The Shock Doctrine by Naomi Klein Journalist Klein gives us a superbly researched history of modern economics that ranks among the most disturbing things I have ever read, on par with the literature I read for the Theology of the Holocaust class I took in college. Once again, reading a book that was dense and important makes for a long review, even leaving out lots of very important bits, so a cookie for anyone who makes it through.
In the good old days after World War II, there lived an economist by the name of Keynes. He theorized that people who felt economically insecure and victimized would turn to fascism and extremism. To protect from this as well as communism, he advocated strong government to ensure social equality and regulate business. This was the theory behind the Marshall Plan, which helped Germany recover economically when popular sentiment would have left the evil Nazis to suffer.
The current popular theory of economics started in parallel with two seemingly unrelated people. One was a psychologist named Ewan Cameron, who theorized that if mentally ill people could be stripped of their personality with electric shocks and drugs, their personality could be rebuilt. The research was carried out in Canada but funded by the CIA. It turned out that Cameron was half right: it’s possible to strip personality away. It’s not possible to rebuild it – you’re just stuck with a shattered person. At the same time, a man named Milton Friedman was developed a new theory of economics. Instead of controlling businesses and taxing businesses and people to level society, Friedman claimed that capitalism left to itself would regulate itself, and become a thing of abstract beauty. He used early computer models to “prove” this and tried to move economics from a “soft” to a “hard science”. Friedman believed that the way to do this was to shock a people or a nation into acceptance, either by the sheer economic shock of making massive changes all at once or using whatever means were necessary. Friedman died just last year, having won the Nobel Prize in economics and revered by many.
Klein follows the progress of Friedman’s economics – mostly called Chicago School economics, because of where it was taught. Chile was the first adaptor of Chicago School economics, where Friedman was an advisor to Pinochet. Pinochet’s infamous killings were the direct result of Chicago School reforms, done to control an outraged population. The torture methods developed by Cameron, as well as disappearances, were used to subdue people in countries across Latin America during the bloody early testing of Chicago School theories, in the 1960s and 1970s. But those protesting the human rights abuses called them only as abuses, without looking for a cause. This enabled the economic theory to be divorced from the resulting human suffering, though proponents of the theory looked for less obvious ways to carry it out.
From outside wars for Thatcher, to economic advisors who duped new regimes like those in Poland and South Africa into accepting economic laws that directly contradicted their central missions, to countries ravaged by natural disasters, the devotees of Chicago School economics found more and more countries to convert. The results were always the same: large profits for multinational corporations, the death or near death of the middle class, and abject poverty for 25-60 percent of the population.
Klein sees the war in Iraq and the War on Terror as a direct result of these theories. The War on Terror doesn’t make sense as a winnable war. As a way to transfer government funds to a large new corporate sector, it has worked brilliantly. And, as Iraq proved resistant to milder shock therapy, the US has turned to more brutal methods of convincing them to go along with US economic policy. As the US has made it clear that neither Iraqi nor US laws apply to corporations operating in Iraq and done very well at destroying existing Iraqi society, Klein finds that this is the purest example seen to date of what happens when Chicago School principles are allowed free reign. The result: mass poverty and insecurity for the average person, the death of local business and industry, fantastic profits for multinational corporations, and a walled off Green Zone where the privileged few surround themselves in luxury, safe from the chaos and terror outside.
The United States has been moving towards following Chicago School Economics since Reagan, moving faster under W., but helped along considerably by Clinton as well. A major assumption has been that democracy and capitalism are the same thing. But, as Klein demonstrated, allowing capitalism free reign works best without democracy, as in modern China. In a final, slightly more hopeful chapter, Klein finds evidence that the initial shock has worn off in many countries, and people are building a middle way between the old Soviet communism and the free-reign capitalism that causes even greater poverty. The World Bank is finding fewer countries willing to take their ideology-laden loans and Keynes has followers again.
The book kept me reading in spite of its length, detail, and images of torture. It’s essential for anyone who cares about the state of the world today. Cookie