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The Shock Doctrine: The Rise of Disaster Capitalism
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Themes
Myths and Propaganda About Neoliberalism and Its Impacts
In The Shock Doctrine, Klein argues against some of the key “myths” about neoliberalism and its impacts, particularly the narrative that neoliberal economic policies lead to prosperity, democracy, and peace. Instead, she argues that neoliberalism is more of a destructive force.
Her exploration of the “myth” of neoliberalism begins with an analysis of neoliberalism in Chile, its aftermath, and its legacy. Proponents of neoliberalism argue that the Chilean case is an example of how neoliberal policies lead to prosperity. Klein is explicit that she views the “myth” of the “Chilean miracle” as factually inaccurate. She notes, “the country’s period of steady growth that is held up as proof of its miraculous success did not begin until the mid-eighties—a full decade after the Chicago Boys and well after Pinochet was forced to make a radical course correction” (85). She argues that in the immediate aftermath of neoliberal policies, Chile’s economy crashed and only recovered after it rolled back some of the reforms. She replicates this format in every case study of neoliberalism she addresses. In every instance, she notes how poverty rates, income inequality, and unemployment rose following the implementation of neoliberalism.
The myth of neoliberalism, as promoted by Milton Friedman and articulated by political economists like Francis Fukuyama, is that neoliberalism leads to the spread of democracy around the world. Klein summarizes their argument as, “When the Soviet Union finally collapsed […] there was now a twin consensus about how society should be run: political leaders should be elected, and economies should run according to Friedman’s rules” (18). She goes on to emphasize “this book is a challenge” to that claim (18). In her case studies from Chile onward, Klein notes in each case how neoliberal reforms were implemented under undemocratic systems, whether through military coups, suspension of normal democratic order, or the creation of outside institutions with government power. She also emphasizes how often neoliberal proponents, like the CIA and the US government more broadly, would support totalitarian regimes instead of democratically-elected ones if the dictators embraced neoliberalism. For instance, as she notes, in Russia, Yeltsin abandoned democracy and yet was still supported by the West because he pushed through market liberalization.
Finally, Klein contests the “myth” that neoliberal policies promote peace around the world. This myth is most clearly articulated by New York Times columnist Thomas Friedman, who wrote, “No two countries that both have a McDonald’s have ever fought a war against each other” (13). The argument is that under neoliberalism and globalization, countries are obligated to trade with one another for specialized goods and services, and therefore they will not go to war to protect trade relationships. Klein argues that the cases of the American invasion of Iraq and the Israeli economy suggest this view is untrue and indeed that the inverse is. She describes the Iraq war as introducing “for-profit warfare” (13), wherein the US government engages in massive deficit spending, creating immense economic opportunities for military contractors and attendant services. As a result, it is more profitable to go to war than to reign during peacetime. This economic model reaches its apotheosis in the case of Israel, a large part of whose economy relies on contracting security, military, surveillance, espionage, and related services domestically and internationally. When Israel goes to war, its economy expands rather than contracts.
Further, Klein documents how neoliberal economic policies are highly destabilizing and often lead to civil unrest as poverty increases, creating more violence and volatility. Klein’s argument throughout The Shock Doctrine thus emphasizes that the reality of neoliberal economics is very different from the story that is told about it in mainstream contexts.
Exploitation of Crises for Economic Gain
A core argument of The Shock Doctrine is that the goal of neoliberal economics relies on “shock therapy.” Under this doctrine, populations that are experiencing a crisis are in a state of shock. While shocked, they are stunned and unable to agitate against or oppose the implementation of unpopular neoliberal policies like privatization or deregulation. Once the policies are in place, the economy goes into rapid contraction and downfall as people are laid off, prices rise, and other destabilization occurs. This leads to another period of shock during which further neoliberal policies can be implemented, creating a vicious cycle.
At each step in the cycle, the wealthy enrich themselves at the expense of the poor and middle class. In this context, Klein describes neoliberalism as a “closed, fundamentalist doctrine” (19) whose only solution to further crises is the imposition of more stringent forms of its belief system. Klein examines case studies of how neoliberals exploit and, in some instances, create a variety of crises, including military coups, economic crises, and natural disasters.
The earliest examples of shock doctrine explored by Klein are those in which neoliberal proponents collaborated with and supported military coups as opportunities to impose neoliberal policies. These largely occurred in Latin America in the 1970s. For instance, she writes how this exploitation was well-documented and tightly connected with Augusto Pinochet’s military coup. As Pinochet’s soldiers took over the Chilean government, “several Chicago Boys were camped out at the printing presses of the right-wing El Mercurio newspaper […as] they frantically tried to get the document [of their economic policies] printed in time for the junta’s first day on the job” (77). Klein describes how this model was reinforced, sometimes with military violence and torture, throughout the “Southern Cone” and elsewhere in the world. Other military actions, such as the US invasion of Iraq, likewise create a crisis that can be exploited to impose neoliberal policies.
Economic crises, particularly hyperinflation and the cost of debt service for newly democratic regimes in developing nations, also create exploitation opportunities for those seeking to impose neoliberal policies. A typical case is that of South Africa, as described in Chapter 10. Following the end of apartheid, the country was facing an economic crisis and needed to borrow money from an international institution to stabilize their economy. In exchange for the loan, the IMF and World Bank obligated South Africa to adopt neoliberal policies, a process known as “structural adjustment.” This also occurred throughout Southeast Asia, Latin America, and elsewhere. Klein also documents how in some instances these economic crises are manufactured. For instance, think tanks in Canada propagated the untrue claim that Canada was about to hit a “debt wall,” leading to the implementation of neoliberal policies like cuts to social spending (257). Afterward, it was revealed that the claims were baseless.
In Part 7, Klein discusses how ecological disasters, namely tsunami and hurricanes, are crises that are also exploited by neoliberal economic policies. The destruction wrought by these crises creates opportunities for neoliberal governments to displace low-income people in desirable locales, as well as push through neoliberal policies. For instance, Klein notes that following Hurricane Katrina, Milton Friedman described the destruction as “an opportunity” to implement policies like the privatization of New Orleans public schools and the massive downsizing of the public workforce of the city.
Klein is highly critical of the exploitative and destructive nature of neoliberal economics. She instead advocates for “a free market in consumer products [that] coexist[s] with free public health care, with public schools, with a large segment of the economy—like a national oil company—held in state hands” (20).
Resistance to Economic and Political Oppression
Another theme that runs through The Shock Doctrine is the methods communities use to resist economic and political oppression. Around the world, people resist neoliberalism, authoritarianism, and other forms of oppression in a variety of ways, including journalism, protests, armed resistance, and electoral politics. Although they may lose some battles, Klein expresses hope that they will ultimately succeed in overcoming oppression, displacement, and disenfranchisement.
Klein argues throughout that neoliberal policies can be defeated at the ballot box. She notes that resistance to neoliberalism is “typical of the majority of citizens, as reflected in election after election in country after country” (103). When citizens have the opportunity to vote, they often vote against politicians who support neoliberal policies, as seen in the example of Chile where, after the authoritarian rule of Pinochet ended, a democracy was once again installed and a socialist president was elected. Throughout the Southern Cone in the 2000s, democratically-elected leaders rolled back neoliberal reforms. They then banded together to create an alternative free trade area not subject to neoliberal price shocks.
Under authoritarian rule, communities often protest the implementation of oppressive policies through demonstrations. Klein notes that governments supportive of neoliberal policies use violent suppression and detention of protesters to ensure their policies will not be contested. In Chile, Argentina, Brazil, and elsewhere in Latin America, “the vast majority of the victims […were] non-violent activists working in factories, farms, shantytowns and universities” (97). In some cases, the regimes go to extreme lengths to silence opposition, such as when activist Orland Letelier was assassinated by Pinochet’s secret police with a car bomb in Washington, D.C. on September 21st, 1976.
Neoliberal economics and their attendant regimes in some instances lead to the rise of armed resistance groups or, as they are typically officially categorized by the US State Department, terrorist groups. Klein documents how Hezbollah and other Islamist groups gained power in Lebanon and Iraq by offering the social services not provided by the neoliberal state. She describes, for example, how Hezbollah “built its loyal base” by “rigging up generators and transmitters, organizing trash removal, providing security” (461).
When peaceful protestors are not violently removed, they are sometimes able to win concessions through occupying contested territory. For instance, in the Conclusion, Klein notes that in Thailand, following a tsunami, a fishing community was able to rebuild their village by using their superior numbers to overwhelm security services tasked with keeping them out, taking initiative to rebuild damaged structures, and not relying on government support. She presents this as one possible mode other communities can use to resist the implementation of neoliberal policies.
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