The Maven of NeoLiberalism
by Neil Smith
The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein. Picador (2008).
Naomi Klein’s The Shock Doctrine hit bookshelves and internet bookseller sites in 2007 just as the storm clouds of global economic crisis were about to burst. She was not in the least concerned with US housing and the subprime mortgage and foreclosure crisis which, however improbably on the face of things, triggered the global financial crisis and eventual economic meltdown. Her focus lay not in the uncontrollable global virulence of a supposedly local crisis lubricated by the instantaneous financialization of loans and debts and credits — when capital globalizes capitalist crises globalize apace — but rather in the deliberate application of economic shock therapy administered from Washington DC and other centers of global political economic control.
From the 1970s onward, from Chile to South Africa and from Poland to Iraq, the market discipline of neoliberal shock therapy, inspired by economists known as the Chicago Boys, was visited as a plague on the world’s poor while padding the Swiss bank accounts of the world’s powerful and wealthy. Nowhere was this plunderous accumulation starker than in Moscow where, as Klein puts it, “the rise of Russia’s billionaire oligarchs proved precisely how profitable the strip mining of an industrialized state could be.” There was no collateral damage in this three-decade rampage by capital. “Disaster capitalism” was precisely the point; the application of shock, up to and including the mass violent loss of life, was calculated and intentional and its costs anticipated. “Destroy and convert” might well have been the motto of disaster capitalism.
In Klein’s own words, supported by ample evidence: the Southern Cone of Latin America was “the first place where the contemporary religion of unfettered free markets escaped from the basement workshops of the University of Chicago and was applied in the real world … [it] did not bring democracy; it was predicated on the overthrow of democracy in country after country.”
That The Shock Doctrine has had a global effect is undeniable. Translated into twenty-five languages, it was an instant best seller in many countries and garnered numerous book prizes in Europe and North America including the prestigious Publisher’s Weekly book of the year prize. However improbably, it debuted at the top of the business best seller list of the conservative Sunday Times of London. Klein is a journalist, not an academic, but the care with detail and the multifold research that constitutes this book makes it far more than a “first draft of history”; rather, it is a decisive and committed analysis of a brutal epoch in the history of capitalism. That the book was so widely read and received such a positive reception in the popular media, even in business circles, suggests that it caught a wave of public and internal disillusionment with the ideological promises of globalization and neoliberalism.
Indeed, from Bangalore to Seattle, Quebec to Genoa, the anti-globalization movement in which Klein participated had already shown that the neoliberal steamroller could be challenged and there was an alternative. The erroneously named Asian economic crisis of 1997 – 1999 revealed disillusionment from within, as top shock doctrine economists such as Joseph Stiglitz and Jeffrey Sachs (treated rather gently in this book) jumped ship with withering critiques of “the project”; revolts in Latin America brought popular leftist governments to power in Venezuela, Brazil and Bolivia as well as others elsewhere later on; and while the so-called “War on Terror” represented an opportunistic global power grab — the Iraq War — its generous corporate welfare giveaways to Blackwater, KBR, Bechtel and a phalanx of corporate military suppliers notwithstanding, was a disastrous strategic mistake even in the Bush administration’s own terms. The global economic meltdown after 2007 was just another nail in the coffin.
Cribbing from German theorist Jürgen Habermas, we might say that by the early twenty-first century it was clear to many that neoliberalism was “dominant but dead.” Dominant because no global alternative had yet fully blossomed; dead because the neoliberal variant of capitalism was widely discredited and had long since stopped generating new ideas. Klein caught this disillusionment.
In a more positive vein, Klein’s book makes a significant gesture in the direction of repairing a long term political rupture. Academics tend to think of the McCarthy period and the early Cold War years as a time when socialists and communists were hounded from the academy, patriotic oaths of allegiance were required, and writers were black-listed. All of this was real enough, but arguably of greater importance was the cleavage established between socialist intellectuals on one side and working class organizers, union members, and striking workers on the other. Some of this political rupture was forced from the repressive apparatus of the state but just as often it was orchestrated by right wing union leaderships themselves.
A central merit of The Shock Doctrine, therefore, is Klein’s coverage of the violent repression of workers and unionists, the targeted assault on working-class power both before and during the capitalist shock treatment administered to various countries, and to a lesser extent her focus too on the organizational responses of workers, unions, peasants, women’s groups, indigenous movements and many others. Especially in the US context, Klein’s energetic prose helps reunite workers’ struggles with a long history of socialist ideas, aspirations and possibilities as she diagnoses the same onslaught against unions and working people in the United States itself (and in Thatcher’s Britain, for that matter), particularly in the brutal state clampdown after Hurricane Katrina broke the New Orleans levees in 2005 and the working class largely African-American population was corralled in the flood waters at the cost of an estimated 1500 lives.
To be sure, there are limits to Klein’s socialist alternatives. She is clear in condemning the brutal tragedy of Stalinism, but leaves the door slightly ajar for a kinder, gentler socialism. Yet her sense of alternatives cleaves just as much to a social democratic gloss on capitalism: a redistributive capitalism with strong state regulation over wages and working conditions, the provision of public health, housing and education, the nationalization of oil companies, banks and other crucial facilities — none of this is inimical to a parallel free market: “Markets need not be fundamentalist.” Like many on the left she holds fast, therefore, to the idea of a Keynesian style new New Deal. But this alternative strikes me, especially amidst continuing fallout from the global economic meltdown, as rather unambitious.
The old New Deal, moreover, was not such a great deal for many. First, Keynes himself was not interested in the diminution of social inequality or in social welfare per se, but rather in the narrow economic goal of stimulating investment via consumption. Second, the New Deal was geared largely to the white working and lower middle classes, selectively omitting coverage for African-Americans. This was most evident in the New Deal’s housing provisions which functioned to stimulate suburban development and white flight, with the consequent class and race geographies we now know. Third, as feminist and labor critiques have pointed out exhaustively, the various social welfare programs and union organizing concessions, whatever else they did, functioned as powerful means of social control and disciplining aimed first and foremost at women and workers.
In addition, the old New Deal did not arrive in a vacuum. Its somewhat benevolent hand of the state was matched every inch by a thoroughly repressive posture. Thus, Franklin Roosevelt did not initiate the New Deal out of patrician benevolence, however much that is the liberal story that has come down to us. Rather, after 1933 he confronted rising labor militancy with more strikes in the auto, coal and other major industrial sectors; escalating unionization; high unemployment and the persistence of “hooverville” tent camps housing the homeless; and growing communist and socialist organization. FDR understood well that revolution was potentially in the cards and the New Deal was intended to blunt its momentum. But at the same time, the Roosevelt administration applied extreme repressive measures against strikers, unions, women’s organizations and the unemployed.
Advocacy of a new New Deal today, therefore, puts the cart of radical change before the horse of political organization. It was meant to save capitalism more than transform it, and the advent of neoliberalism in the 1970s proves the adaptability of capitalist class relations to multiple specific forms. FDR established the New Deal because he had to; he was under extreme political pressure. The lesson for today, and Klein would doubtless agree, is that the first step is one of building organized power among workers, racial and ethnic minorities, migrants, women’s and environmental activists, and so forth. Only then does the political power exist to seriously propose and fight for radical alternatives. The tragedy of the Obama administration’s first year in power is precisely that it failed to encourage the conversion of the mobilization that brought him to power into a political movement. That such a political movement would have held his feet to the fire, demanding vocally that campaign promises be met — and then some! — surely goes a long way toward explaining its non-appearance.
The Shock Doctrine is a legitimately angry and radical book. One gets the sense that Naomi Klein’s powerful narrative and evidence, which scream “SOCIAL REVOLT!” from every page, are fighting against her own caveat that a kinder gentler capitalism might just be finessed. More even than her earlier book, No Logo, this volume will have a lasting and radicalizing effect across old political chasms.
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