In a “free market” economy the majority is excluded from all policy decisions. They are kept disorganized by force and the threat of governmental terrorism.

In most cases, the owners, who are not present in the country, have no interest in fighting for the rights of the people, and the indigenous roots of the local elites have long been integrated into capitalist society to better server the multi-national corporations and the American government. The majority are not seen as human beings. They are overhead; the operating costs of business operations. Work hazards, genocide of the indigenous people, and environmental destruction are considered acceptable so long as it produces the desired outcome – an increase in capital.

They apply a policy of “more guns, less better” which is typically targeted at external threats in order to pacify the internal threat of peasants who are asking for nothing more than for their basic rights as human beings to be acknowledged and adhered to. In this particularly situation of “more guns, less butter,” the elite get more guns while the lower class sacrifices butter in order to attain more butter for the upper-class. This is all undertaken for the “security” of the nation, under the guise of brining “stability,” “growth” and “development” to the people. In reality they are intentionally instigating instability by suppressing democratic leaders and implanting pro-American tyrants in their place to better suit the needs of the United States government and multi-national corporations.

Growth in GNP does not mean that the majority have bettered their situation economically or socially. In Latin America in the mid-1970s, the lower 50% only obtained 13% of income. From 1930 to 1950, Latin America saw a decrease in growth. However, with this decrease came an increase in equality. From 1950 to 1975 Latin America experienced rapid growth; a 400% increase. During this period many lost absolute real income. The lower 60% lost relative income, and the lower 20% lost absolute real income.

The 1970’s counterrevolutions of Chile and Argentina dropped real income for the majority and increased inequality. The Brazilian counterrevolution of 1964 that led to the “economic miracle,” the vast rise in GNP in the country, showed that 60% had marginal gains and many lost absolute real income. The top 10% is the only group that showed adequate gains.

In US-client states in the 70’s the top 10% received 37.5% of the wealth. The bottom 40% got 13.7% of the income. In socialist states in the same time frame the bottom 40% received 40% more than in US-sponsored states. In Cuba, after the revolution that put Castro in the seat of power, life expectancy increased to 72 years of age, which was only 2 years shy of the United States life expectancy. Infant mortality dropped a great deal. Money was invested in roads, schools, water supply, sanitation, health facilities and health services. Hunger was virtually eliminated. This is proof that even in poor nations it is possible to improve the situation of the poor and ill if the government takes an interest in the welfare of its citizens.

The “free enterprise” system allows for government intervention in creating a “favorable investment climate” for the elite classes in complete disregard for the rights of the majority. Agribusiness throughout Latin America has dispossessed tens of millions of indigenous peasants throughout the last few decades. The ancestors of these people have been on this land for thousands of years, and they have been denied their basic rights as human beings under the capitalist system by fascist dictators that are sponsored by the United States government.

The cost-benefit analysis used by economists does not include social costs. If all elements were included in economic analysis when determining GNP, the results would be greatly altered. If, for instance, the external costs of the indigenous people who are stripped of their land were subtracted from the GNP, then the growth would be much lower, and even negative in some cases.

The economic model presumes that local businesses will eventually overcome multinational corporations, but the advantages have never been and will never be overcome. Those who begin operations with a strong technological base are at a permanent advantage. Technology is the result of a system of interacting vertical and horizontal supply linkages. The links do not form in dependent economies. Economists assume that the technological knowledge of multinational corporations will eventually be absorbed by local businesses. This is impossible when these corporations keep their knowledge base at home. These absentee corporations have profound control over the economy of these states. This control will not be relinquished so long as the “free-market” system remains intact.

Walmart is now the largest retailer in Mexico. The number of poor and landless peasants keeps increasing every year. NAFTA is threatening to take away even more land from indigenous peasants whose situation is already grave. Free-market economies, as employed by the United States and their cohorts, do not work to satisfy the basic needs or rights of human beings.

Sources:

Herman, Edward S., The Real Terror Network: Terrorism in Fact & Propaganda. South End Press, Boston, Mass., 1982.
Mankiw, Gregory N., Principles of Macroeconomics, Harcourt College Publisher, USA, 2001.