Book SummaryThe Shock Doctrine, by Naomi Klein

1-Page Summary1-Page Book Summary of The Shock Doctrine

The Shock Doctrine by Naomi Klein is a study of the history of economic shock therapy, which is a method of (supposedly) boosting a country’s economy through rapid deregulation, privatization, and severe cuts to government spending.

The Shock Doctrine also studies how economic shock therapy gave rise to what Klein calls the disaster capitalism complex: a privatized system of destruction and reconstruction that funnels billions of dollars into corporate pockets.

In this summary, we’ll discuss:

• What traditional shock therapy is, and how it relates to economic shock therapy
• The Chicago School of Economics, and its belief in fundamentalist free-market capitalism
• The history of economic shock therapy around the world
• How free-market capitalism and economic shock therapy came together to create the disaster capitalism complex
• How communities are beginning to recover from the destructive shock treatments

Briefly, economic shock therapy is a way to quickly improve a country’s economy through rapid privatization, deregulation, and severe cuts in government spending. In other words, it imposes strict free-market policies on the country in question as quickly as possible.

However, as Klein shows over and over again throughout The Shock Doctrine, this economic plan doesn’t improve an economy. Instead, economic shock therapy invariably leads to mass unemployment, increased poverty, and widespread starvation, while a few select people become extremely rich.

Shock Therapy and the “Clean Slate”

The Shock Doctrine begins with a description of shock therapy as it’s traditionally known: A treatment for mental disorders wherein electric shocks are administered to a patient’s brain to intentionally trigger a seizure. The treatment was pioneered in the 1940s and 1950s by Dr. Ewen Cameron.

Cameron’s goal was to regress his patients’ minds to infancy, what he termed a “blank slate.” He thought that once all their current thoughts and memories were wiped away, he could easily reprogram them with new, healthy thought patterns.

However, while Cameron was very successful at breaking his patients’ minds, he was completely unsuccessful at rebuilding them. On top of that, many of his patients suffered from new and much more severe symptoms—both physical and psychological—than they’d shown before treatment. In short, Cameron fundamentally misunderstood what he was doing to his patients. He wasn’t wiping their minds clean—he was destroying them.

Disaster Capitalism

Disaster capitalism—taking advantage of disasters to push economic reforms that would otherwise fail—also can’t seem to distinguish between destroying and healing.

For example, when the US invaded Iraq in 2003, the Bush administration intended to completely destroy the existing Iraqi economy and build a radical free-market democracy in its place. However, no matter how much the US military blasted away at Iraq, they never managed to create that sought-after blank slate. As a result, they weren’t able to rebuild as the Bush administration intended.

We’ll discuss the Iraq invasion and its numerous failures in greater detail later.

The Chicago School’s Counter-Revolution

Disaster capitalism got its start in the famous University of Chicago’s Economics Department back in the 1950s under Milton Friedman. Friedman believed in unfettered capitalism. He maintained that in an unregulated economy, the natural economic forces of supply and demand naturally balance one another perfectly, leading to an ideal market wherein products are perfectly priced, everyone who wants to work can find a job, and inflation doesn’t exist. He believed that all economic problems are due to government interference in an otherwise perfect system.

Much like Cameron, Friedman believed that he needed to start with a blank slate in order to build this perfect economy. He dreamed of a country that was free from economic regulations, rules, and special interests, where pure capitalism could run its natural course. Also like Cameron, Friedman thought that the only way to reach such a state was through painful, destructive shocks to the country’s standing economy.

(Shortform note: To learn more about Milton Friedman’s ideas, read our summary of Friedman’s Capitalism and Freedom.)

Fighting the New Deal

From the 1930s to the 1950s, economies that blended capitalism with strong government regulation became popular. The most notable of them was Franklin Roosevelt’s New Deal. The world was prospering under these mixed systems, and things were good for the common folks. Those facts left Friedman and his free-marketeering colleagues with few supporters.

However, major US corporations were unhappy being forced to redistribute a lot of their money in the form of taxes and increased worker salaries. To counter this, they promoted Friedman’s policies.

(Shortform note: One of the major difficulties in discussing Friedman’s movement is that it has rebranded itself many times, often using terms that seem to have opposite meanings to one another. For example, Friedman called himself liberal—but his followers in the US associate that term with long hair and high taxes, and prefer to call themselves conservatives. The ideas that Friedman promoted would be called neoliberal in most of the world, but the American branch of this movement adopted the term neoconservative in the 1990s. In our guide, we’ll use the term neoliberal to describe Friedman’s policies.)

By any name, Friedman’s ideology was a three-part agenda that he believed would return the economy to its natural, healthy state:

1. Governments must eliminate all laws and regulations that hinder corporate profits.
2. Governments must sell off any assets that corporations could run instead.
3. Funding for social programs must be drastically cut—or, ideally,...

The Shock Doctrine Summary Chapter 1: What Is Shock Therapy?

The Shock Doctrine by Naomi Klein is a study of the history of economic shock therapy, which is a method of (supposedly) boosting a country’s economy through rapid deregulation, privatization, and severe cuts to government spending.

The Shock Doctrine also studies how economic shock therapy gave rise to what Klein calls the disaster capitalism complex: a privatized system of destruction and reconstruction that funnels billions of dollars into corporate pockets.

In this summary, we’ll discuss:

• What traditional shock therapy is, and how it relates to economic shock therapy
• The Chicago School of Economics, and its counter-revolution against developmentalism
• Why free-market policies never pass without first shocking countries into submission
• The history of economic shock therapy around the world
• How free-market capitalism and economic shock therapy came together to create the disaster capitalism complex
• The immense harm that these things have caused to millions of people
• How communities are beginning to recover from the brutal shock treatments

Briefly, **economic shock therapy is a way to quickly improve a country’s economy through rapid...

The Shock Doctrine Summary Chapter 2: Milton Friedman’s Counter-Revolution

In this chapter, we introduce some of the key players in free-market economics: the Chicago School of Economics and its great hero Milton Friedman. We’ll discuss their retaliation against FDR’s New Deal in the US and similar programs in South America, and their early efforts to replace those programs with their own vision of perfect free-market capitalism—efforts that would, in time, lead to the modern disaster capitalism complex.

The Chicago School of Economics

Disaster capitalism got its start in the University of Chicago’s Economics Department in the 1950s, under Milton Friedman. He wasn’t the only economist of his day who believed in free trade without government interference, but it was Friedman’s energy and charisma that helped the idea to really take root in his students. After Friedman’s courses, they viewed themselves not as mere economists, but as soldiers fighting a righteous war against harmful government overreach and interference.

Much like Dr. Cameron, Friedman believed that he needed to start with a blank slate. He dreamed of a country that was free from economic regulations, rules, and special interests, where pure capitalism could run its natural...

The Shock Doctrine Summary Chapter 3: The First Shock Experiment

In the previous chapter, we discussed the Chicago School’s first forays into establishing neoliberal economies in foreign countries. With the backing of the US government, some of these attempts worked—but their efforts in Chile failed badly.

This chapter discusses the turning point in the battle for Chile when General Pinochet launched a coup and seized the country from President Allende. As we’ll see, Pinochet was much more receptive to the Chicago School’s ideas than Allende, and he was willing to use whatever force was necessary to realize those ideas in Chile. By understanding this history, we’ll see how free-market capitalism and brutal repression go hand in hand.

General Pinochet’s Coup

On September 11, 1973, Chilean general Augusto Pinochet declared war on President Allende. Because Pinochet controlled the military and police, Allende’s forces were wiped out in brutal fashion—24 rockets launched directly into the presidential palace put a swift end to the resistance. The “war” was over by mid-afternoon.

However, the military coup was only the beginning. Pinochet and the other generals knew that their grasp on Chile depended on the people fearing them too...

The Shock Doctrine Summary Chapters 4-5: Violence and the Free Market

While the connection between free-market capitalism and brutal, repressive government seems clear from the example of Chile, many people either don’t see that link or choose not to acknowledge it. These chapters go into detail about why free-market capitalism can’t exist without widespread state violence; and, at the same time, why those two things are largely disconnected in people’s minds.

In short, Friedman and his Chicago School economists naturally did all they could to separate their economic theories from the cruel methods used to implement them. In fact, they argued the exact opposite: that personal liberty and free-market capitalism were intrinsically linked, and neither could exist without the other. Meanwhile, outside investigators also failed to clearly show the connection between free trade and state repression, for various reasons.

The Free Market and Political Terror

One influential opponent of the juntas’ tactics and motives was Orlando Letelier. Letelier had been a Chilean economist and diplomat under President Allende, before being arrested and tortured by Pinochet’s regime. In 1976, after his release, he worked in Washington, D.C. as an...

The Shock Doctrine Summary Chapters 6-8: The Crisis Theory

So far we’ve seen neoliberal economies being forged through violent coups. In this chapter, we’ll examine a different strategy that free-market economists used to advance their agenda: leveraging crises to sway public opinion, rather than making people fall in line with brute force.

The “Crisis Theory” would be instrumental in bringing free-market economics to countries like the US and Britain, where military coups weren’t an option.

Struggles for the Chicago School

Although free-market economics spread quickly and brutally through South America, it had a harder time gaining traction in the US and Britain. In both countries, there was an insurmountable conflict between free-market capitalism and democracy. Because neoliberal policies would hurt the majority of the people, they’d never vote for politicians who tried to implement those policies.

1. Resistance in the US: In 1971, a few years before Pinochet seized power in Chile, President Nixon rebuffed Milton Freidman’s ideas. Though Nixon had once been enthusiastic about Friedman’s capitalist orthodoxy, the US economy was in a slump, and the president knew that trying to implement free-market policies would...

The Shock Doctrine Summary Chapter 9: The Struggle for Self-Determination

As we’ve seen, free-market economies are difficult to create because most people simply don’t want them. This struggle between average people who want stability and peace, and free-market capitalists who want unrestricted trade and immense profits, is the central conflict of the Chicago School’s agenda.

In this chapter, we’ll examine that struggle as it played out in Poland, where the newly-elected Solidarity party was caught between the demands of the people and immense economic pressure from the IMF and the World Bank. We’ll also briefly look at a similar struggle in China, which only ended when the ruling party massacred protestors in Tiananmen Square.

Poland’s Regime Change

Poland also fell victim to the IMF’s bait-and-switch tactics when the newly-elected Solidarity party had to implement harsh neoliberal policies in exchange for foreign aid—policies that went directly against the worker-centric economy they’d promised to create.

In 1980, Poland was chafing under the control of communist Russia. Tensions came to a head when the Communist Party raised the price of meat. In response, Polish workers formed a powerful union which they called Solidarity.

Led by...

The Shock Doctrine Summary Chapter 10: South Africa’s Struggle

In this chapter, we discuss South Africa’s attempts to free itself from the ruling National Party, and how free-market economics destroyed their country in the process. In short, although the people of South Africa technically got the government they wanted, in doing so they unknowingly signed away their hopes of better lives.

South Africa’s struggle for freedom was, if possible, even more dramatic and brutal than many other countries’ fights. However, it ended much the same way, with one important difference: Rather than political repression, the newly freed South Africa found itself the victim of near-total economic repression.

Economic Slavery

In 1955, South Africa was ruled by the white supremacist National Party. That year, the African National Congress (ANC)—which, despite its name, is a political party rather than a congress—began fighting in earnest against their oppressive rule. The ANC started by sending tens of thousands of volunteers to survey people about what they’d want in a post-apartheid state.

The people’s demands, which included land for the landless, free education, higher wages, and shorter hours, were compiled into the Freedom Charter. One...

Shortform Exercise: Reexamine History

As we’ve seen, a major part of what’s allowed Chicago School economics to flourish is misinformation. Countries are sold economic shock therapy with false promises, and then the results of those policies are either glossed over or distorted into something that looks favorable. Take a moment now to consider what you’d previously learned about one of the countries we’ve discussed so far.

Think of a country discussed in Chapters 1-10 that you previously had some knowledge of. What that you’ve read so far changed your thoughts about that country’s history or economy? (How is their story different from what you previously believed?)

The Shock Doctrine Summary Chapter 11: Russia’s Three Shocks

In this chapter, we examine a major turning point in world economics: the collapse of the Soviet Union. That collapse meant that capitalism was now virtually unopposed on the world stage. This had terrible implications for the people that Chicago School economics was supposedly helping, most notably the people of Russia.

In short, now that capitalism had no competition, there wasn’t any reason to make it look appealing. Instead of following the example of post-World War 2 and providing major aid to Russia, Western nations essentially let the broken country fend for itself.

Russia’s Pinochet

In 1991, Mikhail Gorbachev was president of the Soviet Union. Despite the fact that the Cold War had just ended, Gorbachev was so likable and had made such remarkable democratic reforms that he was almost universally loved in the West.

A major part of his plan was to create a mixed economy in Russia. It would be based largely on free-market capitalism, but with a strong social safety net and certain industries remaining under government control. His design was closely based on the Scandinavian model, which Gorbachev called a socialist beacon for mankind.

However, when...

The Shock Doctrine Summary Chapter 12: Sachs’s Successor

In this chapter, we see how Sachs’s failure in Russia drastically changed his views on neoliberalism and free-market economics. However, when Sachs abandoned the free market crusade, others were ready and willing to pick up where he left off.

In fact, these new frontrunners of neoliberalism took things farther than Sachs ever had. One of them made a crucial discovery: Free market economists didn’t need to wait for crises to arise naturally. They were perfectly capable of intensifying problems that already existed, or even of inventing crises completely out of thin air.

Sachs’s Change of Perspective

After Russia succumbed to Yeltsin’s dictatorship, even Jeffrey Sachs realized that the economic shock therapy had failed. He set about trying to secure foreign aid to help the country recover, but he ultimately failed because his fellow economists weren’t interested in helping the US’s former enemy.

However, when Sachs pitched his new plan to the US government and the IMF, they flatly refused to help Russia get back on its feet. That was a devastating blow to Sachs, whose plans heavily relied on foreign aid money—in fact, that money was why Yeltsin had agreed to the...

The Shock Doctrine Summary Chapter 13: Shock Therapy in Asia

In this chapter, we’ll explore how the Chicago School’s crisis theory paved the way for vast new markets in Asia. However, we’ll also see the first signs that economic shock therapy can fail by going too far—if people suffer too much, too quickly, they might try to overthrow the free market and replace it with a more balanced system. That exact thing happened in Indonesia, where the people rose up to oust their leader after one too many shocks.

The “Asian Tigers”

In the late 1990s, financial trouble in Thailand quickly spread throughout the region and led to the near-collapse of many Asian economies. Friedman and his followers saw this crisis as an opening that they could use to establish their policies.

These suffering countries had, just a year before, been held up on pedestals as prime examples of how globalization and free trade could produce enormous economic growth. Free market advocates called them the “Asian Tigers,” and they seemed to have a point: The Tigers’ economies were certainly growing at incredible rates.

However, their growth wasn’t due to unrestricted free markets. The Tigers had heavy government involvement in the economy, and strict policies...

The Shock Doctrine Summary Chapters 14-15: The Washington Consensus at Home

So far our study of free-market capitalism has been mostly focused on US efforts abroad. In this chapter, we’ll see how that movement swept the US itself, mostly under the two Bush administrations.

We’ll also circle back to one of our earliest topics: the terrorist attacks of September 11, 2001, and the resulting invasion of Iraq. Specifically, we’ll see how President George W. Bush’s concept of an outsourced, privatized military functioned during that time.

Dick Cheney Works to Privatize the Military

President Bush Sr.’s Secretary of Defense, Dick Cheney, worked on both sides of the free market—government and corporate—to bring the modern privatization craze to the US military. Working first as Secretary of Defense, and later as CEO of the massive multinational corporation Halliburton, he created a military contract so vague that it put an entire overseas operation under private control.

First, Cheney reduced the number of active soldiers and made up for it by greatly increasing the military’s reliance on private contractors like Halliburton. He then asked Brown & Root—Halliburton’s engineering division—to identify jobs being done by US troops that the private sector...

The Shock Doctrine Summary Chapters 16-17: Iraq: the Culmination of Neoliberalism

Now that we've discussed how the Bush administration took advantage of the 9/11 attacks to advance their free-market vision in the US, we'll look at what happened next as they tried to implement free-market policies in Iraq. We’ll see the US’s efforts to build a new Iraqi economy from the ground up—and why Bush’s privatized, outsourced model of government meant those efforts were doomed to fail.

The Model Theory

Free market proponents claimed that a restructured Iraq would serve as a model for the rest of the Middle East, and inspire those other countries to adopt unrestricted capitalism. In other words, they promised that a brief upheaval in Iraq would directly lead to peace and prosperity across the entire Middle East. That idea was called, appropriately enough, the Model Theory.

The Model Theory was based on the premise that the Middle East was a breeding ground for terrorism, which a few cherry-picked facts seemed to support:

• The 9/11 attackers were from Saudi Arabia and other Middle Eastern nations.
• Hezbollah got funding from Iran.
• Hamas’s leadership was based in Syria.
• Iraq sent money to support the families of suicide bombers....

The Shock Doctrine Summary Chapter 18: Junta Tactics in Iraq

In the last chapters, we discussed how the US brought a new type of privatized, outsourced military and government to Iraq. In this chapter, we’ll see how that occupying force was completely incapable of doing its job—and how, as a result of that fact, the US fell back on the old tactics of the South American juntas.

Giving Up On Democracy

Those behind the invasion and “reconstruction” of Iraq had been banking on the Iraqis being too shocked to resist. The people of Iraq were supposed to meekly go along as they were dragged into an idealized free-market society. Then one day those Iraqis would come out of their trances, and realize with pleasant surprise that their country was a modern paradise. As we’ve already seen, that wasn’t how events played out.

The first summer of Iraq’s occupation saw people enjoying free speech on a level that would have been impossible under Saddam Hussein’s rule. They gathered every day for rallies and protests, news and opinions traveled freely, and even religious clerics turned to talking about politics during sermons.

However, the Iraqis used their free speech to harshly criticize Bremer, voice their outrage about the country’s soaring...

The Shock Doctrine Summary Chapter 19: Ecological Shocks

There’s one type of shock that we haven’t discussed yet: natural disasters. In this chapter, we’ll see how natural disasters can be just as effective as war or market shocks, if not more so.

Much of this section will be focused on Sri Lanka, which was devastated by a tsunami in 2004, which paved the way for privatization and free trade. However, many other Asian countries suffered similar disasters and received similar “help” in the early 1990s and early 2000s.

Sri Lanka the Tourist Trap

Sri Lanka is a small country—roughly the size of West Virginia—but several things made it extremely attractive to the frontrunners of global capitalism:

• It had a large amount and variety of wildlife like leopards, elephants, and monkeys.
• Its beaches weren’t cluttered with high-rises and other such large buildings.
• Its mountains featured many Muslim, Buddhist, and Hindu holy sites.

In short, it was a perfect destination for tourism.

However, Sri Lanka’s east coast had long been threatened by ongoing civil war and was too dangerous for tourists. That changed in February 2002, when the two sides of the war signed a ceasefire agreement. The agreement wasn’t true peace,...

The Shock Doctrine Summary Chapters 20-21: Discrimination After a Disaster

In these chapters, we discuss what Naomi Klein terms disaster apartheid: The unequal treatment that marginalized people receive after a disaster. The chapter begins with a personal anecdote from Naomi Klein about the discrimination she saw in New Orleans after Hurricane Katrina hit. We’ll then move onto a discussion of the prejudice and injustice that Palestinians face in Israel. Finally, we’ll see how both of these topics link back to disaster capitalism.

Apartheid in New Orleans

In September 2005, just a few weeks after the hurricane had hit, Klein was involved in a serious car crash in New Orleans, and an ambulance rushed her to the hospital. She’d seen the terrible conditions at the underfunded, understaffed clinics that had sprung up to help people after the hurricane, and she assumed the ambulance was taking her someplace like that. Instead, she woke up in Ochsner Hospital, a sleek and modern facility where she received immediate, comprehensive care.

The people who worked there, from doctors to security officers, counted themselves lucky that they hadn’t had to deal with the worst damages from Hurricane Katrina. One medical intern thanked God that he hadn’t...

The Shock Doctrine Summary Conclusion: Recovering as Communities

The final chapter of The Shock Doctrine is a message of hope. After spending so much time focused on the devastating effects of neoliberalism and disaster capitalism, we’ll end by taking a look at people and communities that are recovering from their brutal shock treatments.

In short, no matter how bad the state of shock is, it’ll wear off eventually. Avoiding similar shocks in the future is a matter of understanding disaster capitalism and rejecting it. Places like Thailand have done exactly that—local communities worked together to rebuild, without any damaging “help” from foreign interests.

Shock Doesn’t Last Forever

As we’ve seen, free-market economics always result in a huge transfer of wealth and power from the lower economic classes to the upper ones. That transfer never happens peacefully, and in many cases, it doesn’t happen legally. That’s why the Shock Doctrine is necessary for the Chicago School and other free-market crusaders: Their economic reforms can only go through when the people are too exhausted or stunned to fight back.

However, by its very nature, shock eventually wears off. In the 2000s, many former economic shock labs—from the Southern...

Shortform Exercise: Rebuild Your Own Community

Many of us live in communities that haven’t been devastated by disasters, or disaster capitalism. Even so, there’s always work to be done and improvements to be made—and working together on those improvements helps to keep the sense of community strong.

What’s a volunteer project in or around your own neighborhood that you could help with? (Examples might be rescuing stray animals, helping with handiwork, or just picking up litter.)