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“The government didn’t take people to the jungle to be tortured or killed, but so that they could go ahead with their economic plan.”
internment camps in Bolivia’s tropical flatlands.
In fact, much of the developing world, but particularly Latin America, was at that very moment spiraling into hyperinflation. The crisis was the result of two main factors, both with roots in Washington financial institutions. The first was their insistence on passing on illegitimate debts accumulated under dictatorships to new democracies. The second was the Friedman-inspired decision at the U.S. Federal Reserve to allow interest rates to soar, which massively increased the size of those debts overnight.
At the time of the transitions to democracy, powerful arguments were made, both moral and legal, that these debts were “odious” and that newly liberated people should not be forced to pay the bills of their oppressors
Those who favored defaulting on these illegitimately accumulated debts argued that the lenders knew, or ought to have known, that the money was being spent on repression
limitless sums of money are free to travel the globe at great speed, and speculators are able to bet on the value of everything from cocoa to currencies, the result is enormous volatility.
Crisis opportunism was now the guiding logic of the world’s most powerful financial institutions.
The World Bank would make long-term investments in development to pull countries out of poverty, while the IMF would act as a kind of global shock absorber, promoting economic policies that reduced financial speculation and market volatility.
official mandate was still crisis prevention—not social engineering or ideological transformation—so stabilization needed to be the official rationale.
When privatization and free-trade policies are packaged together with a financial bailout, countries have little choice but to accept the whole package.
no other weapon than the peaceful strike weapon.”9 The left saw redemption, a version of socialism that was not tainted by the crimes of Stalin or Mao.
People’s Armed Police, a new, roving riot squad charged with quashing all signs of “economic crimes” (i.e., strikes and protests).
June 3, the tanks of the People’s Liberation Army rolled into the protests, shooting indiscriminately into the crowds. Soldiers stormed onto buses where student demonstrators were taking cover and beat them with sticks; more troops broke through the barricades protecting Tiananmen Square, where students had erected a Goddess of Democracy statue, and rounded up the organizers.
It was this wave of reforms that turned China into the sweatshop of the world, the preferred location for contract factories for virtually every multinational
No country offered more lucrative conditions than China: low taxes and tariffs, corruptible officials and, most of all, a plentiful low-wage workforce that, for many years, would be unwilling to risk demanding decent salaries or the most basic workplace protections for fear of the most violent reprisals.
90 percent of China’s billionaires (calculated in Chinese yuan) are the children of Communist Party officials.
the corporatist state first pioneered in Chile under Pinochet: a revolving door between corporate and political elites
South Africa has surpassed Brazil as the most unequal society in the world.
justice—expensive, sell; status quo—good, buy.
unfettered capitalism: it’s self-enforcing. Once countries have opened themselves up to the global market’s temperamental moods, any departure from Chicago School orthodoxy is instantly punished by traders in New York and London who bet against the offending country’s currency, causing a deeper crisis and the need for more loans, with more conditions attached.
multinational corporations that had benefited from apartheid should be forced to pay reparations. In the end the Truth and Reconciliation Commission made the modest recommendation of a onetime 1 percent corporate tax to raise money for the victims, what it called “a solidarity tax.”
South Africa’s Truth and Reconciliation Commission is frequently held up as a model of successful “peace building,” exported to other conflict zones from Sri Lanka to Afghanistan. But many of those who were directly involved in the process are deeply ambivalent.
it left the economic system served by those abuses “completely untouched”—an
I would look at the systematic effects of the policies of apartheid, and I would devote only one hearing to torture because I think when you focus on torture and you don’t look at what it was serving, that’s when you start to do a revision of the real history.”
of the mines, banks and monopoly industry” but because of the debt, it was doing the opposite—selling off national assets to make good on the debts of its oppressors.
Forty percent of the government’s annual debt payments go to the country’s massive pension fund.
ANC staffers, some of whom had no economic qualifications at all, took part in abbreviated executive training programs at foreign business schools, investment banks, economic policy think tanks and the World Bank, where they were ‘fed a steady diet of neo-liberal ideas.’
Communists in Vietnam and China were doing it, and so were the trade unionists in Poland and the social democrats in Chile,
life under the dictatorship of business people is no better. They couldn’t care less about what country they are in.
Yeltsin, who was still cast in the role of a progressive “genuinely committed to freedom and democracy, genuinely committed to reform,” in the words of then U.S. president Bill Clinton.
Having just doubled military salaries, he had most of the army on his side, and
Communism may have collapsed without the firing of a single shot, but Chicago-style capitalism, it turned out, required a great deal of gunfire to defend itself:
process was so self-evidently corrupt,
did what so many desperate leaders have done throughout history to hold on to power:
fund NGOs that focus on putting anticorruption measures in place before privatizations occur.
casino capitalism.
short-term speculative investment and currency trading, which are highly profitable.
portrayed Iraq as on the road to freedom, even in the face of overwhelming evidence of rampant torture, out-of-control death squads and pervasive press censorship.
the entire thirty-year history of the Chicago School experiment has been one of mass corruption and corporatist collusion between security states and large corporations, from Chile’s piranhas, to Argentina’s crony privatizations, to Russia’s oligarchs, to Enron’s energy shell game, to Iraq’s “free fraud zone.” The point of shock therapy is to open up a window for enormous profits to be made very quickly—not despite the lawlessness but precisely because of it.
today’s multinationals see government programs, public assets and everything that is not for sale as terrain to be conquered and seized—the post office, national parks, schools, social security, disaster relief and anything else that is publicly administered.
all built with public wealth, then sold for a trifle.
Mexico’s economy suffered a major meltdown known as the Tequila Crisis: the terms of the U.S. bailout demanded rapid-fire privatizations, and Forbes announced that the process had minted twenty-three new billionaires. “The lesson here is fairly obvious: to predict whence the next bursts of billionaires will issue, look for countries where markets are opening.” It also cracked Mexico open to unprecedented foreign ownership: in 1990, only one of Mexico’s banks was foreign owned, but “by 2000 twenty-four out of thirty were in foreign hands.”93
calling for law and order after the profits have all been moved offshore is really just a way of legalizing the theft ex post facto, much as the European colonizers locked in their land grabs with treaties.
demands of trade unionists and socialists whose growing strength turned a more radical solution into a credible threat, which in turn made the New Deal look like an acceptable compromise. This unwillingness to recognize the role of mass
Those normal European countries (with their strong social safety nets, workers’ protections, powerful trade unions and socialized health care) emerged as a compromise between Communism and capitalism.
liberation from all constraints is, in essence, Chicago School economics (otherwise known as neoliberalism or, in the U.S., neoconservatism):
with Communism collapsing, there were no other ideas sufficiently powerful to constitute a head-to-head competitor.
high interest rates, which exploded the worth of the debt much as the Volcker Shock had ballooned the developing world’s debt in the eighties.
World Bank, an institution funded, by this time, with tax dollars from 178 countries and whose mandate was to rebuild and strengthen struggling economies,
begging for a sliver of reasonableness and decency on our part.
