Forty years ago today, a US-backed coup d'état in Chile would have much greater ramifications for the world than the terrorist attacks of a decade ago.
General Pinochet not only ushered in a fascist revolution bent on weeding out socialism — and socialists — from the South American country (a revolution that would spread throughout the Southern Cone.) He kicked off, what would turn out to be, a global free-market revolution that would wreak havoc in countries around the world — culminating in the 2008 global economic meltdown.
It all started with the first free-market meltdown: the stock market crash of 1929 that produced the Great Depression. This colossal market failure brought about an end to the Gilded Age and the free-market ideology that produced it.
Keynes and centrist economics
It became clear that the world was stuck in an economic quagmire that required government action. John Maynard Keynes developed the centrist mixed-market economic system which would end the depression and create modern living standards in the post-war era (which were unprecedented in history.)
During this time, free-market economists were all but relegated to the lunatic fringe. Given the enormous success of the Keynesian system, and the obvious failure of laissez-faire, they didn't have a leg to stand on.
Friedman and the free-market revival
In the late 1960s, Milton Friedman spearheaded a free-market comeback founded on a theory about money. Friedman claimed the cause of the Great Depression was not right-wing economics, but the US Federal Reserve's tight monetary policies. Friedman's monetarism got plutocratic doctrine back in the game.
A decade after Pinochet, Reagan and Thatcher brought the free-market revolution to the Western world. Eventually so-called liberals like Bill Clinton would mistake it for evidence-based policy. Clinton, embracing free-market banking deregulation, put an end to the 1933 Glass–Steagall Act that provided 80 years of unprecedented banking stability, which would be at the center of the 2008 financial collapse.
Chile was not only a laboratory for libertarian economics, it was also the birth place of modern methods of torture developed by the CIA. Naomi Klein weaves the two parallel real-history narratives together in a compelling, well-documented book — The Shock Doctrine: The Rise of Disaster Capitalism.
Like Communism and Nazism, free-market ideology is a force of evil that threatens the very survival of civilization. The Keynesian mixed-market system is a proven alternative. It creates a just society founded on equality of opportunity and provides the regulatory framework necessary for environmental sustainability.
Time to turn the tide.