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 of a deliberate strategy of certain leaders to exploit crises by pushing through controversial, exploitative policies while citizens were too busy emotionally and physically reeling from disasters or upheavals to create an effective resistance. It is implied that some man-made crises, such as the Iraq war, may have been created with the intention of pushing through these unpopular reforms in their wake.
The introduction sketches the history of the last 30 years, during which time 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, since the existing order features policies, laws, and practices that interfere with laissez-faire capitalism.
The similarities between economic shock doctrine and CIA-funded shock therapy studies in which electric shocks far exceeding normal therapeutic levels were applied to patients in mental hospitals in an effort to destroy psychological resistance and create a tabula rasa personality, upon which doctors could imprint whatever they wanted.
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 laissez-faire capitalist movement committed to creating free markets that are even less regulated than those that existed 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 and influenced by a prominent group of Chilean economists that had been trained at the University of Chicago in the Economics department, funded by the CIA, and advised by Milton Friedman. The importance of using torture and economic shock therapy in order for the unpopular policies to be enacted by Pinochet, 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 facilitated 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 small 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.