Lets see... long distance phone calls? cell phone service? airplane fares? Banking had been going reasonably well until Clinton ended the GlasStegal era separation of commercial lending and investment banking.
This is not to say there should necessarily be no regulation, just that on the whole deregulation has resulted in a far better standard of living for many people.
First, I recommend that you read Joseph Stiglitz's "Globalization and its Discontents." He worked in Bill Clinton's cabinet and later in the IMF. He also uncovers some of the things that Klein talks about, including "shock therapy" and its failure in Russia in the Preface.
Second, I don't know what sort of alternative explanation Klein could provide. Would it have to be the possibility that these sort of tactics after a catastrophe are not deliberate? I don't think she entertained that because its been recognized as a tactic (refer to what Stiglitz mentioned). Maybe there's some nuance that could be challenged, but overall I think she was on target. I mean, there's historical evidence that Friedman wrote to Pinochet about "shock therapies" and he even alluded to it in his "Freedom and Capitalism" book. So there's the beginning point, and so that sheds an exorbitant amount of light on the events that Klein mentioned. Without that sort of insight, we're just left under the impression that the expansion of these corporations are due to esoteric nuances that you have to read the news to keep up with instead of a strategy developed by Friedman the Chicago School Economists that has shaped a good part of the world and explains why so much of the world outside of the US is categorically opposed to the supposed largess of the supposed free market.
To disappear large numbers of noisome people do not dispatch them hale and hearty. Starve them to wraiths to minimize inert remains. Make the survivables Trustees to lord over new intake, then do them all.
Baby Boomers were one husband supporting a family of four, both parents supporting a family of three, both parents desperately clutching home equity and revolving credit to stay alive. Their raped wallets dumped into slums to create a maleable criminal class. (Sunday 22 Feb. Los Angeles Times front page: 20% of Los Angeles County is on public assistance costing $4 billion/year).
Starved, crippled, and beyond impoverished Baby Boomers are ripe targets for trespasses of Inner City toughs as police forces are helpless. This unforseeable national emergency is already contained by the US House of Reprehensibles, http://www.govtrack.us/congress/billtext.xpd?bill=h111-645 "National Emergency Centers Establishment Act" ...large groups of people to be rounded up and detained
with ample historical precedent: "Law to Remedy the Distress of the People and the Nation"
Let me ask you the following question: Are you sure privatizing phone service has lead to an improvement in service? An improvement in technological standard? Has it made long distance calls easier? The coverage better? You will have to subtract from this technological developments that helped this process later. I can't tell how it was in the USA, but as far as Australia and to a lesser extend also Germany is concerned, privatization of phone service has (besides having caused a lot of confusion) deteriorated a homogeneous coverage since providing connections to sparsely populated areas does not provide good profit, these are often left behind. It has also, at least in my perception, worsened standards. I can't recall we have ever been without a phoneline before switching to a private provider, where one had to get used to this happening for as long as 24 hours, during which the so-called service center only played a recording that lines are all busy. I can't recall one had to make sure one wasn't cheated upon with the bill, or to suddenly be signed up for plans one had not expressed any interest in. Not to mention that one gets charged an enormous amount for calls to other networks, and suddenly phone soliciting has swapped over also to Germany (which, when moved to the USA, was an entirely new phenomenon for me).
Please don't misunderstand, I am not generally against privatization or deregulation. I just think one has to carefully consider its pros and cons, and there are definitely sectors a country should not privatize, eg defense and security.
To come back to Klein's book however, what she has been primarily concerned with has been selling off privatized sectors of countries to non-national companies that, in many cases, did not even hire citizens, with severe drawbacks for the national economies instead of the promised advantages. Is it a surprise people of these nations did not embrace this sort of enforced globalization?
I haven't read the book. My take on all this from other observations:
(1) A society reached a state where it needed shock because its economy was dysfunctional in some way.
(2) Typically, the reason was because of too much government interference in the economy.
(3) Market reforms were indicated in most cases.
(4) The IMF, Friedman prescriptions were in essence correct in broad detail. I imagine Adam Smith, Keynes, Ayn Rand, community college economics teacher - all would have given recommendations similar in general on how to improve the economy.
(5) However, typically these reforms required IMF aid or aid from Western governments, and these would come tied with strings. (e.g., for India, at one time there was a demand to sign over a whole lot of mineral rights to the Americans. India told them to screw themselves; but some other countries succumbed.)
(6) IMF money goes to paying for foreign consultants to come in, live a high life style, while the local population is being told to make sacrifices.
(7) IMF folks are like subprime lenders - they never really check that their loans are going into schemes that can repay the loans. So very often after an IMF plan, the country ends up deeper in debt.
(8) Take a look at the waste and corruption and loss from the US treasury that happened in the so-called reconstruction of Iraq. Now imagine this also happening during the "shock therapy".
Not hard to see where Naomi Klein comes from.
8:56 PM, February 23, 2009
Tkk said...
I read the book when it came out.
There is no better example of the shock doctrine than the latest world event - the economic blowup in the US. But Naomi perhaps could use some clarification on the main ingredients as I present here:
1) You need an attractive ideology being practiced. Here we have capitalism in the USA.
2) You need to turn that popular ideology into an utopia, into a fundamentalism, to be worshiped by powerful people. This is the intellectual component. Here we have the American Republican party which have transformed itself into a Christian fundamentalist economic-political religious order. This is the part where most of the insanity lies.
3) Finally, to implement the shock doctrine you need a third party, one that does the dirty work. In the latest US crisis, that was provided by the combination of corrupt bankers, business elites and some politicians. But once you have 2), 3) is the 'easy' part because corrupt people are always available, waiting for their opportunities.
Go through most of Naomi other examples of shock doctrine and one indeed can identify the 3 components above.
But Naomi forgot to research and mention one of history most appalling example of shock doctrine: the Great Chinese Cultural Revolution of the mid-1960's. Maybe because it was not started by the Chicago School. But by Mao under his most Utopian ideology. Nevertheless, all three critical components were present to play their roles. Popular ideology + Utopian transformation + corruption and madness of actors in power. The resulting shock almost destroyed China.
Yet another nice review of a book that certainly has current relevance. I often wonder how you find the time to read so much; then again I guess that is also relative to how quickly one reads. The only thing I would wonder is how closely linked “shock treatment”, in the manner your author uses it, is related to “fear mongering” or rather using fear as a lever. If looked at in this way I would say that in many instances it has been and is continued to be used intentionally, as a means of control.
If we look at what’s taken place since 911, with irrational fear heightened to be used as a weapon to turn public opinion in directions they would otherwise deny? I also am lead to wonder how the current economic meltdown leaves us also so vulnerable. That is to wonder are we merely under the control of your invisible hand or does that hand bare fingerprints? That is to ask who is it now we are suppose to fear, the bankers, the economists, the greedy, the politicians, ourselves or might it be simply failure.
I hope it will be decided it be failure, yet more importantly that when realized we decide more clearly in what it is we all wish to succeed. So as Obama reminded “ we must pick ourselves up and dust ourselves off”, yet before we do much more we should consider very carefully where it is we wish to go before we travel too far in any one direction.
What I mean is up until now I’ve seen many pointing fingers, yet virtually none accepting responsibility. In my mind I’d rather trust those that admit their mistakes, if that is all they turn as being and follow them through the forest to find the solutions, rather then follow the finger pointers who deny they where also involved as actually part of the problem. Those who fess up and look for new direction I see as perhaps acting in wisdom, while those that deny their own role in this, to only point fingers either have found no wisdom or have decided that we should be denied the benefit of it.
Thanks, I will have a look at this book. I don't think I said anything about alternatives, I was more asking for causal relations. Was the problem created by Friedman and his Chicago Boys? Or were they just convenient to provide the alibi? See, is it without question that this scheme has made the rich richer and the poor poorer on a global level and this has been in the interest of those who hold the power (have the money). So far so good. Question is then A) How could you have done it better? This is not an easy question. After the fact, it is always easy to say you shouldn't have done that or better this, etc. But how could things have turned out differently on spot and what reason do we have to believe this would not have created the same or worse problems? Even I could make up some things in this category, but I would have thought Klein should have been much clearer on this point. And B) To that end, did it actually make a difference there was an ideological and pseudoscientific backup provided by the Chicago school? Naomi certainly does it make seem so, but I am not at all sure about it. If there just hadn't been anything like that, people in power had made up their own ideology from out of thin air in order to justify what they wanted to do. The issue is not so much the availability of one ideology, but its exclusiveness. But that is always a problem, no matter what the ideology. Best,
That is one aspect. But the other side of shocks that Klein is writing about is the exploitation of shocks like natural disasters or terrorist attacks to push through decisions people had not normally agreed on, in many cases by circumventing democratic decision making altogether. Best,
I read her book No Logo back in the good old days before 9/11 when me and a lot of my friends, fresh into Uni, thought that the then swelling crowd of activists and globalization critics could possibly evolve into a coherent movement critical of extremes of capitalism whil not falling into the communist/ extreme socialist trap either. Needless to say that hope died when the towers fell, and now in the crisis we suddenly wake up to some of the same tunes sung back then, and some of the old authors popping up.
Incidentally No Shock was good but already then Klein was somewhat one sided. Ironically ECT is these days making a limited come back and really helping some people.
Snowboarder, yeah, in the US it has led to that. And a lot of other effects. Also no net growth in wealth for the vast majority of the population except during the Clinton years.
Also electricity outages in California, Exxon, etc...
Now in South America privatization enforced by the IMF had disastrous effects in many cases. It didn't lead to cheaper airfare but the collapse of airlines and a general decline in infrastructure and service.
That's the point on the whole deregulation has sometimes led to a better standard of living, and sometimes to a worse. Yet it was prescribed without analysis, without context as a radical universal solution to everybodys economic woes. Completely irrespective of the socio political context.
That's why contemporary research into international development tries to do exactly that: Contextualize. Understand what helps in what situation. When its done by economists it still will favor corporatist solutions over political ones, but the days in which economists were successfully claiming to be the only social scientists worth listening to might, thank god, finally be over.
While not drowning into the conspiracy theory viewpoint, the truth is that, expanding from Friedman's Chicago school, an ideology war aiming at ruling the world has been raging for almost 40 years. This war has been successful because the socialist/communist ideology collapsed in the same time and the new Friedman's globalization/deregulation approach pretended not to be an ideology but a scientifically proven approach sanctified by a Nobel price. Even social-democrat governments in Europe accepted this poisonous ideology, not to speak of the US. Now, we see the effects of this hidden ideology leading to a collapse of our economy and, in the worst case scenario, of the whole world (a little WWIII to shake things up...?). We are dealing now with the ultimate "shock therapy" that should open our eyes on the craziness that has ruled the world since the 70's. The issue is that most of the people in charge today in governments, international organizations and big corporations have been tough from their youth only this hidden Friedman's ideology presented as a scientifically-backed unique truth. That's where we are. We need a revolution to throw away the remnants of Friedman's ideology, but the people in charge are themselves part of his sect. With few exception, like Stiglitz and on the political side the new socialist leaders of South America and a guy named ... Obama (maybe). On the Eureopean side, we still have Barroso, Merkel, Berlusconi or Sarkozy battling to save Friedman's legacy. We are living interesting historical times... Now the real scientific question: what is the ideological relationship between Friedman's ideology and the true existing Black Hole assumption. I'd say, in both case, dream of reality instead of studying it with human eyes and heart.
3:42 PM, February 24, 2009
Anonymous said...
For a really informed read of how the IMF systematically undermined many economies read Joseph Stiglitz' Globalization and Its Discontents.
He is a very bright guy who saw things from the inside.
Q: What do you make of this group of corporatists and Clinton retreads that are surrounding Obama on the economic front?
Klein: I would say it’s disappointing, but we don’t have a right to be disappointed. This is who surrounded Obama during the whole campaign. He’s been taking advice from Larry Summers and Bob Rubin and Paul Volcker all along. He opened up the circle a little bit to people like Joseph Stiglitz and Robert Reich. But to me it’s just shocking—and I know we shouldn’t be shocked... The reason I’m so upset about this is because we’re paying the price for the deliberate amnesia that so many of us signed onto during the Bush years, where we were allowed to say whatever we wanted that was critical about U.S. policy, even about the free market, if we said it all started in 2001, when Bush took office.
Obama’s campaign was the ultimate example of this. “This crisis that we’re seeing is the result of the deregulation policies that have been in place for the past eight years.” No, not eight years! The key pieces of legislation were passed under Clinton.
Indeed, we are living in historically interesting times. Let's hope there will be still people living on this planet in some thousand years to study our story. The conspiracy theory doesn't make sense in that the people who most profited were not the ones who provided the ideology. There has been a huge body of academic work behind this that has been used without sufficient understandings of its implications, and (as Frank said) in which context conclusions would apply. The problem with this ideology is the same as with every other ideology, that people follow it thoughtlessly. Even though I didn't particularly like Klein's book it is a good book just because it gets people to think about what's going on. That, I believe, is the only way towards change. Best,
I think it is a conspiracy but the word conspiracy has some inaccurate connotations. The analogy I heard is that it is just like the Ewings in the old US TV series Dallas. The Ewings are always at each others throat except when it comes to threats from the outside, then they are totally united.
People are kind of squirming for position for when a new economic world order is needed. There is always the problem of killing the golden goose they are always trying to get gold from, the people doing this tend to have too much wishful thinking.
I have refrained to comment for awhile now on the perspectives in relation to the economy because I did not want to intrude while others might like to contribute in regard to opinion.
Once you recognize the architecture as a "systemic process" and are able to look deeper into society, it is only then you can really crystallize what is happening.
The attempt to deal with the economy is not just the idea of "a bail out" as those who try to refine that very basis with which we would like to see society grow and prosper. It is also the need "for the dynamics" to be most fair to all it's contributors.
To start, one needs to recognize the basis of "economic theory." Who is who in terms of the developmental aspects of Nobel prizes, to see that such progressiveness is needed in face of the evolution and design of the system. A message to Smolin, Kaufman, and others.
This mathematical basis may of gone unnoticed as it has inflated in proportion to the ideas and happenings expressed in our society.
The story link will go toward that end to help you crystallize "the whole process" in perspective. I had been concert about such privatization in this way.
Some may slur Canada as a socialistic state but would do well to recognize our concerns as as interested party in providing a sustenance that is essential to all peoples. Heath care as well.
That I point you to a most fundamental recognition of "the need here" then it becomes much clearer when you have somebody who trying to control the tap, has in essence controlled of the market. How about the air you breathe?:)
Such attempts are clasical example by the Hunt brothers to control the silver market, "to control prices" as well for "gas as a commodity" to be held in the same light. Who did not like Microsoft's ascension to dominance, that governments thought better to keep it an open process open in competitiveness?
Advertising is famous for using one of it's products to bolster another product it would like too or does hold.
You do not recognize the devices behind inflation if they are not written as part and parcel of it. I would think this is a leading indicator of it and is rather "the destructive decay of the times" then the failing mortgages were. That is my opinion though.
The American dream is the dream of many to have a home. Let's put it into perspective when you recognize the need for sustenance in water consumption. That such controls will be placed in ore aspect then one can recognize right now has not depreciated on the basis of will of a commodity like gas is to recognize the control it has on the market.
Bee raises the question:how could you have done better? Of course this is not the right question. The fate and destiny of humans living in other nations should not be determined by the interests of very powerfull corporations and their ideological whores such as Milton Friedman. Other nations should be able to experiment with what ever model they want to experiment with.
Alternatives to Milton Friedman and celebrity economist Jeffrey Sachs and their corporates backers-who do you think endows economic chairs-are suppressed through force and violence and the threat of nuclear annihilation.
Shock therapy was imposed on Russia. It is not a "physics" cause and effect question. Framing the issue this way is obfuscation.
It is indisputable now that Barack Obama will continue with the Bush adminstration policy of preventing Iraqi's the right to pursue an independent model of economic development. when he pulls out US troops, he will leave behind an 80 thousand residual US military force
5:43 PM, February 25, 2009
SpinUp said...
Hi, Bee, I think the question is not whether the problem was "created" by the Chicago school. There is no direct causal link there, ideologies are only used to legitimate some kind of power.
The question is neither whether the "pure free market" ideology necessarily leads to the corporatist and oligarchic capitalism that we see in the West, and more importantly that was imposed on the global South. Defenders of neoliberalism tend to say that all failures come from bad application of the original ideas and residual "state disturbance" into the economy.
Similarly, socialists of various kinds tend to say that the original socialist ideology is not responsible for the failed attempts at builing a "better society".
That kind of statements is meaningless, we have no way to know whether any "pure" application of marixsm would have spared Russia the sovietic terror. Same thing for "pure capitalism". Such "pure states" never exist, history is a density matrix. ;)
The real question if you want to act in this world is where the power is. Too much power for the State is certainly bad, too much power for the Big Noney or big Gun guys is as dreadful... We primarily need the basic requierement of power checks that dates back to Spinoza, Montesquieu, and so forth.
Coming back to the book, I think it is a true fact that nowadays power lies "where money is" more than ever before, namely among a few big corporations which are able to set the political agenda. Anyone in the well-fed West (or well-fed in the West) who doubt that, or who think that this kind of "soft" power is "benevolent", would be well advised to visit countries where the "laissez-faire capitalism" has destroyed most of local businesses, and where the only economic growth is trough prostitution, i.e. selling your labor to some foreign companies. People who don't understand frustration, alienation, in the present state of the world might believe "capitalism" as it is now is not so bad. The others, when they have had the chance to claim back their life and think about it, the others don't.
And in that sense the primary goal of Klein, as an activist, is to empower people, as a first step to fight back.
On the other hand it would be wise to ponder a bit more about history, and realise that we need to fight back in a way that do away with "power" as such.
But sorry for the rant... I agree that Klein's book is repetitive, but keep in mind it's not an academic work, more like a journalistic investigation.
7:47 AM, February 26, 2009
Watt Tyler said...
Spinup
You are dead wrong in your claim that there is no cause and effect relationship between the ideas of the Chicago school boys and celebrity neoliberal economists such as Lawrence Summers and Jeffrey Sachs. These creeps actualy formualted specific policies that they knew would be forced on the populations of Russia and Chile. Considering the death and destructon these policies caused in both Chile and Russia, they are both mighty guilty of war crimes. These policies caused a population collapse in Russia. The average lifespan of Russian males was shortened significantly.
Larwence Summers who along with Columbia University's Jeffrey Sachs were the architects of shock therapy for Russia. Summers after a stint at a Hedge Fund, is now Barack OBama's top economic advisor.
10:34 AM, February 26, 2009
changcho said...
"...forced on the populations of Russia and Chile..."
Well I can tell you for a fact it was NOT just Chile - it was MOST of South America (Argentina, Brasil, Chile, Bolivia, Peru, Colombia, Uruguay, Paraguay, etc, etc. etc.), where these neoliberal recipes were introduced...at *gun point* (i.e., military dictatorships).
3:24 PM, February 26, 2009
Watt Tyler said...
Changco
Sorry I didn't mention the other nations that weren't blessed by Larry Summers and Jeffrey Sach's neoliberal magic.
If there is one thing you can be sure of it is this:Barack Obama will use the hard earned money of US tax payers to destabilize the Chavez goverment. Barack will teach Hugo a nasty lesson about entertaining "silly" ideas about economic development independent of Barack's Wallstreet backers.
Spin-up:Such "pure states" never exist, history is a density matrix.;
I don't know how many times I have heard this coming from full fledge science people:) No such pure states? Maybe, one is operating from a set of assumptions as well in a economic sense?
Being part of the process of spintronics, one side does not seem to be able to support itself without "reasonably" without recognizing that it is only half of the computerized process. A machine.:)You forgot about your "entangled partner?"
Just trying to work amongst the shadow people.:) Only advice can come the "techno savy" side of our natures?
Best,
3:48 PM, February 26, 2009
[Image]The Shock Doctrine - The Rise of Disaster Capitalism By Naomi Klein Metropolitan Books (September 18, 2007)
In late 2007, I read an article in Harper's Magazine, titled “Disaster Capitalism” which, well written, vividly argued, left an impression. I Googled for the author, Naomi Klein, and was lead to her website announcing the new book, on which the Harper's article had offered a glimpse. I watched a truly appalling promotional video, and reminded myself that the author probably wasn't responsible for the advertisements before ordering the book.
Summary
In “The Shock Doctrine” Naomi Klein puts forward the thesis that worldwide and over decades shocks have been used to push through unpopular free market decisions, mostly privatization and deregulation, generally against the will of the people but always to the advantage of large corporations, the wealthy upper class, and corrupt governments. Shocks might be natural disasters, wars, terrorist attacks, or economic turmoils. The book is a collection of well researched and documented examples, from Bolivia over Chile, Poland, Iraq, China, the UK, Russia, again Iraq, Israel, South Africa, Sri Lanka, the Maldives to New Orleans.
The book begins with drawing parallels to shock therapy in the 50s and 60s, the attempt to reset the human mind by whatever means into an infantile state, a “clean slate” on which there could be imprinted a new beginning. Klein reports how these insights were later used for purposes of torture all over the world.
Throughout the book, Klein traces the actions of Milton Friedman, and his “Chicago Boys” who provided the ideological and allegedly scientific backup for operations in the course of which hundreds of thousands of people were murdered, died, or committed suicide. (Jeffrey Sachs makes an appearance in several instances.) If her claim of a shocked nation being a desirable state to perform unpopular free market reforms feels far fetched to you as it did to me, this is actually quite well documented in many instances, and one doesn't have to look very far to find this option was considered quite appropriate as means for what some considered progress.
Over the decades, Naomi argues, the ideology spread, packed into the wrapper that a free market maximizes social welfare, filled with a creamy myth of tricke-down. Extreme measures were more easily put into place in tyrannies, but found their way into democratic systems as well, through cloak and dagger operations, through exerting economic pressure, or just by corruption, all in the midst of states of confusion and shock:
“And that is how the crusade that Friedman began managed to survive the dreaded transition to democracy - not by its proponents persuading electorates of the wisdom of their world view, but by moving deftly from crisis to crisis, expertly exploiting the desperation of economic emergencies to push through policies that would tie the hands of fragile new democracies. Once the tactic was perfected, opportunities just seemed to multiply.” Particularly shocking for me has been to learn about the role of the International Monetary Fund (IMF) in these doings. In many cases, support has been tied to requests for privatization and deregulation, clearly interferences with nations' autonomy and often with their political landscape.
Naomi Klein traces traces the historical route to our present days, when a large and increasing sector of our global economy has specialized in disaster help and security, up to the point that devastating news actually score as good news on the stock market. Her account of which private companies made billions after billions with the war in Iraq and Hurricane Katrina, all with taxpayers' money (resp. by increasing the government's debt) is sobering, especially in the face of how incompetent these tasks were performed (or paid for but not performed at all).
She finishes the book with examples of where shock has worn off, especially in South America were social democracy has put a halt to selling off countries and destroying communities, and established a new autonomy of these nations independent on the IMF. The main message I think she wants to get across is to be prepared for when a shock hits, for we can most easily be exploited when taken by surprise.
Comments
The book is an interesting read and an impressive collection of facts, quotations, and data. I can't help however to find Klein's account very single sided. As meticulously as she has collected evidence in favour of her thesis, I did not get the impression she has as carefully looked for evidence against her thesis. I feel like her narrative is compelling in its simplicity and has certainly some truth to it, but lacks many qualifiers.
Most importantly, her arguments are directly and by name targeted at recommendations out of the pocketbook of neoclassical economics. But what she actually is criticising is not a free market or the drawbacks of particular regulations, but corporatism and corruption (not to mention torture). In fact, in the introduction she writes: “A more accurate term for a system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever widening chasm between the dazzling rich and the disposable poor, and an aggressive nationalism that justifies bottomless spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society.” She then however fails to explain why privatization and deregulation must necessarily be tied to these circumstances she is bemoaning, and thus why her constant stabbing at Friedman and the Chicago School. Instead of providing an argument on why this connection would be, she just offers example after example. I don't find this very insightful, as I would have wanted to know what could have been done better and why.
The book was recently turned into a documentary by directors Michael Winterbottom and Matt Whitecross, who make an effort pointing out it is not a conspiracy theory. Indeed, it is not. There is no sense in which Klein raises the impression these events were deliberately planned. Instead, the picture she paints is one in which ideological convictions have gone awry and people in power neglected to pay attention to reality - or just did not live up to their expectations. As she writes repeatedly, there is no way in which the human mind or a country can be cleaned of its history and provide the perfect platform to build on it from scratch a flawless utopia. This strive for perfection is an illusion, and one in whose pursuit comes suffering. To add my own perspective on that, it is less a conspiracy and more a system failure. Most importantly, the system fails to correct its own problems since those who hold the power have no incentives to do so.
Besides this, the book is nicely written and reads very well. It is however very repetitive, and fuzzy in articulating the main claims and conclusions. As far as I am concerned, I would have been fine with the first 100 pages and then a collection of facts and data. I really don't need to be told the story of the evil Friedmanians fifty times. And for my taste, she gives way too much room to the history of shock therapy treatment and its applications for torture. I don't even doubt that these concepts were picked up by economists. Such cross-fertilization between different fields is interesting (the concept of a 'landscape' being picked up by physicists is a similar example), but I didn't want to buy a book on torture or electroshock treatments and would have appreciated less details on that matter.
All together, if this was an amazon review, I'd give three points.
posted by Sabine Hossenfelder at 5:47 PM on Feb 23, 2009
"Book Review: Naomi Klein "The Shock Doctrine""
25 Comments -
Lets see... long distance phone calls? cell phone service? airplane fares? Banking had been going reasonably well until Clinton ended the GlasStegal era separation of commercial lending and investment banking.
This is not to say there should necessarily be no regulation, just that on the whole deregulation has resulted in a far better standard of living for many people.
7:34 PM, February 23, 2009
Hello,
First, I recommend that you read Joseph Stiglitz's "Globalization and its Discontents." He worked in Bill Clinton's cabinet and later in the IMF. He also uncovers some of the things that Klein talks about, including "shock therapy" and its failure in Russia in the Preface.
Second, I don't know what sort of alternative explanation Klein could provide. Would it have to be the possibility that these sort of tactics after a catastrophe are not deliberate? I don't think she entertained that because its been recognized as a tactic (refer to what Stiglitz mentioned). Maybe there's some nuance that could be challenged, but overall I think she was on target. I mean, there's historical evidence that Friedman wrote to Pinochet about "shock therapies" and he even alluded to it in his "Freedom and Capitalism" book. So there's the beginning point, and so that sheds an exorbitant amount of light on the events that Klein mentioned. Without that sort of insight, we're just left under the impression that the expansion of these corporations are due to esoteric nuances that you have to read the news to keep up with instead of a strategy developed by Friedman the Chicago School Economists that has shaped a good part of the world and explains why so much of the world outside of the US is categorically opposed to the supposed largess of the supposed free market.
(Btw, cool blog!)
7:37 PM, February 23, 2009
To disappear large numbers of noisome people do not dispatch them hale and hearty. Starve them to wraiths to minimize inert remains. Make the survivables Trustees to lord over new intake, then do them all.
Baby Boomers were one husband supporting a family of four, both parents supporting a family of three, both parents desperately clutching home equity and revolving credit to stay alive. Their raped wallets dumped into slums to create a maleable criminal class. (Sunday 22 Feb. Los Angeles Times front page: 20% of Los Angeles County is on public assistance costing $4 billion/year).
Starved, crippled, and beyond impoverished Baby Boomers are ripe targets for trespasses of Inner City toughs as police forces are helpless. This unforseeable national emergency is already contained by the US House of Reprehensibles,
http://www.govtrack.us/congress/billtext.xpd?bill=h111-645
"National Emergency Centers Establishment Act" ...large groups of people to be rounded up and detained
with ample historical precedent: "Law to Remedy the Distress of the People and the Nation"
8:05 PM, February 23, 2009
Hi Snowboarder,
Let me ask you the following question: Are you sure privatizing phone service has lead to an improvement in service? An improvement in technological standard? Has it made long distance calls easier? The coverage better? You will have to subtract from this technological developments that helped this process later. I can't tell how it was in the USA, but as far as Australia and to a lesser extend also Germany is concerned, privatization of phone service has (besides having caused a lot of confusion) deteriorated a homogeneous coverage since providing connections to sparsely populated areas does not provide good profit, these are often left behind. It has also, at least in my perception, worsened standards. I can't recall we have ever been without a phoneline before switching to a private provider, where one had to get used to this happening for as long as 24 hours, during which the so-called service center only played a recording that lines are all busy. I can't recall one had to make sure one wasn't cheated upon with the bill, or to suddenly be signed up for plans one had not expressed any interest in. Not to mention that one gets charged an enormous amount for calls to other networks, and suddenly phone soliciting has swapped over also to Germany (which, when moved to the USA, was an entirely new phenomenon for me).
Please don't misunderstand, I am not generally against privatization or deregulation. I just think one has to carefully consider its pros and cons, and there are definitely sectors a country should not privatize, eg defense and security.
To come back to Klein's book however, what she has been primarily concerned with has been selling off privatized sectors of countries to non-national companies that, in many cases, did not even hire citizens, with severe drawbacks for the national economies instead of the promised advantages. Is it a surprise people of these nations did not embrace this sort of enforced globalization?
Best,
B.
8:11 PM, February 23, 2009
Dear Bee,
I haven't read the book. My take on all this from other observations:
(1) A society reached a state where it needed shock because its economy was dysfunctional in some way.
(2) Typically, the reason was because of too much government interference in the economy.
(3) Market reforms were indicated in most cases.
(4) The IMF, Friedman prescriptions were in essence correct in broad detail. I imagine Adam Smith, Keynes, Ayn Rand, community college economics teacher - all would have given recommendations similar in general on how to improve the economy.
(5) However, typically these reforms required IMF aid or aid from Western governments, and these would come tied with strings. (e.g., for India, at one time there was a demand to sign over a whole lot of mineral rights to the Americans. India told them to screw themselves; but some other countries succumbed.)
(6) IMF money goes to paying for foreign consultants to come in, live a high life style, while the local population is being told to make sacrifices.
(7) IMF folks are like subprime lenders - they never really check that their loans are going into schemes that can repay the loans. So very often after an IMF plan, the country ends up deeper in debt.
(8) Take a look at the waste and corruption and loss from the US treasury that happened in the so-called reconstruction of Iraq. Now imagine this also happening during the "shock therapy".
Not hard to see where Naomi Klein comes from.
8:56 PM, February 23, 2009
I read the book when it came out.
There is no better example of the shock doctrine than the latest world event - the economic blowup in the US. But Naomi perhaps could use some clarification on the main ingredients as I present here:
1) You need an attractive ideology being practiced. Here we have capitalism in the USA.
2) You need to turn that popular ideology into an utopia, into a fundamentalism, to be worshiped by powerful people. This is the intellectual component. Here we have the American Republican party which have transformed itself into a Christian fundamentalist economic-political religious order. This is the part where most of the insanity lies.
3) Finally, to implement the shock doctrine you need a third party, one that does the dirty work. In the latest US crisis, that was provided by the combination of corrupt bankers, business elites and some politicians. But once you have 2), 3) is the 'easy' part because corrupt people are always available, waiting for their opportunities.
Go through most of Naomi other examples of shock doctrine and one indeed can identify the 3 components above.
But Naomi forgot to research and mention one of history most appalling example of shock doctrine: the Great Chinese Cultural Revolution of the mid-1960's. Maybe because it was not started by the Chicago School. But by Mao under his most Utopian ideology. Nevertheless, all three critical components were present to play their roles. Popular ideology + Utopian transformation + corruption and madness of actors in power. The resulting shock almost destroyed China.
12:31 AM, February 24, 2009
Hi Bee,
Yet another nice review of a book that certainly has current relevance. I often wonder how you find the time to read so much; then again I guess that is also relative to how quickly one reads. The only thing I would wonder is how closely linked “shock treatment”, in the manner your author uses it, is related to “fear mongering” or rather using fear as a lever. If looked at in this way I would say that in many instances it has been and is continued to be used intentionally, as a means of control.
If we look at what’s taken place since 911, with irrational fear heightened to be used as a weapon to turn public opinion in directions they would otherwise deny? I also am lead to wonder how the current economic meltdown leaves us also so vulnerable. That is to wonder are we merely under the control of your invisible hand or does that hand bare fingerprints? That is to ask who is it now we are suppose to fear, the bankers, the economists, the greedy, the politicians, ourselves or might it be simply failure.
I hope it will be decided it be failure, yet more importantly that when realized we decide more clearly in what it is we all wish to succeed. So as Obama reminded “ we must pick ourselves up and dust ourselves off”, yet before we do much more we should consider very carefully where it is we wish to go before we travel too far in any one direction.
What I mean is up until now I’ve seen many pointing fingers, yet virtually none accepting responsibility. In my mind I’d rather trust those that admit their mistakes, if that is all they turn as being and follow them through the forest to find the solutions, rather then follow the finger pointers who deny they where also involved as actually part of the problem. Those who fess up and look for new direction I see as perhaps acting in wisdom, while those that deny their own role in this, to only point fingers either have found no wisdom or have decided that we should be denied the benefit of it.
Best,
Phil
7:26 AM, February 24, 2009
Hi PenMan,
Thanks, I will have a look at this book. I don't think I said anything about alternatives, I was more asking for causal relations. Was the problem created by Friedman and his Chicago Boys? Or were they just convenient to provide the alibi? See, is it without question that this scheme has made the rich richer and the poor poorer on a global level and this has been in the interest of those who hold the power (have the money). So far so good. Question is then A) How could you have done it better? This is not an easy question. After the fact, it is always easy to say you shouldn't have done that or better this, etc. But how could things have turned out differently on spot and what reason do we have to believe this would not have created the same or worse problems? Even I could make up some things in this category, but I would have thought Klein should have been much clearer on this point. And B) To that end, did it actually make a difference there was an ideological and pseudoscientific backup provided by the Chicago school? Naomi certainly does it make seem so, but I am not at all sure about it. If there just hadn't been anything like that, people in power had made up their own ideology from out of thin air in order to justify what they wanted to do. The issue is not so much the availability of one ideology, but its exclusiveness. But that is always a problem, no matter what the ideology. Best,
B.
8:10 AM, February 24, 2009
Dear Arun,
That is one aspect. But the other side of shocks that Klein is writing about is the exploitation of shocks like natural disasters or terrorist attacks to push through decisions people had not normally agreed on, in many cases by circumventing democratic decision making altogether. Best,
B.
8:16 AM, February 24, 2009
I read her book No Logo back in the good old days before 9/11 when me and a lot of my friends, fresh into Uni, thought that the then swelling crowd of activists and globalization critics could possibly evolve into a coherent movement critical of extremes of capitalism whil not falling into the communist/ extreme socialist trap either. Needless to say that hope died when the towers fell, and now in the crisis we suddenly wake up to some of the same tunes sung back then, and some of the old authors popping up.
Incidentally No Shock was good but already then Klein was somewhat one sided. Ironically ECT is these days making a limited come back and really helping some people.
11:53 AM, February 24, 2009
Snowboarder, yeah, in the US it has led to that. And a lot of other effects. Also no net growth in wealth for the vast majority of the population except during the Clinton years.
Also electricity outages in California, Exxon, etc...
Now in South America privatization enforced by the IMF had disastrous effects in many cases. It didn't lead to cheaper airfare but the collapse of airlines and a general decline in infrastructure and service.
That's the point on the whole deregulation has sometimes led to a better standard of living, and sometimes to a worse. Yet it was prescribed without analysis, without context as a radical universal solution to everybodys economic woes. Completely irrespective of the socio political context.
That's why contemporary research into international development tries to do exactly that: Contextualize. Understand what helps in what situation. When its done by economists it still will favor corporatist solutions over political ones, but the days in which economists were successfully claiming to be the only social scientists worth listening to might, thank god, finally be over.
12:05 PM, February 24, 2009
While not drowning into the conspiracy theory viewpoint, the truth is that, expanding from Friedman's Chicago school, an ideology war aiming at ruling the world has been raging for almost 40 years. This war has been successful because the socialist/communist ideology collapsed in the same time and the new Friedman's globalization/deregulation approach pretended not to be an ideology but a scientifically proven approach sanctified by a Nobel price.
Even social-democrat governments in Europe accepted this poisonous ideology, not to speak of the US.
Now, we see the effects of this hidden ideology leading to a collapse of our economy and, in the worst case scenario, of the whole world (a little WWIII to shake things up...?).
We are dealing now with the ultimate "shock therapy" that should open our eyes on the craziness that has ruled the world since the 70's. The issue is that most of the people in charge today in governments, international organizations and big corporations have been tough from their youth only this hidden Friedman's ideology presented as a scientifically-backed unique truth.
That's where we are. We need a revolution to throw away the remnants of Friedman's ideology, but the people in charge are themselves part of his sect. With few exception, like Stiglitz and on the political side the new socialist leaders of South America and a guy named ... Obama (maybe). On the Eureopean side, we still have Barroso, Merkel, Berlusconi or Sarkozy battling to save Friedman's legacy.
We are living interesting historical times...
Now the real scientific question: what is the ideological relationship between Friedman's ideology and the true existing Black Hole assumption. I'd say, in both case, dream of reality instead of studying it with human eyes and heart.
3:42 PM, February 24, 2009
For a really informed read of how the IMF systematically undermined many economies read Joseph Stiglitz' Globalization and Its Discontents.
He is a very bright guy who saw things from the inside.
4:00 PM, February 24, 2009
From a recent interview with Naomi Klein:
Q: What do you make of this group of corporatists and Clinton retreads that are surrounding Obama on the economic front?
Klein: I would say it’s disappointing, but we don’t have a right to be disappointed. This is who surrounded Obama during the whole campaign. He’s been taking advice from Larry Summers and Bob Rubin and Paul Volcker all along. He opened up the circle a little bit to people like Joseph Stiglitz and Robert Reich. But to me it’s just shocking—and I know we shouldn’t be shocked... The reason I’m so upset about this is because we’re paying the price for the deliberate amnesia that so many of us signed onto during the Bush years, where we were allowed to say whatever we wanted that was critical about U.S. policy, even about the free market, if we said it all started in 2001, when Bush took office.
Obama’s campaign was the ultimate example of this. “This crisis that we’re seeing is the result of the deregulation policies that have been in place for the past eight years.” No, not eight years! The key pieces of legislation were passed under Clinton.
5:53 PM, February 24, 2009
FYI: Naomi Klein just got the Warwick prince in GB today for her book: "The Shock Doctrine".
1:40 AM, February 25, 2009
Hi SFJP,
Indeed, we are living in historically interesting times. Let's hope there will be still people living on this planet in some thousand years to study our story. The conspiracy theory doesn't make sense in that the people who most profited were not the ones who provided the ideology. There has been a huge body of academic work behind this that has been used without sufficient understandings of its implications, and (as Frank said) in which context conclusions would apply. The problem with this ideology is the same as with every other ideology, that people follow it thoughtlessly. Even though I didn't particularly like Klein's book it is a good book just because it gets people to think about what's going on. That, I believe, is the only way towards change. Best,
B.
12:15 PM, February 25, 2009
I think it is a conspiracy but the word conspiracy has some inaccurate connotations. The analogy I heard is that it is just like the Ewings in the old US TV series Dallas. The Ewings are always at each others throat except when it comes to threats from the outside, then they are totally united.
People are kind of squirming for position for when a new economic world order is needed. There is always the problem of killing the golden goose they are always trying to get gold from, the people doing this tend to have too much wishful thinking.
1:45 PM, February 25, 2009
I have refrained to comment for awhile now on the perspectives in relation to the economy because I did not want to intrude while others might like to contribute in regard to opinion.
Once you recognize the architecture as a "systemic process" and are able to look deeper into society, it is only then you can really crystallize what is happening.
The attempt to deal with the economy is not just the idea of "a bail out" as those who try to refine that very basis with which we would like to see society grow and prosper. It is also the need "for the dynamics" to be most fair to all it's contributors.
To start, one needs to recognize the basis of "economic theory." Who is who in terms of the developmental aspects of Nobel prizes, to see that such progressiveness is needed in face of the evolution and design of the system. A message to Smolin, Kaufman, and others.
This mathematical basis may of gone unnoticed as it has inflated in proportion to the ideas and happenings expressed in our society.
The story link will go toward that end to help you crystallize "the whole process" in perspective. I had been concert about such privatization in this way.
Some may slur Canada as a socialistic state but would do well to recognize our concerns as as interested party in providing a sustenance that is essential to all peoples. Heath care as well.
That I point you to a most fundamental recognition of "the need here" then it becomes much clearer when you have somebody who trying to control the tap, has in essence controlled of the market. How about the air you breathe?:)
Such attempts are clasical example by the Hunt brothers to control the silver market, "to control prices" as well for "gas as a commodity" to be held in the same light. Who did not like Microsoft's ascension to dominance, that governments thought better to keep it an open process open in competitiveness?
Advertising is famous for using one of it's products to bolster another product it would like too or does hold.
You do not recognize the devices behind inflation if they are not written as part and parcel of it. I would think this is a leading indicator of it and is rather "the destructive decay of the times" then the failing mortgages were. That is my opinion though.
The American dream is the dream of many to have a home. Let's put it into perspective when you recognize the need for sustenance in water consumption. That such controls will be placed in ore aspect then one can recognize right now has not depreciated on the basis of will of a commodity like gas is to recognize the control it has on the market.
Best,
3:12 PM, February 25, 2009
Tanks for the review, I'll check it out.
4:20 PM, February 25, 2009
Bee raises the question:how could you have done better? Of course this is not the right question. The fate and destiny of humans living in other nations should not be determined by the interests of very powerfull corporations and their ideological whores such as Milton Friedman. Other nations should be able to experiment with what ever model they want to experiment with.
Alternatives to Milton Friedman and celebrity economist Jeffrey Sachs and their corporates backers-who do you think endows economic chairs-are suppressed through force and violence and the threat of nuclear annihilation.
Shock therapy was imposed on Russia. It is not a "physics" cause and effect question. Framing the issue this way is obfuscation.
It is indisputable now that Barack Obama will continue with the Bush adminstration policy of preventing Iraqi's the right to pursue an independent model of economic development. when he pulls out US troops, he will leave behind an 80 thousand residual US military force
5:43 PM, February 25, 2009
Hi,
Bee, I think the question is not whether the problem was "created" by the Chicago school. There is no direct causal link there, ideologies are only used to legitimate some kind of power.
The question is neither whether the "pure free market" ideology necessarily leads to the corporatist and oligarchic capitalism that we see in the West, and more importantly that was imposed on the global South. Defenders of neoliberalism tend to say that all failures come from bad application of the original ideas and residual "state disturbance" into the economy.
Similarly, socialists of various kinds tend to say that the original socialist ideology is not responsible for the failed attempts at builing a "better society".
That kind of statements is meaningless, we have no way to know whether any "pure" application of marixsm would have spared Russia the sovietic terror. Same thing for "pure capitalism". Such "pure states" never exist, history is a density matrix. ;)
The real question if you want to act in this world is where the power is. Too much power for the State is certainly bad, too much power for the Big Noney or big Gun guys is as dreadful... We primarily need the basic requierement of power checks that dates back to Spinoza, Montesquieu, and so forth.
Coming back to the book, I think it is a true fact that nowadays power lies "where money is" more than ever before, namely among a few big corporations which are able to set the political agenda. Anyone in the well-fed West (or well-fed in the West) who doubt that, or who think that this kind of "soft" power is "benevolent", would be well advised to visit countries where the "laissez-faire capitalism" has destroyed most of local businesses, and where the only economic growth is trough prostitution, i.e. selling your labor to some foreign companies. People who don't understand frustration, alienation, in the present state of the world might believe "capitalism" as it is now is not so bad. The others, when they have had the chance to claim back their life and think about it, the others don't.
And in that sense the primary goal of Klein, as an activist, is to empower people, as a first step to fight back.
On the other hand it would be wise to ponder a bit more about history, and realise that we need to fight back in a way that do away with "power" as such.
But sorry for the rant...
I agree that
Klein's book is repetitive, but keep in mind it's not an academic work, more like a journalistic investigation.
7:47 AM, February 26, 2009
Spinup
You are dead wrong in your claim that there is no cause and effect relationship between the ideas of the Chicago school boys and celebrity neoliberal economists such as Lawrence Summers and Jeffrey Sachs. These creeps actualy formualted specific policies that they knew would be forced on the populations of Russia and Chile. Considering the death and destructon these policies caused in both Chile and Russia, they are both mighty guilty of war crimes. These policies caused a population collapse in Russia. The average lifespan of Russian males was shortened significantly.
Larwence Summers who along with Columbia University's Jeffrey Sachs were the architects of shock therapy for Russia. Summers after a stint at a Hedge Fund, is now Barack OBama's top economic advisor.
10:34 AM, February 26, 2009
"...forced on the populations of Russia and Chile..."
Well I can tell you for a fact it was NOT just Chile - it was MOST of South America (Argentina, Brasil, Chile, Bolivia, Peru, Colombia, Uruguay, Paraguay, etc, etc. etc.), where these neoliberal recipes were introduced...at *gun point* (i.e., military dictatorships).
3:24 PM, February 26, 2009
Changco
Sorry I didn't mention the other nations that weren't blessed by Larry Summers and Jeffrey Sach's neoliberal magic.
If there is one thing you can be sure of it is this:Barack Obama will use the hard earned money of US tax payers to destabilize the Chavez goverment. Barack will teach Hugo a nasty lesson about entertaining "silly" ideas about economic development independent of Barack's Wallstreet backers.
3:35 PM, February 26, 2009
Spin-up:Such "pure states" never exist, history is a density matrix.;
I don't know how many times I have heard this coming from full fledge science people:) No such pure states? Maybe, one is operating from a set of assumptions as well in a economic sense?
Being part of the process of spintronics, one side does not seem to be able to support itself without "reasonably" without recognizing that it is only half of the computerized process. A machine.:)You forgot about your "entangled partner?"
Just trying to work amongst the shadow people.:) Only advice can come the "techno savy" side of our natures?
Best,
3:48 PM, February 26, 2009