What shock doctrine?

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Far from being the Marx of the twenty-first century, Naomi Klein is a conspiracy theorist whose work depends on a partial reading of history and offers no constructive vision.

Leon Trotsky once said ‘war is the engine of history.’ He was half right. The violence, chaos and confusion of armed conflict does indeed frequently result in extremely rapid social change. Trotsky had seen the Russian monarchy swept away and a communist regime erected in its place because of the carnage of the Great War. Where he was wrong was to suggest that it was only war that could cause this kind of change, when any kind of upheaval, be it natural disaster, economic collapse or industrial conflict is capable of changing a nation beyond recognition. Look at any significant change in the course of history and it will invariably involve a crisis of some kind.

This is not something Naomi Klein seems to understand. She looks at the fact that the forward march of the market is linked with a series of ‘shocks’ and sees not a historical fact of life but a conspiracy. She believes that followers of Milton Friedman (who she considers fundamentalists) have ruthlessly exploited shocks like Hurricane Katrina, 9/11 and the 1973 Chilean coup to force their view on the world. Furthermore, she suggests that Friedmanite policies can only be fully implemented in an authoritarian state. Hardly any of this stacks up.

Crises do not necessarily bring about a reduction in the size of the state. Without the trauma of World War II we would probably never have had an NHS. Without the Great Depression we would never have had Keynesianism and New Deal liberalism. Miss Klein is herself part of a political movement that has its roots in the upheaval caused by the Vietnam War.

Should you use crisis to further your political ends? Klein appears to believe that you should not but confuses the point by unhelpfully eliding the actions of the Friedmanites with people profiteering from tragedies. One is clearly reprehensible, the other is more debatable. If we focus only on people using crises for what they perceive to be the interests of society rather than their own, then Klein has a problem. Is she seriously suggesting that the world would be a better place if Millicent Fawcett had decided in 1917 that because of the war in Europe now was not the time to get women the vote or if Keynes had decided that it was unfair to use the backdrop of the depression to propose his new economic theory? ‘Making the best of a bad situation’ is normally considered a virtue not a vice.

To characterise Friedman as a fundamentalist is a bit of stretch. He is willing to support a large number of measures to support the poor such as state funded schools and a negative income tax. Market fundamentalists do exist but they tend to be marginal figures like Murray Rothbard and Ayn Rand rather than the architects of Machiavellian conspiracies on a global scale.

Klein’s association of the market with violence and oppression does not stack up. By its very nature a market economy is less violent than its socialist alternative because it relies on voluntary co-operation rather than the coercive power of the state. The example that Klein relies on for this particular argument is the Pinochet regime in Chile, which is comparatively unusual. This is to my knowledge the only case where a regimes move from a command to a market economy has been accompanied by a significant increase in political violence. By contrast the construction of a command economy has hardly ever been achieved by a liberal democracy; it is almost invariably a product of dictatorship.

Probably the biggest problem with Klein’s work is that for all her evident passion and eloquence, she seems to have no interest of any kind in proposing a positive alternative to the market economy. An article in the Economist describes this flaw rather well:

“What is the superior alternative to capitalist development that Ms Klein proposes? She feels under no obligation to say. It is not her job to dictate to the movement. The most she can do, in all modesty, is to offer indications and observations; the people, thus empowered, must do the rest…Certainly, Ms Klein is for justice, “deep” decentralised democracy (not the false kind currently practised), autonomous spaces and diversity of every kind. All these things can presumably be reconciled with the ambitious goals she would doubtless wish to see pursued in welfare spending, environmental protection and income redistribution—aims which, on the face of it, call for a high degree of centralisation and some reduction in the amount of autonomous space—but readers and listeners are never told how this contradiction might be resolved.”

Klein's work gives a very distorted picture in which all the evil in the world is done at the bidding of Milton Friedman and the dubious record of her own side is never examined. It is ultimately a source of heat rather than light; making people angry but not suggesting what they should do about it. To use another Trotsky quote it is time to send the shock doctrine to the 'dustbin of history.'

My Unlikely Hero

I am perhaps an unlikely admirer of Milton Friedman. As a general rule, nice centre-left Liberal Democrats do not sing the praises of Margaret Thatcher’s second favorite economist. However, I feel that he has been much maligned and too often dismissed by people who would actually find that they agree with him on most issues. This is probably because the popular image of him is almost completely false. The heartless conservative who sides with the haves over the have nots and backed Pinochet’s dictatorship simply did not exist.

Many people forget that Friedman was far from being a standard conservative, who fights tooth and nail for their freedom to make ‘loads of money’ while trampling on the rights of foreigners and non-conformists. His commitment to socially liberal causes was beyond reproach. He was an implacable opponent the practice of drafting young men into the military, which he believed was nothing less than a form of slavery. He devoted more time to campaigning on that issue than other and considered his role in bringing it to an end to be his greatest achievement. He is also one of the few prominent public figures to break the greatest public policy taboo of all and call for an end to the prohibition of drugs. Many self proclaimed ‘radical’ politicians have proved unwilling to take such a controversial stance and it is to Friedman’s credit that he was willing to be so honest about such an inflammatory subject.

Nor as is often supposed was he unconcerned with the plight of the poor. As the child of a poor immigrant family he was all too aware of the grim reality of a life for the ‘have nots’. But far from making him into a socialist, this experience made Friedman an even more fervent supporter of capitalism. He contrasted the mass affluence enjoyed by most people in the West with the grinding poverty that most Soviet citizens endured. Joseph Schrumpter’s view that ‘The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls’ was one that Friedman would undoubtedly have shared.

One of the least considered but most influential parts of Friedman’s writing, were his forays into social policy. He gave considerable thought to trying to find ways to help the poor without disempowering them. His prescriptions have been followed by a wide and often surprising range of governments. His idea of using the tax system to pay benefits was adopted first by Clinton’s Democrats and then by Gordon Brown in the form of tax credits. These credits have boosted the incomes of millions of poor families and helped thousands to get into work. Friedman’s plan to give poor parents vouchers with which to buy schooling for their children was to see its most faithful adoption not as you might expect in the US, Hong Kong or Chile but in social democrat Sweden. This scheme has gone a long way towards making the Swedes one of the best educated nations on earth.

Probably the cruelest myth about Friedman is that he was a supporter of Augusto Pinochet’s brutal Chilean junta. The repression that the regime engaged in was anathema to Friedman and he said so repeatedly. True, he did provide advice on economic policy to the Chilean and delivered a series of lectures n Chile while Pinochet was still in power. But he had given the same lectures and offered the same advice to the Chinese government. I doubt anyone would claim that this made Friedman a communist.

Friedman can be seen at his best in the enormously influential TV series, Free to Choose: http://www.ideachannel.tv/

A fuller account of his life is provided by Samuel Brittain: http://www.samuelbrittan.co.uk/text262_p.html

Friedman was a great economist, a great thinker and a great liberal and his work deserves attention from the left as well as the right.