Rough Notes on The Shock Doctrine: The Rise of Disaster Capitalism

These notes are to help navigate Naomi Klein's 2007 book The Shock Doctrine.
They are informal, and not a substitute for the book itself.
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Book Summary: The Shock Doctrine links decades of exploitation and devastation in the name of economic reform, from Chile's 9/11/1973 coup to Katrina. Because populations usually want high employment and social services, the "reforms" are implemented with manipulation and/or terror. In recent years more and more of the world is standing up against these crimes.

Significance: The poverty caused by shock exploitation around the world is extreme. Violence and environmental damage are often quite devastating as well. The Shock Doctrine is one of the best resources for understanding massive abuses, such as the Iraq Occupation. Crimes against humanity are a tool, not a by-product of the profit crusade. (The "Why" of the exploitation is money.)

Readability: The power of the events described, such as the Tiananmen Square Massacre, make the book hard to put down. Reminders connect key events and players. Occasionally the vocabulary is difficult, but most of the content is clear. Note that there are no summaries of the main points, so you will need to mark-up your copy of the book aggressively.

The Shock Doctrine: This is the use of confusion and fear to push through massive exploitation. Shock allows the most powerful to make economic changes with little resistance. State and corporate terror may keep people from speaking out, at least at first. Coups are one way in which to start the shock process, but natural disasters and financial crises are used as well. Sometimes a new government is created but in many cases an existing government or a rising political party suffices. A functioning democracy can limit the brutality and exploitation.

The Exploitation Goals: Wealth and power are the high-level goals. Academics, especially from the Chicago School of Economics, may idealize a brutal, gladiator-style economy. In practice, it is the drive for wealth and power which dominates.

Economic Reform, Advertised Version: "Reforms" are pushed in the name of freeing economies from crippling government constraints. The idea of freedom is important to scrutinize because it is advocated for investors and corporations but not for the general population. ("Freedom" actually has rather a bad history in propaganda.) Going along with this is a shift from the public to the private sector in the name of efficiency and competition. Economic growth and halting inflation are key claims of success.

Economic Reform, Reality: The will of the people (democracy) is bypassed and there are often bloody purges. Poverty explodes, and the middle class shrinks. The people who gain wealth are international investors and often corrupt local government officials. Disappearing and torturing citizens may be long-term tactics. Potential benefits of competition are lost because of massive corruption, monopolies, and economic depression.

Shock Graph: This is a rough, hypothetical example and is not from the book. The purpose is to show how some community attributes might change over time.

Here an idealized democracy increased the quality of life for the general population while decreasing exploitation. The loss of exploitation profits increased the national and international exploitation drive by the elite. This was both to maximize exploitation and issue a global warning that real democracy would not be tolerated. After the exploitation drive became more powerful than democracy, there was a coup with purges of opposition politicians and labor leaders. The elite pushed through exploitation in the absence of democracy. Much of the profits came in the first round of plundering. The quality of life dived, with portions of the population falling into a living hell. (The film Darwin's Nightmare depicts how bad poverty can be.)

A wide variety of scenarios appear in the book. Sometimes inflation weakens the quality of life and contributes to a coup. Sometimes the shocks are natural disasters. Sometimes a population recovers quickly and sometimes decades are required.

Shock Event Timeline: This is a rough event timeline: Shock Era

Entities: The groups pushing and suffering shocks include:

Targets: If a population is completely powerless, the exploitation targets listed below may be pursued.

Area TagExploitation TargetMy Community
GOVERNMENT.ASSETSTake public assets   
GOVERNMENT.SOCIAL_SERVICECut social service spending   
GOVERNMENT.CONTRACTIncrease government contracts to corporations   
SECURITYIncrease surveillance and mercenary spending   
GOVERNMENT.MARKET_REGULATIONEnd local business protections, price controls, and safeguards   
CORPORATE.UNIONDestroy unions   
POLITICS.DEMOCRACYDestroy political opposition   
CORPORATE.ACQUISITIONBuy local companies cheaply   
LAND.ACQUISITIONTake land from the poor   
TAXReduce taxes, especially for the wealthy   
MEDIAControl the news   
GOVERNMENT.HUMAN_RIGHTSCut rights, enable abuses   
GOVERNMENT.ENFORCEMENTProsecute the poor; permit fraud, torture, etc.   

A population's money goes to elites outside and within the region affected. The quality of life drops, and individuals become politically weak. The security sector grows to contain the "surplus population" and the violent resistance.

The tags are rough suggestions and not from the book. Tagging key activities is helpful for planning and monitoring. This is a practice on some large projects.

The Shock Doctrine mostly describes media control and selective law enforcement indirectly.

Shock Spin: These are some of the ways the Chicago School edicts are defended.

The manipulation required to cause the exploitation is usually kept secret. The wealth grabbed by the elite pushing the changes is also not discussed.

Defending Against Shock Exploitation: Many communities can reduce or resist exploitation.

Additional Points:

Chapter Summary:

The following is a terse chapter-by-chapter summary of the book.

Introduction Blank is Beautiful: Three Decades of Erasing and Remaking the World
The introduction outlines the book and the concept of shock as a tool for abusive change.
Part 1 Two Shock Doctors: Research and Development
Ch. 1

The Torture Lab: Ewen Cameron, the CIA and the Maniacal Quest to Erase and Remake the Human Mind
A "criminally stupid" psychiatrist attempted to destroy people's minds with extreme forms of shock and then (superficially) rebuild personalities. The CIA backed the research and adopted some of its practices. The breaking down of an entity with the excuse of later rebuilding it is a theme in economic shock exploitation.
Ch. 2

Chile preparation
The Other Doctor Shock: Milton Friedman and the Search for a Laissez-Faire Laboratory
Milton Friedman was a professor at the University of Chicago's Economics Department who advocated aggressive shifts to "pure capitalism." Mixed economies, with some government control and large government spending, were the enemies of economic freedom. John Maynard Keynes, an important person in helping to stabilize post-WW II economies, was the enemy. As many elite wanted to increase their wealth via corporate power, Friedman became a celebrated champion. US government and business people began supporting the teaching of Friedman's ideas in Latin America. Early CIA coups are discussed, as well as models for brutality. People pushing for a coup in Chile eventually chose Suharto's coup in Indonesia as a model, with brutality used preemptively.
Part 2 The First Test: Birth Pangs (The Southern Cone of South America)
Ch. 3

Chile, Uruguay, Argentina coups
States of Shock: The Bloody Birth of the Counterrevolution
Pinochet helped lead Chile's coup on 9/11/1973 against Allende. "Anti-Communism" was the excuse. Pinochet implemented many of the Chicago School's requests, but not all. There was massive violence, and poverty grew. The rich became richer. In 1982, however, Pinochet went back Allende's mixed economy model because of unacceptable financial problems.

Uruguay took up the Chicago model in 1974. Argentina's military staged a coup in 1976 and also pushed through a partial implementation of the Chicago economic model. Poverty grew in Argentina as a result. The region's regimes began to kill less publicly to reduce international pressure.

Ch. 4

coup effects
Cleaning the Slate: Terror Does Its Work
The regimes in the Southern Cone were especially brutal against those who threatened the emerging economic system. Corporations sometimes drove the terror as well.
Ch. 5

establishment denial
"Entirely Unrelated": How an Ideology Was Cleansed of Its Crimes
Much of the human rights work in the Southern Cone focused on government abuses rather than economic exploitation. Corporations largely escaped connection with the brutality. The Chicago School of Economics received little blame as well.
Part 3 Surviving Democracy: Bombs Made of Laws
Ch. 6

The UK
Saved by War: Thatcherism and Its Useful Enemies
British Prime Minister Margaret Thatcher was too unpopular to advance corporate power until the Falklands War. After this, Thatcher dealt harshly with striking coal miners, spreading fear across unions. She also helped some renters to become owners of their units, increasing her political base. The general move was toward power for the rich. The lesson was that a war could allow a democracy to be manipulated into accepting policies that benefited the few.
Ch. 7

The New Doctor Shock: Economic Warfare Replaces Dictatorship
The young US economist Jeffrey Sachs was part of the push to bring (some of the) Chicago School ideas to Bolivia's troubled economy in 1985. There were elections, but much manipulation and kidnapping followed. Some economic problems in Bolivia subsided, but life for the growing poor became worse. Some economic improvements probably came from a restarting of the large coca industry.
Ch. 8

debt exploitation
Crisis Works: The Packaging of Shock Therapy
The IMF and World Bank began to push hard for Chicago School practices. National debt forced many governments to agree to international demands for "privatization, deregulation/free trade, and drastic cuts to government spending." Eventually some people in the institutions admitted that nations lost financial stability.
Part 4 Lost in Transition: While We Wept, While We Trembled, While We Danced
Ch. 9

Poland, China
Slamming the Door on History: A Crisis in Poland, A Massacre in China
In Poland, international pressure pushed Lech Walesa's Solidarity Party to follow Chicago school practices. This was done against the wishes of most party members. Back in the US, Francis Fukuyama described the end of economic choices in the world.

In China, the Communist Party faced a growing desire for both democracy and an end to the extreme corruption growing under the new capitalist model. Deng Xiaoping, after years of increasing the capacity for internal repression, crushed demonstrators in Tiananmen Square and beyond. Labor leaders were, as usual, key targets. The economy moved closer to the Chicago School model after this. Unemployment shot up.

Ch. 10

South Africa
Democracy Born in Chains: South Africa's Constricted Freedom
The ANC had risen in power with a "Freedom Charter" declaring their goals of helping the general population. When the ANC became a true national political force its members hoped to greatly improve the quality of life for the majority of the population. Once negotiations began with the racist government, however, the ANC agreed to many financial obligations and government limitations. The formal agreements crippled the ANC's ability to make significant long-term improvements.
Ch. 11

Bonfire of a Young Democracy: Russia Chooses "The Pinochet Option"
Though Russian legislators were portrayed as hard-line Stalinists opposing the liberal Yeltsin, it was in fact moderates defending social services against Yeltsin's extreme version of capitalism. Yeltsin used the military to end any hope of government for the people.
Ch. 12

Russia, Canada
The Capitalist Id: Russia and the New Era of the Boor Market
Russia received no real help from the US or other nations because there was no profit motive to help the Russian economy survive. The quality of life worsened significantly.

To push Canada to cut government services, many business institutions began fabricating a "debt wall" crisis. By the time the manipulations became public, the government had already reduced social services. The chapter also mentions how some general international manipulation became public.

Ch. 13

Thailand, South Korea
Let it Burn: The Looting of Asia and the "Fall of a Second Berlin Wall"
Investor panic sparked economic problems in Thailand and then other countries in East Asia. Western governments did not help; the IMF did find this to be a great opportunity for "reform." In general poverty grew with the level of adoption of the Chicago School programs. By the time of the 1999 Seattle World Trade Organization Talks, however, widespread opposition began to limit shock exploitation.
Part 5 Shocking Times: The Rise of the Disaster Capitalism Complex
Ch. 14

Shock Therapy in the U.S.A.: The Homeland Security Bubble
Corporations began taking large amounts of money from the US government, thanks to people existing in both the government and the business world at the same time. The 9/11 attacks in the US briefly raised the status of government employees. The W. Bush administration, however, increased the funding of the private security industry quickly, with little publicity. This helped to create a financial incentive to suspect and arrest people around the world without proof.
Ch. 15

US cronyism
A Corporatist State: Removing the Revolving Door, Putting in an Archway
Many top government officials were key players in the business world as the W. Bush administration progressed.
Part 6 Iraq, Full Circle: Overshock
Ch. 16

Iraq shock
Erasing Iraq: In Search of a "Model" for the Middle East
The US establishment's glee at employing the shock doctrine in Iraq was substantial at the start of the occupation. "Freedom" was meant for corporations. There was no respect for anything Iraqi. The bigger the shock of occupation, the better the results for the US planners.
Ch. 17

Iraq plunder
Ideological Blowback: A very Capitalist Disaster
W. Bush's strategy was an "anti-Marshall Plan," causing mass unemployment. The local population lost government services and jobs. There was no accountability to the international companies making a profit. The CPA itself was too understaffed to function. The economic stress created much of the resistance. Many US corporations left the area, but did not return the money they wasted.
Ch. 18

Iraq hell
Full Circle: From Blank Slate to Scorched Earth
Bremer selectively stopped democracy when it threatened the exploitation planned by the US. US-backed brutality increased under "the Salvador option." This was in part because Rumsfeld had reduced the invasion forces below what career military officers recommended, and Iraq began to escape US control. Kidnapping became a way for local thugs and police to make money. Eventual attempts to employ the local population were too late.
Part 7 The Movable Green Zone: Buffer Zones and Blast Walls
Ch. 19

Asian Tsunami
Blanking the Beach: "The Second Tsunami"
This chapter describes exploitation of the 2004 Asian Tsunami. In Sri Lanka the tourism industry won, and the poor were driven from the beaches and into shanty towns. Aid did not make it to the little person, and a civil war eventually restarted. The international elite's model for exploitation had been how Honduras responded to Hurricane Mitch. The poor of the Maldives also fared quite badly following the 2004 tsunami.
Ch. 20

New Orleans
Disaster Apartheid: A world of Green Zones and Red Zones
This chapter describes how New Orleans suffered after Hurricane Katrina. The W. Bush administration cut the city's social services while giving corporations a wide array of large contracts. Like Iraq, the local population was largely bypassed for the rebuilding work. New Orleans became divided into rich "green zones" and poor "red zones." The chapter describes how hollow the US national government has become. At the local level some rich communities are even outsourcing government functions to corporations completely.
Ch. 21

Losing the Peace Incentive: Israel as Warning
Recently peace has not boosted the world's economy the way disasters and terrorism have. This is termed the "Davos Dilemma." Israel has led the way in profiting from this area, with domestic peace seen as less valuable than long-term conflict. Immigrants from Russia have made Palestinians "surplus people," no longer needed for labor. The profits from Israel's security sector have been huge, and with large technology exports.
Conclusion Shock Wears Off: The Rise of People's Reconstruction
The book concludes with how populations are refusing to accept radical market ideas and dictatorships, especially when such conditions would repeat previous horrors. Having some elite backers of shock exploitation charged and sometimes convicted of crimes is removing the "respectability" of the abuses as well. Some governments are scapegoating minorities as a way to handle economic and political pressure, however. The book ends with examples of people rebuilding their communities themselves.

Minor Notes

Scope: The current shock system is different than the models of exploitation and control used before. Key characteristics of The Shock Doctrine include:

A target government need not be controlled directly by the US government. Financial agreements, especially when driven by debt pressure, often turn a government toward business and away from the needs of its population.

The US does not generally raise its flag over areas exploited with shock, though US military bases are put in some areas. National resources are more important than expanding the national borders.

Naomi Klein is a fairly young Canadian, which probably makes the Vietnam War rather distant to her. US authors sympathetic to the downtrodden usually focus on US-backed coups and open wars. Instead, Klein describes the rise of exploitation through business. Coups and wars are often part of this modern nightmare, but not essential. Financial institutions, big business, and academia drive much of the exploitation.

George Lakoff's Writings: In publications such as Moral Politics Lakoff describes the emotional packaging of economic "freedom." The Strict Father Model is the one pushed with economic shock. (Lakoff focuses on how emotion and idealism drives politics in the US.)

Future Exploitation Targets: These some potential targets for future shock exploitation. The list is only partially from the book.

Michael Moore: Michael Moore's next film, scheduled for 2009, will tentatively include a partial history of US establishment backed abuses around the world. Potentially many of the events in The Shock Doctrine could be covered.

Updated July 14, 2008

(C) 2008 Kevin Pardo