The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

Picador, 2007

Somehow I missed Naomi Klein’s The Shock Doctrine when it was first published in 2007. Now, eight years later, I find myself reading Klein’s works in reverse order. Her most recent book, This Changes Everything: Capitalism vs. the Climate, has changed my life, turning me into a passionate climate activist. With it she has landed high on my list of “truth tellers,” a short list of writers and courageous public figures whom I respect above all others for their brutal honesty in telling us important things we would rather not know.

ShockDoctrineCoverIn The Shock Doctrine she again attacks the twentieth century version of capitalism (no wonder her enemies delight in calling her a socialist). This time the object of her research, keen insight, and sharp-tongued journalism is Milton Friedman, free-market ideologue and one of the principal founders of what she terms “the Chicago school” of economics. I’ve read most of Friedman’s Capitalism and Freedom (as much as I could tolerate) and I found his ideas highly theoretical and abstract, pretty much pie-in-the-sky. Capitalism and Freedom contains no data or real-life case studies to back up his theories.

The Shock Doctrine is, in a word, the story of how much damage Friedman and his disciples have wrought around the world since the publication of his little book in 1962. To implement their vision of an efficiently operating free market, the Chicago school needed laboratories, so they first seized opportunities resulting from political revolutions and the overthrow of dictators in Latin America. They swooped into these countries – Chile, Bolivia, Uruguay, Argentina, and others – before the victors had a chance to set up new governments and economic systems, offering to assist the new leadership in implementing “democratic” reforms. The Chicago school’s idea of democratic reforms entailed lending money and expertise, in exchange for which they insisted these governments privatize their public assets (which, conveniently, resulted in windfalls for American-based multinational corporations), remove price controls, implement austerity, and engage in free trade. When citizens objected to such “democratic reforms,” governments typically responded with violence and suppression, displacing whole classes of people and intimidating, imprisoning, and sometimes torturing dissidents. Friedman and his disciples, laser-focused on their free market experiments, simply looked the other way.

As these scenarios played out in Latin America, wreaking havoc, unemployment, and poverty upon the general populations of these countries, the free-market ideologues moved on to “capitalize” (pun fully intended) on other political and natural shocks around the world: the collapse of the Soviet Union (which they saw as the ultimate triumph of capitalism over communism); the end of apartheid in South Africa; the deliberate “Shock and Awe” in Iraq, with its subsequent windfall of opportunities for reconstruction contracts; the December 2004 tsunami in Sri Lanka; and – perhaps most shocking of all – our own New Orleans and Hurricane Katrina.

In every instance the results were the same: multinational corporations and a few corrupt local leaders became very rich, while the rest ended up worse off than they were before the “shock.”

Conspiracy theorists could have a field day with these interventions, but Klein stops short of accusing Friedman and the Chicago school of purposely encouraging or triggering these shocks (although Shock and Awe in Iraq came very close). What speaks for itself though, is that everywhere these shocks occurred, the Chicago school economists were quick to step in and seize the market opportunities – unintended consequences be damned.

Friedman died in late 2006, untroubled by the relationship of his experiments in capitalism to upheavals of whole nations, still with a blind eye to the concomitant violence and displacement inflicted upon entire populations.

Contrary to the implication of the title of Friedman’s manifesto, Capitalism and Freedom, freedom under capitalism is by no means a given, any more than Naomi Klein is a socialist. Indeed, the results of disaster capitalism, as practiced by the Chicago school and documented so powerfully by Klein, were quite the opposite. The Shock Doctrine exposes a shamefully ugly era in American foreign policy, all conducted under the guise of spreading democracy.

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