As I delve deeper into Klein's rantings about the Chicago school agenda on how the capitalist systems undermines democracy by concentrating power into the hands of the rich, which impoverishing rest of the citizens, I was suddenly struck by a revelation that Klein is constantly avoiding. By giving examples of Chile, Argentina, Brazil, Poland, South Africa and China Klein repeatedly concludes that the Chicago schoool capitalist system supports autocracy and oligarchy.She asserts that Friedman propagates the use of shock therapy for complete & swift application of the free-market theory in any given system, which in turn leads to large scale privatization of industries / basic infrastructure and concentrates power in the hands of the rich few, while also inreasing their monetary power.
Luckily, at the same time I'm also reading Narayana Murthy's Better India, better world - a capitalist's perspective of India's change from a socialist to a capitalist (controlled) market. He too, supports the principle of free-market theory, but strongly supports the importance of philantrophy at the same time.
After comparing both approaches / descriptions, I realized that it is a particular thought of capitalism (namely, the Chicago school) that Klein is so stubbornly opposing. She goes on to say that the Chicago school thought has penetrated IMF, World Bank, etc and hence is being implemented the world over. It becomes clear that she is confusing the political agenda with the economic one. While both go hand in hand,the idea that an economic agenda can destroy democracy cannot be concluded. In each case, the leaders have willingly chosen to go with the free-market theory because it empowers & enriches them at the cost of other citizens. This is a glaring example of a high-level corruption and not that of free-market theory. Klein fails to conclude that the Chicago school theory encourages corruption instead of providing actual free-market movement.
The idea of free-markets is democratization of the economy - providing power to the people to conduct business, choose products & services in a competitive market, and encourage a global competition instead of restricting the market to local products. In each of Klein's examples, the market has promoted foreign investors at the cost of local ones, leading to large scale unemployment and capital & resource flight from the host country to the investors. Many countries, especially India & (to an extent) China have provided examples of a balanced outlook. While foreign investors are free to invest (in certain sectors), they are not free to take the profits to their own country. The profits must be re-invested in the host country, or there should be a technology transfer. Technology transfer is the more lucrative & important aspect of inviting foreigners. Most or all of the countries taken by Klein for the study are third world nations lacking technologies to use their resources or increase quality of living.
It is only logical to invitie global leaders (corporations) to invest in their country & provide technology transfer that will allow the host country to introduce its own services. If a free-market economy is not established, the end result will be like India's telephone system before 1991, so distraught with stone-age technology & lack of management understanding that it was impossible to think of more advanced servies like internet. However, as the foreign investment was opened up, India is now a thriving telecom market with the cheapest service offerings (compared to anywhere in the world), and the rates keep falling every year. Also, all companies find it lucrative to introduce the latest technologies as there is a large consumer base ready to use those. They are currently held back only due to a lacksidal government attitude. The more important fact is the telecom revolution has empowered all individuals from all walks of life without discrimination - anybody from a vegetable vendor or taxi driver to a professional can buy a cell phone service complete with internet, fax, etc to start working & connecting -thus increasing his or her business prospects exponentially. I see this at work daily as my father works from the ease of our home, compared to 3-4 years earlier when he had to run about the whole day connecting with various people. I also see it in my own office where emails are the fastest way to send & receive drawings, get opinion from experts and send changes to the site, without moving from my seat!
I do believe Klein's hypothesis that the Chicago school interpretation of free-market economics has led to large-scale corruption. But to draw an analogy that the free-market theory itself is at fault is not an acceptable conclusion. conclusion. While i have not yet read the entire book and hope that the conclusion doesn't go the way most of the book is, I think the book could really be a misplaced attack on a theory instead of its proponent. Moreover, if the book intends to attack a proponent, it does not deserve critical acclaim, since it is the theory that matters not a single school of thought. Klein would have done better to show the positive side of the free-market theory that Chicago school approach lacks. All said & done,Kleins's book is an important eye-opener in the recent global events and the resultant depression that we are facing. I have been lucky to be provided with such thought provoking reads by Mufaaaza in the line of Chomsky, Economic Hitman & Klein.
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