Friday, February 15, 2008

The Shock Doctrine: The Rise of Disaster Capitalism, by Naomi Klein

I guess you could call The Shock Doctrine Naomi Klein’s follow up to her debut book No Logo. In between she published a collection of her newspaper articles and columns Fences and Windows. Whereas I found No Logo to be a compulsive page-turner, The Shock Doctrine demanded a lot more attention.

The thesis of this book may seem a bit far-fetched. Klein claims that the Chicago School of free market economics, with its patron saint Milton Friedman, promoted a predatory model of economic intervention. Essentially, when a disaster struck, this school’s line of thinking demanded that brutal free market reforms be introduced, just at the moment when a cautionary approach was what was most needed. This group of economists saw states that were politically and economically reduced to rubble as great places to ‘start afresh’, this time with the pure ideology of free markets.

To this reader the whole idea sounded a bit strange, until you read page after page of evidence marshalled to prove the thesis. In the introduction Klein discusses how after the hurricane Katrina tragedy, Milton Friedman saw it as an ‘opportunity’ to privatise the schools. Friedman would go on to be an economic adviser to dictators like Chile’s Pinochet.

What this book perhaps best highlights is that free markets and democracy do not necessarily go hand in hand. In fact, if the examples this book provides are anything to go by, they are probably at odds with each other. If The Shock Doctrine proves nothing else, it is that markets need to be regulated. Markets should work to serve the people. In the Chicago School doctrine exemplified by Milton Friedman and his ilk, we should all literally worship the market. In fact, probably replace government with free markets.

One thing that Klein raised in this book has always been a puzzle to me: Why so many right wing, free market politicians deride government as bad. (They commonly complain too that they could make more money if they worked in the private sector, and that by extension their public service is almost a reluctant gift we should all be grateful for.) Why, one wonders, get involved in government (or regulation, really, to put it another way) if you are ideologically opposed to it?

The Shock Doctrine is a pretty scary book. It should scare you that free marketeers think that free markets and democracy go together, yet they are willing to advise and support dictators like Pinochet and Suharto.

It’s convinced me more than ever that markets do need to be regulated, and that government must ultimately have authority over a country’s economy.

One last note to prove Klein’s point. When I recently read Winning by maverick GE CEO Jack Welch he noted that September 11 was a positive from a business perspective. I should get that book out again just to find the actual quote.

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