the corporate case against global warming. The rich who run the companies ultimately don't suffer from disaster- but the poor do- as Hurricane Katrina in her view demonstrated the rich are able to buy protection, medical care and other things whereas the poor are neglected and treated as criminals.

Klein's Blindnesses

Klein offers us a historical narrative, the problem is that she is trying to make a point in political philosophy via her historical narrative. She doesn't devote that much time to making philosophical points, they arise by inference from the narrative. And that exposes her to writing something which for all its historical coherence, may not be philosophically coherent. I'm not qualified to write about the history that Klein scans- some of it, in particular the mismanagement of the Iraqi utilities by American contractors I can endorse but there are large swathes of Klein's book, the internal politics of Bolivia, that I would turn over to others to critique. But I do think that Klein misses some major points, and its worth just pausing to reflect on these misses before you accept her underlying thesis.

The first of these misses is that capitalism and corruption are uniquely bound together. She establishes that there is a conveyor belt which takes politicians to corporate jobs, and directors to political jobs, that is particularly true in the United States. She asks some legitimate questions- when Henry Kissinger met Bush and Cheney, did he meet them as an ex Secretary of State (his job thirty years before) or as the Chairman of Kissinger Associates. Donald Rumsfeld never divested himself of his major stock options, particularly in health companies, despite presiding over the privatisation of the health care system for American soldiers returning home. George Bush's father is a member of the Carlyle Group which has profited directly from the wars in Iraq and Afghanistan. We could go further- but it isn't necessary. Klein's point is that capitalism as practised in the US is corrupting, there isn't really much argument on that point. But there could be an argument that its uniquely corrupting- it might beafter-all human nature that produces corruption and not capitalism alone. For example, plenty of the leading Nazis were personally very corrupt, inside a system that definitely wasn't capitalist. So were many of the leading communists in the USSR and so was famously the ancien regime in Europe. Corruption is a worry that goes back to Rome if not before.

She also, rightly again, points out the ways that ideologues from the Heritage foundation and Chicago University have used moments of crisis to impose a purist view of their ideology. Again that isn't unique to capitalism. Intellectuals of the left have often flooded into dictatorships to offer their advice at moments of shock. The French Revolution and the Russian Revolution were used as Klein admits to introduce massive changes which never would have been democratically acceptable. Perhaps to use John Gray's formulation it is market fundamentalism which is anti-democratic but in the same way that socialist or any other fundamentalism is, it fails to deal with the crooked timber of humanity, forcing it into straight lines and straight purposes. Like Mr Wickfield in David Copperfield, the economist measures by only one indicy and hence measures nothing of use to anyone not using that indicator. In that sense Klein's radical case, becomes another repetition of the conservative case- distrust ideologues, distrust quick decisions.

Lastly there is another problem inside Klein's thinking and that is the complete lack of a positive alternative. Klein points at several moments in the book to administrations or policies she approves of. She points to South American economic policy in the fifties and sixties, to Scandinavian economies and to the self help efforts of Thai peasants to rebuild their own villages after the tsunami. That's all very well. But of course, there are problems in all the systems that she offers to us. Keynesian big governmental management can end in as much corruption as capitalism. Klein detects where the big areas for the left are- the Economist magazine recently admitted that the Scandinavian model represented a way forwards- and libertarian socialism is an idea whose time may be coming back. She doesn't reflect on any of these ideas, she offers no thoughts of her own but endorses them all. This is a problem in a book that wants to be an inspirational philosophical tool for the left. Klein takes Chomskyite ideas a little further, but she hasn't really devoted herself to an alternative. Perhaps that is something she should consider. Interestingly she believes that globalisation increases inequality and poverty but never mentions the Marxist view that such inequality leads to revolution and the establishment of a new society.

There are also deep problems in her history. Occasionally Klein links things in such a way as to imply a causal connection where none can actually be found. Perhaps most important is the way that she implies in chapters one and two of the book a connection between the thinking of Dr. Ewen Cameron and Milton Friedman. Cameron advocated in the early fifties a method of psychiatric treatment which included the deliberate annihilation of the personality of the patient concerned. His techniques were taken up by torturers in the CIA. Friedman, Klein tells us, was the other doctor shock. What she never does is establish anything more than an analogy between the two people- at times she implies a connection but she never establishes that connection. Tocounter-pose them so often, and draw so many parallels and allege a connection, one has to show that there is one. Klein doesn't.

Furthermore there isn't enough accident in this history. In real life accident, luch and chance provide much of the incident, but for Klein accident seems separate. There are particular examples when it seemed to this author, Klein played fast and loose with the truth. She uses Tianamen to explore the experience of Shock Doctrine, and is right that the events in the square were objections to reform as much as to communism. But she is wrong to suggest that China was able to reform more because of Tianamen. The power of the communist party meant that it could decide what it wished in China- it still can. The party decided in the late seventies that reform was the way to go, Tianamen was a mere episode in that process but it was not crucial. One gets the sense that she needed to write something about China and forced the example into her theme rather than treating it through its own merits.

Capitalism, Liberalism and Democracy

Klein doesn't offer any positive picture, what she does though is suggest some negatives about the Freidmanite view of Capitalism. Simply put, the simple equation between capitalism, liberalism and democracy is one that she undermines. Her view is that capitalism creates centres of power which are far from the democratic arena. These centres of power influence and can control democratically elected politicians through the use of money and offices.Essentially in a a capitalist society profit is the only motivating force and therefore there is no moral imperative holding politicians back from corruption, holding Schroeder back from the Russians.

There is a further point here that she makes but doesn't really develop. Civic virtue is different to the virtue created in the market place. Frequently Klein argues that the big contractors employed by the Americans in Iraq have placed their bottom line ahead of the public good- the hollowing out of the state is a problem she argues for the precisely the same reasons that tax farming was a problem in 18th Century Europe. No contractor is interested really in the outcome that the state wants, they are interested in making profit- and if it costs less to subvert the process or install layers of contractors to insulate against legal risk then that is what they will do. In part Klein argues this is the reason why despite so many millions spent on aid to Iraq or to the tsunami affected areas, nothing happened. The same thing goes for liberalism- if companies evolve promising security and in order to achieve that security they have to torture, they will torture. Again the legal and political systems as in Iraq with reference to the contractors can be and have been corrupted at a cheaper rate than it costs to offer the service.

What Klein is arguing for is some kind of mixed economy. There is plenty to agree with in her rebuttal of the wilder claims its advocates make for capitalism. But there are still some worrying issues in this account.After-all most regimes suffer acutely from corruption, most ideologues take opportunities to ignore due process (I know many personally on the left who have this point of view). It isn't enough to merely say capitalism is bad- you have to as well suggest an alternative. Otherwise you go down a route that at times Klein- and definitely Noam Chomsky- are in danger of going down- praising regimes such as Serbia simply because they are not Capitalist.

This book is deeply flawed. It is also impressive. Klein has done a lot of research, been helped by a lot of people. There are things that might be improved but still there are many things that can be learnt. Reading about torture procedures in Iraq is chilling, reading about the way that private contractors have been employed since September 11th is frightening (at times Klein's book is similar to a long extract from the British anti-establishment magazine Private Eye!) and reading about the callous ways that economists have dismissed at conferences and on television programs the deaths of thousands and unemployment of millions is shaming. That opens up another problem with Klein's argument: she never takes on her opponents where they are strongest but only when they are at their weakest. As a polemical strategy that might work, as an intellectual one it is deeply corrupting. But there are still things missing from this book that would have made it better.

Shock Doctrine is an interesting but deeply flawed book. There are many problems within it, but there are also good things. It is a very long book, coming in at over 400 pages and it is a dense read. Klein can do style but perhaps she could learn brevity as well. It is a book that this reviewer is deeply ambivalent about: I accept that there are problems about capitalism in the modern world, I'm not so sure that Klein will convince many or offers interesting answers to what we do about those problems. She makes many mistakes in this book: if I knew the history better I am sure I could find more- but she has also done some good investigative reporting. Like a Michael Moore film, Shock Doctrine is good reportage, bad history and bad philosophy.

Ultimately Klein's argument is really a conservative one. Utopias and universal solutions don't work! How ironic to have it coming from a professed radical.

Crossposted at Bits of News.


Ian Appleby said...

That is a thorough and thoughtful review. While I think a lot of your criticism sounds well-founded, isn't it a little harsh to blame Klein for not having the answer? It's not as though the rest of us can sit back and say "Oh, come on, Naomi, haven't you worked it out yet?"

I would argue there is value in a work that does set out to deconstruct the pro-market mindset that seems to be the default for the global North. My online persona alludes to imagined communities - it seems very difficult for us to even imagine alternative ways of organising society (what was that we said about Civilisation being rigged?). Let alone finding the answer, raising the question is a valid enough task right now.

Gracchi said...

Yeah that's a possible criticism. It might well be too harsh to condemn her for not writing a different book! Having said that, I think there is a lot of good intellectual energy going into finding out that answer and Klein's book seemed a little old fashioned to me in not taking account of that. I don't think the left has a real problem showing that capitalism doesn't work, it has a real problem in coming up with an alternative- and if Naomi is one of the best intellects around that's what I'd want her working on.

El Dave. said...

Great review. I'd make three points.

1. I think Klein, at least in what I've read to date, which doesn't include Shock Doctrine, is guilty of a teleological view of the development of capitalism.

2. This leads me on to point two. I think she falls between criticisms of capitalism as Friedman would want it and criticisms of capitalism as is. It's possible to argue that the problem with capitalism is not that it is incompatible with democracy, but with nation-states that create eddies in the market that can be exploited.

3. 'The left' already know that 'capitalism' is 'bad'. If no changes are proposed, let alone a routemap, what's the point?

Lord Higham-Johnson said...

A massive shock, whether by natural disaster, war or even internal coup becomes the prelude to massive economic reforms, which in the normal course of events noone in that society would ever endorse.

Precisely our situation now, evne today in Russia. You know we have a crisis here?

…capitalism and corruption are uniquely bound together…

And marxism the daddy of them all, with corruption bound into the system by regulation and dictation, e.g. USSR and China plus the Eastern European examples and Cuba. If you want to see corruption - go to a Marxist.

Dr. Ewen Cameron

Glad you mentioned this monster whom even today people are trying to defend and charging anyone who gainsays them as "conspiracy theorists" which I've just been dealing with in the comments section on my site.

edmund said...

will hopefully be able to post more soon for now i think this article makes a good point


great coments by El Dave by the way really cut to the point in an intellecual way

I thin kthe Friedman/ practice point is particulary importnat.

Anonymous said...

You can read more about Dr. Ewen Cameron's CIA-funded experiments and all the MKULTRA subprojects in the MKULTRA Briefing Book, which was prepared by the CIA in 1976. The CIA Inspector General wrote in 1958 of MKULTRA: "Precautions must be taken not only to protect operations from exposure to enemy forces but also to conceal these activities from the American public in general. The knowledge that the agency is engaging in unethical and illicit activities would have serious repercussions in political and diplomatic circles."