The Devastating Price Of Free Markets


On the 40th anniversary of the military coup that overthrew Salvador Allende’s democratically elected government, NSW Liberal Whip Peter Phelps praised the dictator Augusto Pinochet, for saving Chile from “communism” by adopting the views of the Chicago School of Economics and bringing “prosperity to his country”. Prosperity at a price.

“Yes, Pinochet killed people,” said Phelps, but “if anyone knows of any other way to overthrow a government than by military force, then let me hear about it.” Apparently Phelps, an elected member of NSW Parliament, is unfamiliar with the concept of electoral democracy.

Had Phelps hailed democracy, rather than market fundamentalism, as justification for mass murder, the response may have been different. Democracy and freedom have long been smokescreens for war and many crimes have been committed in their name.

Would Phelps’ comments be utterable today if we did not live in a world where market freedom has become a kind of god?  The “right” of business to operate without impediment is no longer simply the operating logic of global capitalism. It is a principle that many advocates of the free market place above human dignity, security and freedom from suffering for ordinary people.  And it is a right often enforced by violence. That’s what happened in Chile.

Supported by the Chilean ruling class and foreign powers that had previously played a major role in destabilising Allende’s administration, the military attacked a democratically elected government, bombed and machine-gunned its offices, and then hunted down, tortured, murdered and disappeared many of its supporters.

Phelps’ praise for the dictator was indifferent to the systematic human rights violations, and even justified the horror of the regime. During the 17 years of the Chilean dictatorship, 40,000 people were imprisoned and tortured, many of them people (including children) without political affiliation, swept up in the general repression.  Over 3000 were murdered and 1000 of them are still missing. Almost one million Chileans were forced into exile.

It is not a coincidence that the liberalisation of the Chilean economy has been one of the most extreme cases in the world. The current economic model was set up through various legal reforms implemented under a new Constitution that passed without a Parliament or a proper justice system, and at a time that the political opposition was banned and persecuted. But even in the face of state terrorism, people fought back; they did not quietly accept these changes.

When the International Monetary Fund and World Bank began rolling out their structural adjustment programmes in the Global South in the 1980s — programmes of privatisation, tax-cutting, reduction of welfare, weakening of unions and opening economies to global business — democracy was not a precondition. What was valued was pushing ahead whether there was opposition or not. And authoritarian regimes could do that as well as democratic ones, sometimes better.

Not much has changed today. Greece has been handed a classic structural adjustment programme, resulting in drastic unemployment. 

The repression of workers’ movements in the Global South goes on. Only days ago, the conservative government of Enrique Peña Nieto sent in riot police to attack the thousands of public sector teachers who had occupied Zocalo Square in Mexico City. The city had been the scene of two months of rolling strikes organised by the teachers’ union in response to a series of education reforms, including laws to weaken the union’s representative power by individualising accreditation processes. Teachers were beaten, hurled to the ground, lined up against walls, arrested and publicly humiliated in front of television cameras for daring to stand in the face of the market.

In Honduras, unionists have been systematically murdered since the coup that ousted Manuel Zelaya in 2009. Colombia, formerly one of the most unionised countries in the Americas, is now the most dangerous country in the world for trade union activity; it has the highest number of assassinations of unionists anywhere in the world. In Chile, the massive student movement that has been fighting against a highly unequal educational system has been strongly repressed by the police.

The relocation of manufacturing to the developing world, where lower wages and fewer labour protections mean larger profits for transnational business, has been a crucial feature of the comparative advantage strategy of the brave new world. Free trade zones have been set up in many regions promising growth and development for poor countries.  They are premised on the permanent suspension of rights for local employees. Low-paid and precarious work usually results; the claim is that it’s better than being destitute.

Yet the price of free markets can be devastating. The recent Rana Plaza disaster in Bangladesh is a harrowing reminder that competition to produce goods for maximum profit in the Global North has devalued the lives of Southern workers.  There are very large numbers of employees who work without insurance or protections, and in the case of the Rana Plaza and other garment manufacturing zones, without personal freedom. The high death toll of the disaster was attributed to the practice of locking workers inside factories in order to secure merchandise and labour time.

Globalisation is usually pictured as a benign business – jetsetting holidays, world cuisine, mobile phones and Facebook on every continent. There has always been an uglier underside, as the NSA Prism scandal reminds us. Surveillance and violent repression isn’t just what communist governments did. The US government for many years trained military and police officers at the “School of the Americas” how to repress social movements in their own countries. The US has a long history of sending the marines, or supporting military coups, against uppity governments in Latin America – as it did in Chile.

This is the world that Phelps defends, one in which criminals are celebrated as statesmen and saviours of the free market.

The outrage of the 60,000 strong Chilean community at Phelps’ statement is shared by many in Australia. Vlaudin Vega, a member of the “40 Years On” committee says: “for us, it is outrageous, unbelievable that in the Parliament of NSW a person with such a position has made comments that Augusto Pinochet is a hero”. The Chilean community yesterday held a protest in front of NSW Parliament and has launched a petition asking for Phelps to be removed from his post.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.