1 00:00:04,880 --> 00:00:07,960 Speaker 1: Welcomed it could happen here a podcast about things falling apart, 2 00:00:08,039 --> 00:00:10,639 Speaker 1: how they came to be that way. I'm your host, 3 00:00:10,720 --> 00:00:13,080 Speaker 1: Christopher Wong, and today we're to impart three of our 4 00:00:13,119 --> 00:00:16,680 Speaker 1: series of Neoliberalism. We're gonna start today with one of 5 00:00:16,720 --> 00:00:20,880 Speaker 1: the most famous episodes in his history of neoliberalism, September eleventh, 6 00:00:21,960 --> 00:00:26,200 Speaker 1: three coup against Salvador Allende. Allende was a democratic socialist 7 00:00:26,200 --> 00:00:28,440 Speaker 1: of a type that has broadly ceased to exist today. 8 00:00:29,000 --> 00:00:31,800 Speaker 1: A committed Marxist to believe that class of society could 9 00:00:31,840 --> 00:00:35,720 Speaker 1: be created by means of electoral democracy, he embarked on 10 00:00:35,760 --> 00:00:39,360 Speaker 1: a campaign drastically more radical than any modern socialist politician 11 00:00:39,640 --> 00:00:43,080 Speaker 1: has done, more than dream of mass nationalizations, in an 12 00:00:43,080 --> 00:00:45,519 Speaker 1: attempt to develop a technical system that would allow the 13 00:00:45,560 --> 00:00:48,440 Speaker 1: government to democratically plan as much of the economy as 14 00:00:48,520 --> 00:00:53,159 Speaker 1: humanly possible. In part, his hand was forced by Chile's workers, 15 00:00:53,479 --> 00:00:56,600 Speaker 1: who had embarked on their own unsancitioned campaign of takeovers 16 00:00:56,600 --> 00:00:59,640 Speaker 1: of minds and factories, which I Andy disapproved of, and 17 00:00:59,680 --> 00:01:02,680 Speaker 1: now ought to bring under the national planning scheme. To 18 00:01:02,760 --> 00:01:07,360 Speaker 1: do this, he brought in British cybernetics theorists Stanford Beer, 19 00:01:07,680 --> 00:01:10,600 Speaker 1: who embarked on an operation called Project Cybersen to collect 20 00:01:10,640 --> 00:01:14,920 Speaker 1: and coordinate information between various factories and allow democratic planning 21 00:01:14,920 --> 00:01:16,840 Speaker 1: at the ground level in a way that would allow 22 00:01:17,319 --> 00:01:21,199 Speaker 1: instantaneous reaction to crises and immediate changes in production levels 23 00:01:21,200 --> 00:01:24,640 Speaker 1: and conditions inside the factories themselves to deal with them. 24 00:01:24,800 --> 00:01:28,240 Speaker 1: All End, for all of Bark's credentials, was fiercely critical 25 00:01:28,280 --> 00:01:31,880 Speaker 1: of the bureaucratization of the USSR, and in particular in 26 00:01:31,920 --> 00:01:35,160 Speaker 1: the economic sphere, the way its planning systems were essentially 27 00:01:35,200 --> 00:01:38,039 Speaker 1: unable to react to local changes quickly in a context 28 00:01:38,440 --> 00:01:42,240 Speaker 1: where plans were only created every five years. Cybersen would 29 00:01:42,240 --> 00:01:45,120 Speaker 1: solve these problems by workers participation at the factory level 30 00:01:45,160 --> 00:01:49,440 Speaker 1: and constant updated data flows to the planning office. As 31 00:01:49,440 --> 00:01:53,360 Speaker 1: the project went on, Beer became progressively more radical. Strike 32 00:01:53,440 --> 00:01:55,720 Speaker 1: by right wing truck workers backed by capitalists in the 33 00:01:55,760 --> 00:01:59,200 Speaker 1: CIA in nine two threatened to grind the nation to 34 00:01:59,240 --> 00:02:04,280 Speaker 1: a halt. In response, workers formed enormous coodonas industrialities or 35 00:02:04,280 --> 00:02:07,960 Speaker 1: industrial belts to help self organized production and bypass the 36 00:02:08,000 --> 00:02:11,440 Speaker 1: striking right wing workers. In coordination with the Andia's government 37 00:02:11,480 --> 00:02:13,920 Speaker 1: and a new cybers In control room, they were able 38 00:02:13,919 --> 00:02:16,720 Speaker 1: to outmaneuver the strike and maintain production and distribution and 39 00:02:16,840 --> 00:02:20,040 Speaker 1: nearly full capacity by tracking where goods were going and 40 00:02:20,080 --> 00:02:23,480 Speaker 1: where they needed to go along what roots. Beer rapidly 41 00:02:23,520 --> 00:02:27,040 Speaker 1: became convinced that quote, the basic answer of cybermntics to 42 00:02:27,040 --> 00:02:29,959 Speaker 1: the question of how the system should be organized is 43 00:02:30,000 --> 00:02:34,480 Speaker 1: that it ought to organize itself, in essence, that cybersen 44 00:02:34,520 --> 00:02:36,600 Speaker 1: should be used to eliminate the bureaucracy in the state 45 00:02:36,760 --> 00:02:41,280 Speaker 1: entirely and allow workers to directly organize production themselves. Now, 46 00:02:42,240 --> 00:02:45,400 Speaker 1: cyberson in theory is what the near leribals claim, at 47 00:02:45,440 --> 00:02:48,560 Speaker 1: least in public, to want, is an anti bureaucratic system 48 00:02:48,639 --> 00:02:51,000 Speaker 1: that uses the centralized control over the means of production 49 00:02:51,000 --> 00:02:54,280 Speaker 1: to combat totalitarianism and ensure that the state respects individual 50 00:02:54,360 --> 00:02:58,040 Speaker 1: rights and liberties. In fact, as if Vengie Monro's put it, 51 00:02:58,520 --> 00:03:00,960 Speaker 1: Pierre and hiek knew each other. As Beer noted in 52 00:03:01,000 --> 00:03:04,120 Speaker 1: his diary, Hayek even complimented him on his vision for 53 00:03:04,120 --> 00:03:07,240 Speaker 1: the cybernetic factory after Beer presented at a conference in 54 00:03:07,320 --> 00:03:10,920 Speaker 1: the nineteen sixty in Illinois. So, naturally, when the system 55 00:03:10,960 --> 00:03:13,720 Speaker 1: was actually implemented, at least in part in Chile, the 56 00:03:13,760 --> 00:03:16,040 Speaker 1: new liberal position was that every single person involved in 57 00:03:16,080 --> 00:03:19,680 Speaker 1: the entire economic exparment needed to be killed. Chile was 58 00:03:19,680 --> 00:03:22,359 Speaker 1: put under economic blockade by the U S and multinational 59 00:03:22,400 --> 00:03:25,919 Speaker 1: corporations with full and neleable support, an ironic position given 60 00:03:25,919 --> 00:03:29,639 Speaker 1: Milton Friedman Hyak and Rope case, pure and absolute opposition 61 00:03:29,680 --> 00:03:33,760 Speaker 1: to economic blockades of South Africa Rhodesia to its eternal shame. 62 00:03:34,040 --> 00:03:36,400 Speaker 1: The a f L C i O S American Institute 63 00:03:36,440 --> 00:03:39,000 Speaker 1: for Free Labor Development provided training and funds to the 64 00:03:39,080 --> 00:03:42,200 Speaker 1: right wing unions that opposed the leftist government and others 65 00:03:42,280 --> 00:03:46,120 Speaker 1: across Latin America. In Chile, working directly with the CIA, 66 00:03:46,440 --> 00:03:48,520 Speaker 1: the a f L C i OS organizations to train 67 00:03:48,560 --> 00:03:51,000 Speaker 1: the right wing truckers. Here's nineteen seventy two strike we've 68 00:03:51,000 --> 00:03:53,520 Speaker 1: already discussed, and he was nineteen seventy three strike would 69 00:03:53,520 --> 00:03:57,800 Speaker 1: pave the way for Pinochet's coup. In many cases, organized labor, 70 00:03:58,000 --> 00:04:00,360 Speaker 1: especially in the US but also in places like Italy, 71 00:04:01,240 --> 00:04:04,400 Speaker 1: spent the seventies battling their own left flank in defensive capital. 72 00:04:05,680 --> 00:04:08,000 Speaker 1: The reward for their services was capital turning around and 73 00:04:08,040 --> 00:04:11,280 Speaker 1: dutting them like a fish. In the eighties, two fought 74 00:04:11,280 --> 00:04:13,600 Speaker 1: a series of battles with his left flank. Disarming the 75 00:04:13,600 --> 00:04:16,000 Speaker 1: mass workers assemblies that had formed in nineteen seventy two 76 00:04:16,000 --> 00:04:18,839 Speaker 1: could have saved him from the coup. The results was 77 00:04:18,880 --> 00:04:22,120 Speaker 1: the other nine eleven, on which day in nineteen seventy three, 78 00:04:22,160 --> 00:04:25,040 Speaker 1: the military overthrew Allende and a coup, and Allende shot 79 00:04:25,080 --> 00:04:28,240 Speaker 1: himself in the presidential palace. The man who would emerge 80 00:04:28,240 --> 00:04:30,240 Speaker 1: on the top of the power struggle in the military 81 00:04:30,279 --> 00:04:34,159 Speaker 1: at the end of the coup was one Augusto Pinochet. Now. 82 00:04:34,320 --> 00:04:36,960 Speaker 1: Pinochet from the beginning had the support of Chile's own 83 00:04:37,000 --> 00:04:40,320 Speaker 1: domestic neoliberals, of which they were a fairly large number. 84 00:04:40,880 --> 00:04:43,080 Speaker 1: Upon taking power, he carried out what would become the 85 00:04:43,080 --> 00:04:48,280 Speaker 1: standard neoliberal program, returning nationalized industries to the capitalists, eliminating 86 00:04:48,279 --> 00:04:52,440 Speaker 1: price controls, and increasing interest rates. But full scale neoliberalism 87 00:04:52,520 --> 00:04:57,159 Speaker 1: didn't come immediately. Inflation, which Pinochet had nominally in large 88 00:04:57,200 --> 00:05:01,480 Speaker 1: part taken power to control, continued debated, and in nineteen 89 00:05:01,520 --> 00:05:04,279 Speaker 1: seventy four Milton Friedman arrived in Chile to argue for 90 00:05:04,360 --> 00:05:08,520 Speaker 1: neoliberal shock therapy. But it wasn't until Pinochet's desperation from 91 00:05:08,520 --> 00:05:10,040 Speaker 1: money drove him to the I m F that he 92 00:05:10,040 --> 00:05:13,919 Speaker 1: would fully embrace neoliberalism. Most of the world had refused 93 00:05:13,920 --> 00:05:16,359 Speaker 1: to do business with new dictatorial regime, with the exception 94 00:05:16,400 --> 00:05:19,480 Speaker 1: of the U S and oddly enough Mao's China, which 95 00:05:19,480 --> 00:05:23,039 Speaker 1: poured money into the regime and Pinochet's personal pockets. But 96 00:05:23,120 --> 00:05:26,279 Speaker 1: that money was insufficient, and the i m F was 97 00:05:26,279 --> 00:05:28,560 Speaker 1: the only remaining body who would actually lend money to 98 00:05:28,560 --> 00:05:32,719 Speaker 1: Pinochet without any requirements on improving Chile's at this point 99 00:05:32,720 --> 00:05:36,360 Speaker 1: a bismo human rights record. Much of the full neoliberal 100 00:05:36,400 --> 00:05:38,720 Speaker 1: turn that hit Chile in nineteen seventy five came from 101 00:05:38,800 --> 00:05:43,120 Speaker 1: demands from the i m F itself, who Demandedconian measures 102 00:05:43,120 --> 00:05:46,760 Speaker 1: to control inflation. Here, Pinochet was aided by the supporter 103 00:05:46,760 --> 00:05:50,160 Speaker 1: of the neoliberals, whose legitimacy and academic standing allowed them 104 00:05:50,160 --> 00:05:52,480 Speaker 1: to negotiate and secure favor from the I m F, 105 00:05:52,560 --> 00:05:55,720 Speaker 1: which they had already begun to infiltrate. At this point, 106 00:05:55,800 --> 00:05:59,440 Speaker 1: the infamous Chicago Boys, economist trains at the University of 107 00:05:59,520 --> 00:06:02,440 Speaker 1: Chicago by Milton Friedman, were put in charge of the economy. 108 00:06:02,920 --> 00:06:06,480 Speaker 1: University of Chicago trained economists. Sergio di Castro, known as 109 00:06:06,480 --> 00:06:08,520 Speaker 1: the Pinochet of the Economy, was put in charge of 110 00:06:08,560 --> 00:06:12,520 Speaker 1: the ministry of economics. The Castro privatized an enormous portion 111 00:06:12,560 --> 00:06:16,480 Speaker 1: of the remaining profitable state industries, eliminated tariffs and implemented 112 00:06:16,520 --> 00:06:20,120 Speaker 1: free trade policies, deregulated the finance sector, and eliminated any 113 00:06:20,160 --> 00:06:23,359 Speaker 1: remaining price controls. Chicago Boys would go on to do 114 00:06:23,440 --> 00:06:26,040 Speaker 1: things like privatizing the entire dele and pension system with 115 00:06:26,080 --> 00:06:28,960 Speaker 1: the exception of the military, which is a good education 116 00:06:29,000 --> 00:06:31,760 Speaker 1: of any as to what the regime thought the actual 117 00:06:31,760 --> 00:06:37,080 Speaker 1: effects of privatization would be. In nineteen Pinochet declared something 118 00:06:37,120 --> 00:06:43,400 Speaker 1: called the Seven Modernizations, with quote reforms in labor, education, health, 119 00:06:43,760 --> 00:06:48,159 Speaker 1: regional decentralization, agriculture, and justice policy. The goal of these 120 00:06:48,200 --> 00:06:51,880 Speaker 1: reforms was to introduce the market into literally every aspect 121 00:06:51,880 --> 00:06:56,039 Speaker 1: of society. Now. In episode one, I very briefly mentioned 122 00:06:56,040 --> 00:07:00,599 Speaker 1: the Virginia School as one of the major schools of deliberalism. 123 00:07:00,640 --> 00:07:03,440 Speaker 1: The Virginia School the people behind public choice theory. Their 124 00:07:03,520 --> 00:07:06,719 Speaker 1: thing is essentially taking the absolutely absurd set of beliefs 125 00:07:06,839 --> 00:07:10,800 Speaker 1: Chicago School holds about people humans are all knowing, rational, 126 00:07:10,880 --> 00:07:13,560 Speaker 1: calculating gods, optimizing their behavior to get the most of 127 00:07:13,600 --> 00:07:17,640 Speaker 1: every single interaction, to maximize the utility, and then applying 128 00:07:17,680 --> 00:07:20,160 Speaker 1: it to political science and then literally every other field. 129 00:07:20,600 --> 00:07:23,000 Speaker 1: If you've ever heard someone say there's no rational reason 130 00:07:23,040 --> 00:07:26,200 Speaker 1: to vote, because if you're a rational, self interested person, 131 00:07:26,280 --> 00:07:28,560 Speaker 1: the cost of voting outweighs that benefit because your vote 132 00:07:28,560 --> 00:07:31,680 Speaker 1: only matters if a deciding one. Therefore, it's against your 133 00:07:31,720 --> 00:07:34,280 Speaker 1: interest to vote. That's the Virginia School and their public 134 00:07:34,320 --> 00:07:39,440 Speaker 1: choice theory bullshit at work. Pinochet's Seven Modernizations was an 135 00:07:39,440 --> 00:07:42,560 Speaker 1: application of Virginia School doctrine to the entire Chilean state 136 00:07:42,600 --> 00:07:45,280 Speaker 1: and as much as the society is humanly possible, with 137 00:07:45,320 --> 00:07:48,200 Speaker 1: the goal of transforming it into a market I'm going 138 00:07:48,280 --> 00:07:50,720 Speaker 1: to read a section from the Road to Mount Pelion 139 00:07:51,120 --> 00:07:57,080 Speaker 1: describing Virginia School titan James M. Buchanan's work. Quote Ineffectual 140 00:07:57,120 --> 00:08:00,120 Speaker 1: consequences in the political market place were blamed solely the 141 00:08:00,160 --> 00:08:04,280 Speaker 1: fallacies of political decision making. Quote. We can summarize public 142 00:08:04,360 --> 00:08:08,160 Speaker 1: choice as a theory of government failure end quote. Buchanan 143 00:08:08,160 --> 00:08:12,240 Speaker 1: delivered a highly abstract paper titled limited or Untitled Democracy 144 00:08:12,280 --> 00:08:15,080 Speaker 1: to the Montpellion Society in Vina del Mar in Chile, 145 00:08:16,520 --> 00:08:19,240 Speaker 1: which some constructed as a critique of the host country's 146 00:08:19,280 --> 00:08:24,600 Speaker 1: mobilization for action history Buchanan stated that if limited democracy 147 00:08:24,680 --> 00:08:27,880 Speaker 1: was a polity predisposed to disable a political market that 148 00:08:27,880 --> 00:08:31,520 Speaker 1: would otherwise promote the most efficient allocation of resources, the 149 00:08:31,600 --> 00:08:34,040 Speaker 1: only meaningful task of the government would be to deprive 150 00:08:34,240 --> 00:08:37,400 Speaker 1: the polity of its ability to do so. Public choice 151 00:08:37,440 --> 00:08:40,600 Speaker 1: theory thus sought to limit democracy and deep politicize the 152 00:08:40,600 --> 00:08:43,439 Speaker 1: state in order to enable unconstrained market forces to guide 153 00:08:43,480 --> 00:08:48,120 Speaker 1: human interaction. Since the Pinochet regime was committed to using 154 00:08:48,160 --> 00:08:52,200 Speaker 1: its governmental powers in precisely this manner, Buchanan's paper provided 155 00:08:52,240 --> 00:08:54,680 Speaker 1: theoretical support for the regime even if it did not 156 00:08:54,760 --> 00:09:08,320 Speaker 1: openly endorsed the authoritarian rule. Jucanan, of course, would spend 157 00:09:08,320 --> 00:09:11,520 Speaker 1: a bunch of time doing lectures in Chile throughout pinochet icatorship, 158 00:09:11,679 --> 00:09:14,640 Speaker 1: but he was not that regime's most vociferous neoliberal supporter. 159 00:09:15,200 --> 00:09:18,320 Speaker 1: That award goes to Frederick Hyak. Chris Hiek, when asked 160 00:09:18,320 --> 00:09:20,960 Speaker 1: about Chile, which had been to Night that blessed with 161 00:09:20,960 --> 00:09:24,240 Speaker 1: his approval quote, A dicatorship can restrict itself in A 162 00:09:24,320 --> 00:09:27,800 Speaker 1: dicatorship which deliberately is restricting itself can be more liberal 163 00:09:27,800 --> 00:09:30,880 Speaker 1: in its politics than a democratic assembly which has due limits. 164 00:09:31,720 --> 00:09:34,920 Speaker 1: Chile's eighty Constitution was drafted in part by one of 165 00:09:35,120 --> 00:09:39,920 Speaker 1: Yek's friends, Chars wrote Road about Pelion Again, the Constitution 166 00:09:40,000 --> 00:09:43,160 Speaker 1: was not only named after hys book The Constitution of Liberty, 167 00:09:43,440 --> 00:09:47,760 Speaker 1: but also incorporated significant elements of hias thinking. Above all, 168 00:09:47,840 --> 00:09:50,960 Speaker 1: the Constitution placed a strong emphasis on a neoliberal understanding 169 00:09:51,000 --> 00:09:54,920 Speaker 1: of freedom. Guzman's version of freedom is intrinsically connected to 170 00:09:54,960 --> 00:10:00,040 Speaker 1: private property, free enterprise, and individual rights. Individual freedom, in 171 00:10:00,120 --> 00:10:03,440 Speaker 1: his interpretation, can only evolve in a radical market order. 172 00:10:03,840 --> 00:10:07,160 Speaker 1: The Constitution was dedicated to guarantee such an order without 173 00:10:07,200 --> 00:10:11,080 Speaker 1: constraining any economic activities. In order to protect free market 174 00:10:11,080 --> 00:10:16,120 Speaker 1: conditions and individual freedoms against totalitarian attacks or democratic interventions. 175 00:10:16,640 --> 00:10:20,200 Speaker 1: The Constitution stipulated a necessity of a strong central state 176 00:10:20,240 --> 00:10:23,160 Speaker 1: authority to guarantee the established rule of law, and thus, 177 00:10:23,720 --> 00:10:27,400 Speaker 1: above all else is hampered in the application of discretionary 178 00:10:27,440 --> 00:10:31,760 Speaker 1: government power. Exempted were measures to uphold the status quo, 179 00:10:31,840 --> 00:10:35,920 Speaker 1: inasmuch as Goosebon aggressively supported continuing the state of emergency, 180 00:10:36,200 --> 00:10:39,720 Speaker 1: which legalized the use of whatever discretionary powers were deemed necessary. 181 00:10:39,800 --> 00:10:44,280 Speaker 1: Quial opposition that Folks is a high achi in Constitution 182 00:10:44,800 --> 00:10:47,280 Speaker 1: used the state to murder any one once democracy or 183 00:10:47,400 --> 00:10:49,959 Speaker 1: God help them, wants to control the production their forced 184 00:10:49,960 --> 00:10:53,720 Speaker 1: to serve every day. Chile is near liberal lousitions vultron 185 00:10:53,920 --> 00:10:56,400 Speaker 1: by com binding the power of all four major schools 186 00:10:56,400 --> 00:11:01,079 Speaker 1: of neoliberalism Chicago School and Monetary and Economic policy, Austrian 187 00:11:01,120 --> 00:11:05,199 Speaker 1: School Constitutional order order, liberal reliance on the international bureaucracy 188 00:11:05,200 --> 00:11:08,079 Speaker 1: and legal institutions like the i m F in order 189 00:11:08,120 --> 00:11:10,880 Speaker 1: to promote a market economy, and Virginia School public choice 190 00:11:10,920 --> 00:11:14,520 Speaker 1: theory running the state, you get a neoliberal, right wing 191 00:11:14,559 --> 00:11:19,520 Speaker 1: military dictatorship. Now most conventional accounts of neoliberalism will move 192 00:11:19,840 --> 00:11:24,280 Speaker 1: from Chile to Reagan and Thatcher and next episode will 193 00:11:24,280 --> 00:11:26,720 Speaker 1: cover the neoliberal kind of revolution in the angle sphere. 194 00:11:27,840 --> 00:11:31,240 Speaker 1: But focusing on purely national events gives a skewed perception 195 00:11:31,280 --> 00:11:36,199 Speaker 1: of how neoliberalism actually spreads, and in order to correct that, 196 00:11:36,240 --> 00:11:38,599 Speaker 1: we're going to look at Venezuela. I'm going to be 197 00:11:38,679 --> 00:11:41,319 Speaker 1: drawing heavily here from the work of the legendary Venezuelan 198 00:11:41,360 --> 00:11:44,480 Speaker 1: anthropologist Fernando Coren Neil in his book The Magical State, 199 00:11:44,520 --> 00:11:46,400 Speaker 1: which I highly recommend as one of the best things 200 00:11:46,440 --> 00:11:49,439 Speaker 1: that are written about oil and the Venezuelan state. So 201 00:11:50,000 --> 00:11:53,120 Speaker 1: readers be warned. Chapter one is an absolute slog that, 202 00:11:53,160 --> 00:11:54,520 Speaker 1: on the one hand, is one of the most interesting 203 00:11:54,520 --> 00:11:57,360 Speaker 1: explanations of what oiler rents are have ever encountered, but 204 00:11:57,480 --> 00:12:00,920 Speaker 1: also features Coreneal inventing a new tri electic and then 205 00:12:00,920 --> 00:12:04,160 Speaker 1: stubbornly refusing to explain what it is or literally anything 206 00:12:04,160 --> 00:12:07,360 Speaker 1: about how it works. So read the Magical State skip 207 00:12:07,440 --> 00:12:12,559 Speaker 1: chapter one now the guiding principles of the new mass capitalists, 208 00:12:12,840 --> 00:12:16,480 Speaker 1: democratic parties and posted statorship. Venezuela since the nineties sixties 209 00:12:16,920 --> 00:12:21,040 Speaker 1: had been developing sovereignty by economic independence. The keystone of 210 00:12:21,080 --> 00:12:22,960 Speaker 1: this project was an attempt to use the power of 211 00:12:22,960 --> 00:12:26,000 Speaker 1: the state in new oil rents to develop an automotive industry. 212 00:12:27,520 --> 00:12:30,679 Speaker 1: The project has sort of stalled out from its origins 213 00:12:30,679 --> 00:12:32,760 Speaker 1: in the sixties until the rise of the G seventy 214 00:12:32,800 --> 00:12:35,760 Speaker 1: seven Opeque Alliance in nineteen nineteen seventy four that we 215 00:12:35,800 --> 00:12:39,920 Speaker 1: discussed last episode. In nineteen seventy five, Venezuela's Assembly passed 216 00:12:39,920 --> 00:12:43,160 Speaker 1: a law that granted the president's special powers to speed 217 00:12:43,240 --> 00:12:46,320 Speaker 1: up the developments of the Auto Industry CORP. The Auto 218 00:12:46,360 --> 00:12:51,080 Speaker 1: Industry in Venezuela Corinial described it thus quote, The central 219 00:12:51,080 --> 00:12:54,400 Speaker 1: goal was to have the vehicle's value, including the drive train, 220 00:12:54,480 --> 00:12:59,520 Speaker 1: produced locally. Nive major components would be produced by enterprises 221 00:12:59,520 --> 00:13:02,920 Speaker 1: having at LEAs fifty of their capital from local private sources. 222 00:13:03,679 --> 00:13:06,360 Speaker 1: Existing foreign companies would have to become mixed or national 223 00:13:06,400 --> 00:13:09,040 Speaker 1: firms in accord within day impact regulations if they wanted 224 00:13:09,040 --> 00:13:13,240 Speaker 1: to benefit from the common market. Now, this plan is 225 00:13:13,240 --> 00:13:16,959 Speaker 1: what's called industrial import substitution. Developing countries would attempt to 226 00:13:16,960 --> 00:13:20,120 Speaker 1: develop industries, in this case, auto manufacturers inside of a 227 00:13:20,120 --> 00:13:23,040 Speaker 1: country to produce cars for internal consumption instead of importing 228 00:13:23,080 --> 00:13:26,120 Speaker 1: them from other countries. The other key of this plan 229 00:13:26,200 --> 00:13:31,079 Speaker 1: is Danda Impact, an association of Bolivia, Columbia, Ecuador, Peru 230 00:13:31,280 --> 00:13:35,400 Speaker 1: and Chile that was collaborating to develop a regional industrial economy. 231 00:13:35,400 --> 00:13:38,760 Speaker 1: That we use local resources to build a local industrial 232 00:13:38,760 --> 00:13:41,960 Speaker 1: economy producing industrial goods made entirely inside of the countries 233 00:13:41,960 --> 00:13:46,199 Speaker 1: themselves from their resources. Now, Venezuela joins the pact in 234 00:13:46,280 --> 00:13:49,720 Speaker 1: nineteen seventy three and Pinochet notably leaves in ninety seven. 235 00:13:50,600 --> 00:13:53,200 Speaker 1: The key sticking points in this joint and day Impact 236 00:13:53,240 --> 00:13:56,880 Speaker 1: Venezuela attempt to build an auto industry was that Venezuela 237 00:13:56,920 --> 00:13:59,920 Speaker 1: needed technology held by multinational corporations in order to act 238 00:14:00,200 --> 00:14:03,600 Speaker 1: produced the vehicles. Multinational car companies were willing to go 239 00:14:03,640 --> 00:14:05,760 Speaker 1: ahead with the project to build cars in Venezuela in 240 00:14:05,800 --> 00:14:07,959 Speaker 1: the short term because they were hurting from the oil shock, 241 00:14:08,000 --> 00:14:10,520 Speaker 1: and thus we're willing to help national plans develop cars 242 00:14:10,840 --> 00:14:12,520 Speaker 1: as long as they could use the parts to build 243 00:14:12,559 --> 00:14:14,640 Speaker 1: their own cars with parts sourced from around the world. 244 00:14:15,720 --> 00:14:18,520 Speaker 1: And this is where the neoliberal defensive intellectual property rights 245 00:14:18,520 --> 00:14:21,400 Speaker 1: becomes extremely important, because the companies who held the patents 246 00:14:21,400 --> 00:14:24,440 Speaker 1: for the drive trains essentially had a technological strangleholder for 247 00:14:24,520 --> 00:14:38,920 Speaker 1: car developments. Now, Venezuela conducted an extensive bidding process for 248 00:14:38,960 --> 00:14:42,520 Speaker 1: companies to make cars in Venezuela, but the car companies 249 00:14:42,640 --> 00:14:46,480 Speaker 1: essentially sabotaged it by submitting designs that failed specs. The 250 00:14:46,560 --> 00:14:50,120 Speaker 1: result was a kind of political war inside Venezuela and 251 00:14:50,360 --> 00:14:53,600 Speaker 1: particularly inside the Venezuela and ruling class, between national developments 252 00:14:53,600 --> 00:14:59,040 Speaker 1: and international profits. The Venezuelan developmentalists needed a breakthrough. What 253 00:14:59,160 --> 00:15:02,320 Speaker 1: they needed, and that's was new international economic order and 254 00:15:02,360 --> 00:15:09,080 Speaker 1: its corporate regulations, debt relief, and technology transfers. Without them, 255 00:15:09,120 --> 00:15:12,120 Speaker 1: even a third world country like Venezuela flush with oil 256 00:15:12,160 --> 00:15:16,760 Speaker 1: money was incapable of developing an industrial economy. But the 257 00:15:16,800 --> 00:15:20,680 Speaker 1: new international economic order never came. All the G seven 258 00:15:20,680 --> 00:15:22,480 Speaker 1: had to do in order to stop it was stalled 259 00:15:22,520 --> 00:15:25,680 Speaker 1: the G seventy seven out until commodity power faded. The 260 00:15:25,720 --> 00:15:28,320 Speaker 1: G seventy seven had to fundamentally change the structure of 261 00:15:28,320 --> 00:15:30,920 Speaker 1: the economy in order to allow them to industrialize before 262 00:15:30,920 --> 00:15:33,800 Speaker 1: the sort of damocles hanging over all their heads the 263 00:15:33,840 --> 00:15:37,720 Speaker 1: mounting Third World debt fell and decapitated them. The G 264 00:15:37,880 --> 00:15:40,280 Speaker 1: seven strategy to outlast the G seventy seven was to 265 00:15:40,280 --> 00:15:43,160 Speaker 1: pull the various factions to the seventy seven apart, in 266 00:15:43,200 --> 00:15:46,400 Speaker 1: particular pulling the moderate governments away from the radical wing 267 00:15:47,160 --> 00:15:50,320 Speaker 1: of OPEC and the African Socialists. They attacked OPEC by 268 00:15:50,400 --> 00:15:53,240 Speaker 1: using Saudi Arabia to undermine its unity and attempted to 269 00:15:53,320 --> 00:15:56,800 Speaker 1: peel the so called less developed countries away from their 270 00:15:56,800 --> 00:16:00,000 Speaker 1: alliance with OPEC with a promise of aid to patch 271 00:16:00,040 --> 00:16:03,880 Speaker 1: up the damage dealt by increased oil prices. Neither worked 272 00:16:03,880 --> 00:16:06,720 Speaker 1: incredibly well, but when combined with the US essentially shutting 273 00:16:06,760 --> 00:16:08,800 Speaker 1: the U N down by refusing to let any business 274 00:16:08,800 --> 00:16:13,360 Speaker 1: get done, refusing to vote for or even vetoing routine matters. 275 00:16:13,840 --> 00:16:19,320 Speaker 1: The stalling worked, no new international economic order was forthcoming. Instead, 276 00:16:19,760 --> 00:16:24,480 Speaker 1: the world would get neoliberalism. Neoliberalism arrived on the world 277 00:16:24,520 --> 00:16:27,880 Speaker 1: stage in the form of the Vulcar Shock. In ninety nine, 278 00:16:27,960 --> 00:16:30,440 Speaker 1: Jimmy Carter appointed Paul Vulcar as the Chairman of the 279 00:16:30,480 --> 00:16:32,760 Speaker 1: Federal Reserve for the broad mandate to do whatever he 280 00:16:32,840 --> 00:16:37,400 Speaker 1: wanted to reduce inflation. Vulcar had become a disciple of monitorism, 281 00:16:37,440 --> 00:16:39,800 Speaker 1: a Freedman Night Chicago School belief about the role of 282 00:16:39,840 --> 00:16:42,440 Speaker 1: the money supply in the economy, considered to be absolutely 283 00:16:42,440 --> 00:16:46,120 Speaker 1: crank even by modern neoliberals. His solution, which became known 284 00:16:46,120 --> 00:16:50,040 Speaker 1: as the Vulcar Shock, was to increase interest rate. This 285 00:16:50,200 --> 00:16:52,880 Speaker 1: essentially blew a crater in the American economy and immediately 286 00:16:52,880 --> 00:16:55,240 Speaker 1: sent it into recession. And we'll get to Vulcar at 287 00:16:55,240 --> 00:16:57,960 Speaker 1: Reagan's efforts to destroy American labor in the next episode. 288 00:16:58,320 --> 00:17:01,040 Speaker 1: But the damage to the Third World was even worse. 289 00:17:02,280 --> 00:17:06,240 Speaker 1: G seventy seven governments had for decades taking on adjustable 290 00:17:06,320 --> 00:17:09,600 Speaker 1: rate loans pecked to something called the libor rate. When 291 00:17:09,600 --> 00:17:12,360 Speaker 1: they took the loans out, interest rates were virtually negative, 292 00:17:12,600 --> 00:17:16,080 Speaker 1: but when the vulgar shock hit, they skyrocketed. Now, as 293 00:17:16,080 --> 00:17:18,440 Speaker 1: we talked about last episode, a major part of the 294 00:17:18,480 --> 00:17:21,000 Speaker 1: crisis of the seventies was enormous piles of oil money, 295 00:17:21,080 --> 00:17:24,120 Speaker 1: mostly from the Gulf States, floating around that nobody could 296 00:17:24,240 --> 00:17:27,600 Speaker 1: actually get returns on because of declining manufacturing profit rates. 297 00:17:27,920 --> 00:17:30,720 Speaker 1: This money wound up flowing back into the American finance system. 298 00:17:30,720 --> 00:17:34,520 Speaker 1: When capital controls are lifted nineteen seventy, the banks through 299 00:17:34,520 --> 00:17:36,680 Speaker 1: the money at loans in the Third World. Now, some 300 00:17:36,760 --> 00:17:38,960 Speaker 1: of that money had been put into industrial development that 301 00:17:38,960 --> 00:17:41,159 Speaker 1: had yet to pay off. Some of the money had 302 00:17:41,200 --> 00:17:44,480 Speaker 1: simply been put directly into dictators bank accounts, but the 303 00:17:44,480 --> 00:17:46,840 Speaker 1: bank's essentially didn't care if the loans they were making 304 00:17:46,880 --> 00:17:49,440 Speaker 1: had little to no chance of being repaid without some 305 00:17:49,520 --> 00:17:53,520 Speaker 1: kind of structure reformed. Because in control of the I 306 00:17:53,680 --> 00:17:56,720 Speaker 1: m F fell to an arch neo liberal name Jacquis 307 00:17:56,760 --> 00:17:59,320 Speaker 1: de la Rosier. I really don't know if that's how 308 00:17:59,359 --> 00:18:02,840 Speaker 1: to pronounced his name, but he is evil. So neo 309 00:18:02,880 --> 00:18:04,840 Speaker 1: liberals further took control of the World Bank in nine. 310 00:18:06,160 --> 00:18:07,800 Speaker 1: From the I m F and the World Bank, a 311 00:18:07,840 --> 00:18:10,480 Speaker 1: secession of new liberals enshrined the key principle of the 312 00:18:10,480 --> 00:18:14,040 Speaker 1: new neoliberal order, debtors must always pay back their debts. 313 00:18:14,440 --> 00:18:17,400 Speaker 1: Creditors would no longer assume risk for their loans. Instead, 314 00:18:17,600 --> 00:18:20,640 Speaker 1: loans would be repaid at gunpoint. This was no mere 315 00:18:20,720 --> 00:18:24,359 Speaker 1: rhetorical slogan, as the G seventy seven imploded as a 316 00:18:24,400 --> 00:18:26,639 Speaker 1: political body under the weight of hundreds of billions of 317 00:18:26,680 --> 00:18:31,120 Speaker 1: dollars of debt now with interest. Thomas Sankara, the socialist 318 00:18:31,119 --> 00:18:34,560 Speaker 1: president of Burkina Fosso, attempted to rally its remains to 319 00:18:34,680 --> 00:18:38,399 Speaker 1: collectively negotiate debt relief. Sakara was promptly shot by a 320 00:18:38,400 --> 00:18:41,960 Speaker 1: former ally who accused him of threatening Burkina Fossils relationship 321 00:18:42,000 --> 00:18:45,600 Speaker 1: with France. With all resistance slaughtered, entire nations were reduced 322 00:18:45,600 --> 00:18:49,160 Speaker 1: to debt servicing machines as tax dollars were directed from health, education, 323 00:18:49,560 --> 00:18:52,959 Speaker 1: and social security programs into the coffers of international banks, 324 00:18:53,440 --> 00:18:56,600 Speaker 1: which used the newly neo liberal controlled International Monetary Fund 325 00:18:56,640 --> 00:19:00,280 Speaker 1: as their enforcer. The anthropologist David graeber Is write the 326 00:19:00,320 --> 00:19:03,159 Speaker 1: consequence of one such IMF austerity program in debt the 327 00:19:03,160 --> 00:19:07,000 Speaker 1: first five thousand years quote. For almost two years I 328 00:19:07,080 --> 00:19:10,520 Speaker 1: had lived in the highlands of Madagascar. Shortly before I arrived, 329 00:19:10,560 --> 00:19:12,800 Speaker 1: there had been an outbreak of malaria. It was a 330 00:19:12,840 --> 00:19:15,720 Speaker 1: particularly virulent outbreak because malaria had been wiped out in 331 00:19:15,800 --> 00:19:19,320 Speaker 1: Highlight Madagascar many years before, so that after a couple 332 00:19:19,320 --> 00:19:22,760 Speaker 1: of generations, most people had lost their immunity. The problem 333 00:19:22,840 --> 00:19:25,760 Speaker 1: was it took money to maintain those mosquito radication programs, 334 00:19:25,760 --> 00:19:27,600 Speaker 1: since there had to be periodic tests to make sure 335 00:19:27,600 --> 00:19:30,959 Speaker 1: mosquitoes weren't starting to breed again, and spraying campaigns if 336 00:19:30,960 --> 00:19:33,680 Speaker 1: it was discovered that they were not a lot of money. 337 00:19:34,359 --> 00:19:37,600 Speaker 1: But owing to IMF and post austerity programs, the government 338 00:19:37,640 --> 00:19:41,000 Speaker 1: had to cut the monitoring program. Ten thousand people died. 339 00:19:41,560 --> 00:19:45,120 Speaker 1: I met young mothers grieving for lost children. One might 340 00:19:45,119 --> 00:19:46,480 Speaker 1: think it would be hard to make a case that 341 00:19:46,560 --> 00:19:49,080 Speaker 1: the loss of ten thou human lives is really justified 342 00:19:49,119 --> 00:19:51,040 Speaker 1: in order to ensure that City Bank wouldn't have to 343 00:19:51,080 --> 00:19:53,760 Speaker 1: cut his losses on one irresponsible loan that wasn't particularly 344 00:19:53,800 --> 00:19:57,680 Speaker 1: important to its balance sheet anyways. Following the old older 345 00:19:57,760 --> 00:20:01,399 Speaker 1: liberal dream of a legal framework to ensure neoliberal market economies, 346 00:20:02,280 --> 00:20:04,520 Speaker 1: the new generation of neoliberals used the I m F, 347 00:20:04,680 --> 00:20:07,520 Speaker 1: World Bank and other bureaucratic institutions to act as dead 348 00:20:07,640 --> 00:20:11,560 Speaker 1: enforcers and the imposed neoliberal policies from above, without anything 349 00:20:11,560 --> 00:20:15,159 Speaker 1: so petty as democracy interfering with it. In fact, one 350 00:20:15,240 --> 00:20:18,680 Speaker 1: of the first neoliberal structural adjustments, one of a bewildering 351 00:20:18,760 --> 00:20:20,720 Speaker 1: new array of terms for I M F and forced 352 00:20:20,760 --> 00:20:24,960 Speaker 1: austerity programs, was implemented by the Jamaican socialist Michael Manly 353 00:20:25,000 --> 00:20:28,840 Speaker 1: in nineteen seventy seven, which in a single year wiped 354 00:20:28,880 --> 00:20:31,159 Speaker 1: out every gain in education of public health that Madly 355 00:20:31,200 --> 00:20:34,480 Speaker 1: had spent his first term building up. Similar faith would 356 00:20:34,480 --> 00:20:37,800 Speaker 1: be fall health, education, and justice programs across the world. 357 00:20:38,400 --> 00:20:43,199 Speaker 1: The death toll remains unknown. Venezuela would fall victim to 358 00:20:43,280 --> 00:20:48,040 Speaker 1: a similar fate. Without the new international economic order, Venezuela's 359 00:20:48,040 --> 00:20:52,600 Speaker 1: industrial policy imploded as post VOLCRA shock government debt skyrocketed 360 00:20:53,560 --> 00:20:56,000 Speaker 1: in the nineteen eighties, the government began to impose ims 361 00:20:56,000 --> 00:20:59,960 Speaker 1: structural adjustments. Carlos Andres Perez, the man who led the 362 00:21:00,000 --> 00:21:02,960 Speaker 1: industrial pushing in the nineteen seventies, was elected a second 363 00:21:03,000 --> 00:21:05,280 Speaker 1: time in nineteen eighty nine, running a campaign that I've 364 00:21:05,280 --> 00:21:11,000 Speaker 1: seen euphemistically described as quote against liberalization policy. It was 365 00:21:11,560 --> 00:21:15,000 Speaker 1: somewhat more extreme than that, featuring lines such as calling 366 00:21:15,040 --> 00:21:17,720 Speaker 1: the I M f quote a bomb that only kills people, 367 00:21:18,880 --> 00:21:21,119 Speaker 1: But Perez was negotiating with the I M F behind 368 00:21:21,119 --> 00:21:23,520 Speaker 1: the scenes and imposed even harsher I m F Asteria 369 00:21:23,520 --> 00:21:26,680 Speaker 1: measures upon winning the election, leading to a mass uprising 370 00:21:26,720 --> 00:21:28,920 Speaker 1: in nineteen eighty nine that was suppressed in a bath 371 00:21:29,000 --> 00:21:32,280 Speaker 1: of blood, with hundreds killed by the army. But even 372 00:21:32,320 --> 00:21:35,119 Speaker 1: more structural adjustments were imposed after Perez was deposed for 373 00:21:35,160 --> 00:21:40,399 Speaker 1: corruption nineteen, implemented ironically by the founder of the Movement 374 00:21:40,400 --> 00:21:44,639 Speaker 1: towards Socialism, Teodoro Petkoff, the head of Venezuela's planning agency 375 00:21:44,640 --> 00:21:48,719 Speaker 1: in nineteen ninety six. All of Venezuela's economic crisis from 376 00:21:48,720 --> 00:21:51,720 Speaker 1: the nineteen eighties until now stem from the failures of 377 00:21:51,800 --> 00:21:56,520 Speaker 1: nineteen seventies industrialization. Without any kind of industrial economy, even 378 00:21:56,520 --> 00:21:59,160 Speaker 1: the socialists that took power in the nine on national 379 00:21:59,280 --> 00:22:03,119 Speaker 1: level were reduced to shuffling oil rents around, and with 380 00:22:03,200 --> 00:22:05,879 Speaker 1: the market economy still in place, the economy is simply 381 00:22:05,880 --> 00:22:08,920 Speaker 1: imploded again when the loyal prices fell. This is how 382 00:22:08,960 --> 00:22:13,159 Speaker 1: neoliberalism comes to most countries, not as policies implemented by 383 00:22:13,160 --> 00:22:16,639 Speaker 1: anything even remotely resembling the will of the people, but 384 00:22:16,800 --> 00:22:19,960 Speaker 1: enforced by the international economic system itself and the bureaucrats 385 00:22:20,040 --> 00:22:22,200 Speaker 1: the I m F, the World Bank, and the World 386 00:22:22,200 --> 00:22:26,760 Speaker 1: Trade Organization. It is imposed by enormous states at gunpoints, 387 00:22:26,800 --> 00:22:29,400 Speaker 1: constituted by the mass looting of the population in order 388 00:22:29,400 --> 00:22:33,440 Speaker 1: to pay corporate debt. Masters new liberals have effectively achieved 389 00:22:33,480 --> 00:22:37,320 Speaker 1: their goal and transcendent democratic politics entirely from their purchase 390 00:22:37,359 --> 00:22:40,120 Speaker 1: in the international bureaucracy. They can dictate policy to even 391 00:22:40,160 --> 00:22:43,760 Speaker 1: hostile leaders. But tomorrow we'll see what happens when they 392 00:22:43,800 --> 00:22:46,720 Speaker 1: take power domestically. As we would conclude our Neoliberalism series 393 00:22:46,720 --> 00:22:50,600 Speaker 1: with a man rotting in Hell with Paul Bulger Ronald Reagan. 394 00:22:55,160 --> 00:22:57,520 Speaker 1: It could Happen here the production of cool Zone Media. 395 00:22:57,760 --> 00:23:00,680 Speaker 1: For more podcasts from cool Zone Media, visitor website cool 396 00:23:00,720 --> 00:23:02,679 Speaker 1: zone media dot com, or check us out on the 397 00:23:02,720 --> 00:23:05,440 Speaker 1: I Heart Radio app, Apple Podcasts, or wherever you listen 398 00:23:05,480 --> 00:23:08,399 Speaker 1: to podcasts. You can find sources for It could Happen here, 399 00:23:08,480 --> 00:23:12,120 Speaker 1: updated monthly at cool zone Media dot com slash sources. 400 00:23:12,119 --> 00:23:12,960 Speaker 1: Thanks for listening.