1 September 2008 **** Front Page

Misreading Naomi Klein

By Tapani Lausti

Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism. Allen Lane/Penguin Books 2007.

A review of Naomi Klein's new book published in the leading Finnish national daily Helsingin Sanomat (30 March 2008) had this postscript: "Initially I had great difficulties reading this book. Naomi Klein has been ranked eleventh among hundred leading intellectuals in the world. The Shock Doctrine has been praised around the world, winning awards. In spite of this the book seemed like rubbish. Then I understood that one should not read it as an argument in economics. Klein looks at the world with the eyes of a journalist from the point of view of the disadvantaged."

The author of these lines is a leading Finnish green thinker, ex-minister and MP, now a freelance writer, Osmo Soininvaara. In spite of being an anti-neoliberal social thinker, he has great difficulty in understanding Klein's book about the devastation brought to the world by the school called the Chicago Boys and their guru Milton Friedman. Soininvaara does not deny the reality of disaster capitalism but accuses Klein of succumbing to conspiracy theories. The headline of his review was "All history seen as a right-wing conspiracy".

Soininvaara does not explain what he means by this. I suspect that he did not read the book very carefully. There has been no conspiracy. The neoliberal agenda has been declared publicly every time a disaster struck — or was manufactured — somewhere. The shocks were used as an excuse to drastically remake society. All remnants of social democracy would be wiped out, public assets privatised, outside developers given free rein and ordinary people pushed aside, impoverished. The global economy is now awash with big corporations which thrive on cataclysms.

Soininvaara is outraged at the idea that economists could have anything to do with disappeared people or tortured prisoners. If he had read the book more carefully, he would have noticed a crucial point made by Klein. She shows that Friedman and his colleagues' "theories" are not science but ideology. These people are fanatics in their belief in the absolute freedom of the markets.

Also, if Chilean economists went to Chicago to pick up Friedman's ideas and then returned home to implement their ideas with help from Augusto Pinochet's torturers, they cannot plead innocence. Friedman himself had a private meeting with Pinochet during which he advised the general how to go about a "shock treatment" of the economy. This was impossible without political repression.

Chile was important for the Chicago Boys because it had become very clear that their ideas didn't work in practice. The whole Chicago school was about to go down in history as a minor historical footnote. The election of Richard Nixon to the presidency of the US changed everything: "It was Nixon who would give the Chicago Boys and their professors something they had long dreamed of: a chance to prove that their capitalist utopia was more than a theory in a basement workshop — a shot at remaking a country from scratch. Democracy had been inhospitable to the Chicago Boys; dictatorship would prove an easier fit." (p. 63)

Later the collapse of the Soviet Union was crucial for the neoliberal project. It opened doors for these fanatics to run rampant. However awful the Soviet system had been, its existence reminded Western elites of the possibility of people seeking an alternative social order. Western capitalism needed to pretend to have a human face. Now, without the Soviet Union "capitalism was suddenly free to lapse into its most savage form, not just in Russia but around the world". (p. 252)

The shock treatment of Russia had one important but little noticed effect. Klein draws attention to the fact that a million Russian Jews fled their economic misery by emigrating to Israel. Suddenly Israel didn't need Palestinian labourers, they could be replaced by low-waged Russians. Simultaneously the Israeli economy had started to thrive on security-related innovation and production. Any leanings towards a peaceful solution to the conflict receded. The economy was doing alright. It was now part of the global deregularised merry-go-around. (See also Misha Glenny, McMafia: Crime Without Frontiers, Chapter 5.)

Then came September 11 in New York. The "war on terror" was immediately adopted by Israel to rationalise the repression of the Palestinians. Israel showed that a whole country could be a gated community, something neoliberal policies helped to spread around the world. (Yes, Soininvaara is shocked by the emergence of the gated communitites of the rich and the slums of the poor.) This, of course, was something the US was soon experimenting with in Iraq. The Baghdad Green Zone was to be a world of its own.

At the time of the Twin Tower attacks the Bush administration was packed with Friedmanian fanatics. Donald Rumsfeld was Friedman's close friend. He started a process which slowly pushed warfare into a more or less privatised form. Companies like Halliburton would supply the war scene with the needed infrastructure. Soldiers needed only to fight. In a step further, private security companies would send tens of thousands of mercenaries.

I recommed Klein's chapters on Iraq for those Finnish commentators who seem to think that the US troops are in the country in order to "pacify" it. The real story of the Iraqi occupation is so appalling that many people seem to be happy to live in denial, that is if they know anything about it at all. The Finnish media has not been of great help. Probably influenced by this lack of information Soininvaara sneers at Klein for claiming that the privatisation of the Iraq war has brought windfall profits for corporations close to the Bush administration. Soininvaara seems to think that Klein exaggerates how bad things are in Iraq.

The global impact of Friedman's dogmas has been devastating. Klein sums up the legacy of disaster capitalism: "In December 2006, a month after Friedman died, a UN study found that ´the richest 2 per cent of adults in the world own more than half of global household wealth'." (p. 444) It is not surprising then that people have lost "faith in in the core free-market promise — that increased wealth will be shared." (p. 445)

However, the tide is beginning to turn. Many of the leading lights of the global free-market frenzy have been dragged to the courts in an array of scandals and criminal proceedings: "The economic crusades managed to cling to a veneer of respectability and lawfulness as it progressed. Now that veneer was being very publicly stripped away to reveal a system of gross wealth inequalities, often opened up with the aid of grotesque criminality." (p. 446)

So there is hope in the air. In Latin America people are returning to policies which were so brutally suppressed from the 1970s onwards. In many parts of the world the global financial institutions have lost their credibility. Their recommendations are laughed at. People cannot anymore be easily shocked into accepting social programmes which go against their interests. Citizens everywhere are beginning to openly protest against the wide gap between rich and poor (see e.g. Greed has brought us here, fairness must lead us out by Polly Toynbee, The Guardian, 5 August 2008). People understand that they live under a social system which does not serve the interests of majorities neither in rich nor poor countries.

Seemingly unaware of this development, Soininvaara complains that Klein does not offer any solutions. He writes that those seeking justice in the globalised world should not be only backward-looking Luddites. This is another indication of Soininvaara's careless reading of Klein's book. He for instance falsely accuses Klein of romanticising the pre-tsunami poverty of fishermen in Sri Lanka.

Soininvaara writes that to achieve a better future we need better economic programmes. He adds that a book presenting such a programme has still to be written. Soininvaara thus reveals himself to be totally ignorant of a long tradition of alternative thinking. As it happens, I have charted the history and current state of such thinking in my books Toisinajattelun tiekartta (Road map for alternative thinking) and Tienviittoja tulevaisuuteen (Signposts to the future).

It also has to be said that books will not lead the world to a better future. Only thoroughly democratic movements can lead the way. Books can be used for inspiration, and there are plenty of them.


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