"Shock therapy": curators Chubais, Gaidar and Siluanova

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The expression "Chicago boys" was coined 45 years ago. It is associated with the tragic events in Chile: the assassination of the legitimate President of the country, Salvador Allende, on September 11, 1973, and the seizure of power by General Augusto Pinochet. It was a military coup prepared and carried out by the US Central Intelligence Agency.

Socialist Allende became president in 1970 and began economic reforms in the country. One of the most important directions of these reforms was the nationalization of enterprises owned by American capital. This prompted Washington to defend American transnational corporations and organize a military coup.

Literally the day after the coup in Chile, a group of economic experts and consultants was formed, which was called the "Chicago boys". It included approximately 25 economists, most of whom received their degrees from the Higher School of Economics (HSE) at the Catholic University of Chile.

Back in 1956, the school signed a three-year program of close cooperation with the economics department of the University of Chicago, then headed by Milton Friedman. In the post-war period, the University of Chicago actively promoted the ideas of economic liberalism in the United States and around the world. Even the Chicago School of Economics brand was born. And Milton Friedman was the banner of this school.

Already in the 50s, he was flatteringly called the "economic genius" and the founder of modern "monetarism". Later, in 1976, this "genius" was awarded the so-called "Nobel Prize" in economics (in fact, this is a "fake", this name is the Prize of the Bank of Sweden, established in honor of the memory of Alfred Nobel).

The above program was completed in the late 1950s, but informal ties between the economics department of the University of Chicago and the HSE in Chile persisted. Over time, the HSE ideologically turned into a branch of the University of Chicago.

The team of "Chicago boys" actually determined the main directions of economic (and not only economic) reforms carried out by Pinochet's military junta. The essence of these reforms boiled down to curtailing the position of the state in the economy, deregulating the economy, eliminating barriers to foreign trade and cross-border movement of capital, privatizing state-owned enterprises, and creating a most-favored-nation treatment for American capital.

The following ten key figures stood out on the Chicago Boys' team: Pablo Barahona (Chairman of the Central Bank of Chile from 1975 to 1976, Minister of Economy of Chile from 1976 to 1979); Jorge Caujas (Minister of Finance of Chile from 1974 to 1976); Sergio de Castro (Minister of Economy from 1975 to 1976, Minister of Finance of Chile from 1977 to 1982); Hernan Buchi (Minister of Finance of Chile from 1985 to 1989); Jose Piñera (Minister of Labor and Pension Insurance of Chile from 1978 to 1980, Minister of Mines of Chile from 1980 to 1981); Alvaro Bardon (Chairman of the Central Bank of Chile from 1977 to 1981, Minister of Economy of Chile from 1982 to 1983); Sergio de la Cuadra (Chairman of the Central Bank of Chile from 1981 to 1982, Minister of Finance of Chile from 1982 to 1983); Miguel Cast (Minister of Planning of Chile from 1978 to 1980, Minister of Labor from 1980 to 1982, Chairman of the Central Bank of Chile in 1982); Emilio Sanfuentes (Economic Advisor to the Central Bank of Chile); Juan Aristia Matte (head of the Chilean Private Pension System from 1980 to 1990).

By the way, there was also a “girl” in the team of the “Chicago Boys”: Maria-Teresa Infante (Minister of Labor from 1988 to 1990).

It was after the military coup in Chile that the expression "shock therapy" appeared, which became well known to our citizens in the 90s of the last century. Shock therapy in Chile was manifested not only in the fact that many state social programs initiated by Salvador Allende were drastically reduced and even eliminated. There was also a rapid depreciation of the national currency (hyperinflation), massive unemployment began, more than half of the country's population fell below the poverty line.

The Chicago Boys and the military junta faced strong social resistance. And to carry out economic "reforms" they went to the physical suppression of this resistance. Tens of thousands of Chileans were imprisoned, and thousands of Chileans were brutally killed. Terror reigned in the country and a bloody dictatorship was established. The Soviet press of that time fairly objectively described the nightmare that was happening in Chile in the 70s of the last century. But the Western media, which were controlled by the "owners of money", called it "the restoration of democracy", the formation of a "free society" and "market reforms."

Western media not only concealed the real situation in the country, but even trumpeted the so-called "economic miracle" in Chile. Statistical data on the rates of economic growth were cited as convincing evidence of the "economic miracle". The figures for the annual GDP growth of 6 percent or more were cited. But, firstly, there was a banal falsification of statistical data. Secondly, as even Western economists admit, up to 80% of GDP growth was provided by the service sector. And in the service sector, as we know, liberal economics includes finance and various operations of speculators.

Thirdly, even if there were GDP growths, the beneficiary of these growths turned out to be large, primarily American capital. The country was undergoing privatization, which allowed US multinationals to regain control of the Chilean economy.

Against the background of "economic achievements" depicted by official statistics, there was a rapid decline in the standard of living of ordinary Chileans. Real wages have dropped. The merciless exploitation of wage labor created the illusion of an "economic miracle" in Chile. They did not have a positive effect on the well-being and living standards of the majority of the country's population: in the early 1980s, over 40% of Chileans lived below the poverty line; a third of the population received wages below the 1970 level; the income of 80% of Chileans did not reach the national average (about one and a half thousand dollars a year).

It is very regrettable, but even in some textbooks on economics used by Russian students, this "fake" about the "economic miracle" in Chile is reproduced. And in some textbooks the authors even associate this "miracle" with the name of Milton Friedman, unknowingly doing him a disservice. There is a version that the "Chicago boys" were directly led from America by Milton Friedman himself. Moreover, he welcomed the military coup in Chile.

In 1976, the Nobel Committee of the Swedish Academy of Sciences announced the award of the A. Nobel economic prize established by the Bank of Sweden (which is mistakenly called the "Nobel Prize"). This decision, due to the obvious involvement of the laureate in the tragic events in Chile, caused protests around the world and in Sweden itself, but they were ignored by the Bank of Sweden and the Nobel Committee.

The true role of Milton Friedman, the "Chicago School of Economics" and the "Chicago boys" in the destruction of the sovereign economy of Chile in the 70s and 80s of the last century was shown by the Canadian journalist and sociologist Naomi Klein. She is the author of the book The Doctrine of Shock. The Rise of Catastrophe Capitalism”(work on the book was completed at the end of 2007). She entered the list of world bestsellers. Despite the fact that the "owners of money" tried in every possible way to silence this work. The book was translated into Russian at the end of the last decade and published in Russia. I highly recommend it to everyone.

Klein says that in the strategy of the "owners of money" (the main shareholders of the US Federal Reserve System), an important role is given to such an instrument as "shock therapy". The author of "shock therapy" technologies is the "Nobel laureate" Milton Friedman. The technology was tested in Chile, and then it was repeatedly used in different countries of the world. Including in Russia.

"Shock therapy" - a certain algorithm of actions to destroy the political, social and economic system that existed in the country. Several months are allotted for these actions, maximum one or two years (recall the program of Grigory Yavlinsky "500 days"). After the destruction operation, a clean construction site is created, on which the construction of a completely different building begins. The construction is carried out according to the drawings, which were created in the laboratory of the "Chicago School of Economics" by order of the "owners of money".

Let me cite a few excerpts from the book The Doctrine of Shock. The Rise of Catastrophe Capitalism. " The first excerpt reveals the role of Milton Friedman in the transition from capitalism, which tried to ensure at least relative economic and political stability, to capitalism, which purposefully creates "controlled chaos" ("catastrophe capitalism"):

“Friedman was considered the most influential economist of the second half of the 20th century, and his students included several US presidents, British prime ministers, Russian oligarchs, Polish finance ministers, third world dictators, secretaries of the Chinese Communist Party, directors of the International Monetary Fund and the last three leaders of the Federal reserve system of the United States. For three decades, Friedman and his influential followers have perfected just such a strategy: to wait for a deep crisis, then to sell the wreckage of the state to private players, while citizens have not yet recovered from the shock, and then to quickly make these "reforms" sustainable."

Professor of the University of Chicago M. Friedman, according to N. Klein, is an ideologist of deliberate destruction and catastrophes, his recipes have nothing to do with economic reforms in the usual sense of the word: “And as soon as a crisis breaks out, the professor at the University of Chicago assures us, one should act quickly, to make irreversible changes with lightning speed until the crisis-ridden society comes to its senses and returns to the "tyranny of the status quo."

Friedman argues that “the new government has six to nine months when major changes can be made; if she does not use this chance and does not take decisive action during this period, she will not be given other equally rich opportunities. " This version of Machiavelli's advice - to inflict "harm" "suddenly and all at once," seems to remain the most important and invariable point of Friedman's entire strategic legacy."

N. Klein has thoroughly studied the history of the military coup and subsequent "shock" operations in Chile. It shows the true scale of the crimes that General Pinochet committed together with the "Chicago boys": “Reliable data on how many people were killed and wounded in those days was never published. The party speaks of several hundred, according to eyewitnesses of those events, there could be from 2 to 7 thousand killed, and up to 30 thousand wounded. This was followed by a national witch hunt - all opponents and critics of the regime. About 40,000 people were detained, thousands were imprisoned and many - probably hundreds - were executed. As in Latin America, major repression fell on factory workers, who represented the main threat to capitalism without restriction."

What the Western media called (and still continue to call) the "economic miracle" of Chile, in fact, should be called the robbery of the Chilean people, which was carried out not even by economic, but by force: “It is this war, which many Chileans perceived as the war of the rich against the poor and the middle class is behind the so-called Chilean economic miracle.

In 1988, when the economy stabilized and began to grow rapidly, 45% of the population lived below the poverty line. But the 10% of the richest Chileans have incomes increased by 83%. Even in 2007, Chile remains a society with pronounced inequalities: in the list of 123 countries distinguished, according to the UN, by significant social stratification, Chile is in 116th place, that is, it is included in the eight countries with the most unjust social system.

It is noteworthy that many "Chicago boys" turned out to be commonplace corrupt officials trying to cash in on bloody "reforms". They were more concerned with personal enrichment than the state of the Chilean economy. The economic situation sharply deteriorated in the early 1980s, when the debt crisis erupted in Latin America, and the Chilean economy was at the epicenter of this crisis: “Amid the impending disaster, almost all the“Chicago boys”, including Sergio de Castro, have lost their important posts in the government. Other high-profile piranhas at the University of Chicago were suspected of fraud, stripping them of the carefully guarded facade of scientific impartiality so important to the Chicago Boys' image.

After Chile, a wave of special operations codenamed "shock therapy" swept across many countries of the world. Especially in Latin America (Argentina, Bolivia, Peru, Venezuela). In a relaxed form, such special operations were carried out in some other countries (for example, Poland, Israel). It is known that almost four decades ago there was a major turn in the economic policies of the United States and Great Britain. In the USA it was a transition to Reaganomics, in Great Britain - to Thatcherism. Our "economic genius" Milton Friedman is directly related to these reversals. I just want to note that initially the economic reversals in both the USA and Great Britain were planned by the “genius of disasters” as “shock”. Conservative political forces in these countries managed to soften the shock nature of the transition to Reaganomics and Thatcherism.

But in Russia there were no shock absorbers. “Shock therapy” was carried out according to a rigid version. I will not describe it, as people of the middle and older generation remember all this very well. I will cite only some excerpts from N. Klein's book. She writes that "the goal (of shock therapy in Russia - V. K.) is obvious - to abolish the previous state and create conditions for the rampant capitalism in Russia, which in turn will create a free market democracy - under the control of arrogant Americans who have just graduated from university" …

Here she means all the same "Chicago boys". But not only of local origin (as it was in Chile), but of those who came from overseas, many of whom actually studied at the University of Chicago. Moreover, some of them were pupils of Milton Friedman, whom they did not hesitate to call their "spiritual mentor." Among them, for example, the American Jeffrey Sachs. Who, in turn, instructed Anatoly Chubais and Yegor Gaidar.

After Yeltsin left the political arena, we turned down the services of Jeffrey Sachs. When he returned to his homeland, he allowed himself to speak frankly about the reforms that were taking place in Russia under his “supervision”: “The main thing that let us down was the colossal gap between the rhetoric of the reformers and their real actions … The Russian leadership surpassed the most fantastic ideas of the Marxists about capitalism: they considered that the state's business was to serve a narrow circle of capitalists, pumping as much money as possible into their pockets as soon as possible. This is not shock therapy. This is a malicious, premeditated, well-thought-out action aimed at a large-scale redistribution of wealth in the interests of a narrow circle of people."

N. Klein believes that these many Russian leaders of the 90s can also be called “Chicago boys” without a stretch: “… Professor Milton Friedman, who was born in 1912 in Brooklyn in a family of emigrants from Galicia, could hardly have imagined that he would be popular in Russia. However, his involvement in the theory of monetarism made him perhaps the most famous Western economist in Moscow: Yegor Gaidar and Anatoly Chubais were considered here his spiritual students (hence the nickname - "Chicago boys")."

We now have our own "incubator" for the production of "Chicago boys", it is not necessary to import from overseas. I mean an educational institution that has the same name as the one that operated in Chile - the Higher School of Economics (HSE). At the helm of this school are the rector Yaroslav Kuzminov and the scientific leader Yevgeny Yasin. Although both of them are already in years (the first one is 61 years old, the second one is 84 years old), nevertheless, in their spirit and convictions, they are classic "Chicago boys".

N. Klein has many interesting observations related to the events in Russia in the 90s. "Shock therapy" in Russia, in her opinion, turned out to be almost as destructive and murderous as in Chile. Moreover, in Russia this did not even require a tough dictator like General Pinochet: “Yeltsin looks more like a corrupt jester than a formidable dictator. But his economic policies, as well as the wars he fought to defend them, have markedly increased the death toll of the Chicago school crusade, a list that has grown steadily since Chile in the 1979s. In addition to the accidental victims of the 1993 coup, approximately 100,000 civilians were killed in Chechnya. However, the worst massacre started by Yeltsin was slow, but the number of victims is much higher - these are victims of the "side effects" of economic shock therapy."

As I noted above, N. Klein finished writing her book at the end of 2007. More than ten years have passed since then. But the "side effects" of the economic shock therapy of the 90s continue to operate in Russia to this day. Moreover, there are signs that the "owners of money" with the help of "Chicago boys" such as A. Siluanov, M. Oreshkin, A. Kudrin, as well as the "Chicago girl" E. Nabiullina are preparing a second session of "shock therapy" in Russia.