Paul Krugman’s “Ricardo’s Difficult Idea” is still one of my favorite pieces of pop economics. In this light, I was very disappointed to see him referring to Naomi Klein’s The Shock Doctrine in a discussion of the ongoing power struggle in Wisconsin (HT: Charles McKinney). While The Shock Doctrine tells a lot of gripping and tragic stories about governments abusing people and power, readers who really want to know about the political economy of crisis would learn much more from Robert Higgs’ Crisis and Leviathan.
Why? What’s wrong with The Shock Doctrine? Most importantly, Klein’s main thesis–that free-market ideologues and zealots constitute “a movement that prays for crisis the way drought-struck farmers pray for rain, and the way Christian-Zionist end-timers pray for the Rapture”–is at best a special case of a more general phenomenon. At worst it’s just wrong. Tyler Cowen discusses this in greater detail in a 2007 review, Johan Norberg dissects The Shock Doctrine in detail here, and I discuss and criticize some of the book’s key claims in this review essay that appeared in the Journal of Lutheran Ethics.
In The Shock Doctrine, Klein makes a number of claims that are open to empirical testing. In this paper, Robert A. Lawson and I took up her claim that “torture has been a silent partner in the global free market crusade.” In short, human rights abuses were associated with slower economic liberalization. Respect for and protection of human rights were associated with faster economic liberalization.
Krugman mentions Chile, and Chile is central to Klein’s story. After our paper was published and after we sent it around to people who were in the bibliography, I got this email from Arnold Harberger, who was one of the key villains (or heroes, depending on your perspective) of the Chilean economic reforms of the 1970s and 1980s.
In short, Klein’s sneering story about a sinister free-market conspiracy collapses when we look at it carefully. I’m sorry to see that Krugman picks it up and runs with it.