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Using "disaster captialism" to change society and its negative impact
on December 11, 2007
**FYI** Please note to the best of my knowledge I am NOT related to Naomi Klein.**
If you wonder what happened to the middle class, why poverty is on the rise and what the economies in a democracracy, dictatorship and "communism" have in common, you'll find lots of food for thought in Naomi Klein's THE SHOCK DOCTRINE. Tracing the rise of the "Chicago Boys" laissez-faire economic beliefs, their impact on South America, China, Russia, Poland and South Africa and how it impacted their form of government, Klein makes a compelling argument for the flaws in Milton Friedman's economic science.
Naomi Klein's book looks at the conflict between Milton Friedman's "laissez-faire" approach to business and government where business is largely unregulated running itself and government is little more than a bare bones system. According to Klein, Friedman believed that the economic theories he espoused would be perfect and that any problems with it would be due to outside forces interferring with his free market world. His approach was in complete contrast to Keynes who believed that the prime mission of politicians and economists was to prevent unemployment and avoid a depression or recession by regulating the market place. People like John Kenneth Galbraith (heir to Keynes' mantle)believed part of the purpose of economic regulation was to keep our captalist system fair and prevent a small group of businesses from dominating the market. Galbraith also believed in bills like the Glass-Steagall act which created a firewall between Wall Street and various banking institutions (which former President Clinton helped to eliminate). The net result would be to prevent recreating disasters like the Great Depression and 1929 stock market crash (the current version of which contributed to part of the economic mess we're in today).
It's the conflict between these two economic philosphies that allows our economic world to thrive. You'll have to decide for yourself how accurately she reflects each man's philosphy based on what you know about each respective philosphy but I found, for the most part, that the book gave a pretty accurate summation of the benefits and issues at the core of each, as well as which classes benefit the most.
Klein suggests that "disaster capitalism", i.e., introducing radical changes in terms of economic and government policy when a country is in "shock" (taking advantage of the fact that massed resistence is unlikely to that change), is allowing the rise of unchecked multi-national corporations that take advantage of and damage our society in the process. She suggests that Friedman's beliefs that the market will manage itself and that free market capitalism undermined the Soviet Union is an idealized and naive belief. The impact for good and bad is that a business functions like a plant. If it receives too much sunlight and water, it will overgrow and strangle out everything else in the economic ecosystem. The net result would cause the system to become unbalanced with human suffering and economic disaster as the result if left unchecked. She traces a parallel path between the rise of Friedman's economic philosphy and the rise of human rights violations, rise and fall of various governments throughout the world and the opportunism of the business world to exploit it.
She ties all of this together looking at the economic policies and beliefs that are reshaping American society--for good and bad--into a different society where the gap between the wealthy and the poor continues to expand and one where the free market society is being radically retooled. The result is a society where the rich grow richer and the poor grow poorer. The pressured middle class continues to shrink. This undermines the foundation of our economic growth. This book will probably divide those along the more extreme political lines but has the ring of truth nevertheless.
Klein crafts a fascinating book. Although some of her observations might be a bit of a stretch and her arguments occasionally flawed, she provides compelling evidence to support her thesis and connects the dots of events that might otherwise appear to be unrelated. Whether or not you agree with Klein or are outraged by her evidence, you'll find plenty of food for thought in her book.