Not Dead Enough. posted by Richard Seymour

Pinochet is dead, but not dead enough. To see him as simply another vile bastard dictator who has snuffed it is to miss the point. He was crucial, inasmuch as he provided the opportunity for advanced capitalist states to test in the periphery a doctrine that lurked in the margins of political discourse back home. Long before the Arab-Israel war in 1973 and the OPEC crisis, capitalism was showing a serious crisis of profitability. As a result of diminishing returns on investment, the stock markets were slowing down, corporations offered low dividend payouts, interest rates were not much better than inflation - the wealth of the super-rich was being eroded, and a political response was called for.

As the crisis bit, and states went into fiscal crises, a vibrant extra-parliamentary global left pushed mainstream social-democratic parties to pursue the intensification of state regulation of capital (although the Eurocommunists pursued a more openly pro-market approach). If the post-war compromise involved guaranteeing full employment to the working class in exchange for its acquiescence in a the continuation of a precarious capitalism, the compromise could best be prolonged by increasing corporatist management of the economy. In Britain, the Labour Party was elected on the back of a wave of class struggle on its most radical agenda ever, far more radical than its 1945 agenda. Various experiments were attempted with forms of worker management. In the US, a Democratic congress pushed through a raft of laws enshrining new rights for workers and consumers. But, fundamentally, the enemy was not tackled head-on, and the remedies proved inadequate. Stagflation persisted, and in the same year that the Labour Party was bailed out by the IMF, New York went bankrupt. In practise, most social-democratic parties ended up attacking and restraining their own constituencies for pragmatic purposes.

Pinochet's Chile offered a new way of doing things. Following a massive effort of violent coercion, the banning of trade unions, the formation of secret police and mass disappearances, the 'Chicago Boys' were invited by the general to devise radical economic reforms. They privatised public entities, enforced trade liberalisation, and enshrined the right to repatriate profits. They opened up natural resources to be exploited by foreign corporations, with the one exception of the crucial resource of copper. Pinochet could attack the working class with outright violence because he had taken power with the assistance of a US-backed coup after years of CIA destabilisation in which people had been terrorised about the future. But the results of this experiment involved a short-term revival of the Chilean economy and new opportunities for capital accumulation, such that Western state-planners felt confident enough to take it up as their new doctrine.

It was on this basis that Thatcher galvanised consent for her commitment to roll back union power, and it was the same that allowed Paul Volcker in 1979 to notoriously use the fiat of the Federal Reserve to push the rate of interest up to close to 20 per cent, thus deliberately causing a recession not only in the United States but throughout much of the world, and forcing a change in monetary policy. Corresponding political changes facilitated deregulation, privatisation, and the attacks on unions, the catastrophic baby steps in the restoration of capitalist class power. Over the ensuring two decades, the share of the wealth accruing to the top 0.1% in American society trebled.

The experiments with peripheral states for the benefit of the metropolitan ruling classes have not ended either: for a recent example, take the decision to impose a flat tax system on Iraq, a political priority for the Republican right for some time.

Pinochet's central legacy remains in place, and if we want to exorcise his ghost and redeem his victims, the first thing to do is to build the movement internationally to challenge this neoliberal consensus.