Naomi Klein’s The Shock Doctrine is based on shocking distortions

Cato Institute study sets the record straight about Milton Friedman

May 14, 2008

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WASHINGTON—Naomi Klein’s popular book The Shock Doctrine: The Rise of Disaster Capitalism, which claims to expose the truth about capitalism, is based on misconstrued statements, a misunderstanding of economic and political philosophies, and a misleading interpretation of economic history, contends a Cato Institute White Paper.

“To make her case, Klein exaggerates the free-market reforms that take place in times of crisis, often by ignoring central events and rewriting chronologies. She confuses libertarianism with corporatism and neoconservatism,” writes author Johan Norberg, Cato senior fellow, in “The Klein Doctrine: The Rise of Disaster Polemics.”

The paper sheds light on many of the book’s ill-conceived claims. The chief villain in Klein’s story is Milton Friedman, and much of Norberg’s paper is devoted to clarifying untrue statements about the economist. “Klein tries to portray the mild-mannered, and freedom-loving Dr. Friedman as a cold-hearted, war-mongering Mr. Hyde,” says Norberg. Among the clarifications are:

  • According to Klein, Friedman encouraged crises, which disorient and confuse people, to more easily introduce free-market reforms. Klein based this opinion on Friedman’s agreement with “the relatively uncontroversial fact that people change their ways when it seems like the old ways fail.”
  • According to Klein, Friedman saw political freedoms as “incidental, even unnecessary, compared with the freedom of unrestricted commerce.”  In truth, Friedman believed economic and political freedoms were interrelated. He thought it was important for authoritarian regimes to accept liberal economic policies because it would increase the chance that they would become democratic.
  • Klein claims that Friedman favored an aggressive American foreign policy as a way to expand Chicago-style policies. In reality, Friedman never agreed with the Iraq War and he described his position as “anti-interventionist.”

Norberg highlights a fundamental misunderstanding on Klein’s part of the concepts ‘libertarianism’, ‘neoconservativism’ and ‘corporatism.’ She suggests that crises benefit free markets and limited government. This, Norberg says, “is controversial to say the least. In fact, politicians and government officials often use crises as an opportunity to increase their budgets and powers.” Throughout the book, Klein holds Friedman and other libertarians accountable for neo-conservative goals overlooking that they are two very different philosophies. Finally, Klein suggests that corporatism is an extension of Chicago’s free-market revolution because of that school of thought’s “obsession” with privatization. Friedman, however, thought that corporate lobbying interests frequently tried to destroy the beneficial effects brought about by the free-market.

The author concludes: “In the absence of serious arguments against the consequences of free markets, we are left with Klein’s reasonable critique of torture, dictatorships, government corruption, and corporate welfare. In the final analysis, The Shock Doctrine boils down to the curious claim that Milton Friedman and free markets are bad because governments are incompetent, corrupt, and cruel. It is probably not a coincidence that there are blurbs from four fiction writers on the back of the book.”

The report can be found at: http://www.cato.org/pub_display.php?pub_id=9384