The Shock Doctrine: The Rise of Disaster Capitalism
By Naomi Klein
Allen Lane £25, 576 pages
FT bookshop price: £20

We live in a world of unending crises. If it is not natural disasters such as the 2004 Asian tsunami or hurricane Katrina, it is man-made ones like 9/11 or the Iraq war. Financial crises overwhelm entire nations, devaluing their currencies and throwing millions into destitution.

Yet for a tiny cabal of ideologues, according to Naomi Klein, such events are not disasters but opportunities. The shocks they deliver can be used to impose economic reforms such as free trade, deregulation and privatisation that create a pure free-market system in which western corporations can rampage unimpeded.

We are living in an era of “disaster capitalism”, she argues in The Shock Doctrine, in which moments of collective crisis can be used to usher in social and economic changes while people are traumatised. This “shock doctrine” is backed up by rather more unpleasant means to secure compliance, including torture and military assault.

More controversial, its strategy of trying to reshape the human condition has the same intention as the electric shock treatment psychiatrists apply to change the behaviour of mentally ill patients.

This is strong stuff, and an argument that is likely to prove seductive to the anti-globalisation movement whose bible was Klein’s No Logo, published in 2000. Her first book and a global bestseller, No Logo attacked large companies for eliminating choice in the advanced economies while exploiting the people of the emerging markets to make their products.

The Shock Doctrine is more ambitious in its attempts to explain not just the global economic balance of power, but much of the political history of the 34 years since the overthrow of Chile’s president Salvador Allende. It is, however, a deeply flawed work that blends together disparate phenomena to create a beguiling – but ultimately dishonest – argument.

For example, it is not enough for Klein that some crises – such as the Iraq war – are man-made. She wants to argue that all of them are a product of disaster capitalism – even natural phenomena such as hurricanes. “Disaster generation can therefore be left to the market’s invisible hand,” she asserts. She accuses western countries of the bombing of Serbia in 2000 as punishment for that country’s failure to adopt market reforms rather than to end the humanitarian crisis in Kosovo. The Hizbollah attempt to topple the Lebanese government, far from being a power struggle between pro- and anti-Syrian forces, is an outcry by the poor against economic liberalisation.

Her elastic use of the shock metaphor also fails to stand up to scrutiny. Shock therapy in economics is a medical metaphor, suggesting that a sudden and complete treatment is needed to save further deterioration of the economy. Electric-shock treatment in psychiatric institutions was an attempt to relieve the symptoms of mental illness. Torture by electric shock is a notoriously ineffective way of finding out information. And however horrendous the consequences, the “shock and awe” bombing campaign ahead of the Iraq invasion is a military strategy as old as warfare – to overwhelm the enemy with superior weaponry.

Klein links events around the world by the involvement of the “Chicago boys”, followers of Milton Friedman who condone violence and economic disruption to force through reform. A conspiracy far more powerful than the freemasons or communists, they miraculously persuade elected politicians to overturn the democratic will and implement the “Friedman playbook”.

According to Klein, they are guilty of the death of more than 100,000 people in Chechnya, sex trafficking in Thailand, kidnapping in Iraq and charter schools in New Orleans. They are even blamed for creating wealthy people who take holidays in luxury hotels in Sri Lanka, forcing out subsistence fishing communities.

Klein’s writing style has its own “shock and awe” tactics to soften up readers for her wilder claims. She opens the book with a harrowing account of electric-shock treatment in mental institutions, and later describes repression and torture in places such as Chile, Argentina and Iraq. She also deploys 60 pages of footnotes, to convince impressionable readers that resistance is useless. But they expose Klein’s selective approach: she quotes the Financial Times when it suits her, for example, but not when it would be inconvenient.

There are some interesting passages, for example on the growth of the homeland industry in the US. But this is a polemic, and a highly tendentious one – not the “breakthrough historical research” promised on the dustcover.

John Willman is the FT’s UK business editor