Tag Archives: noam chomsky

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Noam Chomsky And Ha-Joon Chang In Conversation On Globalization

There’s a nice interview of Noam Chomsky and Ha-Joon Chang by C.J. Polychroniou of Truthout on the myths of globalization. Of course, as Chomsky and Ha-Joon Chang point out, the debate is not against globalization per se, but globalization under the current rules of the game.

Ha-Joon Chang is direct about his views:

The assumption that globalization benefits everyone is based on mainstream economic theories that assume that workers can be costlessly re-deployed, if international trade or cross-border investments make certain industries unviable.

In this view, if the US signs NAFTA with Mexico, some auto workers in the US may lose their jobs, but they will not lose out, as they can retrain themselves and get jobs in industries that are expanding, thanks to NAFTA, such as software or investment banking.

You will immediately see the absurdity of the argument — how many US auto workers do you know who have retrained themselves as software engineers or investment bankers in the last couple of decades? Typically, ex-auto-workers fired from their jobs have ended up working as night-shift janitors in a warehouse or stacking shelves in supermarkets, drawing much lower wages than before.

He also talks of winners and losers and compensation. Of course, I wish he went further and argued that globalization—under the current rules of the game—-produces not just individual winners and losers and also leads to polarization between nations.

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Noam Chomsky On Neoliberalism: It’s Market For You But State Power For Me

Radio Open Source has a nice intervew of Noam Chomsky by Christopher Lydon where they discuss neoliberalism among other things.  Audio, transcript.

What is neoliberalism?

This question is asked frequently, especially by those who deny that such a thing exists (not the interviewer of course!). In my experience, those who deny it the most are the most neoliberal. At any rate—although I’ll try to describe what it is—it’s not important to get the definition right. Isn’t the creation of the Euro Area without a central government neoliberalism?

In the above interview, Chomksy is faced with this question:

CL: You famously said about neoliberalism that it’s not new, and it’s not liberal. Do you want to define it for people who just landed from Mars?

NC: Well, it’s a kind of a mixture. The rhetoric is free market, individual choice and so on. That’s the rhetoric. The reality is rather different. It’s individualism and market for you but state power for me. So take a look, say, at the actual institutions like the World Trade Organization or NAFTA, what are called the “free trade agreements.” The media calls them “free trade agreements.” They’re not free trade agreements. They’re investor rights agreements. They’re highly protectionist. They provide unprecedented protection backed by state power for major conglomerates like the pharmaceutical industry, media conglomerates, others.

That’s quite accurate, although Chomsky didn’t take the effort to define it but just described it as it is.

A lot of people try to distinguish neoliberalism and the New Consensus of economics. It’s certainly true that you can find examples of economists who believe in neoclassical economics or the new consensus or whatever you call it but don’t exactly advocate policies of neoliberalism. But, I’ll just categorize them as being deceived by economists. Orthodox economics is neoliberalism, except for minor differences. The former is an academic subject built to defend the latter, which is a political ideology. New Consesus Economics exists in academia because neoliberals and conservatives in political positions award them. Neoliberals then quote their research to defend policies.

Neoliberalism is based on three extremely damaging ideas of neoclassical economics: free trade, tight fiscal policy and the production function.

After the economic and financial crisis, it’s true that economists have conceded that fiscal policy has strong positive effects. Yet, it’s situational in most occasions. When a neoliberal party is in power, they might advocate fiscal expansion, at least make it look like they’re doing it. Also, although they sound as if they are unorthodox about it, they’ll rarely concede that they had a different position before the crisis. They’ll make it look like they have always believed their current positions since their undergraduate days. They’ll also pander to people who might want to hear otherwise. So they have different public and private positions. In other words, doublespeak about fiscal policy is the hallmark of a neoliberal.

But although economists have shifted their positions on fiscal policy—at least when it suits them—their voice about free trade has grown stronger. It is here that Chomsky’s point about “market for you but state power for me” appears the most illuminating. Rich nations are rich due to their success in international trade and they try to impose it on poor nations by hook or crook. This requires the cooperation of governments because agreements are negotiated by governments. Poor nations generally are sceptical about economists’ narratives but are arm-twisted by governments of rich nations and there is an establishment around the government which pushes such things both directly and indirectly by controlling the narrative (or control of opinion and manufacturing consent, as Chomsky might say).

Another aspect about neoliberalism is the politics around wages. As Thomas Palley says,

With regard to income distribution, neoliberalism asserts that factors of production—labor and capital—get paid what they are worth. This is accomplished through the supply and demand process, whereby payment depends on a factor’s relative scarcity (supply) and its productivity (which affects demand).

The theoretical basis for this is the narrative build in neoclassical economics using the notion of a production function and marginalism. Reality check: In the late 70s and early 80s, orthodox economists promoted government policies of high interest rates and this created unemployment and led to drastic weakening of labour unions. They were also weakened by laws. Again, markets for you but state power for me.

To quote Chomsky again from the interview,

[neoliberalism’s] crucial principle is undermining mechanisms of social solidarity and mutual support and popular engagement in determining policy.

Noam Chomsky On His New Book, Neoliberalism And More In An Interview With Amy Goodman

Recently, Amy Goodman of Democracy Now interviewed Noam Chomsky with an audience at Cambridge, Massachusetts. Chomsky has a new book, Requiem For The American Dream: The 10 Principles Of Concentration Of Wealth & Power.

The ten principles are:

  1. Reducing democracy
  2. Shaping ideology
  3. Redesigning the economy
  4. Shift the burden on the poor and the middle classes
  5. Attack the solidarity of the people
  6. Let special interests run the regulators
  7. Engineer election results
  8. Use fear and power of the state to keep the rabble in line
  9. Manufacture consent
  10. Marginalize the population

I loved the line about neoliberalism:

So, the neoliberal programs were basically taking off right around 1980. It escalated—started a little with the late Carter, escalated under Reagan, went on more under Clinton and so on. 2007 was the peak of supposed success. This is right before the crash. A lot of euphoria among economists, political analysts about the great achievements of neoclassical economics, of the great moderation, you know, the neoliberal programs, a dismantling of regulations—all these great successes, 2007. What was happening to American working people at that time? In 2007, wages, real wages, were lower than they had been in 1979 when the experiment took off. In fact, for the majority of the population, it’s a period of stagnation or decline. Benefits have declined.

You can read more on the same from the transcript in the website or see the video.

Some Interesting Links On Politics

John Pilger recently wrote an excellent article, Getting Julian Assange: An Untold Story, about Julian Assange on his website. The article was endorsed by Assange himself on Twitter. It tells the story about how Julian Assange has been made a political prisoner. The article was written in response to the closing of an investigation against him by Sweden. Although this is positive, the United Kingdom police has declared that it will still arrest Assange if he steps out of the Ecuadorian embassy in London.

Chelsea Manning was released from prison on May 17, after Barack Obama reduced her punishment. Glenn Greenwald put up a fantastic article on The Intercept telling us how she is one of the biggest heroes of our generation. Greenwald says:

Ever since Chelsea Manning was revealed as the whistleblower responsible for one of the most important journalistic archives in history, her heroism has been manifest. She was the classic leaker of conscience, someone who went at the age of 20 to fight in the Iraq War believing it was noble, only to discover the dark reality not only of that war but of the U.S. government’s actions in the world generally: war crimes, indiscriminate slaughter, complicity with high-level official corruption, and systematic deceit of the public.

The recent terrorist attack in Manchester has again raised the question about what the root causes of terrorism are. There was a conversation last year between Edward Snowden, Noam Chomsky and Glenn Greenwald on this. The discussion—although titled, A Discussion On Privacy—has an interesting digression on terrorism. The YouTube video with the link to that part of the discussion is here. It’s far from the lazy explanation usually given, i.e., religion.

The Soon-To-Be Conventional Wisdom: “Fiscal Policy Is Not So Good”

Donald Trump is the President-elect of the United States. It hardly needs to be mentioned how bad his campaign was. Glenn Greenwald rightly called him an abusive, misogynistic, bigoted, scary, lawless authoritarian.

However on the economic scale, Trump’s plans seem to be to the left of Hillary Clinton. Trump wants to pump the prime, meaning do a fiscal expansion and also put tariffs.

Trump is yet to take his office, but the narrative change about fiscal policy has already started. The important thing to remember is that this is done by economists who might otherwise not object to it – at least the fiscal stimulus.

In other words, just to oppose Trump, economists are on the path to build a conventional wisdom that fiscal policy is neutral or impotent or even destructive if it’s expansionary (as in higher expenditure and/or cuts in tax rates).

Example: Lawrence Summers’ article A Badly Designed US stimulus Will Only Hurt The Working Class for Financial Times. While obviously unable to deny the importance of fiscal expansion (because it works), Summers says:

I am optimistic regarding the efficacy of fiscal expansion. But any responsible economist has to recognise that, past a point, it can lead to some combination of excessive foreign borrowing, inflation and even financial crisis. As Dornbusch showed, in emerging markets this can happen quite quickly. In the US the process would take longer.

Moreover, he also goes on to argue that China is not gaining unfair advantage by keeping its exchange rate at a highly devalued level. Notice the change in tone in Summers’ language. From writing about how the constraints are far, Summers is now saying that fiscal policy is not that good. Surely he’s using a language to hedge himself —as any economist should do—but he’s clearly not saying that, “Fiscal expansion will be good for the US economy. Trump should rather design taxes to be progressive” but instead, giving innuendos that fiscal policy is not that good.

Even a non-progressive system of taxation or even tax cuts for the wealthy can be expansionary. It raises inequality but the size of the pie is still rising. To me it’s still better than a neutral fiscal stance. But Summers’ language is such that it is worse.

Obviously no economist will jump overnight to shifting his/her position to saying, “fiscal policy is impotent or worse expansion destructive”, after the elections, from a position, “fiscal policy should be expansionary” before the elections. So conventional wisdom will be created slowly over the next few months – slowly manufacturing constent, borrowing the phrase from Noam Chomsky.

Is my reading of Summers wrong? Time will tell! But why didn’t Summers ever complain about the non-progressive system of taxation earlier?

Noam Chomsky On Free Trade Agreements

Julian Assange is a probably the third most important figure in the current US elections. I came across a video from earlier this year in which Noam Chomsky defends Julian Assange.

“Free trade” puts a tight reign on the rise in output of economies, takes away a sovereignty from nations and is anti-democratic. Not only that, from the very start, free trade agreements are reached in the most undemocratic ways. Around 2/3rd of this nine-minute video, Chomsky explains how this is so. First, the documents are secretive. Then they are handed over to governments for a yes/no vote, which Chomsky says means they should vote “yes”.

It’s also one of the most important speeches on politics and power.

julian-assange-with-noam-chomsky

Julian Assange with Noam Chomsky. Source: WikiLeaks

Noam Chomsky On Neoliberalism

I have been looking at Noam Chomsky’s views on neoliberalism and I found a documentary Neo-Liberalism Ensnares Democracy by Richard Brouillette which I thought I should mention.

Noam Chomsky on Neoliberalism

Noam Chomsky in ‘Neo-Liberalism Ensnares Democracy’
Picture from the documentary’s site.

Chomsky argues how neoliberalism is not really “neo” and that it is what created the third world. He goes on to argue how this happens: In his language, free capital flows creates a virtual parliament of investors and lenders who carry out moment by moment referendum on government policies. Governments hence face a dual constituency and that neoliberalism is power-play.

The documentary length is 160 minutes (2h 40m). Chomsky appears at 23:06, 57:20, 1:10:22, 1:46:38, and 2:33:18.