Foundations of the American Century

by Inderjeet Parmar

  It is clear that American foundations, without actually understanding the long-term significance of Nigerian dynamics, ended up pursuing a course of action, across several sectors, that exacerbated ethnic tensions, tolerated political and business corruption, and generated a form of market economy that sharpened inequalities across ethnic groups and social classes. According to Green, the Nigerian Plan authored by Stolper was “basically a proposal for growth within the existing economic and sociopolitical structure; it is not a call for development through structural change,” as well as being utterly unrealistic in its “stated growth goals.”129 Indeed, Green argues that Ghana’s economic plan was more attuned to rapid economic development, not Nigeria’s, openly naming Arnold Rivkin as making “unsubstantiated judgments” unencumbered by a knowledge of economics. To Green, the problem in Nigeria lay at the door of its political class, “operating an oligarchy behind—a now badly-cracked—façade of parliamentary democracy.”130 Ghana’s government, on the other hand, was more mass based “and responsive to mass aspirations.” This was known during the life of the plan to professional economists other than those favored by the Ford Foundation, MIT, and the U.S. state. Their policies played an indirect role in Nigeria’s slide into civil war.131

  CONCLUSION

  The evidence above shows clear continuity of the foundations’ domestic and foreign strategies—a smoothly continuous approach to African studies at home and to Africa itself—undergirded by elitist, racial, and imperial assumptions. A globally hegemonic mindset is revealed in the foundations’ funding strategies, with a state-private network central to its realization. Retaining Nigeria in the Western camp and contributing to European recovery and strength took priority over poverty alleviation or improving mass living standards. Equally, it is clear that the Nigerian political class fully supported this approach principally because they were its main beneficiaries. That political class—a class-based ethnopolitical settlement in a federated political system with clearly demarcated (but always contested) lines of regional and central revenue raising and collection—was consciously fostered by the colonialists in the 1950s (and, in the case of tribal chiefs who predominated in the Northern Region, much earlier, and then by U.S. interests both official and private).132 Given the strategic and ideological interest in Africa, the foundations’ knowledge requirements were skewed toward information for influence and control rather than the lofty goals of “development.” Or rather, the components of “development” that favored some degree of social progress—greater levels of equality, welfare, and the like, which would affect most immediately mass living standards and life chances—were easily postponed or jettisoned, while core goals of “development,” such as the maintenance of a pro–free market “modernizing” elite, regardless of its levels of corruption and violence, were advanced. In the writing of Nigeria’s national development plan, Stolper—with full support of the Nigerian political class—dismissed social considerations as “economic nonsense.”

  The outcomes of foundation funding—and other Western funding—were that Nigeria remained in the Western camp because its pro-American political and knowledge networks, despite failure adequately to develop the country, proved resilient. Despite their failure to achieve the ends for which it was claimed they were established, foundation networks continued to form the basis of Nigerian planning and educational development: networks as ends but also as means to unstated ends.

  Similarly, at home, Africanist networks remained very strong and useful, as they created legitimate knowledge of the kind of Africa that U.S. strategic interests wanted and needed to produce, while ignoring other realities in Africa and other knowledge creators on Africa in the United States. U.S. strategic interests wanted an Africa that was dependent, backward, helpless, and devoid of initiative and ideas. Only with foreign—mainly American—intervention would Nigeria and Nigerians achieve their full potential and achieve “takeoff,” in Rostowian terms.

  A Gramscian perspective on the role and influence of the major foundations is, therefore, upheld: they were engaged in developing and implementing a hegemonic project involving the state, corporations, and intellectual elites fostered by the major foundations. There is little evidence of the foundations as part of an independent “third sector” beyond big business and the American state and outside politics and ideology. Knowledge is not neutral—it is thoroughly immersed in the struggle to define the world in particular ways that serve specific interests and not others. That is why the foundations were so particular about the kinds of people and institutions they chose to support or to consign to the margins. Indeed, this was precisely the case in regard to foundation activities in Indonesia, as shown in chapter 5, and was the case in what is hubristically known as Uncle Sam’s “backyard,” specifically Chile, which is the subject of the next chapter.

  7

  THE MAJOR FOUNDATIONS, LATIN AMERICAN STUDIES, AND CHILE IN THE COLD WAR

  Jakarta is Coming

  —Graffiti across Chile before the military coup (1973)

  The Foundation has a structure and interests, symbolized by the people it picks for trustees and officers, that suggest there would, in the long run at least, be limits on our freedom to opt for overly leftist values and objectives, to support scholarship that would show how power and wealth is controlled in a given society or what social patterns are perpetuated by, for example, the operations of a multinational corporation or the foreign assistance programs of the Agency for International Development.

  —John Farrell, Ford Foundation

  There could hardly be a more clear-cut example of a strategy by the United States to transform another country’s political economy than that of Chile after the military coup of 1973.1 The effect of a self-conscious American state strategy, with sustained support from the Ford and Rockefeller foundations, to transplant into Chile an economic ideology of free-market competition surpassed the strategists’ own expectations: a country that was thoroughly statist, with a decades-old welfare state and recognized as the intellectual epicenter for Latin American “structuralist/dependency” thought, was transformed into a “laboratory” for neoliberal experimentation on a radical scale. The Department of Economics of the University of Chicago, led by Ted Schultz, Arnold Harberger, Milton Friedman, and the less direct influence of Frederick von Hayek, was the vehicle for the secular missionaries effecting the transformation; the private Pontifical Catholic University of Chile (CU) was chosen as the bridgehead into Chile and, from there, to challenging the rest of Latin America’s attachment to the ideas and policy implications of “structuralism”—particularly the thought of Raul Prebisch and the UN Economic Commission for Latin America (ECLA, or CEPAL, its Spanish acronym). The International Cooperation Administration (ICA and, later, as USAID) was the initial inspiration and principal financier; Ford and Rockefeller supplied substantial additional research funds (well over a million dollars) from the mid-1950s to the late 1970s (in the case of Ford). The result: the economists trained at Catholic University, with other right-wing Chileans, developed a secret plan in 1972 for a postcoup economic strategy, overwhelmingly supported the military coup, joined the Pinochet government, and provided technocratic expertise for the brutal regime. The stated aim of ICA/USAID, Chicago, Ford, and Rockefeller—and the “Chicago Boys” created by these programs—was Chilean economic and social development: instead, Chileans’ freedoms were curtailed, democracy destroyed, and human rights violated. Chilean society became more unequal, and its economy became deeply indebted to international banks.2

  There is, however, another aspect of this matter that requires exploration if one is fully to understand the effect of American foundations on Chile: the fact that, alongside funding free-market economics thinking, they also funded the economists of the “center” and “left” who championed ECLA’s ideas. ECLA’s “statism” was less an article of faith in “socialism,” even less Marxism, than it was the institutionalization of a policy adopted to meet the deman
ds of the economic crisis of the 1930s, which generated statist responses the world over. ECLA fully recognized the necessity of developing a strong private sector alongside an interventionist state. This was to have an important bearing on U.S. foundations’ economics programs in Chile.

  The long-term consequences of the American foundations’ Chilean “experiment” were interesting: the construction of cadres of “opposition” economists who would later become “governing” economists—in cases of funding for both “left” and “right.” Free-market economists constituted a new intellectual/professional viewpoint previously missing in Latin America/Chile. The funding of centrist/leftist (i.e., statist) economists, in the long run, maintained and developed cadres who would eventually replace the Chicago boys in Chile, once political democracy was restored in the 1990s. The key point is that both schools of economists favored by American foundations were part of a spectrum of economic beliefs featuring important overlaps: only the most extreme elements of the Chicago boys rejected the state in its entirety, and hardly any of the funded “statist” economists rejected the market or a significant role for private capital. Additionally, and highly significantly, the foundations were interested in promoting the most technocratically-minded leftist/centrist economists and consistently promoted the virtues of “apolitical” research and scholarship. This, then, is the “pluralism” that the foundations sought to promote in Chile/Latin America: a predominantly free market–oriented capitalism versus a more state-driven capitalism. Both sets of economic ideas, however, were championed by technocratic economists, expert cadres trained in broadly the same analytical frameworks and methodologies.3 The military coup and regime, however, was to have important unintended consequences. For the first time, leftist and centrist Chilean scholars became unmoored from political patronage—their political parties were dissolved and “their” state dismantled, forcing them into collaborating with scholars of differing political tendencies just to survive. Consequently, when they “returned” to Chile, they were more overtly apolitical and more self-consciously technocratic in outlook. Pinochet’s economists, who had always championed a technocratic approach, now were “opposed” by technocrats of the “left” and “center.” This, too, was significant and linked with U.S. foundation largesse: many of the exiled Chilean social scientists were “housed” in research institutes that were funded by international agencies, including the leading American philanthropies.4 Beyond that left-center-right spectrum lay Cuba, backed by world communism: that was “beyond the pale,” as would be expected.

  Along with the strength of dependency theory and policies in Latin America, the Cuban revolution, combined with the activities of Che Guevara, inspired in American elite circles a fear of the expansion of communist power even further into America’s “backyard.” It forms the essential backdrop to any understanding of the era and the mindsets of the American foreign policy establishment. Pluralism, then, was a concept that could not include certain political forces and tendencies—its underlying base was a capitalistic economy with an “appropriate” mix of state and private initiative but with complete opposition to Cuban-style socialist expropriation of the means of production. The other related point is that American foundations were “forced” to sponsor “statist” economics because of the general consensus, including within the business communities and, especially in Chile, around the necessity of the state’s role in industrialization strategies.5 Hence, Ford and Rockefeller foundations backed both major universities in Santiago—Catholic and the University of Chile—in a self-conscious strategy of complementarity in institutional development.

  By the late 1980s and 1990s, of course, many leftists the world over had abandoned as untenable many of their ideological/political attachments to statism and embraced a watered-down version of market economics, particularly in the conditions of globalization. This helps explain the rightward shift to privatization of President Fernando Henrique Cardoso in Brazil, a former left-of-center dependista. In short, the ideological spectrum of beliefs in regard to economic policy and strategy had narrowed from the 1970s to choices between variations of market capitalism, with an “enabling” state rather than an interventionist one. The long-term consequences of foundation-sponsored economics in Chile and Latin America more generally, conditioned by changing political circumstances, economic and financial crises, and the onset of globalization, were significantly to marginalize socialist options and narrow the range of economic strategies to choices between capitalist market strategies.6 U.S. foundations sustained a strong, largely centrist, internationally connected counterhegemonic intellectual-political network in Chile that gradually came to accept the neoliberal model, with a social dimension, by the late 1980s.7

  LATIN AMERICA AND THE UNITED STATES

  Latin America was, and is, an area considered part of the United States’ “sphere of influence”; indeed, it is often referred to as its “backyard.” The Monroe Doctrine openly declared the principle of “America for the Americans” (under U.S. leadership) in 1823, supplemented by the Roosevelt Corollary in 1904: the right of the United States to intervene to protect civilization and stop barbarism.8

  U.S. interest in Latin America waxed and waned according to developments internal to those states as well as with interest shown by European powers in expanding their influence.9 Consequently, interest intensified whenever nationalist forces gained ground, leading to numerous U.S. military interventions to support threatened regimes or to replace unfriendly governments with those more congenial to American interests.10 With the drive to war in Europe in the late 1930s, the United States took measures to counter the possible growth of Nazi influence. Although the onset of the Cold War saw Latin America as relatively stable and “unthreatened” by world communism, left-nationalist developments in Guatemala and the revolution in Cuba of 1959 caused waves of panic about the regional spread of communistic revolution throughout the region.11 The Kennedy-Johnson administrations viewed the Cuban revolution as a political threat to American interests, a source of subversion, “sabotage[,] and terror,” according to Undersecretary of State George Ball.12 It was America’s aim to strengthen Latin American states’ capacity to withstand communist subversion. President Kennedy’s Alliance for Progress increased the rates of aid to Latin America to support “development” with social justice—although it had little effect other than to support and encourage friendly regimes and leaders. The same point was made in 1962 by one who thought the Alliance for Progress may herald a new age of American support for radical reform and social justice but who also feared the contradiction of the principles of the Monroe Doctrine (opposition to “un-American” policies) and the alliance.13

  In addition to perceived security interests, the United States had significant economic, commercial, and financial interests in the region. When President Dwight Eisenhower toured Latin America in 1960, his delegation boasted about the over $9 billion invested by American corporations in the region and the over $4 billion of government loans and grants between 1945 and 1960.14 In 1880, the value of U.S. direct investments in Latin America had totaled a mere $100 million, growing to $1.7 billion by 1914. At that point, Britain’s foreign investments in the region stood at $3.7 billion.15 By 1929, at $3.5 billion, the United States was the largest foreign investor in Latin America, with a 40 percent share.16 Until the late 1950s, 30 percent of U.S. capital flows abroad were destined for Latin America.17 According to the U.S. Department of the Interior, Latin American exports to the United States accounted for significant proportions of strategic raw materials identified as essential. For example, 99 percent of America’s bauxite, 36 percent of its manganese ore, copper (60 percent), iron ore (43 percent), lead ore (31 percent), zinc ore (35 percent), and crude petroleum (31 percent) came from Latin American sources.18 Overall, 20 percent of U.S. overseas earnings from direct investments derived from Latin America.19

  Chile was heavily dependent on U.S. corporations for investment, on the American state
for economic aid, and on the major international financial institutions—upon which the United States exercised significant influence—for financing development and trade and for maintaining economic operations. By 1970, for example, U.S. direct investments totaled just over $1 billion, out of total foreign investment of around $1.6 billion. Over 50 percent of such private investment was in the mining industries, the rest principally in the manufacture of consumer goods aimed largely at those with the capacity to pay, i.e., the Chilean middle and upper middle classes. In some areas, including iron, steel, and metal products; tobacco; automobile assembly; and pharmaceuticals, U.S. corporations controlled over 60 percent of the assets. Copper, the sale of which produced most of Chile’s foreign exchange, was 80 percent U.S.-controlled.20 In combination, Chile’s industrial and trading dependence on the United States was very significant, leaving her economy vulnerable to external manipulation and sanctions. Add to that the leverage of the U.S. government in the World Bank, the International Monetary Fund, and the Inter-American Development Bank, and political developments in Chile not to the liking of American administrations could be approached by a variety of measures. When President Nixon ordered the CIA to “make the [Chilean] economy scream” in the wake of the election to president of Salvador Allende in September 1970, it is to some of the potential levers of power above that he was referring.21 As Petras and Morley argue, “the externally linked enclave [of Chilean industry and mining] in effect was a ‘hostage’ of the metropolitan countries.”22