{"id":49223,"date":"2021-09-19T12:55:00","date_gmt":"2021-09-19T16:55:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=49223"},"modified":"2021-10-04T10:23:56","modified_gmt":"2021-10-04T14:23:56","slug":"naomi-klein-the-shock-doctrine","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/naomi-klein-the-shock-doctrine\/","title":{"rendered":"Naomi Klein’s The Shock Doctrine: Book Overview"},"content":{"rendered":"\n

What is Naomi Klein’s The Shock Doctrine<\/em> about? How does Klein define “disaster capitalism”? <\/p>\n\n\n\n

The Shock Doctrine, <\/em>by Naomi Klein, is a study of the history of economic shock therapy<\/a>, which is a method of (supposedly) boosting a country\u2019s economy through rapid deregulation, privatization, and severe cuts to government spending<\/a>. It also examines <\/em>how economic shock therapy gave rise to what Klein calls the disaster capitalism<\/a> complex: a privatized system of destruction and reconstruction that funnels billions of dollars into corporate pockets. <\/p>\n\n\n\n

Below is a brief overview of the key takeaways.<\/p>\n\n\n\n\n\n\n\n

What Is Shock Therapy?<\/h2>\n\n\n\n

Briefly, economic shock therapy is a way to quickly improve a country\u2019s economy through rapid privatization, deregulation, and severe cuts in government spending.<\/strong> In other words, it imposes strict free-market policies on the country in question as quickly as possible. <\/p>\n\n\n\n

However, as Naomi Klein shows over and over again throughout The Shock Doctrine<\/em>, this economic plan doesn\u2019t improve an economy. Instead, economic shock therapy invariably leads to mass unemployment, increased poverty, and widespread starvation, while a few select people become extremely rich. <\/p>\n\n\n\n

Shock Therapy and the \u201cClean Slate\u201d<\/strong><\/h3>\n\n\n\n

Naomi Klein’s The Shock Doctrine <\/em>begins with a description of shock therapy as it\u2019s traditionally known: A treatment for mental disorders wherein electric shocks are administered to a patient\u2019s brain to intentionally trigger a seizure. The treatment was pioneered in the 1940s and 1950s by Dr. Ewen Cameron. <\/p>\n\n\n\n

Cameron\u2019s goal was to regress his patients\u2019 minds to infancy, what he termed a \u201cblank slate.\u201d He thought that once all their current thoughts and memories were wiped away, he could easily reprogram them with new, healthy thought patterns<\/a>. <\/p>\n\n\n\n

However, while Cameron was very successful at breaking his patients\u2019 minds, he was completely <\/strong>unsuccessful <\/em><\/strong>at rebuilding them.<\/strong> On top of that, many of his patients suffered from new and much more severe symptoms\u2014both physical and psychological\u2014than they\u2019d shown before treatment. In short, Cameron fundamentally misunderstood what he was doing to his patients. He wasn\u2019t wiping their minds clean\u2014he was destroying them.<\/p>\n\n\n\n

Disaster Capitalism<\/strong><\/h4>\n\n\n\n

Disaster capitalism<\/em><\/strong>\u2014taking advantage of disasters to push economic reforms that would otherwise fail\u2014also can\u2019t seem to distinguish between destroying and healing. <\/strong><\/p>\n\n\n\n

For example, when the US invaded Iraq in 2003, the Bush administration intended to completely destroy the existing Iraqi economy and build a radical free-market democracy in its place. However, no matter how much the US military blasted away at Iraq, they never managed to create that sought-after blank slate. As a result, they weren\u2019t able to rebuild as the Bush administration intended. <\/p>\n\n\n\n

We\u2019ll discuss the Iraq invasion and its numerous failures in greater detail later.<\/p>\n\n\n\n

The Chicago School\u2019s Counter-Revolution<\/strong><\/h3>\n\n\n\n

Disaster capitalism got its start in the famous University of Chicago\u2019s Economics Department back in the 1950s under Milton Friedman<\/a>. Friedman believed in unfettered capitalism. He maintained that in an unregulated economy, the natural economic forces of supply and demand naturally balance one another perfectly, leading to an ideal market wherein products are perfectly priced, everyone who wants to work can find a job, and inflation doesn\u2019t exist. He believed that all economic problems are due to government interference in an otherwise perfect system. <\/p>\n\n\n\n

Much like Cameron, Friedman believed that he needed to start with a blank slate in order to build this perfect economy. He dreamed of a country that was free from economic regulations, rules, and special interests<\/a>, where pure capitalism could run its natural course. Also like Cameron, Friedman thought that the only way to reach such a state was through painful, destructive shocks to the country\u2019s standing economy. <\/strong><\/p>\n\n\n\n

(Shortform note: To learn more about Milton Friedman\u2019s ideas, read our summary of Friedman\u2019s Capitalism and Freedom.<\/em><\/a>)<\/p>\n\n\n\n

Fighting the New Deal<\/strong><\/h4>\n\n\n\n

From the 1930s to the 1950s, economies that blended capitalism with strong government regulation became popular. The most notable of them was Franklin Roosevelt\u2019s New Deal. The world was prospering under these mixed systems, and things were good for the common folks. Those facts left Friedman and his free-marketeering colleagues with few supporters. <\/p>\n\n\n\n

However, major US corporations were unhappy being forced to redistribute a lot of their money in the form of taxes and increased worker salaries. To counter this, they promoted Friedman\u2019s policies.<\/p>\n\n\n\n

(Shortform note: One of the major difficulties in discussing Friedman\u2019s movement is that it has rebranded itself many times, often using terms that seem to have opposite meanings to one another. For example, Friedman called himself liberal<\/em>\u2014but his followers in the US associate that term with long hair and high taxes, and prefer to call themselves conservatives<\/em>. The ideas that Friedman promoted would be called neoliberal<\/em> in most of the world, but the American branch of this movement adopted the term neoconservative<\/em> in the 1990s. In our guide, we\u2019ll use the term neoliberal<\/em> to describe Friedman\u2019s policies.) <\/p>\n\n\n\n

By any name, Friedman\u2019s ideology was a three-part agenda that he believed would return the economy to its natural, healthy state: <\/p>\n\n\n\n

  1. Governments must eliminate all laws and regulations that hinder corporate profits.<\/li>
  2. Governments must sell off any assets that corporations could run instead.<\/li>
  3. Funding for social programs must be drastically cut\u2014or, ideally, eliminated.<\/li><\/ol>\n\n\n\n

    Friedman\u2019s economic strategy aimed to overturn New Deal policies and reset the American economy to how it was before the Great Depression. However, Friedman\u2019s ideas were impossible to implement in America at the time. Even when Eisenhower\u2014a hard-line Republican\u2014took office in 1953, the New Deal\u2019s programs were incredibly popular, and overturning them would almost certainly have cost Eisenhower his shot at re-election. <\/strong>Instead, neoliberals started looking abroad for easier targets. <\/p>\n\n\n\n

    The First Shock Treatment<\/strong><\/h3>\n\n\n\n

    Chile, not the US, would become the first testing ground for Friedman\u2019s economic shock therapy. <\/strong>The Chicago School of Economics\u2014with the backing of the US government\u2014trained Chilean economists in Milton Friedman\u2019s free-market orthodoxy so they could build a new economic system back in Chile based on Chicago School ideals.<\/p>\n\n\n\n

    Chile\u2019s President Allende wasn\u2019t interested in the Chicago-trained economists\u2019 theories, preferring to run the country on a mixed system of capitalism with strong government regulation and social spending.  Chilean general Augusto Pinochet, who overthrew President Allende in a swift and brutal military coup, adopted their ideas. <\/strong>Pinochet, a lifetime soldier with no economics training, knew that he\u2019d need help handling the country\u2019s economic affairs. Therefore, he turned to the economists of the Chile Project.<\/p>\n\n\n\n

    With the backing of Pinochet, the Chicago School-trained economists laid out this lengthy plan for the country bearing all the hallmarks of Milton Friedman\u2019s teachings. It called for deregulation, privatization, and few government-funded social programs (if any). Now that Allende and his supporters were dead, imprisoned, or terrified into submission, the fundamentalists didn\u2019t need to win popular support. Pinochet and his military government adopted the policy suggestions.<\/p>\n\n\n\n

    The Chilean \u201cMiracle\u201d<\/strong><\/h4>\n\n\n\n

    Pinochet held power for 17 years, from his coup in 1973 until he stepped down in 1990. Chile did <\/em>experience years of steady economic growth under Pinochet, and after his death in 2006 many publications, including the New York Times and the Washington Post, praised his free-market policies and the economic miracle they\u2019d created. However, the facts behind that \u201cmiracle\u201d are deeply questionable.<\/strong><\/p>\n\n\n\n

    Chile\u2019s economic growth that the Times and the Post praised didn\u2019t actually happen until the mid-80s, a decade after Pinochet tried Friedman\u2019s economic shock therapy, and long after he\u2019d radically changed course. The reality is that the Chicago School\u2019s extreme free-market experiment was a disaster.<\/strong> Inflation skyrocketed, many people lost their jobs as the market flooded with cheap imports, and starvation quickly spread. The only ones benefiting from the shock therapy were foreign corporations and a few Chilean financiers who made a great deal of money on market speculation. <\/p>\n\n\n\n

    By 1982, Chile faced total economic collapse. Free-market capitalism<\/a> had put all of Chile\u2019s assets in the hands of speculators and financial institutions, who proceeded to run up a massive $14 billion debt. Inflation ran rampant while unemployment climbed to a crushing 30%. <\/p>\n\n\n\n

    In order to save his country, Pinochet had to do what Allende had done years before: Nationalize major industries and put a firm hand on the economy. <\/strong><\/p>\n\n\n\n

    Despite the terrible results of this first experiment, Chile was the beginning\u2014it was the Chicago School\u2019s first major victory in the war to overthrow the New Deal<\/a> and similar programs around the world. Although their policies didn\u2019t improve life for the vast majority of Chileans, they did <\/em>funnel wealth to the governmental and corporate elites<\/a>. During the years of Pinochet\u2019s shock treatment, 45% of Chileans fell into poverty, but the richest 10% of Chileans watched their incomes grow by an average of 83%. <\/p>\n\n\n\n

    The fast and free flow of money among the elites was like a drug for financial markets worldwide\u2014rather than considering the awful cost of their experiment, or reassessing the free-market model, they immediately began looking for their next fix. <\/p>\n\n\n\n

    The Crisis Theory<\/strong><\/h3>\n\n\n\n

    The next major breakthrough for the Chicago School was the Crisis Theory<\/em>: In simple terms, it meant leveraging a political or economic crisis to win public support, rather than pushing through the neoliberal agenda with brute force.<\/strong> Friedman noticed that people and governments are more receptive to dramatic economic policy changes after a crisis, which allowed an opening for his theories to be adopted. <\/p>\n\n\n\n

    The Crisis Theory was necessary because, although free-market economics spread quickly and brutally through South America, it had a harder time gaining traction in the US and Britain where democracy was more deeply entrenched, because people weren\u2019t voting for politicians who tried to implement Friedman\u2019s policies. <\/strong><\/p>\n\n\n\n

    British prime minister Margaret Thatcher demonstrated how the Crisis Theory could advance Friedman\u2019s policies during the Falklands War of 1982. It was an 11-week struggle between Britain and Argentina for control of the Falkland Islands which gave Britain an outside enemy. The people were swept away by a wave of nationalism and militarism, and they eagerly fell in line behind prime minister Margaret Thatcher. Her approval rating rocketed up from 25% to nearly 60%. Thatcher used her newfound popularity to impose neoliberal economic policies and government repression on a level that she\u2019d told the Chicago School was impossible<\/strong>; for example, using police and government surveillance<\/a> to squash a coal miners\u2019 strike. <\/p>\n\n\n\n

    Debt Crises<\/strong><\/h4>\n\n\n\n

    Margaret Thatcher\u2019s efforts in Britain proved that any sort of crisis<\/strong> could get the people to fall in line. <\/strong>Therefore, advocates of the free market reasoned, if internal <\/em>crises could be leveraged as effectively as Thatcher leveraged the external <\/em>crisis of the Falklands War, then they had a chance to fulfill their agenda after all.<\/p>\n\n\n\n

    Several influential economists noted in the mid-80s that hyperinflation was a type of crisis because it had many of the same effects as war: It created mass fear and confusion, displaced many people, and caused widespread loss of life. For the most orthodox of the Chicago School\u2019s followers, this fact meant that hyperinflation wasn\u2019t a problem to solve, but rather an opportunity to seize.<\/strong><\/p>\n\n\n\n

    Ecological Crises<\/strong><\/h4>\n\n\n\n

    So far the crises that we\u2019ve discussed have all been man-made. However, natural disasters are sometimes even more effective than wars or economic crashes.<\/strong><\/p>\n\n\n\n

    The perfect example is December 26, 2004, when a devastating tsunami hit Sri Lanka and almost completely cleared the shoreline. Every hut and fishing boat was swept away in the storm, along with tourist cabanas and bungalows. Approximately 35,000 Sri Lankans died, and almost a million lost their homes\u2014most of whom were small-boat fishers who relied on the sea to live. <\/p>\n\n\n\n

    This event, which was tragic for the fishers, was a golden opportunity for disaster capitalists. <\/strong>Once the rubble and bodies had been cleared away from the shoreline, they were left with pristine beaches all along the coast, ripe for development. Plus, the free-marketeers could use Sri Lanka\u2019s time of need to make demands and gain concessions in exchange for aid. In short order, the country\u2019s democracy was swept aside and replaced with a forum of ten wealthy Sri Lankan industrialists, who oversaw the \u201creconstruction.\u201d <\/p>\n\n\n\n

    Iraq and the Disaster Capitalism Complex<\/strong><\/h3>\n\n\n\n

    In the early 1990s President George H.W. Bush\u2019s Secretary of Defense, Dick Cheney, tried to bring the modern privatization craze to the US military. He decreased the number of active soldiers and increased the military\u2019s reliance on private contractors like Halliburton. When Donald Rumsfeld joined President George W. Bush\u2019s cabinet as Secretary of Defense in 2001, he continued Cheney\u2019s work. He started laying off huge numbers of troops and personnel and hiring outside agencies like Halliburton and Blackwater to take up the slack in order to create a fully outsourced \u201chollow shell\u201d government. Under this model, the government\u2019s only role would be to hand out contracts to private companies, which would\u2014supposedly\u2014handle tasks more effectively and efficiently than a large government ever could. This was the birth of the modern <\/strong>disaster capitalism complex<\/em><\/strong>: a sprawling system whose only purpose was to funnel government money into corporate pockets.<\/strong><\/p>\n\n\n\n

    The War on Terror<\/strong><\/h4>\n\n\n\n

    Bush and Rumsfeld got the chance to realize their dreams due to a national tragedy: the terrorist attacks of September 11, 2001. <\/strong>The attack provided a common enemy for the people to rally against, and a justification for anything the government did to fight back. <\/p>\n\n\n\n

    So began Bush\u2019s infamous \u201cWar on Terror.\u201d While it was supposedly an effort to defeat terrorism around the world, in practice, it was a smokescreen to build a privatized police state, both at home in the US and abroad in the Middle East. Large sections of the economy, ranging from disaster reconstruction to war and homeland security, were turned over to private contractors. <\/p>\n\n\n\n

    The Bush administration\u2019s foreign agenda was even more extreme. The US attacked Iraq in response to 9\/11 and subjected the people there to violent military shocks. <\/p>\n\n\n\n

    Then came the economic shock therapy. The Bush administration<\/strong> thought that they\u2019d finally found their \u201cclean slate\u201d and planned to build their perfect free-market economy<\/a> from the ground up.<\/strong><\/p>\n\n\n\n

    However, they ran in trouble on two fronts. First, they were unable to create an effectively clean slate. The occupying forces met violent resistance at every turn. They responded to violence with further violence of their own, and the entire country spiraled into a war of attrition.<\/p>\n\n\n\n

    Second, they were unable to build a new, functioning economic system. The CPA\u2014Coalition Provisional Authority, Iraq\u2019s interim government\u2014was so understaffed and had so few resources that it couldn\u2019t even begin building the economy that the Bush administration dreamed of. For example, they had only three people assigned to privatizing state-owned factories; by contrast, East Germany had around 8,000 when it undertook the same task. <\/p>\n\n\n\n

    Ironically, this failure was due to the CPA\u2019s devotion to Chicago School fundamentals<\/strong>. After all, minimizing government spending is a cornerstone of free-market capitalism, but in this case, it meant that they didn\u2019t have the money or resources to do their jobs. Additionally, the CPA staffers\u2019 hatred of all things governmental meant that what they were trying to do\u2014build a new state from the ground up\u2014went directly against their beliefs. <\/p>\n\n\n\n

    The Davos Dilemma<\/strong><\/h3>\n\n\n\n

    The ongoing shock treatments around the world culminated in a disturbing realization at the 2007 World Economic Forum<\/a>. <\/p>\n\n\n\n

    For many years, people had believed that stability and peace were necessary for steady economic growth. The Forum, however, was puzzled by a global trend that seemed to buck this common knowledge. The world had been rocked by a near-constant series of shocks, beginning with the stock market crash of 2000 and the terrorist attacks on September 11, 2001. Despite that, the global economy<\/a> was growing at an incredible rate.<\/p>\n\n\n\n

    The logical conclusion was that the economy no longer relies on stability\u2014quite the opposite, in fact. Corporate profits all over the world are actually <\/strong>increasing <\/em><\/strong>in the face of sustained conflict and repeated disasters. <\/strong><\/p>\n\n\n\n

    This conclusion correlates directly with the rise of the massive, multipurpose disaster capitalism complex of the 2000s, where massive contracts were granted to private firms in every industry from fuel to construction\u2014and, of course, security and defense. <\/p>\n\n\n\n

    Conclusion: Recovering From Shock<\/strong><\/h3>\n\n\n\n

    As we\u2019ve seen, free-market policies always result in a huge transfer of wealth<\/a> and power from the lower economic classes to the upper ones.<\/strong> That transfer never happens peacefully, and in many cases, it doesn\u2019t happen legally. That\u2019s why free-market crusaders have to shock countries into submission: Their economic reforms can only go through when the people are too exhausted or stunned to fight back. <\/p>\n\n\n\n

    However, by its very nature, shock eventually wears off. For example, in 2001, Argentina\u2014a former shock therapy laboratory\u2014ousted a series of five presidents in three weeks, all while demanding freedom from the Chicago School\u2019s policies. <\/p>\n\n\n\n

    Lebanon similarly rejected foreign aid\u2014and the economic shock therapy attached to it\u2014in 2006. Despite being deeply in debt and desperate for funds, Lebanese economists and some political leaders recognized that all of the profit would go to the disaster capitalism complex, while all of the hardship would fall upon their own people. General strikes and protests erupted all over the country in response to the proposed shock therapy, and the economy came to a screeching halt.<\/p>\n\n\n\n

    Recovering as a Community<\/strong><\/h4>\n\n\n\n

    However, even as people recover, they face daunting obstacles in reclaiming their countries. Perhaps the biggest problem of all is that they now have to rebuild entire communities from the rubble that economic shock therapy left behind, and they have to do it largely without foreign aid. Nonetheless, there\u2019s cause for hope: communities all over the world are already doing it. <\/strong><\/p>\n\n\n\n

    For example, Thailand was hit by a tsunami similar to the one that devastated Sri Lanka. However, unlike Sri Lanka, the Thai people rebuilt their own settlements and fishing communities, often within mere months.<\/p>\n\n\n\n

    In Thailand\u2014and everywhere else that citizens have bucked the disaster capitalism complex by taking reconstruction into their own hands\u2014people say that they\u2019re not just healing their communities, but themselves as well. <\/strong><\/p>\n\n\n\n

    That\u2019s because shock is, in essence, a feeling of powerlessness; people feel like they\u2019re being swept away by forces that they can\u2019t hope to resist. Therefore, rebuilding their own communities is an expression of their personal power and a rejection of that helplessness. <\/p>\n\n\n\n

    The reconstruction efforts also wholly reject the endless quest for clean slates upon which to build model civilizations. These people aren\u2019t starting from scratch but from the ruins of their old homes. They make do with whatever tools and materials they can salvage, and their only ideologies are community and practicality. As we\u2019re now seeing, communities can join together to support each other and rebuild, rather than waiting for external aid that comes with ulterior motives. These communities are coming back quickly, efficiently, and\u2014most important of all\u2014durably; <\/strong>the people won\u2019t be taken in again by the false promises of economic shock therapy and disaster capitalism. <\/p>\n","protected":false},"excerpt":{"rendered":"

    What is Naomi Klein’s The Shock Doctrine about? How does Klein define “disaster capitalism”? The Shock Doctrine, by Naomi Klein, is a study of the history of economic shock therapy, which is a method of (supposedly) boosting a country\u2019s economy through rapid deregulation, privatization, and severe cuts to government spending. It also examines how economic shock therapy gave rise to what Klein calls the disaster capitalism complex: a privatized system of destruction and reconstruction that funnels billions of dollars into corporate pockets.  Below is a brief overview of the key takeaways.<\/p>\n","protected":false},"author":7,"featured_media":28953,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[40,81,275],"tags":[494],"class_list":["post-49223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-books","category-economics","category-politics","tag-the-shock-doctrine","","tg-column-two"],"yoast_head":"\nNaomi Klein's The Shock Doctrine: Book Overview - Shortform Books<\/title>\n<meta name=\"description\" content=\"The Shock Doctrine by Naomi Klein is a study of the history of the so-called "economic shock therapy". 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