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Neil Davidson

Shock and awe

(Autumn 2009)

From International Socialism 2 : 124, Autumn 2009.
Copyright © International Socialism.
Copied with thanks from the International Socialism Website.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Naomi Klein
The Shock Doctrine: The Rise of Disaster Capitalism
Allen Lane, 2007, £25

Authors with both talent and a theme of topical importance are still not guaranteed to seize the public imagination: they also require good timing. More precisely, they require a mass audience predisposed to sympathetically listen to what they have to say. This means that the writers concerned must be, if not exactly ahead of their potential audience, at least attuned to shifts in popular consciousness that are perhaps not yet fully formed. Several classics of socialist literature appeared too early to have an immediate impact. George Orwell’s 1938 work Homage to Catalonia, for example, is now rightly regarded as one of the outstanding autobiographical accounts of the Spanish Civil War and a merciless critique of the bankruptcy of the Popular Front strategy. But by the time of Orwell’s death in 1950 it had failed to sell even the initial print run of 1,500. [1] The very defeats which Stalinism had helped bring about meant that the majority of socialists were simply not open to the arguments it contained. Its popularity came later, in the wake of Orwell’s fame as the author of Nineteen Eighty-Four and the emergence of a New Left after 1956.

The Canadian radical journalist Naomi Klein has been rather more fortunate in her timing. Between 1995 and 1999 Klein worked to expose how giant multinational brands dominated the world economy. The resulting book, No Logo, appeared early in 2000, only months after the November 1999 demonstrations against the World Trade Organisation in Seattle signalled the coalescence of new forms of collective opposition to capitalist globalisation.

According to Klein’s own account, her book went to the printers as the protesters took to the streets: “I consider myself lucky that I happened to write a book just at a movement’s moment.” Klein herself did not fully appreciate the scale and extent of the movement – although, to be fair, no one else did either. Indeed, before starting the book she was only aware of “small-scale activism” such as “culture jamming” and “ad busting”, and saw these as having an important future only as “an act of faith”. [2] No Logo itself concludes by listing the fragmented groups which she hoped together might “wrest” globalisation “from the grasp of the multinationals”: “Ethical shareholders, culture jammers, street reclaimers, McUnion organisers, human-rights activists, school-logo fighters and internet watchdogs are at the early stages of demanding a citizen-centred alternative to the international rule of the brands”. [3] Nevertheless, No Logo caught a mood and, once a relatively cohesive movement did emerge, it rapidly achieved classic status, elevating Klein to a pre-eminent position in the movement. Contributors to International Socialism have disagreed with her support for decentralisation and opposition to the resolution of strategic differences through hard political argument. But there is no doubt that Klein has played a serious participatory role, refusing the temptation to become a mere radical celebrity offering detached commentary on events. [4]
 

From global brands to disaster capitalism

Seven years lie between No Logo and Klein’s latest book, The Shock Doctrine, during which time her only substantive publication has been a collection of journalism written between Seattle and 9/11. [5] The latter event and the various responses to it on the left seem to have been the catalyst for a change in her perspective. In particular, as she recently explained in conversation with the Marxist geographer Neil Smith, she was concerned about the way in which 9/11 divided what had, until then, been a movement finding its way towards opposing the system as a whole: into oppositions focused respectively on war and capitalism, without seeing the connections between the two. [6] What Klein is attempting in The Shock Doctrine is to integrate events like wars – not least the “Global War on Terror” – but also supposedly “natural” disasters, into an account of how contemporary capitalism works. The Shock Doctrine is in other respects a very different type of book from No Logo. Rather than a series of contemporary snapshots, the approach is historical, tracing the unfolding of the neoliberal era from the Chilean coup of 1973 onwards, occasionally moving further back in time to search for precedents. But the differences are not merely structural. A more sombre tone has replaced the vibrant optimism with which she first caught the movement’s attention. It is as if the longer perspective she adopts here has brought home the extent of the violence committed against humanity during a period which has now lasted nearly 40 years.

We now think of that period as one dominated by neoliberalism, although Klein tends to treat neoliberalism and neoconservatism as interchangeable terms for a particular way of organising capitalism, which she prefers to call “corporatism”, characterised by “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”. [7] Whatever terminology is employed for the current form of capitalist organisation (I will continue to refer to neoliberalism in what follows) Klein rightly distinguishes it from capitalism itself. [8] As we shall see, however, this avoids one error, only to open up the possibility of another – that “another capitalism is possible” shorn of the inhumanity of neoliberalism. I will return to this point below; but first, what is Klein’s argument?

She begins with the way in which theoretical support for free markets was kept alive by a small band of thinkers, above all Milton Friedman (who features as her main intellectual adversary here), after the tide began to turn against free market capitalism with the Great Crash of 1929:

During these dark days for laissez-faire, when Communism conquered the East, the welfare state was embraced by the West and economic nationalism took root in the postcolonial South, Friedman and his mentor, Friedrich Hayek, patiently protected the flame of a pure version of capitalism, untarnished by Keynesian attempts to pool collective wealth to build more just societies. [9]

But the coming to power of rulers either searching for economic answers or already committed to market solutions – initially the Chilean military, then the Thatcher and Reagan governments – provided the first opportunities for these ideas to be put into practice. Coincident with the preservation of neoliberal theory at Chicago University by Friedman and his acolytes, a form of Electro Convulsive Therapy (“electroshock treatment”) was being developed by Ewen Cameron at McGill University with CIA funding. Ostensibly to help psychiatric patients, this was in fact used by his paymasters to reduce prisoners to a vegetative state of blankness and receptivity. Klein claims that this form of psychological torture, “coercive interrogation”, although in actual use, most recently in the aftermath of 9/11, also acts as a metaphor for a broader social process: “Like the terrorised prisoner who gives up the names of his comrades and renounces his faith, shocked societies often give up things they would otherwise fiercely protect”. [10]

Social shock treatment and neoliberal economics have been linked, in the sense that the former has been used to pave the way for the introduction of the latter, in a conjoined process Klein calls “disaster capitalism”. She twice quotes Friedman’s statement that “only a crisis – actual or perceived – produces real change” and argues that neoliberalism is a “shock doctrine” which takes advantage of disaster to impose the idea of the new market order. [11] The notion of “shock” therefore works on three levels: first, “countries are shocked – by wars, coups d’état and natural disasters”; second, “they are shocked again – by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy”; and third, “people who resist are, if necessary, shocked again – by police, soldiers and prison interrogators”. [12]

Putting this argument to work, Klein is able to demonstrate that, contrary to the neoliberal claim that free markets and parliamentary democracy are mutually dependent systems, “this fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion, inflicted on the collective body politic as well as on countless individual bodies”. And not only the introduction but the maintenance of neoliberal regimes requires at the very least the severe curtailment of democracy, in all respects other than the most formal – the bare right to vote for virtually indistinguishable parties. As this suggests, Klein regards neoliberalism from the beginning as a project reliant on state power. Rather than markets being “freed” from the state as the ideology proclaims, we have instead witnessed the formation of a new, but equally close, relationship between the two:

In every country where Chicago School policies have been applied over the last three decades, what has emerged is a powerful ruling alliance between a few very large corporations and a class of mostly wealthy politicians – with hazy and ever shifting lines between the two groups. [13]

Klein supports her argument with a series of individual country by country case studies, which constitute the core of the book and which have an undeniable cumulative power.

The critique I want to offer here differs from the attacks by self-deluded liberals such as Will Hutton. [14] Whatever problems there are with Klein’s work, her position is infinitely more realistic about the workings of capitalism than the vacuous waffle about “civil society”, “democratic governance” and the like which Hutton has been promoting for decades. Above all, Klein is on the side of those who are fighting back against capitalism; Hutton is committed to defending the system against which they struggle, despite its “excesses”. Klein has also been criticised for her unsparing accounts of organisations such as Solidarity in Poland and the ANC in South Africa which once embodied popular aspirations but have since capitulated to neoliberalism. Ronald Suresh Roberts, for example, has accused Klein of condescension towards black South Africans who re-elected the ANC with ever bigger majorities until 2004. [15] To argue that criticism of post-colonial regimes is a refusal of solidarity, regardless of what these regimes have done or failed to do after taking power, is a piece of moral blackmail that has been used all too often in the past to whip Western liberals and even some would-be revolutionaries into line. It is to Klein’s credit that she refuses to bow to it, rightly understanding that the solidarity we owe is to the exploited and oppressed, not to parties or states which claim to represent them while betraying their interests at every turn.
 

The limitations of a metaphor

The real problems with The Shock Doctrine lie elsewhere. The detail which Klein provides of how neoliberalism has become the dominant form of capitalist organisation is far more convincing than the organising metaphor within which it is presented. Klein presents neoliberalism as the manifestation of the inner logic of corporate capitalism (although perhaps not of capitalism itself) and “shock” as the means by which it can be realised. She therefore treats every geopolitical event (using that term in its broadest sense) since 1973 as one either consciously undertaken or opportunistically manipulated to impose neoliberalism, a fixation which inevitably produces unnecessarily conspiratorial undertones to her work. (As Joseph Stiglitz remarks, “There are no accidents in the world as seen by Naomi Klein”. [16]) There are three problems with the “shock” metaphor as an aid to understanding contemporary capitalism.

First, how necessary was “shock” to the introduction of neoliberalism? “There are huge Third World economies that have been ravaged by neoliberalism that haven’t endured ‘the shock doctrine’,” notes Alexander Cockburn. [17] He specifically mentions India in this context, but could just as easily have mentioned Mexico or Egypt. Klein does not discuss either of these countries, even though they are in the neoliberal vanguard of their respective regions and are at least as important in geopolitical and geoeconomic terms as Chile or Iraq, which receive detailed attention because they appear to confirm her thesis. [18] More damaging still is the absence of credible examples of “shock therapy” in the cases of the two states of the developed world where neoliberalism has taken deepest root: the UK and the US.

Klein identifies the Falklands War of 1982 as the decisive moment for Thatcher in implementing her programme in the UK: “The disorder and nationalist excitement resulting from the war allowed her to use tremendous force to crush the striking coal miners and to launch the first privatisation frenzy in a Western democracy”. [19] In fact, the popular impact of the Falklands victory was relatively short-lived and did not feature particularly prominently in Conservative electoral material during the 1983 campaign, although it certainly helped to consolidate Thatcher’s leadership over her party. [20] The Conservative victory that year had a far less epochal and far more conjunctural basis. In electoral terms, they faced a compromised and incoherent Labour Party, a section of whose voting base had shifted to the newly formed SDP-Liberal Alliance. But equally significant was the state of the working class – disillusioned with the previous Labour government, weakened by unemployment but offered some relief by the emergence of the economy from the depths of the 1981–2 slump.

Far from the Falklands being the shock that made Thatcher’s victory over the miners and everything that followed possible, the outcome of the subsequent miners’ strike was itself the turning point in establishing the neoliberal regime in Britain. The key to Thatcher’s triumph was the failure of other unions and the TUC to deliver effective solidarity with the National Union of Mineworkers. The British working class was temporarily defeated in a way that had serious consequences (from which it has yet to fully recover) but it was scarcely shocked into a condition of psychological collapse.

Klein’s account of the USA is even more implausible, focusing as it does on the aftermath of 9/11:

What happened in the period of mass disorientation after the attacks was, in retrospect, a domestic form of economic shock therapy. The Bush team, Friedmanite to the core, quickly moved to exploit the shock that gripped the nation to push through its radical vision of a hollow government in which everything from war fighting to disaster response was a for-profit venture. [21]

Reading this one might almost believe that the US had been spared the neoliberal onslaught until the fall of the Twin Towers. In fact it suffered, from the late 1970s, longer and more intensively than anywhere in the West apart from the UK. In the case of the US too the key was the weakening of the labour movement, a task made easier by the fact that the US labour movement did not even enjoy the collective successes of the British in the early 1970s. The retreat started much earlier than the American equivalent of the miners’ strike, the defeat of the Patco air traffic controllers in 1981. [22]

Second, was “shock” always applied for the purpose of introducing neoliberalism? In general Klein makes far too direct a link between economics and politics. [23] Take, for example, the two central events which dominate The Shock Doctrine, and which she explicitly links: the Chilean coup of 1973 and the invasion of Iraq in 2003. [24]

Klein is, of course, right to say that in Chile it was only in the aftermath of a violent seizure of power by the military that the neoliberal regime could have been put in place. But this was not the motivation for the coup, which was carried out to crush the political aspirations of the working class movement which had looked to Allende and which was by 1973 beginning to organise on its own behalf. In fact the generals initially had little idea what economic policies to introduce and in other circumstances might well have looked to the Catholic corporatist model applied by Franco in Spain after 1939, which had been followed more or less faithfully by previous Latin American dictatorships. In retrospect, the arrival of the “Chicago Boys” to oversee the implementation of Pinochet’s programme of privatisation and deregulation has a wider significance, but initially it appeared to have no resonance elsewhere and subsequent coups to that in Chile did not immediately adopt neoliberalism. Klein herself notes that the Argentinian dictatorship that came to power in 1976 did not follow its Chilean predecessor in privatising social security or natural resources: in fact these were achieved decades later under civilian governments. [25]

In relation to Iraq, Klein quotes Bush the Father at the head of one chapter denying accusations that Bush the Son “invaded Iraq to open up new markets for US companies”, a denial which she regards as self-evidently preposterous. [26] However, painful though it is to admit, the elder Bush is simply speaking the truth. The US did not invade and occupy Iraq in order to create profit opportunities for private security firms but for strategic reasons connected to Middle Eastern oil – not to guarantee price or even supply for American use, but to control the supply in relation to competitors, above all China. [27]

Third, even accepting that neoliberals have opportunistically intervened to take advantage of disaster situations in recent decades, why was it only at a certain stage in post-war history that crises were manipulated to produce these outcomes? Two examples will illustrate the problem.

One is from the core of the world system. At the end of the Second World War it quickly became apparent that Britain had unresolved economic problems. These were not helped by a massive rearmament programme that began to erode the welfare state within years of it being initiated. When the Conservative Party was returned to office in 1951, some members of the new administration led by Rab Butler drafted a proposal to float the pound, which would have immediately led to it falling in value against the dollar. The central intention here was to put an end to balance of payments difficulties which were already characteristic of the British economy. Exports would be given a massive boost, while at the same time imports would fall; domestic prices would be high, but wages would have to be held down to avoid inflationary pressures, not least by allowing unemployment to rise. In effect, the government would be forced to cut funding of the welfare state, especially the housing programme, as well as its overseas military commitments.

The plan was dropped, largely as a result of Churchill’s nervousness over the likely consequences in electoral terms. [28] Historians have tended to treat this episode as a typical example of the consensual thinking which supposedly prevented deep-seated problems from being tackled before the advent of the Thatcher regime. [29] The point, however, is that an experiment of this sort would have been, in capitalist terms, both destructive and unnecessary at this time. Destructive because it was contrary to the type of economic structures being put in place in the advanced capitalist West – most obviously it would have destroyed the Bretton Woods agreement, the only components of which to have been put in place were fixed exchange rates. Unnecessary because from the end of the Korean War in 1953 the British economy began to take off in a boom which meant that any attempt to limit trade union power or redefine the limits of the welfare state could be postponed. British capitalism did indeed have serious underlying problems, but in conditions of generalised expansion few members of the British ruling class felt it was necessary to take action. Those who did argue for proto-Thatcherite solutions in the late 1950s, such as Enoch Powell, were marginalised.

My other example is from the developing world. The Indonesian coup of 1965 was a successful attempt by a section of the local ruling class, backed by the US and the UK, to destroy the power of the Communist Party and the left more generally, in what was at that point the most extreme use of counter-revolutionary violence since the Second World War. But neither internal nor external forces sought to impose what was then thought of as a neoclassical economic programme on the country. Klein draws parallels between the group of Indonesian economists trained at the University of California, the so-called “Berkeley Mafia” who advised the military both before and after the coup, with the “Chicago Boys” who played a similar post-coup role for the Chilean junta ten years later. She rather elides, however, the nature of the economic policies followed in the former case, which were quite different from the latter. [30] Indonesia under Suharto was regarded as a reliable ally of the West in the Cold War, but continued the strategy of state-led economic development initiated by the pre-coup regime. Its economic policies were similar to those of the other newly industrialising countries of East Asia, particularly Taiwan, Singapore and South Korea.

What these examples suggest is that neoliberalism was far from being the application of a doctrine which capitalists, state managers or politicians had been waiting to apply since the introduction of the New Deal in the 1930s or the creation of the post-war welfare states. In other words, if Klein’s thesis was correct, the policies we now associate with neoliberalism would have been introduced much earlier in the 20th century than they in fact were. Instead even the most ferociously counter-revolutionary regimes followed the dominant economic model of state intervention.

It is certainly the case that in the Global South the military repression of regimes reflecting the reformist aspirations of the working class and the oppressed opened up opportunities for multinational corporations to play a greater role but the latter have not themselves always pursued neoliberal policies, nor have they always demanded them from the states with which they have had to deal. Klein writes that “Friedman’s vision coincided with the interests of the large multinationals, which by nature hunger for vast new unregulated markets”. [31] But the interests of the multinationals have changed over time. During the long post-war boom there was general support for state intervention among the larger businesses and corporations, while small businesses retained their traditional hostility to it. These differences expressed the relative security of their positions within the market. Corporations were protected from the worst exigencies of price competition and were able to plan for longer-term investment and growth, and often in alliance with the state. Small businesses were much more vulnerable, and the state simply represented a source of demands for predatory taxation and bureaucratic regulation.

Neoliberal globalisation has changed the relative position of the corporations so that all but the largest transnational corporations are in a similar position in terms of size to the small businesses of the post-war period: “The process of globalisation has sharply increased the degree of competitive pressure faced by large corporations and banks, as competition has become a worldwide relationship.” Corporations still need a home state to act as a base, but they require it to behave differently. Increased competition “pushes them towards support for any means to reduce their tax burden and lift regulatory constraints, to free them to compete more effectively with their global rivals”. [32]
 

Explaining the neoliberal moment

In many respects Klein’s position is close to David Harvey’s. Although he is only mentioned once in the text (in a footnote about the introduction of neoliberalism to China after the Tiananmen Square massacre), Klein refers in her acknowledgements to him as one of “several thinkers and chroniclers of neoliberalism [who] have shaped my thinking”. [33] More recently she has said that her object, “using David Harvey’s parameters”, was to track “the counter-revolution against Keynesianism and developmentalism and the period from the 1930s through to the end of the 1960s, where there was a period when there was a response to another crisis which was the market crash of 1929”. [34] There is, however, one central problem with the concept of a neoliberal “counter-revolution” shared by Harvey and Klein: it perpetuates the neoliberal myth that socio-economic developments in the post-war period were fundamentally detrimental to capital. It is certainly true that a number of concessions were granted to the working class, and it is for this reason that the reputation of “the golden age” remains high, particularly in contrast to what Eric Hobsbawm calls “the landslide” that followed. This reputation rests on two main factors. [35] One was high, indeed for practical purposes full, employment. The other was the expansion of the “social wage” through the provision of education, health and social security, particularly unemployment benefits and pensions. [36]

Both of these were necessary to capital, to gain the support of the labour force, helping to ensure social stability and to aid increases in productivity, thus contributing to international competitiveness. As Hilde Nafstad and her colleagues write, “Welfare states should not be understood simply as a protective reaction against modern capitalism, but as varieties of modern capitalism”. [37] Consequently, these measures were not necessarily dependent for their introduction on social democratic or even liberal democratic governments. As Tony Judt has correctly noted:

Outside of Scandinavia – in Austria, Germany, France, Italy, Holland, and elsewhere – it was not socialists but Christian Democrats who played the greatest part in installing and administering the core institutions of the activist welfare state. Even in Britain, where the post-World War Two Labour government under Clement Attlee indeed inaugurated the welfare state as we knew it, it was the wartime government of Winston Churchill that commissioned and approved the report by William Beveridge (himself a Liberal) that established the principles of public welfare provision: principles – and practices – that were reaffirmed and underwritten by every Conservative government that followed until 1979. [38]

Klein rightly rejects the USSR and its satellites and imitators as a model for the contemporary radical left, but nevertheless considers them to be “post-capitalist” societies, which consequently required an entirely new capitalist class to be created after their demise. However, as this journal has argued since its inception, rather than view these societies as being fundamentally different from those of the West it is better to see them as existing on a continuum of state intervention, with two extremes – the US and the USSR – at opposite ends of the scale.

The real roots of neoliberalism are to be found in the end of the period of exceptional growth that followed the Second World War. The precise causes of the return to crisis after 1973 have been widely debated but some key features are highlighted by most analysts. Increased price competition from West Germany and Japan within the advanced world was made possible by intensive investment in technology and relatively low wages. This forced their hitherto dominant rivals, above all the US, to lower their own prices in a situation where production costs remained unchanged. American corporations were initially prepared to accept a reduced rate of profit in order to maintain market share but, ultimately, they too undertook a round of new investments, thus raising the capital-labour ratio and increasing the organic composition of capital, leading to consequent further pressure on the rate of profit. [39] As Al Campbell writes, neoliberalism was therefore a solution to “a structural crisis of capitalism” in which “policies, practices and institutions” that had hitherto served capital accumulation no longer did so: “More narrowly, one can say that capitalism abandoned the Keynesian compromise in the face of a falling rate of profit, under the belief that neoliberalism could improve its profit rate and accumulation performance.” [40]

But the inadequacy of Keynesian policies was itself the result of changes to the nature of the world economy which had taken place during the long boom – an unprecedented threefold expansion of international trade, the advent of cross-border production, the increase in large-scale foreign direct investment and the creation of “offshore” banking and flows of money capital unlimited by national boundaries – all of which made these policies increasingly difficult to apply with any possibility of success. States had not become completely powerless in the face of markets – that is the myth of globalisation assiduously cultivated by politicians seeking to shift responsibility for neoliberal policies onto what T.S. Eliot once called “great impersonal forces” over which they had no control. In that sense neoliberalism represented a choice, but it was a choice increasingly difficult to avoid so long as the goal was the preservation and expansion of capitalism at all costs.

The economic roots of neoliberalism were therefore decisive. The one condition that was universally required in order to impose the neoliberal regime was to eliminate or at least reduce the power of the organised working class. The real reason for the attack on the ability of unions to effectively defend their members was threefold. The first was to enable corporate restructuring, the closing of “unproductive” units and the imposition of “the right of managers to manage” within the workplace. The second was to ensure that wage costs fell and stayed down so that the share of profits going to capital was increased. This also extended to the social wage. The main source of funding for the post-war welfare states came from redistribution within the working class itself. However, to the extent that it was also a cost to capital, it was one that capitalists were only prepared to pay so long as the system was expanding. When it began to contract, as it did after 1973, these costs had to be reduced, either by attacking provisions directly in the hands of employers (pensions, health insurance) or by shifting the burden of taxation even more decisively onto the working class. The third, more long-term tactical consideration, was to assist social democracy as it adapted to neoliberalism by weakening the main source of countervailing pressure from the broader labour movement, thus ensuring that fiscal and other changes in favour of capital would not be reversed.

Only very rarely did these attacks involve destroying the trade union movement. The Chilean coup of 1973 is exceptional in this respect and it was only possible on a temporary basis. At the time, however, it was regarded as a tragic reversal of the reformist strategy adopted by Allende and Popular Unity, not as foreshadowing any new development. Latin America had, after all, experienced numerous coups in the 20th century, albeit few as violent as this. In the important case of China, the ruling class was fortunate in that there was no movement to be destroyed: the reality of this so-called “workers’ state” being an atomised labour force presided over by official trade unions that were an arm of the state. (Ironically, the emergence of a genuine labour movement in China has been in response to the regime’s neoliberal turn.) In most cases, apart from simply allowing mass unemployment to weaken worker confidence and combativity, the attack on trade union power involved two strategies.

One was to provoke a decisive confrontation between a state-backed employer and one or two important groups of unionised workers (air traffic controllers in the US in 1981, textile workers in India in 1982, miners in the UK in 1984–5), whose defeat would act as an example to the others, against a background of multiplying legal restraints and increasing employer intransigence. In these circumstances politicians gambled that most sections of the trade union bureaucracy would give priority to the continued existence of their organisations, however much reduced in power, rather than mount effective resistance. Looking back at the refusal of other unions or federations such as the AFL-CIO and the TUC to give effective support to unions under attack, the bet appears to have involved a limited amount of risk.

The other strategy was to establish new productive capacity, often virtually new industries in geographical areas with low or non-existent levels of unionisation, and to prevent the culture of membership from becoming established. The classic example of this strategy was the movement of productive capital from the old “rustbelt” industrial regions of the north east US to the southern “sunbelt”. [41] Actual geographical shifts within nation-states were more common and more damaging to trade union organisation than the threatened geographical shifts to locations in the Global South, which were often made by employers but far less frequently carried out, not least because of their lack of technological infrastructure and the cost in abandoning fixed capital which such relocations would involve. However, as Graham Turner notes, “it is the threat of relocation that proves just as powerful as the reality of a transfer somewhere cheaper”. [42]

The emergence of neoliberalism as a conscious ruling class strategy, rather than the esoteric ideological doctrine associated with Friedman & Co, therefore took place in response to the end of the post-war boom, but in changed conditions created by that boom. Politicians and state managers began to implement some of the policies long advocated by Hayek and Friedman, not because individual opportunities to do so which had previously been missing finally presented themselves, as Klein claims, but because the changed conditions of accumulation required changed strategies. Given the limited number of strategies available (assuming these were to be in the interests of capital), it is unsurprising that theory and practice began to overlap. The failure of Keynesianism and other forms of state capitalism predisposed many capitalists, state managers and politicians to embrace theories which they would have rejected earlier as eccentric, or even dangerously destabilising. But it is important to place the spread from economic to ideological crisis in the right order and, even then, to appreciate that the shifts which followed were as much pragmatic as ideological. As Andrew Gamble writes, neoliberalism as “a global ideology” was less significant than “the competitive pressures of capital accumulation in forcing the convergence of all capitalist models and all national economies towards neoliberal institutions and policies”. [43] Even then neoliberalism as a system only emerged in a piecemeal fashion.
 

Conclusion

Neoliberalism is mutating in response to the current crisis. The precise character of this new capitalist organisation is not yet settled. We can, however, be sure that in the absence of a boom comparable to that of the post-war period (which seems unlikely, to say the least) any new formation will prove to be no more beneficial to the working class than its predecessor. Understanding neoliberalism is therefore not a historical issue, but one of urgent practical concern. It has shaped the conditions under which the working class still has to fight, conditions which extend beyond economic structures, or even the immediate situation in the workplace, to the types of political representation and the forms of consciousness with which workers will enter the struggles to come. Yet despite the crucial importance of the issue there is no wholly satisfactory account of this most recent period in the history of capitalism. The book which comes nearest from a Marxist perspective is Harvey’s A Brief History of Neoliberalism, but theoretically it is highly eclectic and consequently misleading on several key points, several of which have already been discussed in International Socialism. [44] Furthermore, although it is markedly more readable than the average work of Marxist political economy (including most of Harvey’s earlier works), it presents a formidable challenge to anyone not already familiar with a series of complex theoretical debates.

For this reason alone, The Shock Doctrine is an important work. Although, as we have seen, it draws on Harvey in some respects, it presents an argument about neoliberalism in terms far more comprehensible to non-academic activists than the jargon of, say, “the spatial fix”. The very fact of its popularity does, however, place an onus on Klein’s fellow members of the radical left to draw friendly but critical attention to its weaknesses. In the end, these do not stem so much from the metaphor which provides Klein with her title and structure but from the understanding of capitalism which underlies it. Above all, Klein does not reject markets:

I am not arguing that all market systems are inherently violent. It is eminently possible to have a market-based economy that requires no such brutality and demands no such ideological purity. A free market in consumer products can coexist with free public health care, with public schools, with a large segment of the economy – like a national oil company – held in state hands ... Keynes proposed exactly that kind of mixed, regulated economy after the Great Depression, a revolution in public policy that created the New Deal and transformations like it around the world. [45]

But it was the propensity for a system run along the lines described here to enter crisis that opened up the very period her book describes. Indeed, economic crisis barely features in her account, unless as something consciously created by ruling classes to change economic structures to their advantage. The idea that capitalism enters into involuntary convulsions as a result of the internal mechanisms of the mode of production is almost entirely absent from The Shock Doctrine, yet paradoxically it is in this fact that hope actually lies.

If neoliberalism was indeed the essence of capitalism then we would expect the bourgeoisie to endlessly seek to reimpose that model, whenever conditions are apt. This is certainly what Klein expects based on her response to the outbreak of the current crisis:

During boom times it is profitable to preach laissez-faire because an absentee government allows speculative bubbles to inflate. When these bubbles burst, the ideology becomes a hindrance and goes dormant while government rides to the rescue. But rest assured: the ideology will come roaring back once the bail-outs are done. [46]

But if this is so, where does the impetus for her desired Keynesian welfare state come from? Surely not from capitalists since, according to Klein, they are merely waiting to reimpose free market conditions. But equally, how can the oppressed and exploited force a change on the capitalist class if the latter have been able to suppress the possibilities of democracy to the extent that her account reveals? Something of this dilemma is apparent in Klein’s final chapter, where she offers some tentative reasons for optimism, which (apart from the Lebanese general strike of 2006) mainly amount to small-scale attempts at post-disaster “community reconstruction”. [47] Her failure to understand the role of crisis, rather than some omnipresent capitalist urge towards free markets, as the motivation behind neoliberalism, also blinds her to the possibilities that a renewed period of crisis presents for both sides in the class struggle. Neoliberalism was founded on the weakening of the labour movement. If what replaces neoliberalism is to be in the interests of the exploited and oppressed, the labour movement must be rebuilt. That task will have to involve much more than projects of reconstructing what we had before the neoliberal catastrophe. We know, not least because Naomi Klein has shown us in this flawed but immensely valuable book, what our enemies are capable of if we fail.

* * *

Notes

1. Davison, 1998, p. 135.

2. Klein, 2008a.

3. Klein, 2000, pp. 445–446.

4. See, for example, Harman, 2000, pp. 53–56.

5. Klein, 2002.

6. Klein and Smith, 2008, pp. 589-590.

7. Klein, 2007, pp. 14–15. See also Klein, 2007, p. 253.

8. Neoconservatism is often wrongly regarded simply as a US foreign policy doctrine based on military intervention. In fact, it is the inescapable domestic complement to neoliberalism across the capitalist world, in the sense that the social division and fragmentation caused by marketisation, commodification, privatisation and the rest require massive increases in the repressive and surveillance apparatus of the state in the name of restoring social discipline. For that reason, although the two ideologies are inextricably linked, we should maintain an analytic distinction between them. For a longer discussion, see Davidson, 2009a.

9. Klein, 2007, p. 17.

10. Klein, 2007, p. 17.

11. Klein, 2007, pp. 6–7, 140–141.

12. Klein, 2007, pp. 24–25. See also Klein, 2007, p. 71.

13. Klein, 2007, p. 15.

14. Hutton, 2007.

15. Roberts, 2008, p. 7.

16. Stiglitz, 2007.

17. Cockburn, 2007.

18. India and Mexico receive one passing reference each, Egypt receives none. See Klein, 2007, pp. 399, 452.

19. Klein, 2007, p. 10. See also Klein, 2007, pp. 136–140.

20. See Sanders, Marsh and Ward, 1987.

21. Klein, 2007, p. 298.

22. Moody, 2007, pp. 106–114.

23. For a discussion of how the links might be made, without reducing one to the other or treating them as autonomous, see Davidson, 2009b.

24. Klein, 2007, pp. 7–8.

25. Klein, 2007, pp. 88, 165–168.

26. Klein, 2007, p. 308.

27. Brzezinsky, 1997, pp. 158–173; Callinicos, 2003, pp. 93–98; Harvey, 2003, pp. 18–25, 74–86.

28. Hennessey, 2006, pp. 199–217.

29. See, for example, Marr, 2007, p. 131.

30. Klein, 2007, pp. 67–70.

31. Klein, 2007, p. 57.

32. Kotz, 2001, p. 104.

33. Klein, 2007, pp. 190, 532.

34. Klein and Smith, 2008, p. 583.

35. Hobsbawm, 1994, pp. 403–416.

36. Although, as Perry Anderson rightly remarks, the period since 1973 has seen dramatic, if uneven, improvements in the living conditions of millions in the Global South who were excluded from the prosperity of the long boom. See Anderson, 2005, p. 301.

37. Nafstead and others, 2007, p. 314.

38. Judt, 2008, p. 10.

39. Harman, 1984, pp. 99–102; Brenner, 2006, pp. 99–101. Harman argues that an increase in the organic composition of capital (as a result of declining effectiveness of the permanent arms economy as a countervailing tendency) was the reason for the falling rate of profit. Brenner rejects this explanation (see Brenner, 2006, pp. 14–15, note 1), but both he and Harman agree that the latter process is central to the crisis.

40. Campbell, 2005, p. 189.

41. Moody, 2007, pp. 43–47.

42. Turner, 2008, p. 10.

43. Gamble, 2001, p. 133.

44. Harman, 2008, pp. 89–92, 100–104. See also Davidson, 2009a.

45. Klein, 2007, p. 20. Klein is, of course, not alone on the left in seeing Keynesian solutions as the only realistic alternative to neoliberalism, either from principle or because of the supposed impossibility of making more radical change under current conditions. Compare the liberal Stiglitz, 2002, pp. 249–250, with the Marxist Harvey, 2005, pp. 183–184,–206.

46. Klein, 2008b.

47. Klein, 2007, pp. 443–466.

* * *

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