After the disaster (but before Krugman endorsed Klein's shock doctrine)

Nate Roberts posted a link on Facebook to a recent piece by Paul Krugman essentially saying that he once thought Naomi Klein's views on neoliberalism were extreme, but now he thinks she could be right. This led me to look up an Anthropology Today editorial I published in April 2008 (half a year before the Lehman Brothers bust). This merely confirms my view that Krugman has no political analysis supporting his pet economic theories, whether Keynesian or Kleinian. There was no online link available (apart from behind a paywall), so I have decided to upload a pdf of the editorial here: afterthedisaster.pdf. Some excerpts:

Naomi Klein’s ‘The Shock Doctrine’ presents a monolithic account of ‘neoliberalism’ that leaves room for a solution only at the margins. Her account, which comes endorsed by many radical glitterati including John Le Carré, Arundhati Roy and John Berger, starts with the ‘Chicago Boys’ in Latin America’s Southern Cone during the early 70s. She covers much the same ground as David Harvey in ‘A Brief History of Neoliberalism’. Harvey makes a contrast between the ‘embedded liberalism’ of the welfare state consensus from the 1940s to the 70s and the ‘disembedded’ markets that followed; Klein speaks of neoliberalism as a ‘counter-revolution’. Both cover the last three decades or so without attempting to place them in any larger analysis of modern world history. Harvey speculates about inflationary and deflationary routes out of neoliberalism, but Klein appears to see no end to it.
Both authors try to tell One Big Story, the restoration of capitalist power by Reagan and Thatcher (with peripheral support from Pinochet and Deng); but Klein extends hers to include a string of disasters since the millennium (September 11th, the invasion of Iraq, the tsunami, Katrina). She represents this sequence as a wholesale looting of public assets by corporate interests in the name of Milton Friedman’s free market doctrine. ‘Disaster capitalism’ generates and feeds off ‘economic shocks’ and these seem to be multiplying since the time when ‘structural adjustment’ imposed brutal economic medicine on weak governments.
After the dictators, Klein’s narrative takes in the economic warfare launched under quasi-legal auspices in Bolivia, Poland, China and South Africa. Thatcher’s revolution was rescued by success against the Argentine generals. Russia’s wealth was handed over to the ‘oligarchs’ for a pittance and then the IMF organized a boot sale of Southeast Asian assets to western corporations. And Israel’s coercive treatment of the Palestinians and Lebanon remains a laboratory for neoliberal repression everywhere. Developments within the United States all point in the same direction.
Does she see any hope of something else, born perhaps of popular resistance to this class warfare? A concluding chapter of two-dozen pages (out of more than 500) addresses ‘the rise of people’s reconstruction’. Neo-liberalism’s nemesis is, wait for it, Morales! Hezbollah! Factory and farm co-ops in Argentina and Brazil! The French and Dutch rejection of the European constitution (the only reference to the EU in the whole book)! And Chavez of course. As people sort among the rubble of their societies, the final sentence tells us that “they are building in resilience—for when the next shock hits”. Naomi Klein’s totalizing vision of the contemporary world renders these scraps of resistance merely symbolic.

What is ‘new’ about neoliberalism (or ‘neo-conservatism’ as it is called in America, where liberalism still evokes Roosevelt’s New Deal)? The state’s pretensions to manage national economies have been progressively dismantled everywhere, while its coercive powers have been expanded. Some were slower than others to catch onto the systematic stripping of public assets for private gain, profit accumulation with no acknowledgment of service, the erosion of civil liberties and the resurgence of racist imperialism.
The overthrow of social democracy in the name of market fundamentalism may have been achieved by coercion in Latin America; the privatization of post-socialism was licensed plunder; small states in regions like Africa that were already being bled by debt interest were brought to heel by the ‘Washington consensus’. Maybe the public authorities in the United States have long been less squeamish about employing techniques of intimidation in support of corporate profit. But who persuaded the pillars of European social democracy to roll over without a fight? The wholesale capitulation of national political classes to an obscene logic of self-enrichment still needs an explanation. Neither Klein nor Harvey is much help here.
To take another example from outside Europe, why would the leadership of the African National Congress throw away the legacy of the anti-apartheid movement in order to pander to international capital at the expense of their own long-suffering people? Naomi Klein’s chapter on South Africa is desperately thin, drawing on a handful of interviews to force the country into her all-encompassing vision, while ignoring the nuances of its history and place within the evolving world economy.
The rise of a sociological rhetoric of ‘embeddedness’ in recent years reminds us that Karl Polanyi’s stock has never been higher than today. In ‘The Great Transformation’, Polanyi debunked Victorian liberalism as the use of state power to secure the freedom of capital at the expense of all other interests. He condemned the high price the British working classes paid for the dominance of the ‘self-regulating market’; but there were also counter-movements within society like Chartism, as the victims of the new liberalism sought to defend themselves. Polanyi sometimes wrote of a ‘disembedded’ capitalism, but industrial markets remained thoroughly ‘embedded’: first, in their dependence on the state and second through the links they retained with a range of social institutions. Polanyi’s real objection was not to the market as such, but to ‘market fundamentalism’.

It is, however, no longer as obvious as it was for Mauss, Polanyi and Keynes where the levers of democratic power are to be located, since the global explosion of money, markets and communications over the last quarter-century has severely exposed the limitations of national frameworks of economic management. We are clearly witnessing the start of another long swing in the balance between state and market. Central banks are pumping liquidity into failing asset markets. The rapid switch by the ‘masters of the universe’ from market triumphalism to the public begging bowl would be surprising, if it were not so familiar. Before long, a genuine revival of Keynesian redistributive politics seems to be inevitable. But the imbalances of the money system are now global. Society is already taking the form of large regional trading blocs; and the inability of the Bretton Woods institutions (World Bank, IMF, WTO) to serve any interest beyond that of western capital has long been obvious. The strength of any push to reform global institutions will depend on the severity of the current economic crisis. A return to the national solutions of the 1930s is bound to fail.

It will not do to place our trust for democratic renewal exclusively on small-scale initiatives in Latin America. The new combinations of money, machines and people emerging today must be addressed squarely. For all her vivid writing and journalistic effort, Naomi Klein’s monochrome synthesis promotes only a politics of evasion and despair. The world society that has developed in the last half-century has some features never seen before and many that are perennial. Any way forward will be worked out by China, Europe, the USA and regional leaders such as India, Brazil and South Africa. They will build on an existing diversity that is hardly illuminated by catchall phrases like ‘neoliberalism’ and ‘American capitalism’.
We are in the middle of an economic disaster alright. So far the politicians, bankers and CEOs who got us into this mess seem to be surviving, even prospering. But before long, people everywhere will be asking loudly “What happened to our money, our jobs and our houses? How did we let them get away with it? How can we make sure it doesn’t happen again?” Things are likely to become a lot more turbulent yet; and debates about political economy will then need much more historical substance than literary fashion seems able to offer at present.

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