(OTHER BOOKS BY NOAM CHOMSKY. ‘Amercan Per adhe Neo Mandar ‘Aste of Theory and Ste ‘Wer wih hve a agus (Ge Ware The Connon Good ral Wrtnge Vol sand 2 The Care of Tore Drtering Dencracy Fol Tangle The US, lado th Plein For Reson of State Kroll of Lagu Is Nat, Origins oud Use Lenape ond Mid Lengua and Pratl of Kec Lechel on Goreme ai Las fom Lenton. Rico om Propaganda Maman Cone (ib EbeardS Hera) ‘Mata Conta Te Spc Acbentof Propagone Thedtinast Program Nrcesary Mins Ox Poon an lacy ase the Md Ex Prat and Emperors The Pola ony of Hume Rights, Vol Land (exh El S. Hema) Poe and Prt ial Prints, Réfecon on Language Redding Cal TFK, th Vi Ral and Rete Soul Par of Eg (tb Mors Halle) Toward a Nw Col Wer Tring the Te The Uni of US. Powe Wel Ondo Oid and New Yar Sor. The Cngust Cotes ym Wr and US Patel Cane ‘Naam Chomsky’ publishers the US, ineade Columbia University Pres, Common Courage, Seven Stone, ad South End Prev inthe UK. Plt rm i Asa Allens Urwin an ia Eat. American erty in Cao Pow Profit Over People Neoliberalism and Global Order Noam Chomsky SEVEN STORIES PRESS New York « Teroste » LondonCopytgh: ©1999 by Noam Chomiy Innodtion ©1988 by Reber We MeChesney ‘Seven ute Pree Ft Eon Al igh exer. No part of dis book may be etc, sre oa terial emote an for yy oro ning Ineo dent, photocopying rocking o ater with the or witea peminion of he puke Inte UK: Tunatound Pusher Sev Lh Unc 3. Olympia Fig ss, Coburg Road Wood Geen London 82 6TZ U.K InCamde ashion Howse, 36 Nolin Read Torn, Ontario MAB 32, Canada ISBN. T888363-69-4 ISBN 1stiae3-427 ph) | Fe cepse. 2. Libri. Demos “t Consmpsion (sanomis I Tie bss C310 1998 330 1F da 987654 oak dein by Adin Simon Seven Sais ie 10 Wats Seer New Yok NY (0013, Pied inthe USA, Introduction by Robert W. MeChesney v ‘The Zapatista Uprising... 121 vi “The Ultimate Me 131 vw “Hordes of Vigilant 159 Index ... 169 sipby eben W.MeCetey 'Neoliberalism isthe defining political economic paradigm ‘of our time—it refers to the polices and processes whereby a rel ative handiul of private interests are permitted to control 3s much, as possible of social Ife in order to maximize thet personal profit Associated initially with Reagan and Thatcher, forthe past two decades neoliberalism has been the dominant global politcal eco- ‘nomic trend adopted by political parties of the center and much ‘of the traditional left as wel as the right. These parties and the policies they enact represent the immediate interests of extremely, "wealthy investors and les than one thousand large corporations ‘Aside trom some academics and members of the business ‘community, the term neoiberaism is largely unknown and unused by the public at-large, especially in the United States. There, 0 the contrary, neoliberal inivatves are characterized as free mar ket polices that encourage private enterprise and consumer choice, reward personal responsibilty and entrepreneurial initiative, and undermine the dead hand ofthe incompetent, bureaucratic and par asitic government, that can never do good even if wel intended, which icraely is. A generation of corporate-financed public rela tions elfors has given these terms and ideas a near sacred aura ‘Asa result, the claims they make rarely require defense, and are wealthy 7 lavoked to rationalize anything from lowering taxes ontle ———————— OT eee | ci why Profs Over People and scrapping environmental regulations to dismantling public edu tation and social welfare programs. Indeed, any activity that might interfere with corporate domination of society is automatically sus pect because ic would interfere with the workings of the free mat ket, which is advanced as the only rational, far, and democratic allocator of goods and services, At their most eloquent, proponents of neoliberaism sound asf they are doing poor people, the envi ronment, and everybody else a tremendous service as they enact policies on behalf ofthe 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, 2 ‘marked increase in severe deprivation lor the poorest nations and peoples of the world, a disastrous global environment, an unsts ble global economy and an unprecedented bonanza for the ‘wealthy. Confronted with these facts, defenders ofthe neoliberal ‘order claim thatthe spoils of the good life wll variably spread to the broad mass ofthe population—as long asthe neoliberal pol cies that exacerbated these problems are not interfered with’ Inthe end, neoliberals cannot and do not offer an emg ical defense forthe world they are making. To the contrary, they offer—no, demand—a religious faith in the ifalibiity of the ‘unregulated market, that draws upon nineteenth century theories that have litle connection tothe actual world. The ultimate trump card forthe detenders of neoliberaism, however, is that there i no alternative, Communist societies, social democracies, and even modest social welfare states ike the United States have all fale, the neoliberals proclaim, and ther citizens have accepted ncolib cralism as the only feasible course. It may well be imperfect, but itis the only economic system possible. Earlier in che twentieth century some critics calle fascism lism with the gloves off” meaning that fascism was pur 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, s indeed “capitalism with the gloves of Invreductionl9 Ie represents an erain which business forces ae stronger and more aggressive, and face less organized opposition than ever before. In this politcal climate they attempt to codity their political power fon every possible front, and a5 a result, make it increasingly dif ficult to challenge business—and next to impossible—tfor non- market, noncommercial, and democratic forces to exist a all Its precisely in its oppression of nonmarket forces that Wwe sce how neoliberalism operates not only as an economic ys 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 lism, ae striking. Neoliberalism works best when there i formal electoral democracy, but when the population i diverted from the information, access, and public forums necessary for meaningful participation in decision making. As neoliberal guru Milton Fried- ‘man pat tin his Cpitalisn avd Fredo, because profit-making isthe essence of democracy, any government that pursues antimarket policies is being antidemocratic, no matter how much informed popular support they might enjoy. Therefore itis best to restrict, goverameats tothe job of proteeting private property and enforc- ing contracts, and to limit political debate to minor issues. (The real matters of resource production and distbution 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 Chiles democratically elected Allende government in 1973, because Allende was interfering with business control of Chilean society Alter fifteen years of often brutal and savage dic {atorship—all inthe name ofthe democratic free market—formal democracy was restored in 1989 with 2 constitution that made i vastly more dificult, if not impossible, for the citizenry to chal lenge the business-military domination of Chilean society. That 's neoliberal democracy in a nutshell trivial debate over minor issues by parties that basicaly pursue the same pro-business poi ies regardless of formal differences and campaign debate,sel chemoby/ Prof Over Peaple Democracy is permisible a long as the control of business is off- limits to popular deliberation or change, ie. so long as it nt democracy. “The neoliberal system therefore hasan important and nec- cssry byproduct—a depolitiized citizenry matked by apathy and. Cynicism. I electoral democracy affects litte of social if, isa tional to devote much attention to i; in the United States, the spawning ground of neoliberal democracy, voter turnout in the 1998 congressional elections arguably wasa record low, with just over one-third of eligible voters going tothe pols. Although occa sionally generating concern from those established parties ike the US. Democratic Party that tend to attract the vores of the dis: possessed, low voter turnout tends tobe accepted and encouraged by the powers.that-be a a very good thing since nonvoters are, not surprisingly, disproportionately found among the poor and working las, Poicigs that could quickly increase voter interest and participation rates ae stymied before ever geting into the pub Tic arena. In the United States, for example, the (wo main busi= ness-dominated parties, with the support of the coxporate ‘community, have refused to reform laws that make it virally impossible to create new political parties (that might appeal tenon business interests) and let them be effective. Although these marked and frequently observed dissatisfaction with the Republi cans and Democrats, electoral politics is one area where notions fof 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 ofthe one-party communist stae than that of 2 genuine democracy, But this barely indicates neoliberaisms pernicious impli- ‘ations foracivic-centered political culture, On the one hand, the ‘social inequality generated by neoliberal policies undermines aay effort to realize the legal equality necessary to make democracy credible Large conporations have resources influence media and overwhelm the politcal process, and do so accordingly. In US ‘electoral politics, for just one example, the richest one-quarter of Introduction| A ‘one percent of Americans make 80 percent of all individual poit- teal contributions and corporations ouspend labor by a margin of 10-1. Under ncoliberalism this ll makes sense, as elections then reflect market principles, with contributions being equated with investments. As a result, it reinforces the irelevance of electoral politics to mest people and assures the maintenance of unques- tioned corporate rule Cn the other hand, to be effective, democracy requires that ‘people feel connection to their fellow citizens, and that this con- nection manifests iself though a variety of nonmarket organic tions and institutions. vibrant poliial culture needs community _roups, libraries, public schools, neighborhood organizations, coop ceratives, public meeting places, voluntary associations, and trade unions to provide ways for citizens to meet, communicate, and interact with thee fellow citizens. Neoliberal democracy, with its notion of the market ural, takes dead aim at this sector. Instead ‘of citizens, it produces consumers, Instead of communities, it pro- ‘duces shopping mall. The net result san atomized society ofdis- ‘engaged individuals who feel demoralized and socially powerless. In sur, neoliberalism the immediate and foremost enemy ‘of genuine participatory democracy, not justin the United States ‘but across the planet, and willbe forthe foreseeable future. Ins iting that Noars Chomsky isthe leading intellectual figure in the world today i the bale for democracy and against neoliberalism. Inthe 1960s, Chomsky wasa prominent U.S. critic ‘of the Vietnam war, and, more broadly, he became perhaps the ‘most trenchant analyst ofthe ways US. foreign policy undermines democracy, quashes human righs, and promotes the interests of the wealthy few Inthe 1970s, Chomsky, along with his co-author Edward S. Herman, began their research on how the US news ‘media serve ete interests and undermine the capacity of the cit- izenry to actually rule their lives ina democratic fashion. Their 1988 book, Manufacturing Const, remains the starting point for any serious inquiry into news media performance ‘Throughout these years Chomsky, who could be charac-sal Chomiby / Pape Over People terized as an anarchist or, peshaps more accurately, a lbertarian ‘socialist, was a vocal, principled, and consistent democratic oppo: fnent and crite of Communist and Lennist political states and pat: ties He educated countless people, including myself, that democracy isa non-negotiable comerstone of any post-capitaist, Society worth living in or fighting for. At the same time, he has ‘demonstated the absurdity of equating captalsm with democracy, for of thinking that capitalist societies, even under the best of ci- ‘cumstances, wil ever open access to information or decision mak Ing beyond the most narrow and contolled possiblities. [doubt any author, aside from pethaps George Orwell, has approached Chom- sky in systematically skewering the hypocrisy of rulers and ideo- Fogues in both Communist and capitalist societies a they claim that theirs i the only farm of true democracy available to humanity Inthe 1990s, all of these strands of Chomsky’ political |work—from ant-imperialism and critical media analysis to writ- ings on democracy and the labor movement—have come together, calminating in work ik this book on democracy and the neahib cra threat, Chomsky has done much to reinvigorate an under standing ofthe social requirements for democracy, drawing upon the ancient Greeks as well a the leading thinkers of democratic ‘evolutions in the seventeenth and eighteenth centuries. As he ‘makes clear, itis impossible to_be a proponent for participatory democracy and atthe same tie champion capitalism, or any other class divided society. In assessing the real historical struggles for democracy, Chomsky also reveals how nesliberalism is hardly a new thing, but merely the current version of the battle for the wealthy few to cireumscrbe the political cof the may. ‘Chomsky may also be the leading critic of the mythology ofthe natural fee" market, thar cheery hymn that is pounded int four heads about how the economy is competitive, rational, ff cient, and far. As Chomsky points out, markets are almost never ‘competitive. Most of the economy is dominated by massive cor- porations with tremendous control over their markets and that ts and civic powers Introduction| 13 ‘therefore face precious little competition of the sort described in ‘economics te«tbooks and politician speeches. Moreover, compo- rations themselves are effectively totalitarian organizations, oper: ating long. nondemocratic lines. That our economy is centered around such institutions severely compromises our ability to have a democratic society “The mythology of the fre market also submits that gov ‘emments ae ineHfcient institutions that should be limited so as fot to hurt the magic ofthe natura laissez-faire” marke, In fact, aeChomsky emphasizes, governments are central to the modern ‘apitalist system. They lavishly subsidize corporations and work twadvance corporate interests on numerous fronts. The same cor- porations thet exul in nealiberal ideology are infact often hyp ‘critica they want and expect governments to funnel tax dollars to them, andto protect their markets for them from competion, ‘but they wan to assure that governments will not tax them or work supportvely on behalf of non-business interests, especially on ‘behalf ofthe poor and working class. Governments are bigger than ever, but under neoliberalism they have far less pretense to being concerned with addressing non-corporate interests ‘And nowhere is the centalty of governments and poll {eymaking more appacent than inthe emergence ofthe global mae kketeconomy What is presented by pro-business ideologues asthe ‘natural expansion of free markets across borders i, infact, quite the opposite Globalization isthe result of powerful governments ‘especially that ofthe LInived Stats, pushing trade deals and other accords down the throats of the worlds people to make it easier for corporations and the wealthy to dominate the economies of nations araund the world without having obligations to the peo: pies of those nations. Nowhere i the process more apparent than {nthe creation ofthe World Trade Organization inthe early 19905, and, now, inthe secret deliberations on behalf ofthe Multilateral Agreement on Investment (MAN) Indeed, its the inability ro have honest and candid dis ‘cussions and debates shout neoiberalism that fs one of ts most14 Chomity Papi Over Paple striking features. Chomshys critique ofthe neoliberal order is eee tively offlimits to. mainstream analysis despite its empirical ‘steength and because of its commitment to democratic values Here, Chomsky’s analysis of the doctrinal system in capitalist democracies is useful, The corporate news media, the PR indus. tty, the academic ideologues, and the intellectual culture wet large play the central role of providing the “necessary iflsions” to make this unpalatable situation appear rational, benevolent, and neces sary if not necessarily desirable. As Chomsky hastens to point ou, this is no formal conspiracy by powerful mterests: it doesnt have to be. Through a variety of institutional mechanisms, signals are tent to intellectuals, pundits, and journalists pushing them to see the status quo as the best ofall possible worlds, and away from challenging those who benefit from the status quo, Chomsky's ‘work isa direct call for democratic activists to remake our media ‘stem so it can be-opened upto anticorporate,antinealiberal per- Spectives and inquiry, Ie also a challenge to all intellectuals, or at least those who express a commitment to democracy, to ake 3 Jong, hard look in the miror and to ask themselves in whose inter. tests, and for what values, do they do their work. Chomsky’ description of the neolibera/corporate hold ‘over our economy, polity, journalism, and culture is so powerful ‘and overwhelming that fr some readers it can produce a sense of resignation. In our demoralized political times, afew may goa step further and conclude that we are enmeshed in this regressive sys tem because, alas, humanity is simply incapable of creating a more ‘humane, egalitarian, and democratic social order. infact, Chomsky’ greatest contribution may well be his insistence upon the fundamental democratic inclinations of che worlds peoples, and the revolutionary potential implicit in those Impulses. The leat evidence of this possibility t the extent f0 which comporate forces go to prevent there being genuine politi> tal democracy. The worlds rulers understand implicitly that theirs ‘sa system established to suit the needs ofthe few, not the many, and that the many cannot therefore ever be permitted to question lis and alter corporate rule. Even in the hobbled democracies that do exis, the corporate community works incessantly to see that important iss like the MAI ace never publicly debated. And the business community spend a fortune bankrolling a PR apparatus to convince Americans that this isthe best of ll possible worl. ‘The time to worry about the possiblity of social change for the better, by ths lage, wall be when the corporate community a ddons PR and buying elections, permits a representative medi, and 's comfortable establishing a genuinely egalitarian participatory democracy because it no Fonger fears the power of the many. But there is no reason to think that day will ever come, [Nealiberalism’s loudest message ts that there is no alter. ‘ative to the status quo, and that humanity has reached its high> «est level. Chomsky points out that there have been several other periods designated as the "end of history” in the past In the 1920s and 1950s, for example, LIS. clites claimed thatthe system was ‘working 2né that mass quiescence reflected widespread satistac: tion with che status quo. Events shortly chereafter highlighted the silliness of those belies | suspect that as som a democratic frees record a few tangible victories the blood will return to thei veins, and talk of there being no possible hope for change will go the same route wall previous elite fantasies about their glorious rule being enshrined for a millennium ‘Thenotion that there can be no superior alternative tothe status quo ismorefarfetched today than ever, inthis ra when there are mind-beggling technologies for bettering the human condi- tion, [is tre that it remains unclear how to establish a viable, free, and humane post-apitalist order, and the very notion has autopian airabout it. But every advance in history, from ending slavery and ‘establishing democracy to ending formal colonialism, has had to conquer the notion at some point that it was impossible to do Ibecause it had never been done efore. And as Chomsky hastens 1 point out, organized politcal activism is responsible forthe degree of democracy we have today, for universal adult suffrage, for women's rights, for trade unions, for civil right, for the frees10| Chomsty/ Profit Over People doms we do enjoy. Even ithe nation of »pos-capitalist society Seems unattainable, we do know that human politica activity can fake the world we lve in vastly more humane. And as we get to thar poin, perhaps we wll again be abet think tems of bul ing politcal economy based on principles of cooperation, equal: ity. self-government, and individual freedom. {inal then, the stagale for social change 8 not a hypo: chetieal sue, The curent neoliberal order has generated masive poltal and economic cise from est Asia eastern Europe and Titi America. The quality of life in the developed nations of Furope Japan, and North America is fragile and the societies are in comsierable turmoil, Tremendous upheavals inthe cards for the coming years and decades. There i considerable doubt about the outcome of that upheaval, however, and lite reason to think {wl stomatialy lead to a democratic and humane resolution “That willbe determined by how we, the people, organize respond and act, As Chomsky say; f you act like there is no possibility ‘fchange forthe better, you gurantee that there wil eno change for the beter. The choice is ours, the choice yours, Robert W. McChesney ‘Madison, Wisconsin (October 1998| wild lke to discuss each ofthe topics mentioned in the “itl: neoliberalism and global order. The tssues ate of great human ‘signficanceand not very well understood. To deal wth them sen- sly, we have to begin by separating doctrine from reality, We _ often discover a considerable gap ‘The term ‘neolberalism” suggests 2 system of principles ‘that is both new and based on clasial liberal ideas. Adam Smith Is revered asthe patron saint. The doctrinal system isalso known asthe "Washington consensus," which suggests something about ‘slobal order A closer look shows that the suggestion about global ‘order is fairly accurate, but not the rest. The doctrines are not new, and the basc assumptions are far from those that have animated the liberal cadition since the Enlightenment ‘The Washington Consensus ‘The neoliberal Washington consensus isan aay of mar: lke oriented principles designed by the government of the United States and the international financial institutions that largely dom {nates, and plemented by them in various ways—for the more ‘vulnerable societies, often as stringent stroctral adjustment pro- 1‘20 Chomsky / Profit Over People rams. The basi rls, in biel, are: Hberlize rade and finance, fet markets set price (get prices right’), end inflation "macrocco- omic stability’), privatize. The goverment should "get out ofthe wway'—hence the population too, insofar as the government is democratic, though the conclusion remsins implicit. The decisions of those who impose the “consensus naturally have amajor impact fon global order Some analysts take a much stronger postion. The international busines press has referred to these institutions asthe core of ade facto world government” of a “new imperial ag.” ‘Whether accurate or not, this description serves to remind us thatthe governing institutions are not independent agents but reflect the distribution of power in the larger society. That hasbeen a truism atleast since Adam Smith, who pointed out chat the 'prin- cipal architects’ of policy in England were “merchants and man- facture” who used state power to. serve their own interests, however “grievous the effect on others, including the people of England. Smiths concer was the wealth of nation," but he under- Stood that the “national interest” largely a delusion: within the “ration” there are sharply conflicting interests, and to understand policy and is effects we have to ask where power ies and how it ts exercised, what later came to be called class analysis. “The ‘principal architects" ofthe neoliberal Washington consensus’ are the masters ofthe private economy, mainly huge corporations that control much ofthe international economy and ynave the means to dominate policy formation as well asthe struc: turing of thought and opinion, The United States has a special role {the system for obvious reasons. To borrow the words of dio. matic historian Gerald Haines, whois also senior historian of the CIA, ‘Following World War Il ehe United States assumed, out of selfinterest, responsibility for the welfare ofthe world capitalist System Haines ix concerned with what he calle “the American ication of Brazil" but only sa special ase. And his words ar accu- rate enough “The United States had been the worles major economy {ong before World War Il, and during the war it prospered while Nesliberaliom Global Order a its rivals were severely weakened The sate coordinated wartime ‘economy was 2 las able to overcome the Great Depression. By “the wars end, the United States had half of the worlds wealth and «postion of power without historical precedent. Naturally, the incpal architects of policy intended to use this power to design global system in hei interests gh evel documents describe the primary threat these foneress,pariculaly in Latin Ameria, as “ada and “national {ni egies" that ate responsive 10 popular presures fr imme diate improvement in the Tow living standards ofthe masses" and development for domestic needs. These tendencies confit with the demand fra political and economic climate conducive to pri ‘ate investment," with adequate repatriation of profits and ‘pro: “tection of outraw materals"—our, even if lcated somewhere ee. For sich reasons, the influential planner Geonge Kennan advised “that we shoul ease to ak about vague and unreal objectives such _ashuman rights, the rasng of the living standards, and demoer- ation and st “eal in stright power concep” not “hampered by idealistic slogans” about “alsism and world benection’— ‘though such slogans are fine in fact obligatory, in publ discourse am quoting the secret record, available now in principle though lange unknown tothe general public o the intelectual “community “Radel nationalism’ is intolerable in sell, but alo "poses a broader “threat to stability” another phrase with a spe: {al meaning As Washington prepared to overthrow Guatemala firs democratic government in 1984, State Department oficial “warned that Guatemala had “become an increasing threat tothe _sabiliy of Honduras and El Salvador Ite agraran reform 83 pow ‘ful propaganda weapon, its broad soil program of aiing the Workers and peasants i a victorious stage aprnet the upper classes and lige foreign enterniss has a strong appeal to the populations of Central American neighbors where similar cond tions prevail” “Stability” means security fr "the upper classe nd large foreign enterprises,” whose wellare must be preserved1a Chomy /Prfit Over Peple ‘Such threats tothe “welfare ofthe world eapitalist system" justly error and subversion to restore “stability.” One of the first tasks ofthe CIA was to take partin the large-scale effort to under- imine democracy tn Kay in 1948, when it was feared that elections might come out the wrong way, direct military intervention was planned ifthe subversion filed. These are described as efforts “to Stabilize tly I is even possible to “destabilize” to achieve ‘sta bility” Thus the editor of the quasi-official journal Fin Afjers cxplins that Washington had to "destabilize a freely elected Marx ist government in Chile” because “we were determined to seck sta bility” With a proper education, one can avercome the apparent contradiction. [Nationalist regimes that threaten “stability” are sometimes, called “otten apples that might “spel the bare’ or viruses that right “infect” others, aly in 1948:4s.one example. Twenty-five ‘yeas later, Henry Kissinger desenbed Chile asa "virus that might send the wrong messages about possibilities for social change, infecting others as fara aly, still not “stable” even after years of ‘major CIA programs to subvert Italian democracy. Vines have to bbe destroyed and athers protected from infection. for both task, ‘violence soften the mos efficient means, leaving a gruesome trail ‘of slaughter, teror, torre, and devastation, {In secret postwar planning, each part of the world was assigned its specific tole. Thus the ‘major function” of Southeast ‘Asia was to provide raw materials forthe industrial powers. Arica was to be ‘exploited’ by Europe for ts own recovery. And s0.0n, through the world In Latin America, Washington expected to be able to {implement the Montoe Doctrine, but again ina special sense Pres: ‘dent Wilson, famous fr his idealism and high moral principles, reed in secret that “nits advocacy of the Monroe Doctrine the United States considers its owe interests.” The interests of Latin “Americans are merely “incidental” not our concern, He recognized that “this may seem based on selfishness alone,” but held tha the doctrine “had mo higher or more generous motive” The United "States sought displace its traditional rivals, England and France, tnd establish: regional alliance under its control that wast stand _apart from the world system, in which such arrangements were not “tobe permitted. ‘The “functions of Latin America were clarified ata hemi- ‘spheric conference in February 1945, where Washington proposed fan Economia Charter of dhe Americas” chat would eliminate cx ‘nomic nationalism “inal its forms." Washington planners under: stood that it would not be easy to impose this principle, State [Department documents warned that Latin Americans prefer ‘poli ces designed to bring about a broader distribution of wealth and to raise the standard of living ofthe masses” and are “conwinced "that the first beneficiaries of the development of a country’s fesources shuld be the people of that county.” These ideas are tunacceptable: the “fist bencliciaries” of a country’s resources are US. investors while Latin America flilsits service function with- fut unreasomable concerns about general wellare or "excessive Industrial development’ that might infinge on US, interests, The postion ofthe Llnited States prevailed, though not ‘without problems in the years that followed, addressed by means need not review. ‘As Europe and Japan recovered from wartime devastation, ‘world order shifted to a tripolar pattern. The United States has ‘etained its doninant role though new challenges are arising, includ- ‘ng European and East Asian competition én South America. The ‘most important changes took place twenty-five years ago, when the [Nixon Adminstration dismantled the postwar glabal economic sys- ‘tem, within vhich the United States was, in effect, the worlds ‘banker, 2 roe it could no longer sustain. This unilateral act (to be ‘ture, with thecooperation of other powers) fed toa huge explosion ‘of unregulated capital flows, Sill more striking isthe shift in the “composition ofthe flow of capital. In 1971, 90 percent of interna “ional financial transactions were related tothe real economy—erade ‘orlong-term ivestment-—and 10 percent were speculative. By 1990 the percentagss were reversed, and by 1995 about 95 percent ofthe‘| chomaky Profi Over Peaple vay greter sums were speculative with daily flows regularly ‘exceeding the combined foreign exchange reserves ofthe seven bees instal powers over illona day, and ver shor erm about 80 percent with round trips of 2 week oles. Prominent economists warned over 20 years ago that the process would lead toa low-growth, low-wage economy, and sap- tested fry simple measures that might preven hese worse fruenes But the principal architects of the Washington consensus preferred the predictable effects, including very high profs. These tliects were augmented bythe (short-term) sharp ris nol prices land the telecommunications revolution, both related to the age state sector ofthe US. economy, to which | wil tum “The so-called "Communist states were outside this global system, By the 1970s China was being reintegrate ito it. The Soviet economy began to stagnate inthe 1960s, and the whole rotten edifice collapsed twenty years later. The region is largely returning to sealer tau, Sectors that were part ofthe West ae rejoining it, while mos of the region is returing ois tra sional service roe, largely under the rule of former Communist bburcascrate and other local associates of foreign enterprises, along. swith criminal syndicates The pater is familiar in the third word, sare the outcomes. In Rusia alone, a UNICEF inquiry in 1993 ‘timated that half milion extra deaths» year result from the neoliberal reforms,” which it gencrally supports. Rusia socal policy chief recently estimated that 25 percent ofthe population has fallen below subsistence levels, while the new rulers have sained enormous wealth, again the familiar pattern of Western dependencies ‘Aso familiar ae the elfects of the large-scale violence undertaken to ensure the “welfare ofthe world capitalist system.” A recent Jet conference in San Salvador pointed ut that over time, the “ulture of terror domestcates the expectations of the majority” People may nolonger even thik about‘leratves di ferent from those of the powestu” who describe the outcome a a grand victory fr freedom and democracy Neoliberati lism and Global Order | ‘Theseare some of the contours af the global order within fh the Washington consensus has been forged. Novelty of Nelberalism Let us look more closely at the novelty of neolberalism place o stats. recent publication ofthe Koyal Institute Intemational Affairs in London, with survey articles on major and policies. One is devoted to the economics of develop: “The author, Paul Krugman, isa prominent figure in the fel makes five central points, which bear directly on our question. First, inowedge about economic development is cry lim: For the United States, for example, two-thirds ofthe rise in capita incume is unexplained, Similarly the Asian success sto- have followed paths that surely do not conform to what “eu: ‘orthodoxy says are the key to growth, Krugman points out -recommerds “humility” in policy formation, and cation about generalizations” His second point is that conclusions with litle basis are oastantly pur forth and provide the doctrinal support for policy ‘Washington consensus is a case in point His third point is that the ‘conventional wisdom fs unsta- regularly shifting to something else, perhaps the opposite of latest phase—though its proponents are again fll of conf 25 they impose the new orthodoxy. His fourth point is that in retrospect, it is commonly that the economic development policies did not “serve their goat” and were based on "bad ideas” Lastly, Krugman remarks, itis usually “argued that bad flourish because they are inthe interest of powerful groups thout doubt that happens” ‘That it happens has been a commonplace at least since Smith. And it happens with impressive consistency, even in ich countries, though its the thied world that provides the recon!25| Chomsky /Prafit “Thats the hear ofthe matter The "bad ideas’ may not serve the “expresed goal” but they typically tur out to be very ged ideas for their principal architects, There have been many experiments inveeonomic development in the modern era, with regularities that arc hart or. Ce tat the estes endo do te wel ‘hough the subject of the experiment often take a beating “The first major experiment was carried out two hundred years ago, when the British rulers in India instituted the “Perma- rent Settlement,” which was going to do wondrous things, The results were reviewed by an official commission forty years later, hich concluded that “the settlement fashioned with great care ‘nd deliberation has unfortunasely subjected the lower classes to ‘most grievous oppression leaving misery that “hardy finds a par- allel in the history of commerce,” as “the bones of the cotton ‘weavers are bleaching the plains of Inia” But the éxperiment can hardly be written off as 2 failure “The British governor-general observed that “the Permanent Set- tlement? though a failure in many other respects and in most ‘important essentials, has this great advantage, at least, of having ‘created a vast body of rich landed proprietors deeply interested in the continuance ofthe British Dominion and having complete ‘command aver the mass of the people.” Another advantage was that British investors gained enormous wealth. India also financed “Ao percent of Britains trade delicit while providing a protected mar ket for its manafacturing exports; contract laborers for British pos sessions, replacing earlier slave populations; and the opium that ‘was the staple of Britains exports to China. The opium trade was {imposed on China by force, not the operations of the “ree mae et just as the sacred principles of the market were overlooked when opium was barred from England, Inbred, the fist great experiment wasa "bad dea” for dhe subjects, but not forthe designers and local elites associated with them, This pattern continues until the present: placing profit over ‘people. The consistency af the record is no less impressive than the thetoric hailing the latest showease for democracy and «api beratim and Global Order|at talsm a an “economic miracl’—and what the shetoric regularly ceals Brasil, for example In the highly praised history ofthe ‘Amercanization of Brazil that mentioned, Geralé Haines writes that from 1945 the United States used Brazil a "testing area for modern scientiic methods of industal development based solidly on capitalism” The experiment was carried out with “the ‘est of imtentions” Foreign inesors benette, but planners ‘n- _cerely believed thatthe people of Brazil would benefit x wel. not describe how they benefited a Brazil became the Latin an darling ofthe international business community” under itary rte, the words ofthe business pres, while the World nk reported that two:thids of the population did not have food for normal physical activity, Weiting in 1989, Haines descnbes “Americas Beaiian 2s"erormously successful’ “areal American success story” eas the ‘golden yea” inthe eyes ofthe business world, with tripling over 1988, while industrial wages, already among lowest inthe world, declined another 20 percent the UN Rar Hanon Deseopnyt ranked Bra next wo Albania, When the dis began tohitthe wealthy aswel the ‘modern scientific meth developmeat based solidly on epitalism’ (Haines) suddenly rook ofthe evils of statism and scialism—another quick on tha: takes place when needed To appreciate the achievement, one must remember that has long bea recognized tobe one of the richest counties, word, wth enormous advantages, including halla century Jjminance and tueaye by the Unite Sates with benign intent, once agin jst happens ta serve the profi he few while the mjory of people in misery ‘The most recent examples Mexico. It wat highly praised riz smdent ofthe nate ofthe Washington consensis and das a model for others—as wages collapsed, poverty almost fasta the numberof ilionires, foreign cap din mostly spective, ofr exploitation of cheap labor contol by the brutal ‘democracy’, Also familiar isthe‘2a Chomsky / Profit Orer People Nealiberalirm and Global Order 29 collapse ofthe house of card in December 1994. Today hall the far less sharp than they are today. Two obvious questions ‘population cannot obtain minimum fod requirements, wil the tran who controls the com market remains on the ist of Mexico hallonares, one category in which the country ranks high 1. Which counties developed, and which nt? CChangesin global order have lo made possble to apply 2. Can we identity some operative factors? aversion ofthe Wathinaton consensus at home. For most ofthe USS population, incomes have stagnated or declined for fifteen The wswer to the fist question is ay clear. Outside of ‘years along with working conditions and job security, continuing ‘Western Europe, two major regions developed: the United States through economic recovery, an unprecedented phenomenon ‘nd Japan—that i, the two regions that escaped European colo. Tequaity has reached levels unknown for seventy yeas, far on Japa colonies are another cae though Japan was a bri- beyond other industrial countries. The Unied States asthe high- ealonial owe, didnot rob its colonies but developed them est level of child poverty of any industrial society, fllowed by the shout the sime rate as Japan ive rest of the English-speaking world. So the record continues What about Eastern Europe? In the fifteenth century, hough the familiar Ist of third world maladies. Meanwhile the pe began to divide, the west developing andthe est becom. business press cannot find adjeckivestmuberant enough to desenibe its service area, the original third world. The divisions deep the dazzling” and stupendous profi growth, though admittedly into eatin this century, when Rosia exrcated itel from ‘the rich face problems too: a headline in Business Werk announces ‘system, Despite Stalin's awesome atracitics and the terrible “The Problem Now: What to Do with All That Cash, as ‘sunging tion ofthe war, the Soviet system did undergo significant profits are “overflowing the cofes of Corporate Ameria” and alization. It the “second worl,” not part ofthe third dividends are booming \d—or was, unt 1989, Profits remain “spectacula” through the mid-1996 fig ‘We krow from the internal record that into the 1960s, sre, with remarkable" profit growth forthe world largest cor Western leaders eared that Russi economic growth would inspite poration, though there “one area where global companies are cal nationalism’ elewhere, and that others too might be not expanding much: payrolls” the leading busines monthly adds Sichenby the disease that infected Rusia in 1917, when it became quietly. That exception includes companies that “hada tric Anwiling “wo complement the industrial economies ofthe West year with “booming profits while they cut workforce, shifted 3 prestigiou sty group desebe the problem of Communism qo parttime workers with no benefits or security, and otherwise 41955. The Wester invasion of 1918 was therefore a defensive ‘haved exacly as one would expect with “eapitals clear subju- Action to pote ‘the welfare ofthe word capital sytem, thea. tation of labor for 13 years” to borrow another phrase rom the ned by socl changes within the service areas And 30 it business press. described in respected scholarship “The cold war loge reall the case of Grenada or Gaatemala though the scale was so diferent thatthe conflict took on Countries Devel Snail of isown. eis not surprising that with the victory of the The historical record offers further lessons. Inthe eigh> Amore power antagonist, traditional patterns are being restored teenth century, the diferences between the frst and third worlds Teshould abo come a no surprise hat the Pentagon budget remainsmci atcold warlevelsandisnow increasing, while Washington inter- aed polices hae barely changed, more acts that helps se might int the reales of global order. : Tanning to the question of which countries developed, a: test oe consuon sem enombly clean develope hs srrnacet on freedom from experiments based on tl senate Oy pnt he ene nd Meee aoa pati gurantee of success, but it docs seem to hve been area cond weston How dil Europe and hove who esaped ws contol succeed in developing? Part ofthe ae uinseome clea by radicalyvolting approved re ma {er doctine Tat cancion ols rom England the Eas Asan wet are today, suey inclading the United tate, the mr potectionism from songs. re andar conor recognise tha sae ime, has paved a cent role n economic growth But impact se epoca ono mow af To enon omar ar nds revolution relied on cheap cotton, mainly Fert Unted Sas ws hep cheapand aval not by ma Trost by lmanton ofthe ingens polation and slaw ere were of coune ater coon proce Promina mong Shoo wu nda is resus Howe to England, wile #8 own semper vente indy was destroyed by British protectionism 3 Fase Another ne egypt which took eps toward development arc une a the United Sats but was blocked by Brith case rahe ate explicit grounds chat Britain would not tolerate ver raen development in that region New England incontrast sree afow the path ofthe moter oun, baring cheaper Toc tes by very high anf asian had done to nda ae aaa fhe renter naty of New Ens, wee teuld hove been destroyed economic historians estimate, Hage ale effets on indus growth generally “hcantemporary analog is he energy on which advance snare economies rey. The "golden ageof postwar devon sky Profit Over People _ Order |34 | ment relied on cheap and abundant oil, kept that way largely by threat or use o force. So matters continue. A large part ofthe Pen ‘tagon budget is devoted to keeping Middle Eas oil prices within ‘range that the United States and its energy companies consider appropriate. know of only ane technical study ofthe topic: it con: