Naomi Klein’s alternative history of present-day capitalism

Naomi Klein is what one might call a social activist. The issue that moves her is that of present-day capitalism that pays little regard for the common people even while it grotesquely enriches the well-off. The 2009 video above (beware: 1 hour 18 minutes) is based on her book The Shock Doctrine (2007), an international and New York Times bestseller.

As you will hear her argue eight minutes into the film, “The thesis of the Shock Doctrine is that we’ve been sold a fairy tale about how these radical policies have swept the globe. They haven’t swept the globe on the backs of freedom and democracy; they have needed shocks, they have needed crises, they have needed states of emergency.”

The book was highly controversial. Critics like John Willman of the Financial Times described it as “a deeply flawed work that blends together disparate phenomena to create a beguiling — but ultimately dishonest — argument.” Indeed, as you watch the opening sequences of the video, about experiments in sensory deprivation and electroshock therapy, you can’t help but feel that if this work is about economics, then she is about to make an audacious leap of logic.

Nor does it let up. It continues trying to pull evidence for her hypothesis from a variety of political events from the coup against Chilean President Allende to the United States’ treatment of detainees in Abu Ghraib prison after the 2003 invasion of Iraq. The problem that Klein has is that she tries too hard; the entire video is itself an exercise in shock tactics, and once conscious of that, you very quickly begin to resist the message. All these political events she is citing, you tell yourself, are highly complex issues with multiple causes. Isn’t she oversimplifying?

Many critics said she was. But Nobel Laureate and former Chief Economist of the World Bank, Joseph Stiglitz reminded readers that “Klein is not an academic and cannot be judged as one.”  The book, he wrote, provides “a rich description of the political machinations required to force unsavory economic policies on resisting countries,” but while the author might have oversimplified, in fact, “the case against these [economic] policies is even stronger than the one Klein makes.”

Chiefly, Klein’s point is that the kind of hard-nosed capitalism ascendent through the last few decades would never have been agreed to by any electorate that had full awareness of what was happening and could exercise democratic rights. Benefitting the few against the interests of many was not something that could be honestly sold in a free democracy. The only way it could be introduced would be in the aftermath of a political, social or economic breakdown, when people were confused or when the will to resist was weak. Even then, in many places, it could not be sustained without repressive measures; as people awoke to the extremely unbalanced effects of such an economic system, they tended to rebel.

Do her examples really show this? Some more convincingly than others; all more complicated than just a handful of sentences could describe. Nonetheless, it’s worth reminding ourselves that to say “it’s more complicated than that” is a form of denial or dismissal — the trick in that expression being to refocus the mind onto other causative factors, thus letting go of the explanation (albeit that it is one among several) that Klein wants us to mull over. If you discipline your mind not to stray, it’s not that hard to concede that perhaps she does have a point. Hers may not be the only explanation, but quite plausibly, hers is a substantial one.

It is after all, what the video calls itself: an alternative history — a fresh look at what happened from an unconventional angle. Alternative readings can have the huge advantage of allowing us to see something that’s been there all the time but obscured by convention.

* * * * *

One country not covered by Klein is China. There too capitalism, and often state capitalism, has gone mad. The hardships inflicted on ordinary people as a result are such that in a typical year about 90,000 riots and civil disturbances are recorded.

I know it’s very difficult to get a sense of this number. One is likely to say: China is such a big country. However, think of it this way: It’s one riot per 15,000 people. It’s equivalent to Singapore, with our 5 million people, experiencing 333 riots, sit-ins or protests a year, or one a day.

In China too, one suspects that such an economic system producing this degree of misery and frustration is only possible because the Chinese Communist Party (CCP) has a tight grip on politics. If the Chinese people had a free vote, they would want a very different social and economic order.

Writing about China and the government’s latest suppression of the latest riots, Straits Times correspondent Peh Shing Huei made an insightful point on 15 June 2011:

But therein lies the problem for the CCP. It is getting so good at managing protests that the fear is it could be slipping into a comfort zone.

It has gone beyond just learning to live with protests. It has, seemingly, mastered the art. And in the process, one wonders what incentives remain for the party to seriously take on the reforms necessary to address the concerns of the protestors — official corruption, abuse of power and land seizures, among others.

– Straits Times, 15 June 2011, China too good at quelling protests, by Peh Shing Huei

* * * * *

It’s not hard to find possible parallels within Singapore history either — and surely with a Gini Co-efficient in the high 40s, we’re one of the most economically unequal places on earth, testimony to our adoption of the same hardline take-no-prisoners economic philosophy. We smashed our independent labour unions quite soon after independence so they would never demur against the economic reshaping being instituted. We muzzled the media so they would glorify the government’s version of capitalism however extreme.

Then when, in the 1980s, a group of socially-conscious liberal Catholics set out to help factory workers know their rights, the Internal Security Act was used, and they were detained without trial. And tortured. They were called “Marxist conspirators” by the government. I would venture to suggest that these 22 persons should wear that label with pride. They were tagged “Marxist” because to those determined to push robber-baron economics, anybody who stands in their way is Marxist or Communist or Socialist. But the verdict of history may well be that “Marxist” is good.

In that sense, Singapore’s history supports Naomi Klein’s thesis — that this extreme form of “free-market” capitalism (one where government is derelict in its social responsibility to mitigate the social effects of corporate and individual greed) is incompatible with a free society, popular dogma and the parallel use of the descriptor “free” notwithstanding. The former can only succeed when the latter is crippled.

Yawning Bread wishes to thank reader Kute Steiner for drawing my attention to this video. Kute Steiner first mentioned it in a comment but I thought it was more important to highlight it in an article of its own.

15 Responses to “Naomi Klein’s alternative history of present-day capitalism”

  1. 1 SE 25 June 2011 at 22:40

    Perhaps this video on “Choice” might also interest you and your readers.

  2. 2 prettyplace 26 June 2011 at 00:49

    Going to watch the video now.
    Marxism is a good system but ideal and people are not perfect.

    Anyways, the capitalist system is not perfect either but it has built a world which is better. It has improved the world to where it is today. Most people have and are having a better & improved life under capitalism.
    Its misallocation & greed which has brought about the shocks. I will find the book. I am sure it’ll be an interesting read.

    • 3 yawningbread 26 June 2011 at 03:15

      You wrote: “Its misallocation & greed which has brought about the shocks”

      The problem is that capitalism is founded on greed, and the way it measures value (in monetary terms) almost always leads to misallocation, because humans judge value with from a multiplicity of dimensions, e.g. community, humanity, love for animals.

      This is not to say that any alternative has proven to be better, but I think it is timely to remind ourselves that capitalism is no cure all.

      • 4 Poker Player 27 June 2011 at 11:39

        Suppose we were talking about motherhood, wouldn’t

        “This is not to say that any alternative has proven to be better, but I think it is timely to remind ourselves that motherhood is no cure all.”

        still be true?

      • 5 prettyplace 28 June 2011 at 01:41

        Pardon me Sir, I should have stated excessive greed.

        I have to agree that different cultures have differing values. Since we are on the topic of economics,i assume they are ‘economically rational beings’ applying the principles.

        There might be an alternative model, Rand’s Objectivism, although quite impossible to apply as well.

      • 6 prettyplace 28 June 2011 at 02:10

        not an alternative model but philosophy.

  3. 7 Sgporean 26 June 2011 at 00:56

    Her speech is here…and she did cover china,

  4. 8 Daniel Ho 26 June 2011 at 11:57

    I wouldn’t say the principles of capitalism is in dispute. Just the implementation. Monopolistic power, distortion of information, economic externalities etc are well explained in the field of microeconomics. What is contentious is how great a role the government has in “correcting” those “imbalances”.

    • 9 prettyplace 28 June 2011 at 01:49

      I don’t agree with Ms Klien’s views. It does seem simplistic. I’ve pasted the link of their arguments.
      She does not seem to understand the political enviroment of the time and the necessary employment of Friedman’s theory & Reganomics.

      • 10 Robs 3 July 2011 at 00:00

        The video is highly disingenuous. Naomi Klein never defended communist dictatorships. She defended the single most successful economic system in human history – the one that enriched Western Europe (and therefore causing the wall to fall) and is currently enriching South America and China – mixed economies whereby capitalism is mixed with strong governmental social protections. And her precise contention is that neoliberal economics often had to be implemented through undemocratic means that suppressed the voice of the majority – see Pinochet’s Chile. The debate is not between welfarism-as-dictatorship and capitalism-as-freedom, and to portray it as such shows an intellectual bankruptcy unworthy of Friedman’s intellect.

  5. 11 T 26 June 2011 at 16:30

    Another video from RSA Animate may also be of interest.

    Capitalism has brought about many benefits because it harnesses, rewards and sustains ambitions which have made it a very dynamic system. The ambition to produce, to profit, etc. Often alongside capitalism is the ideology of meritocracy whereby one is rewarded by one’s own efforts.

    However, excessive ambition can lead to financial, moral and societal ruin. And is it possible for one to succeed purely on individual effort? For example, the food one eats is produced by many hands from (perhaps) as many places far and near. Yet capitalism simplifies things so much just by placing prices on foods, among the many commodities under its markets. Besides the simplicity in valuating commodities, the above-mentioned qualities of ambition, rewards and dynamism create powerful and addictive intuitions for individuals to subscribe to capitalism.

    In this regard, I feel that the biggest act that capitalism has accomplished is isolating individual merit and rewarding it to the point of (almost) ignoring the interconnected nature of growth. Ironically, such growth is largely the product of capitalism.

    Thus, a better system (capitalist or otherwise) should recognize and construct channels to better reward interactions while not ignoring individual effort. Such a system should also recognize the interconnected nature of issues (e.g. crime, deviance, the family) and grapple with them collectively.

    “Handling one societal problem often unearths a couple more.”

  6. 12 Anonymous 27 June 2011 at 11:28

    You can probably see capitalism as an extreme form of evolutionary biology where it rewards the “fittest” (defined in a very narrow sense).

    The problem I am grappling with is whether this is the pinnacle of evolution or is there a further step where we humans can see beyond our puny lives and accept a greater good.

    Perhaps in another few thousand years, if we still exist and not self destruct thanks to our wanton greed.

  7. 13 Rajiv Chaudhry 4 July 2011 at 23:26

    Finally got around to watching the video in its entirety.

    A very well made documentary but journalistically poor because the Chicago school is never given a chance to respond to the charges against it. Were its prescriptions dispensed in full in Latin America by the Generals in charge? We are not told.

    Ms Klein’s basic point, however, that history does not advance smoothly but lurches from crisis to crisis holds water at least in the case of India. India was shaken out of 50 years of self-imposed autarky by a near default in 1998 which forced it to dismantle its infamous “licence Raj” and other socialist era poicies. This freed the economy and set it on the path to spectacular growth over the next 20 years. Ironically, the success of the first round of liberalisations has prevented further much needed reforms from taking place and Ms Klein would probably argue that India needs another shock to really set it on the path to high growth comparable to that of China’s.

    Perhaps what Singapore too needs is another jolt, comparable to expulsion from Malaysia which gave its economy its first impetus, to bring about much needed reform.

  8. 14 Poker Player 5 July 2011 at 12:36

    “India needs another shock to really set it on the path to high growth comparable to that of China’s.”

    I think post-colonial India is seriously under-rated. Inertia (and exactly not having shocks) is a saving grace for countries with 1 billion people. India arrived in the new millenium without having starved and persecuted millions of its own people through sheer pride and vanity. There is something to be said for slow and steady. And we don’t know how the China roller-coaster ride will end.

    Government should be like the Hippocratic oath – first, do no harm.

    • 15 sieteocho 6 July 2011 at 22:56

      Our government has always been founded on the principle, “you can’t make omelettes without breaking a few eggs” (even though admittedly this is true some of the time.)

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