There’s a school of thought that free markets and democracy go hand in hand and together they make people free and prosperous. You’re arguing that free-market ideology has triumphed around the world not because people have embraced the market but because the ideology has been imposed on them, often in moments of distress. Furthermore, these moments of distress have sometimes been created by governments as a pretext to bring in free-market policies. To top it all off, the policies haven’t really worked. They’ve just enriched the people who introduced them. How’s that for a summary?
That’s pretty good. I would quibble with a few things. I don’t know that there are examples of the governments themselves creating the crises.
Okay. Is violence inherent in capitalism or is that something that’s recently mutated out of capitalism as it’s been practised over the last several hundred years?
I think you can make that argument. But the book is really looking at a war between different kinds of capitalism. It’s about a battle of ideas between Keynesianism — a mixed economy, which is what we have in this country — and what I describe as a fundamentalist strain of capitalism which has an objection to the very idea of mixed economy. When these sort of fundamentalist capitalists get their way what is constructed is not capitalism at all, it’s actually corporatism,
Give me the attributes of fundamentalist capitalism.
They’re almost the attributes of every fundamentalist: the desire for purity, a belief in a perfect balance, and every time there are problems identified they are attributed to perversions, distortions within what would otherwise be a perfect system. I think you see this from religious fundamentalists and from Marxist fundamentalists, and I would argue that [Austrian economist Friedrich] Hayek and [University of
So you have these economists advocating for this pure form of capitalism — what is the attraction of disasters to these people?
Well, disasters are moments where people are blasted out of the way, where they are in a state of shock, whether they’re scattered — as after a hurricane hits in New Orleans — or just picking up the pieces after having been bombed, or their entire world view has just been shattered — as after Sept. 11. These are malleable political moments. And there is an awareness that disasters create these opportunities, so you have a whole movement — much of it standing at the ready within the think-tank infrastructure. I think of these think tanks as sort of idea-warmers — they keep the ideas ready for when the disaster hits. Milton Friedman said that only a crisis, real or perceived, produces real change, and when that crisis hits, the change that occurs depends on the ideas that are lying around.
Let’s talk about
It was Nixon and Kissinger together. I end the book with a quote from a declassified letter from Kissinger to Nixon where he says that the threat of Allende was not about any of the things they were publicly saying at the time — that he was cozying up to the Soviet Union, that he was only pretending to be a democrat and that he was going to turn Chile into a totalitarian system. Kissinger writes the real threat is the problem of social democracy spreading. The
And you think they feared that more than they feared the
Well, if you follow the coups, the overthrow of [Prime Minister] Mossadegh in
So Allende’s overthrown by Pinochet, Pinochet has a great deal of support from the United States and from the economists of the Chicago School, and is well-known to have engaged in mass murders and various forms of brutality against his opposition, and you see that as an integral part of the program, really, of installing this new economics in Chile?
The idea that you could turn Chile into a laboratory for extreme Chicago School economics is a little like thinking you could launch a revolution against capitalism in Beverly Hills. It was deeply inhospitable for these ideas. But in this collaboration between Pinochet and the economists who’d gone to the University of Chicago on grants from the U.S. State Department, Chile was a laboratory for all these ideas that to this day have not been implemented in the United States, like a flat tax — a 15 per cent flat tax — charter schools, labour laws that essentially made it illegal for unions to be involved in any political activity. Straight out of the handbook, you know? It was like they took Friedman’s manifesto and just turned it into law. The idea that this could happen in
You talk a lot about torture and brutality and the shock of massive change and what it does to populations, and you see it as part of the mindset of the economists, that that was the only way — to severely shock and disorient people — to get them to change their behaviour and accept a new ideology.
There was, and continues to be, an understanding that unless there is a massive crisis that makes the alternative look even worse, then people just don’t give up things that make their lives better, whether it’s unemployment insurance or public housing. I mean, look at
Let’s go to
The debate in
At the same time we’re starting to see the extraordinary ways in which
And everyone from Google to Yahoo! is playing along.
In 1989 the discourse of these big communications companies was that television — satellite television — was going to bring freedom and democracy to
What I think
With reference to the
Well, what I see — if we bring it back to Friedman — is a very explicit political campaign against the New Deal. You know, he wrote that history took a wrong turn after the 1930s. There was a consensus, after the market crash, that what had gone wrong was that the market had been left to regulate itself and that was simply too brutal. The New Deal came to embody another kind of capitalism, which did much more redistribution. And it wasn’t because people were nice; there was a battle of ideas between Communism and capitalism, and in the 1930s and ’40s and ’50s and ’60s it was capitalism in a seductive phase. And so elements of socialism were inserted into this model so that a more radical version of socialism would be less attractive. I’m quoting FDR and Keynes. And that model actually was the period where you had the most rapid economic growth, but it was more fairly distributed. This was the period where the middle class really grew, not just in the
At what period?
But there’s also lots of evidence that the counter-revolutionaries haven’t had much success. The United States is still very much a mixed economy, and if you look at spending on entitlement programs and Medicare and medicaid and government spending as a percentage of GDP, it’s higher than it was at the start of the counter-revolution …
But the money doesn’t go to the people. The
No, in the
Minimum wage in the
I’m not saying it couldn’t be higher, just on the whole. We’re talking aggregates of working-class people.
Well, it is a story in inequality, so aggregates are misleading. Whenever we add it all together and divide it we end up with figures that gloss over the past 30 years, which is a story of an opening up of a gulf. And when you add to that the ideological campaign’s successful attack on the public sphere then you have a situation like in New Orleans after hurricane Katrina where the state has been so decimated that the public transit doesn’t work, the disaster response consists of handing out DVDs and telling people to run for their lives.
Do you see significant differences between how the
There’s something uniquely naked about the Bush administration. The
Okay, let’s talk about
I think it’s complex, I think it was a combination of teaching the world a lesson — “This is what happens when you mess with the U.S.” — wanting to re-fight the Gulf War, the fact that the military had been playing war games with Iraq for the previous 12 years. All of that contributed, and oil. I also think there are people who really did believe that they were going to build a model in the
You acknowledge in the book that it’s not unusual for new ideas — whether they be pro-market or anti-market or any other kind — to be opportunistic, to seize openings brought by disasters, or even promote disasters in order to make opportunities, and you see revolutionary Marxism as paving the way for this …
I’ve always hated this idea. At leftie talks there’s always somebody who goes up to the mike and says, “But don’t things have to get worse before anything happens?” and I slam those people down because the values that I would hope we represent are human values, and that is such a profoundly anti-human idea — of desiring a descent so there can be some shock that will wake people up.
That’s just how politics works, isn’t it?
It may well. You know, I wrote the book because I think we should know our history a little better. I do think more disasters will come. All of the statistics would indicate we are going to be seeing more intense natural disasters, more category 5 hurricanes, more terrorist attacks. It brings me no joy to say this but we are in shocking times and I wrote the book because I want people to be more shock-resistant. I don’t see it as a game, I actually think that when we know our history and know how these tactics work we are less exploitable, by the left or the right.
But why wouldn’t you be ready? As somebody who believes in a different set of ideas why wouldn’t you seize the opportunity?
We don’t have to give everything up just because we get shocked. I’ll use this phrase from Frederico Allodi, a founder of the Canadian Centre for the Victims of Torture. He says, “In Spain people have metabolized their history.” Countries that have gone through this process of metabolizing their terror become more shock-resistant when the next shock hits. When Spain was hit with the terrorist attack you immediately had Aznar going on television blaming the Basques, saying this is why we’re in Iraq, engaging in sort of fearmonger tactics, and he got voted out of office. People said, “It reminded us of something. It reminded us of how Franco used to keep us afraid.” So, to me, it’s less about whose ideas are going to win the next shock and more we don’t actually have to give up our brains if we get hit by a terrorist attack. It doesn’t have to be the excuse to let the Bush agenda come into
Do you see no successes for capitalism in particular countries …
I disagree. Most of those statistics are about
We haven’t privatized health care.
No, but that is the agenda, and it’s certainly been deeply eroded.
So would you be happy with a market economy if it distributed wealth better?
I’ve been trying to figure out your politics and I can’t.
Look, I think there’s going to be a lot of radical leftists who would be disappointed by how Keynesian this book is.
Are you a Keynesian advocate of a mixed economy?
I think I’m a realist.
Have you ever been active in politics?
No. I vote NDP.
But you are a leader to a lot of people, and you do believe in democracy and in elections, and it would seem a natural step.
Thanks for the career advice.
It’s not advice, I was asking!
Maybe it’s just selfishness, because I enjoy the research process so much — I love it — and politics is so different. But I’m not … I think there could be a political moment where if there was sort of a political project that engaged me …
Would you do it in
Yeah, that’s the only place I would do it. But probably what I would do would be more on the sort of policy wonk side.
You mean get involved with the government?
Yeah, or like a … I don’t even think of it as a government, Ken, because I just think we’d lose! I won’t get past the campaign!