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Reveling in the Financial Crisis By: Cathy Young
Weekly Standard | Friday, March 27, 2009


Move over, Michael Moore: The new rock star of the left has arrived. She is Naomi Klein, a 38-year-old Canadian writer and journalist whose 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, was greeted with rave reviews and became an international bestseller. She has been hailed by British political philosopher John Gray in the Guardian and by Nobel Prize-winning economist Joseph Stiglitz in the New York Times. In February, she became the first winner of England's new £50,000 Warwick Prize for Writing. A long, mostly flattering, though occasionally skeptical profile in the New Yorker, published in December, called her "the most visible and influential figure on the American left--what Howard Zinn and Noam Chomsky were thirty years ago."

Klein's basic message comes down to this: Capitalism is evil, countless crimes have been committed in its name, and much of the foreign policy of the United States and its allies in recent decades has been driven by the twin forces of greed and free-market fanaticism. Even some people sympathetic to Klein's critique of free-market economic doctrine, such as Stiglitz, concede that her analysis is oversimplified. Clearly, her many admirers are not deterred.

The thesis of The Shock Doctrine is that, since market-oriented, government-cutting reforms tend to be highly unpopular, they can only be imposed by coercion and stealth; the marketeers' tactic is to either take advantage of a terrible crisis (natural disaster or war) or help create one, the better to impose their agenda on the lost and confused masses. Klein deduces this nefarious strategy from an uncontroversial statement by the late Milton Friedman in the introduction to a reprint of his book Capitalism and Freedom: "Only a crisis--actual or perceived--produces real change." Throw in Friedman's later comment that Hurricane Katrina, albeit "a tragedy," was "also an opportunity" to rebuild New Orleans's dysfunctional school system with more focus on private and charter schools, and there you have it: Champions of laissez-faire are ghouls who feed on human suffering.

Everywhere Klein looks, from the war in Iraq to the downfall of communism to the 1973 military coup in Chile to the tsunami in Indonesia, she sees this sinister pattern. And she sees something even more sinister: a link between the free marketeers' use of mass shock to tear down faulty institutions and remake society, and bizarre CIA-funded experiments in the 1950s conducted by psychiatrist Ewen Cameron--nicknamed "Dr. Shock"--designed to "unmake and erase faulty minds" by electric or drug-induced shocks and then rebuild the patient's personality. The free-market reformer and the torturer are spiritual twins.

Yes, this really is as kooky as it sounds. Klein's argument frequently lapses from standard left-wing polemic into sheer weirdness. Thus, she finds it telling that Guantánamo Bay detainees scheduled for release were allowed time in a room where they could watch movies on DVD, eat pizza and hamburgers, and "chill out." In Klein's reading, "that was actually the plan"--break the prisoners down through abuse, then fill their emptied minds with American junk culture and junk food. On a grander scale, Klein suggests that the Bush administration deliberately fostered chaos in Iraq after the invasion, since a smooth transition to Iraqi self-government would have inhibited privatization and other free-market reforms in the service of world corporate dominance--never mind that Klein herself acknowledges the eventual abandonment of many free-market reforms in Iraq.

Klein's grasp of economics is tenuous at best. She thinks corporate welfare is consistent with Milton Friedman's doctrines. She declares, in all seriousness, that Chicago-school laissez-faire ideology is uniquely prone to breeding corruption because it praises greed and self-enrichment. (One has to wonder if Klein has heard of public choice theory, which holds that excessive government involvement in the economy is bad precisely because, among other things, greedy officials are likely to promote regulations that serve their interests rather than the public good.)

Since its publication, The Shock Doctrine has been subjected to several withering critiques. Writing in the New Republic last July, senior editor Jonathan Chait, no fan of "absolutist free-market ideology," dismissed Klein's one-track polemic as "perfect nonsense." The most detailed analysis, by Swedish intellectual historian Johan Norberg in a Cato Institute briefing paper, uncovers numerous inaccuracies and distortions in Klein's tome.

Thus, Klein seeks to link Friedman to the dictatorship of Augusto Pinochet in Chile and to demonstrate that imposing Chicago School reforms was the real agenda behind the 1973 coup. But in making this argument, Norberg shows, she fudges the fact that economic liberalization was initially opposed by the junta and began only several years later.

Particularly devastating is Norberg's dissection of Klein's attempt to recast the 1989 Tiananmen Square protests in China as an anticapitalist uprising. In reality, the protesters' demands focused on political issues, particularly free speech; the participants included both supporters and opponents of market-oriented economic reform. Among Communist party elders, most of those who sent in the tanks to crush the peaceful demonstration opposed economic liberalization, which they blamed for the unrest--while the strongest supporter of market reforms, General Secretary Zhao Ziyang, was sympathetic to the protesters. (After the crackdown, Zhao was deposed and placed under house arrest.) While Klein portrays the Tiananmen massacre as a means of terrorizing the populace into submission to radical market reforms, Norberg points out that reforms were actually stalled for several years afterwards.

In September, Klein posted a response to her critics on her website--demonstrating in abundance the very sins that those critics have pointed out. Norberg charges that Klein cherry-picks data to support her claim that free-market reforms cause impoverishment; in reply, Klein cites more cherry-picked data on unemployment and poverty in several countries in various years. Both Norberg and Chait accuse Klein of lumping together her villains under the catch-all label "neoconservative." Klein retorts that she never applied this label to Friedman--and then goes on to quote a passage from her book that lumps together the Heritage Foundation, the American Enterprise Institute, and the Cato Institute as leaders of the "neoconservative" movement. Of course, Cato (where I hold an unpaid position as a research associate) is in no sense "neoconservative" and forcefully opposed the war in Iraq, which Klein sees as the ultimate application of "the shock doctrine."

Economist Anders Åslund of the Peterson Institute told me in an email exchange that Klein's "favorite trick is to take a brief quotation out of context and make it mean the opposite of what the writer or speaker meant"; and that, too, is on display in Klein's attempted self-defense. To back up her claim that NATO military action in the former Yugoslavia was intended primarily (you guessed it) to force the new nations of the Balkans to submit to Friedmanism, Klein calls as her witness former Deputy Secretary of State Strobe Talbott. In a foreword to a 2005 book on the Balkan crisis, Talbott wrote, "As nations throughout the region sought to reform their economies, mitigate ethnic tensions, and broaden civil society, Belgrade seemed to delight in continually moving in the opposite direction.??.??.??. It was Yugoslavia's resistance to the broader trends of political and economic reform--not the plight of the Kosovar Albanians--that best explains NATO's war."

If you're wondering how this proves Klein's point, the answer is that it doesn't. Obviously, Talbott is referring to the Milosevic regime's general rejection of Western values, among them ethnic diversity and political freedom; moreover, in the next paragraph he adds that "only a decade of death, destruction and Milosevic brinksmanship pushed NATO to act." Yet the mere mention of economic reform is enough to trigger Klein's monomania. Ironically, Talbott also points out that most leaders of NATO powers were not right-wing hawks but heads of "socially progressive, economically centrist governments"--an observation that reads like an eerily prescient rebuttal to Klein.

The Shock Doctrine's account of economic and political reform in Russia is a striking example of fuzzy facts and muddled thinking. In Klein's telling, nascent Russian democracy was sacrificed on the altar of the market--by Boris Yeltsin, when he shelled the rebellious Russian parliament to crush its, and the people's, resistance to his radical free-market reforms. Klein compares this event to Pinochet's coup.

There are a few things wrong with this narrative. First, at the time of the showdown with parliament in October 1993, Yeltsin was hardly a champion of radical economic reform: In December 1992, he had replaced his pro-market prime minister, Yegor Gaidar, with "centrist" Viktor Chernomyrdin, a career bureaucrat with strong links to the Soviet-era industrial sector who quickly began pumping money into moribund enterprises, causing hyperinflation.

Second, as to suppressing democracy, most Russians in 1993 supported their elected president over the parliament. Klein dismisses as "a propaganda exercise" a nonbinding referendum earlier that year in which voters expressed confidence in Yeltsin. Yet polls after the October crisis found that a strong majority of Russians blamed the violence either on the parliamentary leaders or on Communist/nationalist extremists; half approved of Yeltsin's use of force to restore order, while fewer than a third disapproved. (Opinion would shift in later years as Yeltsin's popularity plummeted.)

Klein's chronicle of the conflict itself is riddled with errors and evasions. She glosses over the fact that violence was started not by Yeltsin but by the parliament's defenders--who, she admits, included "proto-fascist nationalists"--when they attempted to seize the Ostankino television tower. Her main source, Russian left-wing activist Boris Kagarlitsky, tells her that "some people in the crowd were armed, but most were not." Yet a recent article in the Russian weekly New Times by journalist Yevgenia Albats--who agrees that the shelling of the parliament was a tragic turning point for Russian democracy--speaks of "a crazed mob armed with machine guns and rifles." Klein cites as fact a death toll of 500, without mentioning that this estimate is based on rumor or that the official figure stands at about 150. And while she dramatically asserts that "following the coup, Russia was under unchecked dictatorial rule," she throws in only as an afterthought that "civil liberties were soon restored."

There is no question that economic reform under Yeltsin fell far short of success. But Klein's depiction of a country raped and pillaged by a gang of Friedman Mini-Me's is ludicrously off base. It is true that, after the events of October 1993, advocates of free-market reform were brought back into the government--briefly. The two leading reformers, Gaidar and Boris Fedorov, quit in January 1994, and Chernomyrdin--who declared, "Market romanticism is over"--was back in charge. Privatization and price liberalization notwithstanding, Russia in the 1990s was very far from having a market economy. Private ownership and sale of land remained heavily restricted. Business was strangled by cumbersome, byzantine taxes and regulations, corrupt bureaucracies, and lack of effective protection for property rights.

That Russians suffered much hardship during the early 1990s is also undisputed. Yet Klein's analysis consistently downplays the extent to which hardship predated reform. Thus, the drop in life expectancy began under communism--except for a small blip in the mid-1980s, linked to a crackdown on alcohol consumption. Homelessness, which Klein portrays as a post-Soviet phenomenon, was widely discussed in the newly liberated Soviet press with the advent of glasnost in the late 1980s.

Klein's ultimate proof of the misery caused by privatization is that the number of people below the official poverty line in the Russian Federation rose from 2 million in 1989 to 74 million in the mid-1990s. But Soviet poverty data are of dubious value--in fact, they were widely questioned by glasnost-era Soviet experts--while statistics from the Yeltsin years almost certainly missed a lot of unreported income. Nor does Klein mention the fact that by 1990, with the Soviet command economy in free fall, Russia was plagued by severe shortages; in the words of Russian satirist Viktor Shenderovich, "The Soviet regime still existed but the food had already run out." The market-based reforms, however painful, probably prevented a far worse collapse.

Who is Naomi Klein? The New Yorker profile by Larissa MacFarquhar answers that question in unwittingly revealing ways. Klein is a second-generation red-diaper baby, the grandchild of American Communists who eventually underwent a bitter disillusionment. Her father was a Vietnam war protester who moved to Canada with his wife-to-be, an activist filmmaker, to avoid the draft; her mother later became part of a Canadian taxpayer-funded feminist film studio and made documentaries on left-wing causes.

In view of Klein's obsession with the idea that capitalism's evil gurus use trauma to force change on unwilling populations, it is perhaps ironic that her own change into an activist was precipitated by traumatic experiences. As a teenager, Klein rebelled against her hippie, toy-gun-banning parents. According to MacFarquhar, "two catastrophic events erased her animus toward her parents and their politics." First, when she was 17, her mother suffered a stroke that left her paralyzed for months. Then, in Klein's first year of college, her feminist consciousness was jolted awake when a woman-hating gunman shot 14 female engineering students in Montreal.

As far as her own ideology goes, Klein repudiates "authoritarian Communism," always with that qualifier. While she asserts that she is not against "all forms of market systems," just "fundamentalist" ones, her idea of non-fundamentalist markets includes not only free universal health care but "a large segment of the economy--such as a national oil company--held in state hands." Politically, she is of the hard left. In a recent article in the Nation, Klein urged a "boycott, divest, sanction" strategy toward Israel, similar to the measures against apartheid South Africa; she also revealed that she personally was boycotting Israel, having the Israeli edition of The Shock Doctrine published by a small press "deeply involved with the anti-occupation movement" and donating the proceeds to its work. (As author Ronald Radosh noted on his blog, Klein's position is not even one of moral equivalence between Israel and Hamas: She singles out Israel as the sole villain.) In the New Yorker profile, she faults her husband, fellow leftist Avi Klein, for being "too quick to reject revolutionary movements": "I don't fetishize guerrilla violence, but I think there are situations where people are justified in taking up arms."

Indeed, the vindication of the far left is the not-so-hidden agenda of The Shock Doctrine. Klein tells the left that its ideas did not fail with the fall of the Soviet Union and the apparent triumph of democratic capitalism but were defeated by trickery and force. She claims to be all in favor of accountability for the crimes of communism--but only as long as supporters of market capitalism are forced into a similar reckoning for crimes she regards as equal. And since the capitalists are unlikely to repent, the obvious conclusion is that the left need feel no shame over its past support for tyranny and mass murder: Its opponents, whether "neoconservative" or libertarian, are just as bad.

Not surprisingly, the left, from London (where Klein is a frequent contributor to the Guardian) to Hollywood, loves the message and the messenger. According to actor Tim Robbins, Klein's tome is "so revelatory .??.??. that it could very well prove a catalyst, a watershed, a tipping point in the movement for economic and social justice."

Could it? Paradoxically, the end of the Bush era may dim Klein's star, now that loathing of the administration is no longer a rallying point. Yet her "disaster polemics" (in Norberg's apt phrase) could have considerable appeal at a time when conventional wisdom asserts that the economic crisis has turned the market into the new "God that failed." The Shock Doctrine is already showing up on syllabi, from a course on "The Neo-Colonial Present" at the University of Massachusetts at Amherst to an Advanced Placement high-school English class in the Dallas Independent School District. The demand for Klein as a speaker, on campuses and at such venues as the Commonwealth Club in San Francisco, has skyrocketed since the Wall Street crash--which, she proclaims, "should be for Friedmanism what the fall of the Berlin Wall was for authoritarian Communism, an indictment of an ideology."

That brings us to the final irony of Naomi Klein. The woman who accuses her free-market bogeymen of "pray[ing] for crisis the way drought-struck farmers pray for rain" and using other people's suffering for ideological and often financial gain, is basking in the present crisis as she trots the globe making speeches. "This is a progressive moment: It's ours to lose," she tells the New Yorker. (Apparently, the new progressive American president agrees--though Klein, who in the New Yorker dismisses Obama as just another status quo politician, undoubtedly finds his proposed expansion of the welfare state insufficiently audacious.)

Nor is this the first time Klein has delighted in misery-causing shocks to the system. The most "inspiring" political moment of her life, by her account to MacFarquhar, came in turmoil-stricken Buenos Aires in 2002. "They had thrown out four presidents in two weeks, and they had no idea what to do," Klein rhapsodized. "Every institution was in crisis. The politicians were hiding in their homes. When they came out, housewives attacked them with brooms." As Harvard political economist Dani Rodrik pointed out, these fond memories are of a time when Argentina experienced "more than a doubling of the share of population in extreme poverty."

Shock doctor, heal thyself.

Cathy Young is a contributing editor to Reason magazine.


Cathy Young is a contributing editor at Reason magazine. Her columns also appear regularly in the Boston Globe.


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