Critical Essay on The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein
The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein is a very interesting book that talks about how the various countries of the world have relied on disasters in order to jump start their economies. Klein's thesis can be adequately surmised by her sentence in the book where she writes, “Some of the most infamous human rights violations of this era, which have tended to be viewed as sadistic acts carried out by antidemocratic regimes, were in fact either committed with the deliberate intent of terrorizing the public or actively harnessed to prepare the ground for the introduction of radical free-market 'reforms'” (Klein, 9). Even though many critics (e.g. Pal, 43)believe that Klein overdid it with her analogy about the shock therapy and the disaster-driven economies, she nevertheless presents a very interesting view of how the various economies of the world are progressing.
Klein explains her point of view by talking about how certain elements in various countries use things like war, terror attacks, and natural disasters as 'shock therapy' in favor of moving along their economies. Klein (pp. 25-26) writes, “I am writing about shock. About how countries are shocked--by wars, terror attacks, coups d'etat and natural disasters. And then how they are shocked again--by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy. And how people who dare to resist this shock politics are, if necessary, shocked for a third time--by police and prison interrogators.” Klein criticizes global capitalism and blames it for most of the problems that are ongoing in the world today. She talks about how events such as the overthrow of Salvador Allende, the collapse of communism, the destruction of New Orleans by Katrina, and the invasion of Iraq are seen by the capitalists as opportunistic events that work to get their economic ball in motion.
Even though many people have criticized Klein for taking such a negative take on the current world's most successful economic system of capitalism, one can find certain truths and reasons to her logic. It is no secret that many countries of the world have found themselves in economic stagnation and/or decline and have used things like war and disasters to recuperate from their economic slump. One of the most controversial of these have been the September 11 attacks. These attacks shocked and paralyzed not just the US but also the rest of the world. Yet, we find that many economies of the world, including that of the US and some in the Asian region, fared very well after these attacks. This was because the US began its War ad Terror, which gave it precedence to invade countries like Afghanistan and Iraq. At the same time, countries like Pakistan, who became US allies in this fight, received many grants and funding. This, coupled with the US economy being fueled by war, resulted in many economies being revived. It is this kind of a shock doctrine and incidences of disaster-capitalism that Klein presents in her book.
Another example of this kind of a 'shock therapy' can be found in the events following the disaster brought on in New Orleans by the hurricane Katrina. Katrina left thousands of people homeless and many people shifted from New Orleans to other areas. This caused a lot of money to be spent on housing and rebuilding of the city. However, many capitalists also saw this as an opportunity to make a lot of money, with real estate prices in the neighboring areas went up sharply and many people were able to make a lot of money. We can be sure that Hurricane Katrina was not just a local issue. Its reparations spread to the whole world in the view of nationalism. Nationalism is mostly presented as a radical shift in the consciousness by people globally when they encounter modernity, both technologically and culturally. This brings us to the ideas concerning globalization and how Katrina has not only adversely affected New Orleans, but also positive affected the world's economy. Globalization would in effect mean that a global culture is derived for all countries all over the world so that they can all work in a very viable and concrete economic environment. Many economists believe that investment is required for growth and economic growth provides the only sustainable way of improving living standards, and therefore an integration of cultures is the answer. However, it is not just the volume of investment that matters for growth - it is the productivity gains that result. Growth can contribute to increases in living standards in two ways. First, employment-led growth raises household income, the money earned can be used to educate children or increase skills. Second, companies are a main source of tax revenues for governments and growing economies generate more taxes revenues to invest in healthcare, education and social safety net including well-designed unemployment insurance and severance pay systems. Again similar to the case presented for business it is useful to view citizens is various roles to understand how they can benefit from globalization and to enhance their culture for better economic performance. And since, because of the disaster of Hurricane Katrina, the price of real estate rose all over the areas surrounding New Orleans, well as in most other states, we can safely assume that this was because of the shock doctrine that Klein asserts.
However, at the same time, we have to consider the pros of having such a capitalist structure in place in our world. We find that many free markets in the world that are following the notions of capitalism are doing really well and the people who are living there are living great lives, not just in the economic sense but also socially. Countries like Canada, France, and England are kind of welfare states that are operating on the principles of capitalism, yet they maintain extremely workable healthcare services for their citizens, where medical care is practically free; a benefit that such countries can derive from having a strong capitalist structure. Klein, however, claims that many of the countries sometimes use drastic measures in order to disrupt certain elements within their spheres or in other countries just so they are able to reap the benefits ensuing from these disasters. Klein talks about Chile and Milton Friedman, “Milton Friedman, the apostle of pure unfettered capitalism, sent many of his finest students to Chile for years to spread the message that markets must be allowed to work their pristine logic unhindered by government. They persuaded virtually nobody. Their parties were thumpingly defeated, and the democratic socialist Salvador Allende was elected instead. So the CIA backed an antidemocratic coup by the fascist general Augusto Pinochet--and Friedman swiftly stepped in to design 'the most extreme capitalist makeover ever attempted anywhere'” (Hari, 54).
Klein presents many such examples in her book and she is able to convince many of the readers about how the various countries of the world, including the US, have been employing such shocking methods in order to sustain their economies. After reading the book, we find that Klein writes about disaster capitalism, which is derived from her hatred for this notion. However, the most important aspect of this book is that Klein supports her theories with various facts and her depiction and analysis of the events are not based on mere speculation. This is what makes her book even more interesting and believable, even though the readers can find certain passages perhaps too fantastic to be true.
Hari, Johann. “The Price of Freedom,” New Statesman, 136, (5866): October 15, 2007
Klein, Naomi. The shock doctrine: the rise of disaster capitalism. New York: Macmillan, 2007.
Pal, Amitabh. “Our Favorite Books 2007,” The Progressive, 71, (12): 2007
Naomi Klein’s brilliant new book, The Shock Doctrine: The Rise of Disaster Capitalism, describes how modern capitalism thrives on shocks and disasters. A tsunami sweeps across Asia, and developers take the chance to clear fishing communities off the coasts and build luxury hotels. Hurricane Katrina devastates Louisiana and well-connected corporations turn body retrieval into a money-making enterprise. There is nothing, it seems, that cannot be exploited to turn a profit.
Klein locates the origin of this ‘disaster capitalism’ in Latin America in the 1970s. Specifically, she identifies Chile from 1973 onwards as the first country to undergo economic ‘shock treatment’ (a phrase coined by right-wing economics guru Milton Friedman). The shock that ushered in this particular programme was the coup that overthrew democratic, leftist President Salvador Allende and established a military dictatorship led by General Augusto Pinochet. Economic policy under Pinochet was designed and implemented by the ‘Chicago Boys’ – Friedman and his disciples, who saw the opportunity to put into practice their (neoliberal) theories about market liberalisation, privatisation and state retrenchment. The policies they recommended could only be implemented at the point of a gun. This would be the pattern throughout Latin America in the 1970s: military rule (including systematic murder and torture) and neoliberal ‘shock therapy’ running side by side.
By the 1980s, institutions such as the International Monetary Fund (IMF) and the World Bank had gained considerable leverage because of the massive debt burden under which most ‘Third World’ countries were labouring. One-size-fits-all ‘structural adjustment’ – standardised packages of neoliberal economic reform – were imposed throughout Africa, Asia and Latin America. ‘Shocks’ (in this case collapsing commodity prices and spiraling debt) were still providing the means through which unpopular economic policies could be forced through.
The George W. Bush administration’s ‘war on terror’ took the model to new levels. Iraq represented the ultimate expression of the project – a war (the ultimate ‘shock’) fought largely to maximise corporate profit. Occupied Iraq witnessed an orgy of privatisation as almost every task was contracted out to a private company. The promised reconstruction has not been delivered, but the bottom lines of the favoured insiders have been suitably boosted. ‘[W]hile the reconstruction of Iraq was certainly a failure for Iraqis and for US taxpayers, it has been anything but for the disaster capitalism complex’ (Klein, 2007:381). Klein defines the ‘disaster capitalism complex’ as a ‘full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad’ (ibid:299).
In her conclusion, Klein analyses the forces arrayed against the disaster capitalism complex. These forces include the rise of the radical-populist politics now characterising much of Latin America. The popular hostility within the European Union (EU) to the increasingly neoliberal character of European economic governance is another. Direct action initiatives for local reconstruction have cropped up from Thailand to New Orleans.
These popular movements are not the only problem ‘disaster capitalism’ faces. Multilateral governance of the global economy is in crisis from above as well as from below. Under the Bush administration, an aggressive United States (US) foreign policy rejected or de-prioritised alliances and multilateral obligations that were seen to constrain US power. This may have been the last, desperate throw of the dice by a US regime concerned with losing its global pre-eminence and willing to take extraordinary risks to maintain its global position. With the US now entrenched in its own financial crash and the dollar’s status as the world’s main reserve currency under serious threat, particularly with the emergence of Asia as an alternative leadership pole, the probability of US decline has increased and the disaster capitalism complex that a section of the US ruling élite has pioneered and promoted is likely to go with it.
But, in the meantime, commentators and activists would do well to learn from this book how shocks and disasters will – given half a chance – be turned into opportunities for profit-grabbing and the corporate restructuring of societies. In the same way as Klein’s earlier book, No Logo, worked well as a manual for activism, the current volume performs a similar vital service.
Accessibly written for a popular audience, and certainly appropriate for use in development education settings (including schools), Klein’s book succeeds at almost every level as a means of engaging the public with critical development issues and politics. For the weight of compelling detail it assembles on how the world works, and for the invaluable guide it offers to informed activism, the book is hugely important and highly recommended for all those who want to understand and change the world.
This is an edited and shortened version of ‘The Shock of the New? Disaster and Dystopia’, a review essay published in the journal Capitalism Nature Socialism (2008) vol. 19, No. 1.
Klein, N (2007) The Shock Doctrine: the Rise of Disaster Capitalism, London: Allen Lane.
Andy Storey is a college lecturer in the Centre for Development Studies, School of Politics and International Relations, University College Dublin. He previously worked at the Development Studies Centre, Kimmage Manor, and for the development agency Trócaire. He has published extensively on issues of European political economy and trade policy and on wider development issues, including aid, conflict and migration.