Audacious Undertaking

One of the most discouraging aspects of modern life is that even the most privileged, the most educated and the most able people sometimes feel hostage to forces greater than themselves. Greedy private sector rip-offs, seemingly unfettered corporate abuse, a rapacious and unforgiving credit industry, unreliable and sloppy service providers, traffic gridlock, vaguely corrupt politicians and day-to-day work pressures conspire to disrupt satisfaction with what could and should be the best of times. Add to this a steady stream of negative news emanating from Afghanistan and Iraq, the drumbeat about global warming and mostly justified international anger about the policies and style of U.S. president George Bush, and the early 21st century hardly seems the nirvana it could be.

If discontent dogs the rich and privileged, one can only imagine the pressures on the underprivileged in North America, not to mention the citizens of developing countries. The pace of change, the degradation of the environment, economic dislocation and corporate rapaciousness are all magnified for the poor. Seemingly powerless to affect government policies or their own destinies, the poor worldwide are victims of private greed and public malfeasance—often reduced to manufacturing cheap goods or exploiting natural resources to feed the demands of the rich. Global warming—nourished by the developed world’s excesses—disproportionately affects the most marginal populations. Hurricane Katrina and the Asian tsunami seemed to appear as violent exclamation marks, highlighting the plight of the poor and dispossessed as governments sat by, unwilling or unable to intervene effectively in the aftermath.

The anti-globalization movement was born as a reaction to these excesses and inequalities. Inspired by Naomi Klein’s ideas and formulas in her breakthrough 2000 book No Logo: Taking Aim at the Brand Bullies, young people, idealistic and not yet constrained by mortgages, careers and families, brought outrage to the streets, railing against corporate greed, advocating against exploitive third world labour practices and demanding action from seemingly complicit governments. By linking corporate branding and marketing strategies to issues surrounding globalization, Klein helped give meaning to previously inchoate ideas and provided a coherent narrative to thousands of people searching for a modern political cause.

The anti-globalization movement—a term used here for convenience while recognizing that these are not homogeneous forces—had and has serious, perhaps fatal, weaknesses. Railing against change, especially inevitable change, can look reactionary, as many protestors seem to pine for a world that stands still. Anti-globalization sentiments also create strange bedfellows as protectionist xenophobes ally with idealistic world citizens and anarchists share the stage with staid establishment lefties. While serving as a fruitful rallying point for those on the left of the political spectrum at the end of the 20th century, the anti-globalization movement got all dressed up but really had nowhere to go.

Enter Naomi Klein’s first major work since No Logo and her new attempt to shape the debate. The Shock Doctrine: The Rise of Disaster Capitalism is a sequel of sorts to the trend-shaping No Logo. Where No Logo sought to “fuel the next big political movement” by challenging the domination of transnational corporations, The Shock Doctrine furthers the raison d’etre for the anti-globalization movement by attempting to link recent wars, the aftermath of natural disaster, economic collapse in the developing world and draconian responses to terrorism to a sinister strategy developed by the late University of Chicago economist Milton Friedman and his acolytes. Strategically placed throughout government, industry and the think tank world, Friedman’s disciples, posits Klein, used natural and man-made shock and dislocation to further their narrow economic agenda. Unlike Francis Fukuyama’s “end of history” thesis that the marriage of free markets and democracy emerged victorious from the clash of ideas, Klein argues that the free market triumphs only when forced on unwilling citizens after a disorienting shock, and she coins a new term, “disaster capitalism,” to describe the process.

The audacity of Klein’s undertaking—an attempted rewriting of the economic history of the late 20th and early 21st century—is stunning, and she manages to weave the thread of her argument through dozens of hitherto unconnected events including: CIA-financed psychiatric research in Montreal in the late 1950s; assassinations, torture and death squads in Chile and Argentina; Thatcherism and the Falklands war; the massacre in Tiananmen Square; the fall of communism in the former Soviet Union and the rise of the oligarchs; the Iraq war; the aftermath of the Asian tsunamis; botched responses to Hurricane Katrina; and Israel’s building of a separation wall.

Klein does not just assert the connection between disaster capitalists and the shock that allows them to enact sweeping change; she painstakingly connects the dots to make the case, creating a non-fiction tour de force that reads like a sophisticated political “whodunit.” As an example, Israel’s growing tendency to unilateralism was facilitated, Klein theorizes, by large groups of Russian migrants displaced by neo-liberal economic shock therapy in their homeland. With a new source of cheap labour, Israeli leaders were freed to wall off the Palestinians permanently without fear of adverse economic consequences. In another feat of detective work that would do Holmes or Poirot justice, Klein traces disastrous economic policies in Argentina in the 1990s to documents produced by J.P. Morgan and Citibank and passed off as International Monetary Fund plans.

The basic narrative is as follows: The Friedmanite vision of unfettered capitalism and a “hyper-mobile global economy” is a fundamentally unattractive proposition to most people, particularly the economically vulnerable. Only if the slate is wiped clean somehow and people are in a state of shock with reduced defences can Friedman’s henchmen move in and implement a series of quick and radical economic changes—familiar to many of us as IMF “structural adjustments.” If a large-scale shock materializes—a natural disaster like Katrina, for example—so much the better. If the natural world doesn’t cooperate, something can be invented—the Iraq war is given three chapters. The great institutional players in this game include the World Trade Organization, the World Bank and the aforementioned IMF, backed by Washington’s neo-conservative think tanks. The ultimate goal is to transfer virtually all economic resources and control into private hands, gutting public services and shrinking government.

The Shock Doctrine is an invigorating, maddening and, ultimately, polarizing read. Dense, urgent and gripping, the passionate argumentation and abundant research (complete with 67 pages of notes) give the impression of an important, possibly seminal work of popular political science and economics. The catch—and there is a big catch—is that Klein has overreached and made leaps of imagination that stretch logic and credulity. Her second big book, clearly a labour of love many years in the making, is marred by four major analytical and conceptual flaws.

First—and this is ironic given Klein’s popular status as standard bearer for the developed world’s radically energized youth—The Shock Doctrine ends up sounding profoundly conservative. A hankering for the old days (in Klein’s case, the era of John Maynard Keynes) and suspicion of change are the hallmarks of true conservatism. Reminiscent of the Canadian Tory wag who once quipped that the Magna Carta was “too much, too soon,” Klein’s admiration of Keynes and the “mixed, regulated economy that created the New Deal” can sound quaint and dated. New Deal economics transformed North America, but positive innovations since then, many based on encouraging entrepreneurial wealth creation and liberalizing trade arrangements, deserve more attention. Also, in critiquing selected international economic transitions—most notably Russia, Poland, South Africa and Iraq—Klein occasionally sounds nostalgic for a past that was, for many people, at least as negative as the present.

Second, while she has compiled an impressive collection of statistics and anecdotes, we have only Klein’s word that the disaster capitalism conspiracy is exactly that, a conspiracy. What if the events she describes are really unconnected and accidental? What if people really just muddle through crisis—first trying this approach, then that? What if Iraq, as terrible as it is, is a colossal display of incompetence and bungling rather than a vast conspiracy? Having travelled to Iraq 15 times since 2003 and personally witnessed the constant confusion in goals, the unsuccessful shifts in strategy and the lack of coordination between the Pentagon and the State Department, I would suggest that the record in Iraq screams hubris—notwithstanding the enrichment of some war profiteers—rather than a nefarious master plan.

If globalization is just a term that describes a series of unrelated events and changes, then opposing globalization is like opposing gravity. But if globalization can be described differently—as a connected series of intentional events, woven together by an ideology with powerful adherents—then protesting is no longer tilting at windmills, and powerful critiques of the bogeymen and straw men can be mounted. While there is no question that Milton Friedman is the primary author of a powerful defence of Adam Smith’s economic invisible hand theory, the idea that the CIA conspired to shock people into docility, whereupon the Pentagon, Citibank and the World Bank proceeded to create massive upheavals to make the world safe for Friedman’s economics just beggars belief. Klein also asserts that since the fall of communism free market reforms have “required the systematic murder of tens of thousands and the torture of between 100,000 and 150,000 people.” Although Klein backs her figures with the outcomes of court cases and criminal investigations in Latin America, she connects events in a way that requires a credulity that only some readers will be capable of.

Another serious weakness of the book, despite the power and passion of Klein’s writing, is its naive and unquestioning embrace of public ownership and government action. Public control may be fine in Canada and the Scandinavian countries, but in most of the world, where the public sector is just as rife with greed and unaccountable power as the private sphere, it has no claim to virtue.

Consider some examples of countries where virtually every activity is firmly in “public” hands—most of them operating under some perverted form of socialism, either “corporatist,” that is, run by a powerful cartel of private interests intimately entwined with the state, or “rentier,” deriving state revenues from “rents,” usually from the exploitation of natural resources such as oil.

Algeria is one of few remaining countries in the world that stand proudly socialist. Algerians experience full government control of most industries, enjoy some of the best theoretical labour standards in the world and live under strict currency and trade controls. Of course, Algeria’s utopia exists only in the imagination of its leaders. In reality, unemployment is approaching 30 percent, a civil war killed more than 100,000 people, a small handful of generals and “business people” control the lion’s share of the wealth, and oil revenues are squandered on corrupt and inefficient enterprises. Human rights are in shambles. Not coincidentally, Algiers, the country’s capital, was recently named by The Economist as the world’s worst city.

In Egypt, despite many attempts to privatize state-owned industries, the government and public sector are still firmly in control of most aspects of citizens’ lives. Government-controlled professional associations, unions and guilds dominate entry into many occupations, the public sector is notoriously corrupt and ineffective and most big businesses run on “concessions” issued by powerful figures associated with the regime. Egypt’s streets now seethe with discontent, and thousands of Muslim Brotherhood members and supporters—popular because of the failings of the Egyptian political system—languish in jail under variations of emergency law that have been in place for over 20 years.

In Belarus, dictator Alexander Lukashenko rules with an iron hand over a socialist country where Lenin’s statues still proudly stand. The majority of enterprises are state-owned and foreign investment is less than 4 percent. Calling his system “market socialism,” Lukashenko renationalized many industries and banks in the late 1990s. Good relations with Vladimir Putin’s Russia and high oil prices have improved the economy in recent years, but Belarus is an international pariah where opposition to Lukashenko is not tolerated and where adherence to the supposed glory days of the Soviet Union is the established orthodoxy. As in Soviet days, a small elite, the nomenklatura, establishes and enforces public policy.

Other examples of countries with theoretically strong public control (but elite domination) and draconian trade and currency protection include Iran, Burma and Zimbabwe—not a group of countries likely to make the United Nations Development Programme’s “best of” in its next Human Development Report.

Of course, there are counter-examples where public control and protectionism have made things better. Hugo Chavez has improved the lives of poorer Venezuelans, but his rule comes at the expense of civil and political liberties. Recent constitutional changes proposed by Chavez to further concentrate power in the hands of the executive and to overturn term limits for elected officials (including himself) suggest a trajectory toward increased autocracy. Fidel Castro’s Cuba has survived untold international pressure to provide admirable equity for citizens, but Cuba has become stuck in time—an anachronistic backwater with a population forced to pledge allegiance to a revolution few can remember.

Finally, in perhaps the most serious misanalysis in the book, Klein takes on the question of Lebanon and Hezbollah. Characterizing the Hezbollah-led attempt to overthrow the democratically elected government of Fouad Siniora in late 2006 as “the first national revolt specifically targeting postwar disaster capitalism,” Klein praises the “Islamist party” Hezbollah for their efficiency and generosity. While Hezbollah does play an important and legitimate part in Lebanese society, the group’s role as a Syrian-backed, Iranian-financed private militia accused of indiscriminately targeting civilians with missiles is virtually ignored in Klein’s search for anti-globalization heroes. That Siniora’s democratic government is the weak party in Lebanon, bravely withstanding the onslaught from Hezbollah and its anti-democratic financers to champion a liberal and non-sectarian future for the country, completely escapes Klein’s narrative.

The book winds down with a rather familiar defence of “democratic socialism” (good socialism as practiced by Hugo Chavez) as opposed to “authoritarian Communism” (bad socialism as practiced by Stalin) or social democracy (cheap sell-out of socialism practiced by Tony Blair, Gerhard Schroeder and their ilk). To those in left-wing circles this is a hoary and tired debate, but Klein resuscitates it as brand new, quoting 1970 memos from Kissinger to Nixon like newfound gems. To have the young and talented Klein, hero to a generation of wired, plugged-in idealists looking for a place in the world, concluding that the political future is “markets existing alongside the nationalization of the banks and mines” is almost as discouraging as having to fight the powerful, unaccountable multinationals she skewered so skillfully in No Logo. In the expansive intellectual territory represented by the 561 pages of text that make up The Shock Doctrine, I was hoping for more.