[1] Since the 1960s, I’ve found “development” a concept that is protean in its vagueness, and fraught with moral contention to boot. What does it mean for a materially poor people or nation to “develop”? Recently, Thomas Friedman provided some enthusiastically winsome answers: development occurs when electronic technologies revolutionize communication, information storage and processing, as individuals discover latent capacities in these technologies and ‘upload’ possibilities not yet dreamed of; when companies and individuals re-envision who they are and how they might leverage their resources into the rippling effects of widening prosperity.[1] I could feel good about such trends because the basic plotline was empowerment: enabling those who have been left out to bootstrap their way into a newly interconnected world. I’ve witnessed such boot-strapping in postwar Vietnam,[2] and have no doubt millions of budding entrepreneurs around the globe have done very well on this newly flattening earth.
[2] At the same time, I remain skeptical about what constitutes genuine development. Signal events and trends of the past few decades resist Thomas Friedman’s ideal plotline of general upward empowerment. As a graduate student at the University of Chicago in the mid-1980s, I wrestled with Milton Friedman’s argument that market freedom is necessary for political freedom while observing strident demonstrations against Friedman and his colleagues for assisting the economic makeover of Chile after the 1974 coup against Allende. Other trends seemed to pit democratic empowerment against economic ‘development’. Rightist military regimes became entrenched in Latin America and then welcomed capital investment from outside. National debts ballooned and the “structural adjustment” programs of the International Monetary Fund depressed the living standards of millions throughout the developing world. Poland’s celebrated Solidarity movement foundered under economic stress, as did the ANC-led government in liberated South Africa. The fragile bloom of Russian democracy was choked by mobster capitalism. In Iraq, the US outsourced the reconstruction of Iraq to foreign private contractors rather than to the Iraqi people.
Klein’s argument: ‘Shock therapy’ and the emergence of disaster capitalism
[3] Naomi Klein in The Shock Doctrine threads these and other major ‘development’ debacles into a single claim: that “shock treatment’ was deliberately and callously administered to whole countries, with the intent of opening protected societies to the rapacious forces of private greed operating under the banner of neoliberalist free-market capitalism. Let me outline her argument. In its early and perhaps crudest form, during the 1970s and 1980s, the strategy involved the unholy collaboration of junta generals, foreign corporations and Milton Friedman-trained economists. They administered three kinds of shock: military coups to dismantle democracies, new legislation to sell off national assets and dismantle economic safety nets, and the techniques of imprisonment and torture to overcome the resistance of victims. These three kinds or levels of shock had the net effect of paralyzing the capacity of civil society to resist.[3] It should be noted that this strategy of administering shock evolved. During the 1980s, disciples of Milton Friedman were hired by the World Bank and International Monetary Fund to spread economic shock therapy through the developing nations rendered vulnerable by their debts, and their efforts were abetted by military coups. The strategy softened somewhat in the 1990s, as Harvard economist Jeffrey Sachs proved that it was possible, in Poland, to dismantle protections without destroying the formal procedures of democratic self-rule. But shocks continued to be applied, using a formula readily adapted to particular circumstances. Variants of the shock doctrine were applied in China after Tienanmen Square, in Russia following the attempted coup against Yeltsin, in bankrupt South Africa following the demise of apartheid, and across Asia in the wake of the 1997 financial earthquake. Then it reached closer to home, in the wake of 9/11, and most tellingly, in Iraq. By this point, what began abroad as a strategy for using crises to transform recalcitrant economies had morphed at home into an entire industry founded upon disaster. In the U.S., thanks to federal outsourcing on a massive scale, this new ‘disaster capitalism’ has taken over the federal government’s mandate to protect its citizens, perverting it into an opportunity to rebuild what nature or fighting have destroyed, all at enormous profit. These parasitic firms thrive equally well on the scorched earth of warfare, the rubbled beaches of tsunamis, the festering ruins of post-Katrina New Orleans, or the dark hallways of national paranoia about security: in each case, these corporations move in where citizens are disoriented, to bulldoze any and all obstacles to a kind of ‘development’ which privileges the wealthy by generating more wealth in a way that is freed from the constraints of democratic control or regulation.
Evaluating her argument
[4] What Klein develops here is a very dark reading of how ‘development’ fails when democratic safeguards are ripped away by elites who are bent upon asserting control and squeezing enormous short-term profits. But is her thesis about shock treatment and disaster capitalism empirically supported? Is her dark reading accurate? I personally found the broad arc of her argument compelling, but then again, I read her book as an amateur untrained in political economy. Two economists kindly agreed to take up these questions, however, and their reviews of The Shock Doctrine follow. Both converge in finding much to dismiss in Klein’s argument. Rebecca Judge of St. Olaf College’s Economics Department finds little evidence that economists helped perpetrate the bloody repression which accompanied early exercises of shock treatment, particularly in Argentina. Moreover, she argues that Klein fails to see ‘shock’ for the stiff medicine that it is; it involves nothing more than “responding to an economic crisis with sweeping fiscal and monetary changes enacted speedily so as to avoid both adaptive, self-interested behavior by economic actors, and political instability brought about by a prolonged state of economic disequilibrium.” Our second economist, Art Carden of Rhodes College’s Department of Economics and Business, makes closely related points. First, with respect to the episode in Chile during the 1970s, Carden argues that ‘shock’ treatment was warranted because Allende’s policies of printing money while controlling prices encouraged runaway inflation, and so would have had much worse consequences in the long run that the shortsighted policies espoused by social democrats such as Allende. Second, Carden rejects Klein’s argument that Milton Friedman was linked to the repressive policies of the Pinochet regime.
[5] While neither of our two economists think that Klein’s thesis has much empirical merit, both are true to their discipline in calling for her claims to answer at the bar of empirical fact. Undoubtedly they would be the first to acknowledge that Klein makes many more specific charges than can be researched and answered in these short book reviews. So more investigation is needed. The charges concern alleged linkages: the participation of Milton Friedman and the “Chicago School” in the administration of various forms of shock therapy beyond Chile; other linkages between economic advisors and particular repressive regimes; the linkages between economic, political and psychological dimensions of shock as instruments of governmental policy; the linkages between military and economic elites in devising such integrated strategies; the causal links between near- and long-term harms and benefits of shock treatment; and the linkage between shock strategies and disaster capitalism. In a different vein, it would help to learn whether there are counter-examples: countries where economic shock treatment, presumably induced by the International Monetary Fund and other international institutions, has produced needed reforms with relatively little pain. And in addition to the questions about Klein’s reading of recent history, one might ask about the relative long-term effectiveness of shock vs. gradualist economic policy in fostering general prosperity. The long arc of Klein’s argument implies that economic shock treatment has become decoupled from earlier linkages with brutal repression and torture. Is there indeed such a trend? Will shock treatment, like a mutated flu virus, fade into the background? By the end of the book, Klein shifts attention from shock treatment to disaster capitalism, and this label prompts more questions. It would help to know if some significant segment of global capitalism has become addicted to natural and human-made disasters—and is even willing to foster or perpetuate those disasters in order to generate business? Or will this particular virus also morph into a less virulent form, in order to avoid killing its host? Alas, all these questions still need answers which carry the weight of empirical verification, and so further contributions to the JLE discussion of genuine development would be most welcome.
A compelling read, but too close to propaganda
[5] Even if Klein has been too selective in her data to convince economists, her narrative has another kind of value which merits comment. She has succeeded in making ‘development’ accessible and even exciting to read, and that is no mean feat. The allure of The Shock Doctrine is that it offers an accessible, emotionally gripping narrative to explain how ‘development’ can become perverse and destructive. The story line is easily followed, for it presents a pattern which repeats, mutatis mutandi, from country to country: a fall into chaos and suffering, redeemed ultimately if only partially by citizens who wise up and begin resistance. She warns the reader what to watch for—disaster capitalism—and provides an uplifting ending. She chronicles instances where local people who have survived shock treatment organize to retard or halt the intrusion of corporate takeovers and makeovers of their lands and livelihoods. She finds hope in new Latin American leaders, including Hugo Chavez, who renationalize their economies, revive social programs, and authorize local communities to take charge of their collective welfare. She celebrates the revival of resistance in South Africa, China, Thailand, Lebanon and New Orleans—anywhere that citizens have mobilized to protect and rebuild their shattered communities against further incursions of unrestrained capital.[4] These mini-happy endings etch the sharp distinction between villains, who design and administer shock, and the heroes, who resist.
[6] I wish I could simply celebrate Shock Doctrine as a rhetorical triumph, but I can’t. The very features which make her narrative gripping—a repeated pattern, a suspenseful plot, black-and-white characters—also signal danger, for they are stock elements of propaganda. Klein succeeds in rendering global political economics accessible at high cost, in that her narrative skates perilously close to time-honored techniques for arousing an audience to hate. First she explains and denounces a relatively abstract and complex strategy, and then in a pernicious synecdoche, identifies the person to be held responsible for that strategy. The evil takes on a human face, as an emotionally graspable being upon whom the fear and loathing of the audience easily can be projected. For Klein, Milton Friedman is the legitimating guru of a line of thinking that produced economic shock therapy, and Ewen Cameron is the inventor of psychological shock therapy. Klein’s portrait of these two men is masterful; it is hard to read the first few chapters without being shocked (!) by the perverse callousness attributed to these two figures, and further, to be dismayed by the portrait of Jeffrey Sachs in a later chapter. Yet even if these men are guilty as charged, to demonize them as Klein does smacks of a suspect rhetorical strategy. It is not surprising that our reviewers see a smear in Klein’s depiction of Milton Friedman (Carden), and rise to the defense of Jeffrey Sachs and economists generally (Judge).
Development as empowerment
[7] While the persuasive strategy Naomi Klein pursues is discomfiting, I am not as willing as Judge and Carden are to dismiss this book as fatally flawed by ideological and rhetorical slant. Carden and Judge rightly criticize Klein for not offering her own cure for macroeconomic plagues like inflation and reckless government spending. But macroeconomic policy has little to do with the kind of ‘development’ that Klein is writing about. She is making an overarching moral claim which merits attention in its own right. For Klein, the primary moral question is whether people in threatened communities have the political space and freedom to make decisions about the future of their lives. From this vantage point, all the junta leaders, military advisors, corporate heads, and corrupt officials who threaten such self-determination represent a continuing threat. Genuine development occurs when such threats are met by the reassertion of grassroots political power. It is hard to disagree; I can’t imagine a genuine theory of development which ignores this cry for meaningful agency from the disenfranchised.
[8] So, then, to return to where this review began, it seems we have two polarized accounts of globalization contending to be readily graspable “master narratives” of authentic development: Thomas Friedman’s upbeat account of a reinvigorated capitalism thriving on new ideas and markets, and Naomi Klein’s vision of a parasitic and destructive capitalism dependent on natural, economic, political disasters for profits and growth. Surprisingly enough, when these competing narratives meet, it is not as anti-matter annihilating matter. Both authors vest their hopes for genuine development in the empowerment of people. Friedman celebrates the liberated energies of savvy entrepreneurs who can read trends and ride the waves of globalization; Klein celebrates the revival of victims who are toughened by their ordeals to resist new incursions of shock therapy and disaster capitalism. To be sure, these are substantially different tangents; Klein wants to see them rebuild political structures and take political control over their fate. Friedman is more interested in how they generate wealth, for themselves and the benefit of their local economies. Yet the common term is empowerment, and any narrative of development will need to touch on this idea, as Rebecca Judge does when endorsing Amartya Sen’s account of freedom as the best measure of human development. Let me close, then, with a modest proposal. If we can all agree to keep the focus on empowerment, both political and economic, maybe the goal of genuine development will not always be so difficult to imagine.
[1] Friedman, Thomas
. The World is Flat: A Brief History of the 21st Century. New York: Farrar, Strauss and Giroux, 2005, 2006, chapter 2. The theme of individual empowerment comes across more clearly in his first work on globalization. See also Friedman, Thomas
, The Lexus and the Olive Tree: Understanding Globalization. New York: Farrar, Straus and Giroux, 2000 (updated).
[2] Bird, Frederick, and Stewart W. Herman. International Businesses and the Challenges of Poverty in the Developing World: Case Studies on Global Responsibilities and Practices. New York: Palgrave Macmillan, 2004, 139-180.
[3] Klein, Naomi. The Shock Doctrine: The Rise of Disaster Capitalism. New York: Picador (Henry Holt), 2007. For a representative example of this argument, see chapter 2, especially p. 87.