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The Shock Doctrine - the rise of disaster capitalism, a review

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Naomi Klein's 2007 blockbuster, The Shock Doctrine, the rise of disaster capitalism, gathered together decades worth of economic catastrophes implemented by the US, the IMF and the World Bank, into one handy container and gave it a name that calls out its true intended purpose. Indeed, the economic doctrine that the US and its institutional henchmen have been implementing since the end of WWII is nothing less than a full-blown frontal lobotomy on the world stage for any country that happened to fall victim to it. This treatise will be in three parts and will review the definition of the term Shock Doctrine, its origins and mutation over time, and what the future holds in store for both camps, those that are still victims of Shock Doctrine, and those who have survived and moved on.

Ms. Klein goes through much of the world's economic conditions from the 1970s onwards and explains how these well known events look when perceived through the lens of Shock Doctrine. Wikipedia describes it thus: "Klein introduces two of her main themes, that practitioners of the shock doctrine tend to seek a blank slate on which to create their ideal free market economies, which inevitably requires a usually violent destruction of the existing economic order and the similarities between economic shock doctrine and the original shock therapy a psychiatric technique where electric shocks were applied to mentally ill patients."

It is her contention that the economic model of choice by the US and its supporting international economic institutions, namely the IMF and the World Bank, has been one of devastating consequences. It is nothing less than a two-pronged frontal assault on the economy and country in question where the goal is to first, wipe out any semblance of egalitarian reform and common public assistance, and then to institute egregious monetary reforms that enrich the foreign investor and the very rich. In country after country, she demonstrates how the IMF and WB have destroyed local economies, placed cruel and crushing economic destitution on the public in general, and robbed as much of the country's wealth as possible to fill the pockets of the modern day robber barons, the wealthy local fat cats and the foreign investor.

Throughout this treatise I wish to make special note of the fact, though not so highlighted by Ms. Klein's work but nevertheless prominent, that Western economies, for the most part, have been spared this rigorous, cruel and destructive practice. It is important to mention that while these countries were being transformed into peasant wastelands of unspeakable horror, Western nations were reaping the very benefits they were denying the third world, namely health care reform, public assistance for the needy, plentiful job markets that easily soaked up the excesses in government-sponsored programs, and other economic stimuli directed at easing the burdens of fluctuating market demands and supplies.

Components of Shock Doctrine

There are two basic and fundamental parts to this policy, total abandonment of past economic policies and draconian new policies meant to create an indentured and impoverished mass public with little hope for a decent life as well as the deliberate siphoning off of all the country's resources into the hands of foreign investors and rich national plutocrats and oligarchs. Neither element goes to improving the living standards of the public in question, but rather, they are part and parcel with the stripping away of a given country's wealth into the hands of very few corporate leaders most of whom live in far off distant lands.

The first component is the removal of most elements of public assistance as a sort of slate-clearing process on which the IMF, WB and other involved economic institutions could then begin to write their brutal policies. Each component is crucial for the success of the whole, and this one is covered very well by Ms. Klein. She gives a few brilliant demonstrations how this is done in the target countries.

In fact, by going back to the 1950s and early 1960s and using the MK-ULTRA failures of the psychologists then who were working for the CIA and other government intelligence agencies, Ms. Klein shows just how the idea sprang to life and was nurtured. From Dr. Ewan Cameron's horrific experiments on normal people's brains, basically trying to erase past knowledge and replace it with programmed information, the idea of creating the same scenario on a national economic scale was borne.

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Though he wasn't the first to implement such a cruel and devastating policy, University of Chicago's professor Milton Friedman has long been considered the Overlord Emeritus if its program. He was the first to champion the concept of exploiting economies around the world that had just suffered a severe calamity and needed to be "reprogrammed." By using these disasters as de facto blank slates, he was able to create a brand new economic mold that strictly followed the guiding principles of his new concept exclusively.

Naomi paints a very real and factual portrayal of America's 1973 overthrow of democratically elected Chilean President Salvador Allende and the subsequent draconian financial measures which Friedman et. al. imposed on the hapless country. Though it's true that Friedman referred to the reforms needed in Chile were a "shock treatment," the overall case for her premise about his intervening into recent disasters does not really apply to this particular case because Chile was never anywhere near economic collapse at the time of the American coup d'etat.

While this point may seem a bit picayune given that the resulted solution for their economy followed the principles of disaster capitalism, it is nevertheless an important and crucial piece to the whole event that put General Pinochet into power. The reason is quite simple; the concept being presented here is one of blitzkrieg precision injected just after a cataclysmic and catastrophic economic event. This was not the case in Chile.

The website points this out, "From 1932 to 1973 Chile built on its republican tradition by sustaining one of the most stable reformist and representative democracies in the world." That is not to say that the country was spared any negative downturn in its economy during this period, but rather to demonstrate that the populace was never overly concerned about their country's financial situation. The only substantial harm to their economy came after Allende's election when the US effectively boycotted international aid to them.

This distinction is necessary because disaster capitalism doesn't always wait for a random calamity to occur before forcing its devastating and impoverishing "reforms." This doctrine does not just idly sit on some street corner humming old Tennessee Ford tunes until mother nature or poor governance of a nation allows it to spring into action. It is of the utmost importance that people understand that this policy can just as easily create its own shocking event to force the issue.
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Though Naomi is right in quoting Milton Friedman's comment about his premise for the shock doctrine, "only a crisis - actual or perceived - produces real change[3]," his true intent goes way beyond the perceptions of a given people. The full significance of his statement includes those disasters created by external countries for the purpose of imposing their imperialist ideologies on an unwilling crowd. In other words, this doctrine is not only a reactive policy taking advantage of a preexisting calamity, but is also a proactive policy creating the disasters in the first place so that it can then impose its ruinous remedy.

Naomi's research into this 20th Century monster is very well done and is replete with horrific examples and devastating consequences. It would be wise that we understand the full nature of the beast she has uncovered. Not only does disaster capitalism take advantage of unfortunate countries going through difficult times and destroy their nations' economy and impoverish their citizenry, it creates these very same difficult times in order to force such devastation on the target country.


60 year old Californian male - I've lived in four different countries, USA, Switzerland, Mexico, Venezuela - speak three languages fluently, English, French, Spanish - part-time journalist for Empower-Sport Magazine. I also write four (more...)

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When I read through the first 250 or so pages of T... by GLloyd Rowsey on Saturday, Jan 9, 2010 at 11:33:51 PM
Naomi's book is filled with examples of the horror... by John Little on Sunday, Jan 10, 2010 at 12:37:11 AM