Book Review of ‘The Shock Doctrine’

Book Review of ‘The Shock Doctrine’
‘The Shock Doctrine’ is a book by Naomi Klein that links the global geopolitics, globalization, financial performance, and history from an economics perspective. In this case, Naomi presents shock doctrine as an economics theory explaining the reactionary nature of global economies in response to the illusion of a free market. To support her ideas, the author advances the notion that the global economy is operating within the shock doctrine by applying reactionary principles as seen in the aftermath of disasters when markets tumble (Klein, 2007). These ideas are explored and exemplified in the section on ‘The Myth of the Chilean Miracle’, which is presented from a historical point of view.
The section begins by mentioning that even after three decades of the Chilean miracle being applied, a debate still rages on about whether or not it was successful as an example of free market policies in effect. It goes on to state that the question should not be about who, between Chicago Boys and Pinochet, is responsible for Chile’s economic success. Rather, the question should be whether or not there was any success at all. It concedes that despite the application of shock therapy to buffer the country against economic panic and disorientation, there was a period when the country approached an economic crisis and the economy crashed. This occurred when financial houses incurred enormous debt against the nation’s assets. This debacle brought the shock therapy into question with the government forced to reexamine its economic policies.

The country’s saving grace was its cautious application of the shock therapy and decision to refrain from nationalizing all government assets and sources of revenue. As the other assets crashed since they had been privatized and their owners were in debt and unable to continue operating, the country was able to retain some level of control over the situation since it was able to collect revenue from the assets that it still owned (Klein, 2007).
The discussion makes it clear that Chile is not a true example of a free market economy in effect. That is because shock therapy had to be discontinued when the economy was facing collapse and was only re-implemented after stability had been achieved. In essence, the section makes it clear that the free market economy was not really about improving the economic situation in the country. Rather, it was about creating an opportunity for the elite to enjoy economic success even as the situation worsened for the rest of the country. The elite almost caused the economy to crash when they borrowed heavily to fund their purchase of government assets. Evidence of this is drawn from the country’s continued label as one of the unequal nations in the world. Overall, it is clear that shock treatment as presented by the Chicago Boys was not really about improving the health of the economy, but was about eliminating the poor while protecting the wealthy (Klein, 2007).
Although the Chilean situation may not have turned out as the Chicago Boys had projected, it was still an indicator for the future. That is because the same effects that were noted in Chile have also been replicated wherever shock therapy was applied. Overall, evidence is presented to show that shock therapy is an economically bad policy since it protected the elite while having a negative effect on the rest of the population. In essence, an educated recommendation is made that economists should be more proactive and not reactive (Klein, 2007). In this respect, the section makes it evident that shock therapy has been unsuccessful as an example of free market policies in effect.
Reference
Klein, N. (2007). The Shock Doctrine: The rise of disaster capitalism. New York, NY: Metropolitan Books.