The New Road to Serfdom

Over the course of 500 pages in The Shock Doctrine, Naomi Klein documents the moments of chaos and disruption that allow a small coterie of experts to swoop in and administer what’s invariably called “bitter medicine,” “painful reforms” or “shock therapy”

Christopher Hayes November 9, 2007

First come the bombs, then come the neoliberal economists

In the ear­ly 80s, as Mar­garet Thatch­er attempt­ed to hack away at England’s sub­stan­tial pub­lic sec­tor, she found a frus­trat­ing degree of pub­lic resis­tance. The clos­er she got to the bone, the more the patient wrig­gled and with­drew. Thatch­er dogged­ly per­sist­ed, yet her pace wasn’t fast enough for right-wing Aus­tri­an econ­o­mist Friedrich von Hayek, her idol and ide­o­log­i­cal men­tor. You see, in 1981, Hayek had trav­eled to Gen. Augus­to Pinochet’s Chile, where, under the barbed restraints of dic­ta­tor­ship and with the guid­ance of Uni­ver­si­ty of Chica­go-trained econ­o­mists, Pinochet had gouged out near­ly every ves­tige of the pub­lic sec­tor, pri­va­tiz­ing every­thing from util­i­ties to the Chilean state pen­sion pro­gram. Hayek returned gush­ing, and wrote Thatch­er, urg­ing her to fol­low Chile’s aggres­sive mod­el more faithfully.

In her reply, Thatch­er explained terse­ly that in Britain, with our demo­c­ra­t­ic insti­tu­tions and the need for a high­er degree of con­sent, some of the mea­sures adopt­ed in Chile are quite unac­cept­able. Our reform must be in line with our tra­di­tions and our Con­sti­tu­tion. At times, the process may seem painful­ly slow.”

The Hayek/​Thatcher exchange is one of many reveal­ing his­tor­i­cal nuggets unearthed in The Shock Doc­trine: The Rise of Dis­as­ter Cap­i­tal­ism, Nao­mi Klein’s ambi­tious his­to­ry of neolib­er­al­ism. Hayek isn’t the star of The Shock Doc­trine–that dubi­ous hon­or goes to his pro­tegé and fel­low Nobel Lau­re­ate Mil­ton Fried­man. But Klein’s totemic, capa­cious and bril­liant alter­nate his­to­ry of the last three decades of glob­al polit­i­cal econ­o­my can best be under­stood as a lat­ter-day response to Hayek’s clas­sic right-wing man­i­festo, The Road to Serf­dom.

Writ­ten in exile, while Europe burned, The Road to Serf­doms sim­ple but pow­er­ful the­sis was that the encroach­ment of the state into eco­nom­ic affairs inevitably leads to an encroach­ment in all spheres. For Hayek and his intel­lec­tu­al descen­dants – from Fried­man (Mil­ton) to Fried­man (Thomas) – polit­i­cal free­dom and eco­nom­ic free­dom were insep­a­ra­ble and mutu­al­ly rein­forc­ing. And over the last 30 years, the adher­ents of the Friedman/​Hayek School have point­ed to two coin­ci­den­tal trends in glob­al polit­i­cal econ­o­my to back this grand claim: First, the fall of com­mand-and-con­trol economies and the dis­man­tling of wel­fare states. The sec­ond, the rise of demo­c­ra­t­ic gov­er­nance. With cun­ning aplomb, neolib­er­al writ­ers and his­to­ri­ans have pack­aged these two dis­tinct phe­nom­e­na togeth­er as one sin­gle sto­ry of progress and devel­op­ment. Look: Freedom’s on the march!

Klein res­ur­rects Hayek’s argu­ment and inverts it, show­ing how time and again, the eco­nom­ic free­dom” envi­sioned by Hayek and his ilk has been imposed at the expense of polit­i­cal free­dom, often, Klein writes, mid­wifed by the most bru­tal forms of coer­cion.” From Chile to Iraq, majori­ties empow­ered to choose their own gov­ern­ment don’t start clam­or­ing for flat tax­es, pri­va­tized post offices and an end to con­trols on for­eign cap­i­tal. Instead, they often form unions or call for increased social spend­ing. The Shock Doc­trine is an ency­clo­pe­dic cat­a­log of the tac­tics that gov­ern­ments, cor­po­ra­tions and econ­o­mists have used to impose– usu­al­ly over pop­u­lar oppo­si­tion – what Klein calls the pol­i­cy trin­i­ty” of the Chica­go-School pro­gram: the elim­i­na­tion of the pub­lic sphere, total lib­er­a­tion for cor­po­ra­tions and skele­tal social spending.” 

Over the course of 500 pages, Klein doc­u­ments the moments of chaos and dis­rup­tion that allow a small coterie of experts to swoop in and admin­is­ter what’s invari­ably called bit­ter med­i­cine,” painful reforms” or shock ther­a­py.” Only cri­sis,” she quotes Mil­ton Fried­man as once observ­ing, actu­al or per­ceived, pro­duces real change.” While Klein calls this the shock doc­trine,” I pre­fer a phrase she quotes from for­mer World Bank Chief Econ­o­mist Joseph Stiglitz, who called those who imposed free-mar­ket shock ther­a­py” on Rus­sia in the ear­ly 90s mar­ket Bol­she­viks.” Like Lenin, these eco­nom­ic pol­i­cy-mak­ers saw oppor­tu­ni­ty in cri­sis, and were skep­ti­cal, even con­temp­tu­ous of demo­c­ra­t­ic pieties. They were con­vinced that only an enlight­ened van­guard would be able to take the painful, some­times bloody steps nec­es­sary to bring about rev­o­lu­tion. The most extreme of them also shared with Lenin the impulse to start anew, to wipe out his­to­ry, to work off a blank slate. They held the per­verse belief that a proposal’s ide­o­log­i­cal puri­ty is direct­ly pro­por­tion­al to the pain and dis­rup­tion it causes. 

Klein’s his­to­ry begins in Chile in 1973 and ends in Sri Lan­ka after the 2005 tsuna­mi. Some of the mate­r­i­al – like the gris­ly details of the 70s South Amer­i­can dic­ta­tor­ships’ dirty wars on union­ists, dis­si­dents and left­ists – will be famil­iar to lefty read­ers. But even on famil­iar ter­rain, Klein has a remark­able eye for the reveal­ing detail or the telling quote. She points out that dur­ing Argentina’s mil­i­tary dic­ta­tor­ship in the late 70s and ear­ly 80s, the Gale­rias Paci­fi­co mall, the crown jew­el of Buenos Aires’ shop­ping dis­trict,” con­tained a base­ment tor­ture cen­ter where detainees had scratched pleas for help into the wall. For Argen­tines who know their his­to­ry,” she writes, the mall stands as a chill­ing reminder that … the Chica­go School Project was quite lit­er­al­ly built on the secret tor­ture camps where thou­sands of peo­ple who believed in a dif­fer­ent coun­try disappeared.”

If the shock doc­trine” was born amid vio­lence and repres­sion in South Amer­i­ca, and then devel­oped less open­ly repres­sive means of influ­ence – such as through the Inter­na­tion­al Mon­e­tary Fund’s struc­tur­al adjust­ment pro­grams in devel­op­ing coun­tries – Klein argues it has now reached a kind of final fron­tier. Hav­ing snatched the low hang­ing fruit, it has in its sights the Mid­dle East’s oil-dom­i­nat­ed state economies and the devel­oped world’s last remain­ing un-pri­va­tized func­tions: fight­ing wars and pro­vid­ing security. 

In Iraq, the dan­gers of these two projects have come togeth­er and been made most hor­ri­bly man­i­fest. Paul Bre­mer, the for­mer U.S. admin­is­tra­tor to Iraq, issued orders imme­di­ate­ly pri­va­tiz­ing the state’s fac­to­ries, dis­miss­ing the state bureau­cra­cy (includ­ing, but not lim­it­ed to the Army) and impos­ing a flat tax, all while putting down spon­ta­neous expres­sions of democ­ra­cy and protest that had bro­ken out across the new­ly lib­er­at­ed” country. 

Mean­while, as mer­ce­nar­ies ran roughshod, the pri­va­ti­za­tion of war pro­duced per­verse incen­tives for the cor­po­ra­tions that ben­e­fit­ed from the chaos. Amid the increas­ing chaos, a gut­ted pub­lic sec­tor strug­gled to imple­ment its vision for a new Iraq through lay­ers of sub­con­trac­tors. (Klein notes that in Ger­many, after reuni­fi­ca­tion, a staff of 8,000 gov­ern­ment work­ers over­saw the pri­va­ti­za­tion of the state’s vast hold­ings. In Iraq, that num­ber was three.) In short,” she writes, the [Coali­tion Pro­vi­sion­al Author­i­ty] was itself too pri­va­tized to pri­va­tize Iraq.” 

The sole achieve­ment of the U.S. occu­pa­tion thus far has been the trans­fer of bil­lions of dol­lars of pub­lic mon­ey into the pri­vate cof­fers of those com­pa­nies that man­aged to get their hands on lucra­tive gov­ern­ment con­tracts. This, to Klein’s mind, is the whole rai­son d’etre behind the cor­po­ratist state.”

But Iraq is com­pli­cat­ed. Klein gives a per­sua­sive account of why the insur­gency emerged when it did. How­ev­er, no sin­gle inter­pre­ta­tive frame­work seems up to the task of ful­ly order­ing and untan­gling the var­i­ous com­bustible world­views now fight­ing it out in Iraq.

This rais­es the cen­tral flaw in The Shock Doc­trine: The struc­ture of her argu­ment requires her to whit­tle down some events in order to make them fit, in the process shed­ding their mul­ti­fac­eted and cul­tur­al­ly spe­cif­ic influ­ences and ratio­nales. This ten­den­cy is exac­er­bat­ed by the book’s title and the ani­mat­ing metaphor intro­duced in the open­ing chap­ter. In it, Klein describes a series of hor­ri­fy­ing CIA-fund­ed exper­i­ments under­tak­en by a sadis­tic Cana­di­an doc­tor in the 50s. Sub­jects were shocked, against their will, into states of high­ly sug­gestible infan­til­ism, and the results were enshrined in the CIA’s so-called Kubark” man­u­al, which Klein alleges has become a hand­book for Amer­i­can inter­roga­tors dur­ing the war on ter­ror. The chap­ter is chill­ing. But once the book moves into doc­u­ment­ing the full spec­trum of anti-demo­c­ra­t­ic strate­gies employed by neoliberalism’s pro­po­nents, the poten­cy of the metaphor dis­si­pates. Shock” describes every­thing from the actu­al shock of elec­tric volts used against dis­ap­peared left­ists in Chile and Argenti­na to the metaphor­i­cal shock of the tran­si­tion from com­mu­nism in Rus­sia and East­ern Europe. Even the fair­ly rou­tine polit­i­cal cap­i­tal Thatch­er accrued in the wake of England’s vic­to­ry in the Falk­lands War is a shock. 

The prob­lem is, the more Klein’s con­cept of shock” accounts for, the less it explains. In South Africa, for exam­ple, Klein inter­views African Nation­al Con­gress (ANC) lead­ers to find out how their once social­ist, anti-apartheid move­ment lat­er became a neolib­er­al gov­ern­ment. She finds that, basi­cal­ly, they got hus­tled. Dur­ing ini­tial nego­ti­a­tions over the trans­fer of pow­er, busi­ness inter­ests and inter­na­tion­al finan­cial insti­tu­tions extract­ed seem­ing­ly innocu­ous and tech­ni­cal con­ces­sions that con­sti­tu­tion­al­ly restrict­ed the ANC gov­ern­ment from fol­low­ing through on its pop­u­lar, social demo­c­ra­t­ic promis­es. That’s a reveal­ing anec­dote of the anti-demo­c­ra­t­ic sophis­ti­ca­tion of the van­guard of glob­al cap­i­tal, but it’s a long way from tor­ture cham­bers and elec­tric volts.

If The Shock Doc­trine over­reach­es at times, its cen­tral con­tention is spot on. The force and per­ma­nence of a book like this can change out­looks and sys­tems. Just ask the gen­er­a­tions of thinkers who’ve been influ­enced by The Road to Serf­dom. That book may be mas­sive­ly over-sim­pli­fied and ten­den­tious, but Hayek’s strong argu­ments – along with the repeat­ed blood­shed and tyran­ny of so many com­mu­nist gov­ern­ments around the world – helped force the anti-demo­c­ra­t­ic left and its sym­pa­thiz­ers to take a hard look in the mir­ror. At a cer­tain point, it became impos­si­ble to con­tin­ue to excuse purges, star­va­tion and gulags as some kind of unfor­tu­nate dis­tor­tion of their true vision.

My hope is that Klein’s book can do the same for the many par­ti­sans of Fried­man-style eco­nom­ic pol­i­cy, who have con­vinced them­selves that their utopi­an vision is beau­ti­ful even if its imple­menters have been ugly. Klein has dragged out the bod­ies and plas­tered the self-incrim­i­nat­ing mem­os for all to see. If her argu­ment can become as promi­nent in the next 50 years as Hayek’s was over the pre­vi­ous half cen­tu­ry, the world will be a bet­ter place.

Christo­pher Hayes is the host of MSNBC’s All In with Chris Hayes. He is an edi­tor at large at the Nation and a for­mer senior edi­tor of In These Times.
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