Klein versus the capitalists

[Joanne98]

Author and column writer Naomi Klein's new book The Shock Doctrine has a truly fascinating premise: influential economist and free-market guru Milton Friedman, together with his followers, have succeeded in abusing political, economic and natural disasters over the past 30 years to establish a global brand of capitalism that benefits largely the private sector.

She describes a disaster is little more than an opportunity to start again, a do-over, a try-again by Western capitalists to entrench free-market policies in countries which have long denied it in its purest form.

Published by Penguin, The Shock Doctrine argues that the devastation wreaked by Hurricane Katrina on New Orleans, the Asian crisis, the US invasion of Iraq, September 11, the tsunami which hit Thailand and Indonesia, the economic crisis in South America - to name but a few - provided an opportunity to influential US economists, corporations, policymakers, the World Bank, and the International Monetary Fund to establish sweeping free-market reforms, while citizens and governments alike were still reeling from shock. (Hence, the book's title).

Klein calls these "orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, 'disaster capitalism' ".

She writes that these changes are often implemented to the detriment of the communities in those countries, while the rich remains largely unaffected.

For example, "when the September 11 attacks hit, the White House was packed with Friedman's disciples, including his close friend Donald Rumsfeld. The Bush team seized the moment of collective vertigo with chilling speed . . . The Bush administration immediately seized upon the fear generated by the attacks not only to launch the 'War on Terror' but to ensure that it is an almost completely for-profit venture, a booming new industry that has breathed life into the faltering US economy . . . In 2003, the US government handed out 3 512 contracts to perform security functions, in the twenty-two-month period ending in August 2006, the Department of Homeland Security had issued more than 115 000 such contracts."

Another example is the 1990s Asian crisis, providing the West with the opportunity to dismantle the protectionist trade policies of the continent's rising economies, while also enabling large corporates to swoop in and buy Asian conglomerates and previously State-owned entities at knock-down prices.

According to Klein, IMF help came with provisos, and served the agendas of Western countries - this while suicide and unemployment rates soared.

One of the most interesting chapters for local readers should be the one - even if short - on South Africa.

Klein notes that the ANC, once unbanned, negotiated for political power, while effectively giving away control of the economy.

In addition to this, the ANC's original economic policy as put forward prior to 1994 was given a complete overhaul, due to international insistence that free market principles should prevail in a post-Apartheid South Africa, and not the notion of large scale nationalisation of industries and redistribution of wealth as punted by ANC leader Nelson Mandela during his incarceration.

"Never before had a government-in-waiting been so seduced by the international community".

Klein states that the results of the replacement economic policy of "redistribution through growth" has been "scandalous", although no doubt her statistics will differ from that of the South African government.

One critique is that The Shock Doctrine is a bit short on offering alternatives to raw capitalism.

One solution placed briefly on the table is a "free market in consumer products coexisting with free public health care, with public schools, with a large segment of the economy - like a national oil company - held in State hands".

In the final chapter Klein notes that the shock from disasters eventually wears off, creating a backlash against the capitalist systems implemented, as can currently be witnessed in large parts of South America, while also ensuring that countries are better prepared for the next shock - and less willing to again be seduced by Western (read US) philosophies.

The rather hefty (558-pages), but easy-to-read book will no doubt irk staunch supporters of Friedman's capitalism, and provide social democrats with sufficient ammunition for dinner-party arguments.

In Klein's hands unchecked capitalism, as implemented by Friedman's cohort of migthy men, appears a tyranny, and one that benefits only the rich.

The recommendation is to read The Shock Doctrine, as it provides an alternative view to the mainstream financial media often focusing on those constructing the economy, rather than those affected by it.

- Review copy courtesy of Exclusive Books.
http://www.engineeringnews.co.za/article.php?a_id=124412

[Sarah Ibarruri]

1. We need to start giving this woman's books as gifts to people....

.. seriously. If we don't know what to give, let's give her book. Spread her message loud. Hers and Kucinich's and Edwards'!!!!

[Joanne98]

2. I agree!

[izquierdista]

3. Shock Doctrine Tour

I just got back from a close-up and detailed look at the after effects of the Shock Doctrine, a train trip across the length and breadth of the Ukraine. All around one can see a society in ruins, as if the whistle had been blown on progress and everything had stopped some 20 years ago. Oh, there are a few monuments to the success of capitalist free markets, a nice hotel here, a Lincoln Navigator cruising down the road there, a new high rise going up. However, for the most part, for the common man, capitalism has replaced communism with instability and poverty.

Privatization has meant no money for maintenance, instead, that money is now in the "profits" column, and the buildings and the roads decay and are patched and repaired again and again. Where once a sports complex stood, with a stadium and an arena and a hotel, capitalism has dictated that stadium revenues are insufficient, so it has been abandoned to the weeds; the arena has been turned into a marketplace, with hundreds of small 8 foot by 8 foot stalls. The hotel is still in operation, but the rooms have deteriorated past the point of a skid-row flophouse.

On the bright side, there is freedom all around. In the communist days, it was illegal to be a vagrant, a bomzh (без официальный место жителни - without official place of residence). If you were out panhandling, the militsia would pick you up, take you to a social worker, and get you back to your assigned dwelling. Nowadays, such heavy handed State intervention is nowhere to be found and everyone, young and old (but mostly the old, the pensioners) are free to sleep in whatever train or bus station they like; free to beg on any street corner.

The people seem to have embraced capitalism and the opportunities it has opened up to them. The market stalls mentioned above, there must be millions of them in the country, and millions of families are dependent on them for their livelihood. At one stall, I stopped and took inventory, the proprietor had maybe 150 hats for sale for an average price of about $30 a hat. That's an inventory priced at retail of about $4500. Thinking about profit margins and inventory turnover and all that capitalist business school analysis, I could see where clearing $200 a month would be a challenge. And to do that, the stall owner must be open long hours, ready to keep up with the competition at other stalls.

However, to focus on the stall owner is to miss the point. In the post Shock Doctrine economy, the only point is to move merchandise so that the manufacturers can make a profit. Not the Chinese laborer who made it; she gets pennies for each item produced. Not for the stall owner, they will never do any volume sales. No, the system effectively funnels all the money in the chain up to the top, to the haves and the have-mores.

What's more, the sheer volume of people involved in the market stall economy effectively precludes any grass-roots movement for change, any organizing for social progress. The people are now free market serfs, as effectively tied to their stalls as the serfs were to the land, and so dependent on them to eke out a few hrivnya so they can eat, that they cannot lift themselves above it. All is as it was 100 years ago, before the Revolution, the few live in luxury, while the masses wonder if they will have enough food this week. Per capita meat consumption in the Ukraine is about 1/3 what it was pre-1991, when it was on a par with Western Europe or the U.S.

The way out of their current situation is fairly obvious. Repairing the infrastructure alone could put the people back to work in productive, good paying jobs. Franklin Roosevelt would know what to do. He would pave the roads, reopen the factories, expand public transportation, fund the arts, libraries, hospitals and schools. But the bickering in Kiev goes on and on, and no one really seems to know how to get the economy on a positive track.

One thing that I was surprised to find, given that the Western press had gloated so much about their removal, were the statues of Lenin still present in each town of any significant size. Often standing with his hand outstretched, as if pointing the way to the future, Lenin still has a small following, and small tributes were laid at the base of the statue. How long will it take until they pick up his writings again? Having endured the excesses of Communist doctrine, they now endure the excesses of the Shock Doctrine. At some point, will they realize that there can be a synthesis of a socialized economy with a market economy? Will they look to the Scandinavian countries, which today lead the world in their Human Development Index (HDI) and figure out how to implement it there? I do hope so, for I would like to return and see them prosper.

[Joanne98]

4. Free market serfs! EXACTLY!

[applegrove]

5. I passed my copy of the Shock Doctrine on and told the person to

pass it on too. Just get it out there.