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On the Anti-Democratic Character of Neoliberalism

by Albrecht Mueller Tuesday, Jan. 08, 2008 at 3:37 AM

Privatization, deregulation and cuts in social spending is the trinity of the free market, Naomi Klein explains. The consciou8s production of unemployment is anti-democratic. The conscious worsening of income- and assets distribution is anti-democratic.


By Albrecht Mueller

[This article published in: NachDenkSeiten, December 21, 2007 is translated abridged from the German on the World Wide Web,]

At the year’s end, I offer a few thoughts after reading the Chile-part of Naomi Klein’s “Shock Strategy.” Naomi Klein described the close cooperation between the Chicago Boys around Milton Friedman and the Chilean dictator Pinochet and his henchmen. The representatives of the economic school that considerably influences German economic- and social policy today feverishly awaited the overthrow of the elected president Allende. The new order’s guidelines resembled Milton Friedman’s ideas. “Privatization, deregulation and cuts in social spending is the trinity of the free market,” Naomi Klein explains.

Let me quote from this passage:

“Chile’s economists educated in the US tried to peaceably introduce these concepts in democratic discussions but encountered massive resistance. Then the Chicago Boys and their plans were in a climate that was much more favorable to their radical ideas. In this new era, no one agreed with them except for a handful of men in uniform. Their most steadfast political opponents were either in prison, dead or in flight underground. The spectacle of combat aircraft and death squads ensured that everyone else kept quiet.”

The coup on 9/11/1973 in Chile and the following counter-revolution was the “first concrete victory” of the Chicago School. Chile was the experimental field. Pinochet’s murderous dictatorship was the basis of the experiment.

This collusion provoked indignation from then to today. That indignation ensured the discrediting of this ideology for all time. Nevertheless we witness the opposite.

At that time I remember the many congratulatory addresses on the coup in Chile in Germany’s conservative papers. (A documentation of this and clarification of the question whether there were opposing economic- and social-political arguments would be worth an investigation.)

The ideology tested in the Chilean dictatorship celebrates its partial realization today in many states of Europe and in the European Union. The Lisbon strategy, the Bologna-process, the Lambsdorff paper of 1982 and Agenda 2010 are infected by the same spirit: privatization, deregulation, dismantling the welfare state, stagnation and decline of real mass income on one side and the free floating of soaring top incomes on the other side, denationalization and plundering of public assets in favor of the bank accounts and pockets of the rulers…

Persons still collaborate today in this process of de-solidarity who learned their craft with Pinochet. On page 113 of Naomi Klein’s book, I encountered an old acquaintance: Jose Pinera. He was Pinochet’s minister for labor and mining and implemented the privatization of old age security in 1980. Since the end of the East-West confrontation in Europe, Pinera has pursued his co0nsulting work in Europe… Whoever clicks on his homepage will gain a comprehensive and depressing insight in the dimension and worldwide character of his activities. Pinochet’s labor minister was a ghost-writer of a Red-Green coalition in Germany. I could not even have imagined that ten years ago in a very bad dream. However the parallels even include the terminology. On his personal website, Pinera in May 2004 presented “Agenda Chile 2010.”

One of Pinera’s texts is titled: “On the Way to the Come-of-Age Citizen Reform of Old Age Security in Chile. The Specter of Bankrupt State Pension Systems.” In this article, Pinochet’s labor minister glosses over or whitewashes the situation of privatized pension insurance in Chile in a brazen way. He argues like the proponents of the higher pension age. These proponents stand in the tradition of the violent 1980 experiment in Chile.

The privatization of old age security caused the danger of overwhelming old age poverty in Chile. In a visit to Berlin in January 2005, Ricardo Lagos, president of Chile at that time, referred to this. Another remarkable parallel is the mass unemployment consciously produced in Chile after the coup. In Chile, hundreds of thousands of persons were discharged from the public sector. Milton Friedman recommended this method saying the dismissed “would quickly have new jobs in the private sector that would soon boom when Pinochet removed obstacles now limiting the private market.”

This faith did not come true. However many persons responsible for the rupture of a good economy live in this faith. In Germany, the public sector is thinned out. The restrictive monetary- and fiscal policy gave us a considerable “reserve army” of unemployed in the 1980s, from 1993 and again from 2001. This was not quite as radical as in Chile. But the effect was similar: pressure on the wages and mass income of the working population and soaring profits and assets income. To me, the conscious production of unemployment is anti-democratic.

The conscious worsening of income- and assets-distribution is also anti-democratic. It is no secret that poverty is a vicious cycle and the chance for equal participation of adults and children living in poverty constantly diminishes. Poverty vitiates a democratic life.

The current polemic against the idea that all persons are equal and the consciously pursued division of our society are based on anti-democratic ideas.

In a democracy, the massive plundering of public assets as we experienced it after the 1973 putsch in Chile and experience today in Germany is absolutely intolerable. The selling off of Germany is now mightily underway – because several persons and groups make a fortune. The parallel to the Chile experiment is incontrovertible.

Another example is the consciously pursued dominance of the economy and big money in public life. Beautiful phrases like civil society or promotion of foundations often amount to a de-democratization of public life. Our universities are gradually withdrawn from the influence of the state and handed over to dominant economic groups. The public has to pay more. When public benefits are replaced by enterprises funded by foundations and sponsoring, this is usually connected with the growing influence of financial interests while the interest of the democratic public fades. This is obviously intentional.

Poor Chile has lived through much of this. Many lessons could obviously be learned from Chile. The first lesson is to resist. That is my New Year’s wish.

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