Introduction by Robert W. onsOTHER BOOKS BY NOAM CHOMSKY: American Power and the New Mandarins Aspects of Theory and Syntax At War with Asia Cartesian Linguistics Class Warfare The Common Good Critical Writings Vol. 1 and 2 The Culture of Terrorism Deterring Democracy Fateful Triangle: The U.S, Israel, avd the Palestinians For Reasons of State Krowledge of Language, Its Nature, Origins and Use Language and Mind Language and Problems of Knowledge Lectures on Government and Binding Letters from Lexington: Reflections on Propaganda Manufacturing Consent (with Edward §. Herman) Media Control: The Spectacular Achievements of Propaganda The Minimalist Program, Necessary Illusions On Power and Idealogy Peace in the Middle East? Pirates and Emperors The Political Economy of Human Rights, Vol. | and II (with Edward S. Herman) Powers and Prospects Radical Priorities Reflections on Language Rethinking Camelot, JFK, the Vietnam War and US Political Culture Rules and Representations Sound Pattern of English (with Morris Halle) Towards a New Cold War Turning the Tide The Umbrella of US. Power World Orders, Old and New Year 502: The Conquest Continues Noam Chomsky's publishers in the U.S. include Columbia University Press, Common Courage, Seven Stories, and South End Press, in the ULK., Pluto Press; in Australia, Allen & Unwin; and in Egypt. American University in Cairo PressProfit Over People Neoliberalism and Global Order Noam Chomsky SEVEN STORIES PRESS New York » Toronto ¢ LondonCopyright © 1999 by Noam Chomsky Introduction © 1998 by Robert W. McChesney A Seven Stories Press First Edition All rights reserved, No part of this boak may be reproduced, stored in a retrieval system, or transmitted in any form, by any means, including mechanical, electronic, photocopying, recording or otherwise, withour the prior written permission of the publisher. In the U.K: Turnaround Publisher Services Lrd., Unit 3, Olympia Trading Estate, Coburg Road, Wood Green, London N22 6TZ U.K. In Canada: Hushion House, 36 Northline Road, Toronto, Ontario M4B 3E2, Canada Library of Congress Cataloging-in-Publication Data » Chomsky, Noam. Profits over people: ncoliberalism and global order / Noam Chomsky. p. cm. ISBN; 1-888363-89-4 ISBN 1-888363-82-7 (pbk.) |, Free enterprise. 2. Liberalism. 3. Democracy. 4. Consumption (Economics) I. Tide. HB95.CS516 1998 330.12’2—de2E 98-35985 CIP 987654 Book design by Adam Simon Seven Stories Press 140 Watts Street New York, NY 10013 www.sevenstories.com Printed in the U.S.A.Introduction by Robert W. McChesney ... I Neoliberalism and Global Order ... 79 iT Consent without Consent: Regimenting the Public Mind ... 43 Wl The Passion for Free Markets ... 65 IV Market Democracy in a Neoliberal Order: Doctrines and Reality ... 9/ Vv The Zapatista Uprising ... 227 vi “The Ultimate Weapon” ... 137 vil “Hordes of Vigilantes” ... 159 Index ... 169 7Introdt ction by Robert W. McChesney Neoliberalism is the defining political economic paradigm of our time—it refers to the policies and processes whereby a rel- ative handful of private interests are permitted to control as much as possible of social life in order to maximize their personal profit. Associated initially with Reagan and Thatcher, for the past two decades neoliberalism has been the dominant global political eco- nomic trend adopted by political parties of the center and much of the traditional left as well as the right. These parties and the policies they enact represent the immediate interests of extremely wealthy investors and less than one thousand large corporations. Aside from some academics and members of the business community, the term neoliberalism is largely unknown and unused by the public-at-large, especially in the United States. There, to the contrary, neoliberal initiatives are characterized as free mar- ket policies that encourage private enterprise and consumer choice, reward personal responsibility and entrepreneurial initiative, and undermine the dead hand of the incompetent, bureaucratic and par- asitic government, that can never do good even if well intended, which it rarely is. A generation of corporate-financed public rela- tions efforts has given these terms and ideas a near sacred aura. As a result, the claims they make rarely require defense, and are invoked to rationalize anything from lowering taxes on the wealthy 7—————————S_...:.|S|S|S|LT!T!T!Tttttttt 8| Chomsky / Profit Over People _ and scrapping environmental regulations to dismantling public edu- cation and social welfare programs. Indeed, any activity that might interfere with corporate domination of society is automatically sus- pect because it would interfere with the workings of the free mar- ket, which is advanced as the only rational, fair, and democratic allocator of goods and services. At thcir most eloquent, proponents of neoliberalism sound as if they are doing poor people, the envi- ronment, and everybody else a tremendous service as they enact policies on behalf of the wealthy few. The economic consequences of these policies have been the same just about everywhere, and exactly what one would expect: a massive increase in social and economic inequality, a marked increase in severe deprivation for the poorest nations and peoples of the world, a disastrous global environment, an unsta- ble global economy and an unprecedented bonanza for the wealthy, Confronted with these facts, defenders of the neoliberal | order claim that the spoils of the good life will invariably spread | to the broad mass of the population—as long as the neoliberal poli- cies that exacerbated these problems are not interfered with! | In the end, neoliberals cannot and do not offer an empir- | ical defense for the world they are making. To the contrary, they | offer—no, demand—a religious faith in the infallibility of the unregulated market, that draws upon nineteenth century theories that have little connection to the actual world. The ultimate tramp card for the defenders of neoliberalism, however, is that there is no alternative. Communist societies, social democracies, and even modest social welfare states like the United States have all failed, the neoliberals proclaim, and their citizens have accepted neolib- eralism as the only feasible course. It may well be imperfect, but it is the only economic system possible. Earlier in the twentieth century some critics called fascism “capitalism with the gloves off,” meaning that fascism was pure cap- italism without democratic rights and organizations. In fact, we know that fascism is vastly more complex than that. Neoliberal- ism, on the other hand, is indeed “capitalism with the gloves off.”Introduction lo It represents an era in which business forces are stranger and more aggressive, and face less organized opposition than ever before. In this political climate they attempt to codify their political power on every possible front, and as a result, make it increasingly dif- ficult to challenge business—and next to impossible—for non- market, noncommercial, and democratic forces to exist at all. It is precisely in its oppression of nonmarket forces that we see how neoliberalism operates not only as an economic sys- tem, but as a political and cultural system as well. Here the dif- ferences with fascism, with its contempt for formal democracy and highly mobilized social movements based upon racism and nation- alism, are striking. Neoliberalism works best when there is formal electoral democracy, but when the population is diverted from the information, access, and public forums necessary for meaningful participation in decision making. As neoliberal guru Milton Fried- man put it in his Capitalism and Freedom, because profit-making is the essence of democracy, any government that pursues antimarket policies is being antidemocratic, no matter how much informed popular support they might enjoy. Therefore it is best to restrict governments to the job of protecting private property and enforc- ing contracts, and to limit political debate to minor issues. (The real matters of resource production and distribution and social organization should be determined by market forces.) Equipped with this perverse understanding of democracy, neoliberals like Friedman had no qualms over the military over- throw of Chile's democratically elected Allende government in 1973, because Allende was interfering with business control of Chilean society. After fifteen years of often brutal and savage dic- tatorship—all in the name of the democratic free market—formal democracy was restored in 1989 with a constitution that made it vastly more difficult, if not impossible, for the citizenry to chal- lenge the business-military domination of Chilean society. That is neoliberal democracy in a nutshell: trivial debate over minor issues by parties that basically pursue the same pro-business poli- cies regardless of formal differences and campaign debate.10| Chomsky / Profit Over People Democracy is permissible as long as the control of business is off- limits to popular deliberation or change; i.e. so long as it isn't democracy. The neoliberal system therefore has an important and nec- essary bypraduct—a depoliticized citizenry marked by apathy and cynicism. If electoral democracy affects little of social life, it is irra- tional to devote much attention to it; in the United States, the spawning ground of neoliberal democracy, voter turnout in the 1998 congressional elections arguably was a record low, with just over one-third of eligible voters going to the polls. Although acca- sionally generating concern from those established parties like the US. Democratic Party that tend to attract the votes of the dis- possessed, low voter turnout tends to be accepted and encouraged by the powers-that-be as a very good thing since nonvoters are, not surprisingly, disproportionately found among the poor and working class. Policies that could quickly increase voter interest and participation rates are stymied before ever getting into the pub- lic arena. In the United States, for example, the two main busi- ness-dominated parties, with the support of the corporate community, have refused to reform laws that make it virtually impossible to create new political parties (that might appeal to non- business interests) and let them be effective. Although there is marked and frequently observed dissatisfaction with the Republi- cans and Democrats, electoral politics is one area where notions of competition and free choice have little meaning. In some respects the caliber of debate and choice in neoliberal elections tends to be closer to that of the one-party communist state than that of a genuine democracy. But this barely indicates neoliberalism’s pernicious impli- cations for a civic-centered political culture. On the one hand, the social inequality generated by neoliberal policies undermines any effort to realize the legal equality necessary to make democracy credible, Large corporations have resources to influence media and overwhelm the political process, and do so accordingly. In US electoral politics, for just one example, the richest one-quarter ofIntroduction | one percent of Americans make 80 percent of all individual polit- ical contributions and corporations outspend labor by a margin of 10-1. Under neoliberalism this all makes sense, as elections then reflect market principles, with contributions being equated with investments, As a result, it reinforces the irrelevance of electoral politics to most people and assures the maintenance of unques- tioned corporate rule. On the other hand, to be effective, democracy requires that people feel a connection to their fellow citizens, and that this con- nection manifests itself though a variety of nonmarket organiza- tions and institutions. A vibrant political culture needs community groups, libraries, public schools, neighborhood organizations, coop- eratives, public meeting places, voluntary associations, and trade unions to provide ways for citizens to meet, communicate, and interact with their fellow citizens. Neoliberal democracy, with its notion of the market itber alles, takes dead aim at this sector. Instead of citizens, it produces consumers, Instead of communities, it pro- duces shopping malls, The net result is an atomized society of dis- engaged individuals who feel demoralized and socially powerless. In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future. It is fitting that Noam Chomsky is the leading intellectual figure in the world taday in the battle for democracy and against neoliberalism, In the 1960s, Chomsky was a prominent ULS. critic of the Vietnam war, and, more broadly, he became perhaps the most trenchant analyst of the ways U.S. foreign policy undermines democracy, quashes human rights, and promotes the interests of the wealthy few, In the 1970s, Chomsky, along with his co-author Edward S. Herman, began their research on how the U.S news media serve elite interests and undermine the capacity of the cit- izenry to actually rule their lives in a democratic fashion. Their 1988 book, Manufacturing Consent, remains the starting point for any serious inquiry into news media performance Throughout these years Chomsky, who could be charac-terized we ant anarchist or, perhaps more accurately, a libertarian soctalist, was a Vocal, poncipled, and consistent democratic oppa- sent and crite of Communist and Lenunist political states ard par, ties. He educated countless people, including myseli, thay democracy is a nansnegotiable comerstane of any post-caprislist society worth living it or fighting Jor At the same time, he has demunstrated the absurdity of equating capitalism with democracy, cor of thinking that capitalist societies, even under the best of cir- cumstances, wilhever open accesé to Information or decision mak: ing beyond the mast narrow and controlled possibilities: | doubt any author, aside from perhaps George Cirwell, has approached Chom- sky it systematically skewering the hypocrisy of rulers and ideo lfgues te both Communist and capitalist sacteties as they claim that theirs is the only form ob true democracy available tn humanity In whe 990s, all of these strands of Chomeky's politcal work—trom anti-imperialism and critical media analysie ta writ- ings on democracy and the labor maovement—have came tagether, clilminating in work like this book on demneracy and the nenlib- cral threar. Chomsky has deve much eo remnvigorate an under standing of ehe social requirements for democracy, drawing upon the ancient Greeks as well ae the leading thinkers of democratic revolutions in the seventeenth aid eghncenth centuries. As he makes clear, it is impowsble wo be a proponent for participatory democracy and at the same time champion capitalism, or any other class-divided society, In awessing the real hiseorical struggles for democracy, Chomsky alen reveals how neoliberaliam ts hardly a new thing, but merely the current version of the battle tor the wealthy few to crelimacnbe the political rights and civie peawers of the many Chomsky may also be the leading crite af the mythology ol the parural ‘free® market, thar cheery hymn that ts pounded inia our heads about how the ecanemy 48 competitive. racional, cli cient, and Kar, As Chomsky points out, markets are almost never competitive Most of the economy i+ dominated by massive cor- porations with tremendous contral over their markers and tharfatredaction \ua (herctore face precidus little competition of thesurt described in soonomies teathooks and politicians speeches. Moreover, corpo nitions themselves are eHectively totalitanan organizations, oper- ating alony eondemocrayie |\nes. That our economy & centered aqdund such instictions severely compnsomiees our ability te have a democratic sorcery The mythology of the free market also submits thay gov emments are incthcient Institutions that should be limited so ae not ta hurt the magic of ghe natural “laissez-falve market. In fact we Chomeky emphasizes, povernments are central to the modern capitalist system. They lavishly cubsidise corporations and work foadyance corporate interests on minercus fonts The same cor “porations that cult in meoliberal ideology are in [act alten hyp- weritical they wantand expect govermments to funoel tax dollars to them, and to protect thei markets for them fron competi tien, hut (hey wart to assure that povernnents will not tax ther or work mupportively on behali of mon-business Interesu, expecially on behalf of the poor and working class (Governments are bigger than ever, but under neoliberalism they have far lees pretense vo being eoncemed with addressing non-corporate interests And nowhere ii the centrality of governments and pall- cymuiking more apparent than i the emergence of the global ear ketecconamy What is presented by pro-business ideologues asthe hatural expansion of free markets across borders is. in fact, quite the opposite. Globalization 1s the result of powerhul governments, especially thatot the United Sraces, pushing wade deals and other accords down the throats of the world’s people to make tc easier for corporations and the wealthy wo dominate the economties al mation: around the world withour having obligations to the peo- ples of those nations, Nowhere is the process more apparent than in the creation of the World Trade Organization in the early 19905, and, now, in the secret deliberations on behalf of the Multilateral Agreement on Investment (MAT Indeed, it is the inabillty to have honest and candid dia cudttans and debates about neoliberaliam that i ane al a ment14] Chomuby | Prafit Quer Menple sttiking learures, Chonmky' critique ol the neoliberal onder ts-clfec: jively altlimine to mainstream analysis despite We empincal strength and because of ity commitment tn democratic values Here Chomeky's analysié ef the doctrinal syetem in capitalist democracies 1s useful, The corporate orws media, the PR imdus- try, the academic ideolegues, and the intellectual culture writ large play the central role of prwiding the “necessary illusions” bo make this unpalatable situation appear rational, benevolent, and meces- eary [finot necessarily desirable. As Chomsky hastens to point our, thiy #6. 10 formal conspiracy by powerful interests: it doesn't have to be, Through a yarety af institutienal mechanisms, signals are sent to intellectuals. pundits, and journalists pushing: them tose the stahid quo as the best of all possible worlds, and away [fam challenging those who benelit from the status quo, Chermky's wodeis a ditecr call for democratic activists to remake our media syste) so ipcan heopened up to anticonporate, antinealiberal per: spectives and inquiry, [eis also a challenge to all intelleceuals, or at least those who cxpress a commitment ta democracy, ro take a Jon, hard look wt the mirror and to atk themselves in whose inter- ests, and for what values, do they do their work Chormskys desenption of the neoliberal/eorporate hold aver our economy, polity, journaligm, and culture is so powerful and overwhelming that for some readers It can produce a sense of resignation, In our demaralized political mes, a tew may Ko a step further and conelude thar we are enmeshed in this regressive sys- jem because, ilag, humanity (simply incapable of creatmyg amore hurvanc, egalitarian, and democratic social order, In fact, Chomaky’s greatest contribution may well be hie imeistence upan che fundamental democratic inclinations of the: world’s peoples, and the revolutionary petential implicit in these impulses. The best evidence of this possibillry ts the extent to which corporate forces go to prevent there being genuine polit. cal democracy, The world’s rulers understand implicitly that their isa system established co suit the needs of the few, not the many aad thatthe many cannot therelore ever be permitted to questinnJnriaducenon [15 and alter conporate rule, Even in the hobbled democracies that da exist, the corporate community works incessantly ti vee that (important idgues like the MAT are never publicly debated: And the hisiness community spends a fortune hankrolling a PR apparatus to convince Americans that this is che best of all possible worlds. The time to worry abet the possibility of social change for the better, by this logic, wall be when the corporace commrunity ahan- dons PRand buying elections, permits a representative media, and is comfortable establishing a genuinely ewalitarian participatory democracy because jt no longer lears the power of the many, But there 6 no reason to think that day will ever come. Neoliberalism’s loudest: message te that there Is no alter- hativeto the status qua, and that humanity has reached ita high ett level Chomsky points out that there have been several other periods designated as the ‘end of history” inthe past In the (920s and 1950s, for example LS. elites claimed that the system was working anc that mass quiescence reflected widespread savistoc- clon with the status que, Evenrs shortly rherealter highlighted the silliness of thowe beliels | suspect chat as enon ay democratic fancies recond a few tangible victories the blood will return to their ves, and talk of there being no possible hope for change will go the same route as all previows elite fantasies about ther glorious rule being enshrined for a millennium. The noton that there can te no aiperior alterralive ter the “sbttus que 4 more farketched today than ever in this era when there are mind-boggling technologes lor bettering the human condi- ton, It is tree that it remains unclear how to establish a viable, bree, and humane post-capitalist order, and the very motion has a utopian arrabqut i, Bueevery adyanoe in history, from ending slavery ard establishing demincracy jo ending jormal colonialism, has had to conquer the notion at some point thar it war impossible to do because it had never been done before. And as Chomsky hastens to point out, organized political activiem is reaponsible for the degree of democracy we have tedey, for universal adult suffrage, for women's rights lor trade unions, for civil rights, for the free16| Chemety if Profits Geer Prople dams we do enjoy: Even if the notion of a post-caprtalist seciety deems unattainable, we do know that human political activity ean make the ward we live in vastly more humane And as-we wet ia that point, perhaps we will again be able to thinkin terms of build ing a political ecancmy based on principles of cooperation equal: ity, self-goverriment, and individual freedom Until then, the strugute for social chanie is not a hypo thetical issue. The currctit neoliberal order has wenerated massive political anid economic crises from east Asia to eastera Europe and Lavin America. The quality of life 1 the developed nations of Europe, Japan, and North America is fragile and the societies are in considerable turmoil, Tremendous upheaval (6 in the cards for the coming years and decades. There is considerable doubt about the outcome of thatupheaval, however, and little reason to think ie will automatically lead te a demoeraric and humane resolution. That will be determined by how we) the people, organize, respond, and ect. As Chomsky says, if yoo act like there is no powalbility af change forthe better, you euaranter that there will be no charge far the better, The cholee is ours, the choice is yours Robert W, McChesney Madison, Wisconsin Oetober 1998| would like to discuss cach of the topics mentioned in the ttle: peoliberalisen and global order The issues ane of great homan - sigmilicance and not very well understood To deal with them sen- csibly, we have to begin by separating doctrine from reality, We ‘ohten discover a considerable grap. The term “neoliberalism” suggests a system of principles that is both new and based on classical liberal ideas; Adam Smith ie revered.as the patron saint, The docurinal system is also known ous the "Washington concensus” which mpgesn comeching about global order. A closer look shows that the suggestion about global order is fairly accurate, but not the resi. The doctrines ane mot mew, and the basic assumptions arc tar from those that have animated the liberal tradition since the Enlightenment Tho Washington Consensus The neoliberal Washington consensus is an array ol mar ket oriented principles designed by the government of the United States and the internathonal financial institutions that it largely dom- inates, and implemented by them in various waye—for the more vulnerable gocieties, often as stringent steuctiral adjustment pro- 19B| Cha miky/ Profic Orr Deaple yrows. The basic rules in bret, are. ibenilize trade and fimanece, let markers seh price (wet prices righv!), end inflation ("macroeco- nomic stability’), privatize The government should “get aurot the way —henee the populavon too, imeolar as the povernment bs democratic thnagh jhe conclision remains venplicit. The decisions of those yho Impose the “consensus” navurally have a major impact on global order Some analysts take a much stronger position The international business press has relerred to these institutions as the core of a “de facto world government” of a “new imperial age” Whetheraccurate or not this deecnpeion serves te remind us that the governme institutions are nol independent agents but reflect the distribution of poweran the larger society. That has been a truism at beast since Adam Smith, who pointed out that the “pre cipal architects’ af policy in England were merchants and man- iacwrers," who used me power t.serve their own intercets, however “grievous” the effect on others, including the people of England, Smiths cancer was “the wealth of nations," but he tinder gtood that the “national interest” is largely a delusion: within the “nation” there are sharply conflicting interests, and to understand palicy and its elects we have to ask Where power lies and how it is excteised, what later came to be called class analysis The "principal architects’ of the neoliberal "Wiehingion consensus” ate the masters of the private coonamy, mainly huge corporations that cantrel much of the imiernational economy and have the means tn dominate policy formation as well as the struc- turing ot Chugh and.opinion, The United States hasa special role Wo the system for obvinus reasons. To borrow the wards of diplo- matic historian Gerald Haines, who ta also senior historian of the CIA, "Following World War ll the United States assumed, out of sell-interest, responsibility tor the welfare of the world capitalise syste” Maines is concerned with what he calls “the American ization of Brazil" but only asa special cage. And his words ane accu- fate enough The United States had been the world's major econminy long belare World War ll, and during the war it prospered whileNewliberaiion and Global Onder [zx qerivals were severely weakened The state-comrdinated waritme echnomy was at last able to overcome the Great Depression By athe wars end, the United States had hall ol the world's wealth and # position of power without hessoneal precedent. Naturally, the principal archirects of policy intended. to wee this power to design aglobal sysiem in their interests. High-level documents describe the pamary threat to thieve ‘inbercses, particularly in Lari America, as “redical” and “national- Wttc regimes” that are responsive ta popular pressures for "|mme- diate Improvement to the low living standards of the masses* and development for domestic needs. These tendencies conflict with the demand tor ‘a political and economic climate conducive 1 per “wate investment,” with adequate repatriation of protite and “pro fection of our raw materials’ —ours, even if lected samewhere ele For such reasons, the influential planner Geone Kennan advised har we should “cease eo talk about vague and unreal abjectives-such oat human fuzhts, the ratsing of the living standards, and demacra- tization’ and must “deal in straight power concepts,” mat “hampered “by idealistic slogans” about ‘altrulen and world-benetaction'— though such slogans are fine, in fact obligatory, in public discnarse. 1am querting the secret record, available now in principle, though largely anknown to the general public or the intellectual comimunity. "Radical nationalism is intolerable in (well, buy in alen poses a broader “hres wo stability.” another phrase with ape. cial meaning, As Washington prepared qo overthrow Guatemalas finn democratic government in 1954, a Stare Department official warmed that Guatemala had “become an increasing threat te the of Honduras and El Salvador: Its agranan relorm ia pow “erful propaganda weapon, its broad social program of aiding the and peasan ih & Victonans strapple against the upper and large foreign enverprises has a strong appeal to the Populations of Central American meighbors where similar comdi- tions prevail" “Stability” means security lor ‘the upper classes and Aarge foreign enterprises,” whose welfare must he preserved,22) Chenerky / Peasie Over Mreple. Such threats to the "wellare of the world capitalist «yatem" justity terror and subversion to restore “stabiliry:’ Che of the firet tasks ol the CIA was to take part in the large-wale effort to indet~ mine democracy in Italy in 1944, when it was leaned that election’ might come out the wrong way), direct military jmeervention was planned iF the subversine tailed These are described as effaris “to stabilize lily." I is even possible to “destabilize” to achiewe “sta- bihiiy®” Thus the editer af the quast-atficil journal Ferrin Affine explainn that Washington had wo “destabilize a freely elected’ Mara- ist government in Chile” becaupe “we were detentiimed to seek sta- bility” With a proper education, one can overcome the apparent contradiction Nationalist regimes that threasen “stability” are sometimes called “porenapples’ that might spoil the barrel,” or*viniset! that might “infect’ others. Iraly tv 1M4#one oxample Twenty-live years larer, Heary.Kissinger deveribed Chile as a ‘vines’ that might send the wrong messages about posabilities tor social change, infecting others as (ar as Italy, still not “stable” even alter years of major ClA programs to subwert lialian democracy. Wire: have to: be destroyed and others protected trom inlection: for both tasks, violence is dltén the most eHicient means, leaving a gracsome trail af slaughter, terror, torture, and devastation In secret postwar planning, cach part of the world was assigned tis specific role Thus the "mater function’ of Southeast Asin was ro provide raw materials tor the industrial powers, Africa was to be “esploited” by Europe for its own recovery, And so on, through the wore, in Latin America, Washington expected ty be able to diplement the Monroe Decteine, but again ina specral sense: Pres- ident Wilson, famous for his idealism and high moral principles, agretd iw secret that “in its advocacy of the Manroc Doctrine the United States considers ite awn Interests.” The interests of Latin Americans are merely “incidental” aot curconcem He recognized that “this miay seem based on selfishness alone” but held thar the doctrine “had no higher or more generous motive ” The UnitedNealiberativm and Global Order |a ‘States sought to displace its traditional rivals, Enuland and France, and establish a regional alliance under its control thar was to «tami part from the world avatem, iin which such arrangements were m0 to be permitted. The “huactions of Latin America were claritied at a hemi- spheric conlerence in February 1945 where Washington proposed (ao “Economic Charer of the Americas" that would eliminate con. patie nationalism “be all its tans.” Washington planners uncer giood thar it would mot be easy in impose this principle, State Department documents warned that Latin Americans prefer “pall- desayned to bring about a broader distribution of wealth and ta rae the standard of living of the masses,” and are “convinced thar the first beneticiaries of the development ol a countrys pesources should be the people af that country” These ideas are ptable: the “Hirat beneliciaries” ol a country's resources are ALS. tavestors, while Latin America hiltills its service: lumction with- uunreasonable cancers about general weltare or “excesiwe Widustrial development” that might infringe on LS. interest The position af the United States prevailed, though nin without problems inthe years that followed, addressed by means Daeed nen review Ae Curope and Japan recovered from wartime devastation, world order shitted to a tripolar pattern. The United States hat tained pee dominant role, thowh new challenges are arieinp, includ) Ing Guropean and East Asian competition in South America. The Most important changes téck place twenty-tive years ago, when the on Administration dismantled the postwar global ecapomie sys- fom, within which the United States was, in effect, the weerldis banker, a role at could no longer sustain. Thes wnilaveral act (te be e with the cooperation of other powers) fed bo a huge explosion At unregulated capital lows ‘Suill more striking iy the shift in the ampesitien al the flow of capital, In 1971, 90 percent of interna andl Vinancial minsactions were related to the real coonomy—trade Or long-term investment—and 10 percent were speculative. By 1900 We percentages were reversed, and by (995 about 95 percent of the| Chawiky / Peefir Quer Praple vastly greater sume were speculative, with daily flows regularly excecding the combined foreygn cachange reverves. of the seven biggest industrial power, over $1 pilkon a day, and very short-term about Ai percent with round trips of a week or less freminent economist warned over 20 years ago that the process would lead to alow-growth, low: wage economy, arid sip- gested fairly simple measures that might prevent these conse- quences. Bui the principal archinects of the Washinton consensus preterred the predictable elfeces, including-very high profits These elects were augmented by the (short-term) sharp rise in oil prices and the telecommunications revolition, both related to the hue arate sector of the LES. economy, ter which | will return The so-called “Communist” states were ouride this global averem. By the 19705 China was being reintegrated into lt. The Soviet economy began to stagnate in the 19605, and the whole rotten edifice collapsed twenty years later. The region is larwely returning ta ie enrlier status, Secyors thar were part of the West are rejoining if, while inmost of the region iy returning to its tra- dithanal service tole, largely under the rule of former Comenunist bureawerais and other local associates of foreign enterprives, along with criminal syndicates. The pattern iq familiar in the third world, asare the mmcomes In Russia alone, a UNICEF inquiry in 1999 estimated that a half-willion extra deaths a year rewult trom the neoliberal “reforms, whieh it generally supports, Mussias social policy chief recently estimated that 15 percent of he population has fallen below subsistence Jewels, while the new rulers have gaiied enormous Wealth, again the familiar pattern of Western dependencies Also: Jamiliay are the effects. of the large-scale violence widertaken to cosare the “welfare of the world capitalist system Areeent Jesu conference in Sant Salvador poinred out thay over time, the ‘culture of terror deimesticates the expectations of the majority, People may oo longer even think about “alternatives dif: ferent frum those of the powertul,” who describe the outcome as a grand victory for freedom and demneracy,Neoliberairrm and Glakal Order |28 These are some of the contoursof the global order wiih ch the Washington consentus has been forged. pod place to 'start isa recent publication of the Royal Institute ‘of International Alfarrs in London, with survey articles on major issued and policies Ohne is devoted to the economics of develop. at. Theauthor, Paul Krugman, ica prominent figure in the held He makes five central points, which bear dircethy an our question: First, knowledge about economic development tsvery lim ed, For the United Stanes, lor éxample, two-thirds of the cise in capita income tiinexplained Similarly. the Asian success stn. et have followed parts that surely do oof confor to what “cur amthodoxy says are the key to growth,’ Krugman points out. Be reeernmends “harmiliry’ tn policy Jormarion, and caurion about “gweeping generalizations,” His second point is thar conclusions with little basi« are ponsiantly put horth ane provide the doctrinal support for policy: Washington consensus is @ case In paint, His third point if thatthe “conventional wisdom” is unsta- Ble regularly shifting to something else perhaps the opposite of I latest pPhave—though ite proponents are again full of conf. Gfice af they tmpmve the new orthodoxy. His fourth point is that in retrospect, it is commonly that the economic developupent policies did nor serve their ced poal” and were hased on “bad ideas“ Lastly, Krugman remarks, i iy csually “argued that bad ideas Hourrnh bevause they are in che interest of powertul BrOups. Without doubs that happens” That it happens has been a commonplace at leave since im Smith And it happens with impresive conmsstency, even in le rich countries, though it is the third werld that provides the26) Chemidy f Prufis Geer Peaple_ That ie the heart ol the matter The “bad ideas’ may notserve the “expressed grils” but they typically cum)out 14 be very qand ideas jar their principal aechitecty There bave been many experiments in economic develapment in the moder era, with regpilarities that ace hard to ignore One is that ihe designers tend tc der quite: well, though the subjects ol the experiment often take a bearing The first major experiment was carted out two hundred years age, when the British rulers in India instituted the “Perma- neni Settlement,” which was going to de wondrous things The results were reviewed by an official commission farty years lever, which concluded that “the setilement fashioned with great care and deliberarion has unlertunately subjected the lawer classes wn most eriewous oppression,” leaving misery that “hardly Hrs a par: altel in the htery of comimerce/" #4 “the bones ol the coton- weavers are bleaching the plas of tnedia.” fur the deperimente can hardly be written olf asa failure The British governor:general observed that “the ‘Permanent Set tlement, chough a failure in many other respects and in moat imiprirtant essentials, has this great advantage, at least, ol having ercated a vost body of rich landed proprietors deeply imerested in the continuance of the Hritith Dominias and having complete command over the mass of the people” Another advantage was that Heitish (ewesters gained enormous wealth, India also financed Ai) percent of Writain's trade debit white providing a protected mar- ket fee tes manufacturing exports; cantract laborers far Hiritesh pos sessions, replacing earlier slave populations; and the opium that wae the staple of Britain's experts io China, The opium trade was imposed on China hy force, not the operitians of the “free: mar ket” just a4 the sacred principles of the market were overlooked when opium was barred from England In briel, the firs: great experiment was & “bad idea” borthe subjects, bur not forthe designers and local elites associated with them This pattern continies unell the present placing protit ower people. The comsrcency not the record i no less impressive than ie rhetoric hailing the latest shawease lor democracy and capi-Nraliberaliin and Global Oeder [27 Salis as an “econoniic miracle’ —and what the shew regularly onceals, Brazil, for example. In the highly praived history of the Americanization of Brazil that! mentiowed, Gerald Haines writes hat from 1945 che United States used Brazil asa “testing area for modem scientilic methods of industrial development based olidly on capicalion” The experiment wat carried out with "the “hest of pntentions © Foreign investors benefited, but planner “sin: ceerely beliewed!" that the people of Brazi) would benefit as well | ed net describe how they benefited as Hrazil became “the Larin ferican darling of the international buemess community” under foilitary rule, in the words of the business press, while the World mk reported thay two-thinds of the population did pot have ugh food for oermal physical activity: Writing jn 1989, Haines desenbes “America’s Brazilian | as “enormously sumcessdul,” "a peal American success story.” fwes the “polden year’ in ihe eves of the business world, with lits tripling: ower (96H, while industrial waues, already among fowest in the world, declined another 20 percent, the LIN Repori Development ranked Brazil next io Albania, When the dis- began to hit the wealthy as well, the modern scientific meth- development based solidity on capitalism” (Haines) suddenly ame proofs ol the evils al statism and socialism—another quick tien that iakes place when needed To appreciale the achievement, one must remember that fazil has long been recognized 1a be one of the richest countries world, with enormous advantages, including hall a cenury dminance and nelage hy the United States. with beriign intent; have again just happens to serve the profit of the few while Wing the majority of people in misery, The most recent example i¢ Mexico, liwas highly praised prize Scudent of the rules of the Washington consensus and dat a mode! for mhers—as wages collapsed, poverty cased almost at (aM a8 the timber ol billionaires, foreign cap- ed it (nmowily épecubitive, or for exploitation ot cheap labnr jconthol by the brital democracy"). Also familiar is theFy Chomiky! Mrofir Over Peaple chilapse of the house of cards in December 1994. Today hall the population Cannot obtain minimum lued requirements, while the man whe controls the com market remame on the list af Mesicos billionaires, ome category in which the country ranks high. Changes in global order have also made |) powilsle to apply aversion of the Washingion consensus at home For most ol the LS. population, nqcomes bave stagnated or declined tor hitteen years along with working conditions and job security, continuing through economic recovery, an unprecedented phenomenon Inequaliny has reached levels unknown lor severity years, far beyond other industrial countries The United States has rive high- est level of child poverty ol any indusirml society, followed by the rest of the Frglish-speaking worl Se the record continues through the familiar let of third world maladies. Meanwhile the business press carinor find adjectives @cuberant eneugh to describe ihe “dagzling” aod “stupendous” profit growth, though admittedly the rich face problems too. a headline th Bose Week armounces The Problem Now: What to Do with All That Cash,” as “surging profits” are ‘overflowing the colfers of Corporate America,” and dividends are being Profie: remain “spectacular throagh the nivd- 1996 fig: ures, with “remarkable” pratii @rowth for the world’s largest cor pritationé, though there is "one area where global companies are not expanding muuch: payrolls” the leading business monthly adds quietly That exception includes companies that “had a terrific year” with “booming prelite” while they cur workforces, shifted 16 parole workers with no benefits or security, and otherwise behaved exactly as ope would expect with “capiral’s clear subju pation of labor liar 15 years,” to borrow another phrase fram the busines’ press How Countries Develop. The historical record oblers further lewsons. In the eth: feenth cenuury, the diterences beryeen the first and third worldsNewliheralivm and Gindhel Oraler [am far less sharp than they are tuday Two obvious questions \. Which countnes developed, and which neu? 2 Can we identily some operative | aqters? The answer te the first quesiion is tainly clear Qutwde of éff Etirope, two major regions developed, the United States ad Japan—that is, the two regions that escaped European colo- nization. Japan: colonies are another case) though Japan was a bru. fal colonial power, it did not rob its colonies butt developed them, about the same rate as lapan ivell What about Eastern Europe? In the fifteenth century, Europe began to divide, the west developing and the east becom ¢ its service area, the original third world. The divisions deep- d into early in this century, wher Russia extricated itself from éystem. Despite Stalin's awesome atrocities and the terrible struction of the wars, the Sewret system did undergo significant trialization It i the “second world,” nov part af the third or was, until 1988 We know from the intemal record that into the /a0s, nm leaders feared that Russia economic growth would inepine radical nationaliem® cleewhere and that others too might be cken by the disease that miected Russia in 107 when it became ing. “to complement the industrial economies of the West,” 1985. The Western invasion of 14/4 was therefore a defensive Seton to protect “the wellare ol che world capitaliet evarem," threat ned by social changes within the service areay And so it is described in respected scholarship. The eold war logic recalls the case of (Grenada or atemala, hough the scale was solilferent that the conflier tank alite of sown. It is not surprising that with the victory of the are powerlul antayeniet, traditional patterns are betny restored Utshould also come as no-aurprise that the Pentayon budget remarnsan| Chomiky! Profit Ger Peeple _ at cold war levels andis now wncreatiny, while Washinginn's Inter national policies have harely changed, more (acts that help us gain some insight inv the realities of global urder. Returning ta the question af elich countries developed, at feast one conclusion. seem reasonably clear: development hae been contingent on Irecdom trom. ‘experiments’ based on the “had ideas” that were very good ideas for the designers and their col- Jaberators That is no guarantee ol success, but it does seem to have beer a prerequisite Lor it Let's turvto the second quesune How did Europe and {hose who escaped its contral succeed in developing? Part ol the answer again seemsclear: by radically violating approved tree tvar- ket doctrine. That conclusion holds trom: Enyland to the East Asian growth area today, surely including the Linited States, the leader in pratectioniem fram its Orgems Standard ecanomic histary recogelzes thar state Interven: Hon has played acentral role in economic growth But its trmpact ts underestimated because of to narrew a focus, Ta mention cre major omission, the industrial revolution felied on cheap core, mainly from the United States Irwas kept cheap and available not bw mar- eet forces, but by elimination of the indigenous population and slaw ery. There were of course uther corti producers, Prominent among them ‘was (relia. bis resources flowed to England, while 1 owe advanced rextibe industry was desuroved by British protectionism and fore Another case is Egypt. which ton steps toward development ay the same time as the Linited States but was blocked by Brittsh lance, on the quite ewplicit areunds that Bricain would mot tolerate independent development in thar region, New England, in contrast wasable to follow the patlaf the mother country, harring cheaper Brlich textiles by very high tariffs a5 Britain had done to India. With rut qucty measures, ball ot theemenging textile industry of few Eneg- {and would have been destrayed, ecancmic historians estimale, with lanwe-keale efiects on industrial growth generally A contemporary analog is the enerey ot which advanced industrial eeunomies rely. The “wolden age” of postwar developNeoliberaliim and Glohal Order |™ ment relied on cheap and abundant ail, kept that way largely by threat or use of force. So marters continue. A large part of the Pen- Fagot! budget is devoted tn keeping Middle Exst cil prices within arange that the United States and its enerey companies consider appropriate | knw of wely one techincal study of the csyuie: con. hides that Peniawon expendinures amount toa subsidy af 34 per- gedtot the market price of ofl, demonstrating that “ihe current view a6 fossil Juels are inexpensive i a complete fiction,” the author onchides Estimates of alleged ectticiencies ul erade, and conclu. ony about econmmic health and growth, are ol timined waliclity we ignore many eich hidden costs A group cf prominent Japanese economists recently pab- eda multivolume meview of lapan’s programs of ecomamic devel: nent smce World War Ul They point aut that Japan rejected the liberal doctrines of their LIS. advisers, chriasing Instead a laren duetral policy that assigned a predomimant role io the stare. Mar: echanioms were gradually introduced by the state bureaucracy industrial-financial conglomerates as prospects for commercial inereased. The rejection af orthodox economme precepts was dition (or the “lapanese miracle.” the economests conclude: The ecess is impressive. With virtually no resource base, Japan became he world: biggest manulacturing econamy by the }820s and the lds leaching siairce of foreign investment, also accounting ler hall he worlds ner savings and timancinu: LES. deticits As for Japan's tonmer colonies, the major scholarly study LS. Aid mission in Taiwan found that US advisers and Planners disreparded the principles of “Anglo-American nics) and developed a “state centered stratewy,” relying on participation of the goverment in the econenie activ af the island through deliberate plans and ity eupervision of Gir execution.” Meanwhile U.S, officials were “advertising Tal- I as. private enterprise suncess story” {In South Korea the “entrepreneurial sate” hunetione dil ently, bur with no less of 2 guiding hond, Right now South entry inte the Organization for beunamic Cooperation anc33] Cho mids / frafie Over Peaple Development (OCD) the meh meng club, & bein delayed because of (ts unwillingness to rely on market-ortented policits, Suh as lowing lakerwers by foreign companies aid free move rept of caprtal, muck like rts Japanese mentor, which did mor per ttt Capital expert Grit ths ecomomy was well established. Ina recent issue of the World Bank Resnerch Observer (August 1996), the chair of Clinton's Council ot Economic Advisers, loeph Stiglitz, draws “lessons Jrem the East Aviary Miracle,” ameng them thar "powernment took major responsibility for he promenian of eoonomic grewih,” abandoning the “religion” thar marker: know best dnd interven to enhanee technology transfer, relative equal - ivy, education, and health, along with industrial planning and coor - dinatton, The UN Human Development Report ieee stresses the vital Importance of government policies tn “spreading skills and meet. ing basic social reeds’ asd “Springboard lor qustdined econamic growth,” Meoliberal doctrines, whatever one thinks of them, under- mine education and health, iocrease imequality, and reduce labors share in income, that much is not sericusly in dowht A year later, alter Asian economies were struck a severe low hy tinancial eres and market failures, Sciglite—now chpel economist al (he World Bank —veiterated his conclusions | Keynote Address, updated, Ameual Word Gawk Conference on Developmers Econcwice aw, World Bank 1998 Wider Annual Lectures 2, 1998). “The cur- rent critis in East Avia is not a refutation of the Eage Asian mink cle” he wrote. “The hasic hott remain tio other reginn in the world has ever had icanie rise 40 dramatically and seen so many people move oid it poverty ta such a short time.” The “amazing achieve ments’ are highliphied by the tenfold growth of per capita income in South Korea in three decades, an unprecedented success, with “heavy dines ol goverment mvedverent ay sulation ol dhe Wav ington consena, but in accord with economic develepment inthe U5. and Europe. he cormectly adds "Far tron a refutation of the East Asian miracle,” he concluded, the “serious financial turmoil i Asia “may, in part, be the result of departing from the strategies: that have served these countries so well, including well-regulaiedNewlikpralion ana Glebe! Grider [33 financial markets —an abandonment ul successful SCraleyries: in Pespinse to Western prevsures, in no small measure, Other spe- Galists have expressed similar views, often mare forceiully ‘The comparison.ol East Agia and Latin Amenca is strik- ng: Latin America has the world’s worst recerd for inequality, Faye Asia among the best. The same holds for education, health, and secial wellire generally Imports no Lavin America are heavily skewed toward consumption for the rich, in East Asia, loward pro- ductive investment (Capital flight Item Latin America has gpproached the scale ot the crushing debt; in East Avia tthad been lgbily controlled until very recently: In Latin America, the wealthy are generally cxeript fron sockal obligations including ces The problem of Latin America is not “populism,” Brazilian “eoonamist Hresser Pereira points out, bur “subjection al the state the rich.” East Asia dilfers sharply Latin American economies have also been more open tn ign investment. Since the 14505, foreign mitiltinationals have pentrolled far larger shares of industnal productian” in Laren Amer fea than in the East Asian suceces stories, the LIN analysts of trade d development (UNCTAD) report, Even the Word Bank con: that the foreign investment and. privatization iv hails “has Rinded to substitute tor other capiral flows’ iv Latin America, crate. ring control and sending protits abroad. The bank alka recop- esthat prices in lapan, Korea, and Tarwan deviated more Hom tet prices than thove of India, Braz, Mexico, Venezuela, and alleged interventionists, while the moat interventionist and distorting government af all, China, isthe Bank's lavorite and es} growing borrower And studies of the World Bank on che nf of Chile have avended the fact that nationalized copper Beare a major source of Chile's export revenues, 1 mention only eof Many examples. It stems ihat openness to the mternational economy has Pda significant cost for Latin America, along with ite failure trol capital and the rich, not just labor and the poor Ot ) Sectors of the population benefit, as in the colonial era. TheBM) Chameky (Myajfie Geer Peaple fact that they wre a¢ dedicated to (he doctrines of the ‘religion’ 06 Joreige investors should come as qe surprise The role af uate management and (nitiative in the suc weschul economies should be a familiar story A related queso is how the third world beeanve What itis today, The tsyue isdiscussed by the eminenoeconomic historian Paul Bairoch In are pmportant recent sid be points out thar “there is no doube thay the third world’s compulsory econemic liberalism i the nineteenth cencury ie a mayor element m explaining the delay in ite industrialization and in the very revealing case of India, the “process of de-indus- trializaition® thet converted the industrial workshop and trading cen ter al the world to a deeply impoverished agrculiural society, sulfering a sharp decline in real wayes, food consumption, and avall- ability of other simple commadities, “India was anky the first mayer cawualty ina weny bang list,” Balroch observes, including “even palir- ically independent third world countries [that] were forced to open their markets fo Western products.” Meanwhile Wester soceties protected (hemseelves tron market divcipline, and developed. Varieties of Neoliberal Doctrine That brings we to anqiher important featiere of meter his tory. Free market doctrine comes jn twa varieties. The first 16 the otticial doctrine imposed on the defenseless. The second i what we might call “really existing free market doctrine”. market cise pline is good fervor, but ier larme, exerpt for temporary advan- tage tis ‘really eousting doctrine” chat has reigned since: the seventeenth cenmry, when Hritam emerged as Europe's most advanced develapmengal stave, with radical increases in taxevion and ctficient public adevnstration to orgatice the fiscal and mil: ftaey activities of the wate, Which became “the largest single actor ii the economy” and ite global expansion, according to British his: torian John Brewer, Brita did finally ure te Uberal (ternational iim—n 1H46, after $50 Years o/ procectionin, vialence, and stabe powerNeoliberaiive aod Global Order [35 ad placed it tar ahead of any competinur Hue the wernt the mar- pet had significant reservations. Forty percent ol Rritish textiles ntinwed 1 ye to culamized India, and much the same war true British exports generally Brith Steel was kept from LLS. mar- | kets by very high tarils that enabled the United States to develop fig own steel industry. Bur India and other colonies were still avail- ible, and remained so when Hritish deel was priced out of imter- onal markers. tidia wan instruceve cage. i produced as much on ae all af Europe m the late eighteenth century, and British were studying more acvanced Indian steel raanilac g techniques in 1820 to try to close “the technological yap" hay was producing locome\iwes af competicive levels wher he railway boom began. But really existing free market doctrine stroyed these sectory of Indian ineusiry just asit had destroyed files, Shipburleling, anc other industries thar were advanced by the standards of the day, The United States and Japan, in con- had escaped European control, and could adapt Britain's del of market interlerence. When Japanese competition prived to be too mach to dle, England «iniply called off the games the empire was eAec Claged to Japanese exports, part of the background of World rll ladian manufacturers asked for protection ar the same against England, not Japan. No such luck, under really ing free market doctrine With the abandonment of ite restricted yersian of laissez ire in the (420s, the British government turned to more direct Lion inte the domestic economy as well, Withii a lew years hine tool output increased five times, along with a beam in nicals, steel, aerospace, and a hee al new mdusines, “an unsinge wave of industrial revolution,” economic analyst Will Hutton 0. Stitescontrolled industry enabled Hritain to outproduce any during the war, even to narrow the gap with the LLS | 6 then ondergoing its own drmanc economic expansin pore managers took over the stare-coordinated wartime¥a| Chomsky / Miofee Quer Penpie A century after England wrned to a for of liberal inter nationalism, the United States bollowed the same course Aber 150 years al protectionism and violence, the United States had become by fae che richest and most powerful country in the world and, like England belore ib came to perceive the merits of a “level playing field,” on winch i could expect to crush any competitor But like Enuland, the United Starcs had crucial reservations One was that Washington used its power to bar indepen- dene development elsewhere, as England had done, In Latin Amer joa, Egypt, South Asia, and elsewhere, development was to he ‘complementary,” not ‘eumpentive.” There way aleo large-scale interlerence with trade. For example, Marshall Plan aid was ted to purchase of ULS. agricultural products, part uf the reason why the LLS. shareé in world trade an grains (nereased trom legs than 10 percent belore the war to more than hall by 1950, while Argen- fine exports reduced by two-thirds, U5 Food for Peace aid was also used bath (u subsidize U.S, agribusiness and shipping and to undercut foreigir producers, among other measures to prevent inde- pendent developmen! The virtual destruction of Colombia's wheat growing by such means is one of the factors in the growth of the dnig industry, which has been further acoclerated throughout the Andean region by the neoliberal policies of the paat lew years Kenya's textile industry collapsed in 1994 when the Clinton Administration tmpaved a quota, barring the path to development that has beer followed by every industfal countey, while “Alricant relormers” ane warned that they must make more progress in improving the conditions (or business operations and “sealing in tree-markes reforms” with trade and investment policies that meet the requirements ul Western inwestors. These are only eeattered ilustratiom, The most imporvant departures from free market doctrine, however lie elsewhere One hundamental component of free trade theory is that public subsidies are norallowed But after World War I) US: business leaders expected thar the economy would head rite back to depresiett without state interventian: They also insivtedt thatNeuliterwticn and Glubal Order (37 industny—specitically aireratt, though the conchision was general—‘cannot satistactonly exist in a pure, cunperitive, sidized, ‘free enterprise’ econonry’ and that “the yevernment jetheir only possible savicr.” Lary queting the major business press which also recognized that the Pentagon yyitem would be the best fo transer costs to the public, They understood that social nding could play ihe same strmulative role. but it is mot a direct dy tothe conporate sector, (0 has demmocratzing effects, ancl it edistributive. Military spending has none of these defects Tew alen easy to sell, Prevident Tritian's Air Force Secre- ry pat the matter simply: we should not ise the word “subsidy,” " said, ihe word we should use is “security” He made sure thar military budget would “meet the requirements of the aircralt yj ashe put it One consequence ts that civilian aircrate is the countrys leading export, and the huge travel and tourism try, aircral-based, iv (he source of major pratits Thus it was quite appropriate for Clinton ta choose Boe- (rig a’ “xmode| for companies across America’ ay he preached his fewevision’ of the free market future ot the Agi: Paciic Summit nm t893, 10 much acclaim, A fine example of really existing mar- fete, civilian aircraft produetion i¢ now mostly in the hands of pwo Boeing: McDonald and Airbus, each of which owes ifs exty- dnd success to lange-seale public subsidy: The same partern s in computers and elecwrones generally, automation, chnology, communicatbons, in fact just about every dynamic elor of ihe econuny There was no need to explain the doctrines of “really exist- ce market capitalism’ to the Reagan Administration. They were Masters of the art, extolling the gloriesof the marker to the poor boasting proudly to the hisiness world that Reagan bad more import relied ta LOS. industry than any of his pre- ta more than hall a centory’—which is far too modest, asced all predecessors combined, as they “presided over ealieet swing toward protectionisnl since the 1430s,” Fopmyn ecommenicd in a review of the decade Without thease andza| Chamoky f Prefir Oeet Beagle other extreme measures of marker interference, Il 16 doubthal thar the stee| aulomotive, machine tool, of semiconductor induseies would have survived Japanese competitiun, or been able to forge: ahead in emrerniny: technologies, with broad effects through the economy. That experience Ulastrates once again that “the cooven- Gonal wisdom” "full of holes,” another review ol the Reagan record in Foriegn Affairs paints out. Bur the conventional wikdom reniing its vires as an idenlogical weapon io discipline the deferseless. The United States and Japan have both just announced major new programs for government funding of advanced tech- nology aircraft and semiconduetors, respectively) to sustain the private industrial sector by public subsdy. To illustrate “really extsting free market theary” witha dif- ferent measure, an extensive étudy of transnational corporations (TNCs) by Wintried Ruigrock and Rob yan Tulder toured. that “wir tually all of the world’s largest core fiams have experienced a deci- sive influcnce irom government policies and/or trade barriers on their ctraiegy and competitive pusition,” and “at feast twenty com- panies in the 1993 Fortune 100. would nor have survived at all as independent companies, (they had not been saved by their respec « tive governments,” by socializing losses or by simple state takeover when they were in trouble. One is the leading employer in Gin- grichs deeply conservative district, Lockheed, caved from oollapee by Biige government loan guarantecs The same: study points out that goWertment intervention, which has “beco the nile rather tha the exceptian over the past two centuries... has played a key role jw the development and diffusion ef many product and precess [no jeabions—partiedilagly in aerospace, electronics, moder agriciilture, materials cechnolegies. cnerpy, and transportation rechoolagy ” a5 well as telecommurcations and information technologies generally ithe Internet and World Wide Web are striking recent examples! and in earlier days, textiles and stee!. and of course, enerey Gov- ernment policies “have been an overwhelming force in shaping the strategies and competitiveness of the world’s largest firms,” Other technical studies confirm these conclusionsNeatiberalinm aud Global Greer (29 There is much more in say abour these matiery, but ane cers jon scems lairly clear. the approwed doconnes are crated and oved for reasons of power and protic Convenporary “experi- "follow a lannliar paviern when they take the form of “sacial- fam forthe veh within a system ol global corporate mercantile which “tade’ consists in substantial measure of centrally man- d transactions within single firms, huge institutions linked oo their petitors by strategic alliances, all of them tyranmcal in inpernal nictire, devgned to undermine demecratic decision making ancl osilepuatd the mmeters from market discipline. lt is the poor aod enseless who are bo bee instructed int these stern doctrincs. We might also ask (ast how “global” the eoonomy really and how much it might be subject to popular democratic con- In terms of trade, financial flows, and ovher measures, the aunemy is mat more global thar early in this century Further- re, TNCs rely heavily on public subsidies and domestic mar- eth and their international transactions, including those labeled trade, are largely within Europe, Japan and the Linited es, Where political measures are wvailable without fenr al mil- coups and the like. There 1 a great deal that is new and sig- cant, bie the belief that things ore “owt of control” is not very le, even if we keep to existing mechanisms. Ie it a low of mature that we must beep to these? Ait if we pike seriously the doctrines of classical liberalism, Adar Smith’ praice idivision of laberis well knew, bur not hisdenunciation of ite infu man efects, which will tent working people mio objects “as stupid teed igrerane as (tis possible for a human creature to be,” comething at must be prevented ‘in every improved and civilized suciety” by IMENT action to overcome the destructive force of the "invis: nd.” Also not well advertised 14 Smith's beliel that guvermment jon ii lavour af he workmen is always jist and equitable,” Roush noe “wher tn favour of rhe masters ® Orr his call (oe equality i owhich was ai the heart of his argument for fee markews. Other leading contoboter to the classical liberal canon ih further Wilhelm von Hombald: comdemmed wage labor40) C4 Over People itself: when the laborer works under extemal cont iW, he wrote “we mary admire what he dewey, but-we despise what he is The arladvinces, the artisan recedes.” Alewss cle Tocqueville observed Also a great !igune of the liberal panthesn Tocqueville agreed with Sitith and Jefleryon chat equality of outeame is an em Tani leg - fre of a free and just soctety One hundred and sity years ain he warned! ol (he danwers of a per anent imequality at conditions’ and an end te democracy if “the Manulactunng aristocracy which i gi wind Op under cur eyes’ in the United States, “one of the harshest thar has ever esusted in the world." should escape itsicon is it la er did, beyond his wars: mghemares lant anhy barely touching om intricate and fascinating isstees, which supwest, | think, ahat leading principles af classical liberaliem receive their natural in Ider expresso neo in the theral “religion” but in the independ ing p Movements, at times articulated alsaby such major figures of rwen- Herh-century thought as Bertrand Russell and Inhn Dewey tmavenvents at work ple and ihe ideas and practices of the libertartan socialist One has to evaluate with caution the dactrines that dom inate intellectual discourse. ith carelul attention to ihe arzument the lacts, and the lessons of past and present history Ie makes lit tle sense to ash what is Hight” lor particular countries as if these are entities with common interests and values And what may he pluck for poecrale in th United States, with ther unparalleled advan tages. Could well be wrong for others who havea much narrower scope of choices, We c 1 however, neasonably annicipate that what fi right tor the people of the world will only by the remotest acci ¥ dent morié And ther nto the 1 of the “p cipal architects” of policy No more teaton now than there ever has been to per- t them te shape the hiture in ther own inerests @l this article was orieinally in Spar Jhlished on South Acerca t ditd Portueiiewe transla in, 1/9Consent without Consent: Regimenting the Public MindAdecent democratic society should be based on the prin: col “consent of the governed.” That idem has won general rahoe, but it can be challenged as both toe crung and too ‘Toe strong, because it sagersts that people must be governed id controlled, Too weak, because even the most brutal rulers qlIPe Sortie measure of “consent of the governed,’ and generally in it, not only by force. 1am interested here in how the more free and democra- t es have deal: with these issues, Qver the years, popular ee have sought to gain a larger share in managing their affairs, Aaome wecess alongside many defeats, Meanwhile an instruc dy of thought has heen developed tn justify clite resistance neracy, Those who hape te onderstand the past and shape mftre would de well to pay careful attention noe only w the Pe but alo to the doctrinal framework chat supperts it, he iseiies were addressed 250 years ago by David Hume Hume was intrigued by “the easiness with which the : ed by the few, the implicit submission with which ign” their fare te thew rulers. This he found SUTprising, Toree icalways on the side of the eoverned.” If people wild at, they would rise up and overthrow the masters. He con- 43| Chameky! Profir Oovr Peaple cluded thar government is fgurded on contre! of opinion, a prin- ciple thar “extends to the most despatic and most military govern- ments, a4 well as to the most free and moet popular” Hume surely underestimated the effectivencss of brute force. A more accurate version le that the more “Iree and popular a government, the more it becomes necessary tw rely on control of opinjon to ermure dubmineion to the rulers That people amet sulrmie is taken for granted pretey much acroes the spectrum. Ina democracy, the govemed haye the right to coment, hut gothing mare than that Inthe terminology of mod- em progressive thought, the population may be “spectators,” but not “narticipants,” apart (rem, occasional choices among leaders repre- senting authentic power Thar is the political arena. The general pop- waton must be excluded enively trom the economic arena, where what happens in the society 1 largely determined. Here the public is to have no pole, according to prevailing democratic theory. These assumptions have been challenged threughout his- tory, bot the issues have taken on particular force since the fret modern democratic upsiirge i seventeenth century England The turmanl of che time is oben depicted as a conflict between Kinw and Parliament, bur as is often tror, a gond pant of the population did net want ro be governed by esther of the contestants for power but “by countivimen lke ourselves, chat know cor -wants," so their pamphlets declared, now by “knights and gentlemen” when ilo nee "know the people's sores” and will “hut oppress os.’ Such ideas greatly distressed “the men of best quality,” ws thew called themselves. the "responsible men," in modern termi nology They were prepared to grant the people rmbt, but withiy limiis, and oo the principle that by “the people” we donot mean the confused and ignorant rabble. But how 16 that fundamental prin- erple of social life wo be peconciled with the doctrine of “consent of (he governed,” which was not 4e easy te suppress by then? A solution te dhe problem was proposed hy Humes contemporary Frances Hutcheson, a distinguished moral philradpher He argued tharthe principle af ‘eoesent of the poverned!” is not violaved whenCoote wthowe Conene \a5 nilers impose plans thar are rejected by the public, if later on “supid” and “prejudiced” masses “will heartily consent’ oo what have done tn their name We can adopt the priscyple el “cir ent without consent,” the term used later by socialiagimt Franklin Henry Gielditags. Huteheson was concermed with control of the rabble at ; Giddings. with enforcing onder abroad. He was writing the Philippines, which the U.S. army was liberating at the while also liberating several hundred theusand coule bom sorrows—or, as the yrews ud fe, “slaughtering the natives in lashian” 40 thac “the ovisquided creamres” whe resist us will i! t "respect our arms” and later come no reooanize tharwe with m “liberty” and “happiness” To explain all of this in properly lized tones, Giddings devised hisconcept af “comecnt withnut ent” “If in later years, [che conquered people] cee and admit that the disputed relation was for the highest tmterest, 4 may be yeonably held thar aihonity hasbeen imposed with the consent the governed,” as when a parent prevents a child from ronoing iritc.a busy street. These explanations caprure the real meaning ol the doc. nent “consent of he governed.” The people muse submit to their and if is enough if they give coment withow) consent hina tyrannical state or in toreign domains, force can be used. n the resources of violence are limited, the consent of the gov- eracd must be obtained by the devices called “manufacture of car am" by progressive and liberal npinicn. The enormous public relanans melustry, trom its origins aaely inthis century, has heen dedicated to the ‘control of the puib- if,” as business leaders described the task. And they acted Fwords, surely one of the central themes of modern his- The fact that the public relations industry has (ts roots ane centers in the country that is “most free” is exacely what we Mouldedpect, with a proper understanding of Mume's maxim A lew years alter Hume and Hutcheson wrote, the probe 4G taused by the rabble in England spread to the rebellineag | Liomide ? Prafir Over People colonies 4! North Amenca. The founding fathers repeated thesen- fements af (he Brtush “nen of best qualiny’ in almost the same words, Ay ome pul (“When | mention the pubilic, | mean io include only the rational part ol i, The ignorant and vulgar are as unfit bo judge of the modes ol government], as they are unable to man. age [its] reins.” The people are a ‘yreat beast" thay must be owned, hit colleague Alexander Hamilton declared, Rebellious and inde- pendent farmers had to be taught, sometimes by force, char the ideals of the revoludonary pamphlets were not to be taken boo seri- oosly, The common people were foe te be represented by coun: oymen like themselves who know the people's eres, but by gentry, merchants, lawyers, and other “nesporsiile men” who could be cred to defend privilege The reigning doctrine was expressed clearly by the Pres- ident of the Continental Congressand first Chiel Justice of the Supreme Count, lohn Jay: “The people who own the country ought to govern it.” One issue remained to be settled; Whe owns the country? The question wat answered by the rise af private cor- portions and the seructures devised to protect and support them, though tt remaing a difficult task to compel the public to keep to the spectator role The United States is surely the mosr important cae to study i| we hope to understand the world of today and tomorrow, (One reasen is ies incomparable power Another is its stable demo- cratn institucions Furthermore, the United States was as close fo a tabola race ae one can tind Amenca can be “as happy as she pleases,” Thomas Pane remarked in 1776) “she has a blank sheet to Write upon.” The indigenous societies were largely eliminated The U.S. aleo has little residue of earlier European structures, one reagan forthe rélatwe weakness of the social contract and of sup- part eyetems, which alten had cheir roots in precapitalist institu tions, And to an tiitisual extent, the seciopolitical order was consciously designed, In studying history, one cannot construct experimencs, but the Unised States i6 a4 close to the “ideal case” of state capitalist democracy as Can be (oairidConsent withaue Convent [8 The main designer, furthermore, was an astute political 1 lames Madison, whose views largely prevailed Tn the phates onthe Constitution, Madison pointed outthat if clecuions iv England “were open to all classes al people the property of nded proprictors would be insecure, An agrarian law wrnuld sian @ place,’ giving land io the landless The Constitutional sye- am rust be desagned to prevent such injustice and “secure the per- AE interests of te coupery,’ which are property nghts. Among Madwonian scholars, there i a consensus han “cle : itution was intrinsically on arisweratic document devigned p eheck the democratic tendencies of the period,” delivering ef to a “better sort” of people and excluding those who were neh, well born, of prominent from exercising political power Lance Banting). The primary responsibility of government 14 “to protect the minority ol the opulent againal the majority,” Madi- m9 declared. That has been the guiding principle ol the democ je sysiem from ins Ongins ontil today: In public discussion, Madison spoke of the rights of tes in general, but it 1s quite clear that he had a particular inonty inmind: “dhe minority of ee opulent.” Modern political heory stresses Madison’ belict that “im a quad and a free provern- nt the nghe both of property and of persuns ought to be elec guarded” But in this case poo (t is useful to look at the ihe mare corehully, Then are ho ngehes af property, only righes: ovhar is, nights ol persons with property, Perhaps | have J fom car bot mv car hat no tights The mghé to property 0 iHers tram others in that one persons posession of prope deprives asother ol thar rghe if | own my cae you do nor, ma just and iree society, my freedom) of speech would not limit The Madisonian principle, then, is that government must rd the righes of persons generally, bur must provide special and fuarantess for the niehts of one class of persone, prop: Y OW ners, Madison. foresaw what the threat of democracy wat likely Coie mone sevene ower time because of the increase in “Whe8 | Chamady ¢ Prafie Oeve Maple proportion of those who will labor under all rhe hardships of lite, and secretly sigh fora more equal diseriltution ol 1 blessings” Thew might gain influence, Madieon feared, He was concerned by the “aymptorms ol 4 leveling epiri’ that had already appeared, and weaned “ad the Future danger” (f the oght to vote would place “power Over property in hands without a share in it” Those ‘without prop erty, or the hope of acquiring it, connor be expected m sympathize sufticently with its ight,” Madison explained, His solution was to keep political power iy the hands of chose who “come trom and represent the wealth ol the mavion,” the "more capable cet of men,” wih the general public fragmented and disorganized The problem of a “leveling spirit’ also arises abroad, of course We learn a lot abour ‘really existing democratic theary’ by socing how this problem ie peroeived, pariioularly iv secret internal documents, where leaders can be more hank and open. Take the Important example of Hrazil, the “colossus of the South" On aanatin (960, President Eisenhower assured Brazil- fans that “our socially conscious prvate-enterprise system bene Hits all the people, owners and workers alike: ly freedom thir raglan worker is happily deronserating the joys ol lite under a dergcravia eystern © The ambassador added that US. influence had broken “down the old order in South America” by bringing eo it “such revolutionary ideas as free comptilsory education, equality before the law, a relatively classless sactery, a responsible deri chic system of government, (ree competitive enterprise, [and] a fabiilois etaicland of living lar the ma&ees.” ful Prazillans reacted harshly to the good mews brought by their northern tutors. Latin American elites are like children,” Secretary of State john Foster Dulles informed the National Secu- rity Craumcil, ‘with practically ne capacity for sell government Worse still, che Unwed States vy “hopelessly (ar behind the Sov ets in developing controls aver (he minds and emotions of unsa- phinicated peoples.” Dulles and Eisenhower expressed their concern over the Communist “ability to get control of mast moye- ments ' an ability that “we have ne capacity to duplicate’. "TheCuaseni withows Cannene [48 wor peuple are the ones they appeal co and they have always ped to plunder the rich.” ia other words, we hind it hard te induce people to accept @ doctrine that the tich should plunder the poet, a public rela- ; problem thal had wo vet been solved The Kennedy Adminitration faced the problem by shilt- he mission of the Latin American military irom “hemispheric to “internal security,” adecitian with fateful consequences, ming with the brutal and murderous military coup in Brazil he military had been seen by Washington a an “island of san- Jn Brazil, and che coup was welcomed by Kennedy's ambas- ior, Lincoln Gordon, as a “democratic rebellion, indeed “the ingle most decisive victory of freedom in the mid-twentieth cei yA former Harvard University economist, Gordon added that his wictory af freedom’—that is. the violent overthrow of par- mentary democracy—ahould “create a preatly improved climare by private investments,” giving some further insight inte the oper- live meaniog of the terms fredem and democracy. Two years later Defense Secretary Robert McNamara onmed his associates thar "LS polices toward the Latin Amer- kan military have, on the whole, been effective in attaining the ale ser tor them.” These policies had improved “internal secu- by capabilities’ and esiablished “predominant U.S. military influ- ce” The Latin American military enderstand their tasks and are: ped to pursue them, thanks to Kenpedy's programs of mil- and training. These taske include rhe overthrow of civil- ents “whenever, in the judgment ol the miliary, the jotol these leaders is imjurinus to the weltare of the nation actions by the military are necessary in “the Latin Ameri: cultural environment,” the Kennedy intellectuals explained And we can he confident that they will be carned our properly, w thar the military have gained an “understanding of, and wri- in toward, US, objectives” Tharassures a proper oucome “revolagionary viruggle for power among major groups Nich constitute the present clays structure” in Latin America, an— 50) Chumaky | Prefir Over Peaple outcome that will prosect “private US, invewtinent and trade, the “eeunomtc root’ that % a) the heart of “LIS: political interest in Latin America” Thee: are eceret documents: in this case, of Kennedy lib. eraliem. Public discourse is naturally quite different, If we keep to it, we will understand little abour the trie meaning of “democracy,” or about the alobal order of the past vears, and the hitume ad well, since the same hanes hold the reins ‘The more serious scholarship is clear about the basic facts. The National Security Stares installed apd backed by the Linited Stites are discussed in ao important book by Lar Schoultz, une of the leading Latin American scholars, Their goal, in hes weds, was “in dewtroy permasenly a percerved threat wo the existing STructine obsacneconomic privilege by clrminating the political participation of the numerical majority,” Hamilton's “great beast * The goal is bayeally the same in the home society, though the means are different, The pattem continues today The chanpion human rights vivaion if the hemisphere i Colambia, alsa the beading recipient of US mmihtary aid.and training im recent years: The pretext is the ‘drag war,” but chat is “a ovyrh.” as regularly reported by major human rights groups, the church, and other who have investigayed the shocking record.of anecities and the clove links benyveen the naccorrallickers, landowners, he miliary, and their paramiliiary aeneares, State ternor has devastated popular organizations and virtually destroyed the one independent political panty by ascas- sination of thousands of actiwists, including presidential candidates. mayors, and others, Nonetheless Colombia i hailed as a stable democracy, revealing again what i meant by “demecrcy” A particularly metracti¥ve example ia (he reaction Wo Geatemala's hint experiment with democracy. In this case the secret record is partially available, so we know a good deal about the thinking that guided policy, In (957 the CIA warmed thas the “rad- ical and nationalict policies’ of the government had gained “ihe Support or aoquiescence of almast al) Gustemalane* The povern-Consent wathaas Consent [sa ment wae mobilizing the hither politically inert peasantry” and Hing “mass support tor the present regime” by means of labor janization, agrarian reform, and other palicics “idenvitied with erevolution of 1944," which had aroused “a strong national entio free Guatemala from the military dictauarship, scial ardness, and ‘ecancmic colomialtan which had been the pat: soot che pase” The policies of the dethneratic government red the lovalty and conformed ta the sell-imterest ol mist ally conscious Cuaremalans” State Deparment intelligence d thar the democratic leadership “insisted upon the main- of an open political system,” thus allowing Communist: d their operations and appeal eflecuvely to various sec- ‘of the population” These deficiencies of democracy were by the military coup of 1954 and the reign of terror sino, swith large-scale LS, support The prablem of securing “consent has also arisen with fonal institutions. At first, the Unwed Nations was a rell- instrument of LS. policy, anc was greatly aciwived, [hit decal mation brought about what came to be called “the Granny. al he majority.” From the 1960s Washington took the lead in veto- i Security Council resolutions (with Britain secomd, and Preece distant third), andanoting alone or with a few client states against seneral Assembly resolutions, The LIN fell inuodistawor, and sober began o appear asking why the world was “opposing the d Statee’, that the United States might be opposing the world ouht tec bizarre to be entertained. U.S, relations with the Id Court and other international instinitions have undergone ilar evolution, no which we return My comments cn the Madiwonian ros of the prevailing cepts of democracy were untair in an important respect, (Like m Smith aod other founders of classical liberalism, Madison Capitalist, and anticapitalist in spirit, He expected that the em Would be enlightened Statesmen” and “benewolent philoso **whose wisdom may besa discern the true interests of their Intry:” They would ‘refine and “enlarge” the “public views,”62| Chomsky Pratt Quer People guarding the true interests of the councry against the “moschiels’ of democratic majorities, but with enlightenment and benewalence Madison soon learned dittenently, as the “opulent miror- ity” proceeded to use their newhound power much a Adam Smith had predicted a lew years earlier They were intent on pursuinyy what Smith called che “vile maytm! of the masters: “All [ar our selves, and nothing for other people" Ay 1792 Madison warned that the rising developmental capitalist siate was “qibstinuzings the Motive of private tirerect in place al public duty,” leading to “a real dominarign of the few under an apparent liberty of the many," He deplored “the daring depravity of the times,” as private powers "hecome the pretorian band of the government—at once tts tools and. its tyrant; bribed by its largewes, and overawing it by clam- ore and combinations,” They cast aver-society the ¢hadow that we call “palitics,"as John Dewey latercommented, One eh the major twentieth cenwiry philowphers and a leading figure of North American liberaliem, Dewey emphasized that democracy has lit- He content when big business rales the lite ol the country through iw control of “the means ot production, exchange, publicity, rrans- portation and commiiticatinn, cemlorced by command of the press, press agents and ather means of publicity and propaganda” He held further that ina free and democratic society, workers muri be “the masters of their own industrial fate,” not tools rented by employers, ideas that can be traced back w classical liberalism anvil the Enlightenmenr, and have constantly reappeared in popular struggle if the Linived States as elsewhere, There have been many changes int the past 2) years, hur Madison's words of warning have only heed more apprupriate, taking new meaning with the establishment of great private tyran: nies that were granted extraordinary powers early in this centery: primarily by the courts, The theories devised tr pustify these “col. lectivies legal entities,” as they are sometimes called by legal histo riang, are basecton ideas that also underlie fascism and Bolshevism that organic entities have rights over and above those al perscltt They receive ample “laxgesees from the states they largely dom:Canrent wmirhout Consent | 68 nate, remunaing both “lool: and gyrants” m Madison's phrse And bey have gained eubstantial control aver the domestic and inter- “paticral economy as well as the informational and docinnal systems, bringing to mind another of Madison's concems: that “a popular Ges nent, without popular information, or the means of acquire ng it, is buta Prologue to a Farce or a Tragedy, or perhaps bath.” Let's: sow lool: an the doctrines that hawe been crafted tn Impose the modern forms of poliveal demacrocy. They are epressed quite accurately in an important manual of the public davons industry by one ol itv leading figures, Edward Bernays. e opens by observing that “the conscious and intelligent manip- lation of the orpanized habirs and opinions of the mass is an ortant element in democratic society” To carry out this essen- fa) task, “the intelligent minorities must make use of propaganda Santindously and systematically,” broause they aline “understand (he menral processes and social patterns of the masses” and can tthe wires which contral the public mind.’ Therefore. our ciety has consented to perma free competition to be organized. madership and propaganda,” another case of “oorsent withewt Ht Propaganda prowides the leadership with a mechanism meld the mind of the masses” 40 thae “they will throw ther pewhy waned strength in the desired direction,” The leadership cam iment the public mind every bit as much as an army regiments bodies of its saldiers.” This process af “engineering consent” eWwery “essence of the deniocranc process,” Bernays wrote before he was honored for bis cantnbutions by the Amer ological Association in 1949 The importance of “controlling the public mind” has been ized with increasing clarity as popular struggles succeeded ding the modalices ol demecracy, thus giving rice ou whar I elites call “the crisiy of democracy” as when permally pas apathetic populations become orpanized and 4eek to enter eal arena to pursue their interests and demands, ihreat- Nite and order, As Bermays explained the problem, with54| Chomsdy | Profit Dever Praple _ “universal cullragc and universal schooling. .at Jase ever the brnar yeoisie stood in fear of the common people, For the maces proniised to hecorme king.” a tendency forumately reversed—in i has been hoped—as new methods ‘to mold the mime ol the masses” were devised and implemented. A good New Deal liberal, Bernays had developed his skills in Weodraw Wilson's Committee on Public Information, the lurst ULS state prepaganda agency, “lt was the astounding success of propaganda chiring the war thar opened the eyes af the intelligent jew in all departments of life to the possibilities of negimenting the public mind,” Bernays explained an his paiblic relations man- ual, entitled “Propaganda” The intelligent few were perhaps unaware that their ‘astounding success relied inno small part on propaganda fabrications abeuit Hun atrocities prowided to thes by the British Ministry of Information, which secretly defined tts task as to direct thethought of mast af the world? All of this is geod Wilsunian doctrine, knawn as “Wilson- ian idealism” in political theory, Wilson's own view was that an-clite of wentiemen with “elevated ideals! is needed wo preverve “stall: ity and righteousness.” lit by the intelligent minoticy af “respansi- ble men who must contral decisian making, another veteran of Wilsons propaganda committee, Walicr Lippmann, explained in his influential esays.on democracy, Lippmann was alse the most respected igure: tn LS journalism and a noted commentator on public affairs for halla century. The intelligent minority are & “ape cjalized class” wha wre responsible for setting policy and tor “the formation of a sound public opinion” Lippmann elaboraved. Thew must be free from inierterence by the general public, whi ave: “igre: rant and meddlesome outsiders” The public mist “he put in its plaice,” Lippmann continued: their “hinction’ is fo be “spectarors otaction,” not participants; apart from periodic electoral exercises when they choose among the specialized class, Leaders must be free to operate in “rechniocrane insulation,” po barrew current World Bank terminolory ln the Encyelopurtia of the Social Sciences, Harald Lasewell, cmeCearent withent Comiene \ss he founders ol moder politcal science, warned thar the inrel- Jigent few must recogmize the “ignorance and stupidity of the Soxser and ner succumb to “demucrsiic dogmatic about men Beir the best judges of their own interests.” They are nor ihe best dyes; we are. The masses must be controlled tor their own good i adi more democratic societies, where force vs unavailable, social agers (ust tum ta a whole new technique of contral largely propaganda” Nore thar this is good Lenintst doctnne The similarity ween progressive democratic theory and Marxism -Leertirasint ts er striking, somethin thar Haktrnin had predicted beng: befure With a proper understanding al the concept of “consent,” in sce that Implementation of the business agenda over the ans of the general public is “with the consent of the gav- ped,’ a form ol "consent without consent” ‘That ts a fair deserip- nol what has been happening in the United States. There is apap between public preferences and public policy. fi recent fs the yap has become substantial, A comparison sheds further hon the lunccioning of the democratic system, More than 80 percent of the public think hat the gav- nent ie “nin for the benetit af the few and the special inter- of the people,” up from about 50 percent in earher years peteent believe chat the ecanomic system is “inherently no and that working people have too little say in what woes ehunity More than 70 percent feel chat "business has bd tia much power-Over too many aspects of American life,” most 20 to 1, the public believe that corporations “should sacrifice same profit tor the sake ol making things bet- ihe workers and céminunathes © ‘Public arwtudes remain stubbornly social democratic in tint respects, as they did through the Reagan years, contrary ad deal of mythology Gut we should also nove thar these fall far chor of the ideas thar animated the democratic Working people of nineteenth century North Amer plead with ther rulers tn. be mare benevolent. Rather,$6| Ciemuby/ Prufit Over Peuple they denied their myht werule, Those whe work on che mills should own them, the labor press demanded, upholding the ideals of che American revohution as the dangerous rabble understood them, The 1954 congressional election is a revealing example of the pap berween rhetoric and fact. twas called a "political earth- quake,” 2 “ldindalide victory,” a “telumph of conservariom™” thai reflects the continuing ‘drift vo Whe nighe” as vores gave an “Over whelming popular mandate” ta Newt Gingrich’s ultranght amy who promised to “get governmenc off our backs’ and bring back the happy days when the free market reigned. Turning to the facts, the “landslide victory” was won with barely more than hall the vetes cayt, about 20 percenc of the elec orate, tures that hardly differ from two years earlier, when ihe Democrats won, Orie our ol six yoters described the outcome as “an affirmation of the Republican agenda.” One out of (our had heard of the Contract with America, which presented that agenda. And when informed, the papulacion opposed virtually allot it by large maporites, About ol percent of the public wanted sacial spending dicted. A-year later 80 percent held that “the federal povermment protect the most vulnerable in society, especially the poor and the elderly, by guaranteeing minimum living stan- dards and providing sacial bemetits * Eighty to 90 percent of Amer icamy support lederal guarantees ol public assistance for those who cannot work, unemployment msurance, subsidized prescription drips and pursing home care for the elderly, a minimum bevel at health care, and social security. Three-quarters support tederally quarnreed child care for low-income working mothers The resilience of each witiludes is particularly striking in the light of the unremitting propayanda assault to persuade the public that they hold radically ditterent belicts. Public opinion studies show that the more voters beamed about the Republican program in Congress, the more they oppaved the party and its cungressinnal program: The standard-hearer of ihe revolution, Newt Gingrich, was unpopular ar the time of he ‘tnnmph," and sank steadily afterward, becoming perhaps the mostComimos winkens Consett |r ogular political fwure in the country. One of the mare cori: ects of the 1996 elections was the scene of Gingrich’s clad cites struggling ro deny any Connection 10 thetr leader anal . te the primaries the fleet candidare to disappear, viriin iy at once, wai Phil Grain, the sole representative of the con nessional Republicans, very well funded and saying all the words h dhe voters are supposed to love, according to the headlines. valmost the (ull ange ol policy iysues disappeared instantly as the candidares had to tace the worere in January (496 most dramatic example was balancing the budget, Through jhe major sue in the country was how quickly te de i, seven fora bit longer, The gowernmenr wae shin down several times (the controversy raged, As soon as the primaries opened talk of was gone The Wall Steet formal reported with surprise “have abandoned their balanced budget obsession ~ The ! ohsessien’ of the voters was precively the opposine, as polls Hilary hown: their opposition to balancing the budget minimally realistic assumptions. To be accurate, paris of the public did share the ‘olses- mf ofboth political parties with halanciny the budget In Augeust S the deticit was chosen as the country's most important prob- Py SF percent of dhe population, ranking alongside homeless eo Bul the 3 percent who were obsessed with the budget Aperied to include people whe matter. “Amencan business has ken: balance the federal budget,” Susie Week announced. ing a poll ol sertor exccutives. And whet business speaks, the political class ard the media, which inlormed the pub- tt demanded a balanced budget, detailing the cuts in social Bg ia accord with the public will—and over its substantial tion, as polls demonstrated. [kas pew surprising that the wep disappeared from view as soon as politicians had tr Ince b beast is alee now surprinmne that the agenda continues ter be héented iw tiv wonderd double-edged fashion, with cruel and Popular cuts in social spending alongside increases in thei Pentagon budget thal the public opposes, but with strung bus) ness support m both cases. The reasons for the spending increauey art easily understood when we bear in mind the domestic role af the Pentagen system: 1 transter public hinds ro advanced sector, of industry, so that New Conprich's rich constiments, tor exam gle, can be protected from the rigors of the markerplace wiih more wowernment subsidies shan any other auburban district in the coun- iry juuvside the federal government itecll), while the leader of the conservative revolution denounces. big gavernment and latids rumged individualism. From the beginning: it was clear from the polls that the sin. fles about the comervarive lancdwlide were tintrae Maw the taod ie quietly conceded. The palling specialist of the Gingrich Repub. licans explained thai when he reported that most people supported the Contract with America, what he meant was that they liked the slogans thar were used for packaging. For example, his studies showed that the publie opposes dismantling the health system and wants to “preverve, protect and strengthen’ mw “lor the next pen- ernion.” So dismanilinw is packaped as “a solucion that preserves and. protects” the health syetem for the next generation. The same ts true generally AlloFthiwa very nagural i a coeiety that is, tn arr uinuisctal deyree, bikinessran, with hue eXpendittines on marketing: $1 trl lion doyear one-sith of yross domestic product, much of it tio: deductible, so that people pay forthe privilege of being subjected to mar pulaticn of their attitudes and behaviee. Hut the great beast 6 hand to tare. Repeayedly i) hay been thought thet ihe problem has been salved, and thai the “end of himtery® has been reached ina kind of uropia of the masters. One Classe moment wasatthe origins ol neoliberal doctrine in the early nineteenth century, when David Ricarda, Thomas Malthus, and other great figures of claysical economics announodd that the mew science had proven, with the certainty of Newton's laws, that we only harm the poor by orying to help then, ard thar the best gilt we can oller the silierimg masses is tv bree them trom the delu- Ba] Chaniby/ Profit Over PrupleCrnent withoat Consene |59 thar they have a right to live The new science proved that enple had no tpghts beyond what they can obtain in the unrey- fated libor marker By the (8306 it seemed chat these doctrines ad won the day io England. With the triumph of right thinking he service of British manufacturing and linancial interests, the gple of Enyland were “loreed inte the paths of a utopian exper- mt” Kart Polanys wrote in hey classic work, The Grnat Tramalor- } fifty years ago. lt was the most “ruthless act of social reform" all af history, he continued, which “crushed multitudes of lives” | nimancicipated problem aroie The tupid masses beyan oa mw the conclusion thar if we have no righeta live, then you have fight io tole The Bntish army had to cope with riots and dis- fy, and soon an even greater threat took shape as workers bepan : demanding factory laws and social legislation to pro- them from the harsh neoliberal expenment, and often goina yellbeyond The science, which is tormunately flexible, took new dems as elite upinion shifted in response to. uncontrollable pop- la forces, discowering that the niche to live had to be preserved ider a social contract of scirts. Later in the century, it seemed to many that order had been red, though « few dissented. The fimous artict William Mer i gecl respectable opinion by declaring himself a socialist fatale at Coord He recognized that it was “the recerved opin- hthat the competitive or Devil take the hindmost’ system is the Mi system of coonomy which the world will see, thar its per Shien, and therelore finaliry has been reached ip i.” But if bis. Ory teally is at an end, he continued, then “civilization will die” Ribthis he refused to beliewe, despite the confident proclamations he most learned men.” He wae right, as popular struggle fstrated. In the Unived States ton, the Gay Nineties a cerry ago fre hailed as "periecton’ and "tinality.” And by the Raarmg Twen- Pir. was confidenily assumed thar labor had been crushed por Ge, and the Wiapia of (he masters acheved—an “a most unde- atic America® that was “created over its workers protests,” YaleBO) Chomsky ( Profir Giver Meepte Universiey historian David Montgomery comments But again the celebraton was premature Within a few yours the great beast once pain escaped its cage and even the United States the business. ran soctety par excellence, was forced by popular struggle to grant rights tho had longago heen won in far more autoeratic societies, Immediately after World War !1, business launched a huge propaganda ulfensive to regain whar it had lowe By the late 19505 it was widely assumed that the poal had been achioved. We had reached the “end af ideology” in the incustrial world, Harvard soch- olagist Daniel Bell wrote, A few years earlier, as an editor of the leading busitiess journal Forme, he had reported che “staggerng” ecale of business propaganda campaigns devigned t0 overcame the social democrauic attitudes that periiaed inte the postwar yearv. Aut apatnh the celebration was premature. Events of the 79608 showed that the great beast was still on che prowl, once again arousing the tear ot democracy among ‘responsible men,” The Tri- lateral Commission, faunded by David Rockefeller in 1973, devoed its first major gaudy wo the ‘criss of democracy’ throughout che Hoclestrial world as lane sectors ol the population sought to enter the public arena The naive might think of that asa step toward democracy, but the Commission understood that it wak “excesaive democracy,” and hoped to restore the days when “Truman had beon able to govern the country with the conperation ol a relatively small nomen of Wall Street lawyers and bankers,” as the Amencan map porter commented. That was proper “moderation in demucracy” OV particular concer m the Commission were the failures nf what it called the institutions tesponsible “lor the indoctrination of tbe young. the schools, univeryties, and chunches The Commission qropeved means to restore discipline, ard to reourn the wereral pub lie to paesvity and obtdience, overcoming the crisis.of democracy ‘The Commission represents the more progrestive inter nationalist sectors of power and intellectual life in the United States, Ewope, and Japan the Carer Admunmtration was drawn almost enurely from (4 rake. The right wing takes a much harsher line. From the (9704, changes im the intermational economyCansenr without Corer | je put new weapons inte the hands of the masters, enabling (hem iy away at the hated social conrract that had been won by lar struggle The political spectrum im the Unired States very narrow, has been reduced to near invisibility. A hew alter Bill Clinion took office, the lead story in the Wall nal expressed jis pleasure that “on issue after issue, Mr {roton aed his administration come down on che cme tide ay cor ‘ ca, eliciting Cheers from heads al major corporations, re delivhted thet we're getting along much beter with thiv mation than we did with previows ones,” as ome put it. A year later, busimess leaders bound they could do even bet- d by September 1995 Bisciar Week neparted that the new TTepreients a milestone for bisiness) Never belore have my goodies been showered oo enthustastically on Amencas repreneurs” In the November (996 elections, both candidates moderate Republicans and longtime government insiders, lidates of the business world. The campaign was one oF “Te as, the business press reported. Polls showed that pub- at had declined even below the previous low levels despite breaking spending, and that voters disliked both candidates pected litth: bnom either of them There is large-scale discontent with the workings of the cratic system A similar phenomenon has been reported in tin America, aed though conditions ane quite different, same of eavons are the same. Argentine political scientist Atilin Boron ged the fact that in Latin America, the democratic process lished together with neolibera! econemie reforms, which na disacrer for ost people, The mproduction of similar ms in the richest country inthe world has had similar effects frore than 80 percent of the population feel that the demo- Mic system is a sham and that the economy #6 “inherently unfair” onsent of the governed” ts polng to be very shallow, The business press records “capital's clear subjugation af ar for the past 15 years," which has allowed if to win many fories, Hut tf also warns that the wlonous days may not last> because of the increasingly “aggressive campaign of workers “to secure a so-called ‘living wage” and “a guaranteed binwer piece of che pie’ leis worth remembenng that we have been through all ot this before The ‘end of history,” “pertection,” and “finality” have olten been proclaimed, always falsely: And with all the sordid con— tinuities, an optimistic soul can still discern slow progress, realis- treally, T think In the advanced industrial countries, and often ehewhere too, popular struggles can start from a higher plane and with preater expectations than those of the Gay Nineties and Roar. ing Twenties, or even chirty years ago, And ineernational solidar. fry can take new and more constructive forms as the great majority of the people of the world come to understand that their incerests are pretty much the same and can be advanced by working together, There is na mere reason now than there has ever been to believe that we are constrained by mtystenaus and unknown social Jaws, nov simply decisions made within instgutions that are dubject to human will—biossn institutions, that have to free the teen of legitimacy and, it they de not meet it, can be replaced by others that are more tree and more just, as often in the past. B2| Chomrby | Prafis Quer People A venion of thigaricle was orwinally published in South Amerca uv Spanish and Portiguese translathons, 196.Free Markets"For more than hall a cenvury, the United Nations has been feemain forum for the United Starnes oo ory to create a world in mage, maneowering with its allies to forme plabal acceards whaut rights, nuclear tests, oc the environment that Washington ied would mirror its own values "So nuns postwar history, we am from the opening paragraph of a fremt-page story by Nine York ini political analyst David Sanyer Elst tines are changing. Today, the headline reads, “LS. Is Exporvina: Its Aree-Market Values rough Global Commercial Agreements.” Going beyond the tra. i I reliance on the UMN, the Clinton Adminisuracion is turn- ing to the new World Trade Organization (WTO) to carry out the ik ot “exporting Amencan values.” Down the read, Sanger oon- hikes (quoting the LLS. trade representative), Wis the WTO that May be the most effective instrament bor bringing “America’s pa. an for deregulation’ and for the tree market generally, and “the rican values of free competition, fair rules, and eHective ement, toa world sill honblinag in darkness These “Arie values” are illustrated most dramatically by the wave of the telecommunications, the Intemet, advanced computer tech- owy, and the other wonders created by the exuberamt Ameri- GS66 | Chomiiky / Prafie Over Peuple Gan entrepreneunal spirit unleashed by the market at lav feed from jevemment intertercoce by the Reagan revalution Today “goveramencs are everywhere embracing the free market gospel preached in the (9i(h by President Reagan and Pome Ministey Margarer Thatcher ol Bruin” Yousse? [brahiny reporis i another Tou front-page story, reiterating a commoy theme Like dt or hage i, enthusiast: and critics over a broad range of opinion agree—use to keep to the liberal-to-letr pact of the sper, trim—about “the implacable sweep of what its exponents call the marker revolution”: “Reiganesque rugged individualism” has chanwed the rules ol the game worldwide, while here ac home “Republicans and Detmicrats alike ane ready to grve the market (ull eway' tn their dedication to “the new orthodaxy “ There are a number of problems wrk the picture One ie the account of the last halfcenoyy, Evert the most dedicated. believers in “Americaly eigion’ must be aware chat US.-LIN rela. Hons have been virally the opposite of what the opening pa same depicts ever since the LIN fell out of control with the piregrress 6} decolonization, braving the Unined States regularly isalated in apposition te global aeccordson a wide range ol tues and com- mitted co undermining central components of the UN, particularly thase with a third word qnentation Many questions about the world are debatable, but surely not this one Aé lor Reaganesque nageed individualisiy' ane ite warship ol the marker, perhaps it enough te quo the review ol the Rea- gan years to Faregn Affairs by a senior fellow dor inmemational finance at Che Councilon hore Relations, meting the “irony” thar Ronald Reagan, “the postwar chie! executive with the most pas- sionate love of laissez hire, presided over the greatest owing toward protectionism simce the (990s "—no “irony,” bur the normal work ings of “passionate love of laissez-faire’) for you market discipline, but not for me unless the “playing lield” happens to be tiled in my vor, typically as a result of large-scale state intervention lt is hard to find another theme so dominant in the economic bis- tory of the past three centuries.The Padien for Free Marke 67 Reaganites were following a well-rodden course— urned inte a comedy act by Gingrich ‘conservatives’ — hen they extolled the glories of the market and fesued eter es about the debilicaing culture of dependency to the paor me and abroad while boasting proudly te the business world hor Reagai lind ‘yranted more import refiel ws LS, indestry chan of his predecessors in more than hall a century’; in fact, more han al!) predecessors combined, as they led “the sustained assault free trade] principle” by the rich and pawertul from ihe early deplored in a scholarly review hy General Agreement on and Trade (GATT) secretariat economist Patrick Low, who imates the restrictive effects of Reaganite tieastires at about 2 times (hove of other leading industrial countries * The radical “swing coward protectionism" was only a part dthe “sustained assault" on free trade principles that was accel- ated under “Reaganite rugged individualern " Another chapter story tmcludes the huge transfer of public funds to private often tinder the traditional guise of “security” The cennuries- proceeds today without notable change, not oily here, af ree, though new heights of decepuon and hypocrisy may have np scaled on the local terrain “Thatcher's Bricain” is, in fact, another good choloe to illus- “tree market gospel," Just to keep toa few revelations of the Jasthew months Leach 1997), “during che period of miakithon pres eto make arms sales to Turkey," the London Obserrer reported, e Minidte: Thatcher “peranally inververed to ensure a pay= fot 23m was made out of Britains overseas atd budget, io build a metro in the Turkish capital of Ankara The project Wis Uineconomical, and in 1995 (twas admitted” by Porcign Sec fary Douglas Hurd thar tt was “urlawtul ° The imciclent was par Newlarly mowworthy in the aftermath of the Pergau Dem scandal Which revealed illegal Thatcherite subsidies to sweeten’ anms deals th the Malaysian regime.” with a High Court jadgment against él Tha's aside (roves government credit guarantees and financ- ik arranicements, and the rest uf the panoply of deviews to brans-7 68) Chomsky! Profit Over Peeple het juililic Hinds to the “defense industry,” yielding « familiar range fv henetits to advanced induetry generally A few days before, the same journal reported that “wp tu J million British children are suflering ill-health and stunted yrowth because of maleutrition” a4 aresult ol “poverty on a scale nil seen since the 193lls," The trend to increasing child health has reversed, and childhood diseases that had been controlled are now on the upswing thanks to the (highly selective) “free market gospel” that is much admired by its beneficiaries. A tew toonths earler, a lead headline reported “Ohne jn Three Anitigh Babies Bom in Poverty,” as ‘child poverty has tereated as moch as three-lold since Maryarey Thatcher was elected.” "EMckensian Diseases Return ay Haunt Today's Britain,” another headline reads, repartiny studies concluding that “social conditions in Keita are returning te those of a century age.” Par ticalarly grim are the effects of cutting off gas, electricity, water, and telephones co “a high number of households’ as privatization tukes its natural course, with e variety of devices thar faver “more affluent customers” and aiiount te a “surcharge on the poor,” lead. ing to & “growing gull in energy between rich and pow,” alen in water supply and mther services The ‘savage cuts’ in social pro: grams ate placing the nation “in the grip af panic about imminent social collapse.” Hut industry and finance are benetitinu very nicely hem the same policy choices, And to top it all off, public epend- ing ater seventeen years of Thatcherite gospel was the same 42.25 percent ol GDP that i) was when she took over? Moe exactly untamiliar here, ‘The Wortd Trade Organization: “Exporting American Valoes” Let is pul aside the intriguing contrast heiween doctrine and reality, aod see what can be leaned by examining the new era Thats coming inte view. Quite a let, | chink, The Times ster on how the “US. is exporting its free-mar- hee values” is celebrating the WTO agreement on telecommun’The Peuion for Free Marketi |eo rations. Cine of its welcome effects is to provide Washingion with ew tool ul foreign policy.” The agreement “empowers the Orie go inside che borders of the 70 countries that have signed Ve and it is ne seeret that international instimiinns can function solar as they keep to the demands of the powerful, im particu: wy, the United States. [nthe real world, then, the “new too!” allows he Urited States to intervene profoundly in the internal affairs af others, compelling them to change thei laws and practices. gcially, the WTO will make sure that other countries are “fol- wing through on their commitments Of allow foreigners tn mvemt” without restriction in central areas al their economy In we epecilic case ar hand the lily outcome is clear to all: "The ous corporate beneliciaries of this mew era will be LLS. car- who are best pesivoned to dominare a level playing field” For Eastere Economic Review poines out,” along with one UK, 5. megacorporation. Nor everyone is delighted by the prospects, The winners 2¢ that (act, and nlfer their interpretation: in Sangers words, fear that “American telecommunication giants. . .could over- thelm the flabby government-sanctioned menapolies thar have ne dominated telecommuncations in Europe and Asia" —as im worlds leading econamy and most powerhul state. Itis alsa noting that major contributions co modern technology (oran- Of, fo mention just one) came trom ihe research laboratories: “flabby government-sanctioned monopoly” that dominated ammunicarons here until the 19704. Wy weed its freedom fram discipline to provide for the needs of advanced sectors of try generally by tratslet of public furds (aomerirmes in indi ftways, through monopoly power, unlike the more direct moka): Sof the Pentagon system) Those who cling irrationally to the past see matters 2 bit Nerently The Far Easier Economic Reine posts cut that jobs will Ost in Asia, and ‘many Asian consumers will have to pay more phone eervice belore they will pay lean” When will they payTo| homeby / Profit Over Peaple lew? For that bright future oo dawn, it is only necessary lon for. timn imvestors to be “enceuraged, fo act sncjally desired way,” not simply with an eye to profit and service wo the nich and the bus ness world | dine thi miracle will came tes pies is unex plairied Vhough doubtless the suggestion will inspire serious reflecticn iq corporate headin Th the time span relewart on Planning, the WTO agreement will mise phone service costs for tmost Asian consumers, the Reniey predicts. “The fact ws, comparatively few customers in Asia stand to benetis from cheaper overseas rates” that are anticipaied with the takeover by huge foreign corporations, mostly American, [ni Indonesia, for example, only sbowt 900,(K0 of some 200 million people—specitically the husin secinm—make oversess calls af all, “Ite very likely the cost al local ielecoms service, in general will ee” in Asia, aooinding te David Barden, regional telecoms ana- Iyst. at). Po Morgan Secunties in Hong Kong, Hur thar ts all te the good, he continues: “Ih there oo profitability in the business, there will be ne business” And now that still more public property ts being handed over to foreign corporations, they had better be guar- anteed protitabiliry—televommunications talay and a tar wider range of related services tomorrow. The buditess press precicts that ‘personal coumiunications over the Intermer | includiny corparate networks and interactions] will overtake telecomumunicadions in live of He year, and telephone operators have che biggest interest in Retina inte the online bisitess.° Contemplating the ture of hie own company, lite! CEO Andrew Geove wes ihe lotermet as “ihe biggest change m our covironment’ at present, He expects large- acale growth lor “the connection providers, the people invalved In generating the World Wide Web, the people who raake the com pte” "people" meaning corporations), and the advertising indus try, already running at almow $4950 billion annually and anticipating new opportunities with the privatization of the leter- net, which is expected to convert tt to a global oligopoly ‘ Meanwhile privatization precedes apace cluewhere To (ren take wne important cave, over considerable Pupular opper 7