How much is true in John Perkins’ Confessions of an economic hitman?

The first thing a reader ask while reading John Perkins’ first bestseller Confessions of an economic hitman is where does Perkins lie this time. With most authors such a question would be offensive, but Perkins gives many examples from his past when he did lie. He lied to the police campus while still in the college. He lied while presenting inflated scenarios for building projects in MAINS. He lied to the natives pretending to be their friends while at the same time planning economic operations intended to ruin the country, or so he tells. He lied under oath while presenting nuclear power as the best choice though doubting it himself. We should at least have the courtesy of allowing for the chance that Perkins is lying in his book.

            I basically believe that most, if not all, what Perkins tells of his past, and of historical events, is true. It is only natural that a seller of building projects, wanting to convince the World Bank of the rationality of funding their plan, presents inflated growth figures. Many would consider doing otherwise to be acting against the employer. You do not expect that a sales person will tell you something like actually our product sucks and our competitor has a much better one, even if this would be true. (I would tell exactly that, so no firm would take me as a sales person.)

            Most, if not all, of what Perkins reveals is not any secret. The activities of Kermit Roosevelt in Iran are well known in history. Suspicions of CIA participation in certain deaths of statesmen have been presented before, and there is some reason for these suspicions, though no binding proof. Perkins also does not supply proofs. We may believe that during the time when World Bank and the IMF followed the Keynesian policy of creating economic growth by giving loans and allowed developing countries to gather large loans, many companies, like MAINS where Perkins worked, created highly inflated plans and got them funded. As a result many countries, especially in Latin America, ended up having so huge loans to the World Bank that they could not pay them.

            After the crisis in Argentina the IMF changed the policy and adopted a new policy of balancing the budget. Many countries had tried to create domestic industry that replaced import and they protected their new industry by import customs. The IMF demanded opening the markets for foreign products by removing the protection customs. It also demanded free movement of capital. The result of this new IMF recovery plan was that the country suffered a major recession. Similar events occurred in Africa. In South-East Asia the situation was different. These countries had not tried to build domestic industry to replace import and being protected by customs. They had invested on export products and import customs were to protect export industry only for the time it needed to grow. These countries had not taken huge loans. But when they faced a recession and the IMF stepped in, the new recovery plan of the IMF was still a catastrophe. The reason was that IMF demanded free movement of capital. Releasing capital movements too fast is an error, and an error benefiting speculators and investment banks.

            Where Perkins lies is in explaining this change of IMF policy. He lies by not explaining it clearly enough. The change of policy occurred in 1980s when Perkins was not any more an economic hit man (EHM). Whatever the term EHM may have meant, if there was such a term (maybe it was economic help manager or something of that type), Perkins only worked as an EHM during the Keynesian era. The Keynesian policy worked very well in rebuilding Europe after the World War II and it did show positive development in most developing countries. From the book Globalization and its Discontents by Joseph Stiglitz (2002) we can read that the major problems were caused by the new non-Keynesian policy. The consequences of the fast change of the policy that Stiglitz explains are all very logical and mainly harmful. This new policy, when followed in Finland, caused the depression of 1993-94.

            There is another place where Perkins lies. He mentions at least a dozen times that there is no conspiracy. The problem is the dynamics of what he calls the corporatocracy: big enterprises, big banks and governments. He argues that we are all guilty of exploiting poor countries and should make changes in out own life and that would fix the problem. But if we look at the three components of corporatocracy: big enterprises (like construction firms), big banks (like some Wall Street banks) and the government, we see that one of them is the one calling the shots in globalization. Governments in democracies are formed by politicians elected by people. Though in some countries, like the USA, it may be so that no politician gets elected unless he has the economic backing of the rich elite, in most democracies politicians with different views towards globalization do get elected, and may even get to the government. But while in the government they cannot do much as the market forces (financial circles) dictate what can be done. Big enterprises may look big, but their shares are owned by big owners, which usually are major banks, and these enterprises have big loans from the same major banks. Finally it is the banks that decide what the corporatocracy does. Perkins tries to twist the world conspiracy to mean a conspiracy of a few people (like the conspiracy to murder Julius Caesar consisted only of three people). But the world conspiracy in the present context does not mean this. The conspiracy we are dealing with here is not of the type of a few conspirators. When this started, in the 18th century, it was of the type of a secret society, the Masonic conspiracy that made the French Revolution. That is, it was an organization and it could and did last for hundreds of years. Today it is not Masonic any more. There are other forms than a traditional secret society (of which today an example is the Muslim Brotherhood, secret societies are still here), such as a Theocracy and a small inner circle in it. There are still other forms: it is some times suggested that today the organization is informal, a Group of friends. That there is a Group in the UK and there is a corresponding Group in the USA. Whether this is so or not does not need to be discussed here. If there is such a group, then it is a conspiracy, but it can be larger than some conspirators and it can last for hundreds of years. It represents some interests and has a long term plan (of world rule, in this conspiracy theory).

            Apart from these two lies Perkins writes well and though there is only little of what is new, his personal experiences (which I believe are true, or mostly true) are an interesting addition to this book. Still, I think he wrote the book in order to nullify the valid criticism of IMF by Stiglitz. I think so because Perkins’ book was so well received. He published the book in Random House, not a likely publisher for a real counter-establishment book. His book become a bestseller, not only this but several his books. That does not happen to a real counter-establishment book. As a summary: Perkins’ book has much quite true content, yet puts you on a wrong track. I think, maybe you think differently.

OK, maybe I give you my theory. I do not need to worry about criticism against my theories nowadays because by a brilliant move of not writing posts for some time I have exactly one reader who regularly follows this blog. This is just what I wanted as I certainly do not want any jackals that Perkins mentions coming to do me in. Remember the film Conspiracy theory where the only reader of Mel Gibson’s news bulletin is the CIA. I managed to bore even the CIA.

Thus, it is so that both Perkins and Stiglitz protect the conspiracy. What actually happened is that the USA (Nixon, in fact) stopped the exchangeability of US dollar to gold in 1971. Notice that this was before the oil crises made by OPEC in 1973, today people blame the oil crises, but this was before the crises and it was one of the reason of the oil crises (oil become cheaper as dollar devalued all the time). All currencies, like the UK pound, that were tied to the dollar also devalued. This resulted into high inflation in Western countries, which finally forced Thatcher to adopt the new (catastrophic) policy of globalization. This is also incorrectly explained as stagflation caused by loss of profitability. Notice that economists like to cheat you all the time. So, why did the USA leave the gold standard in 1971? It was an essential pillar of the Bretton Woods system. You have to read the Protocols of the Elders of Zion and you find the answer: any country tying its currency to gold finally gets into problems because gold reserves grow slower than the economy causing deflation. Deflation causes stagnation. But after the dollar was not tied to gold the result was even more interesting: the USA could make any amount of debt and it did not need to be paid back. This is because the dollar was the reserve currency in oil trade. Other developed countries had to buy oil (Europe and Japan do not have enough oil) and they had to get dollars in order to buy this oil. They got dollars by selling to the USA, while the USA simply printed more dollars and did not need to care of balancing the trade or paying back loans. If this seems a bit unfair, then it is so. This is why the USA could have given and forgiven any huge loans to developing countries and simply add the loans that were not paid to its already huge debt. All the USA needed to do was to print more dollars. It does not cost much (but notice that the USA pays interest for these dollars, what a strange system, banks earn all the time.) Nothing was collapsing in this way, as long as the USA ruled the Middle East oil fields. So, the USA did not like Saddam Hussein or Islamists in Iran who tried to be independent. The world economy worked fine with this absurd system, but somebody gained: though the USA did not pay back loans, it did pay interest for the loans. (By printing dollars, and paying interest both for the loans and the dollars.) Other developed and also developing countries finally paid the interest in the final calculation of real values. Who gained is those who got the interest: the banks had a bullet proof machine of making money. As this was the case, then why did the USA change the policy in 1980s from Keynesian to globalization? It was because for these banks globalization is even better: in the new system they really rule the whole world. No government anywhere can oppose. They all must go to globalization. The axis of evil can try to resist, but finally the USA sends the army. This is the reality. It is a conspiracy for ruling the world. Notice that a layman in economy, like me, has to explain this because all experts are just hiding the conspiracy and assure you that there is no conspiracy. They all remember to mention Hitler and the six million, just to make sure that you do not read wrong analyses.