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Jan 25, 2008

Klein versus the capitalists

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Author and column writer Naomi Klein's new book The Shock Doctrine has a truly fascinating premise: influential economist and free-market guru Milton Friedman, together with his followers, have succeeded in abusing political, economic and natural disasters over the past 30 years to establish a global brand of capitalism that benefits largely the private sector.

She describes a disaster is little more than an opportunity to start again, a do-over, a try-again by Western capitalists to entrench free-market policies in countries which have long denied it in its purest form.

Published by Penguin, The Shock Doctrine argues that the devastation wreaked by Hurricane Katrina on New Orleans, the Asian crisis, the US invasion of Iraq, September 11, the tsunami which hit Thailand and Indonesia, the economic crisis in South America - to name but a few - provided an opportunity to influential US economists, corporations, policymakers, the World Bank, and the International Monetary Fund to establish sweeping free-market reforms, while citizens and governments alike were still reeling from shock. (Hence, the book's title).

Klein calls these "orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, 'disaster capitalism' ".

She writes that these changes are often implemented to the detriment of the communities in those countries, while the rich remains largely unaffected.

For example, "when the September 11 attacks hit, the White House was packed with Friedman's disciples, including his close friend Donald Rumsfeld. The Bush team seized the moment of collective vertigo with chilling speed . . . The Bush administration immediately seized upon the fear generated by the attacks not only to launch the 'War on Terror' but to ensure that it is an almost completely for-profit venture, a booming new industry that has breathed life into the faltering US economy . . . In 2003, the US government handed out 3 512 contracts to perform security functions, in the twenty-two-month period ending in August 2006, the Department of Homeland Security had issued more than 115 000 such contracts."

Another example is the 1990s Asian crisis, providing the West with the opportunity to dismantle the protectionist trade policies of the continent's rising economies, while also enabling large corporates to swoop in and buy Asian conglomerates and previously State-owned entities at knock-down prices.

According to Klein, IMF help came with provisos, and served the agendas of Western countries - this while suicide and unemployment rates soared.

One of the most interesting chapters for local readers should be the one - even if short - on South Africa.

Klein notes that the ANC, once unbanned, negotiated for political power, while effectively giving away control of the economy.

In addition to this, the ANC's original economic policy as put forward prior to 1994 was given a complete overhaul, due to international insistence that free market principles should prevail in a post-Apartheid South Africa, and not the notion of large scale nationalisation of industries and redistribution of wealth as punted by ANC leader Nelson Mandela during his incarceration.

"Never before had a government-in-waiting been so seduced by the international community".

Klein states that the results of the replacement economic policy of "redistribution through growth" has been "scandalous", although no doubt her statistics will differ from that of the South African government.

One critique is that The Shock Doctrine is a bit short on offering alternatives to raw capitalism.

One solution placed briefly on the table is a "free market in consumer products coexisting with free public health care, with public schools, with a large segment of the economy - like a national oil company - held in State hands".

In the final chapter Klein notes that the shock from disasters eventually wears off, creating a backlash against the capitalist systems implemented, as can currently be witnessed in large parts of South America, while also ensuring that countries are better prepared for the next shock - and less willing to again be seduced by Western (read US) philosophies.

The rather hefty (558-pages), but easy-to-read book will no doubt irk staunch supporters of Friedman's capitalism, and provide social democrats with sufficient ammunition for dinner-party arguments.

In Klein's hands unchecked capitalism, as implemented by Friedman's cohort of migthy men, appears a tyranny, and one that benefits only the rich.

The recommendation is to read The Shock Doctrine, as it provides an alternative view to the mainstream financial media often focusing on those constructing the economy, rather than those affected by it.

- Review copy courtesy of Exclusive Books.

Edited by: Terence Creamer
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