- by Jeremy Agar

“The Shock Doctrine”,

Naomi Klein, Penguin, Victoria, 2007

Some years into the Nikkei’s* prolonged doldrums a serious looking man on TV said he was hoping for a major earthquake to hit Japan. As it’s on a fault line Tokyo is sure to get one sooner or later, the suit assured the camera, and sooner would be better. If Tokyo fell over, it would have to be rebuilt. This would provide a powerful stimulus to domestic investment, the lack of which had been holding back Japan’s stock market. *Nikkei is a stock index of the Tokyo Stock Market. Ed. 

It sounds like satire, but there was no sense of irony in the remark. That’s because it was a conventional piece of economic analysis, offered in the context of a discussion about global markets. Of all the cliched phrases favoured by financial commentators, the notion of “creative destruction” might be the most popular of all. What better way to boost the Japanese economy, which was becoming deflationary, than by putting the country’s vast savings into something more potent than a tiny bit of bank interest? Capitalist economies need growth and expansion.

Among the money men violent slogans abound, so much so that we tend not to notice them. Naomi Klein thinks we need to. Her starting point is “shock therapy”, the 1990s’ version of the ideology. Had her book detailed the uses of “shock therapy” it would have been valuable, but it would not have been indispensable. Others have told the sorry tale and told it well. Klein makes no claim to having covered new ground or to being an economist. Amid her copious acknowledgements, she admits to having asked for a crash course on the theories of neo-liberalism. She’s too modest. “The Shock Doctrine” offers an original and stimulating synthesis*.

*Klein notes the contributions of writers we’ve discussed in previous issues e.g. John Perkins: “Confessions Of An Economic Hitman”, Antonia Juhasz: “The Bush Agenda” and Stephen Kinzer: “Overthrow”, all reviewed in Watchdog 112, August 2006, online at; also Joseph Stiglitz, “Globalization And Its Discontents”, in Watchdog 105, April 2004, online at I’ve previously reviewed other insightful accounts, including those by Noam Chomsky: “Hegemony Or Survival”, Watchdog 106, August 2004, online at; John Ralston Saul, “The Collapse Of Globalism”, Watchdog 110, December 2005, online at; Bryan Gould: “The Democracy Sham”, Watchdog 114, May 2007, online at; Sharon Beder: “Suiting Themselves”, Watchdog 115, August 2007, online at

Neo-Liberalism: Selfishness & Self-Deception

Neo-liberalism touts itself as a new science, yet it is based on a series of very old assumptions. It pretends to rationality, claiming to be giving us a true account of human nature, alternatives being merely false. But the basic premise on which all is based - that our species is selfish, always seeking to maximise personal gain - is as overt a prejudice as any. Self-deception is at the core of neo-liberal theory and its truths are really hopes. It needs human nature to be this way because that would validate the championing of the rich and powerful. Klein is showing us that, rather than the cool technocrats of their own publicity, neo-libs tend to be frenetic propagandists. They have invented an implausible economic actor for whom every social occasion is a market transaction.           

Klein gives an extensive account of Milton Friedman, guru of what has come to be known as the Chicago School. Friedman has a cult following for lecturing his disciples that “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. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically possible”. This is the origin of shock therapy as an explicitly political phrase. The patient, the moderate welfarist economies of the post-war West, could have been treated in outpatients and sent home, but then he would have continued to live his irrational, unselfish life. So Dr Friedman summoned the orderlies to wheel him into the operating theatre.

“Capitalism And Freedom”, Friedman’s seminal work, came out in 1962, mostly - and fortunately - ignored. The “politically possible” moment arrived in the early 1970s when Chile elected Salvador Allende as President. Being reformist, the new Government might have challenged the US transnationals, and Chile’s tradition of democracy was a threat to the reliable dictatorships in the rest of Latin America. The result is well-known. In the name of “individual freedom” Allende was murdered (in the “first 9/11” i.e. on September 11 th, 1973) and fascism was installed in the form of General Pinochet, a fervent admirer of Friedman.    

The election of true believers Margaret Thatcher in the UK, in 1979, and, in the next year, of Ronald Reagan in the US, gave legitimacy and influence to neo-liberals. As self-styled revolutionaries, Maoists of the Right, the Friedmanites admitted no deviations from the one true path. That way lay temptation. In Klein’s words: “In order for the ideal to be achieved, it requires a monopoly on ideology; otherwise, according to the central theory, the economic signals become distorted and the entire system is thrown out of balance”. So it works best in a dictatorship like Chile, but, if a parliamentary democracy can be convinced to join the movement, the propaganda value is greater. Enter NZ, which succumbed in 1984. In the heady early days of Rogernomics and Ruthanasia, we contended with Chile as the purest expression of the new order (NZ does not feature in the book, probably because our - as we say - clean, green land has a happy reputation). 

Three Essential Elements

Klein points to three essential elements to the neo-liberal revolution: privatisation, government deregulation and big social spending cuts. These enable “huge transfers of public wealth to private hands, often accompanied by exploding debt”. Between Pinochet’s killings and David Lange’s deceptions lies much of the world. Klein tours the trouble spots, showing how crises were created so that the new order could be built amid the rubble of the old. Because none of the world’s societies would choose neo-liberalism, secrecy is always needed *. In Bolivia, which was administered shock therapy in 1985, apparently only five Bolivians knew about the surgery in advance. The five included the head of the army and the head of the police. *The importance of secrecy in a democratic context like NZ is described in my review of “Roderick Deane” by Michael and Judith Bassett in Watchdog 113, December 2006, online at   

Bolivia ’s prescription was written by the American economist, Jeffrey Sachs, who also operated on Russia and Poland **. And in 2006 it was revealed that the 1400-page report that had ravaged Argentina after its 1992 therapy had been written in secret by the Wall Street financiers, JP Morgan and Citibank. **These operations Sachs now disowns, claiming they didn’t follow his medication. As Klein found when interviewing him, Sachs has realised primitive market mechanisms don’t always work but he finds it hard to admit he was wrong. These days his public statements about Africa are certainly more responsible. 

Klein is cogent in putting into context the various experiments. Whatever political circumstances obtain, the therapists have to be adroit opportunists. The best time to strike is when citizens have other things to think about. Some examples: Yugoslavia, after the 1999 NATO attack; China, in 1989 after Tiananmen Square, and Russia, in 1993 after Boris Yeltsin’s tanks fired on Parliament. Thatcher, who had to contend with a notoriously pragmatic and gradualist electorate, could operate only after the Argentine colonels invaded the Falklands in 1982. She seized the moment to pick a fight with the trade union movement by deploying the State against the coal miners. Then she could begin her privatisation.

Restructuring (this more wideranging term does not figure in Kein’s lexicon) needs a cleared building site. Observing the chaos of Yeltsin’s regime, Richard Pipes, a relieved American neo-lib strategist, said he had been hoping “for Russia to keep disintegrating until nothing remains of its institutional structures”. A tactician at investment banker Morgan Stanley told his mates that “what we need now in Asia is more bad news. Bad news is needed to keep stimulating the adjustment process”. A US economist summed up the global need: “Any reform must be disruptive on a historically unprecedented scale. An entire world must be discarded”. 

The South African version was uniquely cynical. In 1993, in the course of the negotiations that ended apartheid, the outgoing regime tried unsuccessfully to cling on by proposing constitutional changes - a decentralised federation, reserved ethnic seats - that would have weakened the African National Congress (ANC) Government by dispersing the power of the central government. These were traditional gambits and recognised as diversions by key ANC personnel.

Amid the euphoria over ending apartheid, a few boring financial matters were added to the agenda. The central bank needed total independence. Like the rest of the world it was now joining, South Africa had to prepare for GATT (the former General Agreement on Tariffs and Trade, now the WT0 - World Trade Organisation). Even as the new country was born, the hopes of freedom fighters had been traded away. Private property is protected (so land distribution is illegal) as are “intellectual property rights” (so there are no cheap drugs to combat AIDS). Subsidies are illegal (so factories are closing).

Why can’t the new Government deliver on building houses and providing public health? Because, under GATT/WTO, the Government has had to fritter its resources servicing a debt - incurred by the previous apartheid regime of the Nationalists. So not only has there has been no nationalisation of strategic assets, but remaining resources had to be sold to pay down the debt. The negotiations that have so crippled the country were kept secret from the ANC caucus. Klein interviewed the doubtless well-meaning negotiator who signed on for the ANC. Asked if he appreciated at the time what he had done, he replied: “Frankly, no”.

Shock And Awe

The best of all opportunities was provided by Al Qaeda on 9/11, exploited by the Bush cabal to remake not only Iraq but also the US itself. And the central metaphor of neo-liberal policy in the 21 st Century has been Shock and Awe, the tactics of Gulf War 2. With one side having a monopoly of force, deployed from a distance, the technicolour blitzkreig was inevitable. That, however, is not the point. Shock and Awe was more than a military tactic. As characterised by the US Army itself: “Shock and Awe are actions that create fears, dangers, and destruction that are incomprehensible to the people at large”. 

This is not like World War 2, when mass bombing was intended to demoralise civilians so that they were unwilling to enlist or to accept ongoing miseries. It was always apparent that Saddam Hussein would not be able to fight on after the first few days. Shock and Awe was not needed to “create fears, dangers, and destruction” so that Iraqi civilians would throw down their weapons. Shock and Awe was designed to bewilder the population so that it would not resist the neo-liberal order that would follow. 

A career US diplomat has confided that, because his Government’s stated aims could not have been achieved, he expects to never understand why Iraq was attacked. Bush and his accomplices might well have had several contributing motives - to do with oil or George Junior’s need to prove himself to George Senior etc - but analysis that ignores the doctrines of shock will always flail. More perceptive was a colleague who concluded that there’s little to be understood by pondering the traditional complexities. Bush attacked because he could. Saddam was shocked and awed, Klein shows, to empower US shock therapists and to bring Iraq into the global capitalist camp. War is the most effective of all therapies (for a detailed analysis of US strategies in Iraq, essentially identical to Klein’s discussion, see my review of Antonia Juhasz’s “The Bush Agenda”, in Watchdog 112, August 2006, online at

“Shock and Awe: Achieving Rapid Dominance”, to give the US Army manifesto its full name, continues: “Nature in the form of tornadoes, hurricanes, earthquakes, floods, uncontrolled fires, famine, and disease can engender Shock and Awe”. Here the Dr Strangeloves have had a lucky run. Klein discusses a domestic example, the deliberately lethargic help offered New Orleans in 2005, where Hurricane Katrina ripped up a city with conveniently large numbers of poor black people. It was a city of unrepaired levees, underfunded public transit, and little disaster preparedness. This was malign neglect, government-as-usual. But after the flood, neo-liberal therapy was administered. While no emergency federal money was allowed to retain public planners, new contracts were granted to outside, private consultants (Klein suggests that the 9/11 hijackers were helped by inadequate, privatised air traffic control and airport checks).

The big disaster opportunities were offshore. The tsunami that hit Sri Lanka in 2004 allowed a tourist official to draw a new “brand personality profile” for his country. The President, elected with a mandate to resist privatisation, visited the devastated coast. “Nature itself”, observed the President, had “whacked us from all sides and taught us a lesson to be together”. Four days after the tsunami, she introduced a water privatisation bill. Three days after that, it was announced that a “taskforce” - not Parliament - would design a new economy. The new “togetherness” was motivated by the opportunity that Big Business saw in beaches swept clean of fishing villages. The hotel industry wanted foreign tourists. As a “safety measure”, locals were sent to camps in the interior, where they remain. Klein discerns a similar pattern of creative destruction following hurricanes in Central America, Thailand and the Maldives. 

If Klein is right about the shock doctrine, the often bewildering decisions made by global elites begin to make sense. “Yet because the decisive role played by shocks and crises has been so effectively purged from the official record of the rise of the free market, the extreme tactics on display in Iraq and New Orleans are often mistaken for the unique incompetence or cronyism of the Bush White House. In fact, Bush’s exploits merely represent the monstrously violent and creative culmination of a 50 year campaign for total corporate liberation”.

Financial traders have long appreciated that markets and disasters are bullish partners. Klein quotes a staffer from the investment house, Smith Barney. Advising a punt on what he called his “Plutonomy basket” of stocks (by which he might have meant that they were the investments that had the potential to make rich people into super rich plutocrats) , he points out that “if income inequality is allowed to persist and widen, the plutonomy basket should continue to do very well”. The fascist mind is partial to metaphors of disease. Hitler set the pattern by imagining the Fatherland as a pure host contaminated by the cancer of inferior races. Klein offers the example of Pinochet, for whom the ideal of democratic solidarity was “gangrene”. A Chicago School economist saw his neo-liberal ideology “as antibodies to combat anti-economic ideas”. Images of cleansing abound in the literature of the shock therapists. When Asian economies went down the gurgler a few years ago Friedmanites prattled about “the Asian Contagion” (they didn’t mind that the contagion was spread by the currency speculation they had demanded).

The “Mistakes” Are Integral

Conventional analysis turns a blind eye. Now that, in the US, the Democrats are ascendant, Bush’s Iraq gambit is routinely dubbed a “miscalculation” or a “blunder”. Previously, looking at Russia, journalists would worry about a “culture of corruption” as evidence that Russians were “not ready for democracy”. Perhaps they were used to dictators. Perhaps the many crimes were an expression of the Russian national character. Domestic American shock therapy is excused as the excesses of a few rotten apples*. There are always vague and irrefutable assertions available which act to deflect a more precise examination. Anything to avoid a diagnosis of systemic intent. * For a discussion of rotten apple ideology, check my review of “Enron: The Smartest Guys In The Room”, Watchdog 111, April 2006, online at

Klein is showing us that “the mistakes” are integral. Far from being unintended, “crisis is built into the Chicago School model. When limitless sums of money are free to travel the globe at great speed, and speculators are able to bet on the value of everything from cocoa to currencies, the result is enormous volatility. And, since free trade policies encourage poor countries to continue to rely on the export of raw resources such as coffee, copper, oil or wheat, they are particularly vulnerable to getting trapped in a vicious circle of continuing crisis. A sudden drop in the price of coffee sends entire economies into depression, which is then deepened by currency traders who, seeing a country’s financial downturn, respond by betting against its currency, causing its value to plummet. When interest rates are added, and national debts balloon overnight, you have a recipe for economic mayhem” (see my review of Raj Patel’s “Stuffed And Starved”, Watchdog 116, December 2007, online at, for a discussion of global food production).

Klein calls it “disaster capitalism”. While the Bushite form it takes is a recent thing, the principle is not at all new. 250 years ago, at the start of the modern period, the economist Adam Smith advocated the seizing of “waste lands” for more profitable use. Now, Klein remarks, his ideological descendants employ the same methods to seize public assets:  “Under Chicago School economics, the State acts as the colonial frontier, which corporate conquistadors pillage with the same ruthless determination and energy as their predecessors showed when they hauled home the gold and silver of the Andes. Where Adam Smith saw fertile green fields turned into profitable farmlands on the pampas and the prairies, Wall Street saw ‘green field opportunities’ in Chile’s phone system, Argentina’s airline, Russia’s oil fields, Bolivia’s water system, the United States’ public airwaves, Poland’s factories - all of them built with public wealth, then sold for a trifle”.

A contrite Jeffrey Sachs has called for a new Marshall Plan to help the poor world. The original Marshall Plan, under which the US government advanced huge loans to rebuild post-war Europe, was an unqualified success. Living standards recovered and then pushed on. This, Sachs seems to think, is reason enough to go back to a proven model. Yes, it might well be, but Klein shows that even an architect of the new model can miss its point. The Marshall Plan was not philanthropic. Strategists needed to counter a Soviet appeal to an ethic of development and equality. In the 1940s, Klein notes, US strategists would rather split Germany than risk losing all of it “either to collapse or to the Left”. She reminds us that President Franklin Roosevelt’s New Deal of the 1930s, with its welfare payments and subsidies, set up the domestic economy recovery. But it was not prompted by a desire to bail out the victims of the Depression so much as by a need to bail out capitalism, the system itself. Tactically, the Marshall Plan was the New Deal extended to Europe. Klein argues that Sachs doesn’t see that “there was never going to be a Marshall Plan for (the new) Russia because there was only ever a Marshall Plan because of (the old) Russia”. 

Capitalism’s “Monopoly Period” Only Lasted A Few Years, In 90s

“We know the adversary, we know the threat”, lectured Donald Rumsfeld, Bush’s recent Defense Secretary, not long before he was fired because he made too explicit the tenets of the disaster capitalists. This echoed standard talk about the Soviets, but Rumsfeld was not thinking of the Russkies. No, the threat was Defense Department bureaucracy. To its boss, even the US Army was a relic of the bad old days of social cohesion. “In the 21 st Century”, Rumsfeld told his underlings, “we’re going to have to stop thinking about things, numbers of things, and mass, and think also and maybe even first about speed and agility and precision”. The Army was “one of the world’s last bastions of central planning”. His solution, to contract out the fighting, to bring in public-private-partnerships, to wage war in Iraq on a just-in-time model consistent with corporatist theory, was a military failure. We are reminded of this every day when we catch the news and hear how America didn’t “plan” for the occupation. To Rumsfeld, the ideologist, it’s been a political success.   

The original, literal, shock therapy was designed by Ewen Cameron, a psychiatrist at McGill University in Montreal. During the McCarthyite post-war, when popular culture was awash with paranoid fantasies about brainwashing Red Chinese and body snatching aliens, Cameron conducted secret experiments for the US Central Intelligence Agency. Electro-convulsive therapy [ECT] was supposed to treat mental disorders by washing memory and personality so that a new brain could be conditioned. “Their minds”, one doctor remarked of his unwitting patients, “seem like clean slates upon which we can write”. A variant on the neo-liberal superstition that humans are rational machines, the therapy left its victims in ruin. The mad doctors had scribbled illegibly. 

Klein argues that ECT is significant for more than the naive cruelty of its methodology. Shock therapy was in part a political act, a technology of control and a progenitor of the shock doctrine. Whether its purpose has been the remaking of a malleable personality or the remaking of a malleable government, shock therapy has a reactionary intent. “The introverted schizophrenic or melancholic may be likened to a walled city which has closed its gates and refuses to trade with the rest of the world”. This was a psychiatrist’s use of the illness metaphor, especially distasteful insofar as it was offered in 1940, when Hitler’s stormtroopers would have agreed with the image. Klein cites it as a foreshadowing of Shock and Awe, whose purpose, as the US Army puts it, is to “paralyse or overload an adversary’s perceptions and understandings of events ... rendering the adversary completely impotent... (through the) manipulation of senses and inputs”.

First Cameron’s schizophrenics, then Chile’s public servants, Bolivia’s tin miners, Sri Lanka’s fishermen, the people of Russia, the poor of New Orleans, the shocked-and-awed of Iraq, the newly enfranchised South Africans, the Palestinians... All have been victims of the burgeoning disaster capitalism. It’s not planned in advance, it’s not a vast conspiracy, no one’s in charge, but that doesn’t mean the pattern’s not there. The outstanding feature of Klein’s brilliant survey is to show the essential element that links places which we are accustomed to see in disparate terms, as though each had idiosyncratic problems. Often racial or religious conflict, as in South Africa or Israel, is a symptom, not the disease. 

A standard economics text from the 60’s taught that we can have guns or we can have butter, productive consumption or military spending. In the same vein Klein discusses the “guns-to-caviar” index, a measure that showed you can afford either fighter jets or executive jets, but not both. Since 2003 - the year of the invasion of Iraq - both indexes have taken off. This, Klein suggests, is the marker of how deeper global instability and rising profits have become entwined: “The disaster capitalism complex thrives in conditions of low-intensity grinding conflict. That seems to be the end point in all the disaster zones, from New Orleans to Iraq”.

Excess hastens its own demise. The new virulent disorder spread swiftly, but so has its antidote, popular opposition. “The disaster capitalism complex is on a par with the ‘emerging market’ and information technology booms of the 90s”. They’re each spectacular but brief outbursts. So ultimately Klein is optimistic. What she dubs capitalism’s “monopoly period” lasted only from 1991, when the Soviet Union collapsed, to 1999, when WTO talks collapsed. Since then in, for example, Latin America and Europe, we’ve seen healthy signs of “shock resistance”.

“Globalisation And The Wealth Of Nations”

Brian Easton, Auckland University Press, 2007

Globalisation, Brian Easton suggests, is best seen as the falling cost of distance. This has in turn allowed for greater economies of scale. Starting at the dawn of the 19 th Century (steam, rail) the world’s technologies have developed exponentially. The globalised world has become a more efficient producer and distributor of goods. This, an inevitable process, has all sorts of historical and cultural consequences. 

Being the most distant (from Europe) and isolated of all, New Zealand has never lost its British migrants’ keen awareness of the economics of distance. Now that we’re no longer so far away (most obviously these days because of computer technology) we’ve been hugely advantaged by globalisation. Like Chris Trotter and Michael King, Easton locates the origins of modern NZ in the invention of refrigeration and the opening of an overseas market in mutton following the first shipment in 1882. So globalisation is the product of technological improvements. These have made our lives easier, richer and more fulfilling. Surely we can agree. Well, yes, we can. But, Easton continues, as though to acknowledge the carping of the critics of globalisation, we might well have become a bit more alike, but that’s a small price to pay.

Here, at the start, Easton invites disagreement. Of course communication has been a benevolent trend. If it rescues us from isolation and ignorance, so that we can share experience and overcome insular narrowness, then how can there be any problem with globalisation. What’s the beef? Do groups like CAFCA want us to let our farms revert to gorse, to turn off our computers, to close our airports (after expelling the foreigners)? This, the standard line of the globalisers, reverses the real attitude of critics, who have inherited an internationalist outlook. Surely a moderate like Easton is not about to endorse the nonsense. 

As a guide to the world economy, this book is fair enough. It’s way better than the pulp pumped out by the unblinking devotees of neo-liberal fashion. Yet it’s an often annoying account. The first, less significant difficulty is that, in order to put things into neat context, Easton breezes past all sorts of messy detail. For instance, addressing the question of whether globalisation means a loss of national identity, he looks at Canada. If anyone is going to be absorbed by the global (that’s American) culture, it’s Canada. It’s next door to the US, sharing a lot of history and culture.     

Easton’s Sketch Of Canada Would Surprise Canadians

He observes that “most Canadians are bilingual” when in fact there are whole provinces where French is spoken as often as it is in Akaroa. Neither would they recognise their origins as including, as an afterthought, just “some Europeans” whose ancestors were neither British nor French, nor from the First Nations. Easton discerns a “vigorous” Quebec separatist movement, whereas separatism has been dormant for decades. In the context of his analysis, this apparently superficial and dated account matters in that Easton says that the separatist impulse has to do with “cultural identity”. Another influence can be assumed in the context of “colonial legacy”. It’s all so NZ, so much cultural baggage.

In its glory days, perhaps, separatism was about culture, especially language. But by the 80s, Quebec nationalism was to a large extent the ideology of a rising business class anxious to sever ties with English Canada - the real, unannounced enemy being social-contract Keynesian Canada - so that it could tag itself to the US “free market”. When Easton notes, correctly, that Canadians often define themselves as having a better, because public, health system than the Americans, this is not mere cultural preference. Besides being a resistance to American ideology, the advocacy for public health is a response to the North American Free Trade Agreement, to globalisation. Similarly, you could argue that, rather than being a response to globalisation, Quebec separatism has been an expression of it. 

The part of Canada which most resembles the US is Alberta, but it does so now no more than it has for the last half century. In Alberta the French language is virtually extinct and much resented. It’s the only province where a candidate like George Bush would have a chance of not running last in an election. This suggests that Tory support, both federally and in Calgary, for Quebec nationalists was not motivated by culture. Alberta is staunch for the southern neighbour because its economy has been based on beef and, vitally, oil.     

Easton ’s scope is wide, but, as with his peremptory chat about Canada, he begs as many questions as he answers. If globalisation is a term to describe economic relationships, then North America and Europe are Rich Club partners (Easton’s phrase), and the relationship that matters is the one that exists between them and the Poor Club. And if we want to think about social trends (which are the stuff of most political policy) we could ask, also, whether relationships between people within the Rich Club have been affected by globalisation. Of course Canadians seem untroubled by the American fact. They host American sports leagues; they cross the border to shop. Americans and Canadians own holiday homes in each other’s countries. To what meaningful extent could globalisation affect the surfaces of middle-class people’s daily lives?   

Cultural convergence has a hidden meaning, a code that, wherever we live, we can all decipher. Becoming alike means becoming American - more exactly, mass consumerist American. Yet individual Americans, depending on age, class and geography, are as likely to reject this image of themselves as the rest of us. Thinking primarily in terms of nations and their cultures doesn’t help an understanding of how the global economy works. The world’s bad neighbours live in economically messed up places, but they will almost always say that they had been living in peace. It would be condescending and inaccurate to offer cultural explanations for the difference between the present condition of North America and, say, the Balkans. According to the mass media the crumbling of Yugoslavia was the result of old ethnic scores being settled. A more careful explanation would note that globalisation itself has been a catalyst for the recent turmoil in Serbia.

And throughout the really poor world. Easton is wise not to offer thumbnail sketches of any of the many lesser known countries enmeshed by global neo-liberalism. Which ones to pick to be representative? Which facts to highlight and which to ignore? Selection can allow, albeit accidentally, for as big a bias as intentional misinformation and Easton is not intending to beat a drum for the marketeers. However, the result is that he can’t show us globalisation at work in the bulk of the globe, where the effects are both more directly and more severely the consequence of the policies he’s endorsing. Despite the shrinking of distance, the sweatshops of Thailand and China and the farms of Mexico and Sri Lanka are still far from Canada.         

Easton almost notes that the rejection of a harmonised European Union in a couple of national referenda was a rejection of the more-market ideology. He prefers an oblique suggestion. There “seems”, he writes, “to be a fear that the social market economy itself is under threat”. Put this way, the opposition is rendered quaint, a Luddite anachronism. Yet Easton abandons hesitancy as he continues his discussion of the contemporary Rich Club. He maintains that the increasing importance of women in the workplace is not an outcome of globalisation. No, not in itself, not in the Rich Club, not if we have in mind executives or managers or chief justices, but the types of jobs in the “free trade” economies certainly are. Had he considered women’s jobs in the Poor Club, Easton could not have reached any conclusion that did not begin by looking at World Trade Organisation (WTO) rules. Insufficient contributions to public health systems in the Rich Club, he goes on, have “nothing to do” with globalisation (in the Poor Club they won’t either, because the effect of WTO rules is that in many cases public health systems won’t begin). Also - the list is long - it is “inevitable” that present pension levels will be cut.

Where’s The Proof?

Just a moment. You have to prove these things. It’s not enough to assert that it’s not possible for a society to provide well paid jobs, good hospitals, and secure pensions, not without addressing the many cogent arguments for seeing the cuts as the direct consequence of globalisation - as its purpose even. Increased job insecurity and the eliminating of jobs “could have occurred, in principle”, without globalisation, Easton points out. In principle, the critics might concur, if they’re right that globalisation is nothing but domestic neo-liberalism exported, joblessness and insecurity are the goal (a suggestion for readers: after you’ve gone through this book, get Naomi Klein’s “The Shock Doctrine” and make up your own minds).

Then Easton again undermines his own narrative. “Given the mobility of capital”, he begins a new section, “there is not enough money around for governments to fund infrastructure and promote trade”.  Here are three more major and barely examined assumptions. Easton takes it for granted, first, that it is the role of taxes paid by citizens to subsidise the costs of private business; second, that governments can’t act to stop tax avoidance by transnational corporations (TNCs); and third, that mobility being ever faster, the money will keep on withering away. On the contrary, anti-globalisers might say, the rules of globalisation were invented so that finance could be irresponsible.    

When it comes to the traditional role of governments (at least since the early 20 th Century Seddon era, in our case) to provide health, education and other social goods, Easton says that Rich Club countries could tax corporations a bit, if they insisted - and if their profits grew as a result of deregulation - but we have to realise that the “traditional Left dream of plundering corporations to fund the Welfare State is fading”. Plundering? In an avowedly dispassionate textbook?

Anti-globalisers have looked at the Doha Round of WTO talks and seen its failure as a victory for the little guys, who were resisting the drive of transnationals to entirely replace public governments. Easton sees it differently. In his view, the Rich Club saw restraints on corporate power as holding back the poor. He presents the negotiations as the defeat of a benign nice guy US side by petty self-interest. The US, he breezily maintains, wanted development for the poor world. The WTO is characterised as wanting the rule-of-law to replace the “law of the jungle”. 

It’s better seen the other way round, as the rule-of-nation-states being replaced by law-of-the-jungle corporates. Yes, they work by rules, but the laws are made so that they’ll get what they want. That makes WTO law the law-of-the-jungle. The big “predators” would limit their powers, Easton says, in return for “increased certainty” for their transnationals. Who are the predators? Easton says that according to the new thinking they are our elected public representatives. They should hand over their responsibilities to Big Business so it can be “certain” that it can do what it wants. In this - the bottom line, we might say - he’s right about what’s going on. But that’s the problem. Globalisation’s critics don’t see democracy as predatory. They don’t see why ordinary people should live in doubt and insecurity so that Big Business can live in confidence and security. They can’t see that the result of transferring authority from governments to corporations will result in a shift in influence “towards the poor and the weak”. All the evidence suggests the opposite: that WTO policies make the poor poorer; and that they do so in order to make transnationals richer. As Easton himself is emphasising, the big neo-liberal states like Bush’s America are all about downsizing public government. On this, both sides of the debate are agreed. The remaining question is whether this is a good idea. The American electorate seems to be grumpy. 

Neo-Liberal Theory Does Not Match Reality

Easton must know that the real world does not work the way neo-liberal theory hopes it does. Profits, he writes, following the letter of the WTO documents as if they reflected their intent, might flow from Poor Club factories to Rich Club boardrooms, but that’s only because of local savings deficits, not the “‘wickedness’” - another loaded “joke” - of TNCs.  Had the locals put aside a few billion, they could have bought shares in the transnationals to offset the outward flow. True enough. And there’s no law that compels the poor of Paris to sleep under bridges and the rich to live in mansions.

This misleadingly bloodless approach enables Easton to claim that “transnationals are but global extensions of local companies”, but they’re not different merely in degree; they’re different in kind. Karl Marx, an economist admired by Easton, explained change as a fluid process. At a certain stage, a critical mass is reached, a tipping point, and things become something other than what they had been. The self-styled revolutionary neo-liberals share this outlook. They hope that the WTO rules are the lever to tip power to the transnationals.

Easton feels able to say that the people he dubs the anti-globalisers want to return to “a vague Arcadia which has never existed”. In doing so, he bashes a very straggly straw man. If there’s anything that marks the anti-imperialist and internationalist movement (a more accurate designation of anti-globalisers) it’s a hostility to exploitation and a championing of social progress. It’s the deniers of past and present injustice, neo-liberal free traders and their predecessors, who live in an imagined Arcadia of freedom loving maidens punching out from the shoe factory and lining up at the local McDonalds. Easton reverses history to imply that the opponents of WTO are against trade. It’s a gibe favoured by neo-liberals, but Easton does himself no favours by borrowing it. It’s a farcical misrepresentation, but if believed it would be especially potent in a country like NZ which depends more than most on the outside world. 

It’s a pity that Easton, who introduced his book as being middle of the road and objective, borrows some of the cheap shots of the globalisers and endorses all the key aspects of their programme. In his Listener columns and talks on current events, Easton has been informative and balanced. It’s his big picture that’s ugly. As though belatedly striving for this moderation, he concludes by observing that the definitive member of the Rich Club, the US, does not enjoy “a good record of delivering” services that benefit its people. These include the “administrative services of government, police and justice, and - more arguably - education, health, social welfare and cultural services” (arguable for the extreme libertarian Right, maybe, but not for - to borrow a phrase - the mainstream). Thus “it is possible that [the] market-state, unconcerned for the welfare of its people, may descend into fractious class warfare”.  Fractious trouble ahead? Class as relevant, and not just “culture”?  Where did that come from?

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Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. April 2008.


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