Sunday, March 01, 2009

The Shock Doctrine 3: The Other Doctor Shock

Edit: Matt's post up for this week here.

(Milton Friedman, talking about greed and how every society in the world runs on it.)

Moving into chapter 2 of The Shock Doctrine, Naomi Klein has taken us from New Orleans to Montreal to Chicago and now from Chicago to Indonesia, Brazil and finally Chile, where we'll see the first real example of radical/disaster capitalism in action. (What's going on here? See the intro here, my posts here and Matt's posts here.)

In my readings of the previous chapters, I've noted that there's a thread of commonality with religion running alongside the development of radical capitalism--not just through the uneasy relationship that the two formed with the rise of the religious right in the Republican party, but in the religious devotion to markets as a good in themselves. In other words, the "doctrine" part is important to remember.

As Klein traces the rise of Milton Friedman, shown above in all his glory, she throws in plenty of religious metaphors to make this clear. A capitalist "Eden," a "prelapsarian" state that the Friedmanites aimed for, a "sacred feature" referred to by economist Frank Knight of the Chicago school. She even notes Friedman's "ecstatic love" of his work and the excitement that rose around him that made him the primary target of her research. He wasn't the first to propose these ideas, but he was good enough to convince lots of people that he was right.

She notes that the dogma requires that:

"It follows ineluctably that if something is wrong within a free-market economy--high inflation or soaring unemployment--it has to be because the market is not truly free."

I might be hammering this point a bit, but it is VERY important to note that this loop is possibly neverending. That simply, people who believe this will always find an excuse to keep believing it, a reason that the market was suffering not from the unregulated greed of the few with little concern for the many, but simply some invisible chains of bondage (the spiritual cousin of the "invisible hand"?)

These true believers aimed their ire not at the Marxism they rose in opposition to, but at Keynesian mixed economies. Klein notes that they wanted a "capitalist Reformation" (again, the religious metaphor) to cleanse capitalism of the taint of social spending and market regulation.

Her discussion of the developmentalist economies of Indonesia and specifically Brazil and Chile would probably be better left to Trend and Erik (maybe you guys can fill in some of the blanks here on the Brazilian junta and its connection to the fall of Allende?) but what I took from the discussion was that the U.S. was willing to export the ideas of the Chicago school economists to developing nations before testing them at home. American people have a nasty habit of protesting when you take away their rights or social support--though as we'll get to, the 9/11 attacks provided a shock that gave the Bush administration some of its leeway to get away with "reforms."

Klein also notes that the corporate sector needed an intellectual like Friedman to spread his gospel--that they could appear to be embracing something proposed by a "scientist" (she mentions the "science is measurement" sign at the University of Chicago) rather than just pushing their own self-interest. But economics is not a science in that it's untestable in a laboratory. Hence, Chile.

The binary logic followed by the Friedmanites and the U.S. government as a whole assumed that the governments in Iran, Indonesia, Brazil and Chile had to be pro-Soviet Communism since they were not in favor of U.S. capitalism. They could not conceive of a third way. I hope I don't have to tell any readers of this blog what our involvement in Mossadegh's Iran has led to. But in case you need it, Klein references Senate hearings and declassified documents to make her case for CIA involvement in all of the above countries.

Though we've associated the Bush administration with a profound anti-intellectualism, it is frightening to see that the expansion of disaster capitalism came from a program that purported to help educate future leaders in Chile--by paying for them to attend the University of Chicago and study economics. Klein calls it intellectual imperialism, and she's right. But it is also heartening to note that it didn't work.

It took the CIA and actual violence to do that. The shocks, in other words, that would shape the philosophy.