Nicholas Blincoe reviews The Shock Doctrine by Naomi Klein

Anyone who wishes to know what our children will believe should read The Shock Doctrine. In many ways it is an old-fashioned book, almost 19th century in its scope and weight, but this is surely its strength. Naomi Klein brings a grand narrative sweep to the most troubling events of the past 60 years, placing them within a single epic drama.

She begins with a piece of scene-setting in the 1950s, where the American consumer boom is juxtaposed with the newly created CIA. So, in the domestic corner, we have the rise of asylums and electro-shock therapy, while, in the outside world, we have American agents screwing with regime change; as though One Flew Over the Cuckoo's Nest had been mixed with The Quiet American.

The narrative proper begins in the Nixon years, with Pinochet's coup against Allende in Chile. The murderous regime of Augusto Pinochet ought to have received universal condemnation. Yet, in one of the oddities of the Cold War, Pinochet was not only welcomed into the club of "civilised" nations, his Chile became a role model to liberal democracies.

The Pinochet government gave the world the first examples of the privatising, monetarist philosophy that would later transform Britain and Poland in the 1980s and spread across the eastern block and Israel in the early 1990s, before reaching Russia and China at the turn of the millennium.

In Klein's account, Pinochet's Chile is the wellspring of all recent history. Its mixture of extreme military violence and laissez-faire "creative destruction" led directly to the "shock doctrine" of Klein's title.

In its most primitive form, this "doctrine" refers to the practice of seeking out wars and natural disasters and, then, while the locals are too shellshocked to protest, clearing a route for multinational companies. Today, however, the doctrine is more refined: its adherents engineer catastrophes.

This she terms "disaster capitalism"; she argues that it has led to the rise of a new kind of multinational that covers all the security, intelligence and war-fighting roles that were once the monopoly of the state. In short, we are seeing the rise of an international gangster class, intent on making cash from chaos.

Iraq is not a flop: it is what it is supposed to be. As Klein says: "When the same mistakes are repeated over and over again, it's time to consider the possibility that they are not mistakes at all."

She sees, in Iraq, a repetition of Israel's increasingly elaborate, violent and apparently goalless occupation of Palestine. To her, the point of the occupation is simply to live with occupation, while making money from selling security know-how. But more, these military adventures provide the model for what to do after natural disasters, as with the jaw-droppingly crappy response to Hurricane Katrina.

An armed guard interviewed outside a New Orleans hotel is revealed as a veteran of Iraq. When asked about the relief programme, he replies that nothing is happening: "It's pretty Green Zone here."

If this précis of The Shock Doctrine suggests it is too choc-full of answers to convince a cynical adult, be warned: Klein is a dramatic writer and a gifted political player.

The Shock Doctrine anticipates the widespread disquiet – nay, rage – at the state of the world as successfully as her previous bestseller, No Logo. Inevitably, there have been attacks.

Did the American-educated economists behind Pinochet's reforms sign up before the coup, as Klein claims, or after, as they aver? Could the massacre in Tiananmen Square really have been a softening-up operation for economic shock therapy?

Klein does not always get away with her most tendentious readings, but she often does. In part, this is down to sheer verve and, in part, because she has the self-damning quotations: an endless stream of inane politicians spoiling for a fight, talking about "shock and awe" and even praising Iraqi looters for their jump-start on the privatisation programme.

She succeeds, too, because the economists who advocated downsizing states knew this would entail such widespread destabilisation that no one would ever vote for it – so they recommended that it be done under the cover of a different emergency.

But if Klein believes this hostility to democracy is restricted to free-marketeers, she should read Maynard Keynes's foreword to the 1933 German edition of his General Theory, where he recommends his reforms to the Nazis by pointing out that it would be easier for them to follow his recommendations than his own government.

Above all, Klein carries off The Shock Doctrine because it is a familiar story. She describes how capitalism conquers by creating conflicts, which is the heart of Marxist theory. She links (medical) shock treatment with (economic) shock therapy and (military) shock-and-awe.

One might argue that this represents a kind of natural history of a metaphor rather than real analysis. Yet her reportage-based approach furnishes powerful examples, resulting in a peculiarly down-to-earth reworking of classical Marxism, with little of its metaphysics.

This is why she will carry our children before her, because anyone who is not a socialist at 20 has no heart.