Naomi Klein takes us on a lengthy journey from the shock doctrine to disaster capitalism. By the time the journey is completed, you might well feel that you have been given the map of Alice's Wonderland and with an audience with the Queen thrown in for good measure. You might even think the Queen is kind of terrifyingly sane in her own way—sane, but very dangerous.

The Shock Doctrine: The Rise of Disaster Capitalism, is nothing less than a re-reading of American foreign and economic affairs for the last 50 years. As a journalist, Klein has traveled the world doing on site research in Iraq, post-tsunami Sri Lanka, Argentina, and post-Katrina New Orleans to add to her years of research. She has delivered an amazing and important book, which begins with the economic theory of Milton Friedman, an obscure and marginalized academic in the '50's and early '60's.

I divide this journey into four historical phases with a narrowed focus on the development of the shock doctrine and its transformation into disaster capitalism. First, Klein describes the incubation and maturation of Friedman's economic ideas at the University of Chicago beginning in 1946 up to the Chilean coup of 1973. The regime of Augusto Pinochet would proved the first laboratory setting for the implementation of Friedman's program. This phase includes the violent revolutions in Argentina, Uruguay, and Brazil. The third phase commences in the '80's with the onset of Thatcherism and the work of Jeffrey Sachs in Bolivia. This period marks the full maturation of the shock doctrine and it's implementation worldwide through the International Monetary Fund up to the invasion of Iraq in 2003. From 2003 forward, the invasion of Iraq, the ultimate expression of the shock doctrine so far, is transforming the world economy. It was economic shock therapy delivered by military intervention. What Klein terms the disaster capitalism complex, although developing quietly for years, has now emerged as a rapidly growing economy. I will comment on each phase.

Phase One: Friedman's System. According to Klein, Friedman construed economic truth as precisely definable and objective science with laws that were equivalent to the laws of physics. Its economic system could, therefore, only be subject to impurities, which for Friedman were introduced by the Keynesian economics. The goal was one of rolling back everything Keynes and his disciples had distorted by their efforts. The solutions as proposed by Friedman always required three areas of intervention: 1) cutting social services and taxes to the bone, 2) privatization of public functions, and 3) deregulation of the economy. As blasé as this sounds from our perspective, Friedman's doctrines were considered very much on the fringe by the majority of economists during the '50's and '60's. But he did attract the attention of both business and government interests. Friedman's contacts in the banking world would bring in plenty of donations from big business to the University. Klein sees this alliance as the beginning of the right wing think tanks that are so ubiquitous today.

US foreign policy was consumed with containing Communism. The constant fear was that other nations could be placed under the sphere of the Soviet empire by not being under US dominion. Thus, developmentalism, or economic nationalism in which nations states protected their own economies and and made calculations about their own self interests was a major concern. US corporations knew that that developmentalist policies would not be good for their profits. In this climate, USAID funded an exchange program bringing South American students to the University of Chicago to be trained as economists on full-ride scholarships. Part of the program established satellite institutions in select South American countries. The students were meant to compete with other local economists for jobs and academic influence. Ultimately hundreds of economists would come out of this effort. The program at first was a failure since the students who became known as The Chicago Boys were academically marginalized by the Latin America. “pink” economists. But their time would come with the Chilean coup—the most significant effort to date to reverse the developmentalist tide.

Phase II: Experiment and Consolidation. Two factors encouraged the introduction of shock into what until then was just a competing economic school of thought. The first was the election of Salvador Allende as President of Chile in 1970. Pressure from the business and military interests from within Chile and the US soon led to active preparation for a coup. The Chicago Boys were at the center of the CIA led plot in preparation of the post-coup economic policy. Another factor was the severe disappointment Milton Friedman had in Richard Nixon's economic policies. Friedman believed his long awaited moment had finally come only to see it vanish with Nixon's popular Keynesian policies. The Pinochet regime for Friedman was a huge opportunity to test his theories. But the irony was that while Friedman equated free-market capitalism with democracy, he lost his best shot at being accepted in the US under Nixon, while his program was adopted in totality under the most repressive of regimes in the Southern Cone of South America.

The Chilean experiment was a raging success, from the perspective of the USA and corporate interests as it opened up many market opportunities for US corporations and crushed a a socialist regime. However, Klein argues that the economic shock therapy applied to the Chilean economy, which is celebrated as the Chilean miracle, was not successful. The Pinochet regime broke what was not broken and fixed little at huge social cost.

Klein takes pains to argue that economic program was inevitably linked to the terrorizing of the population. She in fact devotes the entire first chapter to the means and purposes of torture. She does this for two reasons. First, she does it as a literary device to link the seemingly disparate political and economic programs of the Chilean experiment as two facets of the same entity—they were both meant to be shock the populace to accept the changes which they would normally resist. She wants us to recognize that the ubiquitous use of electrical shock in the torture of bodies is equivalent to the economic shock therapies to bodies politic.

Secondly, Klein wants us to fully appreciate the goal of torture is to cause the ultimate loss of personal identity and to create a state of regression so that the individual is utterly reliant on the captor for the smallest detail of existence. The original studies were conducted in Canada by a leading psychiatrist Ewan Cameron in 1950's. His original research was intended to cure people of mental disturbances by erasing the troubled identity and making the patient a kind of tabula rasa upon which the new identity could by inscribed. He was put to work by the CIA, which was trying to figure out how the Communists could brainwash people. Klein does not argue that the Cameron's work was even indirectly linked to Friedman's. But she does use Cameron's work to provide a lens through which to understand the effect that shock has on people and on collectives. She argues in the terror unleashed by the Pinochet regime and its subsequent uses always served the economic end creating the new economic neo-liberal order.

Uruguay and Argentina would also be subject to shock therapy according to the now experimentally verified shock doctrine. In 1982, Milton Friedman would write in the preface to his highly influential Capitalism and Freedom: “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. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” The shock doctrine was about to undergo a major innovation.

Phase Three: Thatcher, Sachs and Dissemination. Margret Thatcher was a strong admirer of Augusto Pinochet and would have liked to apply his economic program were it not for the fact that she would be voted out of office. The Falklands War would transform this failing politician into the Iron Lady. She would use her new popularity from defeating the “enemy without” to defeating “the enemy within,” the coalminers whom she would brutally suppress. Klein argues that Thatcher's limited neo-liberal reforms were made possible by the shock of the war.

Jeffery Sachs' work in Bolivia would prove to be even more important. He advised the democratically elected government regarding the severe inflation problem. Sachs' imposed a shock therapy program which indeed lower inflation without a requisite coup d'etat. Klein takes pains to point out the repressive measures that were needed to push through the reforms. Sachs had demonstrated that a shock therapy program could be applied in democracy despite strong institutional obstacles. And he inadvertently proved that Friedman's shock hypothesis was not only correct but could be applied in a far greater range of settings. The Friedmanite economists realized that severe economic problems could be seen as opportunities to extend the full blown shock therapy game plan without of the inconvenience of having to stage a military coup.

By the end of the '80's World Bank and the IMF were thoroughly infiltrated by economic shock doctors who transformed these Keynesian institutions into revolutionary centers of neo-liberal transformation. Shock therapy structural adjustment programs were now modeled after the same programs that were instilled by The Chicago Boys in South America: deregulation and free trade, privatization, and deep cuts in government spending. This would be labeled the “Washington Consensus.”

The shock doctrine had been turned into established wisdom and had been repackaged into a highly portable tool set. It would form the basis of the structural adjustment programs that would sweep the world. But at its core, the theoretical basis for disaster capitalism had been worked out—disasters, severe problems, anything that makes a country helpless is an opportunity to impose a program that opens small countries to multi-national corporations. The results were consistent: a few people get very wealthy at the cost of great social suffering.

Phase Four: Iraq and the Rise of the Disaster Capitalism Complex. Whereas the Friedman doctrines advised privatizing non-core functions, privatization of what had been previously thought to be core functions of government were now in play, turning government agencies into hollow shells. The policy of taking privatization to previously unimagined levels has led to the development of para-governmental agencies run on the profit motive.

The Iraq War and the Global War on Terror have been central in this process. The invasion of Iraq was always intended to be the creation of the blank slate upon which western capitalism was intended to be written. The shock doctrine informed the shock therapy of Paul Bremer carrying out the plans of his superiors. They did not need extensive post-war planning because chaos was always part of the plan. The warnings of looting were seen as good news that would add to shocking the population into submitting and creating more rebuilding opportunities. Welcome to Wonderland.
In this process, a vast economy has sprouted—the disaster capitalism complex. It thrives off of the destruction/reconstruction cycle. Vast amounts of skill and organization with the promise of growing profits and huge government contracts have spawned based on strange parody of Gordon “greed-is-good” Gecko from the 1987 movie, Wall Street: disaster is good. And is becoming quite portable taking many opportunities worldwide—anyone with deep pockets can pay for a any combination of security, construction, and governmental solutions. The function of government under this logic is to be a kind of venture capitalist setting up opportunities for the “free market” to take over. Hit by a hurricane and you need to keep the riffraff from coming back? Blackwater. Tired of your taxes going to people with less money than you? Withdraw from your county and hire CH2M Hill to provide a turnkey Green Zone government—or “militarized gentrification.” The new business model is that of the “movable Green Zone.” The successful state of the future will be like Israel: a “standing disaster apartheid state,”an economically booming social disaster spawning state all needing to be cleaned up—at a profit.

Conclusion. Klein wants us to know about how the world works, and to become aware of the strategy to shock us for political ends. She has written a brilliant and important book. It is written with great attention to detail and with excellent documentation. And there are some real gems in the book. For example, her interview with Jeffrey Sachs is priceless. Klein stops short of introducing any overarching economic critique, which I could imagine being a focus for future efforts--maybe in the next volume of the Disaster Capitalism Trilogy.

Alert: the Canadian version which I am reviewing has different pagination than the American version which is a about 100 pages shorter. The USA version has narrower margins and smaller print.

The Painting is by Goya: Saturn Devouring One of His Sons, Prado Museum