Part 13 (1/2)

In Latin America, the original Chicago School laboratory, the backlash takes a distinctly more hopeful form. It is not directed at the weak or the vulnerable but focuses squarely on the ideology at the root of economic exclusion. And unlike the situation in Russia and Eastern Europe, there is an irrepressible enthusiasm for trying the ideas that were subverted in the past.

Despite the Bush administration's claim that the twentieth century ended with a ”decisive victory” for free markets over all forms of socialism, many Latin Americans understand perfectly well that it was authoritarian communism that failed in Eastern Europe and parts of Asia. Democratic socialism, meaning not only socialist parties brought to power through elections but also democratically run workplaces and land holdings, has worked in many regions, from Scandinavia to the thriving and historic cooperative economy in Italy's Emilia-Romagna region. It was a version of this combination of democracy and socialism that Allende was attempting to bring to Chile between 1970 and 1973. Gorbachev had a similar, though less radical, vision to turn the Soviet Union into a ”socialist beacon” on the Scandinavian model. South Africa's Freedom Charter, the dream that animated the long liberation struggle, was a version of this same third way: not state communism, but markets existing alongside the nationalization of the banks and mines, with the income used to build comfortable neighborhoods and decent schools-economic as well as political democracy. The workers who founded Solidarity in 1980 pledged to struggle not against socialism but for it, with workers eventually winning the power to run their workplaces and country democratically.

The dirty secret of the neoliberal era is that these ideas were never defeated in a great battle of ideas, nor were they voted down in elections. They were shocked out of the way at key political junctures. When resistance was fierce, they were defeated with overt violence -rolled over by Pinochet's, Yeltsin's and Deng Xiaoping's tanks. At other times, they were simply betrayed through what John Williamson called ”voodoo politics”: the Bolivian president Victor Paz Estenssoro's postelection secret economic team (and ma.s.s kidnapping of union leaders); the ANC's backroom bargaining-away of the Freedom Charter in favor of Thabo Mbeki's top-secret economic program; Solidarity's exhausted adherents succ.u.mbing to economic shock therapy after the elections in exchange for a bailout. It is precisely because the dream of economic equality is so popular, and so difficult to defeat in a fair fight, that the shock doctrine was embraced in the first place.

Was.h.i.+ngton has always regarded democratic socialism as a greater threat than totalitarian Communism, which was easy to vilify and made for a handy enemy. In the sixties and seventies, the favored tactic for dealing with the inconvenient popularity of developmentalism and democratic socialism was to try to equate them with Stalinism, deliberately blurring the clear differences between the worldviews. (Conflating all opposition with terrorism plays a similar role today.) A stark example of this strategy comes from the early days of the Chicago crusade, deep inside the decla.s.sified Chile doc.u.ments. Despite the CIA-funded propaganda campaign painting Allende as a Soviet-style dictator, Was.h.i.+ngton's real concerns about the Allende election 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.”21 In other words, Allende needed to be taken out before his democratic third way spread. In other words, Allende needed to be taken out before his democratic third way spread.

The dream he represented was never defeated. It was, as Walsh noted, temporarily silenced, pushed under the surface by fear. Which is why, as Latin America emerges from its decades of shock, the old ideas are bubbling back up-along with the ”imitative spread” Kissinger so feared. 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 Inacio Lula da Silva was reelected 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 nineties, resorted to appearing in public looking 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, despite disillusionment with the corruption scandals plaguing his government. 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 Union Fenosa after Hurricane Mitch, he a.s.serted, was the source of the problem. ”You, brothers, are suffering the effects of these outages every day!” he bellowed. ”Who brought Union Fenosa to this country? The government of the rich did, those who are in the service of barbarian capitalism.”22 In November 2006, Ecuador's presidential elections turned into a similar ideological battleground. Rafael Correa, a forty-three-year-old left-wing economist, won the vote against Alvaro n.o.boa, a banana tyc.o.o.n and one of the richest men in the country. With Twisted Sister's ”We're Not Going to Take It” as his official campaign song, Correa called for the country ”to overcome all the fallacies of neo-liberalism.” When he won, the new president of Ecuador declared himself ”no fan of Milton Friedman.”23 By then, the 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 multinational ”plunderers,” he moved on to nationalize parts of the mining sector. In this same period in Mexico, the results of the fraud-tainted 2006 elections were being contested through the creation of an unprecedented ”parallel government” of the people, with votes held in the streets and plaza outside the seat of government in Mexico City. In the Mexican state of Oaxaca, the right-wing government sent in riot police to break a strike by teachers who were demanding an annual pay raise. It provoked a statewide rebellion against the corruption of the corporatist state that raged for months. By then, the 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 multinational ”plunderers,” he moved on to nationalize parts of the mining sector. In this same period in Mexico, the results of the fraud-tainted 2006 elections were being contested through the creation of an unprecedented ”parallel government” of the people, with votes held in the streets and plaza outside the seat of government in Mexico City. In the Mexican state of Oaxaca, the right-wing government sent in riot police to break a strike by teachers who were demanding an annual pay raise. It provoked a statewide rebellion against the corruption of the corporatist state that raged for months.

Chile and Argentina are both led by politicians who define themselves against their countries' Chicago School experiments, though the extent to which they provide genuine alternatives remains a subject of intense debate. The symbolism, however, represents its own kind of victory. Several of the people in the cabinet of the Argentine president, Nestor Kirchner, including Kirchner himself, were imprisoned during the dictators.h.i.+p. On March 24, 2006, the thirtieth anniversary of the 1976 military coup, Kirchner addressed demonstrators in the Plaza de Mayo, where the mothers of the disappeared held their weekly vigils. ”We are back,” he declared, referring to the generation that had been terrorized in the seventies. In the huge a.s.sembled crowd, he said, were ”the faces of the 30,000 disappeared companeros returning to this plaza today.”24 Chile's president, Mich.e.l.le Bachelet, was one of the thousands who were victims of Pinochet's reign of terror. In 1975, she and her mother were imprisoned and tortured in Villa Grimaldi, known for its wooden isolation cubicles, so small that prisoners could only crouch. Her father, a military officer, had refused to go along with the coup and was murdered by Pinochet's men. Chile's president, Mich.e.l.le Bachelet, was one of the thousands who were victims of Pinochet's reign of terror. In 1975, she and her mother were imprisoned and tortured in Villa Grimaldi, known for its wooden isolation cubicles, so small that prisoners could only crouch. Her father, a military officer, had refused to go along with the coup and was murdered by Pinochet's men.

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.”25 It was a reference to Eduardo Galeano's book It was a reference to Eduardo Galeano's book Open Veins of Latin America: Five Centuries of the Pillage of a Continent, 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 first 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. a lyrical accounting of the violent plunder that had turned a rich continent into a poor one. The book was first 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 new investments in education, literacy and health care. 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 a.s.sertion 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 militant 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 of the past-the coups, the foreign shock therapists, the U.S.-trained torturers, as well as the debt shocks and currency collapses of the eighties and nineties. Latin America's ma.s.s 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 sixties, making it harder to demobilize whole movements by eliminating a few leaders. Despite the overwhelming cult of personality surrounding Chavez, and his 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 gra.s.s roots and community level, 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 Chavez 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 seventies.

Latin America's new leaders are also taking bold measures to block any future U.S.-backed coups that could attempt to undermine their democratic victories. The governments of Venezuela, Costa Rica, Argentina and Uruguay have all announced that they will no longer send students to the School of the Americas (now called the Western Hemisphere Inst.i.tute 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.26 Bolivia looks set to cut its ties with the school, as does Ecuador. Chavez has let it be known that if an extremist right-wing element in Bolivia's Santa Cruz province makes good on its threats against the government of Evo Morales, Venezuelan troops will help defend Bolivia's democracy. Rafael Correa is set to take the most radical step of all. The Ecuadorean port city of Manta currently hosts the largest U.S. military base in South America, which serves as a staging area for the ”war on drugs,” largely fought in Colombia. Correa's government has announced that when the agreement for the base expires in 2009, it will not be renewed. ”Ecuador is a sovereign nation,” said the minister of foreign relations, Maria Fernanda Espinosa. ”We do not need any foreign troops in our country.” Bolivia looks set to cut its ties with the school, as does Ecuador. Chavez has let it be known that if an extremist right-wing element in Bolivia's Santa Cruz province makes good on its threats against the government of Evo Morales, Venezuelan troops will help defend Bolivia's democracy. Rafael Correa is set to take the most radical step of all. The Ecuadorean port city of Manta currently hosts the largest U.S. military base in South America, which serves as a staging area for the ”war on drugs,” largely fought in Colombia. Correa's government has announced that when the agreement for the base expires in 2009, it will not be renewed. ”Ecuador is a sovereign nation,” said the minister of foreign relations, Maria Fernanda Espinosa. ”We do not need any foreign troops in our country.”27 If the U.S. military does not have bases or training programs, its power to inflict shocks will be greatly eroded. If the U.S. military does not have bases or training programs, its power to inflict shocks will be greatly eroded.

The new leaders in Latin America are also becoming better prepared for the kinds of shocks inflicted 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,” two hundred 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. In a way, the reclamation experiments are a new kind of post-disaster reconstruction- reconstruction from the slow-motion disaster of neoliberalism. In sharp contrast to the model offered by the disaster capitalism complex in Iraq, Afghanistan and the Gulf Coast, the leaders of Latin America's rebuilding efforts are the people most affected by the devastation. And unsurprisingly, their spontaneous solutions look very much like the real third way that had been so effectively shocked out of the way by the Chicago School campaign around the world-democracy in daily life.

In Venezuela, Chavez has made the co-ops 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.28Many 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. Chavez's many critics have derided these initiatives as handouts and unfair subsidies, of course. Yet in an era when Halliburton treats the U.S. 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 grat.i.tude to U.S. taxpayers by moving its corporate headquarters to Dubai (with all the attendant tax and legal benefits), Chavez'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 Was.h.i.+ngton's financial inst.i.tutions, 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, the 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.”29 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 health care 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-fifties, when 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 far less vulnerable to the kind of sudden price fluctuations that devastated Latin American economies in the recent past. 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. 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 health care 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-fifties, when 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 far less vulnerable to the kind of sudden price fluctuations that devastated Latin American economies in the recent past. 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 need to turn to the IMF or the U.S. Treasury for a bailout. That's fortunate because the 2006 U.S. National Security Strategy makes it clear that for Was.h.i.+ngton, 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 doc.u.ment states. ”A refo-cused IMF will strengthen market inst.i.tutions and market discipline over financial decisions.” This kind of ”market discipline” can only be enforced if governments actually go to Was.h.i.+ngton for help-as Stanley Fischer explained during the Asian financial crisis, the IMF can help only if it is asked, ”but when [a country is] out of money, it hasn't got many places to turn.”30 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 Was.h.i.+ngton. 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 Was.h.i.+ngton.