Preface to the Summary

The Shock Doctrine offers stunning facts and indicting historical events, adeptly strung together in a narrative of free market ideology and reform over the last 50 years. The book offers the definitive history of a particular and particularly reprehensible vein of free market reform, disaster capitalism. The driving analogy compares disaster capitalism to torture, which shocks, distracts, and deconstructs the popular identity while agents provocateurs slip in otherwise rejected reforms. These reforms have vast repercussions to all affected.

I wrote this summary several months after reading the book, based on notes I took. Any mistakes, misquotes, or omissions in the summary are likely mine; correct factual information and analysis is Naomi Klein’s. As I try to outline the history and concepts from The Shock Doctrine, I’m not trying to take credit. I’m also not trying to make any money, so please, nobody sue me.

I’m not attempting to critique or review the book but to summarize it as comprehensively as I can. This summary is not a substitute: Please Read The Shock Doctrine.

My Epiphanies (three of many)

1. Institutions like the US government, the World Bank, the World Trade Organization and the International Monetary Fund purposefully use their money and power to open up countries and industries with the aim of increasing market access and profitability. They remove protective mechanisms, regardless of the cultural or social costs, and usually contribute to the creation of debt, poverty, and wealth disparity, often to the benefit of a small elite.

2. Removing equalizing controls and social protections, free market systems create a feedback loop biased toward the wealthy and powerful elite. Insofar as self-interest is central to free market theory, greed and corruption are unsurprising corollaries.

3. As the free market economy has no social or moral requisites, war, disaster, and instability are suitable avenues for profit. Accordingly, market interests will attempt to privatise sectors like defence and military, and use war and instability to their profit.

The Driving Ideologies

Klein describes free market ideology, championed by Michael Freedom and the Economics department at Chicago University, as a force growing in opposition to Keynesian and Developmentalist theories. Increasingly since the 60’s, free market ideology has trumped developmentalism and Keynesian intervention, often arousing anti-communist sentiment to discredit them. Since the Washington Consensus, and after influencing reform in many countries, the IMF and US administration (and others) have grown more confident and callous in carrying out variations of disaster capitalism to generate free market reform and profit.

Keynesian: John Maynard Keynes was a British economic theorist. In Klein’s simple summary, his views came to dominance immediately after World War II, when the international community sought to support struggling economies to maintain political stability and peace. The main tenets of his theories include intervention, social spending, and regulation to avoid dangerous market fluctuations and maintain standards of living.

the belief that emerging economies need “inward-facing industrialization,” instead of multinational interference and a lack of protections. The aim is to advance the domestic economy, education, and technology rather than offer cheap labour and export of natural resources to an open global market.

Friedmanism / Chicago School: a very clear belief that the free market and its invisible hand are the best mode of economy, and that any regulation, including distributive taxes, restricting tariffs and humane price protections, will interfere and disrupt the properly functioning economy. And so “governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that could be corporations running at a profit. Third, they should dramatically cut back funding of social programs.” All prices and wages should be set by the market and all sectors – including health, education, pensions, and national parks – should be privatised. Global free trade is the extension of these theories.

1989 The Washington Consensus:
an agreement by think tanks, economists, and administration alike. The consensus was a reiteration of Chicago school ideology, writ large and politicised. The focus was on the reduction of inflation by means of privatisation and conditional foreign aid. Significantly, emerging at the same time is the awareness that crises are the best time for economic reform and profit for the international financial community; more shocking is the suggestion of the prerogative to CREATE a crisis to enable reform. Over the course of the 80's and early 90's, these are the thinkers who gained control of the World Bank, the IMF, as well as top advisor positions to developing countries around the world.

The Analogy to Torture

Klein introduces the reader to Ewen Cameron, a psychologist at the University of Mcgill who researched the effects of psychological trauma and electro-shock therapy. Whether his original interest was genuinely medical or not, his research in these areas continued as part of a CIA-funded program at many universities and hospitals to develop an understanding of torture techniques, ostensibly to understand the treatment of American POW's in the Vietnam War.

Klein explains that the techniques perfected by Cameron and others of the era formed an important part of the KUBARK manual, essentially the CIA's guidebook to torture. Strikingly similar techniques, including reading KUBARK, have been used from Saigon to Afghanistan to Guantanamo. Klein's point is that they have been used not 'simply' as part of a war effort, but as part of a targeted campaign to quiet unrest and protest that might arise in to changes in regulation, government, and the economy. Throughout her case studies of crises and economic reform, she includes numerous examples of torture, terror, and intimidation measures employed to keep the affected populations quiet.

This opening allows Klein to set up the driving analogy of the book: nations and their people at key moments are just like Cameron's patients during shock treatment: a confused, somewhat blank slate ready for new information. The 'doctor' would be the US government, lent economists, or the World Bank, etc, who minister the shock or crisis as well as the 'healing' therapy afterward – the free market reforms supposedly intended to save the economy. So, the structure of disaster capitalism closely resembles the structure of Cameron’s medieval program of torture and rehabilitation of patients.

The Disaster Capitalism Cycle

Klein weaves her narrative from 1960’s Brazil to present-day USA, with examples from around the world. The evidence all works to demonstrate a broad four-step process (as I understand it):

1. The shock of war, torture, disaster, or political upheaval distracts or deconstructs the popular identity, precluding or minimizing protest against free market reform and privatisation, which are usually unwanted by the masses.

2. First World interests, multinational capitalist firms, and a cooperative and corrupt elite benefit the most from these changes, while for the general population wages drop, the cost of living increases, and social services like welfare and healthcare decrease.

3. The privatisation of important sectors, from mining to healthcare to homeland security, takes away citizen power and control over policy making in these areas, as the government limits its own power through the free market legislation and de-regulation. It becomes difficult to undo these reforms.

4. A feedback loop of international scale emerges, the wealthy and powerful becoming more so. Certain sectors and private hands have an interest in maintaining instability, as they learn to profit more and more from war and disaster – as the cycle returns to step 1.

One striking eventuation of this process is the ‘Green Zone Phenomenon.’

Green Zone Phenomenon

Late in the narrative Klein takes us to the immaculate gated community of Sandy Springs, Georgia. This republican suburb north of Atlanta incorporated itself to (Klein says) avoid paying taxes that would support the mostly African-American poor in Atlanta. CH2M Hill was hired to administer the town’s accounting, reports, and planning, as Sandy Springs stepped as far as possible out of wider community participation and government control. And so emerged a wealthy, prosperous, closed – literally gated and protected by a security company – community amongst nearby pockets of great poverty.

Klein reports a similar ‘green zone’ community near New Orleans, seemingly untouched by the outside world, more shocking for the nearby devastation and decline of social funding caused by Hurricane Katrina. She points out that the giant firm CH2M Hill has been in charge of building and operating similar enclave communities in Georgia, New Orleans, Iraq, and Sri Lanka as well - with all the comforts money can by, safe from unwelcome neighbours, behind security fences.

Klein sees these green zones as the final destination of disaster capitalism and the ideology of free market privatisation. The wealthy behind the walls are better equipped to deal with disasters, ride out economic fluctuation, and have the skills to continue pulling money into their circle. As money begets money and power begets power, such a community prospers even as neighbours may decline. So “beautiful, perfectly functioning, up-scale communities can exist in the midst of poverty and destruction” because they divorce themselves from government interference and taxation, and take advantage of others with less resources. This thanks to a market that can’t regulate for equality because that would be ‘interference.’

Witnessing the savings and gentrification experienced by Sandy Springs, neighbouring cliques began to consider following that example. To an extent, Israel can be viewed in light of this phenomenon, both in relation to internal poverty, its relation to Palestine, and the turmoil in surrounding countries. “This discarding of 25 to 60 percent of the population has been the hallmark of the Chicago School crusade since the “misery villages” began mushrooming throughout the Southern Cone in the seventies.” The “rich just get better at building walls.”

One to remember: The green zone phenomenon “may partially explain why so many Bush supporters are Christian end-timers. It’s not just that they need to believe there is an escape hatch from the world they are creating. It’s that the Rapture is a parable for what they are building down here – a system that invites destruction and disaster, then swoops in with private helicopters and airlifts them and their friends to the divine safety of the green zone.”

The Message to Take Home

Inspired by Michael Friedman and Chicago School theories, powerful individuals and institutions – especially but not exclusively the IMF, the World Bank, and the US government – have, as the case studies show, increasingly used times of shock and disaster to implement sweeping free market reforms – forcing countries to remove rules and regulations, sell and privatise government owned operations, and cut government social spending and protections.

These institutions are able to do this because of their superior positions financially, politically, and militarily. To achieve reform they take advantage of political disasters that are ‘organic’ (self-developing) or stimulated and manipulated, as well as natural disasters and military conflict. They apply immense pressure and deploy tactics such as using or withholding loans as leverage, manipulating interest rates, threat of sanctions, espionage, and war.

Overtime, these crises have been created more and more consciously, taken advantage of more eagerly and less subtly. Top officials in the World Bank and the IMF (and elsewhere) have overtly stated the value of created and ‘managed’ crises in forcing reform on others.

These actions usually achieve instant financial benefit to foreign bodies and investors, as public assets are sold in liquidation sales. Inflation and unemployment rise, social spending is cut, and domestic poverty, unrest, and crime increase.

And so institutions like the IMF, with a statute to protect global economic stability, and governments supposedly responsible to their people, all take financial and legislative actions driven by a specific economic ideology, with results that often benefit a minority of powerful international players.

Other Notes
The Shock Doctrine offers a far more detailed history and explanation of the development of disaster capitalism than this summary. Natural extensions of this mindset emerge throughout the history: the Greenzone Phenomenon; the economy of war; the distressing confluence of public and private interest; greed and corruption. Several subplots can be pulled out of the over-all narrative: Friedman appears around the world to interject his views; we observe the development specialist Jeffrey Sachs increasingly seek to fight poverty and crippling debt; the US interferes in numerous countries’ governments; popular governments have to pay off debts incurred by tyrants, and reform their economies to meet loan conditions.

With the case studies, I’ve tried to pull out the “Lessons Learned” (as far as I understand them) after each major example.

In contrast to The Shock Doctrine, the current global financial crisis (which broke after the book’s publication) may result in increased regulation in investment and banking systems. This can be seen as a response to the long trend of deregulation and faith in the free market that contributed to creating the crisis. Nonetheless, solutions to the recession (such as stimulus packages) do involve the transfer of large sums of public money into private hands, without necessarily returning power, legislation, wealth, or ownership to the public sector.

Please peruse the case studies, and please read this book!

1960’s Brazil

In 1964 the US supported General Branco's Junta in Brazil, selling government firms and throwing the country open to foreign companies. With democracy and free speech supposedly still in place, massive student protests took place in 1968. The junta responded with military clamp-down, killings, and torture. The Ford Motor Corporation and GM funded private police/torture squads in Brazil to patrol their factories, violently removing unionist agitators. Amidst the killings, Friedman declared Brazil an 'economic miracle.'

Lesson learned:
Market reforms would lead to vocal and widespread protest.

1968 Indonesia

General Suharto took power riding an anti-communist purge, supported by the US administration. The CIA gave Suharto a list of leftists and tracked their assassinations; half a million Indonesians were killed as Suharto solidified his power. Simultaneously, the country's industries were opened to multinationals, allowing 100% foreign ownership and profit in some areas. A Ford Foundation funded university exchange ensured a free market-minded "Berkley Mafia" to fill the ranks of the new administration in the years to come.

Lesson learned:
Amidst military take over and murder, the citizenry would fail to notice and protest economic changes that removed public sector profit.

Estimates of those killed range from half a million to a million. For a more detailed history of the events in Indonesia, read the first essay in John Pilger's The New Rulers of the World.

1970’s Chile

Despite $1 million in bribes from the CIA, Salvador Allende was elected President of Chile on a platform of nationalizing key mining and telephone industries. The Washington Ad Hoc Committee on Chile coordinated with the CIA to deliver a plan to President Nixon: suspend aid, stoke military discontent through bribe and power deals, use ensuing economic and political turmoil to overthrow Allende, and cement free trade and privatisation of important industries.

A university exchange with the University of Chicago since 1957, again funded by the Ford Foundation, had created a surplus of "Chicago Boys," free market minded economists. These intellectuals were entrusted by the CIA with creating the "BRICK," a 500 page reform manual; this manual was delivered to Pinochet's military leaders days before the military coup occurred, Sept 11, 1973. Though no protest occurred, 13,500 civilians were arrested and imprisoned. A state of fear was created as random people were killed or 'disappeared.'

As the economy crashed and inflation reached 375%, Michael Friedman flew to Chile and advised that "Gradualism is not feasible," and the free market shock therapy must be administered without hesitation to have full effects. He called for more immediate cuts to social funding and protections like price controls, more privatisation.

In 1982 Chile's faltering economy crashed again, surviving only on the strength of the mining industry (which hadn't been privatised for fear of mass outrage). A 'corporatist' alliance of police, state, and multinational companies, with some re-nationalized companies, allowed the economy some revival. However, Chile experienced massive poverty with only a well-connected elite achieving wealth and higher standards of life. The Ford Motor Corporation, as well as US media and intellectuals, praised Pinochet's economic wisdom.

Lesson learned:
the formula works. Combining a political shock (the coup) with ensuing fear and torture tactics ensures that market changes will occur without protest, without public awareness.

1970’s South America

1976 Uruguay, Chile, and Brazil were all controlled by US-backed military governments implementing free market reforms.

Argentina likewise witnessed brutal repression, torture tactics, and thousands of 'disappearances.' Klein tells a frightening narrative of society wide, KUBARK-like tactics combined with conscious economic shock therapy in country after country of the Southern Cone of Latin America. What had been improving, more egalitarian countries experienced an upsurge in poverty, with a rapidly growing wealthy elite. Before the interference, Argentina had had lower poverty than the US. An isolated oasis of commercial glory today, the shopping centre Galerias Pacifica, was used as a torture dungeon in the violence of the 70s.

Lesson learned:
This economic shock therapy can at least temporarily quash developmentalism, funnelling profits to foreign-based multinationals, while the entrenched free market legislation and large scale privatisation are difficult to reverse. What also became clear was the dissociation of economics and politics in the public eye: Friedman could be awarded the 1976 Nobel Prize in economics for his theories, while the 1977 Peace Prize went to Amnesty International, for confronting the brutality that coincided with the implementation of those theories.

1980's Debt Crises and the Volcker shock

Klein gives the example of President Kissinger talking to the foreign minister under Argentina's dictatorship, eagerly suggesting America's willingness to lend and support military rule that continues to open up the economy. When the government was overthrown by Peron's nationalist movement, the USA called for a budget structured around immediate debt repayments. There's an unfair pattern witnessed here, repeated in numerous other countries.

First off, foreign bodies like the US administration operating in the Southern Cone actively lend to governments (elected or not, popular or not, brutal and tryannical or not) that privatise their main industries and open their economies to foreign profiteering.

When these governments change or are overthrown, the international lenders immediately hold the new government responsible for the debt. Worse, the conditions and interest placed on loans is at the lender's discretion.

The specific rise Klein discusses is the 1981, 'Volcker Shock,' which raised interest on all US loans to a debilitating 21%. Developmentalist countries that had had their feet swept out from under them in the 70's (their main industries privatised, protections removed through free trade and foreign pressure) were now in even less of a position to defect from international pressure.

In this pattern, repayment schedules and debt restructuring are allowed only in conjunction with further free market policy enactment, the dreaded conditionality of IMF loans. Klein gives a list of staggering debt figures for Latin American countries (suddenly magnified by the Volcker Shock). She then gives typical examples from Argentina and Bolivia where nationalist leaders with wide popular support, once in power, proceed with free market reform. In Argentina, though elected on a popular nationalist platform, by 1994 the government under Menem had privatised nearly 90% of state-owned firms. The new leaders simply have no choice under the massive debt and pressure from international powerhouses like the IMF.

In Bolivia, the reform process involved declaration of a military state with zone passport checks, and a huge crackdown on Union leaders. These responses, in keeping with lessons learned, were swift, strong and unhesitating in order to quell or distract from protest against the economic moves. Klein directly attributes the huge increase in poverty, as well as cocaine production, trade and associated crime in Bolivia, to the sale of key national industries during free market privatisation.

Lesson learned: Manipulation of loans and debt structure can strongarm free market policy changes in reluctant countries; such methods can operate as a preliminary step and essential part of free market shock therapy.
In the case of Bolivia's reforms of this era, Klein introduces Jeffrey Sachs for the first time, an economist of not-quite-Chicago school bent, who advised privatisation and large loans from international donors.

1982 England

A surprising leap takes us to 1982 England, led by a Thatcher who had loudly admired Chile's economic reforms under Pinochet. Klein declares unequivocally that the Falklands War with Argentina, over a tiny and distant point of land, had no purpose but to enable economic reform. By stirring up nationalistic passions and portraying her administration as fore guard, Thatcher gained support and increased militaristic license back home. At this point, an enduring and unswerving strike by coal mining unions was demonised and broken up with hundreds of arrests and thousands of injuries. In short order, with unions quieted and legislatively weakened, a string of privatisations occurred with British Gas, Airways, and Steel

Lesson learned:
Going to war, conflict with unions: any large enough political crises can promulgate shock therapy.

From this point forward, the case studies of shock therapy seem an implementation of the lessons learned. Klein attributes the spread of Chicago School ideology (in part) to the diaspora of graduates into top advisor positions in NGO's and government administrations worldwide. For example, by 1999, 'Chicago Boys' held 25 positions as government ministers and a dozen central bank positions in Argentina.

1988 Poland

In Poland, by 1988, after 8 years of living in a police state, Lech Walesa finally gained power at the head of the Solidarity Party. A charismatic leader, he had the support of unions and much of the wider populous because of his promises for open democracy and a nationalised economy. The IMF and the US called for Poland's large debts to be repaid, offering further aid only on condition of free market changes, and opening up the economy to foreign investment and takeovers. Jeffrey Sachs suggested that Poland hold off on debt repayments, but immediately sell government holdings and privatise large industries to stimulate the economy.

Hounded by the international community, advised by the reputable Sachs, in the midst of economic hardtimes, all the while elated at their political victory, and experiencing early freedom from communist Russia, Klein suggests the people of Poland, perhaps even Walesa, didn't understand the consequences of large scale privatisation. The economy crashed further, with bouts of inflation, and unemployment reaching 25% by 1993, while foreign investors made gains on government assets sold at far less their worth. The international media praised Poland as an example of economic reform, as quality of life plummeted.

1989 The Washington Consensus

At almost the same time the ideology and practices perfected across these cases were put into words: the 1989 Washington Consensus, an agreement by think tanks, economists, and administration alike. The consensus was a reiteration of Chicago school ideology, writ large and politicised unabashedly. The focus was narrowly on the reduction of inflation by means of privatisation and conditional foreign aid. Significantly, inherent in the consensus was the awareness that crises are the best time for economic reform and profit for the international financial community; more shocking is the suggestion of the prerogative to CREATE a crisis to enable reform. Over the course of the 80's and 90's, these are the thinkers who gained control of the World Bank, the IMF, as well as top advisor positions to developing countries around the world.

1990’s Canada

And so, shortly thereafter, along these lines was created a brief financial crisis in Canada. Several intellectuals led by the Fraser Institute think tank started a rumour that Canada's credit security and stock rating were about to collapse. After pressuring a senior credit analyst to drop Canada's credit rating, Fraser Institute members attended a meeting of civil servants and economists to plan the best 'solution', ie the best use, of this opportunity. Apparently the cause of the decline was Canada's high social spending, and so the remedy they recommended was cutting social spending, followed by a cut in taxes to encourage business and investment to return to Canada. Indeed, the government (which was?) dutifully cut spending to welfare and unemployment programs, inflicting damage to these services that would last a decade. All this occurred despite several analysts openly tracking and commenting on the planned and deceitful announcements of impending crisis.

Lesson learned:
With their influence, advisors and economists could create a financial crisis simply by suggesting major flaws in a certain economy, and then use this crisis to benefit big business and international investors. A planned crisis would indeed work as well as one that developed organically.

1990’s South Africa

The focus on reducing inflation and privatising held through South Africa's change of government in 1994. The new government under Mandela, heady with their long-fought freedom from apartheid, was immediately instructed through privatisation and debt restructuring. Rather than imposing taxes on companies that had become wealthy during apartheid, the new government was pressured to privatise remaining state firms so as to be seen 'open for business' to the international community. Though desperate to support the poor populous, the government was instructed to carefully avoid any legislation or even public comments that could be construed as marxist or statist; this was to avoid another stock crash as such was seen after the ratification of the Freedom Charter of 1990.

Morals were clearly not at issue as former apartheid officials and businessmen of the de Klerck era blocked land and asset redistribution, separated and autonomized the central banks, and were guaranteed pensions and investments profits. Simultaneously the new government was held to call for the huge debts that had formerly brutalised and subjugated the population. Discouraged from social spending, aid, and government sponsored job-creation, the quality of life in South Africa actually declined during Mandela's reign. Sadly, his successor Mbeki took IMF and international advice to increase the Chicago style reforms, that MORE of the same was needed before the situation would improve.

Lesson Learned: Dictators and tyrants had nothing to fear economically from losing power, as the international financial community would not focus on accountability in terms of WHO amassed massive debt, but on using that debt to manipulate a country as in the Washington Consensus. Privatisation and free trade reform were more important than social spending for people who had died and fought for their freedom - as the argument went, the free market would do the best job of improving their lives...

1990’s Russia

As the Soviet Union collapsed, Boris Yeltsin gained control of Russia and took on a team of US funded, Harvard-led Chicago Boys, newly labelled 'transition experts.' Jeffrey Sachs, now of immense international fame, was on board as well. Immediately the people's cries for unions, communes and welfare spending were overridden by the lifting of price controls, massive privatization, and the installation of free trade. Though Yeltsin had to seize control with the military after losing the next election, the IMF and the US administration still praised his foreward thinking, economic reform, and fight for democracy!

As average income, quality of life and unemployment worsened, in 1993 the international bodies called for MORE shock therapy, more budget cuts and privatisation. Suddenly $2 billion dollars a month was being moved off shore as Russian oligarchs worked in collaboration with foreign investors - often spending foreign 'aid' that should have gone to the people - to reap the maximum benefit from the nation's garage sale. As protest mounted under the next administration, Putin started a war with Chechnya, which rapidly distracted the press and quashed any dissenting voices. A Harvard-sponsored advisory team was implicated in a profiteering scandal. All the while, Sach's reputation grew and Russia was praised for its progressive reforms.

As Russia's economy plummeted, Sach's was stunned by the lack of investment and foreign aid. He had advised Russia to privatise and open up with the belief that incoming aid would balance the sale of state assets. Klein attributes the lack of international support to wholly political causes: because the great communist threat of the cold war had fallen, there was no longer a need to intervene in struggling countries with the aim of ensuring their capitalist and democratic development. Russia, especially, was least entitled to aid and support from international bodies that had previously fought against the spread of the red.

Lesson Learned:
Internal and international corruption can quite smoothly contribute to free market reforms, especially in a politically turbulent country struggling with new government. Klein goes so far as to say that, insofar as ideologues trust to the free market, individual's greed and corruption are expected corollaries or even a necessity of free market reform. If your focus were on wealth distribution or welfare, in fact, you would be interfering with 'proper' economic transition.

IMF Losing Credibility

Furthering the subplot of Jeffrey Sachs, at a 1993 "transition and reform" meeting in Washington, Sachs surprised the gathered intellectuals and economists with a plea for more international aid with fewer conditions and less interference. He accused the IMF and WB of operating out of self-interest, despite their raison d'etre of supporting failing economies. He was applauded at the conference and, after losing his position with the IMF, went on to focus on developing countries escaping debt.

At the same conference, another speaker named Williamson presented a paper on the role of carefully constructed crises in 'helping' developing economies along their route to free market capitalism. Around the same time, one of the leading administrators of the World Bank suggested that cutting aid (or threatening to) was the most direct means of creating such a targeted crisis.

A former IMF staffer Davison Budhoo issued a public letter accusing the IMF of malpractice and deceit, like Klein even comparing their tactics to torture. But his protest was quieted and forgotten. The use of such 'torture' (with proper economic goals) was now, it seemed, the party line.

Fall of the Asian Tigers

What followed next was the fall of the Asian Tigers. After rapid growth and racing economies through the 90's, suddenly Indonesia, Thailand, the Philippines, Malaysia and South Korea all experienced massive market crashes. With no obvious disasters political or otherwise, the only clear cause was fear itself. Huge speculation on these economies had created a bubble, which was instantly popped as soon as economists suggested flaws and an impending crash.

The IMF both contributed to and took advantage of this crash. First, the IMF suggested that Asian stocks were over-inflated and that there were flaws in their markets, including protectionist and somewhat socialist mixed-market policies. Rumour fed on rumour and the bubble burst. At this point, Friedman (in his 80's) appeared on CNN to warn against over-eager aid, suggesting the Asian markets needed restructuring. This, he affirmed, was not a crisis but the perfect opportunity for reform. The IMF offered loans to these countries with conditions more stringent than ever, including the predictable budget cuts, removal of trade barriers and price controls, privatisation of banks and state firms, and massive lay offs. In South Korea, the IMF used the threat of withholding aid to influence an election toward a cooperative party.

When Indonesia refused the IMF's aid, the IMF forecast both a large reduction in investment and a rapid decline in Indonesia's economy. Indonesia's currency on the stock market dropped 25% in one day. Grudgingly, the Berkeley Mafia were allowed in to direct the restructuring of the economy, just as IMF's conditions were accepted in the other crashed countries. 186 major mergers and private acquisitions of firms occurred over 20 months; government assets and services went on the chopping block or the auction block at blow-out prices; foreign buyers took over local and national firms with no competition whatsoever.

However, the IMF had overplayed its hand. With all the conditions and criticisms of the Asian markets, it seemed nobody trusted those markets enough to put their investments back in, even after the IMF's reforms were put in place. What followed was a tremendous and terrible decline as the currencies continued to fall, unemployment skyrocketed, and axed social programs could not step in to help. Rioting occured in Indonesia, where scapegoated Chinese were the majority among 1200 killed. Poverty, hunger, prostitution and the drug trade skyrocketed across the region to its ongoing detriment.

Lesson learned:
International players like the IMF used their influence to attempt bigger reforms than ever before, on faster growing economies than ever before. Threat of financial collapse and withheld investment had the intended results of forcing free market reforms, and the effects on the countries themselves were disastrous. Jeffrey Sachs claimed the IMF had the most responsibility for the crash. Their shameful tactics in Asia would bring for the first time widespread criticism of the motivations and mode of operation of the IMF, as well as the ideology of the WTO, and the pitfalls of free trade and globalisation. Michael Friedman congratulated the region on its development into true capitalism.

Conflict of Private/Public Interest in the USA

Back in the command centre of free market ideology (as Klein paints the picture), the USA, there had throughout all these enforced reforms, through Friedman's growth in influence and through Reagonomics, always been a resistance to the cutting of social spending, trade barriers and subsidies, and the selling of state assets at public expense. Klein spends some time elucidating the shadier side of things in attempt to show the rise of self-interest, corruption and free market privatisation in the US.

She points out glaring conflicts of interest that Rumsfield embodied: when he became Secretary of Defence, he held shares and positions in several huge firms that would benefit from government spending; he arranged to have the government buy huge stockpiles of AIDS and Bird Flu vaccines for which his companies owned the patents; he pressured the FDA to approve Nutrasweet (aspartame) despite their misgivings, to his financial benefit. To show his broader mindset, she describes a speech he gave (on September 10, 2001, and so it wasn't much noticed in the media) about his intention to clean up the military - basically to reform and privatise it through layers of subcontracts that would mimic Nike's business model.

The examples jump to Dick Cheney, who hired Halliburton to examine possible cuts and avenues of privatisation for the military. So, effectively, the more Halliburton privatised and then built up the army, the more money Halliburton would make. Meanwhile Cheney's wife sat on the board of Lockheed Martin, who held many tech and information contracts with the government.

Another frightening example Klein brings up is Bush Jr.’s privatisation of prisons in Texas and his attempt to privatise welfare (which was fortunately shot down).
The point of all this is to demonstrate that no country or administration is free from the cycle of free market ideology, greed and corruption.

Post-September 11, 2001

Klein moves along to the Age of Fear following September 11, 2001. The events of 9/11 were arguably somewhat enabled by cuts to the Airline industry made by Reagan, who privatised, cut costs, and refused to negotiate with unions, continuously lowering safety and security standards. The message should have been clear, that privatisation makes a country weak and susceptible to disasters.

But instead of leading to an increase in government responsibility, 9/11 led to a massive investment in private 'disaster capitalism,' an economy of homeland security, privatised war, and disaster reconstruction. 9/11 gave carte blanche to large firms and stockholders in this industry, a blank check from the government for anything that wore this patriotic mask over private-interest economics. The Department of Homeland Security would outsource up to 70% of its activities; between 2001 and 2006 $130 billion went to private contractors in the industry; Halliburton's expense account increased in leaps and bounds as they took on more military services and expanded prisons like Guantanamo.

This all contributed to an environment where “public money pays the corporate overhead and invests in corporate infrastructure, as private hands enjoy the increase in stock price.” In this milieu, private companies can even complain about any state-owned or state-run enterprises, seeing this “compassionate federal impulse” – whether spending on defence or social services – as ideologically unacceptable interference.

9/11 essentially stupefied the American population to the point where the government and big business could use endless public money, passed into private hands, to control the citizenry both domestic and international. Vice President Cheney had shares in Halliburton through his term; Rumsfield kept stocks in Lockheed martin: administrators and leaders had direct shares in disaster capitalism. As Klein puts it, the nature of the War on Terror meant that war was no longer a disruption to business, but business itself.

Continuing the onslaught of evidence, Klein gives a frightening list of civil servants who in various ways encouraged the war on terror and then switched into the private sector to reap personal benefit from it. In this period discussed, 94 civil servants moved into the homeland security industry. Former Secretary of State George Schultz formed the Committee for the Liberation of Iraq, which essentially lobbied for the US to attack Iraq. Schultz was also on the board of Bechtel, a large firm that would make huge profits rebuilding in Iraq.

The examples continue to the extent that this segment of the book becomes more an indictment of the US and less a continuation of the general narrative surrounding the shock therapy and free market reform. Nonetheless, the information gathered here is quite stunning, the involved individuals' greed unceasing amidst obvious conflicts of interest. In summary, the war on terror allowed disaster capitalism to blur the line between (public) domestic security and (private) ‘homeland security,’ and between public intellectual, private interest, and policy maker - much to the profit of a select few.

Lesson learned:
Even an educated public, close to home, with a powerful media can be taken advantage of via the same route - through disaster (or terror) and fear to private gain.

The Second Iraq War

The Iraq war is a shining and sickening example of the shock doctrine-disaster capitalism-free market complex. With the start of the war prominent journalist Thomas Friedman positively envisioned Iraq as a model of free market capitalism in the heart of the Arab-Muslim world. Based on Shock and Awe technique developed in the first Iraq war, the US followed perfectly the time honoured routine of bombardment, psychological operations, personal abuse, fear mongering, and sweeping political and economic shock therapy - basically Cameron's torture techniques and identity wiping on a huge and lightning fast scale.

Amidst the apparent difficulties of military strategy, the driving ideology comes through: soldiers were told not to stop looters taking cultural materials, airline equipment or school supplies because interim Coalition administrators like the education advisor, John Agresto, thought the state needed to downsize its assets anyway.

Agresto had never studied Iraq, but his job was not to maintain continuity of education in a nation whose literacy (89%) had been higher than some American states. His job, as with all of the reconstruction, was to wipe the slate clean and start again - while creating profits for any business lucky enough to be involved. 500,000 state workers were laid off, with no sign of respect given to the educated and capable human resources of Iraq. There was no attempt to give Iraq immediate ownership or control of the reconstruction effort.

This disruption of national identity and sense of reconstructing from scratch is perhaps the closest and most powerful analogy in Klein's narrative to Cameron's torture experiments. Ensuing the bombardment and large scale movements, thousands of civilians and combatants alike were rounded up, interrogated and tortured as their rights were completely ignored and widespread fear was created.

The face-to-face conflict itself was highly privatised as security and mercenary firms like Blackwater made up significant shortages in US troop numbers. In one of her impressive power-facts, Klein tells that apparently some of these private soldiers even had experience in Pinochet's Chile. Soldiers like Jeff Perry, who went to Human Rights Watch, spoke out against the torture (including electric shock) in Abu Ghraib and other prisons. Fighting and mass fear-tactics increased as protest and frustration among the Iraqi population mounted.

When the central wave of fighting stopped, Paul Bremer, leading the temporary administration, immediately opened Iraq for sale, with no taxes or tariffs, and every government asset up for grabs. All 200 state firms were to be privatised, some with 100% foreign ownership. Never one to miss an opportunity, Bremer had had practice in homeland security since starting his own Crisis Consulting Practice on October 11, 2001. Only the oil sector was excepted from full privatisation because the Coalition believed such an act would start the war anew, this time bringing in other countries in the region. Nonetheless, $20 billion in oil revenues was appropriated for the reconstruction effort. By 2006, Halliburton also received $20 billion in Iraq contracts.

Another figure for the business side of the war, at the height of it there was one contractor (including private soldiers) for every 1.4 US soldiers. With $70 billion in total gathered for reconstruction, foreign firms like Halliburton, Bechtel, and Parsons assumed command with no open bidding, and no policy in place to ensure national or local Iraqi firms would receive any contracts.

The lack of regulation, the glut of international funding and national asset sales, criminal embezzlement and idiotic layers of subcontracting meant that billions of dollars poured into private hands with little or no result in the rebuilding of Iraq. The Parsons company, for example, was given $186 million dollars in contracts, and ended up building 6 out of 142 scheduled health clinics. The Custer company was found guilty after an insider whistle-blower case, but faced no punishment as any company involved in the reconstruction was deemed outside of US jurisdiction.

When people in cities and towns around the country organised local elections, Bremer dismissed the results as unimportant and unofficial. Unbelievably, he actually prohibited any further such elections. Klein posits that the difficulty in handing power over to a new government was created by the fact that no government elected by or responsive to the people of Iraq would have followed the economic plan and junked the state. Eventually an administration was selected from outcasts, exiles, and US-friendly figures.

The result of the attacks and mismanaged reconstruction was an increase in fundamentalist support and violence in Iraq. Klein suggests that Bremer and others had been aware of this risk, the free market risk of the wealthy few and the angry many, but that they had counted on the shock of the war keeping the Iraqis dumbfounded and quieted. By 2006 some state firms were reconstituted and staffed with local workers; but the selected administration could still push through a law offering the majority of oil-generated profits to foreign-owned firms, despite clear and outspoken protest. The atrocities committed in Iraq and evidence of blatant corruption extend far beyond this short account.

Lesson learned: The US pulled the Coalition of the Willing into an unjustified attack on a sovereign nation under prepense of weeding out terrorism and weapons of mass destruction, and followed precisely disaster capitalism as Naomi Klein describes it, blasting free market reforms into Iraq, and generating unimaginable private profit from the tragedy of war. This seems to be the height of the progression, with all the lessons learned previously coming out of the shadows to create an overt, conscious, corrupt, greedy and violent imposition of one country's (or group's) economic ideology on another, to the detriment of the many and benefit of the few.

The 2004 Tsunami, Southeast Asia

Approximately 250,000 died as a result of the December 26th tsunami in Southeast Asia; national governments and private investors would quickly take advantage of the natural disaster.

In Sri Lanka, the coastline had previously been unavailable to tourism because of small fishing villages, but also because of ongoing threat of conflict with the Tamil Tigers. However, a ceasefire with the Tigers in 2002 removed one of these blocks. And so, prior to the tsunami, in 2004, mass protest had had to prevent government plans for widespread appropriation of coastal land for tourism. These plans were supported by the lobby group USAID, hoping to promote US interests in the area, as well as the IMF and WB, who offered to help with Sri Lanka's large debt in return for public-private partnerships in developing these areas, alongside a reduction of labour support laws and public land ownership laws.

After the wave hit, refugee camps filled with fishers and small-town people whose villages along the coast had been destroyed. Villagers were barred from returning to their villages and returning to their homes, under pretext of safety concerns. At the same time, the previously withheld plans for large scale construction and labour reform began immediately, as luxury hotels sprang up on the coast almost daily. $13 billion in aid (to Southeast Asia altogether?) was used to offer first aid, food, and the construction of emergency shelters and - shockingly - some even contributed to building projects that replaced villages with tourist centres, while none went to rebuilding local people's villages. Foreign companies and firms gained the construction and hotel contracts.

Klein spends a lot of time describing post-tsunami Sri Lanka as an example of the goodness of humanity, with donations flooding in from around the world, and as a new beginning, with cooperation between Tamils and Muslims springing up in the face of the crisis. As the world focussed on the human suffering in the area, the government and private interests took full advantage of the disaster.

Lesson learned: Klein brings up the 1998 Hurricane Mitch in Central America, which resulted in privatisation of national firms in Guatemala and Nicaragua, by instruction of the World Bank. Guatemala's foreign minister remarked that "Destruction carries with it opportunity for foreign investment." And so, the parties involved in Southeast Asia had had 'practice' in this type of disaster capitalism, and played it out adeptly.

Similar reforms occurred in Thailand, the Maldives, Indonesia, and India, with private hands and hotels taking over previously public land in the damaged areas. Locals were not involved in the construction, fishers and villagers would lose their way of life forever and have no homes to return to, nor would they have direct shares in any of the tourist hotels or communities springing up.

Perhaps eventually taxes and the new tourist economy will benefit some, but it's clear millions of displaced people would have fought these changes had they not been focusing on survival.

As occurred in Iraq, a wave of 'unemployed, homeless, hungry and angry' people emerged. In 2006, the Tamil Tigers discontinued the ceasefire that had been in place since 2002. International bodies used continued aid as leverage to pursue further privatization, despite rising protest.

Hurricane Katrina, Louisiana

In 2004 Louisiana had applied to the Federal Emergency Management Agency to develop a hurricane contingency plan, and were denied. Subsequently, FEMA did offer a private company a $1 million contract to review the area, with no concrete preparations achieved. When the hurricane hit, it was especially damaging because of insufficient water levees and transport infrastructure that was unable to evacuate people quickly enough.

Fourteen days after the hurricane, the Heritage Foundation think tank met to discuss responses. Their recommendations are shocking: suspend wage laws, remove corporate tax, wave numerous regulations, open charter schools in place of destroyed public schools. These would supposedly help stimulate economic healing in the area and the most rapid return to normal life. In truth, such reforms (and many were put in place) had been discussed previously, while the disaster merely provided necessary cover.

The facts fit Klein's narrative unimaginably well, as reconstruction firms that worked in Iraq - Halliburton, Blackwater, Shaw, Bechtel - all gained contracts in Louisiana because of their experience. They claimed they were prepared to help in Louisiana because they had contributed so much in Iraq that the reconstruction effort there was slowing down!

What predictably followed was the 'same overspending, underachieving, and cheating' as happened in Iraq. For example, rather than open bidding, closed door dealings meant AshBritt gained a contract to remove debris, despite not owning a single dump truck. Millions of dollars disappeared into a slow and ineffective reconstruction effort. Partly as a result of this spending, the 2005 government budget slashed student loads, social aid, and food stamp programs, once again hurting the poor and disenfranchised. The public service was slashed due to lack of funding as millions of dollars ended up in private hands with minimal positive result.

Lesson learned: The flood enabled the Heritage Foundation’s surprising recommendations. And because of the damage to oil refineries in the region, environmental regulations were at this time slackened to allow oil refiners in the Gulf Coast and Arctic, which had previously been rejected. This demonstrates the impunity with which parts of industry and government believe they can reap the benefits from a crisis or disaster. Disaster capitalism allows free market interests myriad benefit from either a planned crisis or a natural disaster, bringing about otherwise impossible changes as the population recovers from shock and struggles to rebuild a life. It doesn't matter where on earth or in what country, the same holds true.

Israel and the economy of war

Klein suggests that, increasingly, private interests and even the global economy have become dependent on disaster and war, as through recent disasters, the threat of 'terrorism', and the wars in Afghanistan and Iraq, the US and world economies continued to accelerate.

(The global recession starting in 2008, caused by a specific set of investment practices, would likely not impinge on the central thrust of Klein's argument. I imagine, though, that she would point out the laissez-faire deregulation in banking and investment that contributed to the crash, and the fact that bailout attempts pass ever larger sums of public money into private hands, hoping to fix damage caused by many of those hands.)

In 2005 Lockheed Martin could receive $25 billion in contracts payed by taxpayers, and oil prices continued to rise, demonstrating that war, disaster, destruction, and so called 'reconstruction' can all be quite profitable to certain interests. Klein envisages an ongoing and growing synergy between the media, surveillance, security and homeland security industries that would play into and benefit from continued disasters or a constant state of fear. And so, she suggests, peace would be the biggest threat to this economic model.

And nowhere is this economy more dominant than Israel. For one of many starting points: in 2000, the Camp David peace talks with Palestine broke down as Arafat literally walked out; Hamas called the second intifada. As the stock market burst with the dot-com bubble, the Israeli government expanded investment in the technology, surveillance, and security sectors, also allowing military spending to leap. A nation ever defined by war and a security barrier separating it from its neighbours, this was evidence that war was the answer to a flagging economy.

Its history and this recent investment meant Israel was poised to benefit from the post-9/11 world. Israel joined the 'War on Terror' (Klein claims this was purely 'marketing') as its war and technology exports rapidly increased. Countries around the world subsequently hired Israel to teach them the secrets of homeland security and to train anti-terrorism forces. By 2006 Israel was the 4th largest arms deal in the world, impressive considering its size, with largely military technology making up 60% of exports. Besides the obvious conflict with Palestine, economic disparity and poverty also resulted within Israel as an increasingly select elite reaped huge benefits.

Lesson learned: Being at war constantly can bring a financial return, if a country is able to sell its experience, technology, and production capabilities to others. Peace is anathema to this economic machine, while disaster, war, and fear of terrorism stoke its engines. Fear especially enables a select group to continue to benefit from this momentum, pulling public funds into private hands in the name of security and safety. Being so long ‘tortured’ by perceived danger and terrorism, society at large takes such a state of affairs for granted, while those most interested in maintaining the status quo continue to increase reports and degree of threat, so the effects don’t wear off.

Optimistic Conclusion: Increasing Awareness

Klein brings up the selfish and sad reality of ‘green zones’ and suggests that more and more areas are being contested by private interest as free market ideology reaches its zenith, to name a few: security, policing and rehabilitation, fire, health, urban planning. However, as in her novel No Logo, Klein ends on something of a positive note.

Whatever the significance, Friedman died in 2006. While the free market changes he fiercely advocated over his life created massive inequality, nowhere did this go unnoticed. Those involved in the repressive or violent free market reformations, leaders like Pinochet and bankers in some countries, are in some cases being held to account, in court. The farce of democratic intention and the reconstruction debacle in Iraq spurred worldwide outrage. Some ‘anti-neoliberal’ leaders are gaining strength, like Hugo Chavez in Venezuala and Frente Amplio in Uruguay. Indeed, the countries of Latin America increasingly refocus on nationalization, government funding, health care, and social services, their original developmentalism returning as the shock of disaster capitalism wears off.

Many countries are trying to gain control of their own financial future. Some countries are attempting to disengage from military and economic agreements with the US. Brazil, Nicaragua, Venezuala, and Argentina are all working on stepping out of the IMF, and refusing further funding. Ecuador openly accused the World Bank of legislative manipulation based on loans. Asian markets have avoided entanglement with the IMF since the fall of the Asian Tigers and are creating their own bi- and multi-national financial institution and exchanges. After the tsunami, there was some success by villagers in Thailand at reclaiming shore-land and rejecting foreign aid and reconstruction firms. After an attack by Israel, people in Lebanon protested against accepting international aid with free market conditionality; they turned instead to Hezbollah, whose funding – even if motivated by an ideology of its own – quickly achieved perceivable results for the people.

More and more people, Klein feels, are becoming aware of the pitfalls of free market thinking, its underlying motives, and the gap between its realisation and freedom, equality, or democracy. “The shock doctrine is losing its efficacy due to overuse, just as torture techniques wear off over time.” Some people and countries are seeking ways of helping themselves, and helping each other, rather than becoming dependent on international manipulation with a free market agenda.