Shock Therapy: How a Dictator, an Economist, and a Fire Sale Created the Neoliberal World

We begin not in London. Not in Wall Street. Not in the ivy-covered halls of Chicago.

We begin in Chile, 1973.

That year, General Augusto Pinochet overthrew the democratically elected socialist president Salvador Allende in a U.S.-backed coup so brutal it made the Cold War blush. Tanks in the streets. Dissidents in stadiums. Thousands tortured, disappeared. It was the laboratory of fear.

But also... a laboratory of economics.

Waiting in the wings was a group of Chilean economists trained at the University of Chicago under Milton Friedman—later nicknamed the Chicago Boys. They believed in one thing above all: the market knows best. Get the state out. Let capitalism rip.

And now they had a blank canvas—wiped clean of opposition, democracy, and unions.

They called it shock therapy.
They deregulated, privatized, slashed social services, and opened the country to foreign investors.

The result?

  • The rich got richer.

  • The poor got crushed.

  • The middle class got hollowed out.

  • And the global elite got excited.

Because it worked. Not for the people, but for capital. For profit. For ideology.

And that’s when the idea of neoliberalism got its teeth.

Wait—Neoliberalism?

Let’s define it the way its architects would never admit:

A political project to restore the power of capital under the guise of individual freedom.

Its core principles?

  • Market efficiency over public good

  • Private property as sacred

  • State intervention only to defend capital, not restrain it

And it sells itself beautifully.
You won’t hear “exploit the poor.” You’ll hear “free enterprise.”
You won’t hear “loot public assets.” You’ll hear “structural reform.”
You won’t hear “we're crushing unions.” You’ll hear “labor flexibility.”

The Fire Sale

After Pinochet, the International Monetary Fund (IMF) and World Bank started exporting this model around the world.

Got a debt crisis? Here's a loan—but only if you:

  • Cut your social programs

  • Open your markets

  • Privatize your industries

  • Let foreign investors in, cheap

It was the Washington Consensus, and it wasn't a consensus—it was an ultimatum.

In Russia? It dismantled the Soviet economy overnight, giving rise to oligarchs.
In Africa and Latin America? It gutted public health and education.
In the U.S.? It laid the groundwork for Reaganomics and Clinton’s triangulation.

Here’s the kicker:
Neoliberalism didn’t rise in freedom—it rose in violence.

Its first trial run wasn’t a policy paper—it was a military dictatorship.
The “free market” was installed at gunpoint.

And yet somehow, by the 1990s, it had become common sense.

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