Monday, October 6, 2008

"Friedmanism" is a Mythology

AMY GOODMAN: The credit crunch is spreading to financial markets around the world. Nearly 160,000 jobs were lost here in the United States in September. That’s not including losses directly resulting from the financial meltdown. Wall Street might be breathing a little easier since Congress passed the more-than-$700-billion bailout plan Friday, but there are no signs of an easy or quick recovery.

Today we take a look back at the economic philosophy that championed the kind of deregulation that led to this crisis. We spend the hour with investigative journalist and author Naomi Klein, bestselling author of The Shock Doctrine: The Rise of Disaster Capitalism.

Naomi Klein spoke at the University of Chicago last week, invited by a group of faculty opposed to the creation of an economic research center called the Milton Friedman Institute. It has a $200 million endowment and is named after the University’s most famous economist, the leader of the neoliberal Chicago School of Economics.

    NAOMI KLEIN: When Milton Friedman turned ninety, the Bush White House held a birthday party for him to honor him, to honor his legacy, in 2002, and everyone made speeches, including George Bush, but there was a really good speech that was given by Donald Rumsfeld. I have it on my website. My favorite quote in that speech from Rumsfeld is this: he said, “Milton is the embodiment of the truth that ideas have consequences.”

    So, what I want to argue here is that, among other things, the economic chaos that we’re seeing right now on Wall Street and on Main Street and in Washington stems from many factors, of course, but among them are the ideas of Milton Friedman and many of his colleagues and students from this school. Ideas have consequences.

    More than that, what we are seeing with the crash on Wall Street, I believe, should be for Friedmanism what the fall of the Berlin Wall was for authoritarian communism: an indictment of ideology. It cannot simply be written off as corruption or greed, because what we have been living, since Reagan, is a policy of liberating the forces of greed to discard the idea of the government as regulator, of protecting citizens and consumers from the detrimental impact of greed, ideas that, of course, gained great currency after the market crash of 1929, but that really what we have been living is a liberation movement, indeed the most successful liberation movement of our time, which is the movement by capital to liberate itself from all constraints on its accumulation.

    So, as we say that this ideology is failing, I beg to differ. I actually believe it has been enormously successful, enormously successful, just not on the terms that we learn about in University of Chicago textbooks, that I don’t think the project actually has been the development of the world and the elimination of poverty. I think this has been a class war waged by the rich against the poor, and I think that they won. And I think the poor are fighting back. This should be an indictment of an ideology. Ideas have consequences.

    Now, people are enormously loyal to Milton Friedman, for a variety of reasons and from a variety of sectors. You know, in my cynical moments, I say Milton Friedman had a knack for thinking profitable thoughts. He did. His thoughts were enormously profitable. And he was rewarded. His work was rewarded. I don’t mean personally greedy. I mean that his work was supported at the university, at think tanks, in the production of a ten-part documentary series called Freedom to Choose, sponsored by FedEx and Pepsi; that the corporate world has been good to Milton Friedman, because his ideas were good for them.

    But he also was clearly a tremendously inspiring teacher, and he had a gift, like all great teachers do, to help his students fall in love with the material. But he also had a gift that many ideologues have, many staunch ideologues have—and I would even use the word “fundamentalists” have—which is the ability to help people fall in love with a perfect imagined system, a system that seems perfect, utopian, in the classroom, in the basement workshop, when all the numbers work out. And he was, of course, a brilliant mathematician, which made that all the more seductive, which made those models all the more seductive, this perfect, elegant, all-encompassing system, the dream of the perfect utopian market.

    Now, one of the things that comes up again and again in the writings of University of Chicago economists of the Friedman tradition, people like Arnold Harberger, is this appeal to nature, to a state of nature, this idea that economics is not a political science or not a social science, but a hard science on par with physics and chemistry. So, as we look at the University of Chicago tradition, it isn’t just about a set of political and economic goals, like privatization, deregulation, free trade, cuts to government spending; it’s a transformation of the field of economics from being a hybrid science that was in dialogue with politics, with psychology, and turning it into a hard science that you could not argue with, which is why you would never talk to a journalist, right? Because that’s, you know, the messy, imperfect real world. It is beneath those who are appealing to the laws of nature.

    Now, these ideas in the 1950s and ’60s at this school were largely in the realm of theory. They were academic ideas, and it was easy to fall in love with them, because they hadn’t actually been tested in the real world, where mixed economies were the rule.

    Now, I admit to being a journalist. I admit to being an investigative journalist, a researcher, and I’m not here to argue theory. I’m here to discuss what happens in the messy real world when Milton Friedman’s ideas are put into practice, what happens to freedom, what happens to democracy, what happens to the size of government, what happens to the social structure, what happens to the relationship between politicians and big corporate players, because I think we do see patterns.

    Now, the Friedmanites in this room will object to my methodology, I assure you, and I look forward to that. They will tell you, when I speak of Chile under Pinochet, Russia under Yeltsin and the Chicago Boys, China under Deng Xiaoping, or America under George W. Bush, or Iraq under Paul Bremer, that these were all distortions of Milton Friedman’s theories, that none of these actually count, when you talk about the repression and the surveillance and the expanding size of government and the intervention in the system, which is really much more like crony capitalism or corporatism than the elegant, perfectly balanced free market that came to life in those basement workshops. We’ll hear that Milton Friedman hated government interventions, that he stood up for human rights, that he was against all wars. And some of these claims, though not all of them, will be true.

    But here’s the thing. Ideas have consequences. And when you leave the safety of academia and start actually issuing policy prescriptions, which was Milton Friedman’s other life—he wasn’t just an academic. He was a popular writer. He met with world leaders around the world—China, Chile, everywhere, the United States. His memoirs are a “who’s who.” So, when you leave that safety and you start issuing policy prescriptions, when you start advising heads of state, you no longer have the luxury of only being judged on how you think your ideas will affect the world. You begin having to contend with how they actually affect the world, even when that reality contradicts all of your utopian theories. So, to quote Friedman’s great intellectual nemesis, John Kenneth Galbraith, “Milton Friedman’s misfortune is that his policies have been tried.”


    Now, that neglect of public sphere that we saw in New Orleans is, of course, a national crisis. The American Society of Civil Engineers estimates that there is a deficit, an infrastructure deficit of between $1.5 trillion and $2 trillion, just to bring the roads and bridges up to safety standards. And the solution, up until very recently, that was being held up, was public-private partnerships, was privatization of essential infrastructure. You know this in Chicago, because the airport is one of the ones on the block.

    But one interesting thing that happened today is that the biggest—the biggest test case for infrastructure privatization is the Pennsylvania Turnpike, which was on the verge of being handed over to a consortium of private companies on a seventy-five-year lease, and that deal fell through today. And I think part of the reason why it fell through is because one of the companies leading the consortium was Citigroup. And the idea of putting more essential services, more things that are far too important to fail, in the hands of the same people that have made such a mess of the financial sector suddenly seems like insanity. But on the other hand, the economic pressures on states, on the federal government, is only going to increase, right? Because it seems inevitable that those private debts are going to be transferred onto the public books. So, nothing can be taken for granted in this moment.

    The other way where we—the other place where I think we see the legacy of Friedmanism in this moment is in the backlash to the Wall Street bailout, the backlash that essentially killed the bill in Congress, although it’s clear that it’s going to be revived. People got very, very frightened yesterday when the stock market had its worst day, and they called their Congress people with another message. And I just want to say, on that front, that it’s easy to conclude from that that people are just untrustworthy, and they shouldn’t really have a say in the economy, which is, I think, probably what Milton Friedman would say. And this was part of the impulse toward specialization and treating everything economic as hard science, because that means, you know that it’s out of reach of democracy. It’s not subject to any debate; these are hard rules.

    Now, I think that the sort of volatility we’ve seen on the—in the markets the past few days is at least partially the result of the incredible recklessness of the Bush administration in dangling a $700 billion bailout, just free money, saying we’re going to do this, before they had any guarantee that they were going to be able to do it. So, of course, the stock market rallies at the prospect of free money. Why wouldn’t it? And then, when it falls through, of course, it dips. And I’m not saying this is all planned, but this sort of rollercoaster we’ve been on has just been part of this pattern of incredibly poor management, poor government, that infuses every aspect of this crisis.

    And this, of course, is also part of the ideology, because the Bush administration, far from being an aberration, is really the culmination of the idea that government is the problem, not the solution. I think they really believe that and totally abdicate it, their responsibility to manage, to govern. The popping of the housing bubble was a surprise to no one. But the only preparation was a two-and-a-half-page plan presented by Henry Paulson that said, “Give me $700 billion, and don’t ask any questions.” That is not preparing, right? This was laissez-faire in action, a really scary kind of laissez-faire.

    But the anger is, of course—the anger at Wall Street, this sort of—you know, there was a vindictive quality to a lot of what the Congress people heard from their constituents: “Why should we bail them out? Look at what they’ve done to us.” And it was Main Street versus Wall Street. And this is—you know, this is another failure of Friedmanism, because the idea of the ownership society was that class-consciousness was supposed to disappear, right? Because union members were not going to think of themselves as workers, because everybody owned a piece of the stock market, and everybody was going to have a mortgage, so they would think like owners, they would think like bosses, they would think like landlords, not like tenants, not like workers. Class is suddenly back in America, with a vengeance, and it is the result of this class war that was waged from this school.

    Now, interestingly, there is another Chicago boy, and Barack Obama is responding to the market crisis by turning his campaign really into a referendum; though he wouldn’t call it a referendum on Friedmanism, he seems to be turning it into a referendum on Friedmanism. He’s saying that essentially what we’re seeing on Wall Street is the culmination of an ideology of deregulation and trickle-down economics—give a lot at the top and wait for it to trickle down to the people at the bottom—and that is precisely what has failed. And what’s interesting is that the more he says that, the higher his ratings go in the polls.

    So I think we can see a couple of scenarios for the future. One, McCain wins, and it’s economic shock therapy. You know, the thesis of The Shock Doctrine is that we’ve been sold a fairy tale about how these radical policies have swept the globe, that they haven’t swept the globe on the backs of freedom and democracy, but they have needed shocks, they have needed crises, they have needed states of emergencies. It doesn’t necessarily have to be an outright military coup, which are the conditions in which this ideology had its first laboratories. It can just be a bad-enough economic crisis, a bad-enough hyperinflation crisis, in an electoral democracy that allows politicians to say, “Sorry about everything we said during the campaign. Sorry about the usual ways in which we make decisions, debate discussion. We’re going to have to haul up, form an emergency economic team and impose shock therapy,” usually with the help of the International Monetary Fund and the World Bank.

    Milton Friedman understood the utility of crisis. And this is a quote—you know, I use it a lot, but I’ll use it now again, because I think it’s important—which he has at the beginning of the 1982 edition of Capitalism and Freedom: "Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”

    Now, because I’ve been studying the utility of crisis for this free market project, which I consider to be very anti-democratic, it’s really attuned me to looking for the ideas that are lying around. And I’ve been paying really close attention to people like Grover Norquist, Newt Gingrich, the Republican Study Committee, these past few weeks. And I have an “ideas lying around” file, which are the ideas that they are floating right now in the midst of this economic crisis. And a lot of them are familiar, but the point is is that they’re being repackaged now as the way out of this economic crisis. So, it’s suspending the capital gains tax, getting rid of the post-Enron regulations, getting rid of mark-to-market accounting. In other words, more deregulation and less money in the public coffers. And it is interesting that the way in which this bill—the way the senators were trying to get the bailout bill through the Senate, after it had failed to go through Congress, was by adding tax cuts, a package of $118 billion worth of tax cuts. Some of them are good, some of them are not. But it’s a deepening of this crisis.

    So, we know that the crisis is coming, and the question is, how are we going to respond? I think there needs to be better ideas lying around. I think the Milton Friedman Institute is about keeping the same old ideas that have been recycled so many times, that actually make these public crises worse, making sure that they are the ones that are ready and available whenever the next crisis hits. I think that is what—at its core, that’s what so many of the right-wing think tanks are for, and that’s what the Institute is for. And I think that is a waste of the fine minds at this university. I think it is a waste of your minds, your creativity, because all of these crises—climate change, the casino that is contemporary capitalism—all of these crises do demand answers, do demand actions. They are messages, telling us that the system is broken. And instead of actual solutions, we’re throwing ideology, very profitable ideology, at these problems. So we need better ideas lying around.

    We need better ideas responding to what a Barack Obama presidency would absolutely face. As soon as he comes to office, “Yes, you can” turns into “No, you can’t; we’re broke.” No green jobs, no alternative energy, no healthcare for everyone. You know, his plan for—to give healthcare to every child in America costs $80 billion. Bailing out AIG cost $85 billion. They’re spending that money. They’re spending those promises. So, the people who are going to say, “No, you can’t,” who are going to use this crisis to shut down hope, to shut down possibility, are ready.

    And I think it would be so wonderful to have the brilliant young economists of the University of Chicago—I don’t know if any of them bothered to come out tonight—but to have your minds at work meeting this crisis. We need you. We need open minds. We need flexible minds, as creative as possible. The Milton Friedman Institute, in its name and essence, is about trying to recapture a moment of ideological certainty that has long passed. It has long passed because reality has intervened. It was fun when it was all abstract. It was fun when it was all in the realm of promise and possibility. But we are well past that. Please, don’t retreat into your sacred texts. Join us in the real world.

    AMY GOODMAN: Naomi Klein, author of The Shock Doctrine: The Rise of Disaster Capitalism. She was speaking at the University of Chicago against the naming of the economics institute there, the Milton Friedman Institute, invited by a group of faculty.


Joseph Campbell and Eugene Kennedy discussing the importance of keeping our thoughts alive and in tune with the times.

A Discussion 109

KENNEDY: Still, the fact that so many creative persons, so many modern mythmakers, are trying to deal with the impact of space explorations tells us that they feel something in their bones about this change. Do any of these movies capture a sense of what we are talking about?

CAMPBELL: I thought that 2001: A Space Odyssey was very interesting in the way in which it dealt with symbols. You recall, at the beginning, that we see a community of little manlike apes, australopithecines, snarling and fighting with each other. But there is one among them who is different, one who is drawn out of curiosity to approach and explore, one who has a sense of awe before the unknown. This one is apart and alone, seated in wonder before a panel of stone standing mysteriously upright in the landscape. He contemplates it, then he reaches out and touches it cautiously, somewhat in the way the first astronaut's foot approached and then gently touched down on the moon. Awe, you see, is what moves us forward. That's what the filmmaker recognized, that there was a continuity through all time of this motivating principle in the evolution of our species. So the panel is seen later on the moon approached by astronauts. And again, floating in space, mysterious still.

KENNEDY: The point is not to argue over the literal symbolism of the slabs but to let them speak to us as symbols. This is what you mean by religious symbols.
CAMPBELL: Yes, they do not represent historical facts. A symbol doesn't just point to something else. As Thomas Merton wrote, a symbol contains a structure that awakens our consciousness to a new awareness of the inner meaning of life and reality itself. Through symbols we enter emotionally into contact with our deepest selves, with each other, and with God—a word that is to be understood as a symbol. When theologians spoke of God's being dead, a decade or so ago, just as the space age began, they were really saying that their symbols were dead.

KENNEDY: You see a distinction between religion based on the literal interpretation of symbols as historical events and one in which the symbols are mystical references that help us see into ourselves.

CAMPBELL: Yes, the latter is the religion of mysticism, the other a religion of belief in concrete objects, God as a concrete object. In order to understand a

110 Thou Art That

concrete symbol we have to let go of it. When you can let the literal mean¬ing of a religious tradition die, then it comes alive again. And this also frees you to respect other religious traditions more. You don't have to be afraid of losing something when you let go of your tradition.

KENNEDY: Isn't something like this actually happening in some religious bodies? In the Roman Catholic Church, for example, many people no longer readily accept the authority of the clergy to regulate their lives, but at the same time they discover they are close to and even like their Catholic tradition. They seem to possess it in a new way.

CAMPBELL: Yes, that is happening in many groups. Many people have learned to let religious symbols speak directly to themselves to order their lives. They don't believe that a group of bishops or other religious leaders could meet in conference and decide for them which interpretation of a symbol must be believed. But they don't reject their religious tradition. They discover that symbols, when they are not pressed literally, can speak clearly across different traditions. The churches have to ask themselves: Are we going to emphasize the historical Christ, or the second person of the Blessed Trinity, the one who knows the Father? If you emphasize the historical, you deemphasize the spiritual power that is the symbol of the basic consciousness that is within us.

KENNEDY: Isn't it disconcerting for a person to reexamine his or her own religious tradition that way?

CAMPBELL: Yes, that is the problem of letting the tradition die. The mystical writer Meister Eckhart once wrote that the ultimate leave-taking is the leaving of God for God. People feel panicky at the thought that we might all have something in common, that they are giving up some exclusive hold on the truth. It is something like discovering that you are a Frenchman and a human being at the same time. That is exactly the challenge that the great religions face in the Space Age.

KENNEDY: So, in this freefall into the future, understanding our religious symbols is a way of using our parachutes. What about symbols of religious worship?

CAMPBELL: Well, they are meant to be respected, but often they are not. Preachers think they have to explain them instead of letting them speak for

A Discussion 111

themselves. That is why the destruction of the Catholic liturgy in the name of reform was such a disaster. It was an effort to make ancient symbols and rituals more rational. And they threw out the Gregorian chant and other great symbolic achievements in the process; they disowned religious sym¬bols that spoke directly to people without need of mediation. The old rit¬ual of the mass spoke powerfully to people. Now the celebrant carries out a Julia Child sort of function at the altar.

KENNEDY: The justification was that it was the reasonable thing to do. But worship is not reasonable in that sense. You have written that part of our loss of a sense of meaning, our "Waste Land" experience, is due to the fact that we have lost our connections with a mystical understanding of our lives.

CAMPBELL: The problem has been that institutionalized religions have not allowed symbols to speak directly to people in their proper sense. Religious traditions translate mythological signs into references to historical events, whereas properly they stem from the human imagination and speak back to the psyche. Historical events are given spiritual meaning by being inter¬preted mythologically, for instance, with virgin births, resurrections, and miraculous passages of the Red Sea. When you translate the Bible with ex¬cessive literalism, you demythologize it. The possibility of a convincing ref¬erence to the individual's own spiritual experience is lost.

KENNEDY: How would you define mythology here?

CAMPBELL: My favorite definition of mythology: other people's religion. My favorite definition of religion: misunderstanding of mythology. The misunderstanding consists in the reading of the spiritual mythological symbols as though they were primarily references to historical events. Localized provincial readings separate the various religious communities. Remythologization—recapturing the mythological meaning—reveals a common spirituality of mankind. At Easter, to return to our example, we might suggest the renewal of the knowledge of our general spiritual life through casting off, for a moment, our various historical connections.

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