The Economist against Détente
What then was the view of the American empire at the Economist – from now on not just devoted, but increasingly sold to the people running it, at the height of the Cold War? The first indication came with the Portuguese Revolution in 1974. The Economist was intensely worried by the sudden collapse of the Estado Novo dictatorship in Lisbon, and the land seizures, factory occupations and street protests that broke out in popular revolt against it; in particular, it feared the influence of radical socialist and communist elements among officers in the Movimento das Forças Armadas, many of whom had refused to go on with the regime’s brutal colonial wars in Angola, Guinea and Mozambique. Portugal may have been poor and undemocratic, but it was also a member of NATO of global importance, as a still extant imperial power in Africa and Asia. The paper’s choice to take this volatile situation in hand was the aristocratic, monocled General Spínola: considered a moderate, Spínola had served as a volunteer under Franco and as an observer with Hitler’s armies, before experiencing a de Gaulle–like epiphany about the need for ‘reforms’ as military governor of Guinea. After Spínola was pushed out of the provisional government, launched a failed coup and fled in March 1975, the Economist denounced the direction of the Carnation Revolution in purple prose: ‘completely controlled by Marxists’, it was using Nazi ‘Reichstag fire techniques’ to erect a ‘totalitarian state’, with ‘wider repercussions’ than ‘the failed Marxist experiment in Chile’ that could lead to the break-up of NATO.71
Moss was the unmistakable author of these lines. Months later, he wrote in the same alarmist tones about ‘the southern flank’ of the NATO alliance. In July, the Greek junta launched a coup against the leader of Cyprus, Archbishop Makarios III. Long a thorn in the side of the British, who retained huge sovereign military bases on the island, Makarios had fought for national self-determination against them: first as Enosis, or union with Greece, backed by 96 per cent of Greek Cypriots in a referendum in 1950; and then for independence, which arrived in neutered form ten years later, when Makarios became the first elected president. The Economist not only justified his ouster, reminding readers that Makarios had been a pest – ruling with AKEL, the Communist Party, while pursuing a non-aligned foreign policy (under him Cyprus was one of only four non-Communist states to trade with North Vietnam), outside NATO. It also glossed over the bloody consequences: Turkey’s invasion of Cyprus, with the connivance of Kissinger as well as Wilson and Callaghan in London, which in addition to 4,000 dead and 12,000 wounded, drove 180,000 Greek Cypriots from their homes, amidst similar reprisals against the Turkish community.72 The paper even attributed the collapse of the junta in Athens to deft American diplomacy – which had ‘presided over a radical change for the better in the politics of the eastern Mediterranean’, and hoped for more decisiveness of this sort going forward. If not, Spain and Italy could be next in line for subversion, ‘providing the greatest opportunity for the westward spread of communist governments in Europe’ since 1945.73
Outside Europe, the Portuguese Empire rapidly disintegrated, posing immediate questions for US policymakers about what should – and should not – replace it. In December 1975, they gave their answer in East Timor. Hours after getting the green light from Ford and Kissinger in person, on a layover in Jakarta, the Indonesian dictator Suharto invaded the island, which had just proclaimed independence from Lisbon under the banner of the leftwing Front for the Liberation of East Timor. The Economist not only refused to criticize Indonesia’s annexation, but turned a blind eye to the genocidal death toll of some 100,000 in eighteen months, roughly a sixth of the Timorese population.74 In Angola, Kissinger tried to prevent the Marxist-inspired MPLA from taking over as the date set for independence approached, by sending money, weapons and advisors to its two smaller rivals, the FNLA and UNITA. In October, mere weeks before the Portuguese were due to leave, South Africa took a more direct approach – invading from the south at the same time as a coordinated assault from Zaire to the north, converging on Luanda. Only Cuban troops – ferried from Havana at the last moment on ageing Britannia turbo props, without prior consultation with Moscow – allowed the MPLA to hold out and then to win.75 As the Economist warned, however, this was not the end of the story. South Africa could not allow a victory for black radicalism to go unchecked, threatening its hold over Namibia, and the apartheid regime itself in Pretoria. Nor could the US tolerate the defeat of its clients. The Economist suggested several possible chess moves to American leaders: sweetened aid to Angola if it kicked out the Soviets, a ‘total naval blockade’ of Cuba, mining its main ports. Plans to bomb and invade the island could also be prepared, though might be ‘slow to take effect’ and ‘arouse anti-Americanism’.76
From this swashbuckling perspective, the election of Jimmy Carter in 1976 seemed like the start of a strategic unravelling, given the new president’s naïve pursuit of arms control and misty rhetoric about human rights. For the Economist, Carter showed just how dangerously inept he was in his handling of the Iranian Revolution. By 1979, this mass mobilization had forced out the Shah, whose family had reigned for twenty-six years at the pleasure of Washington. To anti-imperialism, the new leader, Shiah cleric Ruholla Khomeini, added religious fundamentalism. In November, students overran and took hostage the US embassy. The Economist called for swift retribution: capture the islets of Abu Musa and the Tumbs; embargo food; if nothing else worked, invade.77 Instead, the hostage crisis dragged on for over a year, during which the Soviets sent troops into Afghanistan. Seeking to prop up a teetering communist regime in Kabul, Moscow intervened after the murder of President Taraki by his second, Hafizullah Amin, who it feared might defect to the American camp; and just as the Iranian revolution unleashed a potent new form of Islamic radicalism, which threatened to spread to Muslim republics inside the Soviet Union.78 At this the Economist exploded, seeing proof of a total loss of nerve. ‘Who invited 40,000 Russian soldiers complete with their Quisling [Babrak Karmal] into Afghanistan? Answer: President Carter, the American congress and American opinion – and those American allies who have not believed, and have done little to remedy or reverse a crumbling of America’s willingness to exercise power.’ At a minimum, the US and NATO must arm the holy warriors, or mujahedin, who were resisting Soviet forces, with the latest tank-busting missiles.79
This excoriation of American fumbling from the right carried over with a vengeance to Central America, where that same year Sandinista guerrillas drove the brutal Somoza dynasty from power in Nicaragua. The paper did not advise direct intervention to prop up this US client, bombing its citizens in the slums of the capital city of Managua for the world to see. But that could change. ‘If Cuban silhouettes do emerge through the murk in Nicaragua, the Americans will have to act.’80 Nor did it apply to the leftwing revolts sparked in neighbouring El Salvador and Guatemala, where ‘American arms will be required to uphold democracy’, as bodies piled up from the rightwing death squads in each.81 Soon it did not apply to Nicaragua either. Ronald Reagan had begun to orchestrate a covert war against the Sandinistas there in 1981, eventually arming more than 15,000 Contras in Honduras and Costa Rica to harry the new regime. Five years later, the Iran-Contra scandal exposed the money-laundering operation, violating American law itself, that was used to finance this – tragic news for the Economist, less because it implicated the president and his advisors in a criminal conspiracy, than for endangering congressional funding for counter-insurgency efforts.82 In the meantime, the Economist had backed an outright invasion of tiny Grenada in 1983, and the toppling of its revolutionary government. In ‘Licensed to Kill’, it airily defended this act, on the grounds that ‘adversaries of the west should live in a state of uncertainty’, while brushing off critics in Britain, troubled by US treatment of a commonwealth member. ‘Superpowers do not need allies’, it told them, ‘only cheerleaders.’83
What they needed was the Economist. By 1983 it was not a proponent so much as a pillar of the special relations
hip, which Knight carefully erected out of his friendships with veterans of the Nixon administration. None was more important than Kissinger, who became a sort of informal housemaster; so at ease, he did a playful TV spot for the Economist in 1996, in which an airline passenger, Mr Burnside, in suspenders and French cuffs, drinks champagne serenely until someone takes the seat next to him. ‘Hey, it’s Henry Kissinger! Ready for a good chat?’ Mr Burnside looks queasy; having failed to read the Economist he is unprepared for the most fateful small talk of his life. In 1979, the tone was graver. That February, the former US secretary of state sat down with Knight for a two-part exclusive interview about the second strategic arms limitation treaty; the discussion also roamed widely over the Cold War. Who would emerge in better shape after a nuclear showdown? The US. How many civilian deaths could be expected? ‘100m’, Kissinger replied, ‘but it will nevertheless leave us politically paralyzed.’ ‘Or could do so … ’, Knight interjected hopefully. ‘Probably would do so.’ Kissinger dismissed the idea that treaties could usher in world peace; if the West did not raise its ‘counterforce capabilities’, it ‘could be entering a period of maximum peril’. Should the ratification of SALT-II, the arms control treaty, be linked to ‘good behaviour’ from Moscow? Yes, Kissinger replied:
Look at what has happened since 1975, in the space of a little more than four years: we have had Cuban troops in Angola, Cuban troops in Ethiopia, two invasions of Zaire, a communist coup in Afghanistan, a communist coup in South Yemen, and the occupation of Cambodia by Vietnam, all achieved by Soviet arms, with Soviet encouragement and in several cases protected by Soviet veto in the United Nations. In addition Soviet advanced aircraft piloted by Soviet personnel are protecting Cuba – presumably against us – so that Cuban pilots and aircraft are operating all round Africa – also presumably against us. That cannot go on and have Salt survive.84
Soon after this call for ending détente, the Economist ran a savagely hostile review of Sideshow: Kissinger, Nixon and the Destruction of Cambodia, which accused its author William Shawcross of writing a ‘sleazy and distasteful’ piece of ‘propaganda’ blaming Kissinger for ‘destroying that beautiful country, Cambodia’. Shawcross wrote an angry letter, to which Kissinger wrote a long, angrier reply, denying one of the central claims of the book – that he had any hand in the coup against Prince Sihanouk in 1970 which eventually brought the Khmer Rouge to power in Phnom Penh. It ‘took us completely by surprise; at first I even thought he had engineered it himself in order to stage a dramatic comeback’.85 Samuel Thornton, a naval intelligence officer in Saigon at that time, then wrote a letter to the Economist in which he described his own part in planning the coup with the full approval of the White House. Knight refused to publish it, privately assuring Thornton that he had investigated these allegations and found them untrue. The investigation seems to have consisted of asking the former director of the CIA Richard Helms, two admirals and Kissinger himself. ‘If all journalists used Knight’s method of asking those at the very top about their possible misdeeds’, Seymour Hersh observed, ‘none of the major investigative stories of the past two decades would have become public.’86
Clubbiness is the appropriate term to describe these relationships, which worked in both directions, in ways large and small. Kissinger might have been the biggest fish. But George Shultz was of greater practical importance, as both a Labour and Treasury Secretary under Nixon; he resigned in time to take over the Bechtel conglomerate in 1974 and a post at Stanford, where he acted as conduit to Reagan. It was on Knight’s visit to California in 1978 to attend the exclusive, all-male Bohemian Grove retreat that Shultz convinced him that ‘Reagan was an intelligent, viable alternative to Carter, who I hated in almost every respect.’ Four years later, Shultz was having dinner with Knight in London. ‘Andrew said, “What’s new?” I said “I’ll tell you at 6 o’clock.”’ At half past seven Knight’s phone rang. ‘He came back and said, “That was the Economist reporter in Washington breathlessly telling me you had been named Secretary of State.” And I said, “Well, what did you do, tell him you were having dinner with me?” He said, “No, I didn’t want to one-up him that badly.”’87 Shultz regularly consulted the Economist during his seven years at the US State Department – taking heart from its position on Iran-Contra, mulling over its advice on his Middle East peace initiative.88
Late to Neoliberalism?
Since the 1960s, the Economist had played a key role in debates over British economic decline via Norman Macrae, who set relatively disappointing figures for output, productivity and growth in a global and comparative context. But his treks abroad aimed to find solutions to these shortfalls, in optimistic and eclectic admixtures – of Japanese banking, German industrial relations, American entrepreneurialism or French indicative planning. In the 1970s, the onset of a worldwide economic downturn and the crises of Vietnam and Watergate changed the tenor of Economist coverage, which became much darker. Macrae’s frantic accounts of Columbia student protestors, or the unruly poverty of black neighbourhoods in New York and Washington, DC, were illustrations of this mood. In Britain, the ongoing confrontation between trade unions and the Heath government, and the trail of uncollected trash and candlelit offices and homes it left behind in 1974, also drew dire warnings; indeed, that ‘Britannia’s dream of apocalypse is now horribly near to coming true’, with inflation soon to reach Weimar levels.89 But for just these reasons, Macrae was reluctant to embrace what became the standard neoliberal solutions to the crises of profitability and inflation that swept the advanced Western economies – and at first neither he nor many other Economist editors thought that Margaret Thatcher and Ronald Reagan were the best leaders to see liberalism through this turmoil. Given that the Economist has become a byword for the neoliberal revolution these two politicians embodied, why was the paper so late to rally to it?
Although gaining ground, in the 70s neoliberalism was not yet the hegemonic system of thought it would become by the century’s end. Weakest post-war in the universities, its adherents had long gathered outside of these to spread their message in think tanks and ‘thought collectives’ – nowhere more successfully than in Britain. This reflected the strength of classical liberalism in its world historic home, from which neoliberals had always derived inspiration. In the 30s, the stiffest resistance to Keynes had after all come from the LSE, where before departing for the US, Hayek wrote The Road to Serfdom as a call to reject ‘foreign ideas’ about the state, and return to the classical conceptions of Smith and Mill; and the economics department had ties from its inception to the most important international association of neoliberal thinkers, the Mont Pelerin Society in Switzerland, founded in 1947.90 The launch in 1955 of the Institute for Economic Affairs further cemented these connections. Arthur Seldon and Ralph Harris developed the IEA into a powerful corporate fundraiser in Britain, inviting leading US academics to give talks, and publishing pamphlets to win those whom Hayek deemed ‘second-hand dealers in ideas’ – teachers, journalists, doctors, lecturers, politicians and businessmen – to its principles.91 By 1974, many were converts. That year Keith Joseph and Margaret Thatcher founded the Centre for Policy Studies inside the Conservative Party, in order to convert it to ‘rigorous free-market ideas’ and policies. Five years later the Adam Smith Institute relocated from the US to London, where it exerted pressure from outside the formal party structures.92
Through these and other transnational channels, the neoliberals had crafted a broad philosophical account of individual liberty, the state and the law in relation to markets – and fought against the trammelling of these by socialists of all shades.93 But it was on a far narrower point that much of the argument was carried in the run-up Thatcher’s election in 1979: the doctrine of monetarism – which posited monetary growth as the cause of inflation, one that governments could measure and should restrict – as the key to restoring order to the economies of the West. It was this belief that the Economist resisted, amidst a broader shift in ideological sen
timent towards the IEA that it had done much to bring about. A long-time critic of the post-1945 consensus when it came to welfare and nationalizations, Macrae did accept one pillar of it: full employment. This made him hesitant to endorse the deflationary shock that a tight money policy and balanced budgets might induce, unless mitigated by other forms of government intervention. It also made him and the paper a target of Milton Friedman – the televisual neoliberal economist at the University of Chicago, whose ‘standard lecture’ in the 1970s (according to Macrae) included the quip, ‘The Economist as a newspaper has practically every virtue, except that it believes in incomes policies.’ Macrae explained why in a dialogue with Friedman in 1974, when the latter was in Britain at the behest of the IEA for the October general election. ‘There is not a very great difference between the money supply policies favoured by Mr. Friedman and by the Economist’, Macrae began. ‘And almost all economists now accept one part of Mr. Friedman’s teaching: that when governments are trying to restimulate demand they habitually and erratically expand money supply by too much.’ The ‘main difference between Mr. Friedman and us is over the alternative to much higher rates of unemployment, which we think is incomes policy’.94 Four years on, Macrae made another attempt to meet the ‘prophet of monetarism’ partway, in ‘Towards a Keynesian Friedmanism’. This macroeconomic hybrid would have three gear shifts: Keynesian demand management ‘one year in five’; interest rate adjustments to control the money supply every year; and ‘instant bank rate monetarism’, to direct the flow of credit on the model of the nineteenth century Bank of England, or twentieth century Bank of Japan.95 But the present crisis just ‘could not be cured by monetarist discipline’ alone, and ‘monetarists are cheating when they say that “only rises in money supply can cause inflation”’.
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