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(Please welcome in the comment section author Naomi Klein — jh)

The political impulse to take advantage of social upheaval in order to implement unpopular policies that a citizenry would otherwise fight against seems to be throughout history a rather intuitive one. In The Shock Doctrine, however, Naomi Klein looks at how Milton Friedman and “The Chicago Boys” — fundamentalist free marketeers whose orthodoxy was incubated under Friedman at the University of Chicago — codified it into economic writ:

[Friedman] observed that “only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”

Those who remember the hasty passage of the Patriot Act and wondered at how the government could suddenly disgorge a tome of civil rights-infringing legislation the size of the Manhattan phone book only weeks after 9/11 and then proceed to bludgeon members of Congress into voting for it in the name of combating terrorism will find the blueprint achingly familiar. If Ronald Reagan was the original White House prophet of Friedman’s views, George Bush has been its most devoted acolyte. Just as many bloggers have long argued, Klein also posits New Orleans was allowed to fester in the wake of Hurricane Katrina not because of cronyism and incompetence but by design, in order to facilitate what Klein refers to as “orchestrated raids on the public sphere” — privatization of assets such as school systems and civic spaces that the public has decades’ worth of investment in.

But according to the revisionist economic history that Klein paints throughout the book, enabling rapacious corporate greed across the globe has been a doctrine embraced and enabled by administrations of both parties. It was Bill Clinton after all who supported Boris Yeltsin with $2.5 billion in aid even as Yeltsin issued a decree abolishing the constitution and dissolving the parliament — and then proceeded to auction off everything of value in the country to the oligarchs at bargain-basement prices. And Rahm Emanuel’s recent bill to militarize and privatize the US/Mexico border is little more than another corporate boondoggle, fueled by fear that the bogeymen are going to eat the babies unless we ascent.

Along with her historical narrative of the exploitation of economic shock across the globe, Klein weaves a tale of torture — the literal “physical” shock applied to a populace unwilling to accept the economic bullying of Chicago school economists, military dictators, the IMF and the World Bank, the CIA and the US government acting as agents of vulture capitalists preaching the doctrine that free markets and democracy go hand in hand. It doesn’t take much perspicacity when looking at the histories of Chile, Bolivia, Argentina, Indonesia and the former Soviet Union to see that the connection is hardly axiomatic. The thread she weaves between economic and physical shock, however, is probably the book’s most tenuous, and the latter gets dropped throughout much of the book — not so much because no connection exists, but rather one senses because there is so much material to manage it becomes difficult to juggle both narratives at once.

Particularly compelling is Klein’s sketch of the “disaster industrial complex” that has driven so much of the economy under the Bush administration, who flogged the “war on terror” in order to liberate the public coffers. While Wall Street speculators financed the dot com boom of the 90s, it is the American taxpayer who has picked up the tab for the new corporate robber barons:

By early 2006, this informal exchange had become an official arm of the Pentagon: the Defense Venture Catalyst Initiative (DeVenCI), a “fully operational office” that continually feeds security information to politically connected venture capitalists, who, in turn, scour the private sector for start-ups that can produce new surveillance and related products. “We’re a search engine,” explains Bob Phanka, director of DeVenCI. According to the Bush vision, the role of government is merely to raise the money necessary to launch the new war market, then buy the best products that emerge out of that creative cauldron, encouraging industry to even greater innovation. In other words, the politicians create the demand, and the private sector supplies all manner of solutions — a booming economy in homeland security and twenty-first-century warfare entirely underwritten by taxpayer dollars.

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Part of the problem is that the disaster economy sneaked up on us. In the eighties and nineties, new economies announced themselves with great pride and fanfare. The tech bubble in particular set a precedent for a new ownership class inspiring deafening levels of hype — endless media lifestyle profiles of dashing young CEOs beside their private jets, their remote-controlled yachts, their idyllic Seattle mountainside homes.

That kind of wealth is being generated by the disaster complex today, though we rarely hear about it. According to a 2006 study, “Since the ‘War on Terror’ began, the CEOs of the top 34 defense contractors have enjoyed average pay levels that are double the amounts they received during the four years leading up to 9/22.” While these CEOs saw their compensation go up an average of 108 percent between 2001 and 2005, chief executives at other large American companies averaged only 6 percent over the same period.

In 2003, Klein reports that the Bush administration doled out $327 billion in private contracts, “nearly 40 cents of every discretionary dollar.” Given the fact that so many of these contracts have been awarded in non-competitive situations with incentives built in to spend as much as possible with virtually no penalties or oversight, those who want to chide Klein for not raising her pom-poms higher and acknowledging the benefits of free market capitalism would do better to note that none of the inherent checks and balances of a truly “free market” are in place here. Rigging the system to give as much money away to your buddies as possible — to the exclusion of those who could possibly do better for cheaper — would more accurately be described as “organized crime.”

Reading the book I was struck with the impression that if we are lucky enough never to have to utter the words “President Giuliani” and don’t have to spend the ensuing years trying to keep the Middle East from being reduced to a sheet of glass, these are the corporate-friendly forces of globalization that we’re going to have to be fighting in order to stem the transfer of wealth in this country into the hands of a few elites while more continue to drop below the poverty line. It’s an extraordinary perceptive and influential book that changed the way I look at politics and the world, and it does end on a hopeful note — eventually the shock wears off and people do start fighting back. I’m looking forward to that impulse gathering momentum within American populist politics as we anticipate the 2008 election and beyond.

Please welcome to the FDL Book Salon Naomi Klein.