WEBVTT - Neoliberalism Part 3: Where is Paul Volker 0:00:04.880 --> 0:00:07.960 Welcomed it could happen here a podcast about things falling apart, 0:00:08.039 --> 0:00:10.639 how they came to be that way. I'm your host, 0:00:10.720 --> 0:00:13.080 Christopher Wong, and today we're to impart three of our 0:00:13.119 --> 0:00:16.680 series of Neoliberalism. We're gonna start today with one of 0:00:16.720 --> 0:00:20.880 the most famous episodes in his history of neoliberalism, September eleventh, 0:00:21.960 --> 0:00:26.200 three coup against Salvador Allende. Allende was a democratic socialist 0:00:26.200 --> 0:00:28.440 of a type that has broadly ceased to exist today. 0:00:29.000 --> 0:00:31.800 A committed Marxist to believe that class of society could 0:00:31.840 --> 0:00:35.720 be created by means of electoral democracy, he embarked on 0:00:35.760 --> 0:00:39.360 a campaign drastically more radical than any modern socialist politician 0:00:39.640 --> 0:00:43.080 has done, more than dream of mass nationalizations, in an 0:00:43.080 --> 0:00:45.519 attempt to develop a technical system that would allow the 0:00:45.560 --> 0:00:48.440 government to democratically plan as much of the economy as 0:00:48.520 --> 0:00:53.159 humanly possible. In part, his hand was forced by Chile's workers, 0:00:53.479 --> 0:00:56.600 who had embarked on their own unsancitioned campaign of takeovers 0:00:56.600 --> 0:00:59.640 of minds and factories, which I Andy disapproved of, and 0:00:59.680 --> 0:01:02.680 now ought to bring under the national planning scheme. To 0:01:02.760 --> 0:01:07.360 do this, he brought in British cybernetics theorists Stanford Beer, 0:01:07.680 --> 0:01:10.600 who embarked on an operation called Project Cybersen to collect 0:01:10.640 --> 0:01:14.920 and coordinate information between various factories and allow democratic planning 0:01:14.920 --> 0:01:16.840 at the ground level in a way that would allow 0:01:17.319 --> 0:01:21.199 instantaneous reaction to crises and immediate changes in production levels 0:01:21.200 --> 0:01:24.640 and conditions inside the factories themselves to deal with them. 0:01:24.800 --> 0:01:28.240 All End, for all of Bark's credentials, was fiercely critical 0:01:28.280 --> 0:01:31.880 of the bureaucratization of the USSR, and in particular in 0:01:31.920 --> 0:01:35.160 the economic sphere, the way its planning systems were essentially 0:01:35.200 --> 0:01:38.039 unable to react to local changes quickly in a context 0:01:38.440 --> 0:01:42.240 where plans were only created every five years. Cybersen would 0:01:42.240 --> 0:01:45.120 solve these problems by workers participation at the factory level 0:01:45.160 --> 0:01:49.440 and constant updated data flows to the planning office. As 0:01:49.440 --> 0:01:53.360 the project went on, Beer became progressively more radical. Strike 0:01:53.440 --> 0:01:55.720 by right wing truck workers backed by capitalists in the 0:01:55.760 --> 0:01:59.200 CIA in nine two threatened to grind the nation to 0:01:59.240 --> 0:02:04.280 a halt. In response, workers formed enormous coodonas industrialities or 0:02:04.280 --> 0:02:07.960 industrial belts to help self organized production and bypass the 0:02:08.000 --> 0:02:11.440 striking right wing workers. In coordination with the Andia's government 0:02:11.480 --> 0:02:13.920 and a new cybers In control room, they were able 0:02:13.919 --> 0:02:16.720 to outmaneuver the strike and maintain production and distribution and 0:02:16.840 --> 0:02:20.040 nearly full capacity by tracking where goods were going and 0:02:20.080 --> 0:02:23.480 where they needed to go along what roots. Beer rapidly 0:02:23.520 --> 0:02:27.040 became convinced that quote, the basic answer of cybermntics to 0:02:27.040 --> 0:02:29.959 the question of how the system should be organized is 0:02:30.000 --> 0:02:34.480 that it ought to organize itself, in essence, that cybersen 0:02:34.520 --> 0:02:36.600 should be used to eliminate the bureaucracy in the state 0:02:36.760 --> 0:02:41.280 entirely and allow workers to directly organize production themselves. Now, 0:02:42.240 --> 0:02:45.400 cyberson in theory is what the near leribals claim, at 0:02:45.440 --> 0:02:48.560 least in public, to want, is an anti bureaucratic system 0:02:48.639 --> 0:02:51.000 that uses the centralized control over the means of production 0:02:51.000 --> 0:02:54.280 to combat totalitarianism and ensure that the state respects individual 0:02:54.360 --> 0:02:58.040 rights and liberties. In fact, as if Vengie Monro's put it, 0:02:58.520 --> 0:03:00.960 Pierre and hiek knew each other. As Beer noted in 0:03:01.000 --> 0:03:04.120 his diary, Hayek even complimented him on his vision for 0:03:04.120 --> 0:03:07.240 the cybernetic factory after Beer presented at a conference in 0:03:07.320 --> 0:03:10.920 the nineteen sixty in Illinois. So, naturally, when the system 0:03:10.960 --> 0:03:13.720 was actually implemented, at least in part in Chile, the 0:03:13.760 --> 0:03:16.040 new liberal position was that every single person involved in 0:03:16.080 --> 0:03:19.680 the entire economic exparment needed to be killed. Chile was 0:03:19.680 --> 0:03:22.359 put under economic blockade by the U S and multinational 0:03:22.400 --> 0:03:25.919 corporations with full and neleable support, an ironic position given 0:03:25.919 --> 0:03:29.639 Milton Friedman Hyak and Rope case, pure and absolute opposition 0:03:29.680 --> 0:03:33.760 to economic blockades of South Africa Rhodesia to its eternal shame. 0:03:34.040 --> 0:03:36.400 The a f L C i O S American Institute 0:03:36.440 --> 0:03:39.000 for Free Labor Development provided training and funds to the 0:03:39.080 --> 0:03:42.200 right wing unions that opposed the leftist government and others 0:03:42.280 --> 0:03:46.120 across Latin America. In Chile, working directly with the CIA, 0:03:46.440 --> 0:03:48.520 the a f L C i OS organizations to train 0:03:48.560 --> 0:03:51.000 the right wing truckers. Here's nineteen seventy two strike we've 0:03:51.000 --> 0:03:53.520 already discussed, and he was nineteen seventy three strike would 0:03:53.520 --> 0:03:57.800 pave the way for Pinochet's coup. In many cases, organized labor, 0:03:58.000 --> 0:04:00.360 especially in the US but also in places like Italy, 0:04:01.240 --> 0:04:04.400 spent the seventies battling their own left flank in defensive capital. 0:04:05.680 --> 0:04:08.000 The reward for their services was capital turning around and 0:04:08.040 --> 0:04:11.280 dutting them like a fish. In the eighties, two fought 0:04:11.280 --> 0:04:13.600 a series of battles with his left flank. Disarming the 0:04:13.600 --> 0:04:16.000 mass workers assemblies that had formed in nineteen seventy two 0:04:16.000 --> 0:04:18.839 could have saved him from the coup. The results was 0:04:18.880 --> 0:04:22.120 the other nine eleven, on which day in nineteen seventy three, 0:04:22.160 --> 0:04:25.040 the military overthrew Allende and a coup, and Allende shot 0:04:25.080 --> 0:04:28.240 himself in the presidential palace. The man who would emerge 0:04:28.240 --> 0:04:30.240 on the top of the power struggle in the military 0:04:30.279 --> 0:04:34.159 at the end of the coup was one Augusto Pinochet. Now. 0:04:34.320 --> 0:04:36.960 Pinochet from the beginning had the support of Chile's own 0:04:37.000 --> 0:04:40.320 domestic neoliberals, of which they were a fairly large number. 0:04:40.880 --> 0:04:43.080 Upon taking power, he carried out what would become the 0:04:43.080 --> 0:04:48.280 standard neoliberal program, returning nationalized industries to the capitalists, eliminating 0:04:48.279 --> 0:04:52.440 price controls, and increasing interest rates. But full scale neoliberalism 0:04:52.520 --> 0:04:57.159 didn't come immediately. Inflation, which Pinochet had nominally in large 0:04:57.200 --> 0:05:01.480 part taken power to control, continued debated, and in nineteen 0:05:01.520 --> 0:05:04.279 seventy four Milton Friedman arrived in Chile to argue for 0:05:04.360 --> 0:05:08.520 neoliberal shock therapy. But it wasn't until Pinochet's desperation from 0:05:08.520 --> 0:05:10.040 money drove him to the I m F that he 0:05:10.040 --> 0:05:13.919 would fully embrace neoliberalism. Most of the world had refused 0:05:13.920 --> 0:05:16.359 to do business with new dictatorial regime, with the exception 0:05:16.400 --> 0:05:19.480 of the U S and oddly enough Mao's China, which 0:05:19.480 --> 0:05:23.039 poured money into the regime and Pinochet's personal pockets. But 0:05:23.120 --> 0:05:26.279 that money was insufficient, and the i m F was 0:05:26.279 --> 0:05:28.560 the only remaining body who would actually lend money to 0:05:28.560 --> 0:05:32.719 Pinochet without any requirements on improving Chile's at this point 0:05:32.720 --> 0:05:36.360 a bismo human rights record. Much of the full neoliberal 0:05:36.400 --> 0:05:38.720 turn that hit Chile in nineteen seventy five came from 0:05:38.800 --> 0:05:43.120 demands from the i m F itself, who Demandedconian measures 0:05:43.120 --> 0:05:46.760 to control inflation. Here, Pinochet was aided by the supporter 0:05:46.760 --> 0:05:50.160 of the neoliberals, whose legitimacy and academic standing allowed them 0:05:50.160 --> 0:05:52.480 to negotiate and secure favor from the I m F, 0:05:52.560 --> 0:05:55.720 which they had already begun to infiltrate. At this point, 0:05:55.800 --> 0:05:59.440 the infamous Chicago Boys, economist trains at the University of 0:05:59.520 --> 0:06:02.440 Chicago by Milton Friedman, were put in charge of the economy. 0:06:02.920 --> 0:06:06.480 University of Chicago trained economists. Sergio di Castro, known as 0:06:06.480 --> 0:06:08.520 the Pinochet of the Economy, was put in charge of 0:06:08.560 --> 0:06:12.520 the ministry of economics. The Castro privatized an enormous portion 0:06:12.560 --> 0:06:16.480 of the remaining profitable state industries, eliminated tariffs and implemented 0:06:16.520 --> 0:06:20.120 free trade policies, deregulated the finance sector, and eliminated any 0:06:20.160 --> 0:06:23.359 remaining price controls. Chicago Boys would go on to do 0:06:23.440 --> 0:06:26.040 things like privatizing the entire dele and pension system with 0:06:26.080 --> 0:06:28.960 the exception of the military, which is a good education 0:06:29.000 --> 0:06:31.760 of any as to what the regime thought the actual 0:06:31.760 --> 0:06:37.080 effects of privatization would be. In nineteen Pinochet declared something 0:06:37.120 --> 0:06:43.400 called the Seven Modernizations, with quote reforms in labor, education, health, 0:06:43.760 --> 0:06:48.159 regional decentralization, agriculture, and justice policy. The goal of these 0:06:48.200 --> 0:06:51.880 reforms was to introduce the market into literally every aspect 0:06:51.880 --> 0:06:56.039 of society. Now. In episode one, I very briefly mentioned 0:06:56.040 --> 0:07:00.599 the Virginia School as one of the major schools of deliberalism. 0:07:00.640 --> 0:07:03.440 The Virginia School the people behind public choice theory. Their 0:07:03.520 --> 0:07:06.719 thing is essentially taking the absolutely absurd set of beliefs 0:07:06.839 --> 0:07:10.800 Chicago School holds about people humans are all knowing, rational, 0:07:10.880 --> 0:07:13.560 calculating gods, optimizing their behavior to get the most of 0:07:13.600 --> 0:07:17.640 every single interaction, to maximize the utility, and then applying 0:07:17.680 --> 0:07:20.160 it to political science and then literally every other field. 0:07:20.600 --> 0:07:23.000 If you've ever heard someone say there's no rational reason 0:07:23.040 --> 0:07:26.200 to vote, because if you're a rational, self interested person, 0:07:26.280 --> 0:07:28.560 the cost of voting outweighs that benefit because your vote 0:07:28.560 --> 0:07:31.680 only matters if a deciding one. Therefore, it's against your 0:07:31.720 --> 0:07:34.280 interest to vote. That's the Virginia School and their public 0:07:34.320 --> 0:07:39.440 choice theory bullshit at work. Pinochet's Seven Modernizations was an 0:07:39.440 --> 0:07:42.560 application of Virginia School doctrine to the entire Chilean state 0:07:42.600 --> 0:07:45.280 and as much as the society is humanly possible, with 0:07:45.320 --> 0:07:48.200 the goal of transforming it into a market I'm going 0:07:48.280 --> 0:07:50.720 to read a section from the Road to Mount Pelion 0:07:51.120 --> 0:07:57.080 describing Virginia School titan James M. Buchanan's work. Quote Ineffectual 0:07:57.120 --> 0:08:00.120 consequences in the political market place were blamed solely the 0:08:00.160 --> 0:08:04.280 fallacies of political decision making. Quote. We can summarize public 0:08:04.360 --> 0:08:08.160 choice as a theory of government failure end quote. Buchanan 0:08:08.160 --> 0:08:12.240 delivered a highly abstract paper titled limited or Untitled Democracy 0:08:12.280 --> 0:08:15.080 to the Montpellion Society in Vina del Mar in Chile, 0:08:16.520 --> 0:08:19.240 which some constructed as a critique of the host country's 0:08:19.280 --> 0:08:24.600 mobilization for action history Buchanan stated that if limited democracy 0:08:24.680 --> 0:08:27.880 was a polity predisposed to disable a political market that 0:08:27.880 --> 0:08:31.520 would otherwise promote the most efficient allocation of resources, the 0:08:31.600 --> 0:08:34.040 only meaningful task of the government would be to deprive 0:08:34.240 --> 0:08:37.400 the polity of its ability to do so. Public choice 0:08:37.440 --> 0:08:40.600 theory thus sought to limit democracy and deep politicize the 0:08:40.600 --> 0:08:43.439 state in order to enable unconstrained market forces to guide 0:08:43.480 --> 0:08:48.120 human interaction. Since the Pinochet regime was committed to using 0:08:48.160 --> 0:08:52.200 its governmental powers in precisely this manner, Buchanan's paper provided 0:08:52.240 --> 0:08:54.680 theoretical support for the regime even if it did not 0:08:54.760 --> 0:09:08.320 openly endorsed the authoritarian rule. Jucanan, of course, would spend 0:09:08.320 --> 0:09:11.520 a bunch of time doing lectures in Chile throughout pinochet icatorship, 0:09:11.679 --> 0:09:14.640 but he was not that regime's most vociferous neoliberal supporter. 0:09:15.200 --> 0:09:18.320 That award goes to Frederick Hyak. Chris Hiek, when asked 0:09:18.320 --> 0:09:20.960 about Chile, which had been to Night that blessed with 0:09:20.960 --> 0:09:24.240 his approval quote, A dicatorship can restrict itself in A 0:09:24.320 --> 0:09:27.800 dicatorship which deliberately is restricting itself can be more liberal 0:09:27.800 --> 0:09:30.880 in its politics than a democratic assembly which has due limits. 0:09:31.720 --> 0:09:34.920 Chile's eighty Constitution was drafted in part by one of 0:09:35.120 --> 0:09:39.920 Yek's friends, Chars wrote Road about Pelion Again, the Constitution 0:09:40.000 --> 0:09:43.160 was not only named after hys book The Constitution of Liberty, 0:09:43.440 --> 0:09:47.760 but also incorporated significant elements of hias thinking. Above all, 0:09:47.840 --> 0:09:50.960 the Constitution placed a strong emphasis on a neoliberal understanding 0:09:51.000 --> 0:09:54.920 of freedom. Guzman's version of freedom is intrinsically connected to 0:09:54.960 --> 0:10:00.040 private property, free enterprise, and individual rights. Individual freedom, in 0:10:00.120 --> 0:10:03.440 his interpretation, can only evolve in a radical market order. 0:10:03.840 --> 0:10:07.160 The Constitution was dedicated to guarantee such an order without 0:10:07.200 --> 0:10:11.080 constraining any economic activities. In order to protect free market 0:10:11.080 --> 0:10:16.120 conditions and individual freedoms against totalitarian attacks or democratic interventions. 0:10:16.640 --> 0:10:20.200 The Constitution stipulated a necessity of a strong central state 0:10:20.240 --> 0:10:23.160 authority to guarantee the established rule of law, and thus, 0:10:23.720 --> 0:10:27.400 above all else is hampered in the application of discretionary 0:10:27.440 --> 0:10:31.760 government power. Exempted were measures to uphold the status quo, 0:10:31.840 --> 0:10:35.920 inasmuch as Goosebon aggressively supported continuing the state of emergency, 0:10:36.200 --> 0:10:39.720 which legalized the use of whatever discretionary powers were deemed necessary. 0:10:39.800 --> 0:10:44.280 Quial opposition that Folks is a high achi in Constitution 0:10:44.800 --> 0:10:47.280 used the state to murder any one once democracy or 0:10:47.400 --> 0:10:49.959 God help them, wants to control the production their forced 0:10:49.960 --> 0:10:53.720 to serve every day. Chile is near liberal lousitions vultron 0:10:53.920 --> 0:10:56.400 by com binding the power of all four major schools 0:10:56.400 --> 0:11:01.079 of neoliberalism Chicago School and Monetary and Economic policy, Austrian 0:11:01.120 --> 0:11:05.199 School Constitutional order order, liberal reliance on the international bureaucracy 0:11:05.200 --> 0:11:08.079 and legal institutions like the i m F in order 0:11:08.120 --> 0:11:10.880 to promote a market economy, and Virginia School public choice 0:11:10.920 --> 0:11:14.520 theory running the state, you get a neoliberal, right wing 0:11:14.559 --> 0:11:19.520 military dictatorship. Now most conventional accounts of neoliberalism will move 0:11:19.840 --> 0:11:24.280 from Chile to Reagan and Thatcher and next episode will 0:11:24.280 --> 0:11:26.720 cover the neoliberal kind of revolution in the angle sphere. 0:11:27.840 --> 0:11:31.240 But focusing on purely national events gives a skewed perception 0:11:31.280 --> 0:11:36.199 of how neoliberalism actually spreads, and in order to correct that, 0:11:36.240 --> 0:11:38.599 we're going to look at Venezuela. I'm going to be 0:11:38.679 --> 0:11:41.319 drawing heavily here from the work of the legendary Venezuelan 0:11:41.360 --> 0:11:44.480 anthropologist Fernando Coren Neil in his book The Magical State, 0:11:44.520 --> 0:11:46.400 which I highly recommend as one of the best things 0:11:46.440 --> 0:11:49.439 that are written about oil and the Venezuelan state. So 0:11:50.000 --> 0:11:53.120 readers be warned. Chapter one is an absolute slog that, 0:11:53.160 --> 0:11:54.520 on the one hand, is one of the most interesting 0:11:54.520 --> 0:11:57.360 explanations of what oiler rents are have ever encountered, but 0:11:57.480 --> 0:12:00.920 also features Coreneal inventing a new tri electic and then 0:12:00.920 --> 0:12:04.160 stubbornly refusing to explain what it is or literally anything 0:12:04.160 --> 0:12:07.360 about how it works. So read the Magical State skip 0:12:07.440 --> 0:12:12.559 chapter one now the guiding principles of the new mass capitalists, 0:12:12.840 --> 0:12:16.480 democratic parties and posted statorship. Venezuela since the nineties sixties 0:12:16.920 --> 0:12:21.040 had been developing sovereignty by economic independence. The keystone of 0:12:21.080 --> 0:12:22.960 this project was an attempt to use the power of 0:12:22.960 --> 0:12:26.000 the state in new oil rents to develop an automotive industry. 0:12:27.520 --> 0:12:30.679 The project has sort of stalled out from its origins 0:12:30.679 --> 0:12:32.760 in the sixties until the rise of the G seventy 0:12:32.800 --> 0:12:35.760 seven Opeque Alliance in nineteen nineteen seventy four that we 0:12:35.800 --> 0:12:39.920 discussed last episode. In nineteen seventy five, Venezuela's Assembly passed 0:12:39.920 --> 0:12:43.160 a law that granted the president's special powers to speed 0:12:43.240 --> 0:12:46.320 up the developments of the Auto Industry CORP. The Auto 0:12:46.360 --> 0:12:51.080 Industry in Venezuela Corinial described it thus quote, The central 0:12:51.080 --> 0:12:54.400 goal was to have the vehicle's value, including the drive train, 0:12:54.480 --> 0:12:59.520 produced locally. Nive major components would be produced by enterprises 0:12:59.520 --> 0:13:02.920 having at LEAs fifty of their capital from local private sources. 0:13:03.679 --> 0:13:06.360 Existing foreign companies would have to become mixed or national 0:13:06.400 --> 0:13:09.040 firms in accord within day impact regulations if they wanted 0:13:09.040 --> 0:13:13.240 to benefit from the common market. Now, this plan is 0:13:13.240 --> 0:13:16.959 what's called industrial import substitution. Developing countries would attempt to 0:13:16.960 --> 0:13:20.120 develop industries, in this case, auto manufacturers inside of a 0:13:20.120 --> 0:13:23.040 country to produce cars for internal consumption instead of importing 0:13:23.080 --> 0:13:26.120 them from other countries. The other key of this plan 0:13:26.200 --> 0:13:31.079 is Danda Impact, an association of Bolivia, Columbia, Ecuador, Peru 0:13:31.280 --> 0:13:35.400 and Chile that was collaborating to develop a regional industrial economy. 0:13:35.400 --> 0:13:38.760 That we use local resources to build a local industrial 0:13:38.760 --> 0:13:41.960 economy producing industrial goods made entirely inside of the countries 0:13:41.960 --> 0:13:46.199 themselves from their resources. Now, Venezuela joins the pact in 0:13:46.280 --> 0:13:49.720 nineteen seventy three and Pinochet notably leaves in ninety seven. 0:13:50.600 --> 0:13:53.200 The key sticking points in this joint and day Impact 0:13:53.240 --> 0:13:56.880 Venezuela attempt to build an auto industry was that Venezuela 0:13:56.920 --> 0:13:59.920 needed technology held by multinational corporations in order to act 0:14:00.200 --> 0:14:03.600 produced the vehicles. Multinational car companies were willing to go 0:14:03.640 --> 0:14:05.760 ahead with the project to build cars in Venezuela in 0:14:05.800 --> 0:14:07.959 the short term because they were hurting from the oil shock, 0:14:08.000 --> 0:14:10.520 and thus we're willing to help national plans develop cars 0:14:10.840 --> 0:14:12.520 as long as they could use the parts to build 0:14:12.559 --> 0:14:14.640 their own cars with parts sourced from around the world. 0:14:15.720 --> 0:14:18.520 And this is where the neoliberal defensive intellectual property rights 0:14:18.520 --> 0:14:21.400 becomes extremely important, because the companies who held the patents 0:14:21.400 --> 0:14:24.440 for the drive trains essentially had a technological strangleholder for 0:14:24.520 --> 0:14:38.920 car developments. Now, Venezuela conducted an extensive bidding process for 0:14:38.960 --> 0:14:42.520 companies to make cars in Venezuela, but the car companies 0:14:42.640 --> 0:14:46.480 essentially sabotaged it by submitting designs that failed specs. The 0:14:46.560 --> 0:14:50.120 result was a kind of political war inside Venezuela and 0:14:50.360 --> 0:14:53.600 particularly inside the Venezuela and ruling class, between national developments 0:14:53.600 --> 0:14:59.040 and international profits. The Venezuelan developmentalists needed a breakthrough. What 0:14:59.160 --> 0:15:02.320 they needed, and that's was new international economic order and 0:15:02.360 --> 0:15:09.080 its corporate regulations, debt relief, and technology transfers. Without them, 0:15:09.120 --> 0:15:12.120 even a third world country like Venezuela flush with oil 0:15:12.160 --> 0:15:16.760 money was incapable of developing an industrial economy. But the 0:15:16.800 --> 0:15:20.680 new international economic order never came. All the G seven 0:15:20.680 --> 0:15:22.480 had to do in order to stop it was stalled 0:15:22.520 --> 0:15:25.680 the G seventy seven out until commodity power faded. The 0:15:25.720 --> 0:15:28.320 G seventy seven had to fundamentally change the structure of 0:15:28.320 --> 0:15:30.920 the economy in order to allow them to industrialize before 0:15:30.920 --> 0:15:33.800 the sort of damocles hanging over all their heads the 0:15:33.840 --> 0:15:37.720 mounting Third World debt fell and decapitated them. The G 0:15:37.880 --> 0:15:40.280 seven strategy to outlast the G seventy seven was to 0:15:40.280 --> 0:15:43.160 pull the various factions to the seventy seven apart, in 0:15:43.200 --> 0:15:46.400 particular pulling the moderate governments away from the radical wing 0:15:47.160 --> 0:15:50.320 of OPEC and the African Socialists. They attacked OPEC by 0:15:50.400 --> 0:15:53.240 using Saudi Arabia to undermine its unity and attempted to 0:15:53.320 --> 0:15:56.800 peel the so called less developed countries away from their 0:15:56.800 --> 0:16:00.000 alliance with OPEC with a promise of aid to patch 0:16:00.040 --> 0:16:03.880 up the damage dealt by increased oil prices. Neither worked 0:16:03.880 --> 0:16:06.720 incredibly well, but when combined with the US essentially shutting 0:16:06.760 --> 0:16:08.800 the U N down by refusing to let any business 0:16:08.800 --> 0:16:13.360 get done, refusing to vote for or even vetoing routine matters. 0:16:13.840 --> 0:16:19.320 The stalling worked, no new international economic order was forthcoming. Instead, 0:16:19.760 --> 0:16:24.480 the world would get neoliberalism. Neoliberalism arrived on the world 0:16:24.520 --> 0:16:27.880 stage in the form of the Vulcar Shock. In ninety nine, 0:16:27.960 --> 0:16:30.440 Jimmy Carter appointed Paul Vulcar as the Chairman of the 0:16:30.480 --> 0:16:32.760 Federal Reserve for the broad mandate to do whatever he 0:16:32.840 --> 0:16:37.400 wanted to reduce inflation. Vulcar had become a disciple of monitorism, 0:16:37.440 --> 0:16:39.800 a Freedman Night Chicago School belief about the role of 0:16:39.840 --> 0:16:42.440 the money supply in the economy, considered to be absolutely 0:16:42.440 --> 0:16:46.120 crank even by modern neoliberals. His solution, which became known 0:16:46.120 --> 0:16:50.040 as the Vulcar Shock, was to increase interest rate. This 0:16:50.200 --> 0:16:52.880 essentially blew a crater in the American economy and immediately 0:16:52.880 --> 0:16:55.240 sent it into recession. And we'll get to Vulcar at 0:16:55.240 --> 0:16:57.960 Reagan's efforts to destroy American labor in the next episode. 0:16:58.320 --> 0:17:01.040 But the damage to the Third World was even worse. 0:17:02.280 --> 0:17:06.240 G seventy seven governments had for decades taking on adjustable 0:17:06.320 --> 0:17:09.600 rate loans pecked to something called the libor rate. When 0:17:09.600 --> 0:17:12.360 they took the loans out, interest rates were virtually negative, 0:17:12.600 --> 0:17:16.080 but when the vulgar shock hit, they skyrocketed. Now, as 0:17:16.080 --> 0:17:18.440 we talked about last episode, a major part of the 0:17:18.480 --> 0:17:21.000 crisis of the seventies was enormous piles of oil money, 0:17:21.080 --> 0:17:24.120 mostly from the Gulf States, floating around that nobody could 0:17:24.240 --> 0:17:27.600 actually get returns on because of declining manufacturing profit rates. 0:17:27.920 --> 0:17:30.720 This money wound up flowing back into the American finance system. 0:17:30.720 --> 0:17:34.520 When capital controls are lifted nineteen seventy, the banks through 0:17:34.520 --> 0:17:36.680 the money at loans in the Third World. Now, some 0:17:36.760 --> 0:17:38.960 of that money had been put into industrial development that 0:17:38.960 --> 0:17:41.159 had yet to pay off. Some of the money had 0:17:41.200 --> 0:17:44.480 simply been put directly into dictators bank accounts, but the 0:17:44.480 --> 0:17:46.840 bank's essentially didn't care if the loans they were making 0:17:46.880 --> 0:17:49.440 had little to no chance of being repaid without some 0:17:49.520 --> 0:17:53.520 kind of structure reformed. Because in control of the I 0:17:53.680 --> 0:17:56.720 m F fell to an arch neo liberal name Jacquis 0:17:56.760 --> 0:17:59.320 de la Rosier. I really don't know if that's how 0:17:59.359 --> 0:18:02.840 to pronounced his name, but he is evil. So neo 0:18:02.880 --> 0:18:04.840 liberals further took control of the World Bank in nine. 0:18:06.160 --> 0:18:07.800 From the I m F and the World Bank, a 0:18:07.840 --> 0:18:10.480 secession of new liberals enshrined the key principle of the 0:18:10.480 --> 0:18:14.040 new neoliberal order, debtors must always pay back their debts. 0:18:14.440 --> 0:18:17.400 Creditors would no longer assume risk for their loans. Instead, 0:18:17.600 --> 0:18:20.640 loans would be repaid at gunpoint. This was no mere 0:18:20.720 --> 0:18:24.359 rhetorical slogan, as the G seventy seven imploded as a 0:18:24.400 --> 0:18:26.639 political body under the weight of hundreds of billions of 0:18:26.680 --> 0:18:31.120 dollars of debt now with interest. Thomas Sankara, the socialist 0:18:31.119 --> 0:18:34.560 president of Burkina Fosso, attempted to rally its remains to 0:18:34.680 --> 0:18:38.399 collectively negotiate debt relief. Sakara was promptly shot by a 0:18:38.400 --> 0:18:41.960 former ally who accused him of threatening Burkina Fossils relationship 0:18:42.000 --> 0:18:45.600 with France. With all resistance slaughtered, entire nations were reduced 0:18:45.600 --> 0:18:49.160 to debt servicing machines as tax dollars were directed from health, education, 0:18:49.560 --> 0:18:52.959 and social security programs into the coffers of international banks, 0:18:53.440 --> 0:18:56.600 which used the newly neo liberal controlled International Monetary Fund 0:18:56.640 --> 0:19:00.280 as their enforcer. The anthropologist David graeber Is write the 0:19:00.320 --> 0:19:03.159 consequence of one such IMF austerity program in debt the 0:19:03.160 --> 0:19:07.000 first five thousand years quote. For almost two years I 0:19:07.080 --> 0:19:10.520 had lived in the highlands of Madagascar. Shortly before I arrived, 0:19:10.560 --> 0:19:12.800 there had been an outbreak of malaria. It was a 0:19:12.840 --> 0:19:15.720 particularly virulent outbreak because malaria had been wiped out in 0:19:15.800 --> 0:19:19.320 Highlight Madagascar many years before, so that after a couple 0:19:19.320 --> 0:19:22.760 of generations, most people had lost their immunity. The problem 0:19:22.840 --> 0:19:25.760 was it took money to maintain those mosquito radication programs, 0:19:25.760 --> 0:19:27.600 since there had to be periodic tests to make sure 0:19:27.600 --> 0:19:30.959 mosquitoes weren't starting to breed again, and spraying campaigns if 0:19:30.960 --> 0:19:33.680 it was discovered that they were not a lot of money. 0:19:34.359 --> 0:19:37.600 But owing to IMF and post austerity programs, the government 0:19:37.640 --> 0:19:41.000 had to cut the monitoring program. Ten thousand people died. 0:19:41.560 --> 0:19:45.120 I met young mothers grieving for lost children. One might 0:19:45.119 --> 0:19:46.480 think it would be hard to make a case that 0:19:46.560 --> 0:19:49.080 the loss of ten thou human lives is really justified 0:19:49.119 --> 0:19:51.040 in order to ensure that City Bank wouldn't have to 0:19:51.080 --> 0:19:53.760 cut his losses on one irresponsible loan that wasn't particularly 0:19:53.800 --> 0:19:57.680 important to its balance sheet anyways. Following the old older 0:19:57.760 --> 0:20:01.399 liberal dream of a legal framework to ensure neoliberal market economies, 0:20:02.280 --> 0:20:04.520 the new generation of neoliberals used the I m F, 0:20:04.680 --> 0:20:07.520 World Bank and other bureaucratic institutions to act as dead 0:20:07.640 --> 0:20:11.560 enforcers and the imposed neoliberal policies from above, without anything 0:20:11.560 --> 0:20:15.159 so petty as democracy interfering with it. In fact, one 0:20:15.240 --> 0:20:18.680 of the first neoliberal structural adjustments, one of a bewildering 0:20:18.760 --> 0:20:20.720 new array of terms for I M F and forced 0:20:20.760 --> 0:20:24.960 austerity programs, was implemented by the Jamaican socialist Michael Manly 0:20:25.000 --> 0:20:28.840 in nineteen seventy seven, which in a single year wiped 0:20:28.880 --> 0:20:31.159 out every gain in education of public health that Madly 0:20:31.200 --> 0:20:34.480 had spent his first term building up. Similar faith would 0:20:34.480 --> 0:20:37.800 be fall health, education, and justice programs across the world. 0:20:38.400 --> 0:20:43.199 The death toll remains unknown. Venezuela would fall victim to 0:20:43.280 --> 0:20:48.040 a similar fate. Without the new international economic order, Venezuela's 0:20:48.040 --> 0:20:52.600 industrial policy imploded as post VOLCRA shock government debt skyrocketed 0:20:53.560 --> 0:20:56.000 in the nineteen eighties, the government began to impose ims 0:20:56.000 --> 0:20:59.960 structural adjustments. Carlos Andres Perez, the man who led the 0:21:00.000 --> 0:21:02.960 industrial pushing in the nineteen seventies, was elected a second 0:21:03.000 --> 0:21:05.280 time in nineteen eighty nine, running a campaign that I've 0:21:05.280 --> 0:21:11.000 seen euphemistically described as quote against liberalization policy. It was 0:21:11.560 --> 0:21:15.000 somewhat more extreme than that, featuring lines such as calling 0:21:15.040 --> 0:21:17.720 the I M f quote a bomb that only kills people, 0:21:18.880 --> 0:21:21.119 But Perez was negotiating with the I M F behind 0:21:21.119 --> 0:21:23.520 the scenes and imposed even harsher I m F Asteria 0:21:23.520 --> 0:21:26.680 measures upon winning the election, leading to a mass uprising 0:21:26.720 --> 0:21:28.920 in nineteen eighty nine that was suppressed in a bath 0:21:29.000 --> 0:21:32.280 of blood, with hundreds killed by the army. But even 0:21:32.320 --> 0:21:35.119 more structural adjustments were imposed after Perez was deposed for 0:21:35.160 --> 0:21:40.399 corruption nineteen, implemented ironically by the founder of the Movement 0:21:40.400 --> 0:21:44.639 towards Socialism, Teodoro Petkoff, the head of Venezuela's planning agency 0:21:44.640 --> 0:21:48.719 in nineteen ninety six. All of Venezuela's economic crisis from 0:21:48.720 --> 0:21:51.720 the nineteen eighties until now stem from the failures of 0:21:51.800 --> 0:21:56.520 nineteen seventies industrialization. Without any kind of industrial economy, even 0:21:56.520 --> 0:21:59.160 the socialists that took power in the nine on national 0:21:59.280 --> 0:22:03.119 level were reduced to shuffling oil rents around, and with 0:22:03.200 --> 0:22:05.879 the market economy still in place, the economy is simply 0:22:05.880 --> 0:22:08.920 imploded again when the loyal prices fell. This is how 0:22:08.960 --> 0:22:13.159 neoliberalism comes to most countries, not as policies implemented by 0:22:13.160 --> 0:22:16.639 anything even remotely resembling the will of the people, but 0:22:16.800 --> 0:22:19.960 enforced by the international economic system itself and the bureaucrats 0:22:20.040 --> 0:22:22.200 the I m F, the World Bank, and the World 0:22:22.200 --> 0:22:26.760 Trade Organization. It is imposed by enormous states at gunpoints, 0:22:26.800 --> 0:22:29.400 constituted by the mass looting of the population in order 0:22:29.400 --> 0:22:33.440 to pay corporate debt. Masters new liberals have effectively achieved 0:22:33.480 --> 0:22:37.320 their goal and transcendent democratic politics entirely from their purchase 0:22:37.359 --> 0:22:40.120 in the international bureaucracy. They can dictate policy to even 0:22:40.160 --> 0:22:43.760 hostile leaders. But tomorrow we'll see what happens when they 0:22:43.800 --> 0:22:46.720 take power domestically. As we would conclude our Neoliberalism series 0:22:46.720 --> 0:22:50.600 with a man rotting in Hell with Paul Bulger Ronald Reagan. 0:22:55.160 --> 0:22:57.520 It could Happen here the production of cool Zone Media. 0:22:57.760 --> 0:23:00.680 For more podcasts from cool Zone Media, visitor website cool 0:23:00.720 --> 0:23:02.679 zone media dot com, or check us out on the 0:23:02.720 --> 0:23:05.440 I Heart Radio app, Apple Podcasts, or wherever you listen 0:23:05.480 --> 0:23:08.399 to podcasts. You can find sources for It could Happen here, 0:23:08.480 --> 0:23:12.120 updated monthly at cool zone Media dot com slash sources. 0:23:12.119 --> 0:23:12.960 Thanks for listening.