Exploring the Eclipse of Equality

Indeed, by Little Else: What Chile might teach us

In Uncategorized on March 11, 2010 at 10:40 am

Today, we witness the passing of something remarkable in Chile–the moratorium on right wing rule after the overthrow of brutal dictatorship. As tragic as it is to have had the earthquake that less experienced civilizations would not have survived, the near apocalypse now stands as a political metaphor for ideological transition: and perhaps forgiveness. Sebastián Piñera has a lot on his shoulders; like Atlas, he has to uphold the ground on which the Chilenos will rebuild. If he carries on the tradition of political restraint that has characterized that system since the overthrow of Pinochet, then we can be hopeful. If not, Latin America may well tip back into counter productive innovations.

What strikes me most about Piñera is not the superficial resemblances to a figure like Italy’s Berlusconi. True, he is among the richest men in the world and has direct control over parts of Chile that make the phrase conflict of interest look like a euphemism, but democracy has been demonstrated to be compatible with a degree of plutocracy. What is most interesting to me is his Harvard Ph.D in economics. From what I can find, without full exploration, his intellectual work  is marked by the laissez-faire approach of the University of Chicago, which has been so contentious in that country for the degree to which Friedman’s ideas were embraced by Pinochet.  His Harvard work looks innocuous enough, but now that a leader of the right is in power, one can’t help but to think of those overused but unforgettable lines from Keynes:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

This time we have a practical man in power who likely does not think himself exempt from intellectual influence. The economist is him, and he may not be defunct. The attraction of the laissez-faire school is as powerful as ever in many parts of the world and has currently become ever more publicly promoted, even in populist movements here in the United States. Now that there is so much work to be done and so much business to be had, Chile could risk becoming the world’s biggest enterprise zone ( a euphemism in itself). This would surely produce a fair amount of unrest in Chile and could polarize the country once again, but that is not the worst of it.

Just for resonance with the quotation above, consider another famous one from Edmund Burke that Paul Samuelson proudly co-opted in the famous textbook of his that reinvigorated the classical tradition after the Keynesian turn:

The age of chivalry has gone: the age of economists, sophists and calculators has arrived

This was surely meant as a kind of ironic poke at conservatism and an opportunity to show how Herbert Hoover economics could be compatible with liberalism and progress–an idea that was quite popular in the environment of the 1940s when conservatism had not thrown off its association with the racial caste system.

One aspect of the line, which has been lost, concerns the word chivalry. It is a curious feature of markets, that when they are instituted (they are never found in nature as we are taught to believe), there is a strong need to provide a garrison function to keep both cheats and moralists from breaking the delicate rules that undergird free exchange. As Plato would have told us, this requires stout guardians who have a code of conduct that prevents them from abusing the power of the sword. This is well rendered as a kind of chivalry and explains why the compatibility of laissez-faire and military dictatorship is no contradiction. Rising free market economies always seem to have awesome militaries and these are used for less than nefarious purposes within the rules of the neo-classical game. Enforcing contracts turns out to be a rough business and Chile’s history of traumatic volatility is our best recent lesson in that regard.

It may be that I worry about this out of personal connection to the country, but I think we have an opportunity in Chile to demonstrate to all of Latin America (and beyond) how a peaceful transition out of horror can proceed. President Bachelet was a great model of how socialist ideals and a personal history of torture can be made compatible with the global norms of political economy. Now that catastrophe has demonstrated again that the essence of liberty is order (as opposed to the reverse), let’s see if market fundamentalism can resist the lure of the fife and the drum.

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