why capitalism needs terror:
It was Nixon and Kissinger together. I end the book with a quote from a declassified letter from Kissinger to Nixon where he says that the threat of Allende was not about any of the things they were publicly saying at the time -- that he was cozying up to the Soviet Union, that he was only pretending to be a democrat and that he was going to turn Chile into a totalitarian system. Kissinger writes the real threat is the problem of social democracy spreading. The Soviet Union was a convenient bogeyman. It was easy to hate Stalin, but what was always more of a threat was the idea of democratic socialism, a third way between totalitarian Communism and capitalism.
(...) The idea that you could turn Chile into a laboratory for extreme Chicago School economics is a little like thinking you could launch a revolution against capitalism in Beverly Hills. It was deeply inhospitable for these ideas. But in this collaboration between Pinochet and the economists who'd gone to the University of Chicago on grants from the U.S. State Department, Chile was a laboratory for all these ideas that to this day have not been implemented in the United States, like a flat tax -- a 15 per cent flat tax -- charter schools, labour laws that essentially made it illegal for unions to be involved in any political activity. Straight out of the handbook, you know? It was like they took Friedman's manifesto and just turned it into law. The idea that this could happen in Chile at this point in history when there was so much support for developmentalism of course required force.
(...) The government, the Communist party, is extremely worried about the levels of inequality that have opened up between the countryside and the city and between the hyper-rich and the hyper-poor living side-by-side. And it's responding in two ways. One is to do some redistribution, which is really outside of the Chicago model. You have major new investments in the countryside, you have a commitment to waive school fees for the first nine years for rural children, because there were 87,000 protests in China last year -- an unbelievable statistic -- so clearly someone's not happy with how things are going in China.
(...) What I think China shows is this idea that there was a natural correlation between capitalism, between free markets and free people -- it's simply not the case. China's either undergoing a very slow transition or they've skipped the democratic phase completely, just sidestepped it, and ended up with this thing that, I think, should be described as corporatism. But that is the trend not just in China but also in Russia, in the United States, in Chile under Pinochet. It was the same patterns of heavily indebted states, actually quite interventionist governments but intervening on behalf of corporations, against workers.
(...) The New Deal came to embody another kind of capitalism, which did much more redistribution. And it wasn't because people were nice; there was a battle of ideas between Communism and capitalism, and in the 1930s and '40s and '50s and '60s it was capitalism in a seductive phase. And so elements of socialism were inserted into this model so that a more radical version of socialism would be less attractive. I'm quoting FDR and Keynes. And that model actually was the period where you had the most rapid economic growth, but it was more fairly distributed. This was the period where the middle class really grew, not just in the United States but in countries like Chile and Argentina. And then kind of a class war was waged -- a right-wing class war.
(...) In 1980 the gap between CEOs and the workers who worked for them was 43:1 and now it's 422:1.
(...) At leftie talks there's always somebody who goes up to the mike and says, "But don't things have to get worse before anything happens?" and I slam those people down because the values that I would hope we represent are human values, and that is such a profoundly anti-human idea -- of desiring a descent so there can be some shock that will wake people up.
(...) Most of those statistics are about China and India, countries that are undergoing rapid urbanization, and what a dollar means if you're living on a farm and growing your own food and have access to water and what it now means in a slum on the outskirts of Delhi, is completely different. But of course there have been successes, and there are wonderful things about living in a capitalist country -- I benefit from it, you benefit from it. We've been forced into believing we can't have the benefits of a market system unless we destroy the bridges that'll allow more people to have that access. And when we do things like, in this country, triple tuition fees over the course of the '90s, and privatize health care, and take out these bridges between classes, we have a very brutal economic law.
(...) Look, I think there's going to be a lot of radical leftists who would be disappointed by how Keynesian this book is.