"Control of Our Lives"
Noam Chomsky Lecture
February 26, 2000
Kiva Auditorium
Albuquerque, New Mexico
It�s no exaggeration to say that the effort to take control of our lives
is a dominant
theme of world history, with a crescendo in the last several centuries of
dramatic
changes in human relations and world order. The topic is far too large to
try to discuss
here. I�ll have to cut it down sharply. First I�ll keep only to current
manifestations and
some of the roots with an eye toward what might lie ahead. Also, I�ll keep
to the global
arena, which is by no means the only domain in which these issues arise.
In the past year, the global issues have been framed largely in terms of
the notion of
sovereignty, that is, the right of political entities to follow their own
course, which may
be benign or may be ugly, and to do so free from external interference. In
the real
world, that means interference by highly concentrated power, with its
major center in
the United States. This concentrated global power is called by various
terms,
depending on which aspect of sovereignty and freedom one has in mind. So
sometimes it�s called the Washington consensus, or the Wall
Streeet/Treasury
complex, or NATO, or the international economic bureaucracy (the World
Trade
Organization, World Bank, and IMF), or G-7 (the rich, Western, industrial
countries) or
G-3 or, more accurately, usually, G-1. From a more fundamental
perspective, though it
takes longer to say, we could describe it as an array of megacorporations,
often
linked to one another by strategic alliances, administering a global
economy which is,
in fact, a kind of corporate mercantilism tending toward oligopoly in most
sectors,
heavily reliant on state power to socialize risk and cost and to subdue
recalcitrant
elements.
In the past year, the issues of sovereignty have risen in two domains. One
has to do
with the sovereign right to be secure from military intervention. Here the
questions
arise in a world order based on sovereign states. Secondly, in the matter
of sovereign
rights in the face of socio-economic intervention. Here the questions
arise in a world
that�s dominated by multinational corporations, especially financial
institutions in
recent years and the whole framework that�s been constructed to serve
their
interests--for example, the issues that arose dramatically in Seattle last
November.
The first category, military intervention, was a very lively topic last
year. Two cases
gained particular significance, attention, prominence--East Timor and
Kosovo, in the
opposite order, which is an interesting fact because that reverses both
the timing and
the significance. There�s a lot to say about these matters and a lot of
new information
about them that I would like to discuss but, reluctantly, I�m going to
drop that topic. If
you�d like to bring it up later in questions, fine. I�ll be happy to talk
about it. It�s a big,
important and instructive topic, but time is short. So let me turn to the
second topic,
and that�s the one I�ll keep to (still cutting things down)--the question
of sovereignty,
freedom, human rights, the kind of questions that arise in the
socio-economic arena.
That�s the subpart of this whole topic I want to keep to.
First a general comment--sovereignty is no value in itself. It�s only a
value insofar as it
relates to freedom and rights, either enhancing them or diminishing them.
I want to
take for granted something that may seem obvious, but is actually
controversial--namely that, in speaking of freedom and rights, we have in
mind human
beings; that is, persons of flesh and blood, not abstract political and
legal
constructions like corporations, or states, or capital. If these entities
have any rights at
all, which is questionable, they should be derivative from the rights of
people. That�s
the core classical liberal doctrine. It�s also the guiding principle for
popular struggles
for centuries, but it�s very strongly opposed. It�s opposed by official
doctrine. It�s
opposed by sectors of wealth and privilege, and that�s true both in the
political and the
socio-economic realms. I�ll ask you to keep that question on the shelf for
a few
minutes and say a couple of words of background.
In the political realm, the familiar slogan is �popular sovereignty in a
government of,
by, and for the people,� but the operative framework is quite different.
The operative
framework is that the people are considered a dangerous enemy. They have
to be
controlled for their own good. These issues go back centuries, back to the
earliest
modern democratic revolutions in 17th century England and in the North
American
colonies a century later. In both cases, the democrats were defeated--not
completely
and certainly not permanently, by any means. In 17th century England, much
of the
population did not want to be ruled by either king or parliament. Recall
that those were
the two contestants in the standard version of the civil war but, like
most civil wars, a
good part of the population wanted neither of them. As their pamphlets put
it, they
wanted to be governed "by countrymen like ourselves, that know our wants,"
not by
"knights and gentlemen [that] make us laws, that are chosen for fear and
do but
oppress us, and do not know the people's sores.�
These same ideas animated the rebellious farmers of the colonies a century
later, but
the constitutional system was designed quite differently. It was designed
to block that
heresy. The goal was �to protect the minority of the opulent from the
majority" and to
ensure that "the country is governed by those who own it.� Those are the
words of the
leading framer, James Madison, and the president of the Continental
Congress and
first chief justice of the Supreme Court, John Jay. Their conception
prevailed, but the
conflicts continued. They continually take new forms; they�re alive right
now. However,
elite doctrine remains essentially unchanged.
Fast forwarding to the 20th century, (I�ll keep here to the sort of
liberal, progressive
side of the spectrum--it�s harsher on the other side) the population are
regarded as
"ignorant and meddlesome outsiders" whose role is to be "spectators," not
"participants," apart from periodic opportunities to choose among the
representatives
of private power. These are what are called elections. In elections,
public opinion is
considered essentially irrelevant, if it conflicts with the demands of the
minority of the
opulent who own the country. We�re seeing that right now, in fact.
One striking example (there are many) has to do with the international
economic
order--what are called trade agreements. The general population, as polls
make very
clear, is strongly opposed to most of what�s going on, but the issues
don�t arise in the
election. It�s not an issue in the elections because the centers of power,
the minority of
the opulent, are unified in support of instituting a particular kind of
socio-economic
order. So therefore the issue doesn�t arise. The things that are discussed
are things
that they don�t much care about, like questions of character or questions
of reform,
which they know aren�t going to be implemented. So that�s what�s
discussed, not what
people care about. And that�s pretty typical, and it makes sense on the
assumption
that the role of the public, as the ignorant and meddlesome outsiders, is
just to be
spectators. If the general public, as it often does, seeks to organize and
enter the
political arena, to participate, to press its own concerns, that�s a
problem. It�s not
democracy; it�s what�s �a crisis of democracy" that has to be overcome.
Again, I�m quoting. These are all quotes from the liberal, progressive
side of the
modern spectrum, but the principles are quite widely held, and the past 25
years have
been one of those regular periods when a major campaign has been conducted
to try
to overcome the perceived crisis of democracy and to reduce the public to
their
proper role of apathetic and passive and obedient spectators. That�s the
political
realm.
In the socio-economic realm there�s something similar. There have been
parallel,
closely-related conflicts for a long, long time. In the early days of the
industrial
revolution in the United States, in New England 150 years ago, there was a
very lively,
independent labor press run by young women from the farms or artisans in
the towns.
They condemned the �degradation and subordination� of the newly emerging
industrial system which compelled people to rent themselves to survive.
It�s worth
remembering, and hard to remember, perhaps, that wage labor was considered
not
very different from chattel slavery at that time, not only by the workers
in the mills, but
right through much of the mainstream--for example, Abraham Lincoln, or the
Republican Party, even editorials in the New York Times (that they might
like to
forget). Working people opposed the return to what they called
�monarchical
principles� in the industrial system, and they demanded that those who
work in the
mills should own them--the spirit of republicanism. They denounced what
they called
the �new spirit of the age--gain wealth forgetting all but self,� a
demeaning and
degrading vision of human life that has to be driven into people�s minds
by immense
effort which, in fact, has been going on over centuries.
In the 20th century, the literature of the public relations industry
provides a very rich
and instructive store of instruction on how to instill the �new spirit of
the age� by
creating artificial wants, or by (I�m quoting) �regimenting the public
mind just as an
army regiments the bodies of its soldiers," and inducing a "philosophy of
futility" and
lack of purpose in life, by concentrating human attention on "the more
superficial
things that comprise much of fashionable consumption.� If that can be
done, then
people will accept the meaningless and subordinate lives that are
appropriate for
them and they�ll forget subversive ideas about taking control of their own
lives.
This is a major social engineering project. It�s been going on for
centuries, but it
became intense and enormous in the last century. There are a lot of ways
of doing it.
Some are the kind I just indicated, which are too familiar to illustrate.
Others are to
undermine security, and here, too, there are a number of ways. One way of
undermining security is the threat of job transfer. One of the major
consequences and,
assuming rationality, one has to assume one of the major purposes of the
mislabeled
�trade agreements� (stress �mislabeled,� because they�re not about free
trade; they
have strong anti-market elements of a variety of kinds, and they�re
certainly not
agreements, at least if people matter, since people are mostly opposed),
one
consequence of these arrangements is to facilitate the threat--it doesn�t
have to be
reality, sometimes it is, but just the threat--of job transfer, which is a
good way of
inducing discipline by undermining security.
Another device, pardon the technical jargon, is to promote what�s called
�labor market
flexibility.� Let me quote the World Bank, who put the matter pretty
plainly. They said,
�Increasing labor market flexibility -- despite the bad name it has
acquired as a
euphemism for pushing wages down and workers out� (which is just what it
is) "is
essential in all the regions of the world� The most important reforms
involve lifting
constraints on labor mobility and wage flexibility, as well as breaking
the ties between
social services and labor contracts.� That means cutting the benefits and
the rights
that have been won in generations of bitter struggle.
When they talk about lifting constraints on wage flexibility, they mean
flexibility down,
not flexibility up. The talk about labor mobility doesn�t mean the right
of people to
move anywhere they want, as has been required by free market theory ever
since
Adam Smith, but rather the right to fire employees at will. And, under the
current
investor-based version of globalization, capital and corporations must be
free to
move, but not people, because their rights are secondary, incidental.
These �essential reforms,� as the World Bank calls them, are imposed on
much of the
world as conditionalities for ratification by the World Bank and the IMF.
They�re
introduced into the rich, industrial countries by other means, and they�ve
been
effective. Alan Greenspan testified before Congress that �greater worker
insecurity�
was an important factor in what�s called the �fairy-tale economy.� It
keeps inflation
down because workers are afraid to ask for wages and benefits. They�re
insecure.
And that shows up pretty clearly in the statistical record. In the past 25
years, this
period of roll-back, of the crisis of democracy, wages have stagnated or
declined for
the majority of the workforce, for nonsupervisory workers, and working
hours have
increased very sharply--they�ve become the highest in the industrial
world--and this is
noticed, of course, by the business press, which describes it as �a
welcome
development of transcendent importance," with working people compelled to
abandon their 'luxurious lifestyles," while corporate profits are
"dazzling" and
"stupendous� (Wall Street Journal, Business Week, and Fortune).
In the dependencies, less delicate measures are available. One of them is
the
so-called �debt crisis,� which is largely traceable to World Bank/IMF
policy programs
of the 1970s, and to the fact that the third world rich are, for the most
part, exempt
from social obligations. That�s dramatically true in Latin America, and
one of its major
problems. The �debt crisis� is something, but we should be careful to
notice what it is.
It�s not a simple economic fact, by any means. It�s, to a large extent, an
ideological
construct. What�s called the �debt� could be largely overcome in a number
of very
elementary ways.
One way to overcome it would be by resorting to the capitalist principle
that borrowers
have to pay and lenders take the risk. So, for example, if you lend me
money and I
send it to my bank in Zurich and buy a Mercedes, and you come back and ask
me for
the money, I�m not supposed to be allowed to say, �I�m sorry. I don�t have
it. Take it
from my neighbor.� And if you don�t want to take the risk of the loan,
you�re not
supposed to be able to say "my neighbor will have to pay for it."
That�s the way it works in the international arena, however. That�s what
the �debt
crisis� is. The debt is not to be paid by the people who borrowed
it--military dictators,
their cronies, the rich and privileged in highly authoritarian societies
that we�ve
supported--they don�t have to pay. So, take Indonesia, where the current
debt is about
140% of Gross Domestic Product (GDP). The money was taken by the military
dictatorship and their friends and probably held by maybe a couple hundred
people at
the outside, but it has to be paid by the population under harsh austerity
measures.
And the lenders are mostly protected from risk. They get what amounts to
free risk
insurance by various devices of socializing costs, transferring them to
Northern
taxpayers. It�s one of the functions of the IMF.
Similarly in Latin America, the huge Latin American debt is not all that
much different
from capital flight from Latin America, which suggests a simple way to
deal with the
debt (or a large part of it), if anyone were to believe in the capitalist
principle, which is,
of course, unacceptable. It puts the burden on the wrong people, on the
minority of the
opulent.
There are other ways, also, of eliminating the debt, and they�re
recognized, and they
also reveal the extent to which it is an ideological construct. One other
method, apart
from the capitalist principle, is the principle of international law that
was introduced by
the United States when it, what�s called in the history books, �liberated�
Cuba,
meaning conquered Cuba to prevent it from liberating itself from Spain in
1898.
Having done that, the United States cancelled Cuba�s debt to Spain on the
perfectly
reasonable grounds that the debt was imposed without the consent of the
population.
It was imposed under coercive conditions. That principle then entered
international
law, largely at U. S. initiative. It�s called the principle of odious
debt. An odious debt is
invalid; it doesn�t have to be paid. It�s been recognized, for example, by
the U. S.
executive director of the IMF, that if that principle were available to
the victims, not just
to the rich, the third world debt would mostly dissolve, because it�s
invalid. It�s odious
debt.
But that�s not to be. The odious debt is a very powerful weapon of control
and it can�t
be abandoned. For about half of the world�s population right now, thanks
to this
method, national economic policy is effectively run by bureaucrats in
Washington.
Also, half of the population of the world (not the same half, but
overlapping) is subject
to unilateral sanctions by the United States, which is a form of economic
coercion
that, again, undermines sovereignty severely and has been condemned
repeatedly,
just recently again, by the United Nations as unacceptable, but it makes
no difference.
Within the rich countries there are other means of achieving similar
results. I�ll come
back to that but, before doing so, just a word about what we should never
allow
ourselves to forget, and that is that the devices that are used in the
dependencies can
be very brutal. There was a Jesuit-organized conference in San Salvador a
couple of
years ago, which considered the state terrorist project of the 1980s and
its
continuation since, by the socio-economic policies imposed by the victors.
The
conference took special note of what it called the residual �culture of
terror,� which
lasts after the actual terror declines and has the effect of"domesticating
the
expectations of the majority," who abandon any thought of"alternatives to
the
demands of the powerful." They�ve learned the lesson that There Is No
Alternative--TINA, as it�s called, Maggie Thatcher�s cruel phrase. The
idea is that
there is no alternative--that�s now the familiar slogan of the corporate
version of
globalization. In the dependencies, the great achievement of the terrorist
operations
has been to destroy the hopes that had been raised in Latin America and
Central
America in the 1970s, inspired by popular organizing throughout the region
and the
"preferential option for the poor" of the Church, which was severely
punished for that
deviation from good behavior.
Again, there�s an awful lot to say about that and I hate to drop it, but
time is short.
Sometimes the lessons about what happened are drawn rather accurately in
measured tones. Right now there is a torrent of self-adulation about our
success in
inspiring a wave of democracy in our Latin American dependencies. The
matter is put
a little differently, and more accurately, in an important scholarly
review by a leading
specialist on the topic, Thomas Carrothers, who, as he says, writes with
an "insider�s
perspective,� since he served in the State Department �democracy
enhancement
programs� of the Reagan administration, as they were called. He believes
that
Washington had good intentions, but he recognizes that in practice, the
Reagan
Administration sought to maintain "the basic order of. . . quite
undemocratic
societies" and to avoid "populist-based change," and like its
predecessors, adopted
"pro-democracy policies as a means of relieving pressure for more radical
change,
but inevitably sought only limited, top-down forms of democratic change
that did not
risk upsetting the traditional structures of power with which the United
States has long
been allied." Almost accurate--it would be more accurate to say �the
traditional
structures of power with which the traditional structures of power within
the United
States had long been allied,� and that�s accurate.
He himself, Carrothers, is dissatisfied with the outcome, but he describes
what he
calls the �liberal critique� as fundamentally flawed. This critique leaves
the old debates
"unresolved," he says, because of "its perennial weak spot." The perennial
weak spot
is that it offers no alternative to the policy of restoring the
traditional structures of
power, in this case by murderous terror that left a couple hundred
thousand corpses in
the 1980s and millions of refugees and maimed and orphaned in the
devastated
societies. So, again, TINA--There Is No Alternative.
The same dilemma was recognized at the other end, the opposite end of the
political
spectrum, by President Carter�s main Latin American specialist, Robert
Pastor,
who�s quite far to the dove-ish, progressive end of the admissible
spectrum. He
explains in an interesting book why the Carter administration had to
support the
murderous and corrupt Somoza regime right to the bitter end, and then,
when even
the traditional structures of power turned against the dictator, the U. S.
(Carter
administration) had to try to maintain the national guard that it had
established and
trained and that was then attacking the population �with a brutality a
nation usually
reserves for its enemy,� as he puts it. This was all done with benign
intent under the
TINA principle--no alternative. Here�s the reason. �The United States did
not want to
control Nicaragua or the other nations of the region, but it also did not
want
developments to get out of control. It wanted Nicaraguans to act
independently,
except� (his emphasis) �when doing so would affect U. S. interests
adversely.� So, in
other words, Latin Americans should be free, free to act in accord with
our wishes.
We want them to be able to choose their own course freely, unless they
make choices
that we don�t want, in which case we have to restore the traditional
structures of
power--by violence, if necessary. That�s the more liberal and progressive
side of the
spectrum.
There are voices that are outside the spectrum--I don�t want to deny that.
For
example, there�s the idea that �people should have the right "to share in
the decisions,
which often profoundly modify their way of life," not have their hopes
"cruelly dashed"
in a global order in which "political and financial power is concentrated"
while financial
markets "fluctuate erratically" with devastating consequences for the
poor, "elections
can be manipulated," and "the negative aspects on others are considered
completely
irrelevant" by the powerful. Those are quotes from the radical extremist
in the Vatican
whose annual New Year�s message could scarcely be mentioned in the
national
press and it�s certainly an alternative that�s not on the agenda.
Why is there such broad agreement that Latin Americans, in fact, the
world, cannot be
allowed to exercise sovereignty, that is, to take control of their lives?
It�s the global
analog to the fear of democracy within. Actually that question has been
frequently
addressed in very instructive ways, primarily in the internal record,
which we have
(quite a free country--we have a rich record of declassified documents,
and they�re
very interesting). The theme that runs through them is strikingly
illustrated in one of the
most influential cases, a hemispheric conference that the United States
called in
February 1945 in order to impose what was called the Economic Charter for
the
Americas that was one of the cornerstones of the postwar world still
firmly in place.
The Charter called for an end to "economic nationalism (meaning
sovereignty) in all
its forms." Latin Americans would have to avoid what was called
�excessive� industrial
development that would compete with U. S. interests, though they could
have
"complementary development." So Brazil could produce low-cost steel that
the U. S.
corporations weren�t interested in. Crucially it was necessary "to protect
our
resources,� as George Kennan put it, even if that required "police
states.�
But Washington faced a problem in imposing the Charter. That was clearly
explained
internally in the State Department at the time in this way:Latin Americans
were
making the wrong choices. They were calling for "policies designed to
bring about a
broader distribution of wealth and to raise the standard of living of the
masses,� and
they were "convinced that the first beneficiaries of the development of a
country�s
resources should be the people of that country," not U. S. investors.
That�s
unacceptable, so sovereignty cannot be allowed. They can have freedom, but
freedom to make the right choices.
That message has been regularly and forcefully reaffirmed in case after
case up to the
present. I�ll mention a couple of examples. Guatemala had a brief
interlude of
democracy. It was ended, as you know, by a U. S. military coup. For the
public, this
was presented as defense against the Russians. A little bit exotic, but
that was the
story. Internally the thrust was different and the threat was seen more
realistically.
Here�s the way it was seen:
"The social and economic programs of the elected government met the
aspirations"
of labor and the peasantry, and "inspired the loyalty and conformed to the
self-interest
of most politically conscious Guatemalans.� Worse still, the government of
Guatemala
had "become an increasing threat to the stability of Honduras and El
Salvador. Its
agrarian reform is a powerful propaganda weapon; its broad social program
of aiding
the workers and peasants in a victorious struggle against the upper
classes and large
foreign enterprises has a strong appeal to the populations of Central
American
neighbors where similar conditions prevail.�
So therefore a military solution was necessary. It went on for 40 years,
and it�s left the
same culture of terror as in Central American neighbors.
The same was true in Cuba, another currently live case. When the United
States
made the decision (secretly) to overthrow the government of Cuba in 1960,
the
reasoning was very similar. It was explained by historian Arthur
Schlesinger, who
summarized to President Kennedy the study of a Latin American mission in a
secret
report to the incoming president. The Cuban threat, according to the
mission, was
"the spread of the Castro idea of taking matters into one�s own hands.�
That�s a
disease that might infect the rest of Latin America, Schlesinger
explained, where "the
poor and underprivileged,� which means almost everyone, �stimulated by the
example
of the Cuban revolution, are now demanding opportunities for a decent
living.� So
something has to be done, and you know what was done. What about "the
Soviet
connection"? That was mentioned in the report in this way: �Meanwhile, the
Soviet
Union hovers in the wings, flourishing large development loans, and
presenting itself
as the model for achieving modernization in a single generation.�
Well, that�s the threat--the threat of taking their lives into their own
hands, and it had to
be destroyed by terrorism and economic strangulation, which is still
continuing. All of
that is totally independent of the cold war, as surely is obvious by now,
even without
the secret record. The same concerns in the postcold-war period led to the
quick
undermining of Haiti�s brief experiment in democracy by Presidents Bush
and Clinton,
continuing an earlier record.
The same concerns lie in the background of the trade agreements�NAFTA, for
example. At the time of NAFTA, you will recall, the propaganda was that it
was going
to be a wonderful boon to working people in all three countries--Canada,
the United
States, and Mexico. Well, that was quietly abandoned shortly after, when
the facts
were in. And what was obvious all along, was in fact finally publicly
conceded. The
goal was to "lock Mexico into the reforms" of the 1980s, the reforms which
had
sharply reduced wages, and enriched a small sector and foreign investors.
The
background concerns were articulated at a Latin American strategy
development
conference in Washington, a workshop in 1990. It warned that "a `democracy
opening' in Mexico could test the special relationship by bringing into
office a
government more interested in challenging the US on economic and
nationalist
grounds.� Notice that�s the same threat as in 1945 and since, overcome, in
this case,
by locking Mexico into treaty obligations. These same reasons consistently
lie behind
a half a century of torture and terror, not only in the western
hemisphere. And they�re
also at the core of the investor rights agreements that are being imposed
under the
specific form of globalization that�s designed by state corporate power
nexus.
Let�s go back to what I asked you to put on the shelf, the point of
departure: the
contested issue of freedom and rights, hence sovereignty insofar as it�s
to be valued.
Do they inhere in persons of flesh and blood, or only in small sectors of
wealth and
privilege? Or even in abstract constructions like corporations, or
capital, or states? In
the past century the idea that such entities have special rights, over and
above
persons, has been very strongly advocated. The most prominent examples are
Bolshevism, fascism, and private corporatism, which is a form of
privatized tyranny.
Two of these systems have collapsed. The third is alive and flourishing
under the
banner, TINA--There Is No Alternative to the emerging system of state
corporate
mercantilism disguised with various mantras like globalization and free
trade.
A century ago during the early stages of the corporatization of America,
discussion
about these matters was quite frank. Conservatives a century ago denounced
the
procedure, describing corporatization as a "return to feudalism" and "a
form of
communism," which is not an entirely inappropriate analogy. There were
similar
intellectual origins in neo-Hegelian ideas about the rights of organic
entities, along
with the belief in the need to have a centralized administration of
chaotic systems--like
the markets, which were totally out of control. It�s worth bearing in mind
that in today�s
so-called �free-trade economy� a very large component of cross-border
transactions
(which are called trade, misleadingly), probably about 70% of them, are
actually within
centrally managed institutions, within corporations and corporate
alliances, if we
include outsourcing and other devices of administration. That's quite
apart from all
kinds of other radical market distortions.
The conservative critique --notice that I am using the term "conservative"
in a
traditional sense; such conservatives scarcely exist any more -- the
conservative
critique was echoed at the liberal/progressive end of the spectrum early
in the
twentieth century, most notably perhaps by John Dewey, America�s leading
social
philosopher, whose work focused largely on democracy. He argued that
democratic
forms have little substance when "the life of the country" --production,
commerce,
media -- is ruled by private tyrannies in a system that he called
�industrial feudalism�
in which working people are subordinated to managerial control, and
politics
becomes "the shadow cast by big business over society.�
Notice that he was articulating ideas that were common coin among working
people
many years earlier, as I mentioned. And the same was true of his call for
the
elimination of, the replacement of, industrial feudalism by self-managed
industrial
democracy.
Interestingly, progressive intellectuals who favored the process of
corporatization
agreed more or less with this description. So Woodrow Wilson, for example,
wrote
that "most men are servants of corporations," which now account for the
"greater part
of the business of the country" in a "very different America from the old,
. . . no longer
a scene of individual enterprise,individual opportunity and individual
achievement,"
but a new America in which "small groups of men in control of great
corporations
wield a power and control over the wealth and business opportunities of
the country,"
becoming 'rivals of the government itself," and undermining popular
sovereignty,
exercised through the democratic political system.
Notice this was written in support of the process. He described the
process as maybe
unfortunate, but necessary, agreeing with the business world,
particularly, after the
destructive market failures of the preceding years had convinced the
business world
and progressive intellectuals that markets simply had to be administered
and that
financial transactions had to be regulated.
Similar questions, very similar ones are very much alive in the
international arena
today, talk about reforming financial architecture and that sort of thing.
A century ago,
right about that time, corporations were granted the rights of persons by
radical
judicial activism, an extreme violation of classical liberal principles.
They were also
freed from earlier obligations to keep to specific activities for which
they were
chartered. Furthermore, in an important move, the courts shifted power
upward from
the stockholders in a partnership to the central management, which was
identified
with the immortal corporate person. Those of you who are familiar with the
history of
communism will recognize that this is very similar to the process that was
taking place
at the time, very quickly predicted, in fact, by left critics,
left-Marxist and anarchist
critics of Bolshevism, people like Rosa Luxembourg, who warned, early on,
that the
centralizing ideology would shift power from working people to the party,
to the central
committee, and then to the maximal leader, as happened very quickly after
the
conquest of state power in 1917, which at once destroyed every residue of
socialist
forms and principles. The propagandists on both sides prefer a different
story for
self-serving reasons, but I think that�s the accurate one.
In recent years, corporations have been granted rights that go far beyond
those of
persons. Under the World Trade Organization rules, corporations can demand
what�s
called the right of "national treatment.� That means that General Motors,
if it�s
operating in Mexico, can demand to be treated like a Mexican firm. Now
that�s only a
right of immortal persons; it�s not a right of flesh-and-blood persons. A
Mexican can�t
come to New York and demand national treatment and do very well, but
corporations
can.
Other rules require that the rights of investors, lenders, and speculators
must prevail
over the rights of mere flesh-and-blood people generally, undermining
popular
sovereignty and diminishing democratic rights. Corporations, I�m sure you
know, are
able in various ways to bring suits, bring actions, against sovereign
states, and there
are interesting cases. For example, Guatemala, a couple of years ago,
sought to
reduce infant mortality by regulating the marketing of infant formula by
multinationals.
The measures that Guatemala proposed were in conformity with World Health
Organization guidelines and they kept to international codes, but the
Gerber
Corporation claimed expropriation and the threat of a World Trade
Organization
complaint sufficed for Guatemala to withdraw, fearing retaliatory
sanctions by the
United States.
The first such complaint under the new World Trade Organization rules was
brought
against the United States by Venezuela and Brazil who complained that EPA
regulations on petroleum violated their rights as petroleum exporters.
Washington
backed down that time, also allegedly in fear of sanctions, but I�m
skeptical about that
interpretation. I don�t think the U. S. fears trade sanctions from
Venezuela and Brazil.
More likely the Clinton administration simply saw no compelling reason to
defend the
environment and protect health.
These issues are arising very dramatically and, in fact, obscenely right
now. Tens of
millions of people around the world are dying from treatable diseases
because of the
protectionist elements written into the World Trade Organization rules
that grant
private megacorporations monopoly pricing rights. So Thailand and South
Africa, for
example, which have pharmaceutical industries, can produce lifesaving
drugs at a
fraction of the cost of the monopolistic pricing, but they�re afraid to do
so under threat
of trade sanctions. In fact, in 1998 the United States even threatened the
World Health
Organization that it would withdraw funding if the World Health
Organization even
monitored the effects of trade conditions on health. These are very real
threats. I�m
talking about today, like this week�s international press.
All of this is called �trade rights.� It has nothing to do with trade. It
has to do with
monopolistic pricing practices enforced by protectionist measures that are
introduced
into what are called free trade agreements. The measures are designed to
ensure
corporate rights. They also have the effect of reducing growth and
innovation,
naturally. And they are only part of the array of regulations introduced
into these
agreements which prevent development and growth. What is at stake is
investor
rights, not trade. And trade, of course, has no value in itself. It�s a
value if it increases
human welfare, otherwise not.
In general the principle of the World Trade Organization, the primary
principle, and
related treaties, is that sovereignty and democratic rights have to be
subordinated to
the rights of investors. In practice that means the rights of the huge
immortal persons,
the private tyrannies to which people must be subordinated. These are
among the
issues that led to the remarkable events in Seattle. But in some ways, a
lot of ways,
the conflict between popular sovereignty and private power was illuminated
more
sharply a couple of months after Seattle, just a few weeks ago in
Montreal, where an
ambiguous settlement was reached on the so-called "biosafety protocol.�
There the
issue was very clearly drawn. Quoting the New York Times, �A compromise
was
reached after intense negotiations that often pitted the United States
against almost
everyone else" over what�s called "the precautionary principle.� What�s
that? Well the
chief negotiator for the European Union described it this way: �Countries
must have
the freedom, the sovereign right, to take precautionary measures with
regard to
genetically altered seed, microbes, animals, crops that they fear might be
harmful.�
The United States, however, insisted on World Trade Organization rules.
Those rules
are that an import can be banned only on the basis of scientific evidence.
Notice what�s at stake here. The question that�s at stake is whether
people have the
right to refuse to be experimental subjects. So, to personalize it,
suppose the biology
department at the university were to walk in and tell you, �You folks have
to be
experimental subjects in an experiment we�re carrying out, where we�re
going to, I
don�t know what, stick electrodes in your brain and see what happens. You
can
refuse, but only if you provide scientific evidence that it�s going to
harm you.� Usually
you can�t provide scientific evidence. The question is, do you have a
right to refuse?
Under World Trade Organization rules, you don�t. You have to be
experimental
subjects. It�s a form of what Edward Herman, a co-author of mine who�s an
economist,
has called �producer sovereignty.� The producer reigns; consumers have to
somehow
defend themselves. That works domestically, too, as he pointed out. It�s
not the
responsibility, say, of chemical and pesticide industries to demonstrate,
to prove that
what they�re putting into the environment is safe. It�s the responsibility
of the public to
prove scientifically that it�s unsafe, and they have to do this through
underfunded
public agencies that are susceptible to industry influence through
lobbying and other
pressures.
That was the issue at Montreal, and a kind of ambiguous settlement was
reached.
Notice, to be clear, there was no issue of principle. You can see that by
just looking at
the lineup. The United States was on one side, and it was joined, in fact,
by some
other countries with a stake in biotechnology and hi-tech agro-export, and
on the other
side was everybody else--those who didn�t expect to profit by the
experiment. That
was the lineup, and that tells you exactly how much principle was
involved. For similar
reasons, the European Union favors high tariffs on agricultural products,
just as the
United States did 40 years ago, but no longer--and not because the
principles have
changed; just because power has changed.
There is an overriding principle. The principle is that the powerful and
the privileged
have to be able to do what they want (of course, pleading high motives).
The corollary
is that sovereignty and democratic rights of people must go, in this
case--and that�s
what makes it so dramatic--their reluctance to be experimental subjects
when U. S.
-based corporations can profit by the experiment. The U. S. appeal to the
World
Trade Organization rules is very natural, since they codified that
principle; that�s the
point.
These issues, although they�re very real and affecting a huge number of
people in the
world, are actually secondary to other modalities to reduce sovereignty in
favor of
private power. Most important, I think, surely, was the dismantling of the
Bretton
Woods system in the early 1970s by the United States, Britain, and others.
That
system was designed by the U. S. and Britain in the 1940s. It was a time
of
overwhelming popular support for social welfare programs and radical
democratic
measures. In part for those reasons the Bretton Woods system of the
mid-�40s
regulated exchange rates and allowed controls on capital flow. The idea
was to cut
down wasteful and harmful speculation, and to restrict capital flight. The
reasons were
well-understood and clearly articulated--free capital flow creates what�s
sometimes
called a �virtual parliament� of global capital, which can exercise veto
power over
government policies that it considers irrational. That means things like
labor rights, or
educational programs, or health, or efforts to stimulate the economy or,
in fact,
anything that might help people and not profits (and therefore is
irrational in the
technical sense).
The Bretton Woods system more or less functioned for about 25 years.
That�s what
many economists call the �golden age� of modern capitalism (modern state
capitalism, more accurately). That was a period, roughly up until about
1970, a period
of quite historically unprecedented rapid growth of the economy, of trade,
of
productivity, of capital investment, extension of welfare state measures,
a golden age.
That was reversed in the early �70s. The Bretton Woods system was
dismantled, with
liberalization of financial markets and floating exchange rates.
The period since has often been described as a �leaden age,� accurately.
There was
a huge explosion of very short-term, speculative capital, completely
overwhelming the
productive economy. There was quite marked deterioration in just about
every
respect--considerably slower economic growth, slower growth of
productivity, of
capital investment, much higher interest rates (which slow down growth),
greater
market volatility, and financial crises. All of these things have very
severe human
effects, even in the rich countries: stagnating or declining wages, much
longer working
hours, particularly striking in the United States, cutback of services.
Just to give you
one example in today�s great economy that everyone�s talking about, the
median
income (half above, half below) for families has gotten back now to what
it was in
1989, which is well below what it was in the 1970s. It also has been a
period of the
dismantling of social democratic measures that had considerably improved
human
welfare. And in general, the newly-imposed international order provided
much greater
veto power for the �virtual parliament� of private capital of investors
leading to
significant decline of democracy and sovereign rights (as intended), and a
significant
deterioration in social health.
While those effects are felt in the rich societies, they�re a catastrophe
in the poorer
societies. These issues cut across societies, so it�s not a matter of this
society got
richer and that one got poorer. The more significant measures are sectors
of the
global population. So, for example, using recent World Bank analyses, if
you take the
top 5% of the world�s population and compare their income and wealth to
the bottom
5%, that ratio was 78:1 in 1988 and 114:1 in 1993 (that�s the last period
for which
figures are available), and undoubtedly higher now. The same figures show
the top
1% of the world�s population has the same income as the bottom 57%--2-1/2
billion
people.
For the rich countries, the point was made very clearly, to quote a
well-known
economist, by Barry Eichengreen, in his highly regarded history of the
international
monetary system. Like others, he pointed out, many people have pointed
this out, that
the current phase of globalization is rather similar to the pre-World War
I period, by
rough measures. However, there are differences. One primary difference, he
explains,
is that at that time, government policy had not yet been "politicized" by
"universal male
suffrage and the rise of trade unionism and parliamentary labor parties.�
Therefore,
the severe human costs of financial rectitude that are imposed by the
virtual
parliament could be transferred to the general population. But that luxury
was no
longer available in the more democratic Bretton Woods era in 1945, so that
"limits on
capital mobility substituted for limits on democracy as a source of
insulation from
market pressures.�
There�s a corollary to that. It�s quite natural that dismantling of the
postwar economic
order should be accompanied by a significant attack on substantive
democracy--freedom, popular sovereignty, and human rights--under the
slogan TINA
(There Is No Alternative). It�s kind of a farcical mimicry of vulgar
Marxism. The slogan,
needless to say, is self-serving fraud. The particular socio-economic
order that�s
being imposed is the result of human decisions in human institutions. The
decisions
can be modified; the institutions can be changed. If necessary, they can
be
dismantled and replaced, just as honest and courageous people have been
doing
throughout the course of history.
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