Naomi Klein: Successfully Tilting At Windmills

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[pictured: Naomi Klein]

Of all the people Klein could have chosen as her story’s archfiend in The Shock Doctrine, she settled upon Milton Friedman, the famous conservative economist.  She paints Friedman as the Doctor Moriarty of economic crimes against humanity, his tentacles stretching –dripping acidic ooze–  into the palaces of tyrants all across the globe.  It is Friedman whom Klein credits with providing the original outline for the evil plan which would eventually become (dun-dun-dunnn!)… “Disaster Capitalism.”

Klein pulls out the following famous quotation from Friedman:  “Only a crisis– actual or perceived– produces real change.  When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”

Friedman was of course speaking of the observed historical fact that people become more open to economic innovations when they are out of work and prices are soaring and the economy is sinking down the drain faster than a dropped ring.  But Klein goes farther than this; she implies that what Friedman actually had in mind was a more widespread and sinister agenda, one in which catastrophic events could be harnessed—perhaps even purposefully created or encouraged— in order to make the sweeping changes to a society that a determined minority (a determined, conservative, business minority, to be precise) has long lay coiled to make.

Klein describes several situations in Latin America in the 20th century in which the U.S. would back government coups, then—following Friedman’s advice—use each created crisis to push the countries toward the economic reforms (and loans, man, loans) that would benefit certain U.S. financial institutions and other companies.

When these countries and others in a similar plight later needed more loans in the 1980s, the International Monetary Fund (IMF) began using the financial crises of the countries as leverage.

Says Klein:  “Officials with the World Bank and the IMF had always made policy recommendations when they handed out loans, but in the early eighties, emboldened by the desperation of developing countries, those recommendations morphed into radical free-market demands.  When crisis-struck countries came to the IMF seeking debt relief and emergency loans, the Fund responded with sweeping shock therapy programs.”

These IMF dictates were euphemistically called “structural adjustments.”  Klein says that the IMF began its hardline stance, demanding radical reforms before making loans, in 1983, and then “for the next two decades, every country that came to the fund for a major loan was informed that it needed to revamp its economy from top to bottom.”

Klein quotes former IMF senior economist Davison Budhoo as saying that, “everything we did from 1983 onward was based on our new sense of mission to have the south privatized or die; towards this end we ignominiously created economic bedlam in Latin America and Africa in 1983-88.”

But twisting Latin America’s already broken arm was just the beginning.  Klein believes that the break-up of the Soviet Union in the early 1990s removed much of the “capacity for resistance” of the Third World against Western economic reforms.  Without the threat of Russia, says Klein, “capitalism was suddenly free to lapse into its most savage form.”  Using the extended metaphor Klein employs throughout her book, she compares the weakened state of the Third World to the weakened “capacity of resistance” of torture victims who have been worn down by sensory and sleep deprivation techniques:  in both cases, the ability to maintain barriers against a determined and dominating force collapses.

After the fall of the Soviet empire, the opportunity for an uncontested Western economic victory was not long in coming.  When the Asian Financial Crisis hit in the late 90s, the IMF, says Klein, used the “extraordinary leverage” granted by the crisis to extract “painful austerity measures.”  A few examples:  before offering assistance to the affected countries, the IMF insisted that each country:  1) strip trade and investment protections,  2) discontinue activist state intervention in the economy,  and 3) make deep cuts in governmental expenditures.

What surprises Klein is:  how brief the reign of all-powerful capital.  Says Klein:  “In retrospect, it is striking that capitalism’s monopoly period, when it no longer had to deal with competing ideas or counter-powers, was extremely brief– only eight years, from the collapse of the Soviet Union in 1991 to the collapse of the WTO talks in 1999.”  I personally think she may be overstating the importance of that year’s Battle In Seattle; I believe the WTO is more powerful today than ever, but it learned in Seattle that it had become overexposed, thus giving the unsatisfied an open target.  So the WTO went underground, well, as much as a worldwide uber-power can go underground.  On the other hand, there was definitely a turn made that year along the road to the New World Order.  Sometimes, when enough crazy kids share the same vision, tilting at windmills can accomplish more than a few broken lances.

The IMF, too, is still powerful, but it has dialed down the brute force and rhetorical volume after the abysmal record of economic performance in the wake of IMF-dictated reforms in Asia, Africa, and Latin America.  Klein states that the IMF’s own internal auditor, the Independent Evaluation Office, was reporting by 2003 that the IMF’s “structural adjustment” demands of Asia during the financial crisis were “ill-advised” and “broader than seemed necessary” and “not critical to resolving the crisis.”  The auditor also counseled that a “crisis should not be used as an opportunity to seek a long agenda of reforms just because the leverage is high.”

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