|
Latin America’s Shock Resistance
By Naomi Klein
11/14/07 "The Nation" -- -- In less than two years, the lease on
the largest and most important US military base in Latin America
will run out. The base is in Manta, Ecuador, and Rafael Correa,
the country’s leftist president, has pronounced that he will
renew the lease “on one condition: that they let us put a base
in Miami–an Ecuadorean base. If there is no problem having
foreign soldiers on a country’s soil, surely they’ll let us have
an Ecuadorean base in the United States.”
Since an Ecuadorean military outpost in South Beach is a long
shot, it is very likely that the Manta base, which serves as a
staging area for the “war on drugs,” will soon shut down.
Correa’s defiant stand is not, as some have claimed, about
anti-Americanism. Rather, it is part of a broad range of
measures being taken by Latin American governments to make the
continent less vulnerable to externally provoked crises and
shocks.
This is a crucial development because for the past thirty-five
years in Latin America, such shocks from outside have served to
create the political conditions required to justify the
imposition of “shock therapy”–the constellation of
corporate-friendly “emergency” economic measures like
large-scale privatizations and deep cuts to social spending that
debilitate the state in the name of free markets. In one of his
most influential essays, the late economist Milton Friedman
articulated contemporary capitalism’s core tactical nostrum,
what I call the shock doctrine. He observed that “only a crisis–
actual or perceived–produces real change. When that crisis
occurs, the actions that are taken depend on the ideas that are
lying around.”
Latin America has always been the prime laboratory for this
doctrine. Friedman first learned how to exploit a large-scale
crisis in the mid-1970s, when he advised Chilean dictator Gen.
Augusto Pinochet. Not only were Chileans in a state of shock
following Pinochet’s violent overthrow of Socialist President
Salvador Allende; the country was also reeling from severe
hyperinflation. Friedman advised Pinochet to impose a rapid-fire
transformation of the economy–tax cuts, free trade, privatized
services, cuts to social spending and deregulation. It was the
most extreme capitalist makeover ever attempted, and it became
known as a Chicago School revolution, since so many of
Pinochet’s top aides and ministers had studied under Friedman at
the University of Chicago. A similar process was under way in
Uruguay and Brazil, also with the help of University of Chicago
graduates and professors, and a few years later, in Argentina.
These economic shock therapy programs were facilitated by far
less metaphorical shocks–performed in the region’s many torture
cells, often by US-trained soldiers and police, and directed
against those activists who were deemed most likely to stand in
the way of the economic revolution.
In the 1980s and ’90s, as dictatorships gave way to fragile
democracies, Latin America did not escape the shock doctrine.
Instead, new shocks prepared the ground for another round of
shock therapy–the “debt shock” of the early ’80s, followed by a
wave of hyperinflation as well as sudden drops in the prices of
commodities on which economies depended.
In Latin America today, however, new crises are being repelled
and old shocks are wearing off–a combination of trends that is
making the continent not only more resilient in the face of
change but also a model for a future far more resistant to the
shock doctrine.
When Milton Friedman died last year, the global quest for
unfettered capitalism he helped launch in Chile three decades
earlier found itself in disarray. The obituaries heaped praise
on him, but many were imbued with a sense of fear that
Friedman’s death marked the end of an era. In Canada’s National
Post, Terence Corcoran, one of Friedman’s most devoted
disciples, wondered whether the global movement the economist
had inspired could carry on. “As the last great lion of free
market economics, Friedman leaves a void…. There is no one alive
today of equal stature. Will the principles Friedman fought for
and articulated survive over the long term without a new
generation of solid, charismatic and able intellectual
leadership? Hard to say.”
It certainly seemed unlikely. Friedman’s intellectual heirs in
the United States–the think-tank neocons who used the crisis of
September 11 to launch a booming economy in privatized warfare
and “homeland security”–were at the lowest point in their
history. The movement’s political pinnacle had been the
Republicans’ takeover of the US Congress in 1994; just nine days
before Friedman’s death, they lost it again to a Democratic
majority. The three key issues that contributed to the
Republican defeat in the 2006 midterm elections were political
corruption, the mismanagement of the Iraq War and the
perception, best articulated by Jim Webb, a winning Democratic
candidate for the US Senate, that the country had drifted
“toward a class-based system, the likes of which we have not
seen since the nineteenth century.” Nowhere, however, was the
economic project in deeper crisis than where it had started:
Latin America. Washington has always regarded democratic
socialism as a greater challenge than totalitarian Communism,
which was easy to vilify and made for a handy enemy. In the
1960s and ’70s, the favored tactic for dealing with the
inconvenient popularity of economic nationalism and democratic
socialism was to try to equate them with Stalinism, deliberately
blurring the clear differences between the worldviews. A stark
example of this strategy comes from the early days of the
Chicago crusade, deep inside the declassified Chile documents.
Despite the CIA-funded propaganda campaign painting Allende as a
Soviet-style dictator, Washington’s real concerns about the
Allende victory were relayed by Henry Kissinger in a 1970 memo
to Nixon: “The example of a successful elected Marxist
government in Chile would surely have an impact on–and even
precedent value for–other parts of the world, especially in
Italy; the imitative spread of similar phenomena elsewhere would
in turn significantly affect the world balance and our own
position in it.” In other words, Allende needed to be taken out
before his democratic third way spread.
But the dream Allende represented was never defeated. It was
temporarily silenced, pushed under the surface by fear. Which is
why, as Latin America now emerges from its decades of shock, the
old ideas are bubbling back up–along with the “imitative spread”
Kissinger so feared.
By 2001 the shift had become impossible to ignore. In the
mid-’70s, Argentina’s legendary investigative journalist Rodolfo
Walsh had regarded the ascendancy of Chicago School economics
under junta rule as a setback, not a lasting defeat, for the
left. The terror tactics used by the military had put his
country into a state of shock, but Walsh knew that shock, by its
very nature, is a temporary state. Before he was gunned down by
Argentine security agents on the streets of Buenos Aires in
1977, Walsh estimated that it would take twenty to thirty years
until the effects of the terror receded and Argentines regained
their footing, courage and confidence, ready once again to fight
for economic and social equality. It was in 2001, twenty-four
years later, that Argentina erupted in protest against IMF-prescribed
austerity measures and then proceeded to force out five
presidents in only three weeks.
“The dictatorship just ended!” people declared at the time. They
meant that it had taken seventeen years of democracy for the
legacy of terror to fade–just as Walsh had predicted.
In the years since, that renewed courage has spread to other
former shock labs in the region. And as people shed the
collective fear that was first instilled with tanks and cattle
prods, with sudden flights of capital and brutal cutbacks, many
are demanding more democracy and more control over markets.
These demands represent the greatest threat to Friedman’s legacy
because they challenge his central claim: that capitalism and
freedom are part of the same indivisible project.
The staunchest opponents of neoliberal economics in Latin
America have been winning election after election. Venezuelan
president Hugo Chávez, running on a platform of
“Twenty-First-Century Socialism,” was re-elected in 2006 for a
third term with 63 percent of the vote. Despite attempts by the
Bush Administration to paint Venezuela as a pseudo-democracy, a
poll that year found 57 percent of Venezuelans happy with the
state of their democracy, an approval rating on the continent
second only to Uruguay’s, where the left-wing coalition party
Frente Amplio had been elected to government and where a series
of referendums had blocked major privatizations. In other words,
in the two Latin American states where voting had resulted in
real challenges to the Washington Consensus, citizens had
renewed their faith in the power of democracy to improve their
lives.
Ever since the Argentine collapse in 2001, opposition to
privatization has become the defining issue of the continent,
able to make governments and break them; by late 2006, it was
practically creating a domino effect. Luiz Inácio Lula da Silva
was re-elected as president of Brazil largely because he turned
the vote into a referendum on privatization. His opponent, from
the party responsible for Brazil’s major sell-offs in the ’90s,
resorted to dressing up like a socialist NASCAR driver, wearing
a jacket and baseball hat covered in logos from the public
companies that had not yet been sold. Voters weren’t persuaded,
and Lula got 61 percent of the vote. Shortly afterward in
Nicaragua, Daniel Ortega, former head of the Sandinistas, made
the country’s frequent blackouts the center of his winning
campaign; the sale of the national electricity company to the
Spanish firm Unión Fenosa after Hurricane Mitch, he asserted,
was the source of the problem. “Who brought Unión Fenosa to this
country?” he bellowed. “The government of the rich did, those
who are in the service of barbarian capitalism.”
In November 2006, Ecuador’s presidential elections turned into a
similar ideological battleground. Rafael Correa, a 43-year-old
left- wing economist, won the vote against Álvaro Noboa, a
banana tycoon and one of the richest men in the country. With
Twisted Sister’s “We’re Not Gonna Take It” as his official
campaign song, Correa called for the country “to overcome all
the fallacies of neoliberalism.” When he won, the new president
of Ecuador declared himself “no fan of Milton Friedman.” By
then, Bolivian President Evo Morales was already approaching the
end of his first year in office. After sending in the army to
take back the gas fields from “plunder” by multinationals, he
moved on to nationalize parts of the mining sector. That year in
Chile, under the leadership of President Michelle Bachelet–who
had been a prisoner under Pinochet–high school students staged a
wave of militant protests against the two-tiered educational
system introduced by the Chicago Boys. The country’s copper
miners soon followed with strikes of their own.
In December 2006, a month after Friedman’s death, Latin
America’s leaders gathered for a historic summit in Bolivia,
held in the city of Cochabamba, where a popular uprising against
water privatization had forced Bechtel out of the country
several years earlier. Morales began the proceedings with a vow
to close “the open veins of Latin America.” It was a reference
to Eduardo Galeano’s book Open Veins of Latin America: Five
Centuries of the Pillage of a Continent, a lyrical accounting of
the violent plunder that had turned a rich continent into a poor
one. The book was published in 1971, two years before Allende
was overthrown for daring to try to close those open veins by
nationalizing his country’s copper mines. That event ushered in
a new era of furious pillage, during which the structures built
by the continent’s developmentalist movements were sacked,
stripped and sold off.
Today Latin Americans are picking up the project that was so
brutally interrupted all those years ago. Many of the policies
cropping up are familiar: nationalization of key sectors of the
economy, land reform, major investments in education, literacy
and healthcare. These are not revolutionary ideas, but in their
unapologetic vision of a government that helps reach for
equality, they are certainly a rebuke to Friedman’s 1975
assertion in a letter to Pinochet that “the major error, in my
opinion, was…to believe that it is possible to do good with
other people’s money.”
Though clearly drawing on a long rebellious history, Latin
America’s contemporary movements are not direct replicas of
their predecessors. Of all the differences, the most striking is
an acute awareness of the need for protection from the shocks
that worked in the past–the coups, the foreign shock therapists,
the US-trained torturers, as well as the debt shocks and
currency collapses. Latin America’s mass movements, which have
powered the wave of election victories for left- wing
candidates, are learning how to build shock absorbers into their
organizing models. They are, for example, less centralized than
in the ’60s, making it harder to demobilize whole movements by
eliminating a few leaders. Despite the overwhelming cult of
personality surrounding Chávez, and his controversial moves to
centralize power at the state level, the progressive networks in
Venezuela are at the same time highly decentralized, with power
dispersed at the grassroots and community levels, through
thousands of neighborhood councils and co-ops. In Bolivia, the
indigenous people’s movements that put Morales in office
function similarly and have made it clear that Morales does not
have their unconditional support: the barrios will back him as
long as he stays true to his democratic mandate, and not a
moment longer. This kind of network approach is what allowed
Chávez to survive the 2002 coup attempt: when their revolution
was threatened, his supporters poured down from the shantytowns
surrounding Caracas to demand his reinstatement, a kind of
popular mobilization that did not happen during the coups of the
’70s. Latin America’s new leaders are also taking bold measures
to block any future US-backed coups that could attempt to
undermine their democratic victories. Chávez has let it be known
that if an extremist right-wing element in Bolivia’s Santa Cruz
province makes good on its threats against Morales’s government,
Venezuelan troops will help defend Bolivia’s democracy.
Meanwhile, the governments of Venezuela, Costa Rica, Argentina,
Uruguay and Bolivia have all announced that they will no longer
send students to the School of the Americas (now called the
Western Hemisphere Institute for Security Cooperation)–the
infamous police and military training center in Fort Benning,
Georgia, where so many of the continent’s notorious killers
learned the latest in “counterterrorism” techniques, then
promptly directed them against farmers in El Salvador and auto
workers in Argentina. Ecuador, in addition to closing the US
military base, also looks set to cut its ties with the school.
It’s hard to overstate the importance of these developments. If
the US military loses its bases and training programs, its power
to inflict shocks on the continent will be greatly eroded.
The new leaders in Latin America are also becoming better
prepared for the kinds of shocks produced by volatile markets.
One of the most destabilizing forces of recent decades has been
the speed with which capital can pick up and move, or how a
sudden drop in commodity prices can devastate an entire
agricultural sector. But in much of Latin America these shocks
have already happened, leaving behind ghostly industrial suburbs
and huge stretches of fallow farmland. The task of the region’s
new left, therefore, has become a matter of taking the detritus
of globalization and putting it back to work. In Brazil, the
phenomenon is best seen in the million and a half farmers of the
Landless Peoples Movement (MST), who have formed hundreds of
cooperatives to reclaim unused land. In Argentina, it is
clearest in the movement of “recovered companies,” 200 bankrupt
businesses that have been resuscitated by their workers, who
have turned them into democratically run cooperatives. For the
cooperatives, there is no fear of facing an economic shock of
investors leaving, because the investors have already left.
Chávez has made the cooperatives in Venezuela a top political
priority, giving them first refusal on government contracts and
offering them economic incentives to trade with one another. By
2006 there were roughly 100,000 cooperatives in the country,
employing more than 700,000 workers. Many are pieces of state
infrastructure– toll booths, highway maintenance, health
clinics–handed over to the communities to run. It’s a reverse of
the logic of government outsourcing: rather than auctioning off
pieces of the state to large corporations and losing democratic
control, the people who use the resources are given the power to
manage them, creating, at least in theory, both jobs and more
responsive public services. Chávez’s many critics have derided
these initiatives as handouts and unfair subsidies, of course.
Yet in an era when Halliburton treats the US government as its
personal ATM for six years, withdraws upward of $20 billion in
Iraq contracts alone, refuses to hire local workers either on
the Gulf Coast or in Iraq, then expresses its gratitude to US
taxpayers by moving its corporate headquarters to Dubai (with
all the attendant tax and legal benefits), Chávez’s direct
subsidies to regular people look significantly less radical.
Latin America’s most significant protection from future shocks
(and therefore from the shock doctrine) flows from the
continent’s emerging independence from Washington’s financial
institutions, the result of greater integration among regional
governments. The Bolivian Alternative for the Americas (ALBA) is
the continent’s retort to the Free Trade Area of the Americas,
the now-buried corporatist dream of a free-trade zone stretching
from Alaska to Tierra del Fuego. Though ALBA is still in its
early stages, Emir Sader, a Brazil-based sociologist, describes
its promise as “a perfect example of genuinely fair trade: each
country provides what it is best placed to produce, in return
for what it most needs, independent of global market prices.” So
Bolivia provides gas at stable discounted prices; Venezuela
offers heavily subsidized oil to poorer countries and shares
expertise in developing reserves; and Cuba sends thousands of
doctors to deliver free healthcare all over the continent, while
training students from other countries at its medical schools.
This is a very different model from the kind of academic
exchange that began at the University of Chicago in the
mid-’50s, when hundreds of Latin American students learned a
single rigid ideology and were sent home to impose it with
uniformity across the continent. The major benefit is that ALBA
is essentially a barter system in which countries decide for
themselves what any given commodity or service is worth rather
than letting traders in New York, Chicago or London set the
prices for them. That makes trade less vulnerable to the kind of
sudden price fluctuations that have hurt Latin American
economies before. Surrounded by turbulent financial waters,
Latin America is creating a zone of relative economic calm and
predictability, a feat presumed impossible in the globalization
era.
When one country does face a financial shortfall, this increased
integration means that it does not necessarily need to turn to
the IMF or the US Treasury for a bailout. That’s fortunate
because the
2006 US National Security Strategy makes it clear that for
Washington, the shock doctrine is still very much alive: “If
crises occur, the IMF’s response must reinforce each country’s
responsibility for its own economic choices,” the document
states. “A refocused IMF will strengthen market institutions and
market discipline over financial decisions.” This kind of
“market discipline” can only be enforced if governments actually
go to Washington for help. As former IMF deputy managing
director Stanley Fischer explained during the Asian financial
crisis, the lender can help only if it is asked, “but when [a
country is] out of money, it hasn’t got many places to turn.”
That is no longer the case. Thanks to high oil prices, Venezuela
has emerged as a major lender to other developing countries,
allowing them to do an end run around Washington. Even more
significant, this December will mark the launch of a regional
alternative to the Washington financial institutions, a “Bank of
the South” that will make loans to member countries and promote
economic integration among them.
Now that they can turn elsewhere for help, governments
throughout the region are shunning the IMF, with dramatic
consequences. Brazil, so long shackled to Washington by its
enormous debt, is refusing to enter into a new agreement with
the fund. Venezuela is considering withdrawing from the IMF and
the World Bank, and even Argentina, Washington’s former “model
pupil,” has been part of the trend. In his 2007 State of the
Union address, President Néstor Kirchner (since succeeded by his
wife, Christina) said that the country’s foreign creditors had
told him, “‘You must have an agreement with the International
Fund to be able to pay the debt.’ We say to them, ‘Sirs, we are
sovereign. We want to pay the debt, but no way in hell are we
going to make an agreement again with the IMF.’” As a result,
the IMF, supremely powerful in the 1980s and ’90s, is no longer
a force on the continent. In 2005 Latin America made up 80
percent of the IMF’s total lending portfolio; the continent now
represents just 1 percent–a sea change in only two years.
The transformation reaches beyond Latin America. In just three
years, the IMF’s worldwide lending portfolio had shrunk from $81
billion to $11.8 billion, with almost all of that going to
Turkey. The IMF, a pariah in countries where it has treated
crises as profit-making opportunities, is withering away. The
World Bank faces an equally precarious future. In April Correa
revealed that he had suspended all loans from the Bank and
declared the institution’s representative in Ecuador persona non
grata–an extraordinary step. Two years earlier, Correa
explained, the World Bank had used a $100 million loan to defeat
economic legislation that would have redistributed oil revenues
to the country’s poor. “Ecuador is a sovereign country, and we
will not stand for extortion from this international
bureaucracy,” he said. Meanwhile, Evo Morales announced that
Bolivia would quit the World Bank’s arbitration court, the body
that allows multinational corporations to sue national
governments for measures that cost them profits. “The
governments of Latin America, and I think the world, never win
the cases. The multinationals always win,” Morales said.
When Paul Wolfowitz was forced to resign as president of the
World Bank in May, it was clear that the institution needed to
take desperate measures to rescue itself from its profound
crisis of credibility. In the midst of the Wolfowitz affair, the
Financial Times reported that when World Bank managers dispensed
advice in the developing world, “they were now laughed at.” Add
the collapse of the World Trade Organization talks in 2006
(prompting declarations that “globalization is dead”), and it
appears that the three main institutions responsible for
imposing the Chicago School ideology under the guise of economic
inevitability are at risk of extinction.
It stands to reason that the revolt against neoliberalism would
be in its most advanced stage in Latin America. As inhabitants
of the first shock lab, Latin Americans have had the most time
to recover their bearings, to understand how shock politics
work. This understanding is crucial for a new politics adapted
to our shocking times. Any strategy based on exploiting the
window of opportunity opened by a traumatic shock– the central
tenet of the shock doctrine–relies heavily on the element of
surprise. A state of shock is, by definition, a moment when
there is a gap between fast-moving events and the information
that exists to explain them. Yet as soon as we have a new
narrative that offers a perspective on the shocking events, we
become reoriented and the world begins to make sense again.
Once the mechanics of the shock doctrine are deeply and
collectively understood, whole communities become harder to take
by surprise, more difficult to confuse–shock-resistant.
Naomi Klein is the author of many books, including her most
recent, The Shock Doctrine: The Rise of Disaster Capitalism.
Visit Naomi’s website at
www.nologo.org
Click on "comments" below to read or post comments
Comment Guidelines
Be succinct, constructive and
relevant to the story.
We encourage engaging, diverse
and meaningful commentary. Do not include
personal information such as names, addresses,
phone numbers and emails. Comments falling
outside our guidelines – those including
personal attacks and profanity – are not
permitted.
See our complete
Comment Policy
and
use this link to notify us if you have concerns
about a comment.
We’ll promptly review and remove any
inappropriate postings.
Send Page To a Friend
In accordance
with Title 17 U.S.C. Section 107, this material
is distributed without profit to those who have
expressed a prior interest in receiving the
included information for research and educational
purposes. Information Clearing House has no
affiliation whatsoever with the originator of
this article nor is Information ClearingHouse
endorsed or sponsored by the originator.)
|
