Milton Friedman's "Chilean Miracle"

ALEJANDRO REUSS

This article is from the January/February 2007 issue of Dollars & Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org/archives/2007/0107reuss.html


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This article is from the January/February 2007 issue of Dollars & Sense magazine.

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The death last November of Milton Friedman, one of the best known and most influential conservative economists of the 20th century, unleashed a chorus of fawning eulogies. In the days after Friedman's death, the "mainstream" media, conservative economists and policymakers, and right-wing politicians and ideologues gushed about Friedman's commitment not only to "free markets" but to individual liberty and freedom from government intrusion of all kinds. The Financial Times summarized his philosophy as a "passionate belief in personal freedom." The New York Times credited him with inspiring a worldwide move "toward less government and greater reliance on individual responsibility." Margaret Thatcher referred to him as an "intellectual freedom fighter," and Federal Reserve Chair Ben Bernanke hailed his understanding of the "close connection that economic freedoms bear to other types of liberty."

A few reports mentioned the controversies surrounding Friedman's influence over and praise for the policies of Chile's military dictatorship. In 1973, the Chilean military overthrew the constitutional government of socialist Salvador Allende, proceeding to imprison, torture, and murder dissidents by the thousands. The dictatorship's chief economic advisors, known as the "Chicago Boys," had been trained in the University of Chicago's economics department, where Friedman was the most important figure. Friedman himself visited Chile in 1975, giving a series of lectures on "free market" economics, meeting personally with Pinochet, and soon after writing the dictator a lengthy letter advocating a "shock program" for the Chilean economy. Friedman's actions were widely viewed as an endorsement of the dictatorship, its notorious human-rights violations notwithstanding, and he later met with protests at home and abroad. While many obituaries for Friedman mentioned the influence of his "free market" ideas on Chile, few bothered to note the contradiction—a self-styled champion of individual liberty with a weak spot for an oppressive and bloody dictatorship. The New York Times' obituary for Friedman referred to the controversy over the Chile visit as no more than a "bump in the road" for him.

Friedman's relationship to the Chilean dictatorship, however, was no mere anomaly in a lifetime otherwise devoted to individual freedom. Rather, it shows an enormous blind spot in Friedman's conception of liberty. Friedman registered no protest against the dictatorship's human-rights violations in his letter to Pinochet, though he did manage to denounce the "trends toward socialism that started forty years ago, and reached their logical—and terrible—climax in the Allende regime," and to praise Pinochet for the dictatorship's "extremely wise" actions to "reverse this trend." In a famous 1982 column in Newsweek, Friedman described Chile under the dictatorship not only as an "economic miracle," despite the dramatic rise in poverty and inequality under the regime, but also as an "even more amazing political miracle." "A military regime," Friedman wrote, "has supported reforms that reduce sharply the role of the state and replace control from the top with control from the bottom." This supposed reduction in the power of the state, of course, ignored the dictatorship's criminalization of political parties and labor unions, its repression against public assembly and protest, and its practice of "disappearing" dissidents. In Friedman's worldview, it would appear, the dictatorship's "deregulation of motor transport" was a great triumph for human liberty, while state-sanctioned kidnapping, torture, rape, and murder were not worth troubling about.

Friedman's checkered history demands scrutiny above all since so many of the United States' current "free market" ideologues share his blind spot. The Cato Institute, a leading right-wing think tank and influential advocate of Social Security privatization, for example, styles itself a champion of "limited government, individual liberty, free markets and peace." Yet it employs a former official of the Pinochet dictatorship, its Secretary of Labor and Social Security, Jose Pinera, as a senior fellow and co-chair of its "Project on Social Security Choice." So much for the commitment to limited government, individual liberty, or peace—all that's left is "free markets." Appropriately enough, the organization administers a biennial prize for a "significant contribution to advancing human freedom," named in honor of—who else?—Milton Friedman.

Alejandro Reuss is a Dollars & Sense collective member, an historian of modern Latin America, and a doctoral student in economics at the University of Massachusetts, Amherst.

Resources: Nobel economist Milton Friedman dead at 94, money.cnn.com, 11/16/06; Holcomb B. Noble, "Milton Friedman, 94, Free-Market Theorist, Dies," New York Times, 11/17/06; Samuel Brittan, "Milton Friedman, economist, dies at age 94," Financial Times, 11/16/06; Milton Friedman, "Free Markets and the Generals," Newsweek, 1/25/82; Milton and Rose Friedman, Two Lucky People: Memoirs (Univ. of Chicago Press, 1998).
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