ECONOMICS

Doing Well by Doing Ill

A woman in Banda Aceh, Indonesia, after the 2005 earthquake and subsequent tsunami
A woman in Banda Aceh, Indonesia, after the 2005 earthquake and subsequent tsunami (Spencer Platt/getty Images)

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By Reviewed by Shashi Tharoor
Sunday, November 25, 2007

THE SHOCK DOCTRINE

The Rise of Disaster Capitalism

By Naomi Klein

Metropolitan. 558 pp. $28

If Thomas L. Friedman has acquired the reputation of being the English-speaking world's foremost cheerleader of globalization, Naomi Klein has established herself as its principal naysayer. With the publication seven years ago of No Logo, in the wake of the anti-World Trade Organization protests in Seattle, Klein demonstrated that the "just do it" triumphalism of Nike and other global brands masked serious inequities and injustices. Her new book, The Shock Doctrine, takes the argument an important step further. Neoliberal capitalism, she argues, thrives on catastrophe: Not only are fortunes made from the misfortunes of the masses, but the global dominance of free-market capitalism is built on the infliction of disasters on the world's less fortunate.

Klein develops her position over 460-some closely argued pages of text, plus meticulous endnotes. The imposition of radical, Milton Friedmanesque free-market capitalism, she claims, often takes place when the targeted population is reeling from some exogenous shock: either a foreign invasion, like the "shock and awe" takeover of Iraq in 2003, or a natural disaster, like the tsunami and Hurricane Katrina, or even an economic meltdown, as occurred in Southeast Asia in 1997 and Argentina in 2001. The kind of disaster that shocks a society into losing its moorings, according to Klein, enables the votaries of the free market to come in and rewrite the rules, re-programming the behavior of entire countries. So L. Paul Bremer, with his impeccable suits and pseudo-military boots, rides roughshod over occupied Iraq, dismantling its state-owned industries while passing new laws to privatize everything and permit foreigners to repatriate all their profits; hyperinflation is curbed in Argentina and Bolivia by remedies ensuring that capitalists prevail; and in the Maldives, islanders temporarily displaced by the tsunami are permanently removed from their homes to free the islands for high-value tourist accommodations. Klein says that not even the United States is exempt from this approach: The tragedy of Katrina in New Orleans has been hailed, she claims, as an opportunity to clear poor blacks out of the city and transform it into a safe place for (white) capital.

Katrina, Klein says, demonstrated vividly the inadequacy, indeed incompetence, of the state, and so provided a ready rationale for the private sector to take over. The prime contractors in the reconstruction of New Orleans are also, Klein points out, the leading contractors in Iraq and in Sri Lanka after the tsunami. She sees this as capitalism exploiting victims of disasters when they are at their most vulnerable and unsettled: People in need of aid are obliged to accept "structural adjustment" policies that change their lives. In the wake of the disaster, fisherfolk in Sri Lanka and Thailand were prevented from rebuilding their waterfront homes, thereby reserving prime beach property for development.

Milton Friedman had argued as far back as 1962 that "only a crisis -- actual or perceived -- produces real change." Klein takes him quite literally at his word, seeing his prescription as a sinister agenda for corporatization, abetted by the "colonization of the World Bank and the IMF by [Friedman's conservative] Chicago School" and the adoption by those two institutions of the "Washington Consensus" policy favoring private-sector-led development.

This is part of my problem with Klein's thesis; she is too ready to see conspiracies where others might discern little more than the all-too-human pattern of chaos and confusion, good intentions and greed, playing out in the wake of catastrophes. Her opening chapters, for instance, recount the tale of a CIA-funded Montreal psychiatrist who conducted electroshock experiments on unwitting patients to de-program their minds and rebuild them as healthy people; Klein argues that this is precisely what the neoliberal "shock doctrine" does to societies and economies, an analogy with torture that might cause apoplexy in the boardrooms of the IMF.

She goes so far as to suggest that economists and policymakers are willing to deliberately precipitate crises to push their agendas. Klein's notion of disaster capitalism voraciously feeding on violent disruptions -- the antithesis of the conventional wisdom that capitalism requires peace and tranquility to thrive -- is a provocative one, partly vindicated by Halliburton's profit margins in Iraq. But it is also overstated, ascribing sinister motives to behavior generally prompted by more banal and benign (if sometimes wrongheaded) ideas. In caricaturing the "shock docs" and their acolytes, Klein is often palpably unfair -- as, for example, in her treatment of Jeffrey Sachs, perhaps the most passionate advocate for the world's responsibility to eliminate poverty.

And her argument raises the question: If the private sector did not ride to the rescue after disasters, who would? The state has been withering away in much of the developing world, and nearly five decades of official development assistance have not built enough state capacity to transform the lives of poor people for the better. More and more governments, afflicted by corruption, bureaucratic sclerosis and inefficiency, are realizing that the private sector is an indispensable partner in the long quest for development. Klein acknowledges little of this.

Despite its limitations, The Shock Doctrine is a valuable addition to the corpus of popular books that have attempted to rethink the big ideas of our post-Cold War age. Francis Fukuyama's notion of the "end of history" -- the idea that all societies would be governed by liberal democracy and free markets -- started the process of reflection; Samuel Huntington's concept of the "clash of civilizations" underpinned much of the anxiety that followed the realization that reports of history's demise were exaggerated. Thomas Friedman's celebration of the flatness of the globalized world is now countered by Klein's argument that when disasters flatten societies, capitalists see opportunities to profit and spread their influence. Each thesis has its flaws, but each contributes to the contest of ideas about the shape and direction of our current Age of Uncertainty. For this reason, and for the vigor and accessibility with which she marshals her argument, Naomi Klein is well worth reading. ¿

Shashi Tharoor is a former Under Secretary General of the United Nations and the author, most recently, of "The Elephant, the Tiger and the Cellphone: Reflections on India in the 21st Century."


© 2007 The Washington Post Company

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