FEATURE DR FRIEDMAN AND MR HYDE: THE RISE OF DISASTER POLEMICS Naomi Klein’s attack on Milton Friedman misses its target, writes Johan Norberg anadian author Naomi Klein’s book Dr Friedman and Mr Hyde The Shock Doctrine: The Rise of Disaster Klein’s exhibit A against Friedman is a quote from Capitalism is a bible for anti-capitalist ‘one of his most influential essays’: activists that has also won praise Cfrom established reviewers. In a Guardian review Only a crisis—actual or perceived— reprinted in the Sydney Morning Herald, John produces real change. When that crisis Gray explained that ‘there are very few books that occurs, the actions that are taken depend really help us understand the present. The Shock on the ideas that are lying around. Doctrine is one of those books.’ In the New York That, I believe, is our basic function: to Times, Nobel laureate Joseph Stiglitz wrote that it develop alternatives to existing policies, is ‘a rich description of the political machinations to keep them alive and available until the required to force unsavoury economic policies on politically impossible becomes politically resisting countries.’ inevitable. (6)1 Klein’s thesis is that economic liberalisation The quote is not from one of Friedman’s most is unpopular, and therefore it can only win by influential essays, but from a new and very brief deceiving or coercing voters. In particular, free- introduction to the 1982 edition of Capitalism market ideas rely on crises. In a time of a natural and Freedom.2 And it’s not about welcoming disaster, a war or a military coup, when people disasters. From the example Friedman gave, that are disoriented, confused, and fighting for their interest in free markets grew as communism own immediate survival, then corporations, politicians, and economists can push through trade liberalisation, privatisation, and lower public spending. According to Klein, ‘neo-liberal’ Johan Norberg is a senior fellow at the economists welcomed hurricane Katrina, the Cato Institute. He gave the CIS John tsunami, the Iraq War and the South American Bonython Lecture in 2005. This article military coups in the 1970s as opportunities to is an abridged version of Cato Institute erase past policies and introduce radical free- Briefing Paper 102. Detailed footnotes market models. The villain in Klein’s story is can be found in that paper, available Milton Friedman, the Chicago economist who from www.cato.org. did more than anyone in the twentieth century to popularise free market economics. She portrays the mild-mannered and freedom-loving Dr Friedman Endnotes for this article can be as a cold-hearted, warmongering Mr Hyde. found at www.policymagazine.com. Vol. 24 No. 4 • Summer 2008–09 • POLICY 7 DR FRIEDMAN AND MR HYDE failed in China and the Soviet Union, and the In other words, if the public is not ignorant, United States and United Kingdom suffered from and not disoriented, but fully informed of the stagflation, it is obvious that Friedman was not reform steps, they would facilitate the adjustment advocating shocks and crises to force anyone to by changing their behaviour when it comes to abandon their old ways. He was merely observing negotiations, saving, consuming, and so on. that people themselves demanded change when Friedman’s view was the complete opposite of old ways failed. But in the rest of the book, Klein what Klein pretends it is.5 pretends that she has proved that Friedman was in favour of deliberately promoting crises. This Six days in Chile is ‘the shock doctrine’, the source of inspiration Klein cites the influence Milton Friedman’s for all those reformers who apparently welcome economic views had on Augusto Pinochet’s conflicts, disasters, and war. military dictatorship in Chile in the 1970s as evidence that free markets rely on tyranny and torture. She writes that Friedman acted as ‘adviser Friedman’s view was the complete to the Chilean dictator’ (7). This is wrong. opposite of what Klein pretends it is. Friedman never worked as an adviser to, and never accepted a penny from, the Chilean regime. He turned down two honorary degrees from Chilean universities that received government funding Klein’s supporting quotes to strengthen her because he thought it could be interpreted as interpretation are taken out of context in the support for the regime. same manner. She takes Friedman’s concept of However, Friedman was in Chile for six days ‘the tyranny of the status quo’ as the tyranny in March 1975 to give public lectures. He had of voters, with a crisis needed for politicians to been invited by a private foundation. While there, bypass the democratic process (6f). For Friedman, he met once with Pinochet for around forty- the tyranny of the status quo was something five minutes, and wrote him a letter afterwards entirely different—an iron triangle of politicians, arguing for a plan to end hyperinflation and bureaucrats and special interest groups (businesses, liberalise the economy. This was the same kind of for example) who advance their own welfare at the advice Friedman gave to communist dictatorships voters’ expense.3 like the Soviet Union, China, and Yugoslavia, yet Of Friedman’s suggestions to reduce inflation, nobody would claim he was a communist. Klein writes, According to Klein, Friedman did not care about the social cost of ending hyperinflation— Friedman predicted that the speed, probably to strengthen the impression that he suddenness and scope of the economic wanted to shock people and let the military deal shifts would provoke psychological with any opposition. She never mentions that he reactions in the public that ‘facilitate the suggested reforms that would lower temporary adjustment. (7) unemployment or that one of his recommendations This gives the impression that Friedman was to create a relief program for Chileans who wanted to incur pain to disorient people and push suffered unemployment and distress.6 his reforms through. But the quote in its entirety Klein writes that the Chilean coup in 1973 was shows that Friedman had something very different a neoliberal one, executed so that Chilean liberal in mind. He actually wrote that if a government economists (‘the Chicago Boys’) could reform chooses to attack inflation in this way, the economy. This is to give the impression that neoliberals have blood on their hands, since the I believe that it should be announced most violent period was shortly after the coup. To publicly in great detail … The more fully do that she has to invent a new chronology and the public is informed, the more will its claim that the liberalisation began when the junta reactions facilitate the adjustment.4 took power (117). This creates a big problem 8 Vol. 24 No. 4 • Summer 2008–09 • POLICY DR FRIEDMAN AND MR HYDE for her. If so, it is impossible for her to claim as an endorsement … I do not regard that Friedman’s visit was of such tremendous giving advice on economic policy as importance, because that didn’t take place until immoral if the conditions seem to me eighteen months later. She tries to have her cake to be such that economic improvement and eat it too. would contribute both to the well-being The reality was that initially, military officials of the ordinary people and to the chance were in charge of the economy. They were often of movement toward a politically free corporatist and paternalist, and opposed the society.9 Chicago Boys’ ideas about radical reforms. It wasn’t until this way of governing the economy Friedman’s hopes that economic liberalisation led to runaway inflation that Pinochet threw his would lead to political liberalisation might not weight behind liberalisation and gave civilians always have been realised (though they were in ministerial positions. Their success in the fight Chile’s case), but it is not honest to pretend that against inflation impressed Pinochet, so they were he didn’t have this view so as to give the impression given a larger role.7 Klein could have used the that he didn’t care about democracy. real chronology to blame Friedman for going to a dictatorship that tortured its opponents—the Making violence liberal traditional criticism—but that is not enough for The essence of Klein’s argument is that free-market her. To find support for her thesis that economic reforms more than just coexist comfortably with liberalism needs violence, she has to make it look the most brutal dictatorships. In Klein’s world, like torture and violence was the outcome of the brutality of authoritarian regimes becomes a Friedman’s ideas. way for the ruling class to force through liberal Several chapters after she has given readers the economic reforms. It is important for her that impression that Friedman supported Pinochet, Chile is not an exception, because if it was it Klein admits with a brief quote that Friedman could be used to support Friedman’s thought that did not support Pinochet’s authoritarian policies a successful economy could moderate the regime (117). That is a rather weak description of his and in the end restore democracy. Therefore disagreement with a regime he called ‘terrible’ and Klein makes the case that several other brutal ‘despicable.’8 dictatorships were liberal reformers as well. Klein claims that Friedman’s definition of freedom meant that ‘political freedoms were incidental, even unnecessary, compared with Klein’s argument is that the freedom of unrestricted commerce.’ (185) free-market reforms more than That was not Friedman’s view. He thought that just coexist comfortably with political and economic freedom really are related, and that it would be easy for dictators to rule the most brutal dictatorships.