The Shock Doctrine: The Rise of Disaster Capitalism

This breaks down a common, state-level psychological warfare tactic used to distract ordinary citizens from their own organizing power together. The contextual examples of the practice come mostly from the George W. Bush years in the U.S. with their shock and awe campaigns with propaganda at home and abroad.

The late Milton Friedman, the renowned economist, believed that democracy and a free-market economy went hand-in-hand, that the greatest threat to both was nationalization, government regulation, and social spending. He preached this philosophy to his disciples at the University of Chicago School of Economics, and they would go forth spreading the Gospel according to the Book of Milton. There is also the International Monetary Fund, an agency founded after World War II to help struggling countries and their economies get back on their feet. Many of its managers and policy makers will be graduates of the Chicago School of Economics, and they will begin to impose the Friedman creed wherever possible. There is only one thing wrong. No population seems to vote in the people who support their brand of economics. Its first success is when a socialist, democratically elected President of Chile, Salvador Allende, is overthrown and killed when the presidential palace is stormed by fascists. Augusto Pinochet comes into power and immediately places the "Chicago boys" in charge of the economy. With the death of price controls and lunch programs, Chileans find themselves spending one quarter of their monthly salaries just to buy bread. They will leave hours earlier for work than usual because they can no longer afford public transportation. Even Chile's social security program, once a model of efficiency is privatized, becoming virtually worthless overnight. Chilean children begin fainting in school from lack of food or milk and many stop attending altogether. The story of Chile will be repeated in Argentina, Bolivia, China, Peru, Poland, South Africa, Sri Lanka, and Russia where the IMF will demand that borrowers meet Draconian conditions before they lend money. In each case these austerity measures will be made overnight, all at once. A shocked population will come to their senses if such radical changes are made over time. They will be able to organize, mobilize and challenge the implementation of such policies. It has to come all at once, right after elections, a coup, or a hurricane when the population will be too dazed and disorganized to respond. This will be the shock, or as author Naomi Klein calls it, shock doctrine. For those who are still lucid, there is the next step in the shock doctrine, terrorize, torture, or make them disappear. In each case, in each country, prices on food and other common items will go through the roof, the number of destitute will increase exponentially, and democracy will be squashed. In China, the communist elite will impose these changes on the masses while ensuring that they will profit handsomely from the economic and social upheaval. President Clinton will cheer the economic shock doctrine instituted by Boris Yeltsin as he dissolves the Court and the Parliament, bringing the Russian army out to attack the latter, which killed more than 300 people and several deputies. A new class of super mega apparatchiks will e

To those who rated this as a bad book and then go on to say the book faults capitalism is missing the point. The world is not black or white or pure capitalism versus total dictatorial communism. For capitalism to really work there needs to be regulations so that the playing field is fair. For a free country to really be free the people must have an opportunity to be part of it (i.e. free quality public education, health care, etc.). If those who find pure capitalism and the shrinking middle class ok, I only point you to the words of John F. Kennedy, "If a free society cannot help the many who are poor, it cannot save the few who are rich". If you don't like communism or dictatorships, then support social programs that give the poor an opportunity to become middle class. I can point to example after example of countries where the wealthy took more and more and gave no opportunity to the poor that eventually had the poor take over and end up with a dictatoral communist country that was far worse than a democratic republic with good regulations on business and robust social programs.

I read this book while crossing the Atlantic. The author has done something extraordinary, the equivalent of Silent Spring for industrial-era capitalism as an immoral form of human organization. This book is unique but also tightly linked to the books that I list below. The conclusion of the book focuses on how Wall Street has discovered how to profit from mega-disasters and financial melt-downs, and contrary to popular belief, Wall Street makes money from these economic down-turns. It is the individual, and the indigenous owners who are forced to sell below market, that lose, every time. The author's opening focus is on privatization, deregulation, and deep cuts in social spending, each as mandated by the International Monetary Fund and the World Bank, with other nasty triggers demanded by the World Trade Organization, that have been systematically used to loot entire nations and their commonwealths--this is apart from the immoral predatory capitalism that uses bribes to clear areas of indigenous peoples so they can steal all the gold or other natural resources, and their only cost is the bribe, while the host peoples lose billions in natural resources. The author teaches us that "disaster capitalism" is the next step above immoral predatory capitalism, in which wars and disasters have been privatized and the global military-industrial-prison-hospital complex has moved one step closer to displacing all governments. She spends time discussion torture by dictators as a silent partner to the free-market crusade, and this is a good time to mention that the book is a standing condemnation of all that Milton Friedman and "the Chicago boys" inserted into the IMF and World Bank via their students. She provides a helpful discussion of how believers in Armageddon, including the neo-conservatives, are motivated by the belief that there is such a thing as a clean slate, and that Africa without Africans, or Iraq without Iraqis, are both desirable for that reason. She does a tremendous job of outlining the three shock waves of disaster capitalism: 1. Government Disaster/War out-sourced 2. Corporate looting 3. Police terrorism A portion of the book focuses on the urgency of restoring unions and the middle class, unions because they protect fair wages that create a middle class. She stresses that the 1970's through the 1990's saw a global (but particularly southern hemisphere) campaign to use the cover of counter-terrorism to murder and terrorize union leaders. As a graduate of the Central American and Andean wars, I can certainly testify to the fact that government death squads were as about looting and killing opposition leaders, and I for one saw no terrorists, only indigenous people's at the end of their rope. Interestingly the author singles out visionaries as being among the top targets for being hunted down and "disappeared." Visionaries counter the government lies that seek to rule by secrecy, impose scarcity, and concentrate wealth with

Klein's book is a solid and invaluable study of "economic shock therapy" (sudden privatization removal of all trade barriers, accompanied by drastic reductions in taxes and social spending) over the past three decades. She concludes that economic shock therapy (originally formulated by economist Milton Friedman) cannot be implemented without a preceding crisis (eg. hyperinflation (eg. Chile, Bolivia), weather disasters (eg. Katrina or the 2004 tsunami in South Asia), war (eg. 9/11, Iraq War II), or major political upset (eg. the Soviet Union after Gorbachev's resignation), and requires suppression of dissent to succeed. The "really bad news" is that each example cited by Klein quickly led to massive economic worsening for the general populace. Worse yet, is Friedman's statement that "our (true free-market enthusiasts) basic function is to develop alternatives to existing policies, and to keep them alive and available until the politically impossible becomes politically inevitable." Worst of all, is a suspicion that the current administration is committed to bringing about such crises if they don't naturally occur. Friedman first learned to exploit large-scale crisis in the mid-70s while acting as advisor to Chile's General Pinochet following his violent 1074 coup. Tax cuts, free trade, privatized services, cuts in social spending, deregulation, voucher-funded private schools quickly followed. Torture cells and mass murders stifled dissent. Unemployment went from 3 to 20% (ultimately 30% in 1982), and thousands of business foundered. Eventually Pinochet was forced to rescind much of what had been done, and Chile began recovering - mainly thanks to its government copper mines that had not been privatized. A lasting result, however, that in 2007, Chileans had the 8th most unequal income distribution. Russia's Yeltsin wasted no time after Gorbachev's 10/91 resignation, and in his first week announced lifting price controls (70% opposed), free trade policies, and the beginning of rapid privatization of the nation's 225,000 state-owned companies. Parliament agreed to give Yeltsin free rein for a year. At the end of that period the economy had fallen 40%, and rising opposition prompted Yeltsin to disband Parliament and back up his decrees with military rule and arrests. A small group of oligarchs managed to use government monies deposited in their just-created banks to buy vast national assets at fire-sale prices - eg. 51% of one oil company went for $130 million, only to be valued two years later at $2.8 billion. (Only Russians were allowed ownership.) These oligarchs then supported Yeltsin with large donations and heavy media coverage - 800X that of his rivals. Despite winning the election, Yeltsin's approval rating fell to 6%, and by '98, over 80% of Russian farms were bankrupt, those living in poverty rose from 2 million to 74 million in 8 years, the population declined 10%, etc. Undeterred, reformers' next stop was Iraq. This tim

In THE SHOCK DOCTRINE, Naomi Klein brilliantly proposes a compelling counter-story to the prevailing fable of free market infallibility. Buttressed by painstaking and wide-ranging research, and an ability to see connections where others only see coincidence, Ms. Klein amply shows that profit-making is not the essence of democracy as Milton Friedman and his minions would have it. She shows instead that the machinery of the state and the requirements of "disaster capitalism" are now so tightly synchronized in their exploitation of disasters both man-made and natural as to be virtually one in the same. Citing pertinent examples to prove her thesis that "disaster capitalism" is now rampant around the world - in Russia, in China, in Iraq to name just a few - she describes how in times of crisis, elites everywhere have learned that they can profit by implementing policies, e.g., "shock therapy" or "shock and awe," that would have been vigorously opposed in normal times. When these changes to Friedmanite free-market dicta are opposed, as they were in Chile, a third shock is implemented. This, according to Klein is a shock that is entirely man-made - the torture and murder of those who would stand in the way of the takeover of the public sector, or, as neo-liberal economists would have it, the bringing forth of a new birth of freedom. During the "Reagan Revolution," Klein argues, the notion of the `Entrepreneur As Hero' was buffed to a high gloss though the influence of right-wing think tanks whose pronouncements were reported by a cowed and obedient media. A decade later in the dot.com era, entrepreneurs were burnished to blinding sheen when the media fed the world images of swashbuckling venture capitalists who were touted as bringing forth a new millennium through the Internet. Klein maintains that George W. Bush's "public offering" -- the War on Terror - covered slavishly and avidly by the media, has been wildly successful, lining the pockets of investors in the new Homeland Security sector as promises of taxpayer money everlastingly flowing into the coffers of the military-industrial-energy complex have been fulfilled. This is the new "new economy:" the looting of the public sector through the now tried-and-true methods of disaster capitalism. THE SHOCK DOCTRINE reveals the many wounds that disaster capitalism has inflicted upon the body politic both here in the U.S. and throughout the world over the past 25 years. It is a breathtaking achievement. Highly recommended.