"Capitalism and Freedom"
Unmasked
[Milton Friedman]
by Stephen Lendman
www.zmag.org, October 5, 2007
An era ended November 16, 2006 when economist
Milton Friedman died. A torrent of eulogies followed. The Wall
Street Journal mourned his loss with the same tribute he credulously
used when Ronald Reagan died saying "few people in human
history have contributed more to the achievement of human freedom."
Economist and former Treasury Secretary Lawrence Summers called
him a hero and "The Great Liberator" in a New York Times
op-ed; the UK Financial Times called him "the last of the
great economists;" Terence Corcoran, editor of Canada's National
Post, mourned the "free markets" loss of "their
last lion;" and Business Week magazine noted the "Death
of a Giant" and praised his doctrine that "the best
thing government can do is supply the economy with the money it
needs and stand aside."
Rarely had so much praise been given anyone
so undeserving in light of the human wreckage his legacy left
strewn everywhere. He believed government's sole function is "to
protect our freedom both from (outside) enemies....and from our
fellow-citizens."
It's to "preserve law and order (as
well as) enforce private contracts, (safeguard private property
and) foster competitive markets." Everything else in public
hands is socialism that for free-wheeling market fundamentalists
like Friedman is blasphemy. He said markets work best unfettered
of rules, regulations, onerous taxes, trade barriers, "entrenched
interests" and human interference, and the best government
is practically none at all as anything it can do private business
does better. Democracy and a government of, by and for the people?
Forget it.
He preached public wealth should be in
private hands, accumulation of profits unrestrained, corporate
taxes abolished, and social services curtailed or ended. He believed
"economic freedom is an end to itself....and an indispensable
means toward (achieving) political freedom." He thought state
laws requiring certain occupations be licensed (like doctors)
a restriction of freedom. He opposed foreign aid, subsidies, import
quotas and tariffs as well as drug laws he called a subsidy to
organized crime (which it is as well as to CIA and money laundering
international banks earning billions from it) and added "we
have no right to use force....to prevent (someone) from committing
suicide....drinking alcohol or taking drugs," while saying
nothing about major banks and CIA partnering for profit with drug
lords.
He favored a constitutional amendment
requiring Congress balance the budget because deficits "encourage
political irresponsibility." He claimed taxes were onerous
and was "in favor of cutting (them) under any circumstances
and for any excuse, for any reason, whenever possible...."
and make corporations entirely exempt from them. He opposed the
minimum wage, supported a flat tax favoring the rich, and believed
everyone should have to buy his or her own medical insurance like
any other product or service.
Can't afford it? Too bad. Get sick? Let
the market heal you.
He opposed public education, supported
school vouchers for privately-run ones, and believed marketplace
competition improves performance even though voucher amounts are
inadequate and mostly go to schools emphasizing religious education
or training. Further, evidence shows teaching quality suffers
in for-profit schools except in elitist ones. Most others stress
cost-cutting and fewer services for bigger returns on investment.
He ignored the fact that Christian fundamentalist
schools harm democracy and violate the constitutional separation
of church and state. They also threaten public education's future
that's been the bedrock of primary and secondary schooling throughout
our history until Friedman first proposed vouchers in the 1980s
as one of his core free choice objectives.
He was a vocal opponent of trade unions,
claimed they were "of little importance (historically in
advancing) worker (rights and gains) in the United States,"
and ignored clear evidence to the contrary in spite of corrupted
union officials who could and should have done more for their
rank and file and still don't. He also claimed "the gains
that strong unions win for their members are primarily at the
expense of other workers (and believing otherwise) is a fundamental
source of misunderstanding." It all came down to supply and
demand for him - "the higher the price of anything, the less....people
will....buy."
Sounds reasonable up to the examples he
gave: "Make labor of any kind more expensive and the number
of jobs of that kind will be fewer. Make carpenters more expensive,
and fewer houses....will be built (and the ones that are will)
use materials and methods requiring less carpentry. Raise the
wages of airline pilots (and) there will be fewer jobs for them
(because) air travel will (cost more and) fewer people will fly."
Bottom line for Friedman - high union
wages harm everyone, including union members. They make consumer
products and services more expensive, he believed, notwithstanding
the fundamental law of pricing every marketing executive knows
but Friedman ignored. It's to charge what the market will bear,
no more or less so, costs aside, prices reflect what buyers will
pay, no more.
Friedman also opposed government-run Social
Security that he called "The Biggest Ponzi Scheme on Earth"
in an article with that title. He described the current system
as "an unholy combination of two items: a flat-rate tax on
earnings up to a maximum with no exemption and a benefit program
that awards subsidies that have....no relation to need (forgetting
it's our most successful poverty-reducing program) but are based
on (criteria like) marital status, longevity and recent earnings."
He wanted it privatized, abhorred the
"tyranny of the status quo," and agreed with Barry Goldwater
that it be voluntary which, of course, would kill it. He added
it's "hard to justify requiring 100% of the people to adopt
a government-prescribed straitjacket to avoid encouraging a few
(many millions, in fact) 'lower-income individuals to make no
provision for their old age deliberately (even though most cannot),
knowing they would receive the means-tested amount.' "
Addressing only eligible retirees, he
ignored millions of others getting Social Security benefits. They
include disabled workers and spouses and children of deceased,
retired or disabled workers. They comprise around 37% of all recipients,
are left out of Friedman's calculation, and would get nothing
under a privatized system.
For Friedman, we're on our own, "free
to choose," but unequally matched against corporate giants
and the privileged with their advantages. The rest of us are unequally
endowed and governed by the principle, "To each according
to what he and the instruments he owns produces," in a savage
world where economic freedom trumps all other kinds. This was
right from Friedman's 1962 laissez-faire manifesto, "Capitalism
and Freedom," that's long on free market triumphalism and
void on its effects on real people.
He opposed social or any market-interfering
democracy, an egalitarian society, government providing essential
services, workers free from bosses, citizens from dictatorship
and countries from colonialism. Instead, he perversely promoted
economic freedom as a be-all-and-end-all, limited government,
and profit-making as the essence of democracy. He supported unfettered
free markets with political debate confined to minor issues unrelated
to the distribution of goods and services he wanted left to the
free-wheeling marketplace.
This was Friedman's best of all possible
worlds with people in it no different than disposable commodities
and government not obligated to fulfill its minimum constitutionally-mandated
function as stated in the Preamble and Article I, Section 8. It's
that "The Congress shall have power to....provide....for
(the) general welfare of the United States" - the so-called
welfare clause Friedman believed conflicted with "capitalism
and freedom" and our "freedom to choose" that ranked
above the law of the land for him.
The School of Thought in the University
of Chicago's Economics Department
Friedman grew up in New York, got his
BA at Rutgers, an MA at the University of Chicago, and his doctorate
at Columbia. Surprisingly, he was a Keynesian early on, but Friedrich
Hayek's teachings changed him into a free market fundamentalist
who'd become what the Economist called "the most influential
economist of the second half of the 20th century (and) possibly
all of it." He returned to the University of Chicago Economics
Department in 1946 and became its charismatic leader on a mission
to revolutionize his profession and the world.
The doctrine was simple at its core -
unfettered free market pure capitalism works best, and Friedman
and his colleagues set out to prove it scientifically in a set
of mathematical equations and computer models they developed.
They promised that left on their own, markets are magical. They
produce the right amount of products and services, at the right
prices, by the right number of workers earning the right amount
of wages to buy what's produced. In short, a win-win for everyone....paradise.
There was only one problem. It's voodoo science, sounds good mathematically
and doesn't work. Friedman and his "Chicago Boys, however,
believed it did but needed a real life "Chicago School state"
to prove it.
He got many, called them models of free
market magic, and justified repression believing ends justify
means and free choice offered "more room for individual initiative....a
private sphere of life (and a greater) chance (authoritarian regimes
he supported would in the end make it possible) to return to a
democratic society." He countered his critics claiming "economic
freedom is an essential requisite for political freedom"
and that transitional pain was worth it for the free market paradise
he promised would emerge. He and his mentor, Friedrich Hayek,
called social democracy, collectivism, socialism and welfare state
economics the "road to serfdom" producing "bondage
and misery" and "coercion rather than freedom."
It was pure baloney, but who could argue
in the face of huge corporate backing, heavy funding and the dominant
media in tow calling market fundamentalism the new orthodoxy and
repression freedom. On the ground, it was different. The record
of Chicago School fundamentalism is in the human wreckage it left
everywhere.
The Human Toll of Chicago School Fundamentalism
Every nation Friedman's ideology touched
took pain, but it wasn't the well-off who suffered, just ordinary
working people targeted for profit in pursuit of "economic
freedom." Early on, his dogma was considered quirky, on the
margins of mainstream economics, and out of step with the Keynesian
post-war golden age of capitalism. It lasted until the 1970s when
recession, stagflation and high unemployment changed everything.
Keynesian economics was unfairly blamed,
and Friedman got his chance to prove government intervention is
the problem and unfettered free markets the solution. It was pure
nonsense and about as scientific as alchemy, but long ago people
thought that worked until they finally understood they couldn't
make gold out of lesser metals.
The First Test Case in Chile
Chile under Augusto Pinochet became Friedman's
first test case to prove what we now know is flimflam. The results
were disastrous and Chileans to this day haven't recovered from
the September 11, 1973 coup d'etat and aftermath that ended the
most vibrant democracy in the Americas and ushered in Friedman's
magic.
The playbook promised paradise but delivered
the junta's "Caravan of Death," hyperinflation, the
economy contracting 15%, wages cut, unemployment at 20%, labor
unionism destroyed, social services gutted, severe poverty, ghostly
factories and rotting infrastructure, out-of-control corruption
and cronyism, a massive transfer of public resources to private
hands, and a repressive military and secret police targeting dissenters
with detention, torture and death. It was hell for Chileans but
nirvana for the privileged and foreign investors reaping big profits
from the masses they took it from. It was just the beginning with
Friedman-style "shock treatment" on to the next target.
One of many was Bolivia with predictable
results and Friedman unrepentant. Food subsidies were ended, social
services gutted, price controls lifted, wages frozen, oil prices
hiked 300%, deep government spending cuts imposed, unrestricted
imports allowed, and state-owned companies downsized costing hundreds
of thousands of jobs before privatizing them.
There was more. Real wages dropped 40%,
poverty soared, but a privileged elite got rich. Public anger
grew with repression the antidote. Tanks rolled in the streets
against striking workers, and police targeted dissenters in union
halls, a university and factories.
"Freedom" for Friedman was hell
for Bolivians. It would soon get worse.
The Tragedy of Post-Communist Russia
The Berlin Wall's fall should have been
a triumph but instead was tragic for Russia's people. Mikhail
Gorbachev came to power in March, 1985 with political and social
change in mind but wasn't around long enough to lead it. He liberalized
the country, introduced elections, and favored a Scandinavian-style
social democracy combining free market capitalism with strong
social safety net protections. He envisioned "a socialist
beacon for all mankind," an egalitarian society, but never
got the chance to build it.
When the Soviet Union dissolved, he was
out, Boris Yeltsin became Russia's president, he supported a corporatist
state and adopted Chicago School fundamentalist "shock therapy"
masquerading as "reform." Its former apparatchiks cashed
in big along with a new class of "nouveaux billionaires"
(called "the oligarchs") who strip-mined the country's
wealth and shipped it to offshore tax havens. For the Russian
people, it was another story. They didn't know what hit them in
what was one of the greatest ever crimes by a government against
its own people who still today are crushed by it. The toll was
devastating and pandemic:
-- 80% of Russian farmers bankrupt;
-- about 70,000 state factories closed
causing an epidemic of unemployment;
-- 74 million Russians (half the population)
impoverished; for 37 million of them conditions were desperate,
and the country's underclass remains permanent;
-- alcohol, painkilling and hard drug
used soared, and HIV/AIDS threatens to become epidemic with a
20-fold increase in infections since 1995; suicides also rose
and violent crime as well more than fourfold; and
-- Russia's population is declining by
around 700,000 a year; unfettered capitalism has already killed
off 10% of it; it's a startling condemnation of Chicago School
orthodoxy and the man who triumphantly spread it in the name of
freedom that's fake, ferocious and fatal.
The Curse of Predatory Capitalism in South
Africa
As in Russia, opportunity for progressive
change became tragedy under neoliberal Washington Consensus policies
far worse than apartheid repression. Nelson Mandela pledged to
support black economic empowerment and seemed poised to lead it
when ANC candidates swept the 1994 elections and he became president.
Instead, political power came at the expense of economic surrender.
The former white supremacist government and industrialists secured
their wealth and privilege by keeping unfettered capitalism unchanged
under harsh shock medicine rules.
It was unforgivable from a man like Mandela
with charisma and political capital enough to have prevented it.
Instead, he chose not to and brushed off later criticism saying
"....for this country, privatization is the fundamental policy."
The toll on his people was horrific:
-- double the number of people living
in desperate poverty on less than $1 a day from two to four million;
-- the unemployment rate doubling to 48%
from 1991 - 2002;
-- two million South Africans losing their
homes while the government built only 1.8 million others;
-- nearly one million South Africans evicted
from farms in the first decade of ANC rule; as a result, shack
dweller population grew by 50%, and in 2006, 25% of South Africans
lived in them with no running water or electricity;
-- the HIV/AIDS infection rate at about
20%, and the ANC government denies its severity and does little
to alleviate it; it's a major reason why average life expectancy
in the country declined 13 years since 1990;
-- 40% of schools with no electricity;
-- 25% of people with no access to clean
water and most with it can't afford the cost;
-- 60% of people with inadequate sanitation,
and 40% no telephones.
Freedom for black South Africans came
at a high price with political empowerment traded for economic
apartheid and no relief in sight for the millions affected. It's
more evidence of Chicago School economics failure and the human
wreckage it leaves everywhere.
Free Market Repression in Haiti
Haitians enjoyed a brief interregnum of
freedom in the 1990s up to 2004 under Jean-Bertrand Aristide and
Rene Preval in his first term. Haitians were only once earlier
free when the first ever independent black republic was established
January 1, 1804, but it didn't last.
Freedom again was lost for one of the
longest ever oppressed people anywhere. It ended February 29,
2004 when US Marines abducted Aristide, in a shocking middle of
the night coup d'etat, and flew him against his will to the Central
African Republic. Haiti is small, around three times the size
of Los Angeles, with a population around eight million. It has
some oil, natural gas and other mineral wealth, but it's main
value is its human resource that corporate giants want as an offshore
cheap labor paradise for Wal-Mart's "Always Low Prices."
Under President Aristide and Preval in
his first term in office, impressive social gains were achieved,
but they're are now lost in the wake of the 2004 coup.
Haiti is once again a free market paradise
with freedom sacrificed (despite an elected president) and real
reforms gutted for the poorest people in the hemisphere:
-- thousands of public sector workers
were fired;
-- many more thousands killed, jailed,
disappeared or forced into hiding;
-- many thousands of small businesses
burned and destroyed as well as homes for large numbers of the
poor;
-- unemployment and underemployment rampant
with up to two-thirds of workers without reliable jobs; destruction
of the country's rural economy an enormous problem with displaced
poor people migrating to urban areas but finding no work;
-- the lowest public sector employment
in the region at less than .7%;
-- education and health care greatly deteriorated
and mostly provided by NGOs, including church-based ones;
-- life expectancy at only 53 years; the
death and infant mortality rates the highest in the western hemisphere;
-- the World Bank places the country in
its bottom rankings with its deficient sanitation systems, poor
nutrition, high malnutrition, and inadequate health services;
-- the country is the poorest in the hemisphere
with 80% of its population living below the poverty line; it's
also the least developed with lack of infrastructure, severe deforestation
and heavy soil erosion;
-- half its population is "food insecure"
and half of all children undersized from malnutrition;
-- less than half the population with
access to clean drinking water;
-- the country ranks last in the hemisphere
in health care spending with only 25 doctors and 11 nurses per
100,000 population and most rural areas having no access to health
care;
-- the highest HIV/AIDS incidence outside
Africa;
-- the World Bank estimates Haiti's per
capita income at under $450; the prevailing sweatshop wage is
around 11 - 12 cents an hour; the official minimum wage is about
$1.70 a day (with most Haitians getting less) with no benefits
and inadequate help from weak unions;
-- restructuring and privatizations, like
what's intended for the state-owned telecommunication company,
Teleco, cost thousands of jobs from downsizings;
-- human rights repression is severe under
a UN paramilitary MINUSTAH occupation masquerading as peacekeepers;
they were illegally sent for the first time ever to support and
enforce a coup d'etat against a democratically elected president;
political killings, kidnappings, disappearances, torture and unlawful
arrests and incarcerations are common forms of repression so real
Haitian democracy can't emerge under its elected president, Rene
Preval, in his second term; he's impotent against the power of
US-orchestrated plunder under Chicago School fundamentalist rules.
Another Friedman legacy of failure, this one close to home.
Free Market Fundamentalist Destruction
in Afghanistan
September 11 erased the familiar world,
created mass disorientation and regression, and made anything
possible under collective shock that didn't take long to unfold.
The "war on terror" was launched in a climate of fear
with Afghanistan first targeted. It inaugurated a brave new post-9/11
world. Its horror continues. War rages, its ferocity intense,
and no end is in sight for a people and nation journalist John
Pilger describes as having been "abused and suffered more
(with less help than any other) in living memory."
War and conquest were planned well in
advance with
9/11 the pretext to launch it. It was
part of a grand strategic plan to control Central Asia's vast
oil and gas reserves, then on to the grand prize in the Middle
East with Iraq its epicenter. It began October 7, 2001, continues,
and has now intensified at an enormous cost to the Afghan people
who've been torn by endless war and internal turmoil for over
two decades.
The toll is horrific and rising:
-- half the population unemployed with
no improvement in sight nor is any planned under fundamentalist
market rules;
-- half the population earning around
$200 a year with those in the booming opium trade doing marginally
better;
-- poverty soared post-invasion, one-fourth
or more of the population needs food aid, and regional famine
risks remain;
-- life expectancy is one of the lowest
in the world at 44.5 years;
-- the infant mortality is the highest
in the world at
161 per 1000 births;
-- one-fifth of children die before age
five;
-- an Afghan woman dies in childbirth
every 30 minutes;
-- an estimated 500,000 homeless are in
Kabul alone including people living in collapsed and unsafe buildings;
-- only one-fourth of the population has
access to safe drinking water and adequate sanitation;
-- only one doctor is available per 6000
people and one nurse per 2500 people;
-- 100 or more people are killed or wounded
by unexploded ordnance each month and rising violence kills many
more;
-- children are kidnapped, sold into slavery
or murdered for their organs bringing high prices in the "free
market" where everything is for sale including body parts;
-- less than 6% of Afghans have electricity
only available sporadically;
-- women's literacy rate is about 19%,
conditions for them are very harsh, they're forced to beg on the
streets or turn to prostitution to survive; many must remain veiled;
-- schools are burned and teachers beheaded
in front of their students;
-- basic services don't exist and essential
ones like schools, health clinics and hospitals are in deplorable
condition with no aid provided to improve them as all of it goes
for profit;
-- as in Iraq, occupying forces operate
outside the law with impunity that includes the use of indiscriminate
force, arbitrary arrests, indefinite detentions and free use of
the harshest types of torture unreported in the mainstream;
-- under military occupation, democracy
in the country is pure fantasy; the puppet president is a caricature
of a man and willing US stooge with no support or mandate outside
Kabul;
-- lawlessness is rampant, war raging,
violence increasing, the drug harvest and trafficking uncontrolled,
corruption massive, Sharia law reinstated, and life overall intolerable
in this free market fundamentalist paradise.
The Epicenter of the "War on Terror"
in Iraq for Market Fundamentalist "Freedom"
Iraq has the misfortune of lying at the
heart of the oil rich MIddle East where two-thirds of proved reserves
are located and the greatest potential amount of them untapped
for lack of development. Its potential remained frozen in time
the result of intervening wars since 1980, economic sanctions
until 2003, and now occupation and conflict for the most sought
after real estate on earth and a no-brainer why it was targeted.
At its core, the plan was simple - a bold
new experiment to erase a nation and create a new one by invasion,
occupation and reconstruction for pillage.
It would transform the nation into a fully
privatized free market paradise with blank check public funds
for profit but none for Iraqis for essential needs, a sustainable
economy or critical local infrastructure.
The record of unfettered capitalism is
consistent. It leaves mass human wreckage everywhere. In Iraq,
it turned a bold new experiment into a horrific disaster:
-- an inferno of uncontrolled violence
throughout the country with new British O.R.B. independent polling
data estimating over 1.2 million Iraqi deaths since March, 2003
on top of about 1.5 million deaths from the Gulf war and economic
sanctions in place until the current war; the true toll may be
even higher with huge uncounted numbers of daily violent and non-violent
deaths that one estimate by Gideon Polya places at 3.9 million
from 1990 to the present; no one knows for sure;
-- the International Rescue Committee
and UNHCR estimating four million displaced Iraqis, including
those internally displaced, with 40,000 additional Iraqis fleeing
their homes each month; these figures may be conservative with
true numbers much higher;
-- a near-total breakdown of essential
services like electricity, drinking water, sanitation, medical
care, education, security and food for many;
-- mass unemployment and extreme poverty
in what was once "the cradle of civilization" now erased
for profit;
-- an overall humanitarian disaster of
epic proportions that continues to worsen with a July Oxfam International
and NCCI network of aid organizations report of other grim findings:
-- eight million Iraqis needing emergency
aid - one-third of the population;
-- four million without enough food;
-- 70% of Iraqis with no adequate water
supply;
-- 80% lack adequate sanitation;
-- 28% of children malnourished;
-- underweight baby births tripled;
-- 92% of Iraqi children with learning
problems due to fear; and
-- a mass exodus of around 80% of doctors,
nurses, teaching staff at schools and hospitals and other vitally
needed professionals.
In addition, local Iraqi industry collapsed,
kidnapping for ransom is a growth industry, the country is a wasteland,
its nation creation project bankrupt, and Iraq today more closely
resembles hell than "the cradle of civilization."
Iraq above all other nations today is
a ghoulish testimony to the myth of free market magic, but it's
even worse than that. It proves Friedmanomics a crime against
humanity and the man who led it a Nobel prize-winning fraud whose
legacy is failure. His real time record is so horrific, it's unrevealed
in the mainstream to suppress it.
It's endless foreign wars, mass killing
and destruction, detentions and torture, contempt for international
law, and total disregard for human rights and social justice everywhere.
At home, it's just as bad short of open warfare:
-- democracy is a fantasy in a corporatist
state placing profits over people;
-- the prison-industrial complex is a
growth industry;
-- social decay is increasing as well
as real human need;
-- social justice, civil liberties and
human rights are non-starters;
-- an unprecedented wealth disparity exists
in a rigid class society with growing poverty in the richest country
in the world that's also the least caring;
-- government is the most secret, intrusive
and repressive in our history;
-- the rule of law is null and void;
-- a cesspool of uncontrolled corruption
prevails with no accountability;
-- a de facto one party state exists with
no checks and balances or separation of powers and a president
claiming "unitary executive" powers to do as he pleases
and does with impunity;
-- suppression of all dissenting ideas
and thoughts;
-- an out-of-control military-industrial
complex bent on world dominance; and
-- a mainstream media serving as national
thought control police gatekeepers glorifying wars, defiling democracy
and supporting imperial conquest and repression.
This is the legacy of the man The Economist
called "the most influential economist of the second half
of the 20th century (and) possibly all of it." Once anointed,
well funded and nurtured, he could never admit he was wrong or
apologize to millions of victims who proved his ideology was hokum.
Never have so many suffered so much to reveal the flimflam of
one man and the movement he led until his death. That's the dark
side of "capitalism and freedom" unmasked that his torrent
of eulogies left out.
Stephen Lendman lives in Chicago and can
be reached at lendmanstephen@sjlendman.blogspot.com.
Also visit his blog site at sjlendman.blogspot.com
and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com
this Saturday at noon US central time but moving to Mondays at
the same time October 8.
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