by Johann Hari

How can Naomi Klein top No Logo, the most influential political polemic of the past 20 years? Her first book forensically studied the bloodstains that have splashed from the developing world's factories and "export processing zones" on to our cheap designer lives - and it spurred the creation of the anti-globalisation movement. Today, she has produced something even bolder: a major revisionist history of the world that Milton Friedman and the market fundamentalists have built. She takes the central myth of the right - that, since the fall of Soviet tyranny, free elections and free markets have skipped hand in hand together towards the shimmering sunset of history - and shown that it is, simply, a lie.

In fact, human beings consistently and everywhere vote for mixed economies. They want the wealth that markets generate, but they also want them to be counterbalanced by strong government action to make life in a market economy liveable. (Even Margaret Thatcher and Ronald Reagan were not permitted by their electorates to tinker with anything but the outer fringes of social regulation and the welfare state.) The right has been unable to accept this reality, and unable to defeat it in democratic elections. So in order to achieve their vision of "pure capitalism, cleansed of all interruptions", they have waited for massive crises - when the population is left reeling and unable to object - to impose their vision.

Klein's story begins with the market fundamentalists' showroom: Chile. Milton Friedman, the apostle of pure unfettered capitalism, sent many of his finest students to Chile for years to spread the message that markets must be allowed to work their pristine logic unhindered by government. They persuaded virtually nobody. Their parties were thumpingly defeated, and the democratic socialist Salvador Allende was elected instead. So the CIA backed an anti-democratic coup by the fascist general Augusto Pinochet - and Friedman swiftly stepped in to design "the most extreme capitalist makeover ever attempted anywhere", as Klein puts it.

All subsidies for the poor were scrubbed away, prices were sent soaring, and unemployment reached unprecedented levels. Friedman told Pinochet to go further and cut harder. The wishes of the people could be safely ignored, because "the shock of the torture chamber terrorised anyone thinking of standing in the way of the economic shocks", she notes. "Attacks on union leaders were often carried out in close coordination with the owners of the workplaces."

So the right-wing vision of total markets - slice away all social protections and let the corporations rule - was born with the iron fist of state violence as its conjoined twin. In most of the places it has been tried they have been there, inextricably stuck together. Klein tracks them across continents: in post-Soviet Russia, for example, Boris Yeltsin could only impose this extreme vision by blowing up the parliament (with most of the elected representatives trapped inside), shredding the country's young democracy, and starting a vast distraction-war in Chechnya that killed 100,000 people. In post-Tiananmen China, the Communist Party could only turn its country into a vast export credit zone with massacres and mass imprisonment which made ordinary Chinese workers too terrified to ask for even the most meagre rights. Indeed, across the planet, "some of the most infamous human rights violations of this era . . . were in fact committed with the deliberate intent of terrorising the public to prepare the ground for the introduction of free-market reforms".

Where this über-corporate vision has not been imposed by force, it has been imposed by blackmail at a time of crisis. One of the ugliest examples Klein exposes is the use of the tsunami - an almost biblical wave that washed away 250,000 people - as a pretext to impose a Friedmanite vision. In Sri Lanka, mega-corporations had long been keen to clear away the old beach-dwelling communities of fishermen and open up the coastline to much more profitable foreign tourism. But the people liked their homes, and their careers, and did not want to hand their beaches over. So these proposals prompted a wave of militant strikes and mass protests. They were then put to the Sri Lankan people in an election - and were defeated by a landslide.

But then a wave washed it all away, and "underneath the rubble and carnage was what the tourism industry had been angling for all along - a pristine beach, scrubbed clean of all the messy signs of people working, a vacation Eden". The Sri Lankan government was told that it would only receive the vast reconstruction loans it needed from the World Bank and IMF if it agreed to a "restructuring" programme - which consisted of everything that the Sri Lankan people had just rejected at the polls. Reeling from the shock, the Sri Lankan government agreed. It banned people from returning to their beach-front homes, declaring a "buffer zone" for indigenous people - but not for the hotel trade, which was free to do as it pleased. So money donated nominally to help tsunami victims was actually used to inflict a "second tsunami" on them, handing over their land to foreign corporations and ending their historic lifestyles for ever.

Similar programmes of extortion have been inflicted on other communities reeling in shock. As the people of South Africa were fighting the last battles against apartheid, the successor ANC was forced to haggle with the IMF and World Bank for their loans. The conditions? Ditch all the social protections included in your Freedom Charter, and leave the economic structures of apartheid in place.

And as the people of Poland emerged blinking from the horror of Soviet communism, the Solidarity government was forced to gut its social-democratic vision and impose a bitter dose of "shock therapy" that cut the country even further to the bone. In both countries, the will of the people was ignored.

Klein's account of this "disaster capitalism" is written with a perfectly distilled anger, channelled through hard fact. She has indeed surpassed No Logo. Today, this brilliant book should stir a tsunami of shame - and of political action by us to finally stop the shock "therapy".

Johann Hari is a British journalist and regular columnist for The Independent.
© 2007 The New Statesman