In May I wrote a critical Cato paper on Naomi Klein’s attack on economic liberalisation, The Shock Doctrine: The Rise of Disaster Capitalism, which I claimed was hopelessly flawed on virtually every level. Now Naomi Klein has responded to some of my claims. This response is in itself an example of the methods Klein regularly uses in her works, what I have called disaster polemics. Her response is selective, includes new mistakes, and backs away from some of the claims that she has made without acknowledging it.
Most interestingly, Naomi Klein now admits that her most central claim of the disastrous effects of free markets — that between 25 and 60 percent becomes a permanent underclass in countries where liberalisation takes place — was just a combination of different measures from a few years in no more than four countries.
In her book The Shock Doctrine, Naomi Klein introduces three arguments:
- Economic liberalisation is unpopular, so those who want to liberalise often hope for a crisis of some sort, so that they can implement their reforms when people can’t resist — a form of “disaster capitalism” that they have learned from the Chicago economist Milton Friedman.
- Economic liberalisation in recent decades has most often been the result of this “global strategy,” of reformers taking advantage of political violence, military coups, war and natural disasters.
- This liberalisation, especially after 1990 when global capitalism lapsed into “its most savage form,” has resulted in widespread poverty and unemployment.
What Klein failed to respond to
In my briefing paper on Naomi Klein’s book I show that those three claims are false.
- Klein doesn’t find any economists who believe in this “global strategy.” She has to take Milton Friedman’s quotes out of context to give that impression. The closest thing she ever comes is one economist who once asked a question at a seminar about whether high inflation might build a pro‐reform consensus.
- Since economic liberalisation has happened in almost all countries in the world to some extent in the last decades, Klein can pick examples of reforms taking place in dictatorships and in times of war and natural disasters. But if you look at the whole world and use statistics instead of anecdotes, you see that reforms have gone the furthest in peaceful democracies, and the era of “savage capitalism” has been the era of democracy — the number of electoral democracies increased from 76 to 121 between 1990 and 2007, according to Freedom House.
- Since 1990, worldwide GDP per capita has increased by a third and absolute poverty has been reduced from 42 to 26 percent according to brand new World Bank statistics (updated since I wrote my paper). 76,000 people were lifted out of extreme poverty every day under “savage capitalism.” And there is a strong correlation: The more economic freedom in a country, the lower the poverty and unemployment rates are.
I also show that Klein is not just unable to support her case with facts and figures, but also she tries to support it with distorted claims, manipulated timelines, and quotes taken out of context.
When Klein now responds to my criticism, it’s not just my name that she consistently avoids mentioning (I think it’s because it sounds more David‐and‐Goliath if she is not criticised by a young Swede, but by “The Cato Institute”), she actually defends only one of her central claims that I criticized. Instead she gives the impression that I have just tried to find small mistakes here and there in her book. I leave the readers to guess what that means, and will now go on to look at her attempts to defend herself on specific points.
Milton Friedman and the war
Since the Iraq War is Klein’s strongest example of the “disaster capitalism” that Friedman is said to have influenced, it is interesting that she never mentions that Friedman was in fact opposed to the war. When asked about this before by journalists, her defence was always that she never wrote explicitly that Friedman was in favour of the war (she just tries to give that impression and so far every single reader that I have talked to got that same impression).
In her response there is a new tune, and Klein actually claims that “Milton Friedman supported the war.” That’s right, now we have it on paper. She can say this only by ignoring all Friedman’s statements against the war and relying completely on a German interview from April 2003 that she apparently found recently, since it is not mentioned in her book. Here Friedman says that he is not afraid that the war would result in less freedom and economic troubles (at a time when it seemed like the war would be over in days), gives President Bush the benefit of the doubt regarding the reasons for the war, and says that the end justifies the means and that relations between US and Europe would improve after the war.
Taken out of context and if we ignore what Friedman said in other places, it does sound like he’s in favour of the war. This is a good demonstration of how Klein works. The phrase “the end justifies the means,” for example, is not a statement of Friedman’s philosophy (in his classic book Capitalism and Freedom he insisted on “the more basic end of the use of acceptable means”), but of his analysis of how the EU and the US think about their relations. Obviously, if Klein responds to me now, she would say, “I never wrote explicitly that it was Friedman’s philosophy.” That’s right, she only tried to make it look like it was.
As an indication of how liberally Klein uses phrases like “pro‐war” and “hawkish” we don’t need to look any further than her response. Klein uses Friedman’s words “But, having said that [the war was a mistake], once we went in to Iraq, it seems to me very important that we make a success of it” — in other words, that it was important that Iraq became a peaceful, prosperous democracy, to prove that he was “hawkish.” It makes you wonder if there really were opponents of the war who hoped that it would become a tragic failure, and in what way that is a dovish position. (And why would Friedman want to see a success if he wanted disasters?)
Klein’s second defence — and the only one that she used before, when she did not think that Friedman was in favour of the war — is that it is irrelevant what Friedman thought about the Iraq War, because she only presented “the invasion and occupation of Iraq as the culmination of Friedman’s ideological crusade because he was America’s leading intellectual favoring the privatization of the state” — the link being that the American military made widespread use of private contractors, and that the US wanted to liberalise the Iraqi economy.
But Klein does not manage to establish this connection; it’s not enough to pretend that a quote from Deputy Secretary of State Richard Armitage about leading Iraqis to religious reconciliation was really about leading Iraqis to laissez‐faire capitalism (p. 361). Lavishing public money on private companies without open bidding was something Friedman always opposed. And in the book, Klein admits that the US was not really interested in liberalisation in Iraq, but in corporatism, protectionism, and subsidies to contractors and corporations — the very things Friedman always opposed.
If you use Klein’s bizarre guilt by association, you could just as well say that the invasion of Iraq was the culmination of her own ideas. Sure, she opposed it, but the war was used to attack the free market and increase public spending, which she is a leading advocate of.
One way in which Naomi Klein can blame free market liberals for everything that goes wrong in the world is that she confuses neo‐liberalism/libertarianism with neoconservatism and with corporatism. Now she defends herself: