The windfalls after the storm

By the time The Shock Doctrine lands on your desk, it’s hard not to feel suspicious. Seven years after her bestselling No Logo, Naomi Klein’s latest book promises to expose how natural disasters and political crises across the globe have been exploited by a cabal of secret operatives seeking fresh slates to introduce draconian financial measures of the variety championed by the late, great Milton Friedman.

From Chile to Bolivia, to Russia, one finds the legacy of Friedman’s economic shock therapy, the idea that sweeping economic changes are best imposed when citizens are reeling in the aftermath of a crisis: a coup, a natural disaster, a terrorist act. In Friedman’s own words, ‘Only a crisis, actual or perceived, produces real change.’

The sentiment leads to Klein’s idea of disaster capitalism, defined as ‘orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities’. In other words: chaos is lucrative.

The first reason you feel suspicious is that her thesis is hardly new. One of Marx’s main insights is that capitalism feeds on its own contradictions — something he thought would eventually lead to its self-destruction. At the opposite end of the political spectrum, the idea that economic and political crises provide market opportunities has always been manna to City workers.

Wall Street trader turned philosopher Nassim Nicholas Taleb’s Fooled by Randomness, hailed by Fortune as one of the most brilliant books of all time, is basically an extended jab at the cautious dullards who grow paralytic during times of crisis, and don’t realise that now is the time to really start buying and selling. Obviously the hedge-fund managers alleged to have made about six billion pounds shorting Northern Rock stock took note.