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How Misguided Financial Policy Strengthens the Right-Wing

Capitalism has shown how democratic processes can be easily evaded. The Chicago boys carried out their radical reform program that was known as shock therapy. This included dismantling social state structures, opening the market to foreign investors and shattering unions. The Pinochet military regime kept the population in a constant state of shock with the terror of arrest waves so the population was too paralyzed to resist the selling off of their infrastructure.

Capitalism has shown democratic processes can be easily eluded. Right-wing groups then use the justice vacuum for populist blaming

By Jule Gourin

[This article published on September 24, 2019 is translated from the German on the Internet, www.zeit.de. Jule Gourin is a philosopher, author and journalist in Flensburg.]

The idea that the market economy leads to more democracy has prevailed for a long time in the history of capitalism. But the question of whether capitalism needs democracy is discussed intensely given growing social inequality and the political crisis of representation.

The government of Margaret Thatcher in the 1980s is commonly regarded as the beginning of neoliberalism that stands for the dogma of TINA - There is no alternative. However, the first neoliberal experiments occurred previously in Latin America. The alliances forged there between authoritarian state- and authoritarian economic policies show that key neoliberal mechanisms are very repressive and undermine society and are not liberal and democratic. Austerity policies play a central role here: rigid state austerity measures aiming at the radical dismantling of social state structures. Right-wing authoritarian forces are strengthened in view of the neoliberal genesis. This leads to the question of how far capitalism can get rid of democracy.

For the political scientist Oliver Marchart, 1973 is the birth-year of neoliberalism - the year of the coup of Salvador Allende in Chile. In the 1960s, the Chicago School led by the economist Milton Friedman had already begun confronting the model of Keynesianism dominant at that time that encouraged the state regulation of the market. Friedman and other neoconservative economists defended the idea of a free market and pleaded for the withdrawal of the state from economic processes. To put their theories into action, they sought to influence Latin America. In the scope of a far-reaching exchange program, Latin American economists, particularly from Chile, were trained in this economic school and were later brought into the Pinochet government. As Marchant writes, Latin America's authoritarian regimes including the regime of the Chilean junta under General Pinochet that came to power through the 1973 coup served for experimental preparation under dictatorial conditions. This regime was advised by US neoliberal economists - the so-called Chicago Boys. After 1975, Chilean economists educated in Chicago were brought into the Pinochet government to restructure the Chilean economy in a neoliberal way in close cooperation with the IMF.

These Chicago boys carried out their radical reform program that was known as shock therapy. This included dismantling social state structures, opening the market to foreign investors and shattering union structures. The military regime kept the population in a constant state of shock with the terror of arrest waves, mass exploitation and testing new torture techniques so the population was too paralyzed to resist the selling off of the public infrastructure and the dismantling of their labor rights.

Subsequently, Friedman and his followers made other authoritarian-governed Latin American states like Argentina, Bolivia, and Brazil into their economic laboratories. He and the Chicago Boys defended their ideas of privatization and deregulation as rational, value-free scientific positions. With this rhetorical evasive action, they could intervene in political-economic ways without assuming any social-political responsibility. According to Friedman who traveled to Chile in 1975 to give advice to Pinochet, the absolute freedom of the market should lead to the freedom of individuals. He publically condemned the violent measures of Pinochet's military junta but accepted the political unfreedom of the population to implement his central ideal of market freedom. He and his supporters also justified the disastrous effects of poverty and unemployment that were consequences of their economic policy. International investors, especially US investors, profited by buying up formerly nationalized businesses and infrastructures sold for a song. .In this historical global perspective, neoliberal policies appear as a project of a neocolonial restructuring of the world in redistribution from bottom to top.

Global Problems Cannot Be Solved on the National Plane

The collaboration of Chicago economists and the International Monetary Fund (IMF) with authoritarian regimes makes clear that the market can be freed from democratic principles. In the following decades, this uncoupling appears in even more insidious policies. The IMF that became the global player of the new debt economy enforced its austerity dictate even under democratic conditions. In this new world economic order, state debts played a key role since the austerity regime of state indebtedness enabled the IMF to exert economic and political influence. Accordingly, the so-called Washington Consensus that earmarked privatization, liberalization, and deregulation was effective worldwide. Therefore, democratically-elected governments that emerged out of resistance against authoritarian regimes were put under pressure by the IMF to carry out brutal austerity measures against their population. This occurred in the shocking moment after political upheavals - as the globalization critic Naomi Klein explained. This happened in the 1990s in Poland after the end of the Soviet Union and after the apartheid regime in South Africa. The IMF used state debts as a powerful lever to force governments to follow the economic course of privatization and deregulation preached by Friedman.

These technocratic, post-democratic forms of government that put states under a global competitive pressure provoke policies of resentment, as the ethnologist Arjun Appadurai emphasizes. With that, the alliance between "market fundamentalism" as the economist Joseph Stiglitz calls absolute faith in the free market and reactionary authoritarian forces becomes a historical vicious circle. The history of the first neoliberal experiments appears as a violent history that extends to the present. The right-wing extremist Jair Bolsonaro in Brazil plans to radically cut the public educational system and simultaneously abandon the ecological resource of the rainforest to the profit-mongering of international conglomerates.

This history continues in Europe. In the last years, leftist protests and partiers directed against the political austerity measures of the European Union were countered with severity. One example is the association of the Euro-group with the Syriza Greek government. The economist and former Greek finance minister Yanis Varoufakis who participated in the 2015 negotiations described how the members of the Euro-group pressed him to agree to additional Greek indebtedness and extend the compulsory austerity measures. The rise of right-wing groups and parties that joined in the governments in Italy, Hungary and - until recently - Austria appears as bitter consequences of the authoritarian demeanor of the EU and shows the nexus of technocratic authoritarianism and reactionary authoritarianism. The appearance of technocrats in charge of things and removed from democratic checks - whether in national governments, on the EU plane or in global institutes like the IMF - empower right-wing forces that stage themselves as "authentic" authorities who represent the "true" will of the people. When social inequalities intensify, it is easier for reactionary movements to orient their abridged globalization criticism to a few scapegoats - migrants, feminism and Islam - and to withdraw into the national on questions of global social possibilities.

The question of whether one supports national protectionism or global financial management is the wrong question. Global problems cannot be solved on the national plane. Taking a global perspective means questioning the dogma of no alternatives, not unconditional advocacy of finance capitalism. If capitalism does not need democracy, then democracy does not need any capitalism. In its history and in the present, the market economy appears as a system of false alternatives. Therefore, the question about the relation between democracy and capitalism must be raised again. Answers are found in the worldwide protest movements - whether the anti-capitalist-feminist Ni-Una-Menos protests in Argentina and Mexico, the Fridays-for-Future movement, in the proposals for a feminism of the 99% or in initiatives of post-growth. The answers are varied. Asking the right questions is crucial.

Translator Marc's note:

Money worship or corporate rule is a false consciousness where caring and sharing are called weaknesses, where human rights and the UN are distractions, where nature is only commodified, where education is reduced to profit bonuses, where privatization is unchallenged and where the state only exists to increase corporate profits.

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You Are Being PLAYED.. Do You Even Realize It? 06.Nov.2019 14:34

Gregory Mannarino

What is missing from the entire spectrum of Democratic hopefuls agenda? A fix to the debt based economic model! All these people are talking about is taxing these, to make it better for these etc.. this WILL NOT WORK! Just moving around debt notes will not fix the core issue which is the debt based economic model.. AND THEY ALL KNOW IT. You are being played.