Did Milton Friedman Make New Zealand a Nuclear-Free Zone?


reason has a cameo in Shock Doctrine author Naomi Klein's recent speech at the University of Chicago:

I think all ideologies should be held accountable for the crimes committed in their names. I think it makes us better. Now, of course, there are still those on the far left who will insist that all of those crimes were just an aberration–Mao, Stalin, Pol Pot; reality is annoying–and they retreat into their sacred texts. We all know who I'm talking about.

But lately, particularly just in the past few months, I have noticed something similar happening on the far libertarian right, at places like the Cato Institute and the Reason Foundation. It's a kind of a panic, and it comes from the fact that the Bush administration adapted–adopted so much of their rhetoric, the fusing of free markets and free people, the championing of so many of their pet policies. But, of course, Bush is the worst thing that has ever happened to believers in this ideology, because while parroting the talking points of Friedmanism, he has overseen an explosion of crony capitalism, that they treat governing as a conveyor belt or an ATM machine, where private corporations make withdrawals of the government in the form of no-bid contracts and then pay back government in the form of campaign contributions. And we're seeing this more and more. The Bush administration is a nightmare for these guys–the explosion of the debt and now, of course, these massive bailouts.

So, what we see from the ideologues of the far right–by far right, I mean the far economic right–frantically distancing themselves and retreating to their sacred texts: The Road to Serfdom, Capitalism and Freedom, Free to Choose.

Some of us distanced ourselves from Bush long ago, Naomi! But it's nice to hear she reads reason, even if she thinks we're responsible when the president follows the exact opposite of our recommendations. Maybe she saw Johan Norberg's devastating review in our pages of The Shock Doctrine. Her talk does address, or at least brushes against, some of Norberg's complaints:

[Friedmanites] will tell you, when I speak of Chile under Pinochet, Russia under Yeltsin and the Chicago Boys, China under Deng Xiaoping, or America under George W. Bush, or Iraq under Paul Bremer, that these were all distortions of Milton Friedman's theories, that none of these actually count, when you talk about the repression and the surveillance and the expanding size of government and the intervention in the system, which is really much more like crony capitalism or corporatism than the elegant, perfectly balanced free market that came to life in those basement workshops. We'll hear that Milton Friedman hated government interventions, that he stood up for human rights, that he was against all wars. And some of these claims, though not all of them, will be true.

But here's the thing. Ideas have consequences. And when you leave the safety of academia and start actually issuing policy prescriptions, which was Milton Friedman's other life–he wasn't just an academic. He was a popular writer. He met with world leaders around the world–China, Chile, everywhere, the United States. His memoirs are a "who's who." So, when you leave that safety and you start issuing policy prescriptions, when you start advising heads of state, you no longer have the luxury of only being judged on how you think your ideas will affect the world. You begin having to contend with how they actually affect the world, even when that reality contradicts all of your utopian theories.

There are so many levels of incoherence and inaccuracy in those passages that I won't try to address them all. Let's just zero in on the contrast Klein draws between utopian theories and real-world practice. It's a fair argument if you apply it properly: that is, if you look at the consequences of Friedman's policy prescriptions where they are put in place. It makes sense, for example, to look at how Friedman's ideas about denationalization and free trade fared in Chile after they were put into effect. It doesn't make much sense to look at Blackwater's contracts in occupied Iraq, because—try as Klein might to pretend otherwise—they don't have anything to do with Friedman. (And of course, it's important to examine the ways Pinochet's Chile deviated from Friedman's economic ideas as well as the ways it embraced them.)

At the same time, you have to consider how Friedmanism fared everywhere some portion of it was applied, not just cherry-pick the most unappealing regimes that experimented with it. If the only place that adopted any of Friedman's economic ideas was Chile, then Klein might be onto something when she suggests there's a connection between libertarian economic policies and deeply un-libertarian ideas about torture, censorship, surveillance, and state-sanctioned murder. But the most sweeping free-market reforms of the last 40 years were not adopted in Pinochet's Chile, Thatcher's UK, or anyplace else addressed in Klein's book. They were enacted by the New Zealand Labour Party in the 1980s. Far from fusing economic liberalization with political repression, the Labour government expanded civil liberties: It adopted a bill of rights, decriminalized homosexuality, improved the treatment of the native Maori. And while Pinochet signed on to the CIA's war against the Latin American left, New Zealand strained its relations with Washington by making itself a nuclear-free zone, a policy that effectively barred the U.S. Navy from New Zealand ports. By Klein's logic, these are all effects of Friedmanomics.

It shouldn't be surprising to find market reforms in a variety of political contexts: As Norberg pointed out in his review, almost every country on the planet has liberalized its economy in some way or another over the last few decades. (One of Klein's favorite economic models, the flexible manufacturing networks of Emilia-Romagna, is itself largely a product of market forces—though not of Milton Friedman.) So yes, it's important to look at how Friedman's theories "actually affect the world." Klein prefers to ignore those parts of world that don't fit her thesis, and to study the effects of measures that violated Friedman's theories instead of advancing them.