Nowhere, however, was the economic project in deeper crisis than where it had started: Latin America. Washington has always regarded democratic socialism as a greater challenge than totalitarian Communism, which was easy to vilify and made for a handy enemy. In the 1960s and '70s, the favored tactic for dealing with the inconvenient popularity of economic nationalism and democratic socialism was to try to equate them with Stalinism, deliberately blurring the clear differences between the worldviews. A stark example of this strategy comes from the early days of the Chicago crusade, deep inside the declassified Chile documents. Despite the CIA-funded propaganda campaign painting Allende as a Soviet-style dictator, Washington's real concerns about the Allende victory were relayed by Henry Kissinger in a 1970 memo to Nixon: "The example of a successful elected Marxist government in Chile would surely have an impact on--and even precedent value for--other parts of the world, especially in Italy; the imitative spread of similar phenomena elsewhere would in turn significantly affect the world balance and our own position in it." In other words, Allende needed to be taken out before his democratic third way spread.

But the dream Allende represented was never defeated. It was temporarily silenced, pushed under the surface by fear. Which is why, as Latin America now emerges from its decades of shock, the old ideas are bubbling back up--along with the "imitative spread" Kissinger so feared.

By 2001 the shift had become impossible to ignore. In the mid-'70s, Argentina's legendary investigative journalist Rodolfo Walsh had regarded the ascendancy of Chicago School economics under junta rule as a setback, not a lasting defeat, for the left. The terror tactics used by the military had put his country into a state of shock, but Walsh knew that shock, by its very nature, is a temporary state. Before he was gunned down by Argentine security agents on the streets of Buenos Aires in 1977, Walsh estimated that it would take twenty to thirty years until the effects of the terror receded and Argentines regained their footing, courage and confidence, ready once again to fight for economic and social equality. It was in 2001, twenty-four years later, that Argentina erupted in protest against IMF-prescribed austerity measures and then proceeded to force out five presidents in only three weeks.

"The dictatorship just ended!" people declared at the time. They meant that it had taken seventeen years of democracy for the legacy of terror to fade--just as Walsh had predicted.

In the years since, that renewed courage has spread to other former shock labs in the region. And as people shed the collective fear that was first instilled with tanks and cattle prods, with sudden flights of capital and brutal cutbacks, many are demanding more democracy and more control over markets. These demands represent the greatest threat to Friedman's legacy because they challenge his central claim: that capitalism and freedom are part of the same indivisible project.

The staunchest opponents of neoliberal economics in Latin America have been winning election after election. Venezuelan president Hugo Chávez, running on a platform of "Twenty-First-Century Socialism," was re-elected in 2006 for a third term with 63 percent of the vote. Despite attempts by the Bush Administration to paint Venezuela as a pseudo-democracy, a poll that year found 57 percent of Venezuelans happy with the state of their democracy, an approval rating on the continent second only to Uruguay's, where the left-wing coalition party Frente Amplio had been elected to government and where a series of referendums had blocked major privatizations. In other words, in the two Latin American states where voting had resulted in real challenges to the Washington Consensus, citizens had renewed their faith in the power of democracy to improve their lives.

Ever since the Argentine collapse in 2001, opposition to privatization has become the defining issue of the continent, able to make governments and break them; by late 2006, it was practically creating a domino effect. Luiz Inácio Lula da Silva was re-elected as president of Brazil largely because he turned the vote into a referendum on privatization. His opponent, from the party responsible for Brazil's major sell-offs in the '90s, resorted to dressing up like a socialist NASCAR driver, wearing a jacket and baseball hat covered in logos from the public companies that had not yet been sold. Voters weren't persuaded, and Lula got 61 percent of the vote. Shortly afterward in Nicaragua, Daniel Ortega, former head of the Sandinistas, made the country's frequent blackouts the center of his winning campaign; the sale of the national electricity company to the Spanish firm Unión Fenosa after Hurricane Mitch, he asserted, was the source of the problem. "Who brought Unión Fenosa to this country?" he bellowed. "The government of the rich did, those who are in the service of barbarian capitalism."

In November 2006, Ecuador's presidential elections turned into a similar ideological battleground. Rafael Correa, a 43-year-old left-wing economist, won the vote against Álvaro Noboa, a banana tycoon and one of the richest men in the country. With Twisted Sister's "We're Not Gonna Take It" as his official campaign song, Correa called for the country "to overcome all the fallacies of neoliberalism." When he won, the new president of Ecuador declared himself "no fan of Milton Friedman." By then, Bolivian President Evo Morales was already approaching the end of his first year in office. After sending in the army to take back the gas fields from "plunder" by multinationals, he moved on to nationalize parts of the mining sector. That year in Chile, under the leadership of President Michelle Bachelet--who had been a prisoner under Pinochet--high school students staged a wave of militant protests against the two-tiered educational system introduced by the Chicago Boys. The country's copper miners soon followed with strikes of their own.

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