To some shock is hell, to others a kindly mother. Part one

22:27 10.06.2010 • Armen Oganesyan , Editor-in-Chief, International Affairs

Not so long ago in Moscow bookstores, Naomi Klein's book "The Shock Doctrine. The rise of disaster capitalism" appeared. Its author is a well known Canadian journalist, who has been published in major journals, such as: "New York Times", "The Guardian," "Harper's Magazine" and the Canadian "Globe and Mail". However, fame came to her not only through newspaper articles, but from the book “No Logo. People Against brands," which in its time has been translated into 28 languages, including Russian and millions of copies have been published.

Ms. Klein is cannot be described as antiglobalist, Marxist or Trotskyite. But as noted by the famous actor and director Tim Robbins, "The Shock Doctrine," is such an important and revealing book that she could become a catalyst for a turning point, the starting point in the movement for economic and social justice. "

One chapter of the book is called the "The beastly fangs of capitalism," but the author criticizes only one of the latest doctrines, namely, the "Chicago school of economics" without bypassing Marxist economic theory.

"Marxists offered utopia to workers, and the theorists from Chicago offered a utopia for entrepreneurs, and both directions argued that, if these ideas are implemented, society will reach perfection and balance." To achieve this, they both suggested starting with a "clean slate." For Marxists, the cleaning agent has been revolution. For the "Chicago School of shock therapy" it was necessary to clean the market from the participation of the state in all its manifestations, leaving behind to the state only the role of policeman, the "night watchman." There are no fixed prices, no minimum wage, private education, and extreme cuts to all sorts of social benefits.

Because of this, the Chicago economists, according to Ms. Klein, didn’t view Marxism as the main enemy. "The real source of problems for them were the supporters of Keynes in the United States, the Social Democrats of Europe,” and a number of Latin American countries, who sought independence through a targeted national economy and social development.

The author believes that for both the Marxists and the Chicago-based models of Milton Friedman, the ideal condition for their realization is the implementation of a totalitarian regime. In the first case, it provides for a "dictatorship of the proletariat", and in the second, the "dictatorship of capital." In this sense, the historical parallels which are drawn by Ms. Klein are of special interest. For the author, it is symptomatic that the ideological doctrine of the "Chicago boys" first came to power under the "guise of Pinochet‘s bayonets in Chile," after “Milton Friedman’s fateful visit to the country in 1975." At the same time, as the author notes, the newspaper "New York Times" asked a simple but painful question: "If the pure Chicago economic theory can be carried out in Chile exclusively at the cost of repression, should its authors not feel some responsibility for what is happening?"

However, there was a voice crying out in the wilderness, who was an ardent admirer of the "Chicago School" and its founder (who would have thought!). Sir Donald Rumsfeld himself, former U.S. Secretary of Defense, "hero" of the Iraq war, said: "Milton [Friedman] is the living embodiment of truth!” Following the precepts of his teacher, Rumsfeld tried to do everything to" zero out "the situation in Iraq to a" clean slate "on which, of course, were drawn the interests of the major American companies, not the Iraqis.

However, why are we talking all about Chile and  Iraq ... Perhaps for us the most interesting pages of this volume contains a story about the use of "shock therapy" in Russia.

The background to the sad story as presented by Ms. Klein goes something like this: Gorbachev managed to do something "completely unheard of - to conquer the American public, denying caricatures of an "evil empire. “Gorby" won himself recognition from "Time" magazine, as Person of the Year 1987. In the eyes of the West, under Gorbachev’s leadership, "the press was free, the president and vice president and local councils were chosen by a vote, and the Constitutional Court received independence."

But Gorbachev chose the path of Keynes, that is, thinking about "a mixed program with elements of the market and social protection." However, the main industry of strategic enterprises and industrial associations, he wanted to keep under society’s control. According to Gorbachev, the implementation of the program was to take 10-15 years. He underestimated at least one factor, the influence of the "Chicago School" in the world of modern capitalism. Gorbachev had a clear passion for the Scandinavian social democratic model, where all of the ideas of social welfare and social contract hated by the “Chicago Boys” remained the unquestioned foundation of society.

It would seem that the Scandinavian model of development chosen by Gorbachev was to please everybody in the West. In Prague, Gorbachev said that "as climbers use one rope, the peoples of the world can either climb to the top together or fall together into the abyss."

According to Klein’s estimates, the "Chicago School shock therapy" had "to forcibly abort the peace process and the process of encouragement initiated by Gorbachev, and later completely abandon it." In 1991, at a meeting of the "Big Seven," Gorbachev personally felt the full force of the "shock therapy." The heads of the leading nations of the world made it clear that "if Gorbachev did not address the radical" shock therapy "of the Soviet economy, they would simply shorten the rope, and the Russian climber would fall into the abyss.”Their proposal for the speed and method of method of change shocked me," said Gorbachev, recalling the events of those years.

This created a paradoxical situation. M. Gorbachev presented himself as a man of democratic reform, in which for the first time the words "glasnost" and "perestroika" were heard in the Soviet Union, which was enthusiastically applauded abroad. On the other hand they put pressure on him, pushing him completely in the opposite direction. Gorbachev, according to Ms. Klein, understood that to "apply the shock therapy” which the leaders of the" Big Seven "and the International Monetary Fund demanded, was only possible with a single tool – the use of force."

The West called upon Gorbachev to become a "strong man." The "Washington Post" in August 1991, on the eve of the August coup in Moscow, published a noteworthy article entitled "Chile under Pinochet: a pragmatic model for the Soviet economy." And the magazine "The Economist" even titled their article "Mikhail Sergeyevich Pinochet." "The climbing partners" were remarkably short-sighted. In the Soviet Union, millions of television viewers watched at the time the tragedy of the fascist coup that led to the tragic death of Salvador Allende and Pinochet's reign. If Gorbachev, for even a moment was to be associated with this odious figure, then the days of his political career would be numbered. Feeling Gorbachev’s confusion, the West, and especially Washington, began to look for a man who could crush the resistance to the economic revolution in the spirit of the "Chicago School."

"And soon after that,” says Ms. Klein, “Gorbachev was faced with an opponent who was eager to play the role of a Russian Pinochet." That became Boris Yeltsin...

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