The theory of shock doctrine explains how stealth, force, and crisis can be employed in certain scenarios to support the implementation of some economic policies which include things like deregulation, privatization, and reduction in the provision of some social services (Norberg, 2008). As postulated by Naomi Klein in The Shock Doctrine: The Rise of Disaster Capitalism advances the theory is evident. Metaphorically, Klein looks at the previous electroshock therapy that was conducted with an aim of returning troubled patients to a state in which they were able to write a new personality (Harrison, 2009). It is possible that the same process can be applied at a macro level and used to enforce policies that are neoliberal in nature around the world.
Klein looks at the importance of ideas and different ideologies, and she highlights that the most important feature of the different beliefs is the free market capitalism that has been evident in over the last forty years. The free market capitalism has ridden on the back of various post-war and disasters or aftershock in the implementation of its tenants. Be it in Pinochet’s 1970’s Chile or Yeltsin’s 1990’s Russia. By looking at the different scenarios, Klein exposes some of the lies of the core premises of the free markets by criticizing some of the notions put forward by its proponents as being the only democratic form of political economy.
The shock doctrine postulates that at a time when a country is faced with coups, natural disasters, wars, and even economic shocks, some of the pro-corporate reformers engage in an aggressive push using some not so popular ‘free market’ measures (Klein, 2008). As suggested by Klein, market fundamentalists who follow Milton Friedman have perfected this art as they wait for a major crisis to happen then they transfer some state-owned assets to the private players at a time when the citizens are still recovering from the shocks, after which they make such changes permanent (Brender, 2010).
Klein’s argument, therefore, is that economic liberalization is very unpopular, and the only way to succeed is a case of deception and coercion by relying on crises since during such periods people are way too occupied with their immediate survival rather than engaging the current regime in opposition (Huneeus, 2007). Klein also examines some dangerous ideas that were as a result of Friedman economics and the extents to which profitable corporations have pushed have given the government the opportunity to employ the use of disaster capitalism (Klein, 2008). The theory explains how people can use force and crises to introduce changes and implement neoliberal policies.
Neoliberalism is a global ideological view that puts corporate profits and powers above the needs of the people such as democracy and even the environment. The people who benefit from such an ideological view are the rich and the global investor club. However, most of the people who are for the ideological view argues that it creates strong economies and lowers the national debt (Harvey, 2005). Klein’s view of neoliberalism focuses on past events in different countries while trying to relate it to the theory of shock doctrine. Neoliberal policies include privatization of state corporations, reduction in government spending on items such as social costs, deregulation, among other policies. It is also characterized by free markets and limited government involvement in business. Neoliberalism exists in powerful Western countries but is rarely referred to as such. The agenda is pushed globally by powerful institutions such as the International Monetary Fund, the World Bank, among other agencies.
Among the first countries to employ the use of shock doctrine was Chile. Chile, a democratic state, elected a socialist president, Salvador Allende. Salvador was overthrown from his presidential office in a coup d’état that was led by an army general Augusto Pinochet, who was supported by the United States (Huneeus, 2007). With the ongoing turmoil as a result of the coup that also resulted in an economic downturn, Milton Friedman suggested that a ‘shock program’ was to be implemented by Pinochet. The program is seen as an opportunity that was taken by Friedman and his disciples to apply their neoliberal theories regarding market liberalization, state retrenchment, and privatization (Klein, Smith and Patrick, 2008). The shock program was to be used in changing some of the county’s reforms such as those of the privatization of most of the state-owned industries, cutting on government spending, and eliminating some of the trade barriers. The rapid-fire economic transformation suggested by Milton Friedman even saw some of the private schools being replaced by voucher-funded private schools (Klein, 2008). In an effort of fulfilling some of these new policies, several Friedman Chilean followers were appointed to different positions (Letelier, 1976). Due to the nature of the policies, they could only be implemented at gunpoint. Therefore, to maintain the changes without much resistance, any opposition to the new appointments was met with force that included torture and in some instances, disappearances were reported. The result was deaths of many people who did not conform to the changes as were seen in many torture cells that were filled with bodies of those who were deemed to stand in the way of the capitalist transformation (Pyrch, 2010).
Friedman is, therefore, an important figure in Augusto Pinochet’s brutal dictatorial leadership since, as pointed out by Klein, he acted as an advisor to the Chilean dictator. Most of Friedman’s policies, however, failed to help the Chilean economy (Valdés, 1995). She mentions the lack of care by Friedman regarding the social cost that would have to be forgone to end the inflation. An example is a failure to control the level of inflation that that had risen to about 375 percent by 1974 which was the highest level in the world under the regime of Pinochet. Klein notes that Friedman was not able to offer his solutions to Chile’s hyperinflation until 1975 (Klein, Smith, and Patrick, 2008). Klein also quotes one of the Chilean economists Orlando Letelier having talked about the terror that existed between Pinochet regime and the proposed free market policies. Letelier’s argument was that Milton Friedman was also to be blamed for some of the regime’s crimes since his services were not only limited to technical advice. He was later on killed by a car bomb an event that Klein argues to be the working forces of the “Chicago Boys” in their bid to impose the free market capitalism in the region (Klein, 2008). Klein also notes that the war on terror that was started in the Southern Cone was, in fact, a war against the obstacles to the new order of contemporary capitalism.
Pinochet’s strategy in the implementation of the new proposals by Friedman needed some level of dictatorship to succeed (Stiglitz, 2007). For smooth implementation of the policies, several economists from Chile were given sponsorships and training in Chicago (Letelier, 1976). Pinochet’s aim was to give the opportunity to the trained economists to lead the Chilean economic debates even though they had little influences on the Chilean political stance (O'Brien, Roddick, and Bureau, 1983).
Even though the shock doctrine is essential in elaborating the attempts by neoliberal markets to take advantage of disaster situations, it does not fully justify the success that has been seen in some elements of the free market ideology (Harvey, 2005). Some examples can be seen in situations where market forces are greater than the use of brutal force. Moreover, it is not only the neoliberals who can take advantage of crisis. The trend all over the world over the past years has seen several social movements and upheavals learn from economic downturns. This gives opportunities for such movements to demand the creation of better and just society (Harrison, 2009).
In conclusion, Augusto Pinochet regime was able to employ the use of the shock doctrine to advance its need for a neoliberal economy by taking advantage of the economic shocks and the disasters resulting from the coup. However, the implementation of the policies that were recommended by Friedman was only possible if there were no resistance, a factor that made the regime brutal in when dealing with any opposition.
Bibliography
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Harrison, M., 2009. Credibility Crunch: A Comment on The Shock Doctrine. University of Warwick. Department of Economics.
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Huneeus, C., 2007. The Pinochet Regime. Boulder^ eColorado Colorado: Lynne Rienner Publishers.
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