![Commanding Heights: The Battle for the World Economy [DVD]](https://m.media-amazon.com/images/I/519WC3X5J2L._SX300_SY300_QL70_ML2_.jpg)
It was hard to rate this documentary in terms of stars because it is very informative and it presents a clear narrative of the "death of Communism (and managed economies)" and "rebirth and vindication of free-market Capitalism." It also makes some compelling, well-reasoned, arguments, which are supported with clear, concrete examples. However, it does not tell the whole story (as no historical narrative can), and in that way has some serious omissions.
The "official story" of the evolution of economic theory presented in this documentary is the following: During the middle of the twentieth century, particularly after the disillusionments of the Great Depression and World War II, the West preferred the theories of John Maynard Keynes (reducing the injustices of Capitalism through "controlled" economies) while the East (the Soviet Union and its satellites and China) turned to all out Communism. While Friedrich Hayek, a free-market capitalist a la Adam Smith, did his best to argue against these theories, the general prosperity of the post-war period in the West made his ideas unappealing and irrelevant. Then, with the economic crisis of the 1970's (stagflation in the US, paralyzing strikes in Britain), the theories of Hayek, and his followers, like Milton Friedman from the University of Chicago, found a voice in Ronald Reagan and Margaret Thatcher. By cutting taxes and spending, controlling inflation, and in the case of Britain, privatizing the commanding heights (major industries) of the national economy, economic prosperity returned. This knowledge was then applied in other countries with great success. While it has not all been rosy, it is the most promising system.
I say this documentary makes some compelling arguments because it convinced me of the failure of managed economies where the central government controls the major means of production, sets prices, etc. The reality is that the laws of supply and demand work despite such efforts (which we see in the formation of black markets). Furthermore government controlled economies work less efficiently than free-markets (i.e., cause shortages, provide no motivation for hard work and risk-taking, etc.).
However, this documentary did not convince me that government intervention in the form of progressive taxation, social programs and laws protecting workers has failed. In fact, the documentary briefly talks about how well Germany's economy did after WWII because it got rid of price control and did not nationalize its commanding heights. However, Germany is a European welfare state with progressive taxation, and lots of social programs, and it has done very well. I know laissez-faire types insist that the US economy is much stronger than the Western European economies (higher GDP, lower unemployment), but this depends on how you analyze the situation. Yes, Europe has higher unemployment, but that's because they provide a living wage. As a result, they don't have the problem of large numbers of working poor. In the US, on the other hand, we have lower unemployment but millions of people who work and cannot support themselves. Also, GDP says nothing about how that wealth is distributed within a country. In the US 1% of the population owns 50% of the wealth, in Europe the wealth is distributed more equally and, according to recent studies, there is much more social mobility than in the US.
My main problem with this documentary are its omissions regarding:
1) The portrayal of Reaganomics. Reagan, like our current president, was not a fiscal conservative; he relied heavily on deficit spending; he increased the national debt more than any president before him (of course Bush II has now outdone him). He continued to spend heavily on the military, while cutting taxes, as a way to strengthen the economy. Thus, you could argue that he was a Keynesian (although Keynes had hoped that the economic recovery caused by governmental spending during WWII, could be achieved "without" war and/or excessive military buildup). Conservatives like to ignore the fact that the military is a huge (and I would say wasteful) government program comprising about 1/2 of the federal budget. It is also hard to truly gauge the success of Reagan's policies since it has not fallen upon us pay back any of the debt. We continue to borrow heavily, while cutting taxes, to finance our dubious military adventures overseas, Iraq being the most recent example. But, as the documentary itself tells us, the fall of the Soviet Union was due largely to their spending half of their federal budget on the military. A similar situation brought about the fall of the Spanish empire. So, what is going to happen to us?
2) Other factors that contribute to economic prosperity. Economic theory is just one factor related to the West's economic prosperity. Another important one is our cheap access to the natural resources of developing nations. The United States has used its military and CIA to install and/or support brutal regimes and oligarchies in order to ensure our access to the resources of these countries. These governments have terrorized and exploited their populations, while making cozy deals with US companies for their own personal enrichment. There is plenty of information on this (any decent history book should do), but for a good general overview of this specific theme, I recommend Stephen Kinzer's new book: "Overthrow: America's Century of Regime Change from Hawaii to Iraq." In this country we conveniently forget that in order for everyone on the planet to consume at the levels we do, we would need two other planets, just to provide the natural resources. Our standard of living is clearly dependent on our "advantage" over the so-called "third world." Furthermore, their remaining in the "developing" phase is also helpful to our economy since that way they have to buy our products but we don't have to buy theirs. It's interesting to see that when the tables are turned (i.e., the current trade deficit with China), classical liberal economic theory starts to lose a lot of supporters in the US. Thus, despite all the talk about improving the plight of the poor (5/6ths of the world's population), there is no honest discussion about what that would really mean for the West, and whether or not we are really willing to give up our "economic advantage." Free market capitalism is great as long as we are on the winning side.
3) Chile. This is an egregious case of whitewashing history. The story is presented as follows: The right-wing dictator, Augusto Pinochet, overall did Chile a service by overthrowing the democratically elected socialist Salvador Allende in a coup. After the overthrow, the kind-hearted, freedom-loving Milton Friedman decided to go down to Chile and give Pinochet some private lessons on free-market economics. Pinochet adopted these measures and Chile lived happily ever after as the most prosperous country in Latin America.
The documentary claims that the Pinochet regime disappeared "hundreds of people," yet by the most conservative figures, six thousand political dissidents were disappeared (secretly abducted, tortured, and murdered). This documentary also makes no mention of the US involvement in the coup: since Allende wanted to nationalize copper, and other major industries controlled largely by US companies (ITT, Pepsi Cola, Kennecott Copper, etc.), Nixon and Kissinger decided to overthrow him. And, while it was true that Chile was undergoing serious economic problems under Allende, this was largely due to Nixon's strategy to crush Allende by making the Chilean "economy scream." For more on our involvement in the Chilean coup I recommend the last two sections of the documentary "The Trials of Henry Kissinger" (or you can read Hitchen's book by the same title). Costa Gavras's film "Missing," as well as documentaries by Patricio Guzm'n ("The Pinochet Case," "The Battle of Chile: The Struggle of an Unarmed People," and "Chile, Obstinate Memory") also give moving accounts of Pinochet's reign of terror. Milton Friedman is shocked that people protested his receiving the Nobel Prize in economics because of his collusion with the Pinochet regime. He even has the gall to say that his reforms brought democracy back to Chile (16 years after we destroyed it!!!). Following this logic, the new socialist president, Michelle Bachelet, is also a result of his (failed?) free market policies.
4) Bolivia. This story is presented as follows: The well-known Harvard economist Jeffrey Sachs goes down to Bolivia, one of the poorest country in Latin America, to help the Bolivians control hyperinflation with some free-market policies. His policies are a success. And it's even more wonderful because they didn't even need to install a bloody dictator to do it. Reality: While this documentary was being made, Bolivians were risking their lives rioting in the streets against these policies, particularly the privatization of water by Bechtel (apparently destitute Bolivians didn't like having to pay Bechtel in order to collect rain water in a bucket). Two presidents were removed from office, several people were killed and hundreds were injured. The people were also calling for the nationalization of Bolivia's natural gas. This widespread grassroots movement brought the left-wing Evo Morales to power through free and fair elections in 2006. One of the first things Morales did was nationalize the natural gas industry. Why? Because Bolivians want more money from "their" natural resources to go to them, and not to private foreign companies. Perhaps government control of this industry isn't the ideal situation, but government is the only tool that this nation had to wrest some of its wealth out of the hands of foreign corporations. If we are honest, we have to admit that Americans and Europeans would never tolerate foreign industries reaping the vast majority of the profits from our natural resources. We wouldn't like free-market economics so much if Latin Americans were getting rich off our natural resources as we continued to live in utter poverty.
5) IMF, World Bank and WTO. This documentary doesn't explain how neo-liberal economic policies have been forced on the poor countries, with devastating effects. In return for supplying loans the IMF and the World Bank demand from their creditor nations that they cut public spending (including on their military), eliminate and/or reduce tariffs, and promote foreign investment and property rights. Rather than helping these countries, these policies help the West secure its dominance over them. For example, by requiring poor countries to eliminate tariffs that protect the few domestic products they produce while continuing to protect ours, we give "our" products an unfair advantage. Also, by promoting foreign investment we ensure that most of these countries' wealth remain in foreign hands. And while the required cuts in public spending often result in fewer social programs, reduced educational opportunities, more environmental pollution, and greater poverty for the vast majority of people, the loans they receive in return are often pocketed by multinational corporations and the country's elite with little ever reaching the people (see John Perkins's "Confessions of an Economic Hit Man "). It is hypocritical to insist poor countries simply cut all deficit and social spending when we do not carry out such extreme measures in our own countries. If all of a sudden we had to make cuts like these, there would be public outrage. Furthermore, requiring cuts in military spending is clearly a way to maintain military dominance over these countries. For more on the devastating effects of neo-liberal (free market) policies enforced by the IMF, World Bank and WTO, I recommend the documentary "Life and Debt" (about Jamaica).
6) Corporations. Classical liberal economists (like Thatcher, Reagan and Friedman in this documentary) love to insist that private property is an essential part of freedom; they claim the two go hand in hand. When you own something, it's yours and you can do what you want with it; you are not subject to the will of others. I agree with this argument, to some extent. The problem is the tendency towards the concentration of wealth within free-market economies. Sure, it's great that the small business owner can control what happens within his/her business, or if a home owner can decide what to do with his/her house (rather than the state), but when the CEOs of huge multi-national corporations, with GDP's bigger than those of most nations, can do whatever they want, we have tyranny of the corporation, not freedom of the individual, and certainly not democracy. For example, if Wal-Mart, one of the biggest employers in the US, decides not to pay overtime and not to promote women, they are "free" to do so, unless the government intervenes. But, if we remove government restraints on business, regular citizens are left with no means to fight back. "Big government" may not be ideal, but at least it is somewhat responsible to the people; corporations are not. Thus, it is incorrect to frame the debate as a choice "for" or "against" individual freedom. The real choice is: are we going to defend the right of big corporations to do as they please or the basic human rights of the "little guy"? It is also necessary to mention the pernicious effects big companies have on "democracy" as well. Their huge campaign contributions to politicians give them disproportionate influence over elected officials; there is a reason why Bush invited Ken Lay ("Kenny Boy" from Enron) to the White House, but he did not invite you and me. For more on the current tyranny of the multi-national corporation, I recommend the documentary "The Corporation."
It is callousness and hubris of the worst kind to say the current free-market economy offers "the best we can do." Twenty thousand people continue to die every day from starvation or lack of access to basic medicines even though there is more than enough food and medicine to feed and care for every person on the planet. Some women who work in the garment industries in developing nations have to wear diapers because their employers will not let them go to the bathroom. Workers in underdeveloped nations that protest their inhuman working conditions are frequently threatened, tortured and/or killed. Corporations are not being held responsible for the destruction of the environment they are causing, which will have devastating effects for all of humanity. And the US continues to use its military to secure its hold on important natural resources in developing nations (i.e., oil in Iraq and Colombia) at the cost of its citizens. Faced with issues like these (which were not emphasized in this documentary), should we really just say: "Hayek got it right and we're currently living in the best of all possible worlds"?
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The best documentary I've seen
Reviewed in France 🇫🇷 on September 1, 2017
