The Shock Doctrine Revisited

Capitalism Running Amuck

By Carlos Algandona - 2008.

Privatization was initiated as an economic response to the Keynesian welfare state, as governments were faced with high deficits and were seeking solutions to their economic problems through mass production and hyper-industrialization. The Stated development strategy was first tested in the Southern Cone, and its stated goals were to bring these third world countries out of their economic lethargy. These policies created a negative humanitarian response as they damaged the social safety net as well the sovereignty of implementing countries forcing them to restructure their development tactics.

Disaster capitalism is the term used by Naomi Klein in her most recent; she uses this term to describe the systematic deconstruction of states that have suffered massive natural disaster, invasions, wars, etc. The idea analyses the rise of privatization within these weakened countries. The ideology of privatization is being spearheaded by the World Bank and other Bretton Woods institutions. Disaster Capitalism is also seen as a window for the implementation of free market practices that would otherwise be massively opposed. These policies include the privatization of previously national institutions such as power generation, telecommunications, and water supply and health care providers. Through the privatization of these institutions politicians have managed to reconstruct these backward countries into market driven “democracies” (not a requisite).

In these newly reconstructed states, the government has become a leaner, precise instrument, and its goal is to act as guarantor of goods of services and at the same time ensuring that laws are not broken and contracts are completed successfully.

Third World countries seem to be the target of pro capitalist regimes promoted by the United States. Policies are introduced in form of social aid and relief. But these loans come with conditions as massive amounts of funding go to these countries and not all is directed to the sectors that really need it, i.e. education, health, and infrastructure reconstruction or social development. The majority of these loans are directed to private organizations that are supposed to carry out the necessary task more efficiently than the government itself. Loans are usually controlled by financial institutions and the countries are given portions of the funds as they manage to accomplish the set goals by western economist.

The rise of a Disaster complex was funded by United States tax dollars and was given the green light with the September 11th attacks on U.S soil. With the dust still settling from the Twin towers, the Bush administration saw this not as a deterrent to their underlying plans for creating a puppet government, i.e. one that is controlled by exterior economic interest and seeks to benefit its investors. In reality September 11th gave them a window of opportunity to do their dealings right under the public gaze. The “Corporate New Deal” (ref to Ronald Reagan’s administration) as it is mentioned in Naomi Klein’s book, is based on the concept as to why government should not have its own employees produce and develop their products, or provide maintenance to their equipment if they can get some private company to do it professionally at a more competitive rate.

In other words the government should be managed as a corporation in which all unnecessary services are taken care of by service private providers. According to George W. Bush’s economic advisors, all Friedmanites, believe in the massive reconstruction of state as the best course of action.

These targeted countries are attractive to the World Bank because negotiation takes place on World Bank terms, in stark contrast to the submissiveness of such political administrations who are seeking a temporary band-aid solution, instead more humanitarian friendly and sustainable goals. After a cataclysmic event, governments will usually do whatever it takes to get aid dollars--even if it means racking up huge debts and agreeing to sweeping policy reforms. Countries within the third world have reached this point, an example is: Mexico who had to declare bankruptcy after being unable to repay their extreme debts a climactic moment amidst all the patterns of borrowing within Latin America And with the local population struggling to find shelter and food, political organizing against privatization can be seen as a luxury.

These types of conditions are spreading across the world with the help of globalization, which lead to Naomi Klein’s main criticism of the current United States administration is the fact that through this process of hollowing of the government the ones who suffer the consequences are the majority of the population not the wealthy minority. The U.S health care system is an example of this as the ones able to afford it can obtain first class treatment, while millions of Americans lack health insurance. Do we expect to receive the same type of treatment in a state of emergency is the private sector going to provide the treatment and goods necessary for the vast majority of the population? The United States citizens have experience already the consequences of cutting the government funding to its social services little less than a year a go Hurricane Katrina hit New Orleans and its people the working class and poor citizens were stranded for days without water, food or shelter.

But they were many who could afford to be evacuated from their gated communities, as the rest were left to their faith. As thousands experienced the aftermath of Katrina the media focused on showing the inefficiency of government agencies responding to the disaster, and right after politicians were shown saying that these types of scenarios will never repeat themselves as these agencies who failed to provide the needed services are now run by private institutions.

This reconstruction process has also been called a sophisticated form of colonialism by Shalmali Guttal a Bangalore based Researcher with a focus on the Global South. Furthermore Guttal’s work explains how disasters have become so profitable for private corporations at the expense of tax payers. Peoples' misery: Wars, terror attacks, natural catastrophes, poverty, trade sanctions, market crashes and all kinds of economic, financial and political disasters have created what its called a disaster economy is seen all over the world as countries undergo a so called “active reconstruction” executed by engineering companies, mega NGO’s, governments, the United Nations, and international financial institutions. These institutions are in charge of creating standardized democratic governments; preaching good governance, transparency, and accountability but often enough these institutions are not transparent.

Structural adjustment programs also include the reshaping of the educational system as Milton Friedman’s ideology outlines some arguments for improving the overall system. He notes that the state should cut back its spending to public schools and give vouchers to parents to pay for their children’s education. Private schools would be able to compete with each other offering the best education possible and this would be available to all that could afford it. Since education should be each individuals responsibility, parents as well as students should make the necessary sacrifices to ensure the best education and hence a better future. In this statement Friedman sees no need for state intervention in the education of children, and sees private institutions as the answer to educational problems.

Klein’s book has also brought negative comments to her door step as many argue that the points made on the book have no backing and that her ranting is just the one of a anti-capitalist. Some claim that her task is to insult the name of economists such as Milton Friedman, and other Chicago School followers. Critique’s to Klein work has been vast and one of them was Joseph Stiglitz of the New York times, making clear at the beginning of his entry that Naomi Klein is a journalist not an economist and therefore tends to oversimplify the policies she is making connections in her book. Other harsher critics like Jeffrey Frankel argue that Klein’s comparison of Friedman’s ideologies with the current Bush’s administration and its policies in Iraq is completely off. Frankel sees George W. Bush a simple practice of cronyism, pushing money and contracts to corporations with connections to the administration.

Others believers of Klein's work can see eye to eye with her statements regarding the existence of a coordinated attack plan on the national sovereignty of countries, and the livelihoods of their population.

After everything that has been mentioned above, one could reach the conclusion that although Naomi Klein’s book “The Shock Doctrine” contains valuable inside but one has to question the veracity of all the information presented. Her journalistic background causes the book to come through as a story, in which she narrates different horrific events, such as torture, natural disasters, and military coups.

Furthermore, she claims that these events have served as a gateway for the re-shaping of economies towards a privatized model. The governments of these countries used the state of mass shock that is being experienced by the population, to implement policies that would otherwise be opposed to by the general masses. The consequences of these policies were already experienced the hurricane Katrina survivors as the local government had already began playing favorites among the victims. Klein mentions these so called FEMA villes, desolated out of the way trailer camps for the low income evacuees, while the wealthy gated communities were promptly outfitted with power generators, medical care, and schools.

Disaster Capitalism is an eminent danger that is gaining and continues to gain popularity among powerful corporations making resistance harder. This book helps further creating knowledge among the masses and hopefully it gives citizens the desire to question their leaders, economic ties, and their actions.


Klein, Naomi, “The Shock Doctrine: The rise of disaster capitalism” First edition, Published by Alfred A. Knopf Canada 2007.

George, Susan. The Debt Boomerang. New York: Penguin Books, 1992.

Oliveri, Ernest J. Latin American Debt and the Politics of International Finance. Westport, Connecticut: Praeger, 1992.

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