“Capitalism and Freedom” Unmasked
Posted Oct 4, 2007

“Capitalism and Freedom” Unmasked

by Stephen Lendman

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
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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.