It Is All Working Quite Well for the Rich, Powerful

C. J. POLYCHRONIOU: Neoliberal ideology claims that the government is a problem, society does not exist, and individuals are responsible for their own fate. Yet, big business and the rich rely, as ever, on state intervention to maintain their hold over the economy and to enjoy a bigger slice of the economic pie. Is neoliberalism a myth, merely an ideological construct?

NOAM CHOMSKY: The term “neoliberal” is a bit misleading. The doctrines are neither new nor liberal. As you say, big business and the rich rely extensively on what economist Dean Baker calls “the conservative nanny state” that they nourish. That is dramatically true of financial institutions. A recent IMF study attributes the profits of the big banks almost entirely to the implicit government insurance policy (“too big to fail”), not just the widely publicized bailouts but access to cheap credit, favorable ratings because of the state guarantee, and much else. The same is true of the productive economy. The IT revolution, now its driving force, relied very heavily on state-based R&D, procurement, and other devices. That pattern goes back to early English industrialization.

However, neither “neoliberalism,” nor its earlier versions as “liberalism,” have been myths, certainly not for their victims. Economic historian Paul Bairoch is only one of many who have shown that “the Third World’s compulsory economic liberalism in the nineteenth century is a major element in explaining the delay in its industrialization,” in fact, its “deindustrialization,” a story that continues to the present under various guises.

In brief, the doctrines are, to a substantial extent, a “myth” for the rich and powerful, who craft many ways to protect themselves from market forces, but not for the poor and weak, who are subjected to their ravages.

What explains the supremacy of market-centric rule and predatory finance in an era that has experienced the most destructive crisis of capitalism since the Great Depression?

The basic explanation is the usual one: it is all working quite well for the rich and powerful. In the United States, for example, tens of millions are unemployed, unknown millions have dropped out of the workforce in despair, and incomes as well as conditions of life have largely stagnated or declined. But the big banks, which were responsible for the latest crisis, are bigger and richer than ever. Corporate profits are breaking records, wealth beyond the dreams of avarice is accumulating among those who count, and labor is severely weakened by union busting and “growing worker insecurity,” to borrow the term Alan Greenspan used in explaining the grand success of the economy he managed, when he was still “St. Alan”—perhaps the greatest economist since Adam Smith, before the collapse of the structure he had administered, along with its intellectual foundations. So what is there to complain about?

The growth of financial capital is related to the decline in the rate of profit in industry and the new opportunities to distribute production more widely to places where labor is more readily exploited and constraints on capital are weakest—while profits are distributed to places with lowest tax rates (“globalization”). The process has been abetted by technological developments that facilitate the growth of an “out-of-control financial sector,” which “is eating out the modern market economy [that is, the productive economy] from inside, just as the larva of the spider wasp eats out the host in which it has been laid,” to borrow the evocative phrase of Martin Wolf of the Financial Times, probably the most respected financial correspondent in the English-speaking world.

That aside, as noted, the “market-centric rule” imposes harsh discipline on the many, but the few who count protect themselves from it effectively.

What do you make of the argument about the dominance of a transnational elite and the end of the nation-state, especially since its proponents claim that this New World Order is already upon us?

There’s something to it, but it shouldn’t be exaggerated. Multinationals continue to rely on the home state for protection, economic and military, and substantially for innovation as well. The international institutions remain largely under the control of the most powerful states, and in general the state-centric global order remains reasonably stable.

Europe is moving ever closer to the end of the “social contract.” Is this a surprising development for you?

In an interview, Mario Draghi informed the Wall Street Journal that “the Continent’s traditional social contract”—perhaps its major contribution to contemporary civilization—“is obsolete” and must be dismantled. And he is one of the international bureaucrats who is doing most to protect its remnants. Business has always disliked the social contract. Recall the euphoria in the business press when the fall of “communism” offered a new work force—educated, trained, healthy, and even blond and blue-eyed—that could be used to undercut the “luxurious lifestyle” of Western workers. It is not the result of inexorable forces, economic or other, but a policy design based on the interests of the designers, who are rather more likely to be bankers and CEOs than the janitors who clean their offices.

One of the biggest problems facing many parts of the advanced capitalist world today is the debt burden, public and private. In the peripheral nations of the Eurozone, in particular, debt is having catastrophic social effects as the “people always pay,” as you have pointedly argued in the past. For the benefit of today’s activists, would you explain in what sense debt is “a social and ideological construct?”

There are many reasons. One was captured well by a phrase of the US executive director of the IMF, Karen Lissakers, who described the institution as “the credit community’s enforcer.” In a capitalist economy, if you lend me money and I can’t pay you back, it’s your problem: you cannot demand that my neighbors pay the debt. But since the rich and powerful protect themselves from market discipline, matters work differently when a big bank lends money to risky borrowers, hence at high interest and profit, and at some point they cannot pay. Then the “the credit community’s enforcer” rides to the rescue, ensuring that the debt is paid, with liability transferred to the general public by structural adjustment programs, austerity, and the like. When the rich don’t like to pay such debts, they can declare them to be “odious,” hence invalid: imposed on the weak by unfair means. A huge amount of debt is “odious” in this sense, but few can appeal to powerful institutions to rescue them from the rigors of capitalism.

There are plenty of other devices. J. P. Morgan Chase has just been fined $13 billion (half of it tax-deductible) for what should be regarded as criminal behavior in fraudulent mortgage schemes, from which the usual victims suffer under hopeless burdens of debt.

The inspector-general of the US government bailout program, Neil Barofsky, pointed out that it was officially a legislative bargain: the banks that were the culprits were to be bailed out, and their victims, people losing their homes, were to be given some limited protection and support. As he explains, only the first part of the bargain was seriously honored, and the plan became a “giveaway to Wall Street executives”—to the surprise of no one who understands “really existing capitalism.”

The list goes on.

In the course of the crisis, Greeks have been portrayed around the globe as lazy and corrupt tax evaders who merely like to demonstrate. This view has become mainstream. What are the mechanisms used to persuade public opinion? Can they be tackled?

The portrayals are presented by those with the wealth and power to frame the prevailing discourse. The distortion and deceit can be confronted only by undermining their power and creating organs of popular power, as in all other cases of oppression and domination.

What is your view about what is happening in Greece, particularly with regard to the constant demands by the “troika” and Germany’s unyielding desire to advance the cause of austerity?

It appears that the ultimate aim of the German demands from Athens, under the management of the debt crisis, is the capture of whatever is of value in Greece. Some people in Germany appear to be intent on imposing conditions of virtual economic slavery on the Greeks.

It is rather likely that the next government in Greece will be a government of the Coalition of the Radical Left. What should be its approach toward the European Union and Greece’s creditors? Also, should a left government be reassuring toward the most productive sectors of the capitalist class, or should it adopt the core components of a traditional workerist-populist ideology?

These are hard practical questions. It would be easy for me to sketch what I would like to happen, but given existing realities, any course followed has risks and costs. Even if I were in a position to assess them properly—I am not—it would be irresponsible to urge policy without serious analysis and evidence.

Capitalism’s appetite for destruction was never in doubt, but in your recent writings you pay increasing attention to environmental destruction. Do you really think human civilization is at stake?

I think decent human survival is at stake. The earliest victims are, as usual, the weakest and most vulnerable. That much has been evident even in the global summit on climate change that just concluded in Warsaw, with little outcome. And there is every reason to expect that to continue. A future historian—if there is one—will observe the current spectacle with amazement. In the lead in trying to avert likely catastrophe are the so-called primitive societies: First Nations in Canada, Indigenous people in South America, and so on, throughout the world. We see the struggle for environmental salvage and protection taking place today in Greece, where the residents of Skouries in Chalkidiki are putting up a heroic resistance both against the predatory aims of El Dorado Gold and the police forces that have been mobilized by the Greek state in support of the multinational company.

Those enthusiastically leading the race to fall off the cliff are the richest and most powerful societies, with incomparable advantages, like the United States and Canada. Just the opposite of what rationality would predict—apart from the lunatic rationality of “really existing capitalist democracy.”

The United States remains a world empire and, by your account, operates under the “Mafia principle,” meaning that the godfather does not tolerate “successful defiance.” Is the American empire in decline, and, if so, does it pose yet a greater threat to global peace and security?

US global hegemony reached a historically unparalleled peak in 1945, and has been declining steadily since. Though it still remains very great and though power is becoming more diversified, there is no single competitor in sight. The traditional Mafia principle is constantly invoked, but ability to implement it is more constrained. The threat to peace and security is very real. To take just one example, President Obama’s drone campaign is by far the most vast and destructive terrorist operation now under way. The United States and its Israeli client violate international law with complete impunity, for example, by threats to attack Iran (“all options are open”) in violation of core principles of the UN Charter. The most recent US Nuclear Posture Review (2010) is more aggressive in tone than its predecessors, a warning not to be ignored. Concentration of power rather generally poses dangers, in this domain as well.

Regarding the Israeli–Palestinian conflict, you have said all along that the one-state/two-state debate is irrelevant.

The one-state/two-state debate is irrelevant because one state is not an option. It is worse than irrelevant: it is a distraction from the reality.

The actual options are either (1) two states or (2) a continuation of what Israel is now doing with US support: keeping Gaza under a crushing siege, separated from the West Bank; systematically taking over what it finds of value in the West Bank while integrating it more closely to Israel, taking over areas with not many Palestinians; and quietly expelling those who are there. The contours are quite clear from the development and expulsion programs.

Given option (2), there’s no reason why Israel or the United States should agree to the one-state proposal, which also has no international support anywhere else. Unless the reality of the evolving situation is recognized, talk about one state (civil rights/antiapartheid struggle, “demographic problem,” and so on) is just a diversion, implicitly lending support to option (2). That’s the essential logic of the situation, like it or not.

You have said that elite intellectuals are the ones that mainly tick you off. Is this because you fuze politics with morality?

Elite intellectuals, by definition, have a good deal of privilege. Privilege provides options and confers responsibility. Those more privileged are in a better position to obtain information and to act in ways that will affect policy decisions. Assessment of their role follows at once.

It’s true that I think that people should live up to their elementary moral responsibilities, a position that should need no defense. And the responsibilities of someone in a more free and open society are, again obviously, greater than those who may pay some cost for honesty and integrity. If commissars in Soviet Russia agreed to subordinate themselves to state power, they could at least plead fear in extenuation. Their counterparts in more free and open societies can plead only cowardice.

Michel Gondry’s animated documentary Is the Man Who Is Tall Happy? has just been released in selected theaters in New York City and other major cities in the United States after having received rave reviews. Did you see the movie? Were you pleased with it? [Ed. Note: Is the Man Who Is Tall Happy? is based on a series of interviews featuring Noam Chomsky.]

I saw it. Gondry is really a great artist. The movie is delicately and cleverly done and manages to capture some important ideas (often not understood even in the field) in a very simple and clear way, also with personal touches that seemed to me very sensitive and thoughtful.

Coauthored with Anastasia Giamali; originally published in Truthout, December 8, 2013