There's much buzz on the Web about Naomi Klein's new book "The Shock Doctrine: The Rise of Disaster Capitalism." (For an overview, see Tyler Cowen's spot-on review today.) Klein argues that "free market ideologues" have consciously created crises as opportunities to force their unpopular policies on unsuspecting populations, both in the US and elsewhere. Those undemocratic moves toward "free markets" have themselves ended in disaster, or so she argues. She manages to link the "shock doctrine" of post-Soviet reform with War on Terror torture (shock... get it?) and lay it all at the hands of... Milton Friedman. She does so, based on Friedman's 1962 quote that goes as follows:

"Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around."

That would seem to be pretty obvious and neutral as written. It also seems to be historically true, though not in the way that Klein thinks. As Tyler and others have noted, the real story of crises in the last 150 years is more like the one our co-blogger Bob Higgs tells in Crisis and Leviathan: when crises occur, it is the state that gains power, rather than some sort of free market utopia emerging. Klein offers numerous examples where she believes that crises have led to "free market" reforms, which in turn have led to disaster. One of those examples is Hurricane Katrina.

Actually knowing quite a bit about this one, the argument is laughable. It was government failure that created the conditions for the flooding of New Orleans, it was government failure (FEMA and others) in this case that turned flooding into a crisis, and it continues to be government at all levels that is the largest roadblock to recovery. (The work of the Mercatus Center's Katrina Project is worth reading. Disclosure: I have a forthcoming study as part of that project.) Moreover, the one organization that was most effective in getting resources to stem the immediate human crisis after the flooding as well as contributing to the longer-run recovery is the favorite whipping boy of Naomi Klein-types everywhere: Wal-Mart. Markets did more to help New Orleans and the Gulf Coast than to create a disaster. Yes, classical liberals offered policy proposals for post-Katrina New Orleans that involved things like school vouchers and other long-standing ideas that we think would improve the lives of people there. But folks on the left dragged out their favorite policy proposals as well. Why does Klein point to just one side as trying to "force" their ideas through in a crisis (as if any of those ideas went through anyway)?

If I could interview Klein, I would ask her two questions:

1. You say that crises are opportunities for free market ideologues to force their preferred policies through in violation of democratic processes. However, in the gravest crisis of the 20th century, the Great Depression, it was government that grew enormously, and the free market was restricted, in ways never before seen in the US. And many of those programs remain with us today, even though the crisis of the Great Depression has long passed. One could make the same argument about several other smaller crises in US history. How do you reconcile the main thesis of your book with the historical evidence that government has grown and markets have been made less free in almost every crisis of the 20th century? Moreover, wasn't FDR's attempt to pack the court and his signing legislation that was later found to be unconstitutional evidence that he tried to force policies on the country by subverting the democratic process?

2. In the aftermath of the biggest crisis in the US of the 21st century (9/11), government spending has grown enormously, government regulations have expanded, and civil liberties are threatened. Each of these are results that people like Milton Friedman and many other classical liberal free market economists not only oppose, but oppose precisely because they are antithetical to the very free market reforms they would like to make. Many on the left, and some free-market libertarians, thus refer to the Bush administration as "fascist." How do you reconcile the left's claim that Bush Administration has engaged in a fascist expansion of government power hitherto unseen in US history with the claim that crises lead to undemocratic free market reforms? Those would seem to be utterly at odds with each other. If Bush really is a fascist, then he really doesn't believe in free markets, and those free market reformers who criticize the Bush-driven growth in government surely haven't seen their ideas win out in this crisis. What gives? It certainly seems like crises produce a lot more government and a lot less free market reform.

Of course, I'm not sure I could be that civil to someone who blames Milton Friedman for waterboarding.