Disaster Capitalism

Naomi Klein’s new book, The Shock Doctrine: The Rise of Disaster Capitalism, has been getting a lot of attention lately. I’m interested in reading it. I liked what I read of her earlier book, No Logo (I read about 3/4 of it), and have appreciated her work in recent years.

At ads without products, I came across the following short advertising film for the book, directed by Alfonso Cuarón of Children of Men fame:


In the film, and it appears the book, Klein draws comparisons between the use of torture in U.S. interrogation techniques (laid out in the CIA manuals) and the methods of “crisis capitalism”, or what she calls the economic “shock doctrine”: each is intended to soften up the victim so that they are more likely to bend, less likely to resist.

In a respectful review in the Guardian (link via The Reading Experience), John Gray puts Klein's thesis like this:

As Klein sees it, the social breakdowns that have accompanied neo-liberal economic policies are not the result of incompetence or mismanagement. They are integral to the free-market project, which can only advance against a background of disasters.

[. . .]

Klein uses torture as a metaphor, and does not claim any cause-and-effect link between its re-emergence and the rise of neo-liberal shock therapy; but she does point to some disquieting similarities. Individuals and societies have been "de-patterned" with the aim of remaking them on a better, more rational model. In each case, the experiments have failed, while inflicting lasting and often irreparable damage on those who were subjected to them.

In his penultimate paragraph, he writes:

There can be no doubt that fortunes have been reaped from the Iraq war as they have been from other experiments in disaster capitalism. Yet I remain unconvinced that the corporations Klein berates throughout the book understand, let alone control, the anarchic global capitalism that has been allowed to develop over the past couple of decades - any more than the neo-liberal ideologues who helped create it foresaw where it would lead. Rightly, Klein insists that free market ideology must bear responsibility for the crimes committed on its behalf - just as Marxist ideology must be held to account for the crimes of communism. But she says remarkably little about the illusions by which neo-liberal ideologues were themselves blinded. Milton Friedman and his disciples believed a western-style free market would spring up spontaneously in post-communist Russia. They were left gawping when central planning was followed by the criminalised free-for-all of the 90s, and were unprepared for the rise of Putin's resource-based state capitalism. These ideologues were not the sinister, Dr Strangelove-like figures of the anti-capitalist imagination. They were comically deluded bien-pensants, who promoted their utopian schemes with messianic fervour and have been left stranded by history, as the radiant future they confidently predicted has failed to arrive.

I disagree with most of this paragraph, which is packed with a lot of questionable assumptions. I won't attempt a point-by-point response, but let me try to address some of them.

In an earlier post in which I briefly asserted that capitalism needs states, I quoted a passage from a Noam Chomsky essay from 1977 ("American Foreign Policy in the Middle East", collected in Towards a New Cold War). As the titles makes plain, the essay was specifically about American policy in the Middle East and, in part, about the role of the oil companies in the region. Here is how the passage began:

The oil companies face local problems as a result of continued American barriers to a political settlement of the Arab-Israeli crisis in the only possible manner, that is, with a two-state settlement along roughly the 1967 borders. But the basic long-term interests of American capitalism have, so far, been adequately served by this policy. As noted before, this is not the first time that the oil companies, despite their power, have been subordinated to more general interests.

And what are these more general interests? They are the maintenance of the capitalist system as a whole. This is where the idea that capitalism needs states comes in. In his review, Gray says: "There are very few books that really help us understand the present." I agree. Gray suggests that Klein's is just such a book. Here are two more: A Brief History of Neoliberalism, by David Harvey, and Empire of Capital, by Ellen Meiksins Wood.

In his book, Harvey traces the development of, experimentation with, and eventual widespread political accommodation to neoliberal ideas and policies. The bankruptcy of New York City in the 1970s; the assassination of Allende of Chile in 1973, followed by the first imposition of Milton Friedman's neoliberal ideas on a nationwide scale by Pinochet, guided by Chicago-trained economists; Thatcherite England; Carter and Reagan; the capitalization of China: Harvey discusses all of this and more, along the way comparing the rhetoric of neoliberalism with the practice. Where Gray paints Friedman and his followers as deluded "utopians" (not unlike popular conceptions of communist revolutionaries), Harvey shows that "the theoretical utopianism of neoliberal argument has . . . primarily worked as a system of justification and legitimation for whatever needed to be done to achieve" the goal of "restoring, or some instances (as in Russia and China) creating, the power of an economic elite". In short, class war, justified by the attractive but ultimately empty rhetoric of freedom. That is, they knew what they were doing, even if Gray is right (and I think he probably is) that "disaster capitalism is now creating disasters larger than [the system] can handle". (For more on what happened to New York City in the 1970s, see "Neoliberalism and the City" from Studies in Social Justice (the link is to a pdf); for an even briefer history of neoliberalism than offered by Harvey's book, see this excellent interview with Harvey at The Monthly Review's MRZine.)

"They knew what they were doing." Who is "they" in this case? If Gray's review is any indication, it sounds as if Naomi Klein focuses on the depredations of "disaster capitalism" through the prism of large corporations. If so, this isn't surprising, given the balance of her work in the past, including No Logo. It's not unimportant, of course. We need to know what those corporations are up to. But, as suggested by the Chomsky passage, there are general systemic interests over and above the short-term needs of even the most powerful corporations. Who attends to the system? Whereas many have observed the existence of hugely powerful multinational corporations and organizations such as the WTO and concluded that we are living in a period of the declining importance of states, in Empire of Capital Ellen Meiksins Wood argues that

. . . for all the globalizing tendencies of capitalism, the world has become more, not less, a world of nation states, not only as a result of national liberation struggles, but also under pressure from imperial powers.

These powers have found the nation state the most reliable guarantor of the conditions necessary for accumulation, and the only means by which capital can freely expand beyond the boundaries of direct political domination. As market imperatives have become a means of manipulating local elites, local states have proved to be far more useful transmission belts for capitalist imperatives than were the old colonial agents and settlers who originally carried the capitalist market throughout the world.

Where formerly it was the British who enforced the nascent global system (Mike Davis' Late Victorian Holocausts, which I am currently reading, is proving invaluably instructive on this score), with the end of World War II (and adverserial inter-ally politics during the war) the United States emerged as its guarantor. Wood spends some time discussing the differences between various empires throughout history (Roman, Chinese, Spanish, Arab Muslim, Dutch, Venetian, British) in order to show how the empire presided over by the United States is different: the first truly capitalist empire. If capitalist imperatives are self-replicating and "purely economic", and neoliberalism promises freedom for all, where is the problem? The problem is

this mode of imperialism, like capitalism itself, has contradictions at its very core. On the one hand, it depends on the separation of the ‘economic’ and ‘political’, which makes possible the unbounded expansion of capitalist appropriation by purely economic means and the extension of the capitalist economy far beyond the limits of the nation state. Capitalism has a unique drive for self-expansion. Capital cannot survive without constant accumulation, and its requirements relentlessly drive it to expand its geographic scope beyond national boundaries too. Yet, on the other hand, capital has always needed the support of territorial states; and while the wide-ranging expansion of capitalist appropriation has moved far beyond national borders, the national organization of capitalist economies has remained stubbornly persistent. At the same time, the nation state has remained an indispensable instrument – perhaps the only indispensable ‘extra-economic’ instrument – of global capital.

'Extra-economic' means politics; 'extra-economic' instrument means the political state, usually in the form of a monopoly on violence. Within countries, the process is more straightforward: "capital appropriates, while the 'neutral' state enforces the system of property, and propertylessness." It's a lot more complicated in the global system, but I think the actions taken by the United States since the end of World War II--from containment policy, including the wars in Korea and Vietnam, to "support" for not only Israel and, earlier, South Africa, but countless Third World despots--make a whole lot more sense when viewed within the conceptual framework of the United States as enforcer and guarantor of the capitalist world system (which is not to say that individual personalities don't impact the political situation in their own ways). Now, as American economic hegemony has all but collapsed, American attempts to throw its weight around militarily seem increasingly desperate.

There is a lot more that can be said about Wood's book (I found the idea of the state as the enforcer of not only the system of property but also "propertylessness" extremely important, and now that she's brought it to my attention, obvious), but I'll leave with one more thing before finishing up here. She points out that the idea that states are declining in importance, the premise that "the nation state is giving way to a new form of stateless 'sovereignty' that is everywhere and nowhere" (as argued by Michael Hardt and Antonio Negri in their popular book Empire, which I have not read)--"such views", she says, "not only miss something truly essential in today's global order but also leave us powerless to resist the empire of capital." Recognizing the remaining importance of states means that there can be--and are--centers of power, potential loci of resistance. Many of us feel powerless enough as it is, but without political entities (in this case states) to resist against, without a place to act politically, that sense of powerlessness can only increase.

I like what I've heard about Naomi Klein's The Shock Doctrine, and I look forward to learning a lot from it. For those interested in understanding the present world, I highly recommend also reading A Brief History of Neoliberalism and Empire of Capital.