Close-ups of capitalism gone awry

THE SHOCK DOCTRINE: THE RISE OF DISASTER CAPITALISM

By Naomi Klein

Metropolitan Books, 576 pages, $27.50

SUPERCAPITALISM: THE TRANSFORMATION OF BUSINESS, DEMOCRACY, AND EVERYDAY LIFE

By Robert B. Reich

Alfred A. Knopf, 288 pages, $25

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If world politics of the last 35 years is an interest, Naomi Klein's The Shock Doctrine: The Rise of Disaster Capitalism is a must. The disasters of the title are occasionally of the natural variety--the Canadian journalist notes that the year before the death of economist Milton Friedman, privatization's most prominent advocate, he made his last foray into public policy with a considerably successful call for dismantling the New Orleans public school system in the aftermath of Hurricane Katrina--but mostly the disasters are manmade. From the economic "shock treatment" imposed upon Third World and ex-communist countries to the "shock and awe" of the American assault on Iraq, Ms. Klein traces what we might fairly call a worldwide capitalist counterrevolution beginning with Gen. Augusto Pinochet's 1973 overthrow of Salvador Allende's democratically elected Socialist government in Chile.

U.S. government and business' glee over the coup against President Allende was obvious long before full public revelations of the depth of their involvement in it, but there were probably few individuals more pleased with the way things worked out than Professor Friedman. For 20 years, U.S. taxpayers had been unknowingly underwriting the training of Chilean economists at the largely free-market University of Chicago Economics Department where Dr. Friedman taught. The Chilean economists' U.S. education was supported through grants from the predecessor agency to the U.S. Agency for International Development. But the trainees had met with little success in influencing democratic Chile upon their return home. Gen. Pinochet, on the other hand, would make one of them, Sergio de Castro, his economic minister. Ms. Klein reports that de Castro "observed that an 'authoritarian government' is best suited to safeguarding economic freedom because of its 'impersonal' use of power." And Dr. Friedman would fly to Santiago in 1975 to personally lobby the new dictator on "the idea of a shock treatment" for the economy.

With facts like this, Ms. Klein challenges "the central and most cherished claim in the official story--that the triumph of deregulated capitalism has been born of freedom, that unfettered markets go hand in hand with democracy," arguing instead "that this fundamentalist form of capitalism has consistently been midwifed by the most brutal forms of coercion." Seeing this variant of capitalism as something of a mirror image of the Stalinist version of socialism, she doesn't find it surprising that undemocratic "communist" China has turned into "the sweatshop of the world." Citing Chinese interpretations not generally found in the American media, she maintains that the "crisis of layoffs" resulting from free-market reforms were central to the 1989 Tiananmen Square demonstrations.

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She also reminds us that before billionaire financier George Soros brought Harvard economist Jeffrey Sachs to Poland to promote economic "shock therapy" there, Lech Walesa, leader of the Solidarity organization that had trounced the communists in the 1988 elections, had held out the hope of something "better than capitalism, that will reject everything that is evil in capitalism." Professor Sachs, of course, could have done little to help Solidarity effectuate its original platform of worker ownership even if he had wanted to. But privatization he could do, as he had demonstrated in Bolivia where his drastic "free market" reforms would ultimately lead, Ms. Klein points out, to the rise of coca farming, for the production of cocaine, as an alternative income source.

Ms. Klein's facts may all be found in the mainstream American press, but her interpretation of them will not be. Former U.S. Secretary of Labor Robert Reich, on the other hand, writes entirely within the American political vernacular. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life has little of the depth of Ms. Klein's book, but then much of what lies within her scope might be considered irrelevant in the realms Mr. Reich may hope to influence. And if you want an interesting collection of facts about recent developments in the American economy, Mr. Reich is your man. He waves at concepts like capitalism, socialism, communism and social democracy, but really just wants to get on with the real point of his book, the impact of the deregulation of the American economy, which has seen the top 1 percent of the population double its share of national income from 8 percent in 1980 to 16 percent in 2004, while the $90 billion family fortune of Wal-Mart founder Sam Walton nearly matches the $95 billion combined wealth of the 120 million Americans who constitute the bottom 40 percent of the population.