Klein describes free market ideology, championed by Michael Freedom and the Economics department at Chicago University, as a force growing in opposition to Keynesian and Developmentalist theories. Increasingly since the 60’s, free market ideology has trumped developmentalism and Keynesian intervention, often arousing anti-communist sentiment to discredit them. Since the Washington Consensus, and after influencing reform in many countries, the IMF and US administration (and others) have grown more confident and callous in carrying out variations of disaster capitalism to generate free market reform and profit.
Keynesian: John Maynard Keynes was a British economic theorist. In Klein’s simple summary, his views came to dominance immediately after World War II, when the international community sought to support struggling economies to maintain political stability and peace. The main tenets of his theories include intervention, social spending, and regulation to avoid dangerous market fluctuations and maintain standards of living.
Developmentalism: the belief that emerging economies need “inward-facing industrialization,” instead of multinational interference and a lack of protections. The aim is to advance the domestic economy, education, and technology rather than offer cheap labour and export of natural resources to an open global market.
Friedmanism / Chicago School: a very clear belief that the free market and its invisible hand are the best mode of economy, and that any regulation, including distributive taxes, restricting tariffs and humane price protections, will interfere and disrupt the properly functioning economy. And so “governments must remove all rules and regulations standing in the way of the accumulation of profits. Second, they should sell off any assets they own that could be corporations running at a profit. Third, they should dramatically cut back funding of social programs.” All prices and wages should be set by the market and all sectors – including health, education, pensions, and national parks – should be privatised. Global free trade is the extension of these theories.
1989 The Washington Consensus: an agreement by think tanks, economists, and administration alike. The consensus was a reiteration of Chicago school ideology, writ large and politicised. The focus was on the reduction of inflation by means of privatisation and conditional foreign aid. Significantly, emerging at the same time is the awareness that crises are the best time for economic reform and profit for the international financial community; more shocking is the suggestion of the prerogative to CREATE a crisis to enable reform. Over the course of the 80's and early 90's, these are the thinkers who gained control of the World Bank, the IMF, as well as top advisor positions to developing countries around the world.