Acclaimed philosopher and activist Noam Chomsky is Institute Professor Emeritus of Linguistics at the Massachusetts Institute of Technology. He shared his perspectives on international affairs, economics and other themes in an interview conducted at his office in Boston on September 14, 2010.
Keane Bhatt: Your new book "Hopes and Prospects" begins with the story of Haiti, and that’s what we discussed last, so it’s an appropriate place to start the interview. For hundreds of thousands of people, decent, hurricane-resistant housing is a chimera. Despite the billions given to relief agencies, Carrefour camp-dwellers pay a monthly "tax" just to stay there; 1.3 million people are still internally displaced. An estimated 8,000 displaced persons have been forcibly evicted. If there were a functioning, democratic Haitian state, it could use eminent domain on behalf of the affected population to secure land for permanent housing. But in the upcoming elections that the U.S. is financing, the largest political party, Fanmi Lavalas, has been excluded along with 13 others, and there hasn't been a comprehensive initiative to provide internally displaced persons with the ID cards required to vote.
You've talked about the contempt for democracy shown before – funding [World Bank official and former Duvalier minister] Marc Bazin's candidacy against Aristide in 1990, punishing Gaza for voting the wrong way, funding opposition parties throughout Latin America – but now it seems that pretenses for supporting even procedural democracy can be abandoned. The Honduran elections under the coup regime were accepted too. Are we seeing a new trend of greater brazenness and extremism?
Noam Chomsky: I think it’s always been true. Democracy is a danger to any powerful group. Take, say, the United States – formally maybe one of the most advanced democracies in the world. And one of the earliest, in fact – in the 18th century, it was way in the lead. The founding fathers were very concerned about the danger of democracy and spoke quite openly about the need to construct the democratic institutions so that threat would be contained. That’s why the Senate has so much more power than the House, to mention just one example.
KB: But it seems that in foreign policy, there used to be a greater tolerance of formal, procedural democracy. Now, as shown by Honduras and Haiti, there's not even an effort to maintain the pretense.
NC: The scholarly literature is pretty straight on this. With regards to Latin America, but in general it's true worldwide, the main scholarship on "democracy promotion" is by Thomas Carothers. He's a neo-Reaganite, who believes that Reagan was kind of a Wilsonian trying to bring democracy, and he was in the State Department in the Reagan years working on democracy-enhancement programs. And he’s an honest scholar. And he's done studies right up to practically the present, and I won't go through the details, but his conclusion is correct and predictable. He says that the United States supports democracy if and only if it conforms to social and economic objectives. And since he's a real loyalist, he regards this as kind of a paradox.
KB: A schizophrenia …
NC: Yeah it’s schizophrenia. He calls every leader "schizophrenic." Well, the leaders are just perfectly realistic.
KB: In "Failed States," you mention seven solutions for dealing with international problems. The third one is, "Let the UN take the lead in international crises." While I see the general wisdom in this, particularly with regard to Iraq and Iran, how does this apply to Haiti, which has been under UN MINUSTAH occupation since the 2004 coup?
NC: First of all, I was actually reporting public opinion there in those passages. Public opinion said, "We think the UN, not the U.S., should take the lead in international crises," and I think there's some legitimacy to that, but we have to recognize – and I probably discussed it in the same context – that the UN is not an independent agent. The UN is an agent of the states that constitute it, and more specifically, of the five veto-holding states in the Security Council, and even more specifically than that, of the United States. The UN can go as far as the U.S. will allow, and no further. And it's bound by conditions that the powerful states, which means mostly the U.S., impose. Haiti's a case in point. But there are plenty of others. Take, say, the sanctions on Iraq under Clinton and until the invasion. They’re called UN sanctions and they were administered through the UN, but if you look at them more closely, it turns out they were U.S. sanctions. So yeah, the flaw you mention is right in here. But that’s inherent in the UN structure. I mean, the UN to some extent diffuses U.S. power. Therefore it's less direct an agency of the United States than the U.S. Army is. But still, it can't escape the distribution of power in the world.
KB: And in the most vulnerable cases, places that can't assert themselves, like Haiti, there’s an even greater expression of that.
NC: Who’s going to object? England isn't going to object, France joins the United States. In fact, France is one of the worst torturers of Haiti both historically and today. China and Russia aren't going to get involved. Okay, so it's the U.S.
KB: Back in 1994, journalist Allan Nairn reported the sentiments of Major Louis Kernisan of the U.S. Defense Intelligence Agency, who said "You're going to end up dealing with the same folks as before, the five families that run the country, the military and the bourgeoisie … it's not going to be the slum guy from Cite Soleil." This is an example of what you've discussed: honest planners using Marxian analysis. Elites and strategists seem to have a good grasp of social and international relations, but with the values reversed. You've said you don't particularly care much for Marx. Does this include the analytical framework that planners and elites employ?
NC: It’s not quite accurate; I don't say I don't care much about him. I wouldn't call myself a Marxist, I don't think anybody should be any kind of an "-ist." As far as Marx's analysis of capitalism, there's a lot of very useful ideas in it, but we have to remember – and he would've been the first to say – he's developing an abstract model of 19th century capitalism. It's abstract and it's changed. As far as his prescriptions for the post-capitalist future were concerned, he really didn't have much to say. And with some justice, I think. On the other hand, I wouldn’t say that I don't care much for Marx; he offered lots of insights into how society works, and he was an extremely good analyst of the current events of the day. I think he would take it for granted that elites are basically Marxist – they believe in class analysis, they believe in class struggle, and in a really business-run society like the United States, the business elites are deeply committed to class struggle and are engaged in it all the time. And they understand. They’re instinctive Marxists; they don't have to read it.
KB: You’ve talked about how you often rely on the elite business press for an accurate portrayal of events. As the reasoning goes, investors need to have a clearer understanding of world affairs and not receive propaganda so as to profit from political and economic developments. What then is the role of The Economist, which one can't read without seeing serious misrepresentations on a seemingly constant basis within its reporting? What role is it serving, and why is its reporting so different from that of, say, the Financial Times or the Wall Street Journal?
NC: I used to read The Economist regularly, but haven't done so for some time. One reason is what you indicate. Another is that they do not provide much basis for what they assert, not even the name of the writers, so at least one can have some judgment of credibility.
KB: You often bring up and advocate Adam Smith, despite acknowledging his shortcomings. For example, you've pointed out the implausibility of even perfect markets leading to perfect equality. Is it partly a strategic effort to deprive the Right of its hero, who decries the division of labor, imperialism and business control over state policy?
NC: Not at all. It's because I think he had a lot to say that is important, once we eliminate the mythology that has been created about him. For example, his critique of division of labor on classical Enlightenment grounds. Or his recognition that state policy is designed by those who dominate the economy, for their own interests, even if the effect on others is "grievous," including the people of England, but most importantly the victims of "the savage injustice of the Europeans," referring primarily to Britain's crimes in India, his main concern as an honest person. His remarks were about the England of his day, but they generalize. Or even his one use of the phrase "invisible hand" in "Wealth of Nations," in arguing (not very persuasively) that it would protect England from the ravages of what we call "neoliberalism" – Ricardo did much the same. Or his call for banking regulation in reaction to a major financial collapse. And much more. That's quite aside from his interesting work as a moral philosopher.
KB: I talked with an older, honest investor recently, a multi-millionaire. He discussed how, as a social norm, his class had relieved itself of any allegiance or loyalty, in contrast to the Eisenhower-era capitalists in the U.S. and East Asian elites today. If this country were to institute higher marginal tax rates – even if well below the 90 percent marginal tax rates under Eisenhower – he said he'd simply shut down what remains of his productive assets in the U.S., put thousands of his workers out of a job, change his citizenship to the UAE, and live there. In fact, after he mentioned Obama's "socialist" tendencies, he was contemplating doing just that. This untethered, transnational mentality that's now predominant is a refutation of Smith and Ricardo's notion that the capitalist class would prefer to support its own country. How does the general population combat this threat, which now extends to physically leaving the U.S. to prevent even income taxes from being levied? You've spoken about worker takeover and management as a solution. What else is in the arsenal of the general population, working through organized labor, the government or other means?
NC: What he’s describing is honest and accurate. In fact, the capitalist class in the '50s was sort of part of a social contract. It was part of the tenor of the times. During the Depression and the War, there was a real radicalization of the population -not just here but all over the world. And the post-War system was designed to reflect that. That's why you get welfare states developing in the '50s – a lot of popular pressure you couldn't escape. Changes have taken place since then and there's actually been a return to an extreme form of predatory capitalism, which means that not only will I close my business or move if I don't like what you do, but something else that's been happening, which is interesting. In the financial institutions, which by now dominate the economic system, the management level repeatedly acts in ways which will destroy their own institutions if it'll increase their benefits, and benefits are not small. You know, you take a look at the revenue of, say, Goldman Sachs – a very high percentage of it just goes to payment of management and bonuses. There was a time traditionally – say, GM in the 1950s – it was trying to develop a consumer base that would be loyal and lasting and they were thinking in terms of an institution that would remain and grow and thrive in the society. By now, a lot of the investment firms – bankers, hedge funds – are perfectly happy to destroy what they're in and come out with huge, tremendous benefits. That's a new stage of capitalism.
Regarding your question on strategies: among less radical options, using the ballot box, as was done in the 1930s and 1960s – to be sure, on a wave of large-scale popular activism. With good effect, leaving a legacy that can be carried forward. And there are many other options, depending on circumstances and level of organization and popular understanding and commitment. To bring that about is always the fundamental step.
KB: In "Hopes and Prospects" you discussed the hypocrisy at the beginning of the financial crisis: IMF proposals for the Third World were to pay back debt to core countries, raise interest rates, privatize and generally engage in pro-cyclical policies. For the U.S., the accepted prescriptions were: stimulate economy, forget about debt, nationalize industry. But since then, a very powerful current emerged and changed the policy debate – now it's about deficit reduction and austerity at home, which the Obama administration is actively fueling with its deficit commission and talk of the federal government's need to tighten its belt. Is this shift another indicator of what Simon Johnson talks about, namely the similarities between the U.S. and emerging-market oligarchies? Is the U.S. "becoming a banana republic," as he puts it? Your book mentions Citigroup's buoyant analysis of plutonomies, in which the economy functions in all respects in the interests of its richest 10 percent, largely oblivious of the needs of everyone else. Is this what’s taking place?
NC: It’s a development that’s been going on, though even more so in Europe. The United States in many ways resembles a Third World country – far more elevated, but it has many of those structural characteristics: the extreme inequality of wealth, the deterioration of infrastructure because it only serves poor people, predatory operations, huge corruption, and so on. These are all pretty typical of Third World countries, not countries that are trying to develop a sound future economy. Let's just steal what we can and go away. Regarding Citigroup's analysis, it's certainly more so than before. It's never been untrue, but certainly more so now. Take the period that was moving toward social democracy of some kind – say the '50s and the '60s – that's when the technology that you're using right now was developed. And it was developed at taxpayer expense, but there was no particular thought that the taxpayer would benefit from it. People who would benefit from it were IBM, Microsoft, and so on. The corporate sector wanted the population of the country to pay the costs, take the risks. And it was done totally fraudulently, not so that you could have a computer. People thought they were defending themselves from the Russians or something. But planners understood.
KB: They were building the base for the economy of the future.
NC: They were building the economy of the future, from which they are going to benefit. And maybe incidentally others will, but that’s only incidental. IBM's an interesting case. So IBM was a big industry, with punch cards and everything, but in the '50s, it essentially learned how to shift from punch cards to effectively functioning digital computers at government labs. Actually right here, down below where we’re sitting in Building 20, where a lot of this was going on. And by the early '60s, IBM had gained enough capacity so it could build its own computer. They had the world's fastest computer: the Stretch.
KB: And the U.S. government procured it.
NC: The government had to buy it, because nobody would buy it. It was way out of sight. And procurement is a major technique of state subsidy, a fact that has been well-studied in the professional literature. And this goes on; it's really not until about the '80s – thirty years after all of this – that IBM could really sell PCs and make a lot of money, and Microsoft could spin off and so on. But what's happening now is quite interesting and it's being discussed by the leaders of industry. The Alfred P. Sloan Foundation has done some studies in which they point out that, the way they put it, "what’s good for General Motors is good for the country" isn’t true anymore. Because by now – and IBM is their example – they discuss the fact, or maybe the Wall Street Journal reports the fact, that IBM is not only offshoring where it can to cheaper labor, but is pretty much compelling its domestic workforce to move to India [Project Match]. So we don't want you here, go live like a third-world person in India. We'll pay you less and you do the same thing. So here's a company that was substantially built by the American taxpayer, became super-rich, and their responsibility to the country is not to just offshore jobs, but send their own workers to India. I think about 75 percent of the IBM workforce is overseas.
KB: Going back to the issue of IMF prescriptions, Olivier Blanchard, IMF chief economist, argued for a higher target of inflation, of around 4 percent. The Wall Street Journal reported that, "Mr. Blanchard says the IMF should lead the rethinking necessary after the worst recession since World War II." What, if anything, can IMF approval of a more expansionary monetary policy mean for the developing world, which often has to obey the IMF, and can this signal a real shift within the IMF? Or is it just temporary maneuvering?
NC: There have been some changes in the IMF, but nowhere near enough, I think. The IMF economists were doubtless shaken by the extreme failures of their prescriptions over many years, and by the collapse of the intellectual edifice of economic theory on which they were relying.
KB: In characterizing the U.S. financial crisis, you say that "markets are inefficient … They can be controlled by some degree of regulation, but that was dismantled under religious fanaticism about efficient markets, which lacked empirical support and theoretical basis; it was just based on religious fanaticism." Was this "irrational fundamentalism" the major factor in the development of the current world economic crisis? I ask because in "Hopes and Prospects," you direct readers wishing to understand the crisis's roots to Foster and Magdoff's "The Great Financial Crisis." Their thesis is that due to long-run stagnation tendencies in the real economy, "profits were increasingly directed away from investment in the expansion of productive capacity and toward financial speculation." For Foster and Magdoff, the religious fanaticism was politically expedient and helped feed a series of massive financial bub