The shock doctrine

“Only a crisis — actual or perceived — produces real change.” Neoliberal economist Milton Friedman

In Sum Pro-corporate neoliberals treat crises such as wars, coups, natural disasters and economic downturns as prime opportunities to impose an agenda of privatization, deregulation, and cuts to social services.

Origins: Naomi Klein’s 2007 book The Shock Doctrine: The Rise of Disaster Capitalism.

The shock doctrine is a theory for explaining the way that force, stealth and crisis are used in implementing neoliberal economic policies such as privatization, deregulation and cuts to social services. Author Naomi Klein advanced this theory in her 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism.

By way of metaphor, Klein recounts the history of electroshock therapy experiments conducted by Scottish psychiatrist Ewen Cameron for the CIA in the 1950s. Cameron’s “shock therapy” sought to return troubled patients to a blank slate on which he could write a new personality. Klein argues that a parallel “shock therapy” process has been used at the macro level to impose neoliberal economic policies in countries around the world.

The shock doctrine posits that in periods of disorientation following wars, coups, natural disasters and economic panics, pro-corporate reformers aggressively push through unpopular “free market” measures. For more than thirty years, Klein writes, followers of Milton Friedman and other market fundamentalists have been “perfecting this very strategy: waiting for a major crisis, then selling off pieces of the state to private players while citizens were still reeling from the shock, then quickly making the ‘reforms’ permanent.”

One of the earliest examples of the shock doctrine is the case of Chile. In 1973, Chile’s democratically elected socialist President Salvador Allende was overthrown in a coup d’état led by army general Augusto Pinochet, with support from the United States. Amid lingering turmoil created by the coup and tensions caused by the ensuing economic downturn, Milton Friedman suggested that Pinochet implement a “shock program” of sweeping reforms including privatization of state-owned industries, elimination of trade barriers, and cuts to government spending. To implement these policies, the Pinochet regime appointed to important positions several Chilean disciples of Friedman. Additionally, to squash popular movements that opposed these changes, the regime unleashed a notorious program of torture and “disappearances,” which ultimately led to the deaths of thousands of dissidents.

Klein contends that various forms of the shock doctrine have since been used to advance hyper-capitalist reforms, for example in former Eastern Bloc countries following the collapse of the Soviet Union and in South Africa after the end of apartheid. More recently, pro-corporate advocates have used the 2004 tsunami in south Asia to privatize public beaches in Sri Lanka and have worked to slash corporate taxes and public education and re-shape neighborhoods in the wake of Hurricane Katrina. In each case we witness, in Klein’s words, “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities.”

Although the shock doctrine has helped explain neoliberal attempts to take advantage of disaster situations, it cannot entirely account for the success of “free market” ideology, particularly in cases in which the market’s powers of seduction play a larger role than the use of brute force. Moreover, we should remember that neoliberals are not the only ones who can capitalize on a crisis. Throughout the world, social movements are learning that political upheaval and economic downturn can create opportunities for popular movements to demand, and construct, a more just and equitable society.

MOST FAMOUS APPLICATION: Chile under Pinochet (1973-1989); post-Soviet Russia; post-tsunami Sri Lanka; post-Katrina New Orleans.

Mark Engler is a senior analyst with Foreign Policy in Focus and author of How to Rule the World: The Coming Battle Over the Global Economy (Nation Books).

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