Noam Chomsky - Free Market Fantasies: Capitalism in the Real World (1996)



for those who are interested in the real world look at the actual history suggest an adjustment a modification of free-market theory to what we might call really existing free-market theory that is the one that's actually applied not talked about and the principle of really existing free-market theory is free markets are fine for you but not for me that's again near a universal so you whoever you may be you have to learn responsibility and be subjected to market discipline that's good for your character it's stuff love and so on and so forth but me I need that a nice state to protect me from market discipline so that I'll be able to rant and rave about the marvels of the free market well I'm getting properly subsidized and defended by everyone else through the nanny state and also this has to be risk free so I'm perfectly willing to make profits but I don't want to take risks if anything goes wrong you bail me out okay so if third-world debt gets out of control you socialize it it's not the problem the banks that made the money when the SNL's collapse no same thing public bells amount when American investment firms get into trouble because the Mexican bubble bursts you bail out and Goldman Sachs and the Malays Mexico bail out and on and on I'm in this case after case of this in fact of the leading top 100 leading transnationals in the fortune list of transnationals there was a recent study of how they have they related to the states in which they're they're all somewhere you know so they're all mostly here in some national state turns out that all hundred of them had benefited from industrial policies meaning state intervention and their behalf all hundred had been if from the state in which they're based and 20 of the hundred had been saved from total disaster that is collapsed by just state bailout when people talk about globalization of the economy remember that the nanny state has to be very powerful in order to bail out the rich and nothing is changing in that regard 20 out of a hundred again we're saved from collapse by this including a number here well that's really existing free-market theory there are many examples of it quite close to home so we could start with their own governor governor weld is described by the Boston Globe as a libertarian with a religious belief in free markets and then a couple of days later they reported that through various scams he had his administration was able to sharply increase federal subsidies to Massachusetts so that way beyond what they were before so that he could parade as a fiscal conservative and that's pretty common just a year before you may recall if you have long memories they had to close George's bank the richest fishing area in the world because it was over being overfished thanks to a combination of deregulation and subsidies to the fishing industry which have that odd consequence that you tend to get overfishing so it looked as if the ground fish were wiped out man to close it off didn't take long for the religious conservative libertarian fanatic William well to take the next jet plane down to Washington hat in hand asking for a federal bailout they wanted the National federal government to declare it a natural disaster and the reason was as he explained with presumably some scientists in tow that there was some strange kind of predatory fish which no one had yet found but they would find it don't worry so some kind of predatory fish had come and sort of wiped out all these you know the cod haddock and all those things so it was a natural disaster and therefore the general public had this sort of payoff the results of deregulation and subsidizing the fishing industry well that's the way to be a libertarian with religious fervor another one is the leader of the conservative revolution Newt Gingrich nobody's more passionate about the market then he is particular about what his own district which he calls a Norman Rockwell world of jet planes and fiber optics as indeed it is except if you asked where jet planes and fiber optics came from you discover that the public paid for them and still pays for them and in fact he manages to get more federal subsidies for his district than any suburban county in the country outside the federal system so you can have conservatism and flowering among the malls and so on or you go back to the Reaganites were also very passionate about free markets for everyone else meanwhile they boasted the American business community correctly that they had done more that they hadn't stood more protection than any post-war American administration in fact more than all of them combined they had doubled import restrictions blocking and recap helped and poured public funds into major industries to enable them to recapitalize to protect in fact reconstruct the steel industry and the automotive industry and the semiconductors and so on which would have disappeared if they'd opened the markets now the Thatcherite in England were about the same government expenditure is relative to GNP stayed pretty constant although anything that went to the general population collapsed meanwhile military industry shot up arm sales are booming think that's all publicly subsidized stuff arm sales to nice guys like Saddam Hussein and General Suharto and others well that's a really existing free-market theory what are the core policies well the Washington Consensus which is basically designed for the third world to make it that way and keep it that way it's now being applied not just to the third world countries but to were the rich industrial societies with the United States and Britain in the lead however it's with a twist since it's being applied at home this is really existing free-market theory that's being applied at home meaning nuanced you know so powerful government to protect the rich and market discipline and tough love for everyone else and you see that very clearly go through the various elements of the Washington Consensus the first one is two about reducing government well that's false we're not reducing government we're switching shifting it around so social spending is indeed way down since the 1970s when this stuff started accelerated after 1980 but starting in the mid 70s the kind of a benchmark example was AFDC the main support system that was cut up virtually in half from about 1970 to 1990 with obvious effects on where families and children and so on it was part of a general war against women and children that was conducted by the Conservatives under the name of Family Values it's interesting that they really get away with that that tells you something about the intellectual culture well one part was the reduction of AFDC from by roughly half from about 1970 to about 1990s now essentially gone that's a purpose of that as you know is that 7 million a couple of million I think 5 or 6 million kids average 7 years old can learn responsibility that's part of tough love meanwhile another part of the government has been very stable and in fact is going up namely the Pentagon system which remains at approximately cold-war levels fact higher now than it was under Nixon although you know the big enemy is disappeared which tells you exactly how much tells a rational person at least exactly how much they were worried about the Russian threat at not as it remained at Cold War levels but it's going up under the initiative of the fiscal conservatives the Heritage Foundation which you know sort of the right-wing nation that designs the budget for the Gingrich army are calling for an increase in the Pentagon system as is Gingrich as indeed most Clinton so that goes up and I should say the cutting of Social special spending is being cut very sharply very much over public opposition at the time of the 1994 congressional election you know the big landslide over 60% of the public wanted and social spending to increase okay went very sharply down what about Pentagon spending going up well that's the public is six to one opposed to that which gives you some one it's one aspect of a big picture about what's happening to American democracy and somewhat of a change not a huge change the so one part of the system is going up Pentagon spending in other parts going down social spending and the same is true in other domains like for example legal aid for the poor is being slashed and virtually destroyed on the other hand the security system States the government security system state and federal that's going up so prisons are going way up the prison population crime hasn't really hasn't changed for about 20 years but and instantly us crime rates are not off the spectrum contrary to what a lot of people believe crime rates are sort of it toward the high end of the industrial world but not off the spectrum with one exception namely murder with guns but that's a special feature of American society which do not do with crime rate apart from that crime rates are kind of toward the high end not going up the prison population tripled during the Reagan years is going up even faster now and I think the reason is another aspect of the third world model namely the superfluous population there is a big superfluous population they don't contribute the wealth protection well we're civilized folks we're not like the people we fund in Colombia go out and murder them so we throw them into jail and that's going way up in even more and there's also with Congress I'd benefit to this the putting more and more people in jail and in fact under harsher and harsher conditions has an is a technique of social control for everybody else I mean when you're if you're you know when someday down the road you decide to run a dictatorship and you want to really harm people it's kinda like Hitler Germany or something you know you know that you're gonna carry out policies are gonna cause people a lot of harm you got to control them somehow and there aren't many ways to do it everyone hits on the same ways what you do is engender fear and hatred and you know make them hate the guy who looks a little different or whatever it may be and then you punish those bad guys because they're really awful and you punish them really hard and so on and that makes people even more frightened you can just see that happening right around you and building up the perception of crime crime has oh like a what they call in literary theory a subtext you're supposed to understand criminal has the word a little word black in front of it just like welfare mother you know black rich black and the and criminal means you know that black guy is coming at you so what you want to do is this has the dual effect of getting rid of a superfluous populations basically unskilled workers close race class correlation and also demonizing them so everybody else is scared and frightened and they'll be willing to accept what's happening to them too and not look at where the source is so that part of the drug wars basically for this has almost nothing to do with drugs but it has plenty to do with criminalizing and unwanted population and scaring everybody else and so does the harsh inning of prison conditions which is really it's the United States off the map on this one in violation of international conventions constantly condemns in human rights forums and getting much worse the reinstitution of chain gangs was of course bitterly condemned but you know that's that bad South Alabama well it's now in Illinois the state Senate of Illinois ago legislated chain gangs not for violent criminals incidentally for people who are found with drugs or you know robbing the store or something like that the Chicago Press pointed out that this carries this kind of reminiscent of slavery but the legislature and the senator state senator who put it through said that this is just another aspect of what he called tough love and then he explained that some people work better under humiliation so it's really good to restore elements of slavery and again the subtext is everybody else gets scared you know if those guys have to walk around like slaves in Chains we must be in real danger so therefore we'll accept what's happening to us that's the logic so prisons are going up and it's and that has a lot of side benefits apart from just getting rid of perf lewis population it is a source of cheap labor so prison labor is going way up cheap labor ought to worry about unions no benefits they don't get out of line and that also naturally undercuts wages elsewhere so when just like forcing welfare mothers to work you know raising children isn't work as anybody knows who's had children so you have to drive them the work kind of like people would go to you know fidelity investment to figure out scams but I deal with security market really want these people to work but since there's no jobs for them they're gonna work at low paid or so publicly subsidized wages which will undercut other wages and the same with prison labor also in fact the scale of prison construction which is a kind of Keynesian stimulus to the economy anyway but its scale has become so enormous that even high-tech industry you know the guys who are usually just ripping off the Pentagon system they're beginning to look at it figuring out the correct recognizing that high-tech surveillance devices and so on may be another way to sort of get the transfer of public funds to make sure that high-tech industry keeps moving it's reached it's not the scale of the Pentagon but it's going up well that's one aspect of what's called reducing government modifying government to be more precise another aspect of it is what's called devolution you know reducing moving governmental power from the federal to the state level and that has a kind of a rationale which you hear all over the time a place for example there was an op-ed a couple of weeks ago in the New York Times by John Cogan those who were instituted Stanford whose pointed out what he called a philosophical issue that divides the Democrats and the Republicans the philosophical issue is that the Democrats believe in big government and entitlement and the Republicans believe in getting power down closer to the people to the states because they're kind of populist types well it takes about maybe three seconds thought to recognize to realize that moving power down to the states in funding and so on is just moving it away from the people for perfectly elementary reason there's a hidden part of the system of the power system that you're not supposed to know about or think about and that's private power and now it takes a big corporation like say General Electric or Microsoft to sort of pressure the federal government but even middle sized guys have no problems with state governments they can control them quite easily and in case anyone was too dull to figure this out by themselves the same day is Kogan's op-ed in The New York Times which is a typical one that there was a story in The Wall Street Journal about Massachusetts which had a headline that read what fidelity investment wants it usually gets okay and then the story went on to say that fidelity investment the biggest investment firm in Massachusetts wanted even more subsidy and support from the state government that it already gets and it was threatening if it didn't it would move over the border to Rhode Island where it just owns the place so therefore the passionately libertarian governor quickly rearranged you know tax subsidies and one thing or another so that fidelity got what it wanted well fidelity couldn't have done that with the federal government that said you know you give us even more we're going to move to Switzerland or something I mean other guys can do it maybe but not fidelity Raytheon it's as big as manufacturing producer did the same thing Raytheon instantly filled fidelity it's not it's not that fidelity is poor they just announced record record profits couple days ago same with Raytheon just announced record profits but you know having big problems so they wanted even a bigger tax subsidy and direct subsidy and tax write-offs which just means transfer of taxes through from the state of Massachusetts and they threatened if they didn't get them they were going to go to Tennessee so of course they got them the Legislature passed a special law giving what they call defense industry special extra subsidies notice that Raytheon is publicly subsidized in the first place that's where it's money comes from but now it has to be and additionally subsidized so that its profits will be even higher than the record profits it just made same with fidelity and that's the kind of game anybody can you know even even weigh down that much smaller businesses can play with states the consequences of devolution are quite straightforward it means that any funding that goes to say block grants that go to the states you can be reasonably confident that they'll end up in the deep pockets of rich people not you know in the in the hands of hungry children or we're mothers or anything like that that's how you get power down to the people okay that's a devolution in fact quite generally when you look at it what's called government cutting is is more or less cost transfer it's almost never reduction sometimes it's increase so let's take what's big health reform reform is a word you always ought to watch out for you know like when now called started the Cultural Revolution it wasn't called a reform you know reform is a change that you're supposed to like okay and what so as soon as you hear the word reform you can reach for your wallet and see who's lifting it anyhow there are things called health reforms and the health reforms are supposed to you know cut government costs well they do cut one kind of cost but of course they raise another kind of cause there's a very respectable outfit called the National bipartisan leadership council headed by two ex presidents Ford and Carter and it just did a study of the cost transfer effects of the planned health reforms it concluded that they would add about ten billion dollars a year extra costs but those extra costs will come from wages and higher premiums okay which means it's a highly regressive tax on the poor highly regressive tax you know if it comes from wages and premiums of course and that's ten billion dollars a year they also estimated that it'll increase the number of uninsured by fifteen to twenty percent up by this is by the year 2002 so up to about fifty four million by the year 2002 well that's a cost and big cost an unmeasurable cost and and so you find all the way across the board and furthermore it's no big secret so like the Wall Street Journal had a headline which pointed out that when the reforms were you know moving through Congress it's a rich gain poor lose trade-offs for the middle class okay which is right that's exactly what the reforms are intended to do you have to remember my middle class they mean the people right below the very rich so they don't mean the median you know they're not talking about people with 30,000 a year income they mean every you know so what it really means is great for the rich super-rich trade-offs for those the near rich tough business tough love for everybody else which is most every when you close public hospitals and that sort of thing you know exactly who's gonna suffer well let's go to what are called take say New York which it has to a conservative governor and conservative mayor and they're carrying out very extensive conservative tax cuts because their fiscal conservatives the tax cuts the New York Times pointed out in a small item all benefit business so by accident all the tax cuts benefit business well there are also tax increases which are compensating for the tax cuts but don't call them tax increases what they call them is the phrase is reduction of subsidies for public transportation and for tuition and public universities well subsidy itself is another interesting word kind of like reform it's a subsidy if public funds are used for public purposes that's called a subsidy it's not called a subsidy when they go to private wealth that's reform or something so the so they're cutting down subsidies for public transportation well that's just a tax you know if you pay twenty percent more for getting on the subway that's tax the same if you pay higher tuition at City College and that's a highly regressive tax so who rides the subways and who goes to City College so what the doing is shift is cutting taxes for business for the rich and increasing taxes for the poor which are gonna compensate for that and and that's called fiscal conservatism and cutting government well so it is across the board you take other examples but if you think about it all the same take a look a close look at the things that are called cutting government you'll notice they quite characteristically have this property the next element of the Washington Consensus is making the taxes the more regressive okay we don't talk about that it's stated openly the thing that isn't stated openly is the reason this is supposed to be in order to increase investment and give or give everyone jobs but it's a really weird way to do that I mean the country is already a washing capital the people whose taxes are being cut don't know what to do with their money if you want to increase growth there's another approach that might be used in stimulate weak demand by progressive taxes that has put more money into the hand the hands of people who can spend it that increases growth that would increase growth but that's not the right way to do it the right way to do it is by cutting financial gains so that you can have more speculation against currencies the so that's the second part make the tax system more regressive what about deregulation well same effect deregulation is a cost shifting measure so for example if you deregulate if you allow industries to as they've done already to deposit toxic wastes without costs because you have deregulation it increases their profits but it also increases water and sewage rates which is a regressive tax on everybody else who's got to pay that also it has further costs some of them you can't estimate for example the costs in say health and quality of life and so on no way to give numbers to those and there's also going to be the eventual cost of clean up but that's going to be a public cost remember incidentally a good one because when you clean up the wastes that increases the gross national product and we all like to see that gillip but the public I'll pay those costs so what it is is it just another form of radical cost shifting increase wealth for the rich and decrease it for everyone else so it fits the experiments design and in general it's kinda like a short-term profit game for some very small sum and a big cost for everyone else what about deregulating the labor market well same process actually that was done by simply criminal behavior the best review of this I know is in Business Week the Reagan administration ascent as they point out essentially informed the corporate world that they were not going to enforce the laws there are laws you know much hated laws like the Wagner Act on that gives you the right to organize and the Reagan administration simply informed business they were none force them so the number of illegal firings went up by about a factor of six and similarly across the board they also informed business that were not going to enforce the OSHA regulations safety regulations so the number of days lost to injury and the number of injuries and so on also shot up and in fact that was a great way to undermine the unions and the right to organize whole pile of policies like that which was part of deregulating labor markets another part of deregulation of labor markets is to make them work what's called more flexible meaning you don't have any security and no guarantees number of temporary workers goes right up way up no benefits you never know if you don't have a job tomorrow that's really good for the economy that's good for having jobs some of the most profitable corporations the ones whose way up on the fortune 500 list and looming are the ones that what they call cell manpower you know like manpower incorporated selling temps which is terrific for making labor markets flexible happens to destroy everybody's life but that doesn't really matter it's again the similarity the third world is very close back in nineteen this is what's called economic health and when you witness carry those happens you call it an economic miracle another technical term so for example Brazil was a terrific economic miracle under the neo-nazi generals that we installed with great self adulation back in the 60s and by 1971 it had become the Latin American darling of the business community and the President General ran place pointed out that the economy is doing fine it's just that the people aren't well we just we have a Nobel Prize winner who just won the Nobel Prize last years last time Robert Lucas of Chicago and he was interviewed by The Wall Street Journal and said we've been doing great and have been for a long time he didn't even bother had what the Brazilian general did it's only the people who aren't doing well what he means by we is the top 5% maybe top 10% and that's right we've been doing great we're doing fine the economy is fine by now we don't even worry about the fact that the people aren't doing so well like bother repeating the statistics which you know and he knows perfectly well okay that's economic miracles we're now beginning to get one ourselves what about privatization well again the effects that are obvious so say in the latest economic miracle in Mexico privatization meant as usual handing over public assets to friends of the President or you know other rich people or international investors at a fraction of their cost and in fact in Mexico the number of billionaires during the economic miracle went up even faster than the percentage of people on the poverty line as some were doing well and the people didn't happen to be doing so well and in fact it was a catastrophe for them even before the collapse so that's privatization what about property rights increase of property rights that's very important in fact it's a critical aspect of the what are called misleadingly the free trade agreements which actually have strong protectionist elements in them Uruguay round and NAFTA and so on and one of them is increase of intellectual property rights go into the details but what it amounts to is guaranteeing that major corporations have a monopoly on the technology and knowledge of the future and they extended those to the various devices so that it's about 50 years before you can interfere with owned property which comes from public subsidy usually through research and then is handed over to some private corporation and there's a lot of touching so increasing property rights has a big effect highly protectionist measure which is central to the new trade agreement and has a long-lasting effect way down the road on organizing the International economy and who gains and who loses a last element of the Washington Consensus is reducing trade barriers and here there's another scam that you ought to keep your eyes on the what's called trade and economic is a very odd notion so for example if Ford Motor Company moves parts from Indiana at the Illinois for assembly and then moves them back to Indiana that's not called trade but if Ford Motor Company takes parts in made in Indiana and moves them across the border to Mexico we can get much cheaper labor and you have to worry about the you know pollution and so on and they get reassembled in Mexico and then sent back to say Illinois for value-added that's called exports and imports never I didn't do with Mexican economy or in fact any economy it was all internal to the Ford Motor Company but its exports and imports so how big an element is that well about 50% of US trade so about 50% of what's called US trade is actually internal to individual corporations meaning controlled by a very visible hand with all sorts of methods around for distortion of markets and you know robbery and so on and so forth it's about the same for Japan and for the world you know it's hard to get numbers but what's estimated for the world is around 40% of trade agreements like say the Uruguay Round know yet if that increases what's called trade what it actually does is increase investor rights that is it increases the power of transnational corporations we have to really look pretty closely to figure out what the effect is on trade in any meaningful sentence for example it may it may increase cross-border operations but decreased rate and a meaningful sense of trade meaning something that's not under the control of kind of corporate mercantilism going on with this it's perhaps worth noticing that the very concept of capitalism and markets has virtually disappeared so for example if you take the current issue of Foreign Affairs there's an article by Joseph Nye of the Kennedy School and maybe it's Dean at the Kennedy School who explains that there's a big new weapon in the hand American diplomat American diplomats he says has a diplomacy has a force multiplier and the reason is because of the attraction of democracy and free market enthusiasms of the United States that's given those things have given the u.s. a real force multiplier then he spells it out it comes from Cold War investments in high technology electronics aviation telecommunications and so on that's our free market enthusiasms and democracy well where did electronics and aviation and telecommunications come from well from public funds didn't have any do it free market they came from public funds which were transferred to high technology industry under the conscious guys deceit of security and it was conscious so Truman's first secretary of the Air Force back in 1948 pointed out to Congress that the word to use is not subsidy the word to use is security and in fact the whole system was designed that way and stays that way so that's the tribute to democracy and the free markets tributes of democracy and free markets is you robbed the public by deceit to pay but to enrich the rich that's free markets and democracy and it's published without comment another article in and probably nobody notices you know because the because the concept of capitalism just like the concept of democracy is just gone knows what is democracy means deceive people into doing what their rich people want and markets means making sure that make sure the public subsidize the rich or to take another example take say The Wall Street Journal which think the last holdout remembers what capitalism is well they had a front lead article a couple of weeks ago on various strategies that states meaning like states of the union we're using to try to be more business friendly and the they pick two examples Virginia and Maryland who are sort of competing and to see hookans most sponsor entrepreneurial would be most business-friendly and so on and they said well for a while it looked like they have somewhat different strategies that's why they were describing turned that for a while Maryland was doing better than it turned out Virginia is doing better now and Virginia is doing better they're more business-friendly more gung-ho about business and so on all right you read the article turns out it's not Virginia and Maryland what it is is the suburbs of Washington some of which are in Virginia and the others of which are in Maryland and what are the two business strategies entrepreneurial strategies well the suburbs of Washington figured they could rip off by the National Institute of Health and the others develop biology based industries they were looking for biotechnology and so on they figure that's going to be the big cash cow and Virginia which is more business-friendly decided that the old cash cow the Pentagon would probably be the best way to rip off public funds so they were concentrating on electronics and telecommunications and so on and it turned out that Virginia had the better strategy the better business strategy they made a better guess about which public funds to rob and that's what it means to have entrepreneurial values and it's again reported without comment this just continues virtually without a break no the New York I'll give you one last example the New Yorker had a rather good article actually you know they by now the story about what's happening to the economy into the population which used to be what crazies on the Left talked about it's now sort of hit the public you know so you can read it in the newspapers New Yorker had an article in which they reviewed the figures on decline of real wages and you know increase in profits and the story you're familiar with by a guy named Thomas Cassidy wasn't a bad article actually sort of repeated the familiar facts and then he ended up by saying look no one's to blame for this it's just the market in its infinite and mysterious wisdom just has these effects and there's nothing you can do about it they gave three examples exactly three examples in the the market in its infinite and mysterious wisdom namely Grumman McDonnell Douglas and Hughes Aircraft you know maybe this is some kind of subtle irony that I'm missing but these are three prototypes of publicly subsidized corporations Grumman Hughes McDonnell Douglas they would exist for two minutes if it wasn't for a huge public subsidy so that's the market and it's infinite and mysterious wisdom when Clinton was announcing his grand vision of the free market future at the APEC conference in Seattle II did the same thing it was in the Boeing terminal that's where he announced it and he gave Boeing Boeing as the example of the grand vision of the free market future and there were big headlines in all the newspapers a lot of applause about our love of the free market and so on it's unnecessary to comment but it is kind of interesting what it means is that the concept of capitalism and markets has disappeared as fully as the concept of democracy which is an interesting fact about the modern period and a kind of a natural effect of you know of applying the Washington Consensus at home because you really have to drive out any understanding of what's going on namely that it's really existing free markets that are being imposed well all of these current measures share one fundamental principle and I think it's really part of it firk well two two related fundamental principles one is they transfer wealth to the wealthy and the second is they transfer a decision-making power to the wealthy so all of them have the effect just think of through what all every one of them has the effect of putting more power to make decisions into the hands of unaccountable private tyrannies what we call corporations basically totalitarian institutions but they're on it mostly unaccountable and that's the effect I think through the examples every case of the Washington Consensus applied at home has exactly this effect and a good part of the propaganda system has the same goal in this case surely conscious so the propaganda system is design has been for years to demonize unions which makes a lot of sense unions are a democratizing force in which the mass one of the few ways in which the large mass of the population can pool pool limited resources and work together for some common good so that's that bad thing democracy so naturally you want to demonize and destroy unions and that's been going on forever and the other leading propaganda theme and I don't mean by that you know like just would hear in the newspaper reading the newspaper and so on like the entertainment industry and television and everything else the is anti politics meaning setting up a picture it's called any politics the picture is a very specific kind of anti politics you have to establish the image you know get into people's heads that the government is the enemy federal government state governments are okay because they can be sort of controlled by business anyway so it doesn't matter but the federal government sometimes a little too big to be pushed around so it's the enemy and it cannot be nobody can dream of the possibility that the government is of By and For the People that's impossible it's an enemy to be hated and feared not there are a lot things wrong with it but that's not what's wrong with it from their point of view is it has a big defect it's potentially influenceable by the population and big enough to stand up against private power and that's the detail so you have to regard it as the enemy it cannot be of by and for the people it's kind of a them versus us business this is them is the government which is the enemy us is all of us nice people no server working man loyal wife maybe that's your job these days that hard-working executive toiling 20 hours a day for the benefit of all the friendly bankers out there trying to find give you money that's us and then there's them them is the Outsiders the unamerican you know the agitators union organizers big government and so on and so of us versus them that's the picture that has been rammed into people's head for at least 50 or 60 years by intensive propaganda everywhere movies television textbooks just constant and not by accident this is this part is all extremely conscious we have a huge public relations industry which spends billions of dollars a year on exactly the sort of thing unconsciously they can tell you that well why is it happening now not say 30 years ago one proposal is it's the market and it's mysterious wisdom we can put that aside this is perfectly conscious social policy and also hints under social control second is we live in lean and mean times we got it tighten their belts complete nonsense so my view is look at the business press they're just ecstatic no one have been for years Businessweek just came out a couple of days ago with the annual issue on the top 1000 corporations the headline is 1995 was one for the books America's most NASA America's most valuable companies grew even more valuable by a record 35 percent that's these lean and mean times were in another headline in Business Week reads the problem now what to do with all that cash as the coffers of corporate America are overflowing with surging profits another one talks about the government really great government it says the Gingrich Congress represents a milestone for business never before have so many goodies been showered so enthusiastically on America's entrepreneurs the headline of that one incidentally is return to the trenches you know like we got a ask more feeding frenzy has to go on from the nanny state fortune magazine you know they're their big business journal I mean they can't even find the adjectives in the last couple of years to describe what's going on one year it's dazzling you know the next year is stupendous I mean I'm waiting for the fortune 500 issue see what adjectives they come out with next week what they've been double digit profit growth for unheralded four years with pretty stagnant sales and fortunately wages going down CEO salaries are going through the roof and it's uncorrelated with performance it's another interesting aspect of it now studies of it so just some other thing there's nothing to it the markets or anything else the I mean while wages continue to decline as does family income and so on well you know nobody who even looks at the business press can believe that there are lean and mean times as I said the country is just awash with capital their problem is in order to do with it so therefore get more another theme that's around now is you have to have what's called downsizing in order to be competitive well the Bureau of Labor Statistics came out with its figures up to last year they have him forward 1993 from 80 from 1983 to 1993 the category of executives managers and administrative personnel grew 30% okay that's downsizing the fastest-growing white-collar population happens to be security guard well yeah that's connected with turning it into a third world country you take a walk down San Salvador you know you'll see plenty of security good you know rich people actually protected and furthermore all these prisons you're throwing people into they need security guards so yeah there's their administrative personnel and that's increasing but so our name in corporations there's no downsizing going on except for working people that's quite different why is it happening now anyway those are let's go back to why it's happening now well the fact is it's always going on just depending on the weapons at hand business American business particularly is highly class conscious and very open about it incidentally and it's always fighting a bitter class war you go back a century ago into what were called the gay 90's when incidentally the international economy was about as interesting the International economy was pretty much as like it is now in terms of capital flows and so on hasn't become more globalized in terms of trade and capital flow and so on was then even be less so the about a century ago it looked as if the game was over you know they were talking about the end of history perfection had been reached in the devil take the hindmost society where everybody's for themselves enriched yourselves and so on it was monstrous for working people very brutal in fact here that was a century ago well yeah didn't and no in Europe particularly the social contract was slowly imposed not easily it didn't happen here by the Roaring Twenties as they were called labor had no voice this is the you know the age of mass production Mabuse and so on labor was out of it it was a business run society almost completely and it looked permanent again you know utopia the masters and of history all this talk the 1930s it proved to be wrong there was a lot of popular organizing popular protest it rammed through elements of the social contract that had been achieved in Europe decades earlier and that just caused hysteria in the business community you read the business press it was talking about you know the hazard facing manufacturers and the rising political power of the masses and how we're gonna face disaster unless we figure out some way to reverse this and control their minds and control them and so on a huge propaganda campaign began right after the Wagner Act was packed passed 1935 in in those in the next two years the National Association of Manufacturers its public relations budget multiplied by a factor of twenty no as they recognize the force alone is not going to be enough u.s. has a very violent labor history and plenty of the workers were getting killed but it was clear that this wasn't going to be enough they had to have huge propaganda it was sort of put on BET's when all this harmony business that I was talking about guttin designed you know it was a specific design as to how to carry out what they called scientific methods of strikebreaking by controlling communities and so on well I was put on hold during the war and then it picked up right after the Second World War was over with an enormous propaganda campaign I mean you can't believe the scale until you look at it and the purpose was very explicit the purpose was to win the everlasting battle for the minds of men which have to be indoctrinated with the capitalist story as we sell our preferred way of life and on and on these are others quotes from mainstream PR literature and it was very substantial and aimed precisely at what I described I mean they described what they're doing and you can see it in the propaganda schools entertainment industry everything else well what happened in the 1970s but what happened is there were some changes in the International economy and in technology and so on which just put new weapons into the hands of the Masters one crucial factor which everyone points to is an enormous growth in financial capital financial transactions it just boomed short-range financial transactions that came about partly because of the dismantling of the post-war Bretton Woods system of regulated currencies which kind of made currencies free-floating the Nixon administration just dismantled it partly it came about for technical reasons I mean the telecommunications revolution which was of course publicly subsidized at that point made it possible to transfer funds very rapidly also like you can about it by now it's estimated around trillion dollars a day just shift up and back from one market to another very short term transactions all in a heap and aimed it's something they're all aimed at low growth and high profits and low wages and that's a that is a factor that's driving policy in that direction I don't think it's many means an uncontrollable factor but it is a it's definitely a factor and let's just put a lot and the changes are in the in the composition of capital transactions are very striking around from about maybe the time when you have data like late 19th century up till about 1970 rough estimate was that about 90 percent of capital first had to do with the real economy you know with investment and trade 10% speculation by 1990 the figures had reversed by 1995 the latest I'm dead you know UN Economic Commission estimate was about five percent real economy 95 percent speculation short-term speculation like against currencies which is essentially aimed at driving down growth and increasing profits and lowering wages this was understood very quickly by the late 70s and there were proposals made for example by James Tobin Yale economist Nobel Prize winner at an American Economic Association presidential address 1978 simply suggested a simple reform low tax very low tax on short-term financial transactions just to slow it down you know throw a little sand in the gears probably work it's been called the Tobin tax but it's not getting anywhere because the weapon is a very important one that weapon has been used very efficiently for all the purposes they've been described and there are other things I is it out of control is there nothing we can do well there's no reason to believe that I mean elementary reforms like say the Tobin tax could have maybe a big effect furthermore more globally all of these interchanges as I mentioned the International economy is not more integrated by most measures than it was a hundred years ago in fact less in many respect and the transactions that are going on are mostly within the big three regions United States Japan and Europe now that's under political control you know that's not out of political control democratic societies in the these three areas could control this the idea that it's somehow you know kind of impossible to control over the world that's just not true you look at the flows they're internal to the highly developed rich societies where theoretically there are democratic governments and could impose all sorts of restrictions for them were all talk about corporate greed and everything is crucially beside the point in my point of view I think and should be recognized as a very big regression from what working people and a lot of others understood very well a century ago talk about corporate greed is nonsense corporations are greedy by their nature there's no such you know nothing nothing else there are instruments for interfering with markets to maximize profit and wealth and give market control you can't make them more or less greedy I mean maybe you can sort of force them it's like taking a totalitarian state I'm saying be less brutal well yeah maybe you can get a totalitarian state to be less brutal but that's not the point the point is not to get a tyranny to be less brutal but to get rid of it now like 150 years ago that was understood I mean if you read the labor press there was a very lively labor press right around here you know Lowell Lawrence in places like that around the mid 19th century run by artisans and what they call factory girls young women from the farms who were working there and they weren't asking the autocracy to be less brutal they were saying get rid of it you know the and in fact that makes perfect sense these are not these are human institutions you know there's nothing graven in stone about them they're created early in this century with their present powers they come from the same intellectual roots as the other modern forms of totalitarianism namely Stalinism and fascism and they have no more legitimacy than they do so it's not a I mean yeah let's try and make them make the autocracy less brutal if that's the short term possibility but we should have the sophistication of say factory girls in Lowell 150 years ago and recognize that this is just degrading and intolerable and that as they put it those who work in the mills girona and on everything else and that's democracy you don't know that you don't have the money you




Comments
  1. Let's remember that Chomsky's impressive-sounding recitation of fact & figure-EVEN IF it is all accurate-ALL has the great luxury of 20/20 Hindsight after the fact, from a man who has spent his career as a Linguistics Professor, criticizing others from the sidelines, but without ever having the balls to actually get involved in the Policy-Making Process, and show us all he can do a better job, himself! SMH

  2. Some Chomsky Content is categorized by youtube as "inappropriate or offensive" now (see ex. Manufacturing Consent 1 of 9)… for how long will we have acces to "free information". I wonder.

  3. @ around Chompsky's complaining about companies blackmailing states with a threat to move to another state unless they get a tax break. He didn't use the word blackmail but that's essentially the argument. But this is really ironic because if one state offers a better deal than another then they get the businesses – it's a free market for goodness sake.

  4. I used to like Chomsky but the more I listen to him, the less I like. For example he's got a long list of free market transgressions and, well, yes – they are free market transgressions. But the current thinking is that a pure free market system would not work for may reasons, e.g. monopolies. So surprise, surprise, there is a lot of transgressions. There are bailouts, but the average life of a publicly listed company in the US is about 40 years so there are 1'000 (more?) companies left to die for every bailout.

    Secondly people and companies operate, not with in a perfect ideology, but within real life. If your competitor is getting subsidies then you'd be a fool not to fight for them too. Those of the rules of the society in which you live and because competition in essentially a free market system then you are fighting for survival.

    Lastly, what else is there? Central planning?

  5. Great talk.

    But a little beside the subject, does anyone know the name of the song playing at the beginning?

  6. Overfishing occurs because of concepts YOU support, like the abolition of private property. when there's private property, there isn't overfishing. google "tragedy of the commons".

  7. Why the fuck do so many "anarchists" ignore real anarchists when they say THIS IS NOT A FREE MARKET?!?! Guess what Noam, if a company gets bailed out by "public funds", ITS NOT A FREE MARKET!!!!!

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