Review of The Shock Doctrine

April 26, 2010

Naomi Klein’s The Shock Doctrine is a must-read for anyone in the modern West.  Okay, that’s a broad statement, so let me try one more focused: it is a must-read for Red-state Christian America.  Too long have we blindly thrown our weight behind the idea that capitalism would bring peace, freedom, and prosperity to the benighted Third World, and have we, with dangerous syncretism, imagined that its onward march was the vanguard of the Kingdom of God, trampling over secularists in our race to declare its victories as the offspring of our Christianity’s genius.  We glibly reassure ourselves that we are “pro-life” because we decry the crimes of abortion doctors, all the while ignoring the blood of the neoliberalism crusade’s millions of victims.  Naomi Klein calls on us all to wake up and smell the ugly stench of reality.  What makes this book so compelling is that it transcends standard debates about whether the “free enterprise system” or state-run enterprise works better, by examining the actual track record of the Chicago School, pure capitalist notion of free markets, and concluding that this “free enterprise system” has never existed.  We are accustomed to treating “the government” and “private companies” as two antithetical actors, and yet this assumption is no longer true, if it ever was.  

Take Lockheed Martin, for example--the US government is their biggest client, and Lockheed receives a greater share of the federal budget than do several large governmental agencies like the Department of Commerce.  What we have now is a corporatist state, an unholy alliance of government force and market greed, each of which is dangerous enough on its own, but which together are a truly terrifying combination.  In this combination, the government imposes a “free” market by force on unwilling citizens, then helps make sure that big corporate or political supporters get the lion’s share of that market, at the expense of most of the citizenry.  These corporate giants then come to wield the lion’s share of political power as well, which they continue to use for their benefit.  At the same time, this alliance means that, as things like war and disaster relief become for-profit enterprises, large corporations position themselves both to exploit and to encourage political and social chaos worldwide.  

Klein’s core thesis is that all of this has been the direct result of the attempt to apply Friedmanite Chicago School economics, a thesis that does not need to rely on tendentious causal connections or vague post hoc ergo propter hocs, since in many cases she can show how self-avowed Friedman proteges were the architects of these enterprises, which were enthusiastically hailed by Friedman and his cohorts.  Shortly after I started reading this book, I looked at some of the reviews on Amazon and decided to check out the small cluster of 1-star reviews, just to see what the opposition was saying.  A common complaint seemed to be: “This woman must not have read Friedman!  Friedman’s ideal wasn’t all this stuff that she’s portraying--dictatorships and oligarchical economies and a powerful corporatist state--he wanted freedom!”  Yes, but these people must not have really been reading this book.  The point isn’t what Friedman’s ideal was, just as the point isn’t what Marx’s ideal was.  With both, the problem is that their ideal, while great on paper, simply did not reflect the way real societies function, with real power interests that will protect themselves.  Especially if read with Polanyi’s argument about the inherent unnnaturalness of the self-regulating market in mind, The Shock Doctrine strongly suggests the conclusion that Pinochet-style violence, repression, inequality, and corporate dominance is the inescapable result of the attempt to apply Friedmanism in the world as we know it.  Forget the facile equation of capitalism and “freedom” or “democracy”--a democratic society, Klein shows, will revolt against the attempt to impose such an economic system, and so it can only be imposed by force or chaos, and then freedom is out of the picture.

  

How did we ever trick ourselves into believing that if we just removed the impediments to letting society be run by greed, we’d have a free and peaceful world?  Greed means that Lockheed Martin will fund war propaganda to get us to invade Iraq, and who’s to tell them that’s off-limits?   

Now, this book has some flaws, of course, which can get quite annoying at times.  For one thing, Klein doesn’t always seem to realize the radicalness of her own thesis--the thesis that we can no longer dichotomize business and government, since the two have increasingly merged their interests, personnel, and operations.  Repeatedly, she falls back into talking as if we’re dealing with a straightforward government vs. business, public vs. private battle, in which the public sphere is always the good guy, and private business is always the bad guy.  All of the problems, on this narrative, stem from not enough government--if only the government were bigger and stronger, all would be well.  And this gets tiresome--for some reason, whenever some crucial task currently administered by government isn’t getting done, it’s because the government is underfunded and sapped of resources, but whenever some crucial task currently administered by a private company isn’t getting done, it’s because they’re lazy, corrupt, and inefficient.  This is a rather dubious picture.  However, that said, the book does force us to rethink some of our equally dubious conservative assumptions--namely, that a private company will always do a job better than the government will, or that governments cannot do a fair bit of good in restraining baleful inequalities within society.

Also, Klein is terribly one-sided in her telling of the story.  She never really gives Friedman, et. al., a chance to tell their side of the story; when she does quote them or give a bit of their perspective, she immediately makes snide mockeries.  I think this tale could be even more compelling than it is were she to give them a fair hearing, to say, “Here’s what this movement wanted to achieve.  They really wanted these great goals, and they really thought these things would happen, and here’s why.  But here’s why those dreams failed when they met reality.”  Without that kind of sympathy and perspective, this ends up sounding propagandistic at times.  

Of course, another related criticism is that, as would surely be the case in any book of this size and scope, there are some places where the argument seems much weaker, and somewhat strained.  Was there really foul play going on here?  Was the story really that simple there?  Are we really to believe that this policy was such a bad thing?  She has some really damning material when she’s discussing Chile and the South American juntas, and also when she discusses post-9/11 developments and the Iraq War.  Most of the stuff in between contributes valuably to her thesis and narrative, but in some of it, it feels like she’s overreacting.

Finally, and perhaps most interestingly for us Christians, this book is handicapped by the fact that it is written in an almost relentless torrent of moral passion, but a passion without any clear basis.  As a Christian, I can offer all kinds of reasons why most of the phenomena described in this book are indeed evil and appalling and should be resisted.  But what’s her basis?  At times, it seems to be an unswerving devotion to democracy.  Time and time again, her objection to Friedmanism is that its adoption in a society has to be undemocratic--it will not be supported by the majority of the people, and so the rulers have to find some way of imposing it against their will.  I’m not convinced this is automatically wrong.  After all, the purpose of rulers is to rule, is to make hard decisions that may not be popular, and if the rulers are in fact wiser than the ruled, that may mean they will take the right course of action, even if it is not generally supported.  But there is a difference between governing and oppressing, and in most of her examples, the actions taken were not merely undemocratic, but violent and deceptive.  So, a Christian can get angry about this as well.  She also seems to operate on the assumption that there’s a huge range of tasks in a society that ought to be provided by the government rather than for a profit.  Many of us may not entirely agree with her here, but I do begin to see the benefits of leaving the profit motive out of the picture when it comes to basic services for a society, even if that doesn’t mean it’s best to put the central government in charge of them.    And as Christians, we should agree that there is something wrong and dangerous about companies making a profit off of disasters, violence, and people in great need.  Biblically, the principles are clear--if your brother is weak and poor, you can’t try to make money off of him; you have to help him at your own expense.  Capitalism says, “Aha!  This person or this country has been brought to its knees--now’s the chance to make a killing!”  Finally, she is operating on the assumption that the people of a country have a right to a fair share of the products of their country, and that huge income inequality is an unjust state of affairs. I have a feeling that many people from my background will not share these assumptions, but I confess that I’m finding it rather difficult to object to them.  

In conclusion, this book is a wake-up call for Christians in the Western world who are accustomed to take it as one of those inevitable facts of life that the two-thirds world is poor and oppressed, and who subconsciously (or even openly) attribute it to the native incompetence and wickedness of these peoples: “We’re Protestant Christians, and so we’ve figured out how to prosper; they’re not, so it’s no wonder they’re condemned to keep wallowing in poverty.”  This book alerts us to the fact that this poverty and oppression is the result of particular decisions and policies largely emanating from our shores, policies that we have enthusiastically supported as long as they made us richer, and that we have a responsibility to repent of.

The Rise of the Two-Income Family

February 28, 2010

(The following experimental thoughts were inspired by some fascinating remarks by Oliver O’Donovan in recent class.)

Christian conservatives have an odd tendency to divorce social and moral problems from economic problems.  A classic example is the issue of women in the workplace.  I grew up in a small subculture that strongly opposed the idea of women having careers and that traced many of the ills of our society to the feminist movement, and the loss of a proper understanding of the family and the gender roles it presents to us.  Interestingly, feminism seems to have largely missed some of the economic roots of the problem as well.  According to the conservatives, the problem was that a proper understanding of the family collapsed, feminism went around persuading women to be uppity, and, thinking they had to prove themselves, women marched out into the workplace.  According to the feminists, the workplace was full of sexists who wanted to keep their power over women by refusing to let them work, and it took a sustained and aggressive campaign by women to get equal employment rights.  

While there is truth in both of these narratives, both ignore another tremendously significant factor--namely, that the world of business had a very good reason for wanting to haul women in, rather than keep them out: wages.  

Until the middle of the last century, there was a widespread cultural consensus (strongly propounded by Catholic social encyclicals, among other things) that a business ought to pay its workers a wage sufficient to support a family in reasonable comfort, the assumption being that in each family, only the father was working out of the home, and the father had to earn enough to provide.  Normal wages then, by the 1950s, having to meet this societal expectation, were quite high.  Businesses, then, had a strong incentive to increase the supply of wage-earners, thus bidding down wages, and indeed, to overturn the whole cultural consensus that there would only be one wage-earner in a family.  Although it is true that many sexist businessmen let prejudice get in the way of good economic sense, it is nevertheless true that the liberation of women and breakdown of the traditional family was largely motivated by economic interest on the part of businesses.  The radically different understanding of gender roles and of the family that we now have to deal with was not so much a triumph of liberal social ideals, then, but of capitalism; indeed, we could say that this was perhaps capitalism’s greatest triumph of social revolution.  

The consequent bidding down of wages and changes in the structure of the marketplace have had wide-ranging economic effects as well, helping turn us into more of a consumerist culture.   In the old family organization, it was the husband’s duty to bring home the wage, and it was the wife’s duty to help make that wage go as far as possible.  The wife practiced “home economics,” making the home an efficient, thrifty economic unit so that some of the wages could go into savings.  Now, with the wife out in the workplace, no one has the time and expertise to practice thrift and home economics.  It is now normal for families to eat out almost as much as they eat in, and to buy overpriced and unhealthy pre-cooked meals when they do eat in.  Instead of caring for their children, they pay others to do so, and pay for all sorts of toys and activities to entertain the children.   In short, families no longer create or maintain any of the things they need for life, but simply purchase them and replace them as soon as they are worn out.  The family is no longer a carefully-run economic unit, but a federation of two income-earning and several income-spending units.  It is surely true that many factors besides women in the workplace have helped cause this transition to consumerism, but this shift is certainly one that deserves more attention than it is generally given.

"The Sweet Odor of Gain"

February 25, 2010

The Protestant ethic may have been a friend of capitalism, but Martin Bucer certainly wasn’t.  Some of the most interesting passages in his De Regno Christi are the extensive advice he gives magistrates about economic affairs, and in which he rants against the profit-seeking proto-capitalists.  Two sections in particular intrigued me.  

First was his treatment of the issue of the enclosures, a matter of which I’d never heard before last semester, but which came up a number of times in Theology and the Global Economy class.  The enclosures were the expropriation of small landowners by larger magnates, who wanted to use their property to expand their sheep herds for the lucrative wool industry.  This took place as a result of the breakup of the monasteries, and the distribution of their enormous lands to the members of parliament who supported the king.  These were thus in a position so superior to the surrounding small farmers that they could readily buy them out.  Hilaire Belloc argues that it was these expropriations, transforming England from a society of free small landholders to one of a propertyless working class and a propertied upper class, that enabled capitalism to take root in England, and in such a vicious form as it did, because a division between the capital-owners and the laborers had already been created.  

Bucer was almost as upset as Belloc about what was going on, although he had only just come over from Germany to live in England.  It was clear to him that the land was to be used for the sustenance of the maximum number of men, not the generation of maximum profit: 

“Now, it is apparent that this island has been adorned by the Lord with such good soil and climate that it should be able to produce far richer farm products than it now does, if the fields would be cultivated with a right diligence and if all land were cultivated which used to be and should be cultivated on its own merits and for the good of the commonwealth, at the expense (at least partial if not entire) of the profit in wool.  Insofar as this profit provides only harmful pomp and luxury, it should be turned over tot he purpose of giving sustenance to human beings who are the sons of God.  They say that this trade in wool has now so increased that in most places one man uses as much land for the pasture of his sheep as was used a short time ago to support the life of more than a thousand men.  But what person not completely destitute of the mind of Christ can fail to acknowledge that Christian princes must make it a major project that there should be as good men as possible everywhere who live for the glory of God; therefore, such princes must in every way be on guard lest their own interests more than those of the commonwealth, excited by the infinite stimulus of greed, should displace men from the lands, and rob the state of its greatest riches and ornaments, namely, good citizens....”

To solve this problem, Bucer recommends dramatic state intervention to divide up land for cultivation and to set fair prices:

“It will be necessary: first, to designate for the pasture of sheep that portion of land which the Lord himself seems in his generosity especially to have provided for this work and which ancestral followers of God adapted to this use; secondly, that lands fit for planting should be rented for cultivation at a fair price.  For this price really began to increase enormously after the lands of the monks had come into the power of those men whose insatiable avarice for everything necessary for the sustaining of present life increases daily.”

Second, Bucer also has many other recommendations to the king about how he should restrain a capitalistic greed and the proliferation of luxury in the realm of commerce:

“Marketing is a business which is honest and necessary for the commonwealth if it confines itself to the export and import of things that are advantageous to the commonwealth for living well and in a holy way, but not those which encourage and foster impious pomp and luxury.  In order to benefit men’s piety, this purpose ought never to be absent from the thoughts and deeds of Christians but should always be considered and weighed as scrupulously as possible.”

Notice here that Bucer believes that those involved in “marketing,” which is to say, commerce, cannot plead the excuse that they are merely bringing to market those items which the market demands--an excuse that is sacrosanct in our society--but that they have a responsibility only to bring those items which promote good morals and piety.  He will later insist that the magistrate also has a responsibility to make sure that they do so, since they will probably be too greedy to exercise such responsibility themselves:

“Inasmuch as merchants pretty commonly reject this purpose, they burst forth with wickedness and greed, so that next to the false clergy there is no type of men more pestiferous to the commonwealth.  For, in the first place, for the sweet odor of gain, of which they accumulate an immense amount with little work through their nefarious skills, and for the splendor of pomp and luxury, of which they recognize no measure or limit, they attract the more outstanding talents, which if they were dedicated to philosophy, could be of very great use both to the State and the Church....For they cover their minds with the darkness of perverse judgment, so that they judge nothing to be important but to excel in the accumulation of wealth, through good and evil means, and in the expenditure of what has been accumulated in all kinds of worthless ways of life.”

C’mon Martin, lay off it--can’t you appreciate someone who’s got a good head for making profit?  And if he doesn’t have the incentive of a few well-earned creature comforts, what else is going to make him work?  

“And since they must often live immoderately, they perpetrate frauds in business, multiply profits wherever they can, increase monopolies in order to make a gain not only for their limitless luxury but also for the constant increase of the interest they are taking.  It also happens frequently that they influence the councils and impede the law courts of the princes for their own ends, so as to remove the obstacles to their artful trickery.”

No way, Martin!  You think that good profit-seeking free-marketeers would try to form monopolies, or would lobby the governments to change regulations in their favor?  Don’t be such a cynic!

“Furthermore, they daily invent astonishing enticements for the purchase of their trifling wares, which are designed and prepared only for impious luxury and pomp, and they seduce nobles and other wealthy men of little thrift into buying them.  And when they do not have enough money for these trifles which are esteemed as the ornaments of the nobility and its social status, there is at hand the money of the merchants, but at interest, and such a poisonous interest that within a very brief time whole families are destroyeed and overthrown.”

Oh come now!  Now you have a problem with advertising too?  C’mon, every merchant has a right to tout his product to consumers, and if they choose to buy it, that’s their choice.  They’re responsible individuals, so how can you blame the marketer if they choose to go into debt to buy his products?

So what does Bucer suggest should be done about all this?

“It must be ordered, first, that nobody should be allowed to enter merchandising whom officials have not judged suitable for this sort of thing, having found him to be pious, a lover of the commonwealth rather than of private interest, eager for sobriety and temperance, vigilant and industrious.  Secondly, that these should not import or export merchandise other than what Your Majesty has decreed.  And he shall decree that only those things are to be exported of which the people of the realm really have an abundance so that their export may be of no less benefit to the people of this realm, to whom these things are surplus, than to those who take them to foreign countries and make a profit on them.  So also he should permit no merchandise to be imported except what he judges good for the pious, sober, and salutary use of the commonwealth.  Finally, that a definite and fair price should be established for individual items of merchandise, which can easily be arranged and is very necessary (so fiery is human avarice) for conserving justice and decency among the citizens.”

Wow...certainly not what you’d call laissez-faire.

And to think Christians call Obama a “socialist”!  

(In case Davey should misunderstand, that is meant as a criticism of us, not of Bucer.  And in case others should misunderstand that, I do have criticisms of Bucer.)

HOPE for Haiti? Disaster Capitalism Strikes Again

An AP article yesterday entitled "Can low-paying garment industry save Haiti?" highlights how depressingly hypocritical US commitment to helping Haiti really is.  Using the quake as an opportunity to kick into high gear a plan formulated last year, the UN, Obama administration, and American business community are planning to expand the sweatshop industry as a means of helping Haiti's economy recover from the disaster.  

Yes, you heard that right--more sweatshops to help the Haitian people...typical American solution.  The industry in Haiti currently pays a wage of $3.09 a day, having refused to accept a law last year that had tried to peg the minimum wage at a bounteous $5 a day.  (The clothes sewed, incidentally, are no Wal-mart brands, but sell for $550 a pop at stores like Jos. A. Bank.)  At this wage rate, employees can pay for the barest food and, if they're lucky, shelter, and no more; indeed, they must miss out on the free food handouts that are currently available because they're kept at work all day.  

Nevertheless, Bill Clinton, currently serving as a "special envoy" to the nation, promised that "The rich will get richer, but there will be a much, much bigger middle class, with poor people pouring into it at a rapid rate."  The theory, of course, is that eventually, all these folks will save up enough money from their meager wages that they can spend more, encouraging more industries, and thus more wages, and they'll be able to acquire more skills, and thus command higher wages, and so on.  The problem, of course, is that the wages are so low that nobody has anything left over to save or invest, and the population is so desperate and unemployed that those wages won't be rising anytime soon.  In fact, in the last twenty-five years, real wages have fallen by 50% at these factories!   No one has poured into the middle class from sweatshop work; rather, the poor and desperate have simply sunk even deeper into poverty and desperation.    

Nevertheless, a year and a half ago, the US Congress passed an act called the "Haiti Hemispheric Opportunity through Partnership Encouragement Act" or "Hope II," giving Haitian sweatshops completely tariff-free access to US markets, to try to encourage more US clothing companies to outsource their labor there.  Of course, the lifting of such barriers does nothing to raise wages, but simply boosts factory profit margins, which now average 22%! 

I recall Rerum Novarum's indispensable dictum:

"If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice."

Three Muted Cheers (Review of Stark, Part IV)

Now, to close on a good note, here’s three good things in the book:
First, it thoroughly dismantles many smug and self-satisfied Protestant attacks on Catholicism. Stark is right to point out that Weber’s Protestant Ethic and the Spirit of Capitalism was driven partly by an anti-Catholic sentiment that wanted to insist that all the progress had happened in the Protestant countries because of their Protestantism, and the Catholic countries were stagnant because of their Catholicism. Such arguments are a dime-a-dozen in modern American Protestantism. Of course, it goes the other way too--Catholic anti-capitalists have tried to pin all the blame for capitalism on Protestantism. Stark’s account shows fairly clearly that, whatever you want to think about capitalism, the praise or blame has to be more evenly distributed among Catholics and Protestants, and it will remind Protestants that Catholicism has been, in general, a friend of progress, freedom, and development every bit as much as Protestantism has.

Second, this book lent a great deal of support to a hypothesis I’ve been nursing for a while; namely, that there is a direct connection between the size of a political entity and the amount of genuine freedom that is possible within that entity. Stark argues that it was the medieval city-states that prospered much more than larger kingdoms or empires, because their much smaller size was conducive to greater freedom for the people and the commerce and greater responsiveness on the part of their governments. The post-Reformation stagnation of France and Spain vis-a-vis the Netherlands and England was due to their much larger populations and more centralized governmental structures, which could not help curtailing freedom simply because of their size. So, lots of good ammunition here for anarcho-syndicalism. Of course, Stark does not seem to realize the importance of his own observation here, and generally reverts to repeating the tired formulas of despotism vs. market-friendly governments. This means, incidentally, that he has rather too much faith in the “market-friendly” US government, not recognizing that its sheer size means that it will undermine freedom.

Third, in a fascinating passage, Stark confirms another hypothesis that had materialized in my mental matrix last term: to be a social good rather than a social ill, capitalism requires well-distributed land ownership, or at least, easy access to land ownership. In reading about the horrific depredations of British capitalism, I wondered to myself why we had not, in general, experienced the same social misery here in the US with the rise of industrial capitalism. A combination of Belloc, Berry, and the Torah hinted at an answer: in Britain, industrial capitalism arose against a backdrop of landlessness, and hence workers were ripe for exploitation, social dislocation, etc.; in the US, industrial capitalism arose against a backdrop of almost limitless private access to land, as the country expanded westward; hence, workers were in principle free and self-sufficient economic agents, capable of holding their own against capitalist manufacturers (though of course one could argue here that this relative well-being was simply maintained at the expense of tremendous exploitation of the Indians). This is precisely what Stark argues on pages 222-25. If this is true, it suggests an explanation for why industrial capitalism is having such deleterious effects in Third World countries, and also suggests that Torah principles of land-ownership may still have a lot of truth and relevance.