In Latin America, the Americans would eventually stage or support six more military coups: Argentina in 1962, Guatemala again in 1963, Brazil in 1964, Bolivia in 1964, Uruguay and Chile in 1973. What might have been a last resort had become an easy habit—yet one that did not quench American desire for global power. Despite destructive influence in the Western hemisphere, the Americans’ failure to fully wrest control over the region would inspire them to look elsewhere for self-renewal. President Kennedy, so embarrassed by the Bay of Pigs invasion, needed to show that U.S. power was credible. And so from Greece to Latin America and across Asia, the Americans searched for the vulnerable country where they could forever prove their authority. Kennedy’s adviser, the modernization theorist Walt Rostow, told the president: “Vietnam is the place.”
Those decades of interventions, coups, and invasions had been justified by Truman’s benign words and intentions. My perception of the Truman Doctrine had been mostly all benevolence and protection. It is one of our origin stories. Even after the invasion of Iraq, there are few things that happen militarily, politically, or economically—the IMF hammering Greece, the many American-sponsored dictatorships whose brutality inspired the revolts of the Arab Spring—that do not recall this very illusion of largesse, this language of virtue and progress, and this iron core of cold, imperial self-interest. In an essay called “The CIA in Latin America,” Gabriel García Márquez quoted from a book called Inside the Company, written by a whistleblower and former CIA officer stationed in Latin America. The officer, Philip Agee, wrote: “The key question is to pass beyond the facts of CIA’s operations to the reasons they were established—which inexorably will lead to economic questions: preservation of property relations and other institutions on which rest the interests of our own wealthy and privileged minority [italics mine]. This, not the CIA, is the critical issue.”
*
I WASN’T SURE what interests Agee was talking about, but I would learn about them from a young economist who was among the many Greeks protesting in the streets in 2010, whom I interviewed years after. His father had come to Greece from Cairo in the 1940s, at the beginning of the Greek Civil War. Upon his arrival, a policeman asked him to sign a paper denouncing communism, which he refused to do. He was not a Communist, but he reasoned: “Look, I am not a Buddhist, either, but I would never sign a denunciation of Buddhism or Islam or the Jewish faith.” The police “beat the shit out of him” and sent him to a concentration camp, where he became a member of the Communist Party. The economist himself had been a student activist and had belonged to the party PASOK, led then by the anti-American Andreas Papandreou. During the 1970s “junta” era, the economist explained, it was very hard to avoid being political.
The economist’s name was Yanis Varoufakis. Over the years, he developed a theory about the worldwide financial crisis that showed how the Truman Doctrine and Marshall Plan years of the 1940s and ’50s had long ago set the calamity in motion.
“The story is one in which the postwar period is characterized by two different phases, both of them featuring the United States as the protagonist,” he said. “The first phase is Bretton Woods—I call it the Global Plan, because it’s not just Bretton Woods, it’s bigger. Bretton Woods was the monetary system the Americans established—a system of fixed exchange rates and the IMF and all that.
“But they did something else, too: the United States tried to augment the fixed exchange rate with something quite remarkable, which I call a surplus recycling mechanism. This was not the first time we had an exchange rate. We had the gold standard in the interwar period. Why did that collapse? Because you didn’t have a mechanism for recycling surpluses from the surplus countries to the deficit countries. When you don’t have that, the moment there is a recession, the deficit countries fall into a black hole and drag everyone down with them. The New Dealers who went through the Depression understood this very well, and it was the same New Dealers who designed the postwar world.”
“They set out to design the postwar economic system?” I asked.
“Yes. If you look at the Senate papers of the period between 1946 and 1947, you will find lots of statements by James Forrestal and Dean Acheson to this effect.”
At the time of the Bretton Woods conference, a New York World-Telegram editorial put it this way: “The kid who owns the ball is usually captain and decides when and where the game will be played and who will be in the team.”
“Look, it made perfect sense to them,” Varoufakis went on. “They understood why American capital collapsed in the Great Depression. They also understood that by 1945 the world economy was finished, and Europe was finished, and America had a historic duty to reset the scene and rebuild global capitalism. They felt that duty and they did have that duty.
“What was the Marshall Plan? It wasn’t just a plan stemming the advances of the Soviet Union. The economic minds behind the Marshall Plan needed the Marshall Plan to create this surplus recycling mechanism. American factories were overproducing at that time. They needed the Europeans to buy their goods, but the Europeans had no money. So they put two and two together and said, Okay, we’ll give them money. That’s surplus recycling. And this worked brilliantly, until a very important linchpin fell off this global plan.”
The Marshall Plan, in other words, had not been the act of charity so many Americans and foreigners celebrated. It was a global economic scheme. But then the exuberant postwar economy of the 1940s, ’50s, and early ’60s began slowing, while others abroad improved.
“America suddenly stopped having surpluses. That started an economic disintegration—in the period between 1965 and 1971, from LBJ to Nixon. It was their idea to do the second phase of the global plan. It was also Paul Volcker’s idea. He was central.”
“Paul Volcker? The financial crisis guy? Seriously?” I said. Paul Volcker assisted President Obama in regulating Wall Street after the 2008 financial crisis.
Varoufakis laughed. “Americans tend to have a memory that spans a maximum of ten years. Volcker said: What are we going to do now? How will we retain our hegemony if we don’t have surpluses to recycle? Then he said: If we can’t recycle our surpluses, we’ll recycle everyone else’s surpluses. And this is the second phase of the global plan.”
I wanted him to say whether these economic decisions were good or bad; it was still difficult for me to interpret American history any other way.
“I try not to make moralistic judgments,” he replied, looking at me worriedly. “At the time, America was losing control of the Europeans. The Europeans were incensed—especially French president Charles de Gaulle—that America was not doing austerity. The argument from the European side was, Look, if you don’t have surpluses, then you must do austerity. And LBJ and then Nixon said, We’ll be damned if we are going to shrink our economy for your benefit, damn you! They were not going to destroy the system they created for someone else’s benefit.”