Naomi Klein's "The Shock Doctrine: The Rise of Disaster Capitalism" is a journalistic tour de force. Over nearly 600 pages of text, she traces the rise and implementation of neo-liberal economic ideology in many times and places: 1960s Indonesia under Suharto's coup and his allies in the Berkeley Mafia, in the Southern Cone in the 1970s and in particular in Pinochet's Chile, in Brazil, in Thatcher's UK, 1980s Bolivia, in China following Tiannamen, in Germany, Poland and Russia following the collapse of communism, in South Africa following the fall of Apartheid, in the Asian financial crisis, in post-9/11 USA with the homeland security bubble, in post-9/11 Israel with the same homeland security bubble, in the Iraq war, in New Orleans following Katrina, and in places like Sri Lanka that were victims of the 2005 Tsunami. The cases that get the most attention are Pinochet's Chile, Russia under Yeltsin and Iraq under the USA. As the book was put out in 2007, it does not include the current American financial crisis, it does say later on that the USA is headed toward economic collapse, something Klein might wish she had elaborated on.
The narrative, which is primarily descriptive rather than analytical, is informative if nothing else. Readers will learn of the "Chile Project", a plan to have Chile's brightest economic students receive their graduate education at the University of Chicago. The plan was so successful that Pinochet's finance minister, Sergio de Castro, was one of the alumni, and it would be further implemented to impact the rest of Latin America. The reader will learn that Margaret Thatcher seemed unlikely to hold on to power, up to and until she decided to fight a war over a previously marginalized and neglected piece of land: The Falklands Islands. Following the war, Thatcher would go on to use the same propaganda tactics against coal miners, referring to them as "the enemy within", while the Friedmanite Junta in Argentina lost power.
The comprehensive historical referencing is necessary for Klein's thesis. Her thesis is that neo-liberal economic philosophy has not been able to win support democratically, and that it has been implemented throughout the world via the use of shocks. Over time, the promoters of neo-liberalism have grown aware of this and have taken on an approach to incorporate that into their long-term planning, "instability is the new stability" and allow shocks to take place. She brings up the use of torture and makes it not only relevant but integral. She points out that many of the most economically "liberal" regimes were also the most repressive, and her argument is that it may be impossible to run economic liberalism without a police state to enforce it. Milton Friedman is quoted dismissing this notion as silly. Following his visit to China in 1989, he wrote a letter to a student newspaper asking them if they would critique him for supporting a regime like China, implied to be different from that of Pinochet's Chile [Friedman had visited Chile in 1975 and had said Pinochet's regime was off to a good start]. A few months later the Tiananmen massacre took place. Klein introduces the reader to a narrative of the massacre ignored by the North American press. An alternative narrative, advanced by - among others - Wang Hui in his 2003 book "China's New Order", is that it was not merely about "democracy versus communism," the protesters were against the corporatization of China's economy underg Deng Xiaoping. Milton Friedman was in fact supporting a regime much like Pinochet's Chile.
Torture is not just used as a supporting device to neoliberalism, to keep dissidents in line. Klein argues that it's also a metaphor to the shock doctrine, what torture does to the individual, the shock doctrine does to societies. It was found in studies, conducted in the 1940s and 1950s, that an optimal interrogation strategy was to shift from sensory overload to sensory deprivation. With these methods, as opposed to rote sadism, victims might suddenly regress to behaving like children, crawling on all fours, being incontinent at both ends and sucking their thumb. Psychologists like Ewen Cameron believed that this was the blank slate, a fantasy neurological state of behaviorist psychology on which any psychology could be imprinted. By destroying the old individual, a new better individual could be built. Cameron achieved great success at destroying individuals, but never anything other than failure in rebuilding newer, better individuals. Upon destroying the individual, rubble and ruins are left behind, not a plain field. While this was shown in the case of individuals, it was not shown, or rather it was shown and not widely understood, in the case of societies. When the USA moved into Iraq with its aptly named "Shock and Awe" campaign, one of the leaders dismissed accusations of "nation building". He said it was "nation creating", the implication that Iraq was a blank slate. Another major figure, John Agresto, director of higher education reconstruction for the occupation, commented that he had never read any books on Iraq, because he wanted to lead with as open a mind as he could have. A Mormon missionary thought that the Book of Mormon would open eyes in Iraq, and that he would eventually be a hero of Iraqi history for spreading his gospel. The reader is informed that the military knew that museums, holding ancient Mesopotamian artifacts, might be looted, but that the leadership deliberately chose not to protect them. The National Museum of Iraq lost 80% of its 170,000 objects. Meanwhile, some saw the looting as a form of rapid privatization... it would accelerate the destruction of the country, allowing a new country to be rebuilt on Friedmanite grounds. "I thought the privatization that occurs sort of naturally when somebody took over their state vehicle, or began to drive a truck that the state used to own, was just fine," said Peter McPherson, the senior economic adviser to Paul Bremer (Klein, page 427).
The Iraq war ties into the Homeland Security Bubble, a Bush-era source of "economic growth" in the USA which is never mentioned in the mainstream media. Both Rumsfeld and Cheney had at least tens of millions of dollars of assets coming into their positions, with many of those held on. This gave them a direct interest in privatizing the military, a position Rumsfeld advocated in a September 10, 2001 speech to US generals, where he compared the Pentagon bureaucracy to the Soviet Union. As of the book's publishing, the Pentagon sends US$ 270 billion to private contractors. Washington became the next silicon valley. There were 2 security-oriented lobby firms in 2001, but by mid-2006 there were 543. Cameras, data mining, image recognition are a tough business. The CEOs of the top 34 defense contractors enjoyed a 108% compensation increase between 2001 and 2005, compared to a 6% average at other large American companies in that period.
As an aside, the book also benefits from the best explanation I've seen of the collapse of the Israeli-Palestinian peace process. What is known is that there was some popular support for peace in Israel in the 1990s, and that this support went away and was replaced by a more hardline outlook. I've never seen this explained in a satisfying manner in the mainstream press, and I was interested in Klein's two points on this regard. Following the collapse of the Soviet Union, ironically caused by "Washington Consensus" shock policies such as privatization, there was an influx of nearly 1 million Russians into Israel, equivalent to a ~20% increase in population. At this point, Israeli businesses no longer needed Palestinians for cheap labour. The borders would often be closed off, leading to catastrophic economic problems in the Palestinian territories, amplified by Israel's refusal to allow Palestinians to trade with other countries, which in turn fed terrorism. Additionally, following the 9/11 WTC bombings, there was a homeland security bubble throughout the world, a bubble I've also never seen mentioned in the mainstream press (only the housing bubble is discussed) but well documented in The Shock Doctrine. Israel's leaders, who previously had a vision of themselves as the Singapore of the Middle East, now had another vision, that of a futuristic fortress. Israeli corporations benefit from the media analysis of their anti-terrorism dealings because it is free marketing for their police state technologies. In its December 12th, 2005 issue, Forbes magazine declared Israel "the go-to country for anti-terrorism technologies". Here's a link to the article: [..]
This comprehensiveness is depressing. The book was a page turner, in my case, but also a teeth gnasher. The dominance of neoliberal philosophy appears to be total, and it succeeds virtually wherever it goes in the period 1965-2005. Solidaire was hijacked in Poland, and the African National Congress turned its freedom charter, which it had held on for nearly forty years, into a joke once it achieved power. It's begun undermining the very apparatus of its enforcement, the united states military, an entity that was largely privatized under Rumsfeld. Every so often when individuals do end up leaving the fold, they don't go very far, for example Jeffrey Sachs going to debate war with his former friends to argue that more foreign aid is the solution... as if there are no complete ideological alternatives. Perhaps there aren't.
* In the 1980s, Sachs was a young Harvard celebrity professor, who brought the shock doctrine to Bolivia, where inflation went down and unemployment went up, which he calls a success.
* He was brought to Poland in the early 1990s. They liked the way he was able to raise foreign aid with his connections. He did the same in Poland, moving the Soldaire party to the right, though it took time to convince them.
* He tried to do the same in Russia, they got the shock doctrine but to his surprise he wasn't able to raise foreign aid this time. In her interviews with Sachs, he apparently believes that they (the IMF economists) were lazy in not analyzing the Russia situation, which he thinks warranted a Marshall Plan. Klein implies that Sachs is blind, and that the IMF crowd didn't give aid to Russia because they wanted it to fail.
* He is now in open ideological disagreement with the IMF crowd and advocating debt forgiveness. He has moved from Harvard's economic department to Columbia's.
If I had written a book like this I might have contemplated suicide. I suspect this is where her last chapter "Shock Wears Off" originates... perhaps her publisher told her that her text was too gloomy, and she needed at least some bloomy to compensate. In her last chapter, she argues it is difficult to pull off the shock doctrine on the same population multiple times. She argues that the current socialist successes in Latin America are largely due to the excesses of the Juntas in the 1970s and 1980s. If true it's a nice story, but I wonder if there's more. Are there truly more successes in Latin America now than there were in other parts of the world in other decades? Is the region better protected than South Korea, Thailand, etc were before the Asian Financial Crisis hit? If Valenzuela is such a beacon of socialism, how has the US military not yet bombed the country? I guess history will tell. I do want to believe Klein's final conclusion, that shock wears off, but it is hard to do so following her encyclopedic cataloguing of their skill at manipulating the world over the previous four decades.
The Shock Doctrine: The Rise of Disaster Capitalism
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Last update: 02-05-2025
About this item
The bestselling author of No Logo shows how the global "free market" has exploited crises and shock for three decades, from Chile to Iraq
In her groundbreaking reporting, Naomi Klein introduced the term "disaster capitalism." Whether covering Baghdad after the U.S. occupation, Sri Lanka in the wake of the tsunami, or New Orleans post-Katrina, she witnessed something remarkably similar. People still reeling from catastrophe were being hit again, this time with economic "shock treatment," losing their land and homes to rapid-fire corporate makeovers.
The Shock Doctrine retells the story of the most dominant ideology of our time, Milton Friedman's free market economic revolution. In contrast to the popular myth of this movement's peaceful global victory, Klein shows how it has exploited moments of shock and extreme violence in order to implement its economic policies in so many parts of the world from Latin America and Eastern Europe to South Africa, Russia, and Iraq.
At the core of disaster capitalism is the use of cataclysmic events to advance radical privatization combined with the privatization of the disaster response itself. Klein argues that by capitalizing on crises, created by nature or war, the disaster capitalism complex now exists as a booming new economy, and is the violent culmination of a radical economic project that has been incubating for fifty years.
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David M. Nataf5.0 out of 5 stars Page Turner and Nail Biter
Dienne5.0 out of 5 stars The elephant identified
I've read dozens (hundreds?) of books about what went wrong during the Bush administration (as well as books about what's continued to go wrong under Obama too). Some books are about specific things such as the Iraq war or GITMO. Others look at more overarching themes such as executive power or disregard for the rule of law. Most of such books have made some important points and contributed some valuable analysis, but I've usually been left feeling like the blind men arguing over what they've discovered. "It's a rope," says one. "No, it's a wall," says another. "You're both wrong, claims the third, "it's a tree trunk."
Naomi Klein's "The Shock Doctrine" is the first book that correctly identifies the elephant. Now, perhaps Ms. Klein doesn't have the elephant quite right - maybe her elephant's ears are a tad too large, or perhaps its tail is a bit too short, but overall, she has described the elephant remarkably well.
Following an introduction, Klein opens with the story of Dr. Ewen Cameron, a psychiatrist who believed that in order to "heal" his patients, he first needed to destroy their dysfunctional personality structure and "regress" them back to infancy in order to create a "clean slate" upon which to build a new, healthy personality. To accomplish this, he used a barrage of "treatments" from psychoactive drugs to extreme doses of electroshock therapy to sensory deprivation for weeks or even months at a time. The only problem, of course, is that he never successfully re-created fresh, healthy people - all he did was traumatize people and leave their old selves virtually destroyed.
Now, it may seem a bit of a leap from one obscure Canadian psychiatrist to the global wave of "shock and awe" which has escalated especially in the last decade, but Ms. Klein has followed the trail carefully and plausibly. One of the first and most important stops along this trail is the economist Milton Friedman, the godfather of the "Chicago School" system of supply-sided free market capitalism.
Friedman and his followers believe that if only there were purely unregulated, completely free markets, all or nearly all world problems would correct themselves through market "signals". Friedmanites believe that most if not all problems result from government regulations which distort the markets and confuse the signals. Their problem, especially during the height of New Deal Keynesian economics, was that no purely free market existed anywhere. In language eerily reminiscent of Ewen Cameron, Friedman wished to create a "clean slate" upon which "healthy" capitalism could be built.
The next problem, however, was the pure capitalism was (and remains) deeply unpopular and, hence, difficult to implement in a democratic state. It turns out, fancy that, that given the choice, people *want* their government to protect them from rapacious corporate interests. The "Southern Cone" region of South America exemplified this problem. Having recently broken away from European colonial powers, nations like Chile and Argentina began building "developmentalist" economies - basically capitalistic economies protected by government regulations. Furthermore, these developmentalist economies were by and large successful. And wildly popular.
The Friedmanites initially tried to overcome developmentalism (note, despite the rhetoric, the concern was never about communism) by sending hundreds of Chile's brightest students to study economics at the University of Chicago. These "Chicago Boys" were to return home and implement their newfound knowledge. But they weren't taken very seriously back home, since developmentalism was still in full-swing.
Their chance came with the brutal and bloody overthrow of the democratically elected Salvador Allende by the U.S. backed Augusto Pinochet. In correspondence with Pinochet, Friedman urged Pinochet to use the window of opportunity created by the shock of the violent overthrow to implement "shock therapy". While the country was still reeling, and while dissidents were being actively and publicly silenced, Pinochet opened up nationalized companies to foreign private investors at fire sale prices. He repealed trade restrictions which resulted in a flood of cheap foreign goods which put many local companies out of business. In the name of "austerity" and reducing debt, he cut back on social programs for the poor and very young and old. Most Chileans were too busy trying to survive and put their lives back together to protest. Those who did tended to mysteriously disappear or simply get executed on the spot.
Of course, even with the markets thrown wide open, the markets did not correct the ills of the country. In fact, things got significantly worse until some of the worst of the abuses were halted and some basic regulations restored. Meanwhile, over half of Chile's population descended into poverty and destitution.
In country after country, Klein details how the same basic patterns repeated over and over again, with variations to account for the learning curve of the Chicago Bys and the different initial circumstances of each country. Indonesia, Argentina, Uruguay, Poland, Russia, South Africa, China and Iraq all experienced variations of "disaster capitalism" following (or during) wars, coups or revolutions, often in direct opposition to what the revolutionaries were fighting for. Time after time, nationalized industries were ripped from the people and pillaged by foreigners while governments cut back on aid to their own people. Time after time free market capitalism was implemented by brute force and shock therapy because it could not be implemented by democratic vote.
Even the "developed" nations were not immune to the assault by the Chicago Boys. Both Margaret Thatcher in Britain and Ronald Reagan in the U.S. were ardent admirers of Milton Friedman, but both knew that they couldn't get away with what Pinochet and Suharto had. But both found their openings to begin making lasting changes - Thatcher used the Falkland's war while Reagan used the air traffic controllers strike, among others.
Klein also shows how disaster capitalism gets implemented after natural disasters. Fishing families swept from their villages by the 2004 tsunami returned to find their beaches closed to them but wide open for luxury hotels and tourist resorts. Refugees from 2006 Hurricane Katrina returned to find no effort to rebuild their public schools, but charter schools already infested the city.
Klein's book is a searing indictment of Milton Friedman and his followers, their morally bankrupt economic philosophy and the wide spread pain and suffering they have caused. This book is a must-read for anyone who wonders how we got where we are now. How it is that in the richest nation on earth, upwards of 10% of the population is unemployed, more than one in four children is food insecure and 49 million American don't have basic health coverage, while the top 1% own fleets of cars and boats and even entire islands.
My only disappointment with the book is that it was published in 2007 - just before the Great Recession. I hope that Klein comes out with a follow up soon. In her final chapter, "Shock wears off", Klein talks about a number of hopeful signs, many coming from the first countries to be shocked and awed. It is her belief that as shock wears off, people become shock resistant and once more able to fight back. Perhaps that's what we're seeing with the Occupy movement.
This far-reaching, wide-ranging and hard-hitting tour de force is also extensively documented in 100+ pages of end notes plus several asterisked footnotes. This book should be required reading for every high school and college economics class, if not for every American. I can't recommend it highly enough. Amazon only allows five stars, but I give it ten.
Naomi Klein's "The Shock Doctrine" is the first book that correctly identifies the elephant. Now, perhaps Ms. Klein doesn't have the elephant quite right - maybe her elephant's ears are a tad too large, or perhaps its tail is a bit too short, but overall, she has described the elephant remarkably well.
Following an introduction, Klein opens with the story of Dr. Ewen Cameron, a psychiatrist who believed that in order to "heal" his patients, he first needed to destroy their dysfunctional personality structure and "regress" them back to infancy in order to create a "clean slate" upon which to build a new, healthy personality. To accomplish this, he used a barrage of "treatments" from psychoactive drugs to extreme doses of electroshock therapy to sensory deprivation for weeks or even months at a time. The only problem, of course, is that he never successfully re-created fresh, healthy people - all he did was traumatize people and leave their old selves virtually destroyed.
Now, it may seem a bit of a leap from one obscure Canadian psychiatrist to the global wave of "shock and awe" which has escalated especially in the last decade, but Ms. Klein has followed the trail carefully and plausibly. One of the first and most important stops along this trail is the economist Milton Friedman, the godfather of the "Chicago School" system of supply-sided free market capitalism.
Friedman and his followers believe that if only there were purely unregulated, completely free markets, all or nearly all world problems would correct themselves through market "signals". Friedmanites believe that most if not all problems result from government regulations which distort the markets and confuse the signals. Their problem, especially during the height of New Deal Keynesian economics, was that no purely free market existed anywhere. In language eerily reminiscent of Ewen Cameron, Friedman wished to create a "clean slate" upon which "healthy" capitalism could be built.
The next problem, however, was the pure capitalism was (and remains) deeply unpopular and, hence, difficult to implement in a democratic state. It turns out, fancy that, that given the choice, people *want* their government to protect them from rapacious corporate interests. The "Southern Cone" region of South America exemplified this problem. Having recently broken away from European colonial powers, nations like Chile and Argentina began building "developmentalist" economies - basically capitalistic economies protected by government regulations. Furthermore, these developmentalist economies were by and large successful. And wildly popular.
The Friedmanites initially tried to overcome developmentalism (note, despite the rhetoric, the concern was never about communism) by sending hundreds of Chile's brightest students to study economics at the University of Chicago. These "Chicago Boys" were to return home and implement their newfound knowledge. But they weren't taken very seriously back home, since developmentalism was still in full-swing.
Their chance came with the brutal and bloody overthrow of the democratically elected Salvador Allende by the U.S. backed Augusto Pinochet. In correspondence with Pinochet, Friedman urged Pinochet to use the window of opportunity created by the shock of the violent overthrow to implement "shock therapy". While the country was still reeling, and while dissidents were being actively and publicly silenced, Pinochet opened up nationalized companies to foreign private investors at fire sale prices. He repealed trade restrictions which resulted in a flood of cheap foreign goods which put many local companies out of business. In the name of "austerity" and reducing debt, he cut back on social programs for the poor and very young and old. Most Chileans were too busy trying to survive and put their lives back together to protest. Those who did tended to mysteriously disappear or simply get executed on the spot.
Of course, even with the markets thrown wide open, the markets did not correct the ills of the country. In fact, things got significantly worse until some of the worst of the abuses were halted and some basic regulations restored. Meanwhile, over half of Chile's population descended into poverty and destitution.
In country after country, Klein details how the same basic patterns repeated over and over again, with variations to account for the learning curve of the Chicago Bys and the different initial circumstances of each country. Indonesia, Argentina, Uruguay, Poland, Russia, South Africa, China and Iraq all experienced variations of "disaster capitalism" following (or during) wars, coups or revolutions, often in direct opposition to what the revolutionaries were fighting for. Time after time, nationalized industries were ripped from the people and pillaged by foreigners while governments cut back on aid to their own people. Time after time free market capitalism was implemented by brute force and shock therapy because it could not be implemented by democratic vote.
Even the "developed" nations were not immune to the assault by the Chicago Boys. Both Margaret Thatcher in Britain and Ronald Reagan in the U.S. were ardent admirers of Milton Friedman, but both knew that they couldn't get away with what Pinochet and Suharto had. But both found their openings to begin making lasting changes - Thatcher used the Falkland's war while Reagan used the air traffic controllers strike, among others.
Klein also shows how disaster capitalism gets implemented after natural disasters. Fishing families swept from their villages by the 2004 tsunami returned to find their beaches closed to them but wide open for luxury hotels and tourist resorts. Refugees from 2006 Hurricane Katrina returned to find no effort to rebuild their public schools, but charter schools already infested the city.
Klein's book is a searing indictment of Milton Friedman and his followers, their morally bankrupt economic philosophy and the wide spread pain and suffering they have caused. This book is a must-read for anyone who wonders how we got where we are now. How it is that in the richest nation on earth, upwards of 10% of the population is unemployed, more than one in four children is food insecure and 49 million American don't have basic health coverage, while the top 1% own fleets of cars and boats and even entire islands.
My only disappointment with the book is that it was published in 2007 - just before the Great Recession. I hope that Klein comes out with a follow up soon. In her final chapter, "Shock wears off", Klein talks about a number of hopeful signs, many coming from the first countries to be shocked and awed. It is her belief that as shock wears off, people become shock resistant and once more able to fight back. Perhaps that's what we're seeing with the Occupy movement.
This far-reaching, wide-ranging and hard-hitting tour de force is also extensively documented in 100+ pages of end notes plus several asterisked footnotes. This book should be required reading for every high school and college economics class, if not for every American. I can't recommend it highly enough. Amazon only allows five stars, but I give it ten.