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The shock doctrine and industrial relations

journal contribution
posted on 2020-08-31, 00:00 authored by D Peetz, Linda ColleyLinda Colley, R Nolan
Crises require swift policy responses, but can provide an opportunity for political leaders to introduce reforms that might otherwise prove unpopular (Colley and Head 2014). They provide an opportunity to advance neoliberal economic policies that could not be progressed through democratic means but where a sweeping crisis provides a pretext to override the expressed wishes of voters (Friedman 1962, cited in Klein 2007). Policy shifts are also possible in democratic contexts, where there is widespread acceptance of a policy problem and a government can provide a compelling alternative (Kingdon 2003; Sabatier 2007). In her book Shock Doctrine, Naomi Klein (2007) provides numerous examples, such as Hurricane Katrina in New Orleans, where states’ crisis response and recovery plans advanced capitalism and corporate goals at a time when victims were unable to regroup and resist. Not all crises need lead to outcomes like this. The response of the Malaysian government to the 1997 Asian financial crisis, for example, was to incorporate the peak council representatives of labour into the national decision-making process, through a new national economic planning body — representatives it had previously threatened to jail, from a movement it had previously legislated against (Campbell 2001). So crises can be critical junctures in reshaping a country’s political economy. While the state will frequently serve the interests of capital, it is still an actor in its own right. The interests of political leaders might not always coincide with those of capital. And there may be times when capital, and even the state, sees benefits from accommodation with labour in response to a crisis. So it was that the post-war settlement through most of Western Europe was a mostly Keynesian accommodation. This current crisis, then, could have gone either way. The fact that the Australian Council of Trade Unions (ACTU) played a critical role in the introduction of the JobKeeper wage subsidy scheme, and the reported daily interactions between the ACTU secretary and the relevant federal minister (Maley 2020) could have indicated a major realignment between the state and unions, and that the government had come to accept a legitimate role for unions. Similarly, some may have thought that the introduction of JobKeeper, doubling of unemployment benefits and provision of free child care may have signalled a recognition of the legitimacy of Keynesian approaches that repudiated austerity.




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University of Sydney

Peer Reviewed

  • Yes

Open Access

  • No

External Author Affiliations

Griffith University, McKell Institute

Era Eligible

  • Yes


Journal of Australian Political Economy

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