The Shock Doctrine: The Rise of Disaster Capitalism

The Shock Doctrine (2007) is a critique of neoliberalism by Canadian writer and activist Naomi Klein. Klein analyzes the history of neoliberalism and its relationship with crises to argue that neoliberal economics—as promoted by Milton Friedman and his acolytes—exploit and create crises to impose neoliberal policies on unwilling populations through undemocratic means. In Klein’s view, this happens through the mechanism of “shock therapy,” through which nations take advantage of crisis moments to strategically introduce new legislation when a country’s constituents are too overwhelmed to contest them. They then reinforce those policies, in some instances through the use of physical violence, including electroshock torture. The Shock Doctrine was made into a documentary in 2009. Other works by Naomi Klein include the best-sellers No Logo (1999) and Doppelganger: A Trip Into the Mirror World (2023).

This guide uses the 2007 Metropolitan Books hardcover edition.

Content Warning: The source material and guide feature discussion of torture, wartime violence, rape, mental illness, death by suicide, physical abuse, and religious discrimination.

Summary

The Shock Doctrine is broken into seven parts that critique examples of “shock therapy” throughout history and in different countries, in roughly chronological order. In the Introduction, Naomi Klein lays out her thesis. She argues that neoliberal economists have a quasi-religious belief in their economic theory that leads them to apply their policies of austerity, market deregulation, and privatization indiscriminately. Klein contests their claims that neoliberalism leads to prosperity, peace, and democracy, arguing that instead their policies serve to make the wealthy even wealthier while impoverishing more people.

In Part 1, Naomi Klein describes the psychiatric origins of “shock therapy” in the CIA-funded experiments of Dr. Ewan Cameron at McGill University in the 1950s. Cameron believed he could wipe people’s minds using electroshocks and drugs and then rebuild their minds with better “programming.” She connects this psychiatric belief to leading neoliberal economist Milton Friedman’s ideas about political economy. He believed shock therapy deployed during moments of crisis could be used to “reset” a nation’s economy, which afterward could be rebuilt according to his precepts. In some instances, electroshock torture techniques developed by the CIA on the basis of Cameron’s research were used against those who protested Friedman-esque economic reforms.

In Part 2, Klein describes one of the earliest examples where Friedman’s shock doctrine approach was applied, in Chile and elsewhere in the “Southern Cone” of Latin America in the 1960s and 1970s. In the context of the Cold War, the US government through the CIA collaborated with military juntas to overthrow left-wing, democratically-elected governments in Chile and elsewhere in Latin America. Once in power, the dictators implemented neoliberal economic policies guided by the “Chicago Boys,” the term given to Friedman’s supporters and acolytes. Those who resisted the regime change were imprisoned, tortured, and killed. Critique of these regimes focused on their human rights abuses, but failed to connect those abuses to the need to reinforce neoliberal economic policies.

In Part 3, Klein describes the evolution of the shock doctrine and its application in the 1980s. In the United Kingdom under Thatcher, the shock of the Falklands War was used to garner support for neoliberal market reforms. In the 1980s, Bolivia transformed from a dictatorship into a democracy. However, the government was still forced to service debt taken on by the dictatorial regime. This, coupled with high Federal Reserve interest rates, resulted in hyperinflation. This crisis was used as a pretext to implement neoliberal policies in Bolivia and Argentina. International organizations like the IMF and World Bank mandated these market reforms in exchange for loans to service the debt.

In Part 4, Klein describes how the shock doctrine was applied in the 1990s in Poland and Russia around the time of the fall of the Soviet Union. In both instances, the governments were advised by self-proclaimed Keynesian economist Jeffrey Sachs. However, Sachs recommended the new regimes adopt neoliberal policies instead of Keynesian ones. This led, in Russia in particular, to the creation of a caste of oligarchs who purchased formerly state-owned assets like oil and gas companies.

In Part 5, Klein describes how Donald Rumsfeld, Dick Cheney, and others in the George W. Bush administration came into office with the goal of privatizing government services. She argues they intended to enrich themselves in the process. When the attacks on 9/11 occurred, it provided them with a crisis they could exploit to impose these policies in the United States, particularly in the form of the massive expansion of the use of security contractors.

In Part 6, Klein describes how the United States used the crisis of the invasion of Iraq in 2003 to impose neoliberal economic policies. She argues that these policies led to a deepening and worsening of the crisis there, as grassroots democratic reforms were oppressed and people were impoverished and unemployed. She argues this created an opportunity for Islamist groups to gain power by providing services the state did not.

In Part 7, Klein describes how natural disasters like tsunami and hurricanes are crisis situations that can be used by neoliberals to impose market reforms. She looks at the aftermath of the tsunami in Sri Lanka and Hurricane Katrina in New Orleans, analyzing how the natural disaster is used to displace people to make room for tourist developments and to privatize government services. In Chapter 21, she writes about how Israel is an example of how the neoliberal reliance on privatized security and military services has created an economy in Israel that expands rather than contracts during times of war and conflict.

In the Conclusion, Klein describes how people have begun to organize and combat the imposition of neoliberal policies. In some cases, governments that supported those measures were defeated in elections. She also writes positively about villagers in Thailand, who used community organizing to override government efforts to displace them following a tsunami. She ends on a message of hope, arguing that the more people know about how the shock doctrine works, the less effective it will be.