Theos-Talk Archives (October 2001 Message tt00177)

Why not read some Chomsky for yourself instead of allowing apologists to
do it for you?


Chomsky in The New Statesman
July, 1994 

There's a conventional doctrine about the era that we are entering and
the promise that it is supposed to afford. In brief, the story is that
the good guys won the cold war shoot-out and they're firmly in the
saddle. There may be some rough terrain ahead, but nothing that they
can't handle. They ride off into the sunset, leading the way to a bright
future, based on the ideals that they have always cherished but have not
always been able to protect -- democracy and free markets and human
rights... 

The reality, however, is very different. Power is increasingly
concentrated in unaccountable institutions, and the rich and powerful
are no more willing to submit themselves to market disciplines or
popular pressures than they ever have been in the past. Let's begin with
human rights, because they are the easiest place to start: they are
actually codified in the Universal Declaration of Human Rights, passed
unanimously by the United Nations General Assembly in December 1948. In
the United States, there has been a good deal of very impressive
rhetoric about how we stand for the Universal Declaration, and how we
defend the principle of universality against backward, third-world
peoples who plead cultural relativism. 

But the rhetoric is rarely besmirched by any reference to what the
Universal Declaration actually says. 

Article 25, for example, states: "Everyone has the right to a standard
of living adequate for the health and well being of himself and his
family" -- this is the terminology of 194 remember -- "including food,
clothing, housing and medical care and necessary social services, and
the right to secure that in the event of unemployment, sickness,
disability, widowhood, old age or other lack of livelihood." 

How are these principles upheld in the richest country in the world,
with absolutely unparalleled advantages and no excuses for not
completely satisfying them? The US has the worst record on poverty in
the industrialized world. Tens of millions of people are hungry every
night, including millions of children who are suffering from third world
levels of disease and malnutrition. In New York City, one of the richest
cities in the world, 40 per cent of children live below the poverty
line, deprived of minimal conditions that offer some hope for escape
from misery, destitution and violence. 

This is, moreover, just one part of a general worldwide catastrophe.
Unesco estimates that about 500,000 children die every year as a result
of the debt repayment burden alone. Debt repayment means that commercial
banks made bad loans to their favorite dictators, and those loans are
now being paid by the poor, who of course had absolutely nothing to do
with the process. Meanwhile, the World Health Organization estimates
that 11 million children die every year from easily treatable diseases.
The World Health Organization describes it as "a silent genocide": it
could be stopped for pennies a day. And Unesco estimates that the human
cost of what is called "economic reform" in Russia has been some 500,000
excess deaths a year since 1989. There are comparable figures for
elsewhere in eastern Europe. 

Let's turn now to Article 23 of the Universal Declaration. It states:
"Everyone has the right to work, to just and favorable conditions of
work, and to protection against unemployment, with remuneration ensuring
for himself and his family an existence worthy of human dignity,
supplemented if necessary by other means of social protection."
Furthermore, "everyone has the right to form and join trade unions, for
protection of his interests." 

To take the last point first, in the US, technically, everyone has the
right to join a trade union. But the reality is quite different. In
1992, the International Labor Organization, which rarely has an unkind
word for its paymasters, called on the US to conform to international
labor standards on "permanent replacement workers," which were then
violated only by the US and South Africa in the industrial world.
"Permanent replacement workers," otherwise known as scabs, are those
brought in to replace sacked unionized workers to break strikes:
international labor law condemns the practice, but it is condoned in the
US. There was an article in Business Week last week describing some of
the consequences of the American state's vicious anti-labor activities.
Illegal firings for union organizing have gone up sixfold, it reckoned,
in the past 25 years. In particular, thousands of union organizers have
been illegally fired since the start of Ronald Reagan's presidency in
1981. 

According to the US Labor Department, the destruction of the unions as
been the main factor in the decline of real wages that has continued
since the Reagan era. Health and safety standards in the workplace have
also deteriorated: there are laws, but they're simply not enforced, so
the number of industrial accidents has risen sharply in the past ten
years. Then there is the effect of the decline of unions on democracy:
the unions are one of the few means by which ordinary people can enter
the political arena. Finally, there's a psychological effect. The
destruction of the unions is part of a much more general effort to
privatize aspirations, to eliminate solidarity, the sense that we're all
in it together, that we care for one another. 

Let's go back to Article 23 again: "Everyone has a right to work." The
ILO has just published a report estimating the level of global
unemployment in January 1994 at about 30 per cent. That, it says
accurately, is a crisis worse than in the 1930s. Everywhere, there are
idle hands, and everywhere there is work to be done, but the economic
system is simply incapable of bringing them together. 

In the US, of course, there is currently a recovery. But it's remarkably
sluggish, with less than a third of the job growth of previous six
recoveries. Furthermore, of the jobs that are being created, an enormous
proportion -- more than a quarter in 1992 -- are temporary jobs, and
most are not in the productive part of the economy. Economists welcome
this vast increase in temporary jobs as an "improvement in the
flexibility of labor markets." No matter that it means that when you go
to sleep at night you don't know if you're going to have work the next
morning -- it's good for profits, which means that it's good for the
economy. 

Another aspect of the recovery is that people are working longer for
less money. The workload is continuing to increase, while wages are
continuing to decline -- which is unprecedented for a recovery. US wages
-- as measured by labor costs per unit output -- are now the lowest in
the industrial world, except for Britain. Having been the highest in the
world in 1985 (as one might expect in the world's richest country), US
labor costs are today 60 per cent lower than Germany's and 20 per cent
lower than Italy's. The Wall Street Journal called this turnaround "a
welcome development of transcendent importance." 

It is fashionable to claim that all this is simply the effect of trade
and automation, transmitted through "market forces," operating rather
like natural laws. In fact, the state has played a decisive part in both
trade and automation. Trade is massively subsidized, particularly
through manipulation of energy costs for transport: a realistic
assessment of the costs of trade would somehow have to include, for
example, a proportion of the costs of maintaining the US military
presence in the Middle East, a major purpose of which is to keep oil
prices within a particular range. Not too low, because the oil companies
need to make plenty of profit, but not too high because trade has to be
"efficient." 

Similarly, for decades, automation has had to be developed in the state
sector (meaning, in the US, the military sector). In the 1950s, for
example, before computers were marketable, they were virtually 100 per
cent supported by the taxpayer. The free enterprise system means that
the public bears the cost, and if anything comes out of it, it's handed
over to the corporations. 

This is not to say that the state can control market forces. Here, it is
worth recalling, after Richard Nixon's death last month, his demolition
in the early 1970s of the Bretton Woods system for regulating
international currencies, in which the US served in effect as
international banker. One effect of the deregulation of currencies was a
huge increase of the size of capital and financial markets. And the
amount of capital transferred daily is increasing. It's probably now
about a trillion dollars a day -- again swamping governments. 

There has also been a radical change in the nature of currency
transactions. According to John Eatwell, an economist at Cambridge
University, before Nixon dismantled the system, about 90 per cent of
international currency transactions were for long-term investment or
trade and about 10 per cent for speculation. Now there's a vastly
greater amount, and figures have reversed. It's 90 per cent for
speculation, and about 10 per cent for investment and trade. And this
appears to be a major factor in the decline of growth rates since the
early 1970s. A study published in The Wall Street Journal a week or so
ago estimated that about half the decline in growth rates is due to the
speculative capital. Bond holders want money to be stable: they don't
want growth because it might lead to inflation. 

The increase in speculative capital means that it is now difficult for a
nation state -- even the US, the richest economy in the world -- to
carry out even minimal economic planning. (For a third-world country,
the position is hopeless.) And the new GATT agreements are designed to
undercut the possibilities for planning even more, by extending
so-called liberalization to what they call services -- meaning that big
Japanese, British and American banks can displace the banks in smaller
countries. 

While capital is now highly mobile, labor is increasingly immobile --
and that has immediate consequences. It means that it is easy to shift
production to low-wage, high-repression areas of the world with low
environmental standards. And it also makes it very easy to play off one
immobile national labor force against another, as happened during the
North American Free Trade Agreement debate in the US, for example, when
the media carefully focused on the argument that NAFTA would mean jobs
flowing from Mexico to the United States. 

On the other hand, there was another point that just about everybody
agreed on across the board; that the effect of NAFTA would be to cut
wages in the United States for unskilled workers (a technical term that
means about 70 or 75 per cent of the workforce). The agreement is
expected to have the same effect in Canada and could well cut wages in
Mexico, although for different reasons. To cut wages, you don't have to
move manufacturing, you just have to be able to threaten to do it. The
threat alone is enough to lower wages and increase temporary employment.


The shift from national economies to a single global economy also has
the effect of undermining functioning democracy. The mechanisms are
pretty obvious. Power is shifting into the hands of huge transnational
corporations and away from parliamentary institutions. Meanwhile,
there's a structure of governance that's coalescing around these
transnational corporations. 

A couple of years back, the Financial Times described this as "a de
facto world government," including the World Bank and the IMF, GATT, the
World Trade Organization, the G7 Executive, and so on. This has the very
useful property that it removes power from parliamentary institutions,
which are considered dangerous, naturally, because they might fall, at
least partially, under the influence of the rabble. 

The Economist recently described how important it is to keep policy
"insulated from politics." If the policy is insulated from politics, you
can have democratic forms, certain that they're not going to harm
anything. The insulated technocrats can work for the health of the
economy in the technical sense of that term, meaning low growth and low
wages -- but high profits for that small section of the world's
population that already enjoys extreme wealth and privilege.