The Emerging Global Economic Order
Vol 3 # 4 1994
David Barsamian interviews Noam Chomsky: long time political activist, writer and professor of linguistics at MIT, is the author of numerous books and articles on U.S. foreign policy, international affairs and human rights. Among his books are: Year 501, Rethinking Camelot, Letters from Lexington and The Prosperous Few and the Restless Many
DAVID:
In the fall of 1993 the Financial Times trumpeted, ‘The public sector is in retreat everywhere’. This is before the passage of the two major corporate-state initiates, NAFTA and GATT. How were they able to do it and what are the consequences?
NOAM:
First of all, it’s largely true, but major sectors of the public sector are alive and well, in particular those parts that cater to the interests of the wealthy and the powerful. They’re declining somewhat, but they’re still very lively. They’re not going to disappear. How were they able to do it? These are developments that have been going on for about twenty years now. They had to do with major changes in the international economy that had become more or less crystallized by the early 1970s. For one thing, the period of U.S. global economic hegemony had pretty much ended by the early 1970s. Europe and Japan had reemerged as major economic and political entities. There was pressure on profits. The costs of the Vietnam War were very significant for the U.S. economy, and extremely beneficial for its rivals. That tended to shift the world balance. In any event, by the early 1970s the U.S. felt that it could no longer sustain its traditional position as essentially international banker, which was codified in the Bretton Woods agreements at the end of the Second World War, with currencies regulated relative to one another and the U.S. dollar, the international currency, fixed to gold. Nixon dismantled that whole system and introduced wage and price controls and in various other ways dismantled the whole international system. That led to a period of tremendous growth in unregulated financial capital. It was rapidly accelerated by the short-term rise in commodity prices, the oil price rise, and indeed others. Oil wasn’t the only one, which led to a huge flow of petrodollars into the international system, now largely unregulated. There were technological changes that took place at the same time which were significant. The telecommunications revolution made it extremely easy to transfer capital or paper equivalents of capital, in fact, electronic equivalents of it, from one place to another. There has been an enormous expansion of unregulated financial capital in the past twenty years. What’s more, its constitution changed radically. Whereas in the early 1970s about ninety percent of financial transactions were devoted to long-term investment and trade, basically more or less productive things, by now that’s reduced to ten percent. About ninety percent is being used for speculation. This means that huge amounts of capital, $14 trillion, according to a recent World Bank estimate, are now simply very quickly moveable around the world basically seeking deflationary policies. It is a tremendous attack against government efforts to stimulate the economy. I think it was pointed out in the same Financial Times article to which you referred. That’s one factor.
Related to that was a very substantial growth in the internationalization of production, so it became a lot easier than it had been in the past to shift production elsewhere to places where you get much cheaper labor, generally high-repression, low-wage areas. So it becomes much easier for, say, a corporation executive who lives in Greenwich, Connecticut to have corporate and bank headquarters in New York but the factory is in some Third World country. That now includes Eastern Europe. The actual banking operations taking place in various offshore regions where you don’t have to worry about supervision and that sort of thing, you can launder drug money or whatever you feel like doing, this has led to a totally different economy. With the pressure on corporate profits that began in the early 1970s came a big attack on the whole social contract that had developed through a century of struggle and had been kind of codified around the end of the Second World War with the New Deal and the European social welfare states and so on. There was a big attack on that, led first by the U.S. and England. Thatcher came along, and by now going to the continent. It’s had a big effect. One effect has been a serious decline in unionization, which carries with it a decline in wages and other forms of protection. That’s led to a very sharp polarization of the society, primarily in the U.S. and Britain, but it’s extending.
Just this morning driving in I was listening to the BBC. They reported a new study of children in Britain which concluded that children living in work houses a century ago had better nutritional standards than millions of children in Britain today living in poverty. That’s one of the grand achievements of the Thatcher revolution, in which she succeeded in devastating British society and destroying large parts of British manufacturing capacity and driving England into, as the Financial Times puts it, the poorhouse of Europe. England is now one of the poorest countries in Europe, still above Spain and Portugal, but not much. It’s well below Italy. That’s the British achievement.
The American achievement was rather similar. We’re a much richer, more powerful country, so it isn’t possible to achieve quite what Britain achieved. But the Reaganites succeeded in driving U.S. wages down so we’re now the second lowest of the industrial countries. Britain is the lowest. We’re right barely above it. Wages in Italy are about twenty percent higher than in the U.S., Germany maybe sixty percent higher. Along with that goes a deterioration of the general social contract. The breakdown in public spending or the kind of public spending that goes to the less privileged. That’s rather crucial. That’s just a concommitant. We should bear in mind, and it’s important to say, that the kind of public spending that goes to the wealthy and the privileged, which is enormous, remains fairly stable. That’s a major component of state policy.
DAVID:
What was the extent and quality of domestic opposition and resistance to NAFTA and GATT?
NOAM:
That was quite interesting. The original expectation was that NAFTA would just sail through. Nobody would ever even know what it is. So it was signed in secret. It was put on a fast track in Congress, meaning essentially no discussion. There was virtually no media coverage. Who was going to know about a complex trade agreement? So the idea was, We just ram it through. That didn’t work. And it’s interesting that it didn’t work. There are a number of reasons. For one thing, the labor movement got organized for once and made an issue of it. Another was this sort of maverick third party candidate Ross Perot, who managed to make it a public issue. And it turned out that as soon as the public heard about it and knew anything about it they were pretty much opposed. I followed the media coverage on this, which was extremely interesting. Usually the media tried to keep their class loyalties more or less in the background. They tried to pretend they don’t have them. But on this issue the bars were down. They just went berserk, especially toward the end when it looked like there was going to be a problem. Then they simply turned into raving maniacs. It was a very quick transition after it passed, incidentally. The day after it passed everything changed. I’ve written about this in Z. But nevertheless, despite this enormous media barrage and the government attack and huge corporate lobbying, which totally dwarfed anything else, of course, despite that the level of opposition remained pretty stable. If you look at polls right through the period, roughly sixty percent or so of those who had an opinion remained opposed. It varied a little bit here and there, but that’s quite substantial. In fact, the end result is very intriguing. There was a poll published a couple of days ago in which people had to evaluate labor’s actions with regard to NAFTA. The public was overwhelmingly opposed to the actions of the labor movement against NAFTA, about seventy percent opposition to it. On the other hand, the public also took exactly the same position that labor was taking. So why were they opposed to it?
I think it’s easy to explain that. The media went berserk. From Bill Clinton down to Anthony Lewis, or maybe across to Anthony Lewis, as you pointed out to me in an earlier interview (December 6, 1993), there was just hysteria about labor’s musclebound tactics and these backward labor leaders trying to drive us into the past, jingoist fanatics and so on. What they were saying was never reported. In fact, the content of the labor critique has virtually not appeared in the press. But there was plenty of hysteria about it all over the spectrum. Naturally people see what’s in the press and figure labor must be doing really bad things. The fact of the matter is that labor, one of the few more or less democratic institutions in the country, was representing the position of the majority of the population on NAFTA. Evidently from polls the same people who approved of the positions that labor was actually advocating, though they may not have known it, were opposed, or thought they were opposed to the labor tactics. I suspect that if someone had a close look at the Gore-Perot television debate, they might well find the same thing. There were some interesting facts about this debate which ought to be looked at more closely. I didn’t watch it, but friends who did watch it thought that Perot did quite well and they ended thinking that he just wiped Gore off the map. But the press, of course, instantly had a totally different reaction. The news right after was that Gore won a massive victory, same thing with next morning’s headlines, tremendous victory for the White House. If you look at the polls the next day, people were asked what they thought about the debate. The percentage who thought that Perot had been smashed was far higher than the percentage of people who had seen it, which means that most of the people were getting their impression of what happened in the debate from the front pages the next day or the television news. As the story, whatever it may have been, was filtered through the media system, it was turned into what was needed for propaganda purposes, whatever may have happened. That’s a topic for research. But on the reaction of the public to labor’s tactics, it’s quite striking.
DAVID:
One of the mass circulation journals that I get is Third World Resurgence, out of Penang, Malaysia. In that I learned that in Bangalore, India, a half a million farmers demonstrated against GATT. I wonder if your local paper, the Boston Globe, featured that?
NOAM:
I also read it in Third World Resurgence and in Indian journals. I don’t recall having seen it. Maybe there was something. I wouldn’t want to say it wasn’t there without checking. But there was plenty of public opposition to both NAFTA and GATT. The same in Mexico on NAFTA. Incidentally, you asked about GATT. That did sail through. What they had planned for NAFTA worked for GATT. So there was virtually no public opposition to GATT, or even awareness of it. I doubt a tiny fraction of the country even knows what it’s about. So that was rammed through in secret, as intended. Strikingly, they couldn’t quite do that in the case of NAFTA. It took a major effort to get it through, one which was very revealing about class loyalty and class lines. The New York Times, after the vote, actually allowed itself the phrase “class lines.” I’ve never seen that in the Times before. You’re not allowed to admit that there are classes in the U.S. But they recognized it after the vote, when they started telling the truth about the story. In Mexico there was tremendous public opposition. That was barely reported here. What happened in Chiapas doesn’t come as very much of a surprise. There has been an attempt to portray the Chiapas rebellion as something about the underdeveloped south as distinct from the developed modern north. At first the government thought they’d just destroy it by tremendous violence, but they backed off and they’ll do it by more subtle violence, when nobody’s looking. Part of the reason they backed off is surely they were afraid that there was just too much sympathy all over the country and that if they were too up front about suppression they’d cause themselves a lot of problems all the way up to the Mexican border. The Mayan Indians in Chiapas are in many ways the most oppressed. Nevertheless, the problems they are talking about are the problems of a large majority of the Mexican population. Mexico too has been polarized by this decade of neo-liberal reforms which have led to very little economic progress but have sharply polarized the society. Labor’s share in income has declined radically. The number of billionaires is shooting up.
DAVID:
But I found the mainstream media coverage of Mexico during the NAFTA debate somewhat uneven. You mentioned the New York Times. They have allowed in a number of articles that official corruption was and is widespread in Mexico. In fact, in one editorial they virtually conceded that Salinas stole the 1988 presidential election. Why did that information come out?
NOAM:
I think that that’s impossible to repress. Furthermore, there were scattered reports in the Times, of popular protest against NAFTA. Tim Golden, their reporter in Mexico, had a story a couple of weeks before the vote, probably early November, in which he said that lots of Mexican workers are concerned that their wages would decline after NAFTA. Then came the punch line. He said that undercuts the position of people like Ross Perot and others who think that NAFTA is going to harm American workers for the benefit of Mexican workers. In other words, they’re all going to get screwed. So that undercuts the critique of NAFTA here. It was presented in that framework as a critique of the people who were opposing NAFTA here. But there was very little discussion here of the large-scale popular protest in Mexico, which included, for example, the largest non-governmental trade union. The main trade union is about as independent as the Soviet trade unions were. There are some independent ones, and they were opposed. There were large public protests not reported here. The environmental movements were opposed. Most of the popular movements were opposed. The Mexican Bishops’ Conference, for example, came out with quite a strong statement endorsing the position of the Latin American bishops at Santa Domingo in December 1992. There was a major conference of Latin American bishops, the first one since Puebla and Medellin back in the 1960s and 1970s, which was quite important. It was not reported here, to my knowledge. The Vatican tried to control it this time to make sure that they wouldn’t come out with these perverse ideas about liberation theology and the preferential option for the poor. But despite a very firm Vatican hand the bishops came out quite strongly against neo-liberalism and structural adjustment and these free-market-for-the-poor policies. The Mexican bishops reiterated that in their critique of NAFTA. If there was anything about that here, I didn’t see it.
DAVID:
What about the psychological and political position of people like us find ourselves in of being ‘against’, of being anti, re-active rather than pro-active?
NOAM:
NAFTA’s a good case, because in fact the NAFTA critiques were pro-active. Very few of the NAFTA critics were saying, No agreement. Not even Perot. He had constructive proposals. But if you look at the labor movement, or the Congressional Office of Technology Assessment, another major report which was also suppressed, or other critics, me too, in fact, virtually every critic I saw, were saying there would be nothing wrong with a North American Free Trade Agreement. But not this one. It should be different. Here are the respects in which it should be different. Those were proposed in some detail. It’s just that it was all suppressed. What’s left is the picture that, say, Anthony Lewis portrays, jingoist fanatics screaming about NAFTA. Incidentally, what’s called the left played the same game. James Galbraith is a left-liberal economist at the University of Texas. He had an article in which he also denounced the jingoist left. He picked me out as the main person, quoting an article in which I said the opposite of what he attributed to me, of course, but that’s normal. It was in a sort of left-liberal journal, World Policy Review. He said there’s this jingoist left, nationalist fanatics, who don’t want Mexican workers to improve their lives. Then he went on with how the Mexicans are in favor of NAFTA. By the Mexicans he meant Mexican industrialists and executives and corporate lawyers. He didn’t mean Mexican workers and peasants. He doesn’t even know anything about them. All the way over from people like James Galbraith and Anthony Lewis, to way over to the right, you had this very useful fabrication, that critics of NAFTA were just reactive and negative and that they were jingoist and were against progress and wanted to go back to old-time protectionism. When you have essentially total control of the information system, it’s rather easy to convey that image. It leads to the conclusion that you describe, that the critics are re-active and not pro-active. It isn’t true. You read the reports and studies and analyses and you see that they had very constructive proposals.