Published on May 9, 2013
The Shock Doctrine: The Rise of Disaster Capitalism is a 2007 book by the Canadian author Naomi Klein, and is the basis of a 2009 documentary by the same name directed by Michael Winterbottom.
The book argues that the free market policies of Nobel Laureate Milton Friedman have risen to prominence in some countries because they were pushed through while the citizens were reacting to disasters or upheavals. It is implied that some man-made crises, such as the Falklands war, may have been created with the intention of pushing through these unpopular reforms in their wake.
The book has an introduction, a main body and a conclusion, divided into seven parts with a total of 21 chapters.
The introduction sketches the history of the last thirty years where economic shock doctrine has been applied throughout the world, from South America in the 1970s to New Orleans after Hurricane Katrina. Klein introduces two of her main themes. That practitioners of the shock doctrine tend to seek a blank slate on which to create their ideal free market economies, which usually requires a violent destruction of the existing economic order. The similarities between economic shock doctrine and the original shock therapy — a psychiatric technique where electric shocks were applied to mentally ill patients.
Part 1 begins with a chapter on psychiatric shock therapy and the covert experiments conducted by the psychiatrist Ewen Cameron in collusion with the Central Intelligence Agency: how it was partially successful in distorting and regressing patients’ original personality, but ineffectual in developing a “better” personality to replace it. Parallels with economic shock therapy are made, including a digression on how government agencies harnessed some of the lessons learned to create more effective torture techniques. Torture, according to Klein, has often been an essential tool for authorities who have implemented aggressive free market reforms — this assertion is stressed throughout the book. She suggests that for historical reasons the human rights movement has often portrayed torture without explaining its context, which has made it frequently appear as pointless cruelty. The second chapter introduces Milton Friedman and his Chicago school of economics, whom Klein describes as leading a movement committed to free markets even less regulated than before the Great Depression.
Part 2 discusses the use of shock doctrine to transform South American economies in the 1970s, focusing on the coup in Chile led by General Augusto Pinochet. The apparent necessity for the unpopular policies associated with shock therapy to be supported by torture is explored.
Part 3 covers attempts to apply the shock doctrine without the need for extreme violence against sections of the population. The mild shock therapy of Margaret Thatcher is explained as being made possible by the Falklands War, while free market reform in Bolivia was possible due to a combination of pre-existing economic crises and the charisma of Jeffrey Sachs.
Part 4 reports on how the shock doctrine was applied in Poland, Russia, South Africa and to the tiger economies during the 1997 Asian financial crisis.
Part 5 introduces the “Disaster Capitalism Complex”, where the author describes how companies have learnt to profit from disasters. She talks about how the same personnel move easily from security-related posts in US government agencies to lucrative positions in corporations.
Part 6 discusses the occupation of Iraq, which Klein describes as the most comprehensive and full-scale implementation of the shock doctrine ever attempted.
Part 7 is about the winners and losers of economic shock therapy — how narrow groups will often do very well by moving into luxurious gated communities while large sections of the population are left with decaying public infrastructure, declining incomes and increased unemployment.
Conclusion is about the backlash against the shock doctrine and economic institutions that propagate it like the World Bank and IMF. South America and Lebanon post-2006 are examined as sources of positive news, where politicians are already rolling back free-market policies, with some mention of the increased campaigning by community-minded activists in South Africa and China.