Free reign to market forces causes collapse

  • October 3, 2008
{mosimage}TORONTO - The Wall Street crisis is a story of how the privileged few took advantage of the middle class and the poor, and how the U.S. government failed its citizens, said anti-globalization activist Naomi Klein on the day the Bush administration’s $700-billion bailout plan failed to pass in Congress.

The U.S. House of Representatives could not agree on the plan, resulting in the bill’s failure on Sept. 29.

De-regulation and giving a free reign to market forces have led to some corporations profiting enormously on the backs of ordinary people, Klein told a sold out crowd of about 800 people at the Bloor Cinema.

The talk was part of her international tour to promote her 2007 book The Shock Doctrine: The Rise of Disaster Capitalism.

{sa 0676978010}According to Klein, the shock doctrine is a philosophy that has guided decision-makers in the United States and elsewhere over the past 50 years. The political agenda is so unpopular that it can only be imposed when there is a shock in society such as a war, natural disaster or terrorist attack, Klein said.

And this agenda usually includes free market economic reforms, which have led to “disaster capitalism” in several economies around the world. Klein said disaster capitalism has led to the exploitation of cheap foreign labour and its most spectacular example: the Wall Street fiasco.

On the American economic crisis, Klein said all constraints on profit making for the Wall Street elite were removed by the federal government, including trade barriers, labour rights, environmental standards, free trade and the quest for deregulation.

Fr. Jack Costello, S.J., former director of the Jesuit Centre for Social Faith and Justice in Toronto, said Klein’s economic view is similar to a Catholic perspective on the financial crisis.

“The self-regulating market is an icon of idolatry,” Costello said, adding that Klein echoes a similar message in her book, “but without the God language.”

Costello said he didn’t find Klein’s book surprising or ground-breaking because the self-regulating market has already been in practice in Canada under the Conservative government and the current Republican administration in the United States.

Meanwhile, Reid Locklin, Christianity and Culture professor at Toronto’s University of  St. Michael’s College, said Klein’s argument that the state has a role in caring for its citizens has “tremendous affinity” with Catholic social teaching, citing papal teachings which have called for the world’s goods to be shared by everyone.

“The poor have a right to the wealth that is concentrated in the hands of a few,” he said.

Encyclicals like Pope Leo XIII’s Rerum Novarum, John Paul II’s Sollicitudo rei socialis and Benedict XVI’s Deus caritas est have discussed a social concern for ensuring universal justice, especially for the most vulnerable, Locklin said.

In particular, John Paul II wrote about guarding against the exploitation of cheap labour and even called for a stronger hand of guidance from international and national bodies to regulate exchange rate fluctuations, he said.

During her talk, Klein also hinted that the shock doctrine could be coming to Canada if a Conservative majority wins the federal election on Oct. 14, adding that the next government must address poverty and homelessness.

But Fred McMahon, director of the Centre for Globalization Studies at the Fraser Institute, an economic policy think tank, said he doesn’t agree with Klein’s shock doctrine argument and doesn’t understand the charge of a “hidden agenda” against the Conservative Party which could result in social service cuts due to an economic downturn.

Market economies have lead to poverty reductions around the world, McMahon said.

“I think it’s criminal for rich people sitting in the West, seeing the affluence in the West, to go out and try to tell poor people to reject free markets which people back in their home country would never do,” McMahon said.

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