Archive for the ‘Naomi Klein’ Category

Capitalism: The Untold Story

Posted: April 20, 2011 by snoussik0 in Naomi Klein

Capitalism Vs. Socialism (source: http://www.theworkzine.com)

By: Karim Snoussi

Today we live in a world of crises. We are witnessing economic meltdowns, disproportionate wars, surging food and oil prices, extreme poverty, and rising unemployment, which has sparked uprisings all around the globe. With the recent protests in North Africa threatening to spill over to the Middle East, economists are predicting skyrocketing oil prices that could contribute to a much deeper depression of world economies. Some people blame the current economic crisis on the Bush administration’s mishandling of wars and budget mismanagement, others blame it on wall street’s Ponzi schemes that were fueled by greed. Other people think that this is just another cycle that the world economy, “based on capitalism,” is going through and, with time, the market is going to correct itself and everything is going to go back to “normal.” A number of other people are using this crisis to lay down the foundation for the argument that capitalism is a flawed system that is doomed to fail. Naomi Klein is a well-known social democrat activist and writer; most famous for her criticism of the Iraq war, Israeli policies, and big corporations.

Naomi Klein Book (source: http://www.tomsito.com)

In her book, The Shock Doctrine: The Rise of Disaster Capitalism, Klein describes the horrific events she witnessed during her visit to Iraq after the invasion. She is very critical of the privatization of Iraq’s economy as facilitated by multinational corporations. She affirms that capitalism is the cause of this corruption and unjust war, and she suggests that democratic socialism is the solution. In p. 569 of her book, she states, “Democratic socialism, meaning not only socialist parties brought to power through elections but also democratically run workplaces and land holdings, has worked in many regions, from Scandinavia to the thriving and historic cooperative economy in Italy’s Emilia Romagna region. It was a version of this combination of democracy and socialism that Allende was attempting to bring to Chile between 19870 and 1973.” In chapter 16, p. 328 of her book, Klein goes on to describe the US as a free-market capitalistic democracy, but is it? I argue that the United States is neither capitalistic nor a free-market. But first let’s define the two political systems, Socialism and Capitalism.

Bernie Madoff (source: http://www.politicolnews.com)

According to the encyclopedia of Britannica, Socialism is “a system of social organization in which private property and the distribution of income are subject to social control, rather than to determination by individuals pursuing their own interests or by the market forces of capitalism. The term is also applied to to political movements whose aim is to put such a system into practice (Socialism).” I would also quote from Britannica that “Capitalism, also called free market economy, or free enterprise economy, is an economic system in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets (Capitalism).” Accordingly, socialism relies upon an organized power structure where the distribution of wealth and individual income is controlled. This control goes against the free-market and social individual freedoms. Therefore, we provide an environment for this social organization to breed corruption, greed, power, and control. On the other hand, capitalism strips the power away from the government and gives it back to people. It is a pure free-market system that allows the market to regulate the prices and production through supply and demand. According to the definition, if the economy is not a free market, it can’t be called capitalism. If the government proclaims capitalism or a different form of capitalism, it doesn’t mean it is the case. Stating the United States is a regulated capitalist system, it does not abide with the definition and putting ‘regulated’ next to ‘capitalism’ is like putting ‘dictatorial’ next to ‘freedom’. I don’t believe a dictatorial free society can exist. Moreover, In a country that is free of corruption and its citizens are treated equally, capitalism does not allow for big corporations to emerge because there will be equal opportunity for companies to compete. Still, any system that goes unchecked will breed corruption. People have to always be politically active and make sure no one is above the law. Because capitalism calls for a small government, it is easier to control. In the case of socialism that calls for a central organization, it is much more likely for corruption to occur.

Klein is trying to make the argument for socialism while comparing it to our current economic and social system, which she calls “capitalism.” In fact, I believe the United States’ current economy is neither based on capitalism nor socialism nor a free-market. Although our leaders are suggesting that the economy is a free-market capitalism, they are not allowing it to function as a real free-market capitalistic system, due to regulations and wide spread corruption that enable the rich to get richer and the poor to get poorer. Now that we have all these regulations and the American government is bigger than ever, the top 1% of Americans own 34.6% of the wealth and the top 20% own a shocking 85% of the wealth, leaving 15% of the population with only 15% of the wealth (Domhoff). They have created a system that only benefits them and gave it the name, “free-market capitalism.”

There are multiple reasons why the United States economy is not a free-market capitalism:

The government regulates interest rates.

The government uses bailouts by taking the tax payer’s money and distributes it to private companies.

The federal reserve keeps printing money, inflating the dollar and driving commodity prices up (Brouwer).

The Federal Reserve dictates to the other banks what to do.

The government decides for the people what countries they should make business with.

The government signs free trade agreements such as NAFTA and CAFTA.

The government uses subsidies and tariffs.

— The Federal Government collects income tax, which was introduced until 1861 in order to fund the Civil War with a rate of 3% and has been rising since then. None of that money collected today fund any function of the government. It is collected by the IRS and directly transferred to the Federal Reserve Banking System to pay off the debt that was accumulated over the years (Terrell).

The list can go on and on. I believe that these interventions affect the cost of goods and services, and result in artificial prices. When people give the government power to control prices they cannot proclaim a free-market democracy, as Klein is claiming in chapter 16, p. 328 of her book.

Corruption Vs. Dictatorial (source: http://www.2politicaljunkies.blogspot.com)

In her book, Klein should not compare socialism as an ideology with the current system that she calls, “Capitalism.” She should either compare the United States, a self-proclaimed capitalist, with China, a self-proclaimed socialist; or compare capitalism with socialism as ideologies. As we can’t blame socialism for the genocide committed in the past century in countries such as Russia and China, we cannot blame capitalism for the wars and the financial crisis where the United States is responsible. Instead, I suggest we should stop pointing fingers at at different social systems because our societies function with neither of them and turn our focus on our corrupt leaders and elites. The divide and conquer tactic has long served them to the point where we live in a society divided on so many issues including race, class, gender, politics, economy, welfare etc… People should unite on one cause, which is to end corruption and make sure that no one is above the law. Perhaps Klein should have focused on the corruption that led to the war and not criticize any political system because our societies function with neither of them.

To show the extent of impunity that some politicians enjoy, here is one of multiple corruption cases in the government. If it wasn’t for corruption, Dick Cheney, former CEO of the world’s second largest oil services corporation, Halliburton, would have never become Vice President of the US. In turn, he would have never provided falsified intelligence information to Collin Powel that was used as a pretext to invade Iraq. According to Bloomberg Business Week, Nigerian government filed corruption charges against Cheney and Halliburton in early December, 2010 (Bala-Gbogbo). Later on, after pressure from the U.S. government, Nigeria agreed to drop the corruption charges in exchange for a $250 million settlement. It is important to point out that Iraq sits on the world’s second largest oil reserves. If there was true capitalism under just law, Dick Cheney would have never reached office in the first place.

Social Class (source: http://www.anti-capitalism.org)

In an interview with A.V. Club Klein suggested that the U.S. should nationalize its oil companies just like Saudi Arabia and Iraq. I believe further nationalizing the U.S. economy is going to lead to a catastrophe. If our government officials can’t run the government how can we trust them to fully run and manage companies? Aren’t the same people who head these multinational companies also running the government? Dick Cheney is one example, but there are multiple examples of deep ties between the government and big corporations. If these companies work under the law, they would have never reached the power and the excess of wealth that they enjoy today. Not only they enjoy impunity but also the full support of the government with policies such as ‘too big to fail.’ Nationalizing companies and handing them to a corrupt government is submitting to this organized power structure that has been leading the country into bankruptcy. Klein’s solution only facilitates more grip for the rulers on America’s wealth. The opposite should be done, more power to the people and less for the elite. No to the concentration of power in fewer hands.

Pointing fingers (source: http://www.artfire.com)

I believe we need to stop pointing fingers at different social systems because our societies function with neither of them. People are divided and while we are pointing fingers at each other our corrupt leaders are gaining more control of our institutions and our private lives. We need to stop dividing and start uniting against one goal, which is ending corruption and taking the corrupt ones to trial to set the example. The problem is not Free-market Capitalism since it has never been one in the first place; instead, it’s the anti-free market policies of the Federal Reserve and the Federal Government, along with corporate fascism.

Works Cited

Bala-Gbogbo, Elisha. ”Nigeria Withdraws Charges Against Cheney, Halliburton.” Bloomberg Businessweek. 17 Dec. 2010. 1 May 2011 <http://www.businessweek.com/news/2010-12-17/nigeria-withdraws-charges-against-cheney-halliburton.html&gt;.

Brouwer, Kurt. ”What Causes Higher Prices & Inflation?” Market Watch. 2 Feb. 2011. 1 May 2011 <http://blogs.marketwatch.com/fundmastery/2011/02/02/what-causes-higher-prices-inflation/&gt;.

“Capitalism.” Encyclopedia Britannica. 15th ed. 2nd vol. 1992.

Domhoff, William G. ”Wealth, Income, and Power.” University of California at Santa Cruz. Jan. 2011. 19 Feb. 2011 <http://sociology.ucsc.edu/whorulesamerica/power/wealth.html&gt;.

“Socialism.” Encyclopedia Britannica. 15th ed. 10th vol. 1992.

Terrell Ellen. ”History of the US income Tax.” Business Reference Services. Feb. 2004. 1 May 2011 <http://www.loc.gov/rr/business/hottopic/irs_history.html&gt;.

by Barry Talley

A woman searches for relatives among the bodies left in the courtyard of a hospital in Port-au-Prince. DAMON WINTER / THE NEW YORK TIMES

Within the context of terror, chaos, and confusion, an opportunity for profit has arisen. As stated by Naomi Klein in Shock Doctrine: the Rise of Disaster Capitalism, certain free market policies and their policy makers have seized these opportunities to push through their capitalist and political agendas while victims and their societies are in the midst of dealing with either man-made or natural disasters. Often these policies are meant to benefit a sector of the market such as land developers or specific industries and would not ordinarily have been possible if diversions had not occurred.

Klein states,

“Victims of these disasters are in the midst of “thinking about how to get drinking and bathing water for tomorrow,not whether a company wanted to privatize their water system and sell it back to them in a year. But these techniques don’t only work on individuals. They can work on entire societies. A collective trauma, a war, a coup, a natural disaster, a terrorist attack puts as all into a state of shock. And in the aftermath, like the prisoner in the interrogation chamber, we too become child-like, and more inclined to follow leaders who claim to protect us (Klein. The Shock Doctrine: The Rise of Disaster Capitalism).

Haiti has a long history of crisis, most man-made. Recurring military and governmental coups created governmental instability. Deforestation of the land, mostly used for fuel over the last two hundred years, has left only 2% of the indigenous forest (Malik.  A Country Study: Haiti). Mother nature has dealt the final blows.

On January 12, 2010, at 5PM, a massive earthquake struck the Haitian capital of Port-au-Prince. With a magnitude of 7.0, the natural disaster paralyzed an already beleaguered nation, awash in poverty and underpinned by a tenuous government. Looking forward to its first peaceful elections and transfer of presidential power in almost fifty years, there was a sense of optimism. When the earth had stopped shaking, all had changed. In the following days the death toll would exceed 300,000 and approximately 280,000 buildings and structures in the city would be destroyed. The earthquake left millions in the Haitian capital homeless and scared (Kurczy. Chile Earthquake Facts: Chile vs. Haiti in Numbers). Already suffering with a poverty level that exceeded 80% of the net population, Haiti, the poorest nation in the western hemisphere, was ill prepared to deal with the emergency response, political upheaval, and long-term financial blow that this event created.

The earthquake and its aftershocks were soon followed by an outbreak of cholera. With an unprecedented 12,000 non-governmental agencies delivering services in the small and easily accessible Caribbean country, how did such a treatable and easily controllable illness claim another 2,500 lives? Were the newly erected tent cities to house the millions of homeless with no access to treated water to blame? Even prior to the earthquake, only 12% of Haiti’s 9.8 million people received treated tap water (Karunakara. Haiti: Where Aid Failed).

Set up to help funnel and expedite the international donations and aid, The Interim Haiti Recovery Commission led by former President Bill Clinton and former Haitian Prime Minister Jean-Max Bellerive had been slow to allocate the billions of dollars of international aid to combat the impacts of the 2010 quake. In the commissions second meeting, goals were outlined which included clearing a million cubic meters of ruble in Port-au Prince. According to the commission  land needed to be cleared to meet long-range plans which included a re-invention of the Haitian public school system and agricultural development.

Over time, as international aid and donations continued to languish in the accounts of the respective aid agencies, questions started to be asked about the method of aid delivery and how it was organized. Most of the individual agencies fell under the supervision of the UN or US Aid and it was soon apparent that many, while having good intentions, did not have the capacity to meet the magnitude of the catastrophe.

So what has developed is a country of tent cities. Eighteen months and 5.3 billion pledged dollars later, the country is still in ruins. It is estimated that more than a million people are still homeless and have no permanent housing. The tent and shelter camps provided by aid agencies are overrun by roaming gangs of criminals, many of whom escaped when the National Penitentiary collapsed after the earthquake. Women and men in these encampments live in fear, and are often the victims of assault and rape (as stated by the New York Times. July 12, 2010).

The earthquake, poverty, and continued crisis has created an opportunity for social experimentation and engineering. The annual World Economic Forum, which ironically was scheduled for the week following the earthquake and attended by national governments, corporate leaders, and policy makers, reviewed a study that had been prepared to entice the business community to invest in Haiti. As a benefit, the authors of the study have proposed a reinvention of the education system which will provide an adequately trained “work force”, wage controls for low-cost production, a “cooperative legal system that reduces the opportunities for litigation”, and reduced exportation tariffs to incentivize industrial development ( World Economic Forum,2011). The World Bank has also decided to alleviate the Haitian government of its previously owed national debt  thereby reducing risk to international investors (The World Bank, 28th May 2010).

The natural disaster had “forcibly wiped out and erased all obstacles to the construction of a model corporatist state free from all interference” (Klein. The Shock Doctrine: The Rise of Disaster Capitalism). The reset button had been pressed by the earthquake. All that is needed is the policy maker to finalize the details and create the conditions and assurances that will allow for the corporate markets to move in and seize the opportunities.



Farmer, Paul. Plans and Benchmarks for Haiti.” The New York Times  29 August 2010. Web. 25 February 2011.

“Haiti Earthquake of 2010.” The New York Times 12 July 2010. Web. 15 February 2011.

Karunakara, Unni. Haiti: Where Aid Failed.”  Gaurdian UK  28  December 2010. Web. 12 February 2011.

Klein, Naomi. The Shock Doctrine: The Rise of Disaster Capitalism. New York: Metropolitan Books, 2008.

Kurczy, Stephen. Chile Earthquake Facts: Chile vs. Haiti in Numbers.” Christian Science Monitor.  2 March 2010. Web. 27 February 2011

Malik, Boulos A.  A Country Study: Haiti .Washington, DC : Federal Research Division, Library of Congress,  December 1989.

World Economic Forum in partnership with the World BankPrivate Sector Development in Haiti: Opportunities for Investment, Job Creation and Growth.   New York: World Economic Forum, 2011.Web. 12 February 2011.

The World Bank. World Bank Announces Total Cancellation of Haiti’s Debt. Washington, DC: The World Bank,  28 May 2010. Web. 27 February 2011