Naomi Klein Has Some 'Splainin' To Do

Obama economic team fierce adherents of Klein's Shock Doctrine

In The Shock Doctrine Naomi Klein paints a sobering picture of the global economy.



In the book, Klein argues that the free market reforms instituted in many developing nations -- and in western countries albeit in a watered-down form -- have adapted the torture methods developed by Ewen Cameron, McGill University's notorious "Doctor Shock", to the global economy.

In the book Klein insists that economists operating according to the theories developed by Milton Friedman have taken advantage of economic disaster in many developing states. Where such disasters didn't occur naturally Klein argues that they imposed them.

Klein insists that free market capitalism has to be held responsible for the disasters that have unfolded wherever the "shock therapies" enacted by Friedman's disciples have been used.



The Shock Doctrine emerges as a damning indictment of conservative economic policies.

The book portrays many conservative-minded economists as vultures -- opportunists pecking the carrion left behind by economic disasters that have often been the result of the policies themselves.

One wonders, however, how Klein would treat the opportunism now being practiced by economists who share many of her Kenyesian views.



Terence Corcoran has connected the dots between Klein's Shock Doctrine and some of the initiatives being prepared by Barack Obama's incoming economic team.

“You never want a serious crisis to go to waste," said Obama's Chief of Staff Rahm Emanuel. “This crisis provides the opportunity for us to do things that you could not do before.”

If that sounds familiar, it should. Most readers should be forgiven for recognizing the similarity between those comments and those uttered by members of the Bush administration following 9/11.



Corcoran offers a scathing denunciation of what he perceives to be the not-so-new-found hypocrisy of the left, and of Klein in particular:

"Haven’t we heard all this before? Isn’t cashing in on crisis supposed to have been George W. Bush’s game, with the evil Dick Cheney at his side and propped up by the crisis-mongering cabal of capitalist free-market running dogs from the Chicago School, the Milton Friedmanites? Isn’t this Naomi Klein’s The Shock Doctrine actually being implemented — not by the right but by the left?

Looks like it to me, which is perhaps why we haven’t heard too much criticism from the left on the emergence of Barack Obama as the world’s leading practitioner of the art of disasterism. Ms. Klein reached hard to paint President Bush as a ruthless crisis monger. He invaded Iraq after 9/11 because it was something his administration’s key advisors (and his father?) always wanted to do. The War on Terror was a pretext for privatization and security controls. Hurricane Katrina turned into a great opportunity to roll-back labour standards, close public housing and privatize schools in New Orleans. Free trade was foisted on Americans by politicians during economic turmoil.

All that was deplorable when the Bush administration seemed to be doing it, but it’s OK on the left now when their man is talking about turning the current economic crisis into an open pit for every policy intervention sitting in the filing cabinets of liberal think-tanks and Democrats in Congress. It’s apparently just fine to cash in on a crisis if the initiatives are the ones you want."

Which is all well and good.

But it isn't as if Klein has never criticized Obama. As a matter of fact, Klein has criticized Obama for not being progressive enough.

But if Obama's administration really does take the current economic crisis as an opportunity to implement the program Corcoran is predicting -- "radical labour reform, ratchet up government spending, nationalize industries, roll-out energy controls, re-regulate banking and industry, socialize health care, turn the economy over to the carbon police", Klein's Shock Therapy may face some serious impediments to its credibility.



After all, it isn't as if Keynesian economics haven't had their own fair share of negative consequences. In fact, as recently as 1993 Canadians were facing a fiscal meltdown, complete with a decimation of the country's credit rating.

Many of Klein's contemporaries have argued that the record deficits seen under Brian Mulroney's government between 1980 and 1993 were actually the result of hiked interest rates. Yet they cannot account for the fact that the government had already been spending at deficit levels since the glorious Trudeau years.



In other words, while de-regulation of financial markets and the resultant trading of Equity Derivatives resulted in short-term financial gain leading to long-term financial disaster, so have the Kenyesian economics that thinkers such as Naomi Klein favour.

Even if Obama turns around and implements a dream package of economic goodies for Keynesian disciples it isn't going to provide any sort of miracle cure for the global economy, or even the American economy. What it will do is lead the United States deeper into a cycle of ever-mounting debt that, if left unchecked, will inevitably destroy their economy.

What is needed now is not wholesale embracing of Keynesian economics, nor has the wholesale embracing of Friedmanism ever posed the prospect of an economic miracle.

Now is truly the time for a more pragmatic brand of economics. The remaining questions are: do the economic officials of the world have the political will to find it, and can they amass the necessary political capital?

Only time -- and Obama's actions -- will tell.