Archive for the ‘Economy’ Category

Shock Doctrine: a review

June 19, 2010

This Saturday evening, I went to see “The Shock Doctrine”, here in the Filmfoyer in Tilburg (1), a documentary based on Naomi Klein’s book of the same title. It was a worthwhile experience. The move is a clear exposition of how the neoliberal version of capitalism came to dominate many parts of the world, the harm this capitalism is doing, and both the possibility and the necessity of resistance.

The story is built around a lecture Naomi Klein is giving. We see her speak clearly, for a short while. Then we are taken out of the lectuere hall, to be shown the realities that illustrate her story. These realities – footage of psychological experiments, coup détats, wars, enonomic disasters, with explanatory comments – take up the bulk of the film. But again and again we are taken back to the lecture hall, and in this way we are reminded of the the function of all the footage: illustrating the talk by Naomi Klein, the argument she is making.

The first episode is about medical-psychological experiments in the US, later taken over by the CIA: people are made into a kind of mental blank, which makes it possible fo fill the mind with an endlessly repeated message. We see one of the victims of this shock treatment, for this is literally what it is. This is, as it were, the metaphoric message of the whole movie: you shock people into accepting things they would not otherwise tolerate.

Then we get to the essence of the movie: neoliberal economics conquers the world. Enter Milton Friedman, economist, an outsider in the Fifties, with his strange message of privatisation, free markets, dismantling state protection. However, his kind of policies came to dominate many parts of the world. The way that happened is a road full of violence.

For instance, violence in Chili. There, social protections became part of society during the sixties of the twentieth century. A left wing government was elected into office in 1970. The US government did not like it, a military coup ubnder Pinochet took over, torture an death were imposed upon people who resisted, trade unionists, leftists. What policies were imposed by the new gevernment? Naked neoliberalism, leading to more poverty and unemployment. Who advised the government? Milton Friedman and people who had been his students. A similar military victory for neoloberalism happened in Argentine. In Britain and the US, similar economic policies were imposed by right wing giocvernments under Thatcher and Reagan.  We see vivid pictures of the resistance Thatcher’s government provoked in Britain. After the fall of the Berlin Wall, especially Russia became the victom of a ferocious experiment in imposed l neoliberal free market fundamentalist policies.

Again and again we are made aware of how a shock – military couop, in Thatcher’s case a war with Argentine about the Falklands – waused to shock the popular tion, after which a new dose of neolobaralism follows. The same happened in 2001 after nine- eleven, the terror attacks. Wars against Afghanistan and Iraq followed. In Iraq, the US occupation impsed far-going privatisation, war profiteering through contractors, the dismantling of large parts of the state and the civil service. The shock of war was followed by the ‘therapy’ of neoliberalism. Then there was ther tsunami in Asia, and the hurricane Katrina in New Orleans, used in a similar way: Sri Lankan people preventing afterwards to return to their places of living on the coast, to make room for luctrative sale of coastal areas, for instance.

Ans so it went, again and again. But Klein leaves us with messages of hope. Near the end of the movie, the women hathat endured the shock experiments in the Fifties, was shown again. W She had forced the government to recogbnise the wrong that she had to suffer. A small but significant, of which she was righly proud.

The end of the movie was significant as well. Klein told an anecdote about president Roosevelt – whole New Deal was part of the trend to welfare capitalism which later was replaced by the neoliberal victories . She told how a progressive gropup once visited Roosevelt and made a proposal. The president listened, and then said, in essence: “Now go home, and force me to do it.” She mentioned how many strikes there were in the year 1937, under Roosevelts presidency: a good way to indeed forcefully bringing about change. The message: things change if we don’t wait for politicians, but move ourselves, take action, and  make things change. The movie ended with sounds of what must have been a large demonstration. The slogans were audible. I heard the familiar : “A-Anti-Anticapitalista!”

The move leaves a strong impression, and is well worth watching. This review does onluy mention parts of the threads Klein is weaving to make her argument. There are weaknesses in her analysis, however. I think Klein is a bit too positive about the welfare capitalism that went before neolaiberal capitalism, too positive for instance about Roosevelt and his New Deal, and maybe even under the illusion that we should return to something like that. I think we deserve better.

Her sketch of the dominance of neoliberalism is clear, but her explanation is not totally convincing. She makes it seem as if the victory of neoliberal doctrines, its march from a small currency in economic science to dominant ideology from Britain to Chile, is a product of clever peoplen in high places conspiring cvery affectively. There is, however, much more to in than that. At the root of it is the fact that the economic model of the Fifties – let’s call it welfare capitalism – suited the capitalist class very well in those years. Relatively high wages and a system of sopcial benefits meant hign consumtion, high sales and high profits. This was well worth the relatively high taxes and relatively strong trade unions that came along with it, as far as most capitalists were concerned .

However, this system entered into crisis of profitali bility, partly because of overproduction and unsaleable products, partly because the working class became to strong. Capitalist circles were in need for a restructuring of the economy that weakened the working class and restored profits. Neoliberalism offered a way to do it. That is why a doctrine that was marginal in 1951 became hegemonous from the seventies onwards. This is the kind of background that is needed to understand the shift that Klein sketches in the, otherwise very valuable, documentary “The Shock Doctrine”.

(1). Thanks, Riekie and Ardin, for taking me along 🙂


Scary and hilarious at the same time

July 15, 2008

Basially, it is sary, very scary. But it has its funny, even hilarious side as well. i am talking about the eonomy -an eonomy enteringa severe recession, if I interpret the signs correctly.

Some of those signs: stock exchanges are almost in free fall. London loses 2,49 % today; Frankfurt and Paris lose more than two % as well. Asia: same story basically. Hong Kong donw 4 %, Japan 2 %, China 2 % (BBC, 15 july). In Britain, talk is now of impending recession. Consumer prices have risen 3,8 %, the highest inflation rate since 1997. Inflation is expected to rise even higher, to above 4 %. This means that the Bank of England is not inclined to lower rates. Lowering rates – the way to make lending-for-investments cheaper – is what central banks are supposed to do to encourage economic activity. But it also tends to encourage inflationary tendencies. “Rate cuts are looking much less likely”,  accoording to Ross Walker, an economist connected to the Royal Bank of Scotland Group ( International Herald Tribune , 15 July).

The recession is connected to the crisis in the housing market. Cheap lending to encourage people to buy their own house hase gone wrong, when too many people could nog pay back what they borrowed. That meant people losing their homes through repossession; it also meant banks getting in trouble because they did not get their money back. In the marxist sense, this is a crisis of overproduction: an overproduction of credit, as it were. But credit is connected with all kinds of economic activity, one bank in trouble can pull down other companies. The crisis in the banking sector is flowng over into what looks like a rather serious recession.

What makes the world economy more vulnerable is the steep rise in oil prices. Last week, the price of a barrel of crude oil reached 147 dollar. This means a price rise of 50 % in 2008 alone. Car drivers are paying the price, transport costs are rising, peoplecan look forward to high heating bills coming  winter (Aljazeera, 12 july). The threat of general inflation will become even more serious this way.

Meanwhile, companies are reacting to economic trouble in a very familiar and very anti-social way. Siemens, for instance, the big automobile company in Germany. “Against the backdrop of a slowing economy, we have to become more efficient”,  according to Peter Loescher, Siemens CEO. and that is why Siemens will cut 16,750 jobs, out of the 400,000 jobs in that company (Aljazeera, 8 July). Making workers pay for an recession that is the product of an economy over which these same workers have no serious say. That is the answer from above, from the company directors and big shareholders, supported by governments. When will we see a big company trying to become ‘more efficient’ by seriously cutting back on shareholders’ profits en CEO salaries and bonuses?

This all is scary. It means more unemployment, more people in financial troubles, more people losing homes. That is already scary enough. It means that there will be a need for collective resistance, for radical left wing answers, left wing forces uniting workers and other disadvantaged people in solidarity against lay-offs, wage cuts and so on. These left wing forces, however, are weak in many places, almost non-existent in oiothers. This is even more scary than the recession itself. For, where people get desperate, and the left isn’t there to offer hope, the fascist right may begin to fill that void. We better get our act together.

However, let us not stop smiling when we find a reason to smile. For instance, when the US government acts forcefully to save two lending institiutions, Fannie Mae en Freddie mac, both deeply introubled because of the problems in credits in the housing sector. Th government plans to buy stocks in both companies and is ready to lend momey to these companies as well (Christian Science Monitor, 15 July).

This shows how hollow are the neoliberal claims of ‘let the market do it’s job, and let the government stay out of the economy’. The money that is not there when it is a matter of supporting poor people, is readily available when it ios  a metter of corporate needs. As soon as it is a matter of saving big companies and the whole financial sector from collapse, we don’t see much free market liberalism. Instead, we see massive state support going to big corpaorations. Let us smile about this irony-coupled-with-hypocrisy. We will need all good cheer we can get in the troubled times ahead.