The Shock Doctrine

1. Economic shock therapy: A tool for radical free-market transformation

"Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around."

Origins of shock therapy. Milton Friedman and the Chicago School economists developed the concept of using economic crises as opportunities to implement radical free-market reforms. This approach, known as shock therapy, involves:

• Rapid privatization of state-owned assets
• Deregulation of markets and industries
• Drastic cuts to government spending and social programs

Global implementation. Shock therapy has been applied in various countries, often following political or economic crises:

• Chile under Pinochet's dictatorship (1973-1990)
• Bolivia during hyperinflation (1985)
• Poland and Russia after the fall of communism (1989-1991)
• Asian countries during the 1997 financial crisis

The strategy relies on the disorientation caused by crises to push through unpopular economic reforms before opposition can mobilize.

2. The Chicago School's influence on global economic policies

"The Chicago School strain of capitalism does indeed have something in common with other dangerous ideologies: the signature desire for unattainable purity, for a clean slate on which to build a reengineered model society."

Intellectual foundations. The Chicago School, led by Milton Friedman, promoted a radical free-market ideology that emphasized:

• Minimal government intervention in the economy
• Unrestricted free trade and capital flows
• Privatization of public services and assets

Global reach. Chicago School ideas spread through various channels:

• Training of foreign economists at the University of Chicago
• Advisory roles in international financial institutions (IMF, World Bank)
• Influence on policymakers in developing countries

The ideology gained prominence in the 1970s and 1980s, becoming the dominant economic paradigm known as neoliberalism or the Washington Consensus.

3. Crisis as opportunity: Exploiting disasters for economic reform

"The shock doctrine mimics this process precisely, attempting to achieve on a mass scale what torture does one on one in the interrogation cell."

Disaster capitalism. Klein argues that crises – whether natural disasters, economic collapses, or wars – are increasingly seen as opportunities to implement radical free-market reforms. This process involves:

1. Waiting for or manufacturing a crisis
2. Exploiting public disorientation and fear
3. Rapidly pushing through controversial economic policies

Examples of crisis exploitation:

• Hurricane Katrina and the privatization of New Orleans' public schools
• The 2004 tsunami and the displacement of fishing communities in Sri Lanka
• The Iraq War and the creation of a corporate-friendly "clean slate" economy

The shock doctrine relies on the public's inability to resist sweeping changes during times of crisis and trauma.

4. The role of violence and repression in implementing shock therapy

"Shock and terror are not only compatible with democracy, they are what made the advent of democracy possible."

Authoritarian tactics. Klein argues that the implementation of radical free-market reforms often requires state violence and repression to overcome popular resistance. This has manifested in various ways:

• Military coups and dictatorships (e.g., Chile, Argentina)
• Suppression of protests and labor movements
• Use of torture and disappearances to instill fear

Democratic facade. In some cases, the appearance of democracy is maintained while:

• Emergency powers are invoked to bypass normal democratic processes
• Elections are manipulated or their results ignored
• Media and civil society are controlled or intimidated

The use of force highlights the contradiction between free-market ideology's claim to promote freedom and its reliance on coercion to implement its policies.

5. Privatization and corporatism: The hollowing out of government

"The creation of this corporate state-within-a-state is the result of three decades of policy decisions."

Outsourcing governance. Klein describes a trend of governments transferring their core functions to private corporations, including:

• Military and security operations
• Disaster response and reconstruction
• Social services and infrastructure management

Corporate-state fusion. This process leads to a form of corporatism where:

• Private companies profit from public funds and crises
• The line between public and private sectors blurs
• Democratic accountability is reduced

Examples:

• Halliburton's role in the Iraq War
• Private contractors in disaster relief efforts
• Outsourcing of government IT and data management

The result is a "hollow state" where elected officials have less direct control over government functions.

6. The rise of disaster capitalism in the post-9/11 era

"The ultimate goal for the corporations at the center of the complex is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary and day-to-day functioning of the state—in effect, to privatize the government."

Homeland security boom. The 9/11 attacks and subsequent War on Terror created a massive new market for security and surveillance technologies. This led to:

• Rapid growth of the homeland security industry
• Increased government spending on private security contractors
• Erosion of civil liberties in the name of security

Disaster response industry. Natural disasters and conflicts became opportunities for profit:

• Private companies taking over disaster relief efforts
• Reconstruction contracts awarded to multinational corporations
• Displacement of local communities in favor of corporate interests

The post-9/11 era saw the normalization of disaster capitalism, with crises becoming routine business opportunities rather than exceptional circumstances.

7. Resistance and alternatives to the shock doctrine

"So while the shock doctors are busily trying to erase and create the kind of no-history tabula rasa that has always been the dream of totalitarians, resistance movements in Latin America are ... responding to the attack with a 'shock of the past.'"

Growing opposition. As the effects of shock therapy became apparent, resistance movements emerged:

• Anti-globalization protests (e.g., 1999 WTO protests in Seattle)
• Left-wing governments in Latin America rejecting neoliberal policies
• Grassroots movements for economic justice and democratic control

Alternative models. Some countries and communities have developed approaches that challenge the shock doctrine:

• Venezuela's "Bolivarian Revolution" emphasizing social programs and regional cooperation
• Argentina's worker-occupied factories following the 2001 economic crisis
• Community-based disaster response and reconstruction efforts

These movements often draw on historical memory and local traditions to counter the "blank slate" approach of shock therapy, emphasizing collective action and participatory democracy as alternatives to top-down economic restructuring.

Last updated: January 22, 2025