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Minnesota who was assasinated before the
2002 election by the conservative white trash
that rules this country so they could take
control of the senate and ram their agenda
down the throats of the american people
(who will transfer it back to him after he leaves
office) defrauded the government billions of
dollars via Tenet Healthcare. I meant to say HCA
Healthcare. See article below. After pulling off
such a successful scam the senate criminals
decided he was worthy to be their fearless leader.
Missouri who was assasinated right
before the 2000 election on behalf of
criminal conservatives who have taken
over our government in order to pass
legislation on behalf of criminals in the
energy, healthcare and Tobacco
industries and force their ideology on the
world. Their agenda is to have an
income distribution like Latin America.
Watch the movie Seven Days in May.
country the past twenty years he would win in a landslide. But of course the US totalitarian keepers of the empire wouldn't
allow him to do that.
Now the conservative criminals via the EU are forcing the Landesbanken in Germany to fuction as privatized banks for
ideological reasons. They might admit that the key to sucess of German industry is due to the low interest loads and the
special relationship they have with the government owned banking system. They don't care. These sick fuckers just want to
fuck everything up they can get their hands on. The sooner these sick fucks are exterminated the better we will all be.
Democracy inaction
If U.S. officials who are complaining about election fraud in Ukraine applied the same standards in Ohio, then our own
presidential election certainly was stolen.
- - - - - - - - - - - -
By James K. Galbraith
Nov. 30, 2004 | The election was stolen. That's not in doubt. Secretary of State Colin Powell admitted it. The National
Democratic Institute and the International Republican Institute both admitted it. Sen. Richard Lugar of Indiana -- a
Republican -- was emphatic; there had been "a concerted and forceful program of Election Day fraud and abuse"; he "had
heard" of employers telling their workers how to vote; yet he had also seen the fire of the resisting young, "not prepared to
be intimidated."
In Washington, former National Security Advisor Zbigniew Brzezinski demanded that the results be set aside and a new vote
taken, under the eye -- no less -- of the United Nations. In the New York Times, Steven Lee Myers decried "the use of
government resources on behalf of loyal candidates and the state's control over the media" -- practices, he said, that were
akin to those in "Putin's Russia."
Personally, I don't know whether the Ukrainian election was really stolen. I don't trust Lugar, Powell or the National
Democratic Institute. It's obvious that U.S. foreign policy interests, rather than love of democracy for its own sake, are behind
this outcry. Russia backed the other candidate in Ukraine. For Brzezinski, doing damage to Russia is a hobby.
But if the Ukraine standard were applied in Ohio -- as it should be -- then the late lamented U.S. election certainly was
stolen. In Ohio, the secretary of state in charge of the elections process was co-chairman of the Bush campaign in the state.
He obstructed the vote count systematically -- for instance, by demanding that provisional ballots without birth dates on their
envelopes be thrown out, even though there is no requirement for that in state law. He also required that provisional ballots
be cast in a voter's home precinct, ensuring that there would be no escape from long lines. Republicans fielded thousands
of election challengers to Democratic precincts, mainly to try to intimidate black voters and to slow down the voting process.
A recount, demanded and paid for by the Green and Libertarian parties, has been stalled in court, so that it won't possibly
upset the certification of Ohio's electoral votes.
In Franklin County, Ohio, there was rampant abuse, with voting machines added in Republican precincts and taken away in
Democratic ones, as documented by the Columbus Dispatch. The result was a crippling pileup at the polls; many thousands
did not vote because they simply could not afford to wait. I witnessed this with my own eyes. And Sen. Lugar could have, too,
for much less than the price of airfare to Kiev.
According to an article by Bob Fitrakis and Harvey Wasserman: "The man running the show in Franklin County was Board of
Elections Director Matt Damschroder, former head of the county's Republican Party ... Damschroder's official records also
show that while desperate poll workers called his office throughout the day, at least 125 machines were held back at the
opening of the polls and an additional 68 were never deployed. Thus while thousands of inner city voters stood in the rain,
were told their cars would be towed, and were then forced to vote in five minutes or less, Damschroder sat on machines that
could have significantly sped the process."
These are the established facts. Eyewitness reports of other forms of abuse include malfunctioning voting machines in
Youngstown, a mysterious lockdown of the vote count in Warren County and lesser incidents that run into the thousands.
And then there are allegations of irregularities in the count -- how solid these are, one does not know. Taken together, are
these enough to change the outcome? No one can say. But the same is true in Kiev. And there, allegations by the defeated
opposition are taken in good faith, and are quite enough to satisfy international observers and the government of the United
States.
So where is the press? Why aren't there more stories on Ohio? Why is there no national pressure for a prompt statewide
recount? Why no continuing outcry? Why no demand -- as our friends are making with strong American support in Ukraine
-- that the election results in Ohio be set aside and a new vote held? Why has our election, with all its thuggery, been
forgotten just three weeks after it occurred?
One reason, of course, is that the U.S. government gives direction in these matters, here at home as well as around the
world. And our press, like that in "Putin's Russia," follows suit. Our political leaders, if one could call them that, stay silent
and move on. They are terrified of being mocked and bullied by the press.
Another reason is that in Ohio, pissed-off voters are well behaved. They are working the hearings process, the recount
process and the unhearing, unseeing courts. In Kiev, by contrast, hundreds of thousands of demonstrators are on the
streets, staying there overnight in the bitter cold, bringing the government to a halt and the world to attention.
We'll get our democracy back, one of these days, when the Democratic Party has a mass base and is prepared to use it in
the same way.
Good Things Happening in Venezuela
By Michael Parenti
printer friendly version
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Even before I arrived in Venezuela for a recent visit, I encountered the great class divide in that country. On my connecting
flight from Miami to Caracas, I found myself seated next to an exquisitely dressed Venezuelan woman. Judging from her
prosperous aspect, I anticipated that she would take the first opportunity to hold forth against President Hugo Chavez.
Unfortunately, I was right.
Our conversation moved along famously until we got to the political struggle going on in Venezuela. “Chavez,” she hissed,
“is terrible, terrible.” He is “a liar.” He “fools the people” and is “ruining the country.”
She owns an upscale women’s fashion company with links to prominent firms in the United States. When I asked how Chavez
has hurt her business, she said, “Not at all.” But many other businesses, she quickly added, have been irreparably
damaged as has the whole economy. She went on denouncing Chavez in sweeping terms, warning me of the national
disaster to come if this demon continued to have his way.
Other critics I encountered in Venezuela shared this same mode of attack: weak on specifics, but strong in venom, voiced
with all the ferocity of those who fear that their birthright (that is, their class advantage) is under siege because others below
them on the social ladder are now getting a slightly larger slice of the pie.
In Venezuela over 80 percent of the population lives below the poverty level. Before Chavez, most of the poor had never
seen a doctor or dentist. Their children never went to school, since they could not afford the annual fees. The neoliberal
market “adjustments” of the 1980s and 1990s only made things worse, cutting social spending and eliminating subsidies in
consumer goods. Successive Administrations did nothing about the rampant corruption and nothing about the growing gap
between rich and poor, the growing malnutrition and desperation.
Far from ruining the country, here are some of the good things the Chavez government has accomplished:
A land reform program designed to assist small farmers and the landless poor has been instituted—this past March a large
landed estate owned by a British beef company was occupied by agrarian workers for farming purposes
Education is now free (right through to university level), causing a dramatic increase in grade school enrollment
The government has set up a marine conservation program and is taking steps to protect the land and fishing rights of
indigenous peoples
Special banks now assist small enterprises, worker cooperatives, and farmers
Attempts to further privatize the state-run oil industry—80 percent of which is still publicly owned—have been halted and
limits have been placed on foreign capital penetration
Chavez kicked out U.S. military advisors and prohibited overflights by U.S. military aircraft engaged in counterinsurgency in
Colombia
“Bolivarian Circles” have been organized throughout the nation, neighborhood committees designed to activate citizens at
the community level to assist in literacy, education, vaccination campaigns, and other public services
The government hires unemployed men, on a temporary basis, to repair streets and neglected drainage and water systems
in poor neighborhoods
Then there is the health program. I visited a dental clinic in Chavez’s home state of Barinas. The staff consisted of four
dentists, two of whom were young Venezuelan women. The other two were Cuban men who were there on a one-year
program. The Venezuelan dentists noted that in earlier times dentists did not have enough work. There were millions of
people who needed treatment, but care was severely rationed by one’s ability to pay. Dental care was distributed like any
other commodity, not to everyone who needed it, but only to those who could afford it.
When the free clinic in Barinas first opened it was flooded with people seeking dental care. No one was turned away. Even
opponents of the Chavez government availed themselves of the free service, temporarily putting aside their political
aversions.
Many of the doctors and dentists who work in the barrio clinics (along with some of the clinical supplies and
pharmaceuticals) come from Cuba. Chavez has also put Venezuelan military doctors and dentists to work in the free clinics.
Meanwhile, much of the Venezuelan medical establishment is vehemently opposed to the free clinic program, seeing it as a
Cuban communist campaign to undermine medical standards and physicians’ earnings. That low-income people are
receiving medical and dental care for the first time in their lives does not seem to be a consideration that carries much
weight among the more “professionally minded” practitioners.
I visited one of the government-supported community food stores that are located around the country, mostly in low income
areas. These modest establishments sell canned goods, pasta, beans, rice, and some produce and fruits at well below
market price, a blessing in a society with widespread malnutrition.
Popular food markets have eliminated the layers of middlepeople and made staples more affordable for residents. Most of
these markets are run by women. The government also created a state-financed bank whose function is to provide low-
income women with funds to start cooperatives in their communities.
There is a growing number of worker cooperatives. One in Caracas was started by turning a waste dump into a shoe factory
and a T-shirt factory. Financed with money from the Petroleum Ministry, the coop has put about 1,000 people to work. The
workers seem enthusiastic and hopeful.
Surprisingly, many Venezuelans know relatively little about the worker cooperatives. Or perhaps it’s not surprising, given the
near monopoly that private capital has over the print and broadcast media. The wealthy media moguls, all vehemently anti-
Chavez, own four of the five television stations and all the major newspapers.
The person most responsible for Venezuela’s revolutionary developments, Hugo Chavez, has been accorded the usual ad
hominem treatment in the U.S. news media. An article in the San Francisco Chronicle described him as “Venezuela’s
pugnacious president.” An earlier Chronicle report (November 30, 2001) quotes a political opponent who calls Chavez “a
psychopath, a terribly aggressive guy.” The London Financial Times sees him as “increasingly autocratic” and presiding
over something called a “rogue democracy.”
In the Nation (May 6, 2002), Marc Cooper—one of those Cold War liberals who nowadays regularly defends the U.S.
empire—writes that the democratically-elected Chavez speaks “often as a thug,” who “flirts with megalomania.” Chavez’s
behavior, Cooper rattles on, “borders on the paranoiac,” is “ham-fisted demagogy” acted out with an “increasingly autocratic
style.” Like so many critics, Cooper downplays Chavez’s accomplishments and uses name-calling in place of informed
analysis.
Other media mouthpieces have labeled Chavez “mercurial,” “besieged,” “heavy-handed,” “incompetent,” and “dictatorial,” a
“barracks populist,” a “strongman,” a “firebrand,” and, above all, a “leftist.” It is never explained what “leftist” means.
A leftist is someone who advocates a more equitable distribution of social resources and human services and who supports
the kinds of programs that the Chavez government is putting in place. (Likewise a rightist is someone who opposes such
programs and seeks to advance the insatiable privileges of private capital and the wealthy few.) The term “leftist” is
frequently bandied about in the U.S. media, but seldom defined. The power of the label is in its remaining undefined,
allowing it to have an abstracted built-in demonizing impact, which precludes rational examination of its political content.
Meanwhile Chavez’s opponents, who staged an illegal and unconstitutional coup in April 2002 against the democratically
elected government, are depicted in the U.S. media as champions of “pro-democratic” and “pro-West” governance. We are
talking about the free-market plutocrats and corporate-military leaders of the privileged social order who killed more people
in the 48 hours they held power in 2002 than were ever harmed by Chavez in his years of rule.
When one of these perpetrators, General Carlos Alfonzo, was hit with charges for the role he had played, the New York
Times chose to call him a “dissident” whose rights were being suppressed by the Chavez government. Four other top
military officers charged with leading the 2002 coup were also likely to face legal action. No doubt, they too will be described
not as plotters or traitors who tried to destroy a democratic government, but as “dissidents,” decent individuals who are
being denied their right to disagree with the government.
President Hugo Chavez, whose public talks I attended on three occasions, proved to be an educated, articulate, remarkably
well-informed and well-read individual. He manifests a sincere dedication to effecting some salutary changes for the great
mass of his people, a person who in every aspect seems worthy of the decent and peaceful democratic revolution he is
leading. Millions of his compatriots correctly perceive him as being the only president who has ever paid attention to the
nation’s poorest areas. No wonder he is the target of calumny and coup from the upper echelons in his own country and
from ruling circles up north.
Chavez charges that the United States government is plotting to assassinate him. I can believe it.
--------------------------------------------------------------------------------
Michael Parenti’s recent books include Superpatriotism (City Lights) and The Assassination of Julius Caesar (New Press),
which was nominated for a Pulitzer Prize. His forthcoming book, The Culture Struggle will be published by Seven Stories
Press in the fall of 2005.
By FRANK RICH
Published: July 24, 2005
PRESIDENT BUSH'S new Supreme Court nominee was a historic first after all: the first to be announced on TV dead center
in prime time, smack in the cross hairs of "I Want to Be a Hilton." It was also one of the hastiest court announcements in
memory, abruptly sprung a week ahead of the White House's original timetable. The agenda of this rushed showmanship -
to change the subject in Washington - could not have been more naked. But the president would have had to nominate Bill
Clinton to change this subject.
Barry Blitt
When a conspiracy is unraveling, and it's every liar and his lawyer for themselves, the story takes on a momentum of its
own. When the conspiracy is, at its heart, about the White House's twisting of the intelligence used to sell the American
people a war - and its desperate efforts to cover up that flimflam once the W.M.D. cupboard proved bare and the war went
south - the story will not end until the war really is in its "last throes."
Only 36 hours after the John Roberts unveiling, The Washington Post nudged him aside to second position on its front
page. Leading the paper instead was a scoop concerning a State Department memo circulated the week before the outing
of Joseph Wilson's wife, the C.I.A. officer Valerie Plame, in literally the loftiest reaches of the Bush administration - on Air
Force One. The memo, The Post reported, marked the paragraph containing information about Ms. Plame with an S for
secret. So much for the cover story that no one knew that her identity was covert.
But the scandal has metastasized so much at this point that the forgotten man Mr. Bush did not nominate to the Supreme
Court is as much a window into the White House's panic and stonewalling as its haste to put forward the man he did. When
the president decided not to replace Sandra Day O'Connor with a woman, why did he pick a white guy and not nominate the
first Hispanic justice, his friend Alberto Gonzales? Mr. Bush was surely not scared off by Gonzales critics on the right (who
find him soft on abortion) or left (who find him soft on the Geneva Conventions). It's Mr. Gonzales's proximity to this scandal
that inspires real fear.
As White House counsel, he was the one first notified that the Justice Department, at the request of the C.I.A., had opened
an investigation into the outing of Joseph Wilson's wife. That notification came at 8:30 p.m. on Sept. 29, 2003, but it took Mr.
Gonzales 12 more hours to inform the White House staff that it must "preserve all materials" relevant to the investigation.
This 12-hour delay, he has said, was sanctioned by the Justice Department, but since the department was then run by John
Ashcroft, a Bush loyalist who refused to recuse himself from the Plame case, inquiring Senate Democrats would examine this
12-hour delay as closely as an 18½-minute tape gap. "Every good prosecutor knows that any delay could give a culprit time
to destroy the evidence," said Senator Charles Schumer, correctly, back when the missing 12 hours was first revealed
almost two years ago. A new Gonzales confirmation process now would have quickly devolved into a neo-Watergate
hearing. Mr. Gonzales was in the thick of the Plame investigation, all told, for 16 months.
Thus is Mr. Gonzales's Supreme Court aspiration the first White House casualty of this affair. It won't be the last. When you
look at the early timeline of this case, rather than the latest investigatory scraps, two damning story lines emerge and both
have legs.
The first: for half a year White House hands made the fatal mistake of thinking they could get away with trashing the Wilsons
scot-free. They thought so because for nearly three months after the July 6, 2003, publication of Mr. Wilson's New York
Times Op-Ed article and the outing of his wife in a Robert Novak column, there was no investigation at all. Once the
unthreatening Ashcroft-controlled investigation began, there was another comfy three months.
Only after that did Patrick Fitzgerald, the special counsel, take over and put the heat on. Only after that did investigators
hustle to seek Air Force One phone logs and did Mr. Bush feel compelled to hire a private lawyer. But by then the
conspirators, drunk with the hubris characteristic of this administration, had already been quite careless.
It was during that pre-Fitzgerald honeymoon that Scott McClellan declared that both Karl Rove and Dick Cheney's chief of
staff, Lewis Libby, had personally told him they were "not involved in this" - neither leaking any classified information nor
even telling any reporter that Valerie Plame worked for the C.I.A. Matt Cooper has now written in Time that it was through his
"conversation with Rove" that he "learned for the first time that Wilson's wife worked at the C.I.A." Maybe it all depends on
what the meaning of "telling," "involved" or "this" is. If these people were similarly cute with F.B.I. agents and the grand jury,
they've got an obstruction-of-justice problem possibly more grave than the hard-to-prosecute original charge of knowingly
outing a covert agent.
The Clinton Vision
Noam Chomsky
Z Magazine, December 1993
At the end of September, the Clinton Administration finally addressed "the vision thing" in the domain of foreign policy, with
major addresses by the President and Secretary of State, and of particular significance, by National Security Adviser
Anthony Lake, who laid forth the intellectual foundations of the new Clinton doctrine at the Johns Hopkins School of
Advanced International Studies. A new National Export Strategy was announced that set guidelines for international
economic policy, and a White House panel on intervention applied the doctrine in this particular sphere, all within a few
days. The seriousness of the enterprise was duly recorded with such headlines as "U.S. Vision of Foreign Policy Reversed"
(Thomas Friedman, New York Times), implying a dramatic policy change.1
The new vision is based on a picture of the contemporary world that has risen well beyond opinion, to the heights of truism.
The picture is sketched eloquently by the Times chief diplomatic correspondent, Thomas Friedman: "America's victory in the
cold war," Friedman wrote a year ago, was "a victory for a set of political and economic principles: democracy and the free
market." At last, the world is coming to understand that "the free market is the wave of the future -- a future for which
America is both the gatekeeper and the model."2
The term "gatekeeper" has an ominous ring. The whole affair merits some thoughts about how we keep the gates, who we
let in, and what kind of model we are to offer to the world. We begin with Anthony Lake's address, recognized to be the
centerpiece of the new vision.
1. "From Containment to Enlargement"
A long-time liberal dove, Lake explained that "Throughout the cold war, we contained a global threat to market democracies:
now we should seek to enlarge their reach." Containment having succeeded, we can now go on to "enlargement --
enlargement of the world's free community of market democracies." The title of his address is: "From Containment to
Enlargement." That is the new vision that replaces the defensive stance of the past half century. People everywhere can
only hail this new departure, realizing that "of course" the US is unlike any other nation past or present, Lake observes, in
that "we do not seek to expand the reach of our institutions by force, subversion or repression." Commentators were duly
impressed by this enlightened stance.
A rational person who wanted to know what Russia (pre-Gorbachev) was trying to do in world affairs would, naturally, look at
what Russia did do where its influence reached, specifically, in the East European satellites. Undertaking that exercise, sane
people -- assuming that they did not simply collapse in ridicule -- would have known how to evaluate an announcement by
Leonid Brezhnev that the USSR would no longer be content with containing the Evil Empire, but would now move on to
"enlargement" of the community of free and democratic societies. Similarly, sane people who wanted to know what the US is
trying to do in world affairs would look at what it has done where its influence reached, and would evaluate the
announcement of the new vision in these terms -- again, assuming that they did not simply collapse in ridicule. It is
interesting that the questions that would occur to a moderately intelligent 10 year old do not seem to have been raised.
This stance might be justified by the argument often voiced in sophisticated circles that in the special case of the United
States, facts are irrelevant. Thus in the prestigious journal International Security, the Eaton Professor of the Science of
Government at Harvard instructs us that the United States must maintain its "international primacy" for the benefit of the
world, because its "national identity is defined by a set of universal political and economic values," namely "liberty,
democracy, equality, private property, and markets" (Samuel Huntington). Since this is a matter of definition, so the Science
of Government teaches, it would be an error of logic to bring up the factual record, and we would simply be illustrating our
silliness by doing so, as if Orwell's Winston Smith had experimented with objects scattered on a table top to test Big
Brother's denial that 2+2 = 4.3
Lacking sophistication, let us proceed nonetheless.
We might also tarry briefly on Orwell's core concerns, not given quite the prominence of his critique of the official enemy. In
an unpublished introduction to Animal Farm, Orwell wrote that "The sinister fact about literary censorship in England is that it
is largely voluntary. Unpopular ideas can be silenced, and inconvenient facts kept dark, without any need for any official
ban." The desired outcome is attained in part by the "general tacit agreement that `it wouldn't do' to mention that particular
fact," in part as a consequence of media concentration in the hands of "wealthy men who have every motive to be dishonest
on certain important topics." As a result, "Anyone who challenges the prevailing orthodoxy finds himself silenced with
surprising effectiveness."
Orwell believed that the United States was different, more free and open. That error was not made by John Dewey, more
familiar with US intellectual culture. Speaking of "our un-free press," he observed that critique of "specific abuses" is of
limited value: "The only really fundamental approach to the problem is to inquire concerning the necessary effect of the
present economic system upon the whole system of publicity; upon the judgment of what news is, upon the selection and
elimination of matter that is published, upon the treatment of news in both editorial and news columns." We should ask "how
far genuine intellectual freedom and social responsibility are possible on any large scale under the existing economic
regime." Not very far, he judged.4
The reaction to Clinton's new vision falls well within these strictures, though to document the (virtually exceptionless) pattern
of which this is a typical instance is something of a waste of time, as Orwell and Dewey recognized. The more firmly
conclusions are established that challenge system-supportive doctrine, the more they must be suppressed; if the
conclusions were established by the standards of physics, they would have to be buried so deep in the memory hole as to
be completely beyond recovery. Those who fail to grasp these simple requirements would be well advised to seek a trade
outside of the respectable intellectual culture, where the gatekeepers understand what "it wouldn't do" to say or think.
Returning to the questions that would at once occur to a naive ten year old, to evaluate the announcement of the new
vision, we turn to US behavior in regions where its influence reached. There are many choices, the US being a global power.
But the most illuminating will surely be the Western Hemisphere, where the US has long run the show virtually without
interference, so its deepest values and convictions are revealed with great clarity.
According to the doctrine that we are to accept as unquestioned truth, "throughout the Cold War we contained a global
threat to market democracies" in the Western hemisphere, never having sought to expand our power "by force, subversion,
or repression," from the days when we were "exterminating...that hapless race of native Americans...with such merciless and
perfidious cruelty" (John Quincy Adams), until the present. To put the best possible face on the higher truths that it is
unthinkable to question, let us select the peak moments of American liberalism, the days of JFK and LBJ (who far surpassed
his predecessor in his commitment to liberal ideals). Taking just the most important case of the many that come to mind, the
higher truth entails, then, that at the peak of modern liberalism, JFK and LBJ dedicated themselves to the violent overthrow
of the parliamentary government in Brazil in favor of a National Security State in order to contain a global threat to market
democracy.
So, indeed, the matter was perceived. Kennedy's Ambassador Lincoln Gordon, who moved on to Washington after helping
lay the groundwork for the coup, lauded the "democratic rebellion" of the neo-Nazi Generals as "a great victory for the free
world," "one of the major turning points in world history." "The principal purpose for the Brazilian revolution was to preserve
and not destroy Brazil's democracy," the respected liberal democratic statesman informed Congress two years later, while
the torturers and murderers were -- very visibly -- at work. It was "the single most decisive victory of freedom in the mid-
twentieth century," he testified, and should "create a greatly improved climate for private investments" -- a comment we may
file away for later reference. After leaving the State Department, Gordon went on to become the President of Johns Hopkins
University, where Lake announced the new revolution in foreign policy.
As the Generals instituted a regime of fascist terror, Brazil became "the Latin American darling of the international business
community," the business press reported. It was also hailed by the leading academic apostles of the free market, much
impressed by the purity of doctrine of the technocrats and the "miracle" they had wrought -- though in fairness, it should be
added that there were occasional reservations about the sadistic violence by which the miracle was instituted. The euphoria
persisted through the 1980s, until the fortunes of the rich began to be affected by the economic disaster, at which point the
methods that had been hailed as a "real American success story," yielding "impressive economic growth based solidly on
capitalism," were suddenly transmuted to a proof of the failure of statist interference with our market ideals; the self-
adulation, not untypical, is quoted from a highly regarded 1989 scholarly monograph by Gerald Haines, senior historian of
the CIA.5
Brazil is a highly illuminating case, perhaps the reason why "it wouldn't do" to reflect on the obvious lessons. Brazil is far and
away the most important country in Latin America, firmly under US control since 1945, when it became a "testing area for
modern scientific methods of industrial development" applied by US experts, Haines observes with pride. It is a country with
enormous resources that should be the "Colossus of the South," ranking alongside the "Colossus of the North," as predicted
early in the century. It has had no foreign enemies, and benefited not only from careful US tutelage but also from substantial
investment. It therefore shows with great clarity just what the US can achieve in "enlarging the free community of market
democracies" under conditions that are near ideal.
The successes are real enough. Brazil has enjoyed a very high growth rate, which conferred enormous wealth on everyone
except its population -- apart from the top few percent, who live at the standards of the wealthiest Westerners. It is a sharply
two-tiered society. Much of the population live at a level reminiscent of Central Africa. As Haines was hailing the success
story of American style capitalism, the UN Report on Human Development ranked this rich and privileged country in 80th
place, alongside of Albania and Paraguay. In the northeast, Brazilian medical researchers describe a new subspecies:
"pygmies," with 40% the brain capacity of humans, thanks to severe malnutrition in a region with fertile lands, owned by
large plantations that produce export crops in accord with the doctrines preached by their expert advisers. Hundreds of
thousands of children die of starvation every year in this success story, which also wins world prizes for child slavery and
murder of street children -- in some cases for export of organs for transplant, according to respected Brazilian sources.
Perhaps Brazil was unusual. We might therefore look elsewhere, perhaps Guatemala, turned into a "showcase for
capitalism" in 1954 when Washington overthrew the democratic capitalist government and soon to celebrate the fortieth year
of our achievements in exterminating another "hapless race of native Americans with such merciless and perfidious cruelty,"
along with others who were in the way. Or El Salvador, the recipient of some $6 billion in "aid" from the US in the 1980s. The
results, always well known outside of Orwell's "prevailing orthodoxy," were recently reviewed by the UN Truth Commission,
which attributed 85% of the horrendous record of atrocities to the security forces trained, armed, and advised by the US,
and another 10% to the death squads linked to them and to the wealthy business sector that the US expects to keep firmly
in power. The media meanwhile professed shock at the revelation of what they had chosen to suppress when it mattered.
The Clinton Administration responded by establishing a Commission to inquire into this grim history; its mandate was to
improve procedures, nothing more, because "We don't want to refight the battles of the 80's. We're not a house-cleaning
Adminstration." The Salvadoran government agreed, issuing an amnesty for the killers and torturers in gross violation of the
peace accords that established the Truth Commission, which stated that the guilty must be punished, and rejecting the
Truth Commission demand that the Supreme Court be dismantled in view of its record of complicity in atrocities.
Immediately after the Truth Commission report appeared, the political party of the killers (Arena), which the US continues to
support, held its convention to nominate its candidate for the coming election, Armando Calderon Sol. The party dedicated
itself anew to defending the memory of the founder, Roberto d'Aubuisson, one of Central America's great murderers, trained
at the School of the Americas, now at Ft. Benning, Georgia. Calderon Sol declared that the party is united "more than ever
to defend [d'Aubuisson's] memory," while the convention hall echoed with the Arena theme song, which pledges to make "El
Salvador the tomb where the Reds will end up" -- the term "Reds" being understood quite broadly, as events have shown.6
In El Salvador too our defense of market democracy has spared its beneficiaries no horror. The Salvadoran government
procurator for the defense of children, Victoria de Aviles, recently acknowledged that the "big trade in children in El
Salvador" involves not only kidnapping and a gratifying improvement in exports, but also their use "for pornographic videos,
for organ transplants, for adoption and for prostitution." Hardly a secret, veteran British Latin America correspondent Hugh
O'Shaughnessy observes, recalling his direct observation of an operation of the Salvadoran army in June 1982 near the
River Lempa, where the US-trained troops "had a very successful day's baby-hunting," loading their helicopters with 50
babies whose "parents have never seen them since." O'Shaughnessy's report on "Takeaway babies farmed to order"
appeared in the London Observer the same day that the Times featured Anthony Lake's uplifting and admired remarks on
"enlargement" of our traditional mission of mercy and benevolence.7
There is no need to review further how we have "contained a global threat to market democracy" in "our little region over
here," as FDR's Secretary of War, Henry Stimson, described the Western hemisphere. It is enough to recall a warning
issued by Simon Bolivar in 1822, as he sought to liberate Latin America from Spanish rule: "There is at the head of this
great continent a very powerful country, very rich, very warlike, and capable of anything" -- including the evasion of
"inconvenient fact."
US power has of course reached far beyond the Western hemisphere. The obvious example that our hypothetical ten year
old would look at to evaluate the presupposed higher truth is the Philippines, which has benefited from almost a century of
US rule, tutelage, and assistance since its liberation-through-slaughter. The country is situated in the world's leading growth
area, in which it remains the sole basket case, very much on the Latin American model. Could that tell us something about
our role in advancing market democracy? One could write a revealing article reviewing how the question has been
addressed in the respectable literature; a very brief article.
We learn more about our role as "gatekeeper and model" from a World Bank study reported in the London Financial Times
just as the new vision of foreign policy was released here.8 The World Bank found that Latin America has "the most unequal
income distribution in the world," and predicted "chaos" unless governments "act aggressively against poverty," which is
truly appalling in its depth and scale. Why should Latin America win this glorious record too? Another obvious question, lying
well beyond the horizons of respectability.
Those interested in an answer might look back to 1945, when the US was setting out on its crusade to "contain the global
threat to market democracies" -- or as the senior historian of the CIA puts it, when "the United States assumed, out of self-
interest, responsibility for the welfare of the world capitalist system." In "our little region over here," our foreign enemies --
France and Britain -- were to be displaced, so we would have a free hand. That was simple enough, but another problem
arose: Latin Americans had not taken the right graduate courses and didn't understand the fundamental principles of
economic rationality, which required that their development be "complementary" to the US economy, in accord with the
sacred principle of comparative advantage. The Latin American countries advocated what a State Department officer
described as "The philosophy of the New Nationalism," which "embraces policies designed to bring about a broader
distribution of wealth and to raise the standard of living of the masses." Another State Department expert reported that
"Economic nationalism is the common denominator of the new aspirations for industrialization. Latin Americans are
convinced that the first beneficiaries of the development of a country's resources should be the people of that country."
These mistaken priorities ran directly counter to Washington's plans. The issue came to a head in a February 1945
hemispheric conference, where the US put forth its "Economic Charter of the Americas," which called for an end to economic
nationalism "in all its forms." The first beneficiaries of a country's resources must be US investors and their local associates,
not "the people of that country." There can be no "broader distribution of wealth" or improvement in "the standard of living of
the masses," unless, by unlikely accident, that happens to result from policies designed to serve the interests of those with
first priority.
Given US power, economic rationality prevailed, with the consequences that the World Bank now fears. All happily invisible
to the triumphalists.
Perhaps something changed in more recent years, say the 1980s, when the yearning for democracy became a leading
principle of our foreign policy, right-thinking people know. Instead of rendering my judgment, let me cite that of Reagan
insider Thomas Carothers, a State Department official in the Latin American Bureau who "worked on a variety of assistance
projects designed to promote democracy in Latin America and the Caribbean," he reports, and has written extensively on
the consequences; he has no doubts about the "sincerity" of the efforts, though even his own account suffices to show that
they were utterly cynical in conception.
Carothers finds a correlation between US influence and the rise of democracy in the hemisphere: a negative correlation.
Where US influence was least, in the southern cone, steps towards democracy took place, opposed by the Reagan
Administration, which later hastened to take credit for them. Where US influence was greatest, the effects were worst, in fact
far worse than Carothers recognizes given his crabbed conventional conception of "democracy," though he clearly
articulates the main point. Washington adopted "prodemocracy policies as a means of relieving pressure for more radical
change," he writes, "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." Its "impulse is to promote democratic
change, but the underlying objective is to maintain the basic order of what, historically at least, are quite undemocratic
societies." The US keeps to "very limited, controlled forms of democratic change" because of its "deep fear...of populist-
based change in Latin America -- with all its implications for upsetting established economic and political orders and heading
off in a leftist direction."9
Washington's allies, therefore, are "the existing power structures," not those who work "from the bottom up to spread the
ideas and principles of a democratic society among the citizenries." These miscreants, in fact, are the ones left in ditches,
tortured and mutilated, dismissed to their proper place by the security forces we train, arm, and advise -- though awareness
of that decisive truth is too much to expect.
What of the "global threat" to the "market democracies" we were defending in Latin America? Take Brazil, where US
intelligence could find no hint of Soviet intrusion, even if that were imaginable. In fact, in "our little region" there have been
no Russians in sight, unless we virtually invited them in. It is perfectly true that targets of US attack sought help from
somewhere, and since they were not going to get it from the subordinates of the Enforcer, they ultimately turned to the
Russians, who were sometimes willing to help, for their own cynical reasons, in which case the US victims became tentacles
of the Evil Empire, whom we must destroy in self-defense.
By similar logic, a Soviet Anthony Lake could have argued that the USSR was defending freedom and democracy in
Afghanistan from the "global threat" of American imperialism and its terrorist forces -- who, since liberation from Soviet rule,
have been destroying and massacring with great zeal and success, another "inconvenient fact" that merits little notice.
There would, for example, be little utility in focusing on the exploits of the CIA favorite Gulbuddin Hekmatyar, one of the
world's most extreme Islamic fundamentalist fanatics, who bears primary responsibility for 30,000 deaths in the capital city of
Kabul alone according to the London Economist, surpassing Pol Pot in Phnom Penh, it appears.
Perhaps the "global threat" refers to indigenous Communists. Here there is much to say, including some reflections on the
familiar doctrine that democracy requires exclusion of "Communists" from the political system, by violence if necessary. Thus
when the US-backed terror regime was doing its work in Iran after the 1953 CIA-MI6 coup that overthrew the conservative
parliamentary government, the New York Times praised the US clients for their "long record of success in defeating
subversion without suppressing democracy," noting with pleasure the suppression of the "pro-Soviet Tudeh party," formerly
"a real menace" but "considered now to have been completely liquidated," and the "extreme nationalists" who had been
almost as subversive as the Communists -- all liquidated without suppressing "democracy." The practice is, again, standard,
and passes with little comment, given the prevailing concept of "democracy."
Still more interesting, perhaps, is the way the concept "Communist" is understood. Here the record is voluminous and
consistent: to gain the title "Communist," it is enough to work "from the bottom up," appealing to the "poor people" who "have
always wanted to plunder the rich," as John Foster Dulles described the plague. That is precisely why the US terror war in
Central America, motivated by the "sincere impulse" to bring democracy, was in large measure a war against the Church --
"Communists," in the technical sense, once the Bishops had adopted "the preferential option for the poor." Nothing changes
in this regard as new visions replace the old.
The Bush-Clinton approach to Haiti reveals the pattern of continuity with only tactical modifications. The matter requires
much more careful treatment, but a close look will show that since the military coup that overthrew President Aristide, the
basic goal has been to impose a settlement that will deny more than a figurehead role to the elected President, much
disliked in Washington and New York because of his remarkable base of support in popular organizations that threaten to
bring about functioning democracy. If Aristide can be returned alive, fine; it will offer opportunities for pieties about our
dedication to democracy. But the bottom line is that effective power must remain with the "moderate" and "progressive"
sectors of the business classes -- meaning those who do not see massacre and torture as the optimal means to dominate
and marginalize the poor majority. In the interests of "democracy," the ruling sectors will have to be "broadened" to include
the torturers and murderers as well -- "conservative critics close to the military," as the New York Times prefers to call them.
10 No problem, because the military will be professionalized by US trainers, that is, by the same people who have already
civilized the top command in Ft. Benning, including those now orchestrating the bloodbath -- facts quietly omitted from the
standard resumes.
But the government will not be "broadened" to include the overwhelming majority of the population, who are to be reduced to
traditional passivity by the effective use of terror, their organizations decimated and their leaders either killed or placed in
remote cubicles. We will then be told that this is the best form of "democracy" for backward peoples lacking our
sophistication, democratic culture, civility and respect for others, and our traditions of freedom and justice.
An important fact about our intellectual culture is that people can read and write about our long-term policies of defending
market democracy from the Communist threat without laughing. That takes no little talent. It is real tribute to the educational
institutions and the information system.
2. Defending Market Economies
Let us drop the drivel about our love of democracy and look at the market, thus at least approaching the real world. Recall
the one quoted statement of Lincoln Gordon's that does not simply send shivers up the spine: the neo-Nazi triumph should
"create a greatly improved climate for private investments," as indeed it did. It is quite true that we seek to impose market
discipline on the Third World, now including the large regions of Eastern Europe that are to return to their Third World
origins. But the odes to the market are carefully crafted to conceal two important facts. First, market discipline in the Third
World is attractive because it will leave the societies open to Western plunder. Second, the wonders of the market are for
them, not us, and have always been: every successful developed society, from Britain to the East Asian Tigers and
dramatically including the US, gained this status by radical violation of the doctrines we impose on the poor and keeps that
status in the same way.
The second prong of the new vision, Clinton's new international economic program, reflects the understanding of these
truisms. While Administration rhetoric on the marvels of free trade boomed on the front pages as part of the PR campaign to
ram through an unpopular (and in fact, highly protectionist) version of a North American "free trade" agreement (NAFTA),
the business sections reported the new National Export Strategy that is to go far beyond the "less coordinated efforts" of
Reagan and Bush, with a planned expansion of Export-Import Bank lending, which as the Reaganites had conceded in their
day, already violated GATT rules. The Clinton Administration opposes the measures it is implementing, the press reported,
because "they amount to government subsidies that distort international markets." But there is no contradiction. As
explained by Ex-Im Bank President Kenneth Brody, "by creating such a program in the United States, the Clinton
Administration would have more influence in seeking international limits on such lending." The President also approved an
independent program that would release $3 billion in loan guarantees to domestic and foreign buyers of US-built ships --
again, for the purpose of inducing others to end such gross interferences in the market, the Wall Street Journal explained.
The logic will be recognized instantly: war brings peace, crime brings law, arms production and sales bring arms reduction
and nonproliferation, overthrowing democratic governments brings "showcases for democracy," etc. In simple words,
anything goes, as long as there is a good answer to the question: "What is in it for us?"
The simple truths were underscored by Clinton's Treasury Secretary Lloyd Bentsen: "I'm tired of a level playing field," he
said: "We should tilt the playing field for U.S. businesses. We should have done it 20 years ago." In fact, "we" (meaning
state-corporate power) have been doing it for two centuries, dramatically so in the past 50 years, even more under the
Reaganites. But that is the wrong image to convey. It is preferable to speak warmly of Carter-Reagan achievements in
moving "toward a defense buildup and less government intervention in the economy" -- Harvard economist and Wall Street
Journal contributing editor Robert Barro, pretending (it has to be a pretense) that he does not know that the Pentagon is,
and has been explicitly designed to be, a massive form of government interference in the economy to ensure that high-tech
industry feeds at the public trough.11
As I discussed here in February, the Reaganites had forged new paths in violating market orthodoxy for the benefit of US-
based corporations, but they did not go far enough to satisfy the business community, one reason for the substantial
corporate-financial support for Clinton's program as a New Democrat. And the new programs, like the old, are described in
the business press, renowned for its devotion to the needs of working people, as aimed at increasing "jobs," a term that has
taken on the meaning of the unpronounceable word "profits" in conventional Newspeak.
The phrase "What is in it for us?" is not mine. I stole it from the third component of the new Clinton vision, the decisions of
the White House panel on intervention. The Clinton panel determined to put an end to the era of altruism. No more "nice
guy," as in the days when we turned much of the world into graveyards and deserts. Henceforth the guiding consideration
will be "What is in it for us?," the words that the New York Times highlighted in its report.
Thomas Friedman's full report on the new "enlargement" doctrine fills in the picture. The National Security Adviser, he
observed, had focused on the fact "that in a world in which the United States no longer has to worry daily about a Soviet
nuclear threat, where and how it intervenes abroad is increasingly a matter of choice." That is the "essence" of the new
doctrine, Friedman emphasized, a doctrine that clearly and explicitly reflects the understanding that the "nuclear threat" was
the Soviet deterrent to US intervention. Now that the deterrent is gone, intervention can be freely undertaken, as had been
observed years earlier by others, with the Cold War winding down.
Summarizing, the new vision is that in the international economy, we will no longer be satisfied by a "level playing field" for
US corporations, but will construct a proper tilt by violating free trade rules even more thoroughly than before. And with the
deterrent gone, we will intervene where and how we choose, though only when there is something in it for us. The technical
term for this stance is "the Politics of Meaning," to which the Clintons are said to be sincerely devoted.
Actually, there is nothing new in the new vision, apart from tactical adjustments reflecting new realities of global power. The
mood of despair in the Third World is easy to understand, quite apart from the catastrophe of global capitalism that has
ravaged the traditional colonies. It is captured by a leading Brazilian theologian, Cardinal Paulo Evaristo Arns of Sao Paulo,
Brazil, who observes that throughout the Third World "there is hatred and fear: When will they decide to invade us," and on
what pretext? And by Egypt's leading newspaper, the quasi-governmental Al-Ahram, which describes the new world order as
"codified international piracy."
Another component of the new vision was leaked to the press as its basic features were being presented in public: a draft
report on government secrecy sent to the National Security Council by Clinton's Information Security Oversight Office. The
report recommends that classified documents be held for longer than was the practice during the Cold War, apart from the
rule of the Reaganite reactionaries, whose commitment to state power and secrecy went far beyond the norm. Their 1982
decision to keep "virtually all [secret government] documents classifed indefinitely" is to be relaxed, AP reported, with
restrictions of only up to 40 years, as compared to Nixon's "hold period" of 30 years and Carter's of 20 years. The Clinton
task force also recommended slow and extremely costly document-by-document review instead of declassification en masse,
and called for "balancing public interest and national security concerns," as determined by "agency officials." The procedure
for automatic declassification of certain top secret documents, set at 10 years by Nixon and 6 by Carter, is should be
extended to 15 years, the task force proposed.12
Returning to our attitude towards markets, the doctrinal system has faced unexpected problems among the population, who
were expected to sit by in silence and ignorance while the state executives rammed through their secret version of NAFTA,
grossly misdescribed as a "free trade agreement." In the light of unanticipated popular opposition, it has been necessary to
revive traditional modes of population control.
In earlier years, huge propaganda campaigns had been undertaken to overcome deviant ideas among the general public,
notably after World War II, when the world was swept by a current of social reform, bitterly fought by the US government at
home and abroad. Success in reversing these trends was great in most of the world, including the United States itself,
though in Europe and Japan the attack on labor and democracy did not achieve all of its goals and countries adopted a kind
of "social contract" that included such depraved ideas as health care, workers' rights, and other departures from the
principles for which we serve as a gatekeeper and a model.
In the US, the wave was beaten back in part through massive propaganda efforts orchestrated by the Chamber of
Commerce and the Advertising Council, which conducted a $100 million campaign to use all media to "sell" the American
economic system -- as they conceived it -- to the American people. The program was officially described as a "major project
of educating the American people about the economic facts of life." Corporations "started extensive programs to indoctrinate
employees," the leading business journal Fortune reported, subjecting their captive audiences to "Courses in Economic
Education" and testing them for commitment to the "free enterprise" system -- that is, "Americanism." The scale was
"staggering," sociologist Daniel Bell (then a Fortune editor) observed, as the business world sought to reverse the
democratizing thrust of the Depression years and re-establish the ideological hegemony of the "free enterprise system." A
survey conducted by the American Management Association (AMA) found that many corporate leaders regarded
"propaganda" and "economic education" as synonymous, holding that "We want our people to think right." The AMA
reported that Communism, socialism, and particular political parties and unions "are often common targets of such
campaigns," which "some employers view...as a sort of `battle of loyalties' with the unions" -- a rather unequal battle, given
the resources available, including the corporate media, which offered the services free of charge, then as now.
The results were remarkable, leaving the US off the spectrum of industrial societies on social issues and basic human rights.
Health care is one case that finally gained attention, as the highly bureaucratized and inefficient private system began to
become too much of a burden to corporations, though the US will remain alone, it seems, in ramming through -- again, over
popular opposition -- a system that is highly regressive (not tax-based) and that attends carefully to the needs of the few
huge insurance companies that are to take the central management role, at substantial public cost.
We might note that this is characteristic of the "welfare state." A minimally realistic picture of the phenomenon will take into
account the fiscal measures designed to benefit the rich, which amount to hefty government welfare payments. Reviewing
the scale of these devices, political scientist Christopher Howard points out that "one crucial fact remains: the middle- and
upper-income classes are the main beneficiaries of the hidden welfare state." Thus "over 80% of the tax benefits for home
mortgage interest, charitable contributions, and real estate taxes go to those earning more than $50,000," not to speak of
"the large fraction of tax expenditures that subsidize corporate fringe benefits."13 Moving on to a fully realistic conception of
the "welfare state," we will also take account of the Pentagon system, export promotion devices, and other measures
designed to provide taxpayer subsidies to the wealthy -- to protect "jobs," in standard parlance. The new health reform
program is well-crafted to satisfy the conditions of one-sided class warfare that guide policy generally.
On health reform, it has so far been possible to keep the options within a narrow spectrum that excludes the general public,
which continues to favor a standard tax-based (single-payer) system by considerable margins, as has been the case from
the mid-1940s.14 But on "free trade," discipline eroded significantly (not necessarily for good reasons, a different matter).
Accordingly, as noted, it was necessary to undertake "population control measures," to adopt some terminology of
counterinsurgency literature.
Returning to the traditional methods pioneered by the PR industry, the New York Times, in a front-page story, graciously
provided the foolish masses with "A Primer: Why Economists Favor Free-Trade Agreement." Critics of the executive version
of NAFTA are declared to be "malicious" liars, with what they say entirely ignored apart from the easy and irrelevant targets.
The Times patiently explains the "fundamental insights" about international trade that have not changed for 250 years, citing
the "legendary textbook" in which Paul Samuelson quotes John Stuart Mill as saying that international trade provides "a
more efficient employment of the productive forces of the world." Who but a lunatic could oppose that?15
To be concrete, who but a lunatic could have opposed the development of a textile industry in New England in the early 19th
century, when British production was so much more efficient that half the New England industrial sector would have gone
bankrupt without very high protective tariffs, thus cutting short industrial development in the United States? Or the high
tariffs that radically undermined economic efficiency to allow the United States to develop steel and other manufacturing
capacities? Or the gross distortions of the market that created modern electronics? Who could be so silly as to fail to
understand that we would be far better off if the US were still pursuing its comparative advantage in exporting furs and crops
from stony New England soils, while India produced textiles and ships and, for all we can guess, might have led the way to
industrial revolution? Perhaps joined by Egypt, which might not have had to rely on such radical violation of market
principles as extermination of the natives and slavery to enable King Cotton to fuel the industrial revolution, as the British
and Americans did. And who could be so ridiculous as to contemplate a NAFTA designed to reflect the interests and
concerns that are actually articulated by critical voices in all three of the countries to be linked by treaty arrangements?
No reflections on these matters appear in the primer offered to the backward peons.
Thanks to extreme departure from market orthodoxy, things did not pursue the course that economic rationality might have
entailed. Thus India, under British rule, deindustrialized, becoming an impoverished agricultural society, while Britain
prospered. Egypt's attempt to enter the industrial world was beaten back by British power. The pattern has extended
through much of the world, the US taking the lead in the campaign against independent development abroad, and against
market discipline at home, as Britain faltered in the task. Today, India, like most of the South, is undergoing neoliberal
"structural adjustment" reforms, while the US, as always, violates market principles as it pleases along with the rest of the
industrial world, most of it more protectionist than in 1980, the Reaganites often leading the pack in the attack on economic
rationality.
There are notable effects, and beneficiaries are not lacking. Take diamonds. Seven out of ten diamonds sold in the West
are cut in India, with super-cheap labor, now being driven down to still greater depths of misery thanks to structural
adjustment. But there is a bright side: "We pass some of the benefits to our overseas customers," an Indian diamond
exporter observes. Workers and their families may starve to death in the New World Order of economic rationality, but
diamond necklaces are cheaper in elegant New York shops, thanks to the miracle of the market.
There are also a few highly touted success stories, notably Ghana, "regularly cited by [International Monetary] Fund and
[World] Bank economists as the prime example of how structural adjustment cures failing economies and places them on a
path to sustainable growth," Ross Hammond and Lisa McGowan point out in a review of this "showcase." Thanks to its
obedience to market discipline, Ghana was "showered with foreign aid," including more soft loans from the World Bank than
any country except China and India (in absolute, not per capita value). Manufacturing has declined, as have domestic food
and livestock, and food self-sufficiency generally. Malnutrition has increased, environmental degradation is proceeding
apace, the external debt has tripled, and since 1987, Ghana has paid more to the IMF than it has received -- a standard
Third World phenomenon, as the capital hemorrhage from the poor to the rich countries has been joined by capital export to
the IMF and Work Bank, now "net recipients of resources from the developing countries," the South Centre (formerly the
South Commission) reports in a 1993 study. But there are reasons for IMF and Bank enthusiasm about Ghana. Agroexport
has grown, "rich Ghanaians have fared quite well under adjustment" as land ownership and income have concentrated, and
Western creditors and investors are doing nicely. The leading success story deserves its reputation.16
The picture only darkens as we move closer to home, where our benevolence can be exercised more efficiently. Consider
Nicaragua, destroyed by US terror and economic warfare, now "challenging Haiti for the unwanted distinction of being the
most destitute country in the Western hemisphere," Hugh O'Shaughnessy reports from Managua. Infant mortality has
reached the highest level in the continent after a dramatic decline before the effects of the US war set in by the mid-1980s.
The UN reports that one-quarter of all children are malnourished. Diseases that had once been almost eliminated are
rampant. Women set up street corner soup kitchens "to save tens of thousands of youngsters from starvation." Sandinista
health, nutrition, literacy and agrarian programs "have been scrapped by a government pressed by the International
Monetary Fund and Washington to privatise and cut public spending." The social fabric is coming apart under severe
duress, with rapidly rising crime and violence, as usual directed mainly against the most vulnerable people: rape, for
example, is escalating.
"The country's leaders seem to care little," O'Shaughnessy reports, though there is little they can do in the face of the
orders from on high. "Finance Minister Emilio Pereira boasts that Nicaragua has the lowest inflation in the western
hemisphere -- never mind that its four million people are starving." The far right refuses any compromise, knowing "that it
has the support of the US government." "The Central American Foreign Ministers and secretary general of the Organisation
of American States, who came on a mission of mediation, left in despair [on Sept. 9] after [right wing elements of the US-
backed UNO] refused to join peace talks."
In the countryside, the situation is even worse than in Managua. Contra forces are fighting again in the North, boasting of
their Miami suppliers. Others too are mobilized, as desperation is driving peasants to armed combat. In the main cotton
producing areas, not an acre was sowed this year because of lack of credits -- though the most powerful producers,
including the minister of agriculture and cattle-ranching and the president of the High Council of Private Enterprise, Ramiro
Gurdian, received over $40 million in loans last year, Barricada Internacional reports. Central America specialist Douglas
Porpora writes that 70% of what limited credits there are go to "a small number of large export producers," in accord with
standard US policies of enriching the wealthy sectors involved in agroexport. Farmers had been driven out of these regions
by Somoza, who had taken over the land for cotton export, part of the "economic miracle" hailed in the US, as the economy
grew while the population starved. After years of intense pesticide use, much of the soil has lost its fertility. Banana exports
and other agricultural production have also collapsed, and sugar mills, including those which had become profitable under
government control, are being shut down, apparently in a campaign by the former owners, now restored, to destroy the
unions and reverse the gains in workers' rights of the past years.17
Despite its victory, the US is not satisfied. Nicaragua's people must suffer much more to atone for the crimes they have
committed against us. In October 1993, the IMF and World Bank, virtually US-run, presented new demands of unusual
severity. Nicaragua must reduce its debt to zero; eliminate credits from BANIC, one of the remaining state banks; privatize
enterprises and government services such as energy and water, to ensure that poor people really feel the pain -- unable to
give their children water to drink, for example, if they cannot pay, thanks to zooming unemployment. Nicaragua must cut
public expenditures by $60 million, virtually eliminating much of what remains of health and welfare services, while the
mounting disaster offers new opportunities to condemn the "economic mismanagement" of the despised enemy.
The $60 million figure was perhaps selected for its symbolic value. Last year the already privatized banks shipped $60
million abroad, following sound economic principles: playing the New York stock market is a far more efficient use of
resources than giving credits to poor bean farmers, as any competent student of economics can explain. The bean harvest
was lost, a catastrophe for the population. Banks are now to be fully privatized, to ensure the "more efficient employment of
the productive forces of the world," with consequences for the population that are evident but that do not enter into
calculations of economic rationality, as sophisticates understand.
It is only fair to add that the wonders of the free market have opened up alternatives, not only for rich landowners,
speculators, and corporations, but even for the starving children who press their faces against car windows at street corners
at night, pleading for a few cents to survive. Describing the miserable plight of Managua's street children, David Werner, the
author of Where There is No Doctor and other books on health and society, writes that "marketing shoe cement to children
has become a lucrative business," and imports from multinational suppliers are rising nicely as "shopkeepers in depressed
communities do a thriving business with weekly refills of the children's little bottles" for glue-sniffing, said to "take away
hunger." The miracle of the market is again at work, maximizing efficient use of resources.18
On Nicaragua's Atlantic Coast, 100,000 people are now starving to death, with aid only from Europe and Canada, Church
sources report. Most are Miskito Indians. Nothing was more inspiring than the laments about the Miskitos after a few dozen
were killed and many forcibly moved by the Sandinistas in the course of the US terrorist war, a "campaign of virtual
genocide" (Reagan), the most "massive" human rights violation in Central America (Jeane Kirkpatrick), far outweighing the
slaughter, torture, and mutilation of tens of thousands of people by the neo-Nazi gangsters they were directing and arming,
and lauding as stellar democrats, at the very same time -- or the "successful baby-hunting" that foreign reporters observed
at exactly that moment. What has happened to the laments, now that 100,000 are starving to death?19
The answer is simplicity itself. Human rights have purely instrumental value in the political culture; they provide a useful tool
for propaganda, nothing more. Ten years ago the Miskitos were "worthy victims," in Edward Herman's useful terminology,
their suffering attributable to official enemies; now they have joined the vast category of "unworthy victims" whose far worse
suffering can be added to our splendid account. What more need be said?
"The United States has a visceral need to annihilate the Sandinistas once and for all," said a foreign affairs expert whom
O'Shaughnessy quotes. That was evident years ago, when the refusal of the Sandinistas to genuflect in the expected
fashion aroused sheer frenzy. In 1985, one congressman described "the lust that members [of Congress] feel to strike out
against Communism" in Nicaragua. Opinion divided between those who called for brutal terror to punish the crime of
disobedience, and those on the far left of the respectable spectrum who recommended that we should support terror only if
it is "cost-effective" (Michael Kinsley), and if that test fails, we should seek other means to "isolate" the "reprehensible"
government in Managua and "leave it to fester in its own juices" (Senate dove Alan Cranston). Nicaragua must be restored
to the "regional standards" of our terror states, Tom Wicker and other media doves declared with passion. Nor will the US
rest until the military is under Washington's control, with consequences that are familiar throughout the continent, a crucial
element of US policy towards Latin America for 50 years, emphasized with particular force by the Kennedy intellectuals.
Nicaragua's efforts to pursue the peaceful means required by international law aroused particular fury. In 1984, senior US
government officials demanded that an invitation to Daniel Ortega to visit Los Angeles be withdrawn "to punish Mr. Ortega
and the Sandinistas for accepting the Contadora peace proposal," the New York Times reported without comment, referring
to peace efforts that the US government was able to undermine. The World Court condemnation of the US evoked further
tantrums. Washington's threats finally compelled Nicaragua to withdraw the claims for reparations awarded by the Court,
after a US-Nicaragua agreement "aimed at enhancing economic, commercial and technical development to the maximum
extent possible," Nicaragua's agent informed the Court. The withdrawal of just claims for billions of dollars of reparations
having been achieved by force, Washington abrogated the agreement, suspending its trickle of aid with demands of
increasing depravity and gall.
The imperial arrogance is most impressive. Having been condemned by the World Court for the "unlawful use of force"
against Nicaragua in a campaign of wholesale international terrorism that no other actor in the world scene could hope to
approach, we now demand righteously that Nicaragua prove to us that it is not engaged in terrorism. Any further aid is
conditioned on this proof, the Senate voted. And having helped to destroy the country and its people prior to the terrorist
war, we now demand that the beneficiaries of those wonderful years receive properties and reparations. In September 1993,
while the new foreign policy vision was taking its final form, the Senate voted 94-4 to ban any aid if Nicaragua fails to return
or give adequate compensation (as determined by Washington) for properties of US citizens seized when Somoza fell --
assets of US participants in the crushing of the beasts of burden by the tyrant who had long been a US favorite. Voting
against were Paul Wellstone (D-MN), Jeff Bingaman (D-NM), Paul Simon (D-IL), Russell Feingold (D-WI). In October,
Senator Christopher Dodd, a leading Senate dove, visited Managua to ensure that these orders are fully understood.
Nothing will satisfy the lust to punish the transgressors, even their reduction to Haitian standards. Any mafia don would
understand. If someone on your turf fails to pay protection money, you don't just give him a black eye. Others have to learn
the lesson. The world must come to understand what virtually limitless power will achieve if offended in any way -- the lesson
that Bolivar sought to impart. Accordingly, the treatment is uniform, extending to Vietnamese, Cubans, Iraqi children, indeed
anyone who doesn't understand the rules of the world for which we are the gatekeeper and the model.20
3. Demystification
A major qualification has to be added to everything said so far. I have been adopting the standard mystification that nations
are actors in world affairs, nonsense of course. In any "really existing state," power is sharply skewed; those who hold it use
the state to defend their interests, whatever the impact on others at home or abroad, a truism emphasized by that noted
revolutionary Marxist Adam Smith, among many others.
Demystifying, all looks different. Who lost War II? Certainly not German and Japanese industrialists who dedicated
themselves to the fascist cause, and were quickly restored to power and wealth by the conquering armies. Who won?
Certainly not the anti-fascist resistance, which was dispersed or decimated by the military victors. Who lost the Cold War?
Surely not the reigning Communist nomenklatura, now the leaders of nomenklatura capitalism -- "a parasitical new robber-
baron class of speculators and mafiosi," as Soviet scholar Robert Daniels calls them, with wealth beyond their wildest
dreams. Surely not the tough Communist Party boss of Sverdlovsk, Boris Yeltsin, now elevated to the rank of leading
democrat as he reverses Russia's democratic gains from 1989, highly praised by Western governments and press -- and by
financial markets -- because of his commitment to the "market shock" that is expected to "create a greatly improved climate
for private investments." Or his old subordinates from the CP apparatus, now staffing his bureaucracy. Who won the Cold
War? Not the huge mass of the populations controlled by Western power sectors, neither in the former colonial domains nor
at home; nor the common people of the East, now learning anew the lessons of their history as Third World subjects.21
A true history will depart radically from standard formulas.
In Adam Smith's day, the "principal architects" of policy, who saw to it that their interests were "most peculiarly attended to,"
were "merchants and manufacturers." The world has changed since, quite considerably in just the last 20 years, in part as a
result of Richard Nixon's dismantling of the post-World War II (Bretton Woods) international economic system. One
consequence of these major changes in world order has been a huge increase in unregulated capital. The World Bank
currently estimates the total resources of international financial institutions at about $14 trillion. Not only can European
central banks not defend national currencies in the face of this unprecedented private power, but the European Monetary
System has "effectively collapsed" as EC governments "have experienced the power of today's free-wheeling global capital
markets," the Financial Times reports in a review of the world economy and finance. The huge and unregulated international
capital market controls access to capital, but "global investors impose a price. If a country's economic policies are not
attractive to them" they will use their power to induce changes. Such pressures may not be "fatal" to the very rich, but for the
South, the international capital market is "no more than an unacceptable arm of economic imperialism," which governments
cannot resist in an era when even in the rich countries, governments "are on the defensive and global investors have
gained the upper hand."
A related development is the dramatic shift in use of capital resources. Cambridge University economist John Eatwell notes
the striking fact that "In 1971, just before the collapse of the Bretton Woods fixed exchange rate system, about 90 percent of
all foreign exchange transactions were for the finance of trade and long-term investment, and only about 10 percent were
speculative.
Today those percentages are reversed, with well over 90 percent of all transactions being speculative. Daily speculative
flows now regularly exceed the combined foreign exchange reserves of all the G-7 governments," the richest seven. One
consequence is that "economic performance in the 1970s and 1980s has been poor throughout the industrial nations of the
OECD," with growth in each G-7 country about half that of the 1960s, unemployment at least doubled, and productivity
growth in manufacturing industry sharply down. Furthermore, "the sheer scale of speculative flows can easily overwhelm any
government's foreign-exchange reserves," as just noted. National economic planning is increasingly difficult even for the
rich, market instability is increasing, and governments are driven to deflationary policies to preserve market "credibility,"
driving economies "toward a low-growth, high-unemployment equilibrium," with declining real wages and increasing poverty
and inequality.
A third related development has been the sharpening of the double-edged conception of the market: fetters for the weak, to
be thrown aside at their pleasure by the strong. During the past 20 years, free market rhetoric has soared to glorious
heights, while the rich countries have enhanced their protections against market discipline. GATT economist Patrick Low
draws attention to "the sustained assault on [free trade] principle from which the GATT suffered, starting around the early
1970s," a "difficult period economically" until today, in which "the GATT did not fully succeed in holding the line against
growing protectionism and systematic decline" -- to put it mildly. Again, the Reaganites combined the two tendencies quite
brilliantly, orating in free market voices to the poor while assuring the rich, loud and clear, that the state will intervene
massively to protect their interests. Secretary of the Treasury James Baker "proudly proclaimed that Mr Ronald Reagan had
`granted more import relief to US industry than any of his predecessors in more than half a century'," international
economist Fred Bergsten points out, adding that the Reaganites specialized in the kind of "managed trade" that most
"restricts trade and closes markets," voluntary export restraint agreements -- "the most insidious form of protectionism,"
which "raises prices, reduces competition and reinforces cartel behaviour." The increase in the Pentagon budget alone is a
major form of state intervention in the economy for the benefit of the rich, and has been understood just that way for half a
century -- one reason why there will be a long wait for a "peace dividend."
A fourth related development has been the rapid acceleration of the internationalization of the economy. Foreign sales of
Transnational corporations (TNCs) now far exceed all of world trade -- and of what is called "world trade," well over a third is
now estimated to be intrafirm transactions, centrally managed interchanges within corporations that happen to cross an
international border -- one of many reasons why talk about "free trade" and "markets" is of limited relevance to the real
world.
An obvious corollary is the sharp decline in meaningful democracy discussed before in these pages (see, e.g., Edward
Herman, "The End of Democracy?," Z September), as extreme totalitarian institutions (corporations, banks, investment firms,
etc.), with strict top-down control, internal secrecy, and only the most limited public accountability gain even further power on
a global scale. Naturally they are constructing organs of governance to reflect their interests (GATT, the IMF and World
Bank, the EC executive, G-7 closed sessions, etc.), all properly insulated from popular interference, even awareness, a new
and higher stage in the long struggle to remove any threat to "top-down" forms of democracy that enhance "the traditional
structures of power with which the United States has long been allied" -- eliminating mystification, "the traditional structures
of power" with which the "principal architects" of US government policy and the interests they serve have "long been allied."
The consequences are not hard to see or understand: slowdown in economic growth, decline in economic or other planning
in the interests of the general population, and extension of the Third World model to the rich countries themselves as the
domestic population becomes superfluous for profit-making, the supreme human value in the world for which we are "the
gatekeeper and the model."
The US and Britain have been leading the way in these developments, and their accomplishments are welcomed by those
who matter. While the new Clinton vision was receiving its final touches, a front-page story in the Wall Street Journal
reported "a welcome development of transcendent importance," no less: "the increasingly competitive cost of U.S. labor."
Thanks to the harsh attack on labor through a combination of state power and improved opportunities to shift production
abroad, US labor costs per unit output fell 1.5% in 1992, while costs increased in Japan and Europe, as well as Taiwan and
South Korea. In 1985, hourly pay in the US was higher than the other G-7 countries. By 1992, it had fallen to below its
wealthy competitors, apart from England, where Thatcher had done even better in punishing working people. Hourly wages
were 60% higher in Germany than in the US, 20% higher in Italy. The US has not yet reached South Korea and Taiwan, but
progress is being made, in the richest country in the world, with unparalleled advantages -- and a highly class conscious
business community, fighting a bitter class war against an enemy lacking resources, organization, and meaningful modes of
interaction or participation.22
The lessons are spelled out by Business Week. Europe must "hammer away at high wages and corporate taxes, short
working hours, labor immobility, and luxurious social programs." It must learn the lesson of Britain, which finally "is doing
something well," the Economist announces approvingly, with "trade unions shackled by law and subdued," "unemployment
high," and the Maastricht social chapter rejected so that employers are protected "from over-regulation and under-flexibility
of labour" (job security). American workers are barely a step behind.
The end of the Cold War offers new weapons for use against working people in the rich societies. There are "green shoots
in Communism's ruins," exults the world's leading business daily, the London Financial Times; not everything is grim in the
former Communist world. The "green shoots" are the new opportunities for corporations to reduce costs thanks to "rising
unemployment and pauperisation of large sections of the industrial working class" as capitalist reforms are instituted. GM
opened a $690 million assembly plant in East Germany, where workers are willing to "work longer hours than their pampered
colleagues in western Germany" at 40% of the wage and with few benefits, the journal relates happily. Poland is still better,
with workers available at 10% the wage of the pampered Western workers, kept that way "thanks largely to the Polish
government's tougher policy on labour disputes," that is, repression of labor.
Of course, the term "markets" has its usual meaning. GM purchased an auto plant near Warsaw, economist Alice Amsden
comments, "on the under-the-table condition that the Polish government provide it with 30 percent tariff protection" -- the
usual form that "free market" enthusiasms take. Tax holidays for investors are also offered, among other gifts.
The same is true when our own growing Third World seeks to entice foreign investors. Alabama recently beat out
competitors for a new Daimler-Benz plant for which its population "will pay dearly," the Wall Street Journal noted a few days
after the Clinton economic strategy was announced. Germany's leading conglomerate paid a royal $100 for the plant site,
and has been offered a package of tax breaks valued at over $300 million, along with other publicly-funded services.
Alabama "has a Third World economy," the head of an economic development group observes: "They're losing money to
invest in their people, their roads, their state in general," as the market performs its miracles. The traditional Third World
can explain to us how it works.23
The prospects are inspiring. Canadian social benefits and workers' rights can be attacked through "free trade," which forces
harmonization downwards to US standards. The same device can be used to "lock the United States into a low-wage, low-
productivity future," the congressional Office of Technology Assessment concludes in its review of the executive version of
NAFTA, scrupulously designed to protect rights of investors, not workers or future generations (the environment). And an
increase in standard of living for Mexican workers is not a serious threat, given harsh dictatorial rule and the flooding of the
labor market as peasants are driven from the land by US agribusiness exports. German workers had become "used to some
of the best working conditions on earth," Business Week comments under the heading "Time to Leave the Cocoon?" But no
more, as some "60% of German industrial jobs are threatened by competition from Eastern Europe, Asia, and the U.S.," the
last now offering its contribution to the ranks of the Third World thanks to "the welcome development of transcendent
importance." With these "green shoots" rising in old and new Third Worlds, Germany's biggest employers' federation,
Gesamtmetall, was able to issue a "declaration of war," cancelling "union wage and vacation contracts -- for the first time
ever." Meanwhile profits should do just fine, as the world moves towards the desired two-tiered model under its new visions.
24
In brief, the developments of the past years offer new ways to put the screws on the overwhelming majority of the population
both abroad and at home, options enhanced by the end of the Cold War -- which is why the Cold War victors are celebrating
so triumphantly: investors, executives, and wealthy professionals at home; the former Communist Party rulers now joining in
the global rip-off; their counterparts in the traditional South; and, of course, respectable sectors of the educated
communities, who are called upon to trumpet the "victory for a set of political and economic principles: democracy and the
free market." The Clinton vision merely announces another small step towards the same ends.
How far can this go? Will it really be possible to construct an international society on something like the Third World model,
with islands of great privilege in a sea of misery -- fairly large islands, in the richer countries -- and with controls of a
totalitarian nature within democratic forms that increasingly become a facade? Or will popular resistance, which must itself
become internationalized to succeed, be able to dismantle these evolving structures of violence and domination, and carry
forth the centuries-old process of expansion of freedom, justice, and democracy that is now being aborted, even reversed?
These are the large questions for the future.
Noam Chomsky
Oct. 28, 1993
A government of lies: The political meaning of the Rove affair
By Patrick Martin
23 July 2005
Whenever a major crisis emerges in political life, it is necessary to distinguish between the often peculiar forms in which the
crisis makes its initial appearance and the more fundamental underlying issues. So it is with the uproar touched off by the
reports that Karl Rove, Bush’s top political aide, leaked the identity of a CIA undercover operative to the press, as part of an
effort to punish critics of the Iraq war.
The facts of the Rove affair are no longer in question. In July 2003, after former ambassador Joseph Wilson published an
op-ed column in the New York Times criticizing the administration for making bogus claims that Saddam Hussein had sought
to purchase uranium in Africa, the White House moved swiftly to retaliate. Wilson explained in his article his own role in going
to Niger at the behest of the CIA to investigate the issue in 2002, and related how he found the charges to be unfounded.
Only a day after the column appeared, top White House aides were reading a secret State Department memorandum on the
Wilson trip which included the information—denoted as top secret—that Wilson’s wife Valerie was a CIA operative
specializing in the field of weapons of mass destruction. Within three days, Rove and other officials were circulating that
information to the press, suggesting that Mrs. Wilson had engineered her husband’s trip and presenting this as a case of
nepotism that cast doubt on Wilson’s findings.
A week after Wilson’s column appeared, right-wing columnist Robert Novak, a longtime recipient of leaks from Karl Rove,
became the first journalist to identify Mrs. Wilson publicly as a CIA agent, under her maiden name, Valerie Plame. This was
accompanied by the White House-inspired smear about her alleged role in sending her husband to Niger.
Special prosecutor Patrick Fitzgerald was appointed by Attorney General John Ashcroft in December 2003 to investigate
whether crimes were committed in leaking Plame’s name and identity to the media. While Rove’s attorney has said that Rove
is not a “target” of the investigation—meaning no decision has yet been made on a possible indictment—he admitted that
Rove and many other White House aides remain “subjects,” i.e., potentially indictable. Fitzgerald must complete his
investigation and bring indictments by October, when the term of the grand jury looking into the affair expires.
In a sign of the growing concern that some White House aides will face charges, either for the leak itself or for subsequent
lies or obstruction of justice before the grand jury, Bush appeared before the press July 18 and significantly revised his
public stance on the case. Where previously he had pledged to fire any staffer found to be involved in leaking the name of
the covert CIA officer, he now limited this to a commitment to fire any official who was guilty of a crime. This much more
narrow standard would allow Rove, for instance, to keep working at the White House as deputy chief of staff and top political
adviser even if he were to be indicted.
The more thoughtful media commentators have begun to acknowledge that the real issue in the Rove affair is not whether
Rove, Cheney’s chief of staff Lewis Libby, former Bush press secretary Ari Fleischer or some other White House aide leaked
Plame’s name or lied about it to Fitzgerald’s investigators or the grand jury. Such lies are only symptomatic of the much
greater lies which constitute the Bush administration’s entire case for war in Iraq: claims that Iraq possessed weapons of
mass destruction and Saddam Hussein was an ally of Al Qaeda, and suggestions that the Iraqi president was somehow
linked to the 9/11 terrorist attacks.
In one perceptive commentary, New York Times columnist Frank Rich wrote July 17 that the public should not “get hung up”
on Rove “or on most of the other supposed leading figures in this scandal thus far.” He continued: “Not Matt Cooper or Judy
Miller or the Wilsons or the bad guy everyone loves to hate, the former CNN star Robert Novak. This scandal is not about
them in the end, any more than Watergate was about Dwight Chapin and Donald Segretti or Woodward and Bernstein. It is
about the president of the United States. It is about a plot that was hatched at the top of the administration and in which
everyone else, Mr. Rove included, are at most secondary players. That the investigation has dragged on so long anyway is
another indication of the expanded reach of the prosecutorial web.”
Rich’s column was entitled, “Follow the Uranium,” and the comparison to Watergate is more than apt, as is his political
conclusion: “This case is about Iraq, not Niger. The real victims are the American people, not the Wilsons. The real culprit—
the big enchilada, to borrow a 1973 John Ehrlichman phrase from the Nixon tapes—is not Mr. Rove but the gang that sent
American sons and daughters to war on trumped-up grounds... this scandal is about the unmasking of an ill-conceived war,
not the unmasking of a CIA operative...”
Like Watergate, and unlike the bogus right-wing-inspired investigations into the Clinton White House, the Rove affair is
about government policy, in which the actions of the bit players can be traced back directly to the decision-makers at the
top: Bush, Cheney, Rumsfeld & Co. And like Watergate, the information has begun to surface because of a bitter conflict
within the state apparatus, in which murky and even reactionary motives play a role. (Let us not forget the lesson of
Watergate’s Deep Throat, now revealed as FBI deputy director W. Mark Felt, who leaked critical details of the Nixon White
House conspiracy largely out of institutional loyalty to the FBI and J. Edgar Hoover.)
The driving force of the conflict now raging in official Washington is the increasingly evident failure of the Bush
administration’s military intervention in Iraq. There are bitter recriminations over the consequences of Bush’s refusal to heed
the cautions from the intelligence agencies and military about the likely outcome of the invasion of Iraq, which has left
American imperialism bogged down in an open-ended counter-insurgency campaign.
The dreams of a swift and easy victory giving the US control over the second largest oil exporter, as well as a dominant
strategic position in the Middle East, have been shattered. Instead, the plans of the US government and the military for
further actions—in Iran or North Korea, for example, and ultimately China—have been significantly undermined, at least in
the short term, because nearly all of the deployable forces of the Army and Marine Corps are tied down in Iraq.
No section of the political establishment advocates an American withdrawal, which would constitute a strategic defeat far
more costly than Vietnam. But there are intense divisions over policy, with leading sections of the Democratic Party openly
advocating the commitment of tens of thousands more troops to ensure military control of Iraq, a course of action that leads
inevitably to restoration of the draft.
In the meantime, there is plenty of blame to go around for the current debacle, and a bitter struggle is taking place within the
upper echelons of the executive branch, Congress, the judiciary, the two bourgeois political parties, the intelligence
agencies, the military brass, and the most powerful corporate lobbyists, influence peddlers and media figures.
All told, this ruling stratum involves mere thousands of people, a layer so narrow that three of the current protagonists, Karl
Rove and Joseph and Valerie Wilson, attend the same church in suburban McLean, Virginia. This makes the infighting
especially bitter, as demonstrated by Rove’s role in “outing” Mrs. Wilson and perhaps endangering her life. In so doing, the
Bush White House broke one of the time-honored rules of the Washington Mafia—likewise observed by its underworld
counterpart—“Fight if you must, but don’t ‘hit’ the wife.”
Frank Rich is correct to trace the Rove affair back to the “big lie” campaign to sell the Iraq war, but he is only half right, or,
rather, he stops halfway. The Iraq war was not the beginning of Bush’s lies, but the culmination. This is an administration
based on lies from its very inception, when it took office through the theft of the 2000 presidential election, hijacked by the
Supreme Court intervention to shut down ballot-counting in Florida.
Then came September 11, 2001, an event which has been the subject of the greatest campaign of distortion and cover-up
in US history. No serious investigation has been conducted into the US government role in these attacks: from the initial CIA
recruitment and training of the founders of Al Qaeda in the 1980s, to the inexplicable ease with which the Islamic
fundamentalist terrorists entered the United States and orchestrated multiple hijackings, even though many of them were on
government watchlists or actually under surveillance by US intelligence agencies.
The least credible of all accounts of 9/11 is the official story that 19 predominantly Saudi terrorists entered the United States
and carried out an intricately organized attack involving multiple hijackings, without any US government agency having the
slightest idea what they were doing. This must be set against the enormous political benefits which the Bush administration
derived from the 9/11 attacks, which provided the pretext for long-planned invasions of Afghanistan and Iraq and for an
unprecedented attack on democratic rights at home, and which served as the basic platform for Bush’s 2004 reelection
campaign.
Tens of millions of Americans recognize today that the Iraq war is based on lies, but they find no political expression for this
understanding within the existing two-party system. The whole US political establishment is deeply discredited—the
Democratic Party, which voted for the war and continues to support it; the media, which swallowed Bush’s lies and
regurgitated them uncritically; and the official “labor” movement, a political cipher with no serious influence or support in the
working class.
Opposition to the war and support for a US withdrawal from Iraq are widespread, despite the virtually complete ban on such
views within the official media and political circles. And there is growing recognition that the “war on terror” is actually a war
for oil and world domination.
The conclusion that must be drawn from the complicity of the entire political system in an imperialist war justified by lies is
the need to develop a mass independent political movement of the working class based on a socialist program and directed
against the financial oligarchy in whose interests this war is being waged, and all of its political representatives.
This past April debate began in Congress on the Central American Free Trade Agreement (CAFTA). CAFTA represents the
Bush administration’s effort to resurrect its stalled plans for a “free trade” zone encompassing the entire Western
hemisphere, called the Free Trade Agreement for the Americas (FTAA). FTAA is the Bush-Corporate plan to extend the
North American Free Trade Agreement (NAFTA), passed in 1994, that established a free trade zone between Canada, the
U.S., and Mexico. NAFTA has already cost U.S. workers the loss of more than a million jobs.
CAFTA is thus the strategic nexus, the transition between NAFTA and Bush’s future plans for a Western hemisphere-wide
version of NAFTA involving 34 nations, a FTAA. But passage of CAFTA is not guaranteed. Not because of massive public
opposition to the further loss of U.S. jobs to corporate-defined trade that would result should CAFTA and FTAA pass. But
because of splits within the U.S. corporate elite over the proper pace and focus of free trade.
U.S. agribusiness is uneasy about the CAFTA deal, especially the politically powerful sugar industry. Textiles, apparel, and
other U.S. light manufacturing industries are also opposed. With average factory wages of 90 cents an hour in the CAFTA
region, CAFTA will almost certainly result in significant losses due to imports for these U.S. corporations, which are already
being hammered by even lower cost imports from China producing similar factory goods for 64 cents an hour. From their
perspective, they don’t need another “China on their doorstep” to compete with.
Aligned against this group are corporations strongly pushing for further expansion of “free trade” in the Western
hemisphere. This group constitutes a long list of “who’s who” among U.S. multinational corporations. With only $33 billion in
U.S. annual trade with Central America today, these corporate forces dominating U.S. trade policy for the past two decades
are not concerned about exports vs. imports. The value of current U.S. trade with the small city-state of Singapore, for
example, exceeds U.S. trade with all the CAFTA nations. U.S. multinationals’ interest in the CAFTA deal is not about trading
products with Central America, it is about opening U.S. corporate foreign direct investment into that region and then
extending it beyond, to all of Latin America. For them CAFTA is not really about trade, but about exporting their factories
(and U.S. jobs) to the region to take advantage of lower labor costs, looser environmental regulations, and lower taxes in
particular. As others have noted, CAFTA is not a trade agreement, but a U.S. multinational corporation “outsourcing”
agreement.
Lined up on behalf of this latter corporate faction are the big guns of the corporate lobbying world—the Business
Roundtable (BRT), the National Association of Manufacturers (NAM), the U.S. Chambers of Commerce (USCC), and their
joint cross-organization lobbying organization on which representatives of all the above traditional corporate lobby groups sit
called the Emergency Committee for American Trade, or ECAT.
ECAT is composed of the CEOs of major U.S. corporations with global operations. The same folks sit on ECAT that drove
NAFTA and China free trade deals in the 1990s. ECAT was formed in the late 1970s when the current “free trade” offensive
began to take form. ECAT corporations total $2 trillion in annual sales and employ five and half million workers. The
interlockings between ECAT and the BRT, the NAM, and others are exceptionally tight. For example, Harold McGraw III, who
is chair and CEO of the McGraw-Hill companies is also chair of ECAT as well as chair for the International Task Force of the
Business Roundtable. ECAT is also the lobbying arm for the ad-hoc Business Coalition for U.S.-Central American Trade, a
subgroup of 400 companies and trade associations, established specifically to get CAFTA passed. Their ad-hoc coalition is
an example of loose corporate alliances that come and go with specific legislative objectives. ECAT remains as the front
coordinating group focusing on “free trade” for the traditional general corporate lobbying groups like BRT, NAM, and others.
CEOs of the latter sit on the former, and may bring in others to participate in ad-hoc formations like the Business Coalition.
ECAT and other corporate driven trade policies over the past quarter century have cost U.S. workers at least 8 million lost
jobs and reduced wages for the rest by at least 15-25 percent as a result as well. Since Bush alone took office,
approximately 1.8 million U.S. jobs have been lost directly attributable to so-called “free trade.” Those losses were roughly
equally distributed between losses due to NAFTA trade and China trade. Higher paying manufacturing and technology jobs
have been leaving the U.S. in tens of thousands every month.
The devastation of U.S. jobs by such trade policies is not a recent Bush phenomenon. This has been going on since
Reagan and now is accelerating to record levels under George W. Bush. Consider the manufacturing sector in the U.S.
alone: in 1979 just before Reagan came to office, there were 21.2 million manufacturing jobs in the U.S. By 1992, after 12
years of Reagan and Bush senior there were only 16.7 million such jobs. According to one study, trade and the growing U.S.
trade deficit accounted for 83 percent of the millions of jobs lost in manufacturing alone between 1979-1994. According to
the same study, the millions of jobs lost to foreign imports paid on average twice that of new jobs that were created in U.S.
export industries during the same period. Jobs lost were clearly being replaced by jobs of lower quality and lower pay.
Apart from assisting and presiding over the launching of a free trade offensive by U.S. corporations in the 1980s, it was on
Reagan’s watch that a first formal free trade agreement was negotiated by the U.S. with another country, in this case
Canada in 1988.
The U.S.-Canada Free Trade law served as the precursor to NAFTA. Building on the U.S.-Canada Free Trade agreement,
George H.W. Bush in 1990 then developed the plan to extend that agreement to Mexico, thus creating NAFTA, the direct
predecessor to the currently debated CAFTA. However, it would take a Democrat, Bill Clinton, to deliver the Bush-corporate
vision.
With 3.2 million jobs already lost by 1994, following the implementation of NAFTA that same year, another 3 million jobs were
lost between 1994 and 2000. Moreover, the trade-related loss of 3 million jobs during the Clinton years occurred in only 7
years, in contrast to the previous 3 million jobs lost during the previous 15 years from 1979-1994. Trade-related job loss
during the 1990s occurred at an average rate of 428,000 a year compared to 213,000 a year on average during the
Reagan-Bush period, or nearly twice as fast. That accelerating loss in the 1990s was due largely to NAFTA.
There is a direct relationship between U.S. trade deficits and U.S. job losses due to trade. For example, the U.S. Department
of Commerce in 1994 estimated that for every $1 billion in U.S. trade deficit (or surplus), one could expect a loss (or gain) of
approximately 13,000 jobs in the U.S.
The U.S. net trade deficit with Mexico and Canada surged from $16.1 billion in 1993, the year preceding NAFTA’s
implementation, to $111 billion a year today. By 2000 a total of 766,000 actual and potential U.S. jobs were lost to Mexico
due solely to the effects of NAFTA. During the first two years of the George W. Bush administration another 113,00 jobs
were directly lost, raising the overall total of net U.S. jobs lost due to NAFTA between 1994-2002 to 879,280. An additional
number of lost jobs for 2003-04 is yet to be estimated, but it is probably safe to assume the total loss of jobs to date from
NAFTA exceeds one million and rising.
The loss of a million U.S. jobs, overwhelmingly manufacturing and high paid quality jobs, has had a definite negative impact
on the average hourly wage in the U.S. The U.S. Trade Deficit Review Commission, a source unlikely to overestimate the
loss of jobs due to trade, concluded in its report in 2000 that “Trade is responsible for at least 15% to 25% of the growth in
wage inequality in the United States”
But NAFTA wasn’t the only game in town during the Clinton years. Between 1994 and 2000 trade policies apart from NAFTA
resulted in the loss of additional high paid U.S. jobs. Most notable among other initiatives was Clinton’s successful push for
more open trade with China. In 1999, the year preceding the passage of PNTR, U.S. imports from China exceeded exports
to China by $81 vs. $13 billion. The loss of U.S. jobs from China trade during the 1990s had already amounted to 880,000,
according to reliable estimates.
In 2001 the U.S. International Trade Commission (USITC) predicted that by 2010 the U.S. trade deficit with China would
reach $131 billion. This would translate into a net further loss of 817,000 jobs from trade with China, added to the 880,000
jobs lost during the 1990s. But even this would prove a gross underestimation.
By the end of Bush’s first term in 2004, fully 6 years earlier than predicted by the USITC, the trade deficit with China
amounted to $162 billion (not $131 billion), creating the largest trade imbalance ever recorded by the United States with a
single country and millions more lost jobs to that economy. That China trade deficit is projected to exceed $200 billion in
2005. Under George W. Bush it is clear that U.S. job losses due to trade deals have been accelerating. That’s a $162 billion
annual trade deficit with China and another $111 billion for NAFTA; with more than a million lost jobs due to NAFTA and
another 1.7 million lost to China over roughly the last decade.
The Bush-Corporate Drive
In 2002 the Bush team and U.S. corporate free traders set out in heavy handed fashion to force an FTAA agreement on
Latin American nations that largely benefited U.S. multinational corporations at the expense of those nations. Bush had
originally planned to achieve this through negotiations within the World Trade Organization (WTO). But trade negotiations
collapsed in September 2003 at the WTO meeting in Cancun, Mexico. Resistance to Bush and U.S. demands within the
WTO was led by a coalition of 21 nations, at the core of which were 13 Latin American countries, in turn led by Brazil,
Argentina, and Venezuela. These were countries that had been particularly ravaged by free market and free trade
experiments in the previous decade and now had elected leaders willing to bargain harder with the U.S.
The focus of their opposition was Bush’s refusal to open U.S. agricultural markets at Cancun, his insistence on pro-U.S.
intellectual property rights, his opposition to labor and environmental issues, and U.S. demands for special treatment for U.
S. pharmaceutical, technology, and professional services.
Bush had hoped to quickly follow up any success at the September 2003 WTO with the rapid conclusion of an inter-
Americas FTAA agreement scheduled for November 2003 in Miami. Bilateral free trade agreements concluded the previous
July 2003 with Chile and Singapore were to provide the “model” for the FTAA. But once again at Miami in November 2003,
the same issues of agricultural subsidies, U.S. tariffs, intellectual property, rules for unlimited direct U.S. investment, and
services trade were key. Brazil, Argentina, and Venezuela once again led the opposition. To avoid an embarrassing break
up of this second attempt at regionalized trade, the U.S. agreed to what was called FTAA-lite, essentially a face saver for the
Administration. It meant in effect that all parties would keep trying to negotiate a FTAA-wide agreement at a subsequent
date, although for now FTAA was essentially tabled indefinitely.
Following the tactical defeats in Cancun and Miami, Bush trade strategy quickly shifted. To reverse the appearance of
momentum lost, the Bush administration quickly closed the CAFTA deal in December 2003 with four nations in the Central
America region: El Salvador, Nicaragua, Honduras, and Guatemala. Added impetus to CAFTA was soon provided by Costa
Rica and the Dominican Republic, both joining in early 2004. In addition, follow-up meetings to strategize how to resurrect
FTAA were held by the CAFTA group in Mexico later in 2004 and in early 2005.
Bush strategy thus turned to CAFTA to get his plans for a Western hemisphere free trade zone back on track. The Bush
team envisions passage of CAFTA as a means to pressure the South Americans to return to the table to negotiate with the
U.S. once again. Should the Bush-corporate forces fail to get CAFTA passed, the larger real corporate trade target of FTAA
for all intents and purposes will die on Bush’s watch.
The Strategic Lynchpin
CAFTA remains the lynchpin to Bush’s trade plans in his second term. Should CAFTA get approved by Congress later this
year, the Bush administration will quickly attempt to add to the list of free trade partners countries such as Peru, Ecuador,
Panama, and Columbia with which it currently is negotiating bi-lateral trade agreements, as well as to add Chile with which it
has already negotiated a trade agreement. With CAFTA and these latter countries in hand it will have achieved something
of a countervailing presence in Latin America with which to pressure Brazil and its allies.
But there are growing obstacles to this Bush plan. On the one hand, a trade deficit is expected to exceed $700 billion in
2005, with more than $200 billion of that attributable to China alone. On the other hand, there is also the growing trade
independence of Latin American nations in general as those countries rapidly drift “left” as the U.S. is bogged down in the
Middle East. Brazil in particular, together with its key allies in South America, Argentina, and Venezuela, is intent on
establishing closer trade ties and deals with Europe, OPEC oil producing countries, and other WTO nations. Another
obstacle to Bush’s trade plans is the European Economic Community, which not only has targeted Brazil and other southern
tier South American countries for trade deals, but also is increasingly locked in a trade struggle with the U.S. over
penetration of the China market. On the surface this U.S.-Europe competition for China markets and profits appear as a U.
S. concern over Europe selling military technology to China. But military sales are only a cover issue raised by the U.S. The
real struggle is over non-military markets. There is Bush’s gamble with his current strategy of devaluing the U.S. dollar,
which may prove ineffective in terms of stimulating U.S. exports or mitigating the U.S. $700 billion trade deficit—and it is
beginning to show signs of exacerbating economic crises in other areas of the U.S. economy.
Longer term, beyond solidifying trade deals throughout Latin America, the Bush-corporate objective is to establish more of
the same in southern Asia. Trade deals with Australia and Singapore are already in place and negotiations are underway
with Thailand and other nations in that region. It is all part of the emergence of three regional capitalist mega-trade blocs,
aligning U.S. corporate interests and its allies on the one hand against two other major blocs on the other: the European
Economic Community and an Asian bloc led by China.
What happens with CAFTA in 2005 may thus have an impact at least on how fast the new U.S. dominated mega-trade bloc
forms, even though it will have little to do with the inevitability of its, or the two other mega-trade blocs, eventual formation.
--------------------------------------------------------------------------------
This article is an excerpt from Rasmus’s just released book, The War at Home: The Corporate Offensive From Reagan to
Bush (www.kyklosproductions.com).
Another World Is Under Construction
By Hope Chu
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On April 16, 2000 protests at the spring meetings of the World Bank and International Monetary Fund (IMF) began five
years of major demonstrations against these institutions in the United States. Five years later, on April 16, 2005, protesters
again gathered in the seat of the world’s economic and military power to speak truth to the power of these institutions. The
protests in Washington were the focal point of a weekend of action organized by the Mobilization for Global Justice (MGJ), a
Washington-based, non-hierarchical, and nonviolent association of individuals and organizations that works on issues of
global economic and social justice and sustainability.
Taking place during the Global Week of Action, the mobilization in Washington acted in solidarity with over 10 million people
in 80 countries around the world raising their voices against an unjust international economic system. In addition to
hundreds of actions in the U.S., protesters in Washington joined students in South Africa, unions in Egypt, workers and
schoolchildren in Bangladesh, women in Chile, farmers in the Philippines, social workers in Kenya, fisherfolk in India, and
millions of others around the world in calling for an end to the institutions that have, for the past half-century, employed the
mechanisms of oppression, debt slavery, and imperialism in the service of corporate and elite power.
Borrowing from the World Social Forum, the theme of the weekend was “Another World Is Under Construction,” highlighting
community alternatives and resistance to externally-imposed policies in DC and around the world. Another primary focus of
the protests was MGJ’s demands of the World Bank and the IMF, demands that are informed and supported by grassroots
social movements around the world.
The Group of 7
Reflecting their coordination in the global economy, the finance ministers of the Group of 7 (G7) countries (U.S., UK,
Canada, France, Germany, Italy, and Japan) met the day before the Spring meetings of the World Bank and the IMF. On the
agenda of the G7 was debt cancellation for impoverished countries, which had undergone protracted debate. Whereas last
year’s G7 proposals for debt cancellation included debt owed to both the World Bank and IMF, this Spring the U.S. Treasury
stopped talking about cancelling IMF debt, a critical component of debt cancellation.
To reiterate the demand for 100 percent debt cancellation for all impoverished countries with no harmful economic
conditionalities and using the World Bank and IMF’s own resources, MGJ—along with co-organizers Jubilee USA Network, 50
Years Is Enough Network, Religious Working Group on the World Bank and IMF, Africa Action, and American Friends
Service Committee—held a rally in advance of the G7 meeting, urging the ministers to make the right choice.
A lively crowd of about 150 people gathered on the sidewalk in front of the U.S. Treasury building in downtown Washington,
while speakers made the case for debt cancellation, citing the illegitimate origins of these debts, the prior repayment of the
principal, and the destructive effects of debt servicing and loan conditions imposed by the World Bank and IMF on indebted
countries. MGJ staged street theater that examined the foundation of the G7.
Making Connections
MGJ also sponsored a teach-in for activists in the U.S. to share insights and strategies with activists from the Global South.
The teach-in highlighted the similarities between economic policies in Washington, DC and in the Global South, which are
based on the same neo-liberal philosophy that privileges the market and the economic interests of the wealthy few over the
lives of the majority of people in this world.
The teach-in featured a panel of organizers from the Global South, including Virginia Setshedi of the Anti-Privatization
Forum (South Africa), Victor Geronimo of COMPA/Coordination of Popular, Union, and Drivers Organizations (Dominican
Republic), and Lidy Nacpil of the Freedom from Debt Coalition/Jubilee South (Philippines). U.S. speakers included Devin
Walker from the DC Health Care Coalition, an organization fighting for affordable health care for all residents of Washington,
DC, and Basav Sen from MGJ.
The over 70 participants at the teach-in shared stories of struggle, experiences, and strategies on issues they had in
common, despite their diverse geographical origins. The group focused on the privatization of essential services;
gentrification and displacement; affordable housing; forced immigration; worker’s rights; and the need for increasing access
to public health care and education.
On Saturday April 16, the first day of the World Bank and IMF meetings, over 1,000 protesters gathered in front of the
headquarters of the two institutions in a spirited rally featuring Setshedi, Geronimo, and Washington’s Reverend Graylan
Hagler, a longtime leader in the struggle for economic, social, and racial justice and the peace movement in the U.S.
Emceed by human rights activist and World Bank critic Dr. Vineeta Gupta, the speakers presented damning evidence
against the two financial institutions, pointing to their dismal records and their roles in exacerbating the poverty, health,
education, environmental, and economic crises in debtor countries.
The protesters then turned their backs on the World Bank and IMF—in solidarity with millions around the world who are
rejecting their policies—and marched out of downtown Washington, led by colorful puppets and the energetic music of the
Rhythm Workers’ Union and the Rude Mechanical Orchestra. The march culminated at a rally with more speakers, music,
and spoken word performances.
Emphasizing resistance to the neo-liberal policies of the IMF and World Bank, the speakers included Nacpil and Jonah
Gokova (Zimbabwe Coalition on Debt and Development) who gave stirring accounts of the international movements for debt
cancellation. Mario Cafiero, a member of the Argentine parliament, spoke of his country’s struggle against IMF policies.
Giving a local perspective were peace activist Katy Nelson of the DC Anti- War Network and Vanessa Dixon of the DC
Healthcare Coalition.
Construction Continues
The days of action concluded with an MGJ-sponsored community action project, co-organized with a local senior group, We
Are Family. On Sunday, volunteers visited seniors in Washington residences, building intergenerational solidarity and
connecting the dots between global struggles against neo-liberalism and corporate greed and local struggles against the
same destructive policies in our own communities.
MGJ continues to build relationships and coalitions with groups in Washington and internationally. In the past year, MGJ has
supported Washington-area movements working for fair labor practices, including the Georgetown Students’ Living Wage
Coalition, which recently won a living wage for Georgetown University employees, and solidarity actions with local parking lot
workers.
Looking beyond the April mobilization, MGJ is committed to organizing around a myriad of other social justice issues while
maintaining a focus on the World Bank and the IMF, including:
A campaign to tax the World Bank and IMF, which own over $1.4 billion in property and who make $4 billion in profits, but
which currently pay the cash-strapped city of Washington no taxes
Free trade agreements, including rallies during the meetings of the Central American Free Trade Agreement (CAFTA), the
Free Trade Area of the Americas (FTAA), the U.S.-Andean Free Trade Agreement (AFTA), and the World Trade
Organization (WTO)
Participating in many events highlighting global processes and their effects locally, including Bio-democracy events
protesting the annual meeting of the Biotechnology Industry Organization in Philadelphia, Pennsylvania
--------------------------------------------------------------------------------
Hope Chu has worked with the Mobilization for Global Justice for the past two years and is on staff at the 50 Years Is
Enough Network in Washington, DC.
Sunday, August 15, 2004
1:48:00 AM EDT
Hearing Steve Earle, "What's a Simple Man to Do?"
James Galbraith on our current American economic problems
During the last couple of years, I've been very impressed with the analyses of James Galbraith, economist at the University
of Texas. Fortunately for us, he does not restrict his writing and research to economics. But also fortunately for us, he
does bring his professional talents to bear on our current economic problems, as well.
In this post, I'm commenting on some of his ideas that I think provide a good insight into our current economic dilemmas.
And for anyone who reads this, to encourage them to keep your eyes open for his work, especially his columns for Salon.
com.
For this post, I'm listing the articles at the bottom and citing the quotations by number in my text.
The War Problem
Many Americans have the impression, largely based on the experience of the Second World War in the US as (mis)
understood and (mis)interpreted for decades by both advocates and critics of the military-industrial complex, that military
spending is automatically good for the economy. In fact, that is true only in special circumstances and in a qualified way.
More specifically, in our current circumstances, Iraq War spending provided a quick fix for the US economy. And the "high"
is already wearing off. Galbraith observes:
In the near term, more military spending - the Iraq war, the occupation and military restocking - and the portion of the tax
cuts that did flow to the middle class are bringing what may perhaps best be described as a false dawn. Indeed in 2003 we
again learned two Keynesian truths. First, that a big increase in government spending is a fast and efficient way to pump up
the economic growth rate. Second, that most households are income-constrained; increasing their disposable income will
increase their spending. But the future tax cuts are weighted even more heavily to the wealthy, and the pace of military
spending is unstable and in any event [an] unsatisfactory way to generate an enduring economic expansion. (6) (my
emphasis)
Despite the increase in military spending under Bush, both on the Iraq war and elsewhere - notably the spectacularly
useless Star War boondoggle - the increase in deficit spending attendant to that is not the more serious problem Galbraith
sees in the current war economy. He believes instead that the diversion of public and official attention from critical long-term
and short-term problems is a more serious impact.
Not that he thinks that the Bush World Order is anything other than a dangerous undertaking, economically as otherwise.
Despite the wealth of the US, we do not have "the financial or material capacity to wage continuing war around the world,"
despite the power fantasies of the neoconservatives. (2)
A new risk of inflation is one of the potential costs of the Iraq war. A number of factors right now are contributing to
inflationary pressures in the global economy that affect the US in particular, including the declining dollar which our chronic
trade deficit forces on us, oil being by no means the smallest component of that deficit.
There's also a problem that you won't hear described this way from economists at big banks or brokerage houses:
And there is profiteering. Firms with monopoly power usually keep some in reserve. In wartime, if the climate is permissive,
they bring it out and use it. Gas prices can go up when refining capacity becomes short -- due partly to too many mergers.
More generally, when sales to consumers are slow, businesses ought to cut prices -- but many of them don't. Instead, they
raise prices to meet their income targets and hope that the market won't collapse. Own a telephone? Cable TV? Electrical
connection? Been to a doctor? Filled a prescription? Have a kid in college? Then you know what I mean. (5)
A lot of people still profess to be very relieved that we invaded Iraq to seize weapons of mass destruction that didn't exist.
But reality has been crashing in pretty hard on the whole enterprise. And economic realities are affected by it, as well.
Bush wants to describe his foreign policy as a War on Terrorism. But limits on war profiteering and higher taxes on the
wealthy to pay for all these wars and allegedly vital programs like Star Wars (missile defense) are strictly off the table for the
Bush dynasty. Of the latter program, Galbraith writes, "Missile defense is not about North Korea, and still less about Iran or
any other 'rogue state'; it's about the contracts." (3)
Establishment economists largely missed the effects of acceleratinginflationary pressures. As early as the first quarter, the
economic data were signalling the possibility of a new round of "stagflation" (for those who remember the term from the
1970s). Galbraith took a well-deserved shot at those timid ladies and gentlemen of his profession in June:
Why the surprise? It lies partly in the incurable optimism of members of the business press. They want growth and rising
markets. They believe in the psychological power of their own voices. But they have no underlying theory beyond the idea
that psychology matters and that optimism leads to growth. Doubters therefore get squelched. Our voices are dissonant,
and our arguments are, well, just a bit too difficult. But when bad things happen, we are not surprised. (7)
Yes, there are real costs to empire. This description of the long-term difficulty of sustaining the imperial policies that Bush
and his "Vulcans" are pursuing is worth quoting at some length:
The difficulty of empire is that it is expensive in material and moral terms. In Iraq, for a very brief period, the administration
pretended that a vast country could be governed from the outside by a skeleton crew, consisting mainly of very young
soldiers, trained well for combat but poorly for civil administration in an Arabic-speaking country. The provision of security,
infrastructure and civil administration was not adequately prepared for. Instead, the administration has chosen to pursue a
version of "shock therapy" - of conversion to unregulated private markets - that would have seemed extreme even to the
market Bolsheviks of the collapsing Soviet Union in 1991.
Meanwhile the burdens of empire are growing palpably as time passes. While success
against the Iraqi resistance remains possible, it is also possible that the U. S. will be forced eventually to choose between
leaving Iraq or putting in the full force required to control and to run it. One way we lose control, while the other can only add
to the miseries of our balance of payments, while forcing the mobilization of hundreds of thousands of young Americans into
military and occupation service and exposing them to a high level of violence. In such a contest, the local adversary has
great advantages, including considerable cover among the local population and access to cheap and effective means of
resistance, including explosives, mines, automatic rifles and rocket-propelled grenades.
How can the cost be met, especially, if the coin of our realm, the U. S. dollar, is at
the same time vulnerable? It may not be impossible, but it won't be easy. The problem of empires, historically, is not military
defeat. It is bankruptcy: moral, political, and also economic. (6) (my emphasis)
The Consumer Problem
Galbraith has been focusing in particular on the overextension of the consumer. Ever since the recession began in 2001,
consumer spending has largely driven the recovery. That spending has been based to a large degree on heavy loads of
debt. As he memorably phrases it, the full employment and prosperity of the 1990s "were based on dreams, illustions and
mortgages." (6) Galbraith has argued that until consumer spending retrenches and brings household debt down to a more
sustainable level, strong business investment will not occur. He wrote in the fourth quarter of 2002:
[T] the recession in consumer spending cannot be put off forever. American households are still being crushed by debt.
After September 11, their spending was held aloft by falling oil prices, falling interest rates, the tax rebate, rising government
spending and the auto companies' willingness to unload their inventories at a loss. Interest rates remain very low, alongside
a continuing bubble in the price of housing, which supports a continued flow of equity loans. But this source of consumer
spending is already nearing its limits. (2)
For those who believe in the magical powers of the Fed - and the believers are legion - he has an important observation in
an August column:
Have you seen what happened to mortgage rates since the Fed started raising rates? They first rose and then fell -- from
6.25 percent to as low as 5.5 percent for a 30-year fixed rate in the past few days. That means there aren't many takers
anymore. The household debt engine kept the economy moving for four years after the Internet bust, but it seems it's now
breaking down. It was, in fact, perfectly predictable that it would. I, for one, predicted it. We just didn't know when. (8)
At the same time, state and local governemnt spending has been in heavy retrenchment mode. in California, the miracle-
promising Gov. Schwarzenegger continued the outsted Gov. Gray Davis' approach of cutting services and borrowing money
to cover the annual operating deficit. Only he did it with $4 billion less in revenue due to his promised car tax cut.
He also points to the problem of corporate corruption and its effects on the financial markets. While the Sarbannes-Oxley
reform legislation and high-visibility prosecution of corporate malefactors address some of those problems, he doesn't
expect a thoroughgoing reform to occur while the Bush dynasty holds power. "Failure to attend to these issues is
necessarily endemic in an administration build on corporate fraud and committed to war for oil." (2)
The Jobs Problem
Galbraith is clearly not too concerned about ruffling the feathers of respectable Republicans. So he doesn't mince words
the way more timid and conventional economists are wont to do:
Team Bush is bent on eroding pay and working conditions, as in their recent assault on fair labor standards affecting
overtime.
Possibly, this is intentional. The men in charge under George Bush talk about
growth. Certainly they appreciate the positive growth rates that war spending has brought them. But do they really want full
employment prosperity, strong labor unions and rising wages? Probably not. Theoil, mining, defense, media and drug firms
who form their constituency rely on monopoly power, patents, and the control of public resources for their profits. They are
threatened by strong labor and do not depend, very much, on strong consumer demand. (6)
No, they won't be inviting him to speak at the Republican national convention.
He also observes that Bush is following a strategy that anti-government conservatives don't like to broadcast and election
times as a rule, but which influences their support for a strategy of huge taxes cuts and staggering deficit spending that can
scarcely be described as "conservative" in most people's understanding of the concept. Which is, squeeze the budget with
tax cuts and that makes it easier to cut public services which directly and signficantly benefit working families but not so
much the wealthiest Americans who are the heart and soul of the Republican Party's concerns.
Since conventional economists are loath to spell things out this clearly, it's good to have an economist who will:
The Bush years are a study in deliberately wasted effort: Repeal of the estate tax. Tax exemption for stock dividends.
Ballistic Missile Defense. The USA PATRIOT Act. The war on Iraq. Each of these initiatives has a clientele. None of them
seriously aims to achieve its stated goal, be that economic recovery or homeland security or national security writ large. ...
So it is today on the economy. What does Bush want? He wants a growth rate high enough to get him through the election.
That's obvious. After that, he doesn't care. His clientele -- the military contractors, oil companies, pharmaceutical firms and
big media that control this government -- make their money on patents, contracts and the exercise of monopoly power.
(Case in point: Bush is pressuring impoverished Central Americans, in trade negotiations, to add 10 years to the length of
drug patents.) These people have no interest in full employment. They like unemployment, weak labor, low wages and a
government that bullies on their behalf. And after the election, if Bush wins, that is what they will get for four more years. (3)
In another description of the sector orientation of the current administration, Galbraith points out how narrow the focus of
the Halliburton Republicans really is:
There is irony here for America's wealthy. It is true that a group of great wealth holds the levers of power in the country
today. But this group, in large measure a coalition of contractors and monopolists, does not have interests in common with
the full range of wealthy individuals in this wealthy land. There are many others - exporters, retailers, the residents of large
cities, providers of services to the broad population and many passive investors - whose interests align with those of working
Americans and who would prosper even more under an economy investing vigorously at home. They are not well served by
a program of stagnation and empire, even partially compensated by tax cuts on capital income. (6)
Galbraith calculated in April that in order to reach the employment-to-population ratio of June 1999 would require 308,000
new payroll jobs per month until March 2008. (4) That's a good number to keep in mind when we see the monthly job
numbers reported. The recently-released number for July was 32,000.
He took another jab at the establishment economists in August over the July jobs numbers:
Business economists reacted to the jobs report as they always do. First, they said that no one expected it. Within their
community this was largely true: Apart from a handful of honorable people, no one paid by Wall Street ever expects bad
news. (And evidently they don't read [Galbraith's column in] Salon.) Second, they blamed oil prices, which could be a
transitory factor; then again, maybe it isn't. Finally, some said they found the slowdown reassuring. Perhaps it will lead to a
more sustainable path for future economic growth. Ah, yes, that's remotely possible. On the other hand, perhaps it will lead
to a full-fledged slump. The business economists do not know. (8)
The pressure of inflation will also provide an excuse for Republicans to pursue policies to increase pressure on jobs and
wages even more. Even though a labor shortage can hardly be said to be causing those pressures at this time: "The
inflation the United States is experiencing ... [is] a product of the war, oilprice uncertainty and monopolistic manipulations in
sectors like healthcare." (7)
The Oil Problem
The longer-term problem Galbraith sees with the Bush dynasty's military crusading is that it diverts attention from the critical
longer-term problem of oil. As Keynes famously observed, in the long run we are all dead. But for those who are around for
the next few years, it will be hard to escape some of the effects of our current energy situation.
He describes some of the truly grim implications of a unilateralist American policy "under conditions of permanent war":
It is a straightforward fact that if global oil production starts to decline but U.S. consumption does not, everyone else will be
required to cut purchases and uses of oil. But how can oil prices be held stable for Americans yet be made to rise for
everyone else? Only by a policy of continuing depreciation in everyone else's currency. Such a policy of dollar hegemony
amid worldwide financial instability, of crushing debt burdens and deflation throughout the developing world, is perverse. It
will make our trading partners' exports cheap, render their imports dear and keep their real wages low. It will price American
goods out of world markets and lead to unsustainable dependence on foreign capital. It will be a policy, in short, of beggar-
all-of-our-neighbors while we live alone, in increasing idleness and inside the dollar bubble. (2)
In 2002, he pointed out something that probably does have bearing on the current oil price pressures:
Nor is Bush's strategy necessarily irrational insofar as it affects oil -- in the short run. With a new Iraqi government, the
United States will gain a client state that is prepared to help keep the oil price within the band that both U.S. consumers and
the remaining U.S. oil producers can tolerate -- low enough so as not to fatally drain purchasing power from the former, high
enough so as not immediately to ruin the latter. Given the George W. Bush-Dick Cheney commitment to unlimited oil
consumption, this will prove useful in putting off a day of reckoning. As total world oil production declines -- credible scientific
evidence suggests that this may start happening quite soon -- the Middle East's share of the remaining reserves will rise.
So, too, would the potential for cartel control and price manipulation. A robust U.S. military presence in the oil fields, directly
or by proxy, will naturally make higher oil prices less of a danger. This is part of the appeal of war with Iraq. (2)
Whether or not oil was the dominant motive for the Iraq War - and I'm personally still agnostic on that issue - we know from
the administration's public statements that they expected Iraqi oil production to recover far quicker than it has. Bob
Woodward's Plan of Attack tells of a Saudi suggestion that they would try to boost production in time to get oil prices down
for Bush's re-election campaign. But a prolonged period of depressed output in Iraq and serious problems with sabotage
were simply not contemplated in Bush and Cheney's grand Mesopotamian adventure.
Galbraith wrote in April:
[O]il and gas prices -- a fundamental price in oureconomy -- are already high and still likely to rise. With gasoline averaging
$1.80 around the country and hitting $2.49 at the hottest spots, transportation costs for all commodities are rising too. With
oil at $37 per barrel -- up $10 in the past six months -- fertilizer and therefore food costs will be affected in the months
ahead. (5)
Without a more concerted American policy to conserve energy and develop safe and sustainable alternative resources, at
some point the US will face a catastrophic combination of international hostility and investor flight from the dollar. We'll all
know when that arrives.
But the country's current international isolation over Iraq and other issues, combined with the momentary spike in the price
of oil, provides us a glimpse into the future. Like Calchas the bird-interpreter in the first book of the Iliad, we have a glimpse
right now of the things that are to be if we continue on this course.
The Future
As a final note, Galbraith's analysis of the current economic situation and what should be done to cure it is no partisan
polemic for John Kerry's cautious proposals. Kerry essentially hopes to repeat the Clinton strategy and pay down the huge
Bush deficit so another Republican president can come along in four years or eight and wipe out all the progress made on
deficit-reduction by more huge tax subsidies for the wealthy. If Galbraith's view of the economy is accurate, a President
Kerry will haveto be willing to adjust his strategies to unpleasant realities in the economy, as he will also have to do in Iraq.
1. The War Economy Levy Economics Institute 2001
2. The Unbearable Costs of Empire American Prospect 11/18/02 issue
3. The no jobs president Salon.com 01/19/04
4. The Bush jobs chasm Salon.com 04/06/04
5. How you will pay for the war Salon.com 04/20/04
6. The American Economic Problem Reprinted from Intervention (Germany) Vol. 1, No. 1 (2004) (*.pdf version available;
scroll down to middle of page)
7. Squeezing workers Salon.com 06/28/04
8. Our sinking ship Salon.com 08/10/04
The PU-litzer Prizes for 2004
Norman Solomon
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The PU-litzer Prizes were established a dozen years ago to provide special recognition for truly smelly media performances.
Jeff Cohen, founder of the media watch group FAIR, and I sifted through a large volume of entries. And now, the 13th
annual PU-litzer Prizes for the foulest media performances of 2004 are:
MANDATE MANIA
Too many winners to name
It became a media mantra. Two days after the election, the Los Angeles Times reported that “Bush can claim a solid
mandate of 51 percent of the vote.” Cox columnist Tom Teepen referred to Bush’s vote margin as an “unquestionable
mandate.” Right-wing pundit Bill Kristol argued that Bush’s “mandate” went beyond the 49-states- to-one landslides of Nixon
in 1972 and Reagan in 1984. Reality check: This was the narrowest win for an incumbent president since 1916. As Greg
Mitchell wrote in Editor & Publisher: “Where I come from, 51 percent is considered a bare majority, not a comfortable margin.
If only 51 percent of my family or my editorial staff think I am doing a good job, I might look to moderate my behavior, not
repeat or enlarge it.”
MEDIA BIGOT
MSNBC & radio host Don Imus
On his November 12 show, the day after Palestinian leader Yassir Arafat died, Imus said of Palestinians: “They’re eating dirt
and that fat pig wife of his is living in Paris.” After an Imus colleague referred to Palestinians as “stinking animals” and said
“they ought to drop the bomb right there, kill ’em all right now,” Imus responded: “Well, the problem is we have (NBC
reporter) Andrea (Mitchell) there; we don’t want anything to happen to her.” In February, when a civilian Iranian airliner
crashed, killing 43 people, Imus reacted: “When I hear stories like that, I think who cares.”
NO APOLOGY FOR BEING GULLIBLE
CBS anchor Dan Rather
Asked at a Harvard forum in July what network TV news could have done better during the build-up to the Iraq war, Dan
Rather said “more questions should have been asked” and then declared: “Look, when a president of the United States, any
president, Republican or Democrat, says these are the facts, there is heavy prejudice, including my own, to give him the
benefit of any doubt, and for that I do not apologize.”
TIMIDITY RULES
Washington Post columnist David Ignatius
Explaining why mainstream journalism failed to ask tough questions about the Iraq war before it started, columnist Ignatius—
a war supporter—wrote in April, “In a sense, journalists were victims of their own professionalism. Because there was little
criticism of the war from prominent Democrats and foreign policy analysts, journalistic rules meant we shouldn’t create a
debate on our own.” Create a debate? Ignatius suggests it would have been unprofessional to raise questions at a time
when many experts, over a hundred Congress members, and millions of others were already questioning the drive to war.
“ONLY RIGHT-WING POLITICS THIS YEAR”
Disney’s Michael Eisner
In May, when Disney refused to distribute Michael Moore’s Fahrenheit 9/11 movie, CEO Michael Eisner said that Disney
“didn’t want to be in the middle of a politically oriented film during an election year.” But Disney was one of the 2004 election’
s leading broadcasters of political propaganda, almost all of it pro-Bush, as its powerful talk radio stations served up hour
after hour of right- wing hosts like Rush Limbaugh, Sean Hannity, Bill O’Reilly, Laura Ingraham, Matt Drudge, etc., etc.
MEDIA MOGULS FOR BUSH
Viacom CEO Redstone
Seven weeks before the election, Sumner Redstone expressed support for Bush on behalf of his company, which owns
CBS, UPN, MTV, VH1, Infinity radio, and dozens of other subsidiaries: “From a Viacom standpoint, the election of a
Republican administration is a better deal. Because the Republican administration has stood for many things we believe in,
deregulation and so on.” Days later, Redstone added: “I vote for Viacom. Viacom is my life and I do believe that a
Republican administration is better for media companies than a Democratic one.” Ironically, cultural conservatives often
blame TV and radio sleaze on “the liberal media”—not GOP-backing media owners like Redstone and Rupert Murdoch.)
MOUTHPIECE FOR POWER
The Washington Post
Credit for candor goes to Karen DeYoung, former assistant managing editor, for this comment in an August report
examining why the Washington Post marginalized prewar doubts about White House claims about Iraqi weapons of mass
destruction: “We are inevitably the mouthpiece for whatever Administration is in power. If the president stands up and says
something, we report what the president said.” If counter-arguments are put “in the eighth paragraph, where they’re not on
the front page, a lot of people don’t read that far.”
STENOGRAPHIC PRIDE
Judith Miller, NYT
Defending her use of anonymous sources like Ahmed Chalabi, a highly unreliable Iraqi exile, in prewar front-page stories on
Iraq’s supposed WMDs, reporter Miller explained: “My job isn’t to assess the government’s information and be an
independent intelligence agency myself. My job is to tell readers of the New York Times what the government thought about
Iraq’s arsenal.” Miller did not explain how her job differs from being a PR agent for the U.S.
WINNING HEARTS & LUNGS
Thomas Friedman, NYT
In a November 18 column datelined “Camp Fallujah, Iraq,” columnist Friedman summed up the situation after the U.S.
assault had left much of Fallujah in rubble: “Bottom line? Iraq is a country still on life support and U.S. troops are the artificial
lungs and heart.” Apparently, the U.S. military needed to deprive the country of oxygen and blood in order to save it.
ORWELLIAN FORCES
Nic Robertson & others
U.S. military spokespersons describe those who attack U.S. soldiers in Iraq as “anti-Iraqi forces”—even though, by all
documented accounts, the vast majority of those forces are Iraqis. Some U.S. journalists have begun to make that newspeak
their own, among them CNN’s senior international correspondent Robertson. On November 25, Robertson reported from
“Camp Freedom in Mosul, where the troops go out in their Striker vehicles into the city of Mosul.... What they are doing has
been conducting offensive operations to disrupt the anti-Iraqi forces.”
OUTFOXING FOX
Jack Cafferty, CNN
As co-anchor of CNN’s morning program, Cafferty reported on March 31: “It’s a red-letter day here in America,” he said. “Air
America, that communist radio network, starts broadcasting in a little while.” Cafferty was unyielding when CNN colleague
Soledad O’Brien responded by saying that the new talk-radio network was not Communist but liberal. He replied: “Well. Aren’
t they synonymous?”
Market Democracy in a Neoliberal Order:
Doctrines and Reality
Davie Lecture, Part !, University of Cape Town, May 1997
By Noam Chomsky
I have been asked to speak on some aspect of academic or human freedom, an invitation that offers many choices. I will
keep to some simple ones. Freedom without opportunity is a devil’s gift, and the refusal to provide such opportunities is
criminal. The fate of the more vulnerable offers a sharp measure of the distance from here to something that might be called
"civilization." While I am speaking, 1000 children will die from easily preventable disease, and almost twice that many women
will die or suffer serious disability in pregnancy or childbirth for lack of simple remedies and care. UNICEF estimates that to
overcome such tragedies, and to ensure universal access to basic social services, would require a quarter of the annual
military expenditures of the "developing countries," about 10 percent of U.S. military spending. It is against the background
of such realities as these that any serious discussion of human freedom should proceed.
It is widely held that the cure for such profound social maladies is within reach. The hopes have foundation. The past few
years have seen the fall of brutal tyrannies, the growth of scientific understanding that offers great promise, and many other
reasons to look forward to a brighter future. The discourse of the privileged is marked by confidence and triumphalism: the
way forward is known, and there is no other. The basic theme, articulated with force and clarity, is that "America’s victory in
the Cold War was a victory for a set of political and economic principles: democracy and the free market." These principles
are "the wave of the future—a future for which America is both the gatekeeper and the model." I am quoting the chief
political commentator of the New York Times, but the picture is conventional, widely repeated throughout much of the world,
and accepted as generally accurate even by critics. It was also enunciated as the "Clinton Doctrine," which declared that our
new mission is to "consolidate the victory of democracy and open markets" that had just been won. There remains a range
of disagreement: at one extreme "Wilsonian idealists" urge continued dedication to the traditional mission of benevolence; at
the other, "realists" counter that we may lack the means to conduct these crusades of "global meliorism," and should not
neglect our own interests in the service of others. Within this range lies the path to a better world.
Reality seems to me rather different. The current spectrum of public policy debate has as little relevance to actual policy as
its numerous antecedents: neither the United States nor any other power has been guided by "global meliorism." Democracy
is under attack worldwide, including the leading industrial countries; at least, democracy in a meaningful sense of the term,
involving opportunities for people to manage their own collective and individual affairs. Something similar is true of markets.
The assaults on democracy and markets are furthermore related. Their roots lie in the power of corporate entities that are
totalitarian in internal structure, increasingly interlinked and reliant on powerful states, and largely unaccountable to the
public. Their immense power is growing as a result of social policy that is globalizing the structural model of the third world,
with sectors of enormous wealth and privilege alongside an increase in "the proportion of those who will labor under all the
hardships of life, and secretly sigh for a more equal distribution of its blessings," as the leading framer of American
democracy, James Madison, predicted 200 years ago. These policy choices are most evident in the Anglo-American
societies, but extend worldwide. They cannot be attributed to what "the free market has decided, in its infinite but mysterious
wisdom," "the implacable sweep of ‘the market revolution’," "Reaganesque rugged individualism," or a "new orthodoxy" that
"gives the market full sway." The quotes are liberal-to-left, in some cases quite critical. The analysis is similar across the rest
of the spectrum, but generally euphoric. The reality, on the contrary, is that state intervention plays a decisive role, as in the
past, and the basic outlines of policy are hardly novel. Current versions reflect "capital’s clear subjugation of labor" for more
than 15 years, in the words of the business press, which often frankly articulates the perceptions of a highly class-conscious
business community, dedicated to class war.
If these perceptions are valid, then the path to a world that is more just and more free lies well outside the range set forth by
privilege and power. I cannot hope to establish such conclusions here, but only to suggest that they are credible enough to
consider with care. And to suggest further that prevailing doctrines could hardly survive were it not for their contribution to
"regimenting the public mind every bit as much as an army regiments the bodies of its soldiers," to borrow the dictum of the
respected Roosevelt-Kennedy liberal Edward Bernays in his classic manual for the Public Relations industry, of which he
was one of the founders and leading figures.
Bernays was drawing from his experience in Woodrow Wilson’s state propaganda agency, the Committee on Public
Information. "It was, of course, the astounding success of propaganda during the war that opened the eyes of the intelligent
few in all departments of life to the possibilities of regimenting the public mind," he wrote. His goal was to adapt these
experiences to the needs of the "intelligent minorities," primarily business leaders, whose task is "The conscious and
intelligent manipulation of the organized habits and opinions of the masses." Such "engineering of consent" is the very
"essence of the democratic process," Bernays wrote shortly before he was honored for his contributions by the American
Psychological Association in 1949. The importance of "controlling the public mind" has been recognized with increasing
clarity as popular struggles succeeded in extending the modalities of democracy, thus giving rise to what liberal elites call
"the crisis of democracy" as when normally passive and apathetic populations become organized and seek to enter the
political arena to pursue their interests and demands, threatening stability and order. As Bernays explained the problem,
with "universal suffrage and universal schooling,...at last even the bourgeoisie stood in fear of the common people. For the
masses promised to become king," a tendency fortunately reversed—so it has been hoped—as new methods "to mold the
mind of the masses" were devised and implemented.
To discover the true meaning of the "political and economic principles" that are declared to be "the wave of the future," it is
necessary to go beyond rhetorical flourishes and public pronouncements and to investigate actual practice and the internal
documentary record. Close examination of particular cases is the most rewarding path, but these must be chosen carefully
to give a fair picture. There are some natural guidelines. One reasonable approach is to take the examples chosen by the
proponents of the doctrines themselves, as their "strongest case." Another is to investigate the record where influence is
greatest and interference least, so that we see the operative principles in their purest form. If we want to determine what the
Kremlin meant by "democracy" and "human rights," we will pay little heed to Pravda’s solemn denunciations of racism in the
United States or state terror in its client regimes, even less to protestation of noble motives. Far more instructive is the state
of affairs in the "people’s democracies" of Eastern Europe. The point is elementary, and applies to the self-designated
"gatekeeper and model" as well. Latin America is the obvious testing ground, particularly the Central America-Caribbean
region. Here Washington has faced few external challenges for almost a century, so the guiding principles of policy, and of
today’s neoliberal "Washington consensus," are revealed most clearly when we examine the state of the region, and how
that came about.
Washington’s "crusade for democracy," as it is called, was waged with particular fervor during the Reagan years, with Latin
America the chosen terrain. The results are commonly offered as a prime illustration of how the U.S. became "the inspiration
for the triumph of democracy in our time," to quote the editors of the leading intellectual journal of American liberalism. The
author, Sanford Lakoff, singles out the "historic North American Free Trade Agreement (NAFTA)" as a potential instrument
of democratization. In the region of traditional U.S. influence, he writes, the countries are moving towards democracy, having
"survived military intervention" and "vicious civil war."
The primary "barriers to implementation" of democracy, Lakoff suggests, are the "vested interests" that seek to protect
"domestic markets"—that is, to prevent foreign (mainly U.S.) corporations from gaining even greater control over the society.
We are to understand, then, that democracy is enhanced as significant decision-making shifts even more into the hands of
unaccountable private tyrannies, mostly foreign-based. Meanwhile the public arena is to shrink still further as the state is
"minimized" in accordance with the neoliberal "political and economic principles" that have emerged triumphant. A study of
the World Bank points out that the new orthodoxy represents "a dramatic shift away from a pluralist, participatory ideal of
politics and towards an authoritarian and technocratic ideal...," one that is very much in accord with leading elements of
20th century liberal and progressive thought, and in another variant, the Leninist model; the two are more similar than often
recognized. Thinking through the tacit reasoning, we gain some useful insight into the concepts of democracy and markets,
in the operative sense.
Lakoff does not look into the "revival of democracy" in Latin America, but he does cite a scholarly source that includes a
contribution on Washington’s crusade in the 1980s. The author is Thomas Carothers, who combines scholarship with an
"insider’s perspective," having worked on "democracy enhancement" programs in Reagan’s State Department. Carothers
regards Washington’s "impulse to promote democracy" as "sincere," but largely a failure. Furthermore, the failure was
systematic: where Washington’s influence was least, in South America, there was real progress towards democracy, which
the Reagan administration generally opposed, later taking credit for it when the process proved irresistible. Where
Washington’s influence was greatest, progress was least, and where it occurred, the U.S. role was marginal or negative. His
general conclusion is that the U.S. sought to maintain "the basic order of...quite undemocratic societies" and to avoid
"populist-based change," "inevitably [seeking] 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."
The last phrase requires a gloss. The term "United States" is conventionally used to refer to structures of power within the
United States; the "national interest" is the interest of these groups, which correlates only weakly with interests of the
general population. So the conclusion is that Washington sought top-down forms of democracy that did not upset traditional
structures of power with which the structures of power in the United States have long been allied.
To appreciate the significance of the fact, it is necessary to examine more closely the nature of parliamentary democracies.
The United States is the most important case, not only because of its power, but because of its stable and long-standing
democratic institutions. Furthermore, the United States was about as close to a model as one can find. America can be "As
happy as she pleases," Thomas Paine remarked in 1776: "she has a blank sheet to write upon. The indigenous societies
were largely eliminated. There is little residue of earlier European structures, one reason for the relative weakness of the
social contract and of support systems, which often had their roots in pre-capitalist institutions. And to an unusual extent, the
socio-political order was consciously designed. In studying history, one cannot construct experiments, but the U.S. is as
close to the "ideal case" of state capitalist democracy as can be found.
Furthermore, the leading framer of the constitutional system was an astute and lucid political thinker, James Madison, whose
views largely prevailed. In the debates on the Constitution, Madison pointed out that in England, if elections "were open to
all classes of people, the property of landed proprietors would be insecure. An agrarian law would soon take place," giving
land to the landless. The system that he and his associates were designing must prevent such injustice, he urged, and
"secure the permanent interests of the country," which are property rights. It is the responsibility of government, Madison
declared, "to protect the minority of the opulent against the majority." To achieve this goal, political power must rest in the
hands of "the wealth of the nation," men who would "sympathize sufficiently" with property rights and "be safe depositories of
power over them," while the rest are marginalized and fragmented, offered only limited public participation in the political
arena. Among Madisonian scholars, there is a consensus that "The Constitution was intrinsically an aristocratic document
designed to check the democratic tendencies of the period," delivering power to a "better sort" of people and excluding
"those who were not rich, well born, or prominent from exercising political power." These conclusions are often qualified by
the observation that Madison, and the constitutional system generally, sought to balance the rights of persons against the
rights of property. But the formulation is misleading. Property has no rights. In both principle and practice, the phrase "rights
of property" means the right to property, typically material property, a personal right which must be privileged above all
others, and is crucially different from others in that one person’s possession of such rights deprives another of them. When
the facts are stated clearly, we can appreciate the force of the doctrine that "the people who own the country ought to
govern it," "one of [the] favorite maxims" of Madison’s influential colleague John Jay, his biographer observes.
One may argue, as some historians do, that these principles lost their force as the national territory was conquered and
settled, the native population driven out or exterminated. Whatever one’s assessment of those years, by the late 19th
century the founding doctrines took on a new and much more oppressive form.
But the growth of the industrial economy, and the rise of corporate forms of economic enterprise, led to a completely new
meaning of the term. In a current official document, "Person" is broadly defined to include any individual, branch,
partnership, associated group, association, estate, trust, corporation or other organization (whether or not organized under
the laws of any State), or any government entity," a concept that doubtless would have shocked Madison and others with
intellectual roots in the Enlightenment and classical liberalism—pre-capitalist, and anti-capitalist in spirit.
These radical changes in the conception of human rights and democracy were not introduced primarily by legislation, but by
judicial decisions and intellectual commentary. Corporations, which previously had been considered artificial entities with no
rights, were accorded all the rights of persons, and far more, since they are "immortal persons," and "persons" of
extraordinary wealth and power. Furthermore, they were no longer bound to the specific purposes designated by state
charter, but could act as they chose, with few constraints. The intellectual backgrounds for granting such extraordinary
rights to "collectivist legal entities" lie in neo-Hegelian doctrines that also underlie Bolshevism and fascism: the idea that
organic entities have rights over and above those of persons. Conservative legal scholars bitterly opposed these
innovations, recognizing that they undermine the traditional idea that rights inhere in individuals, and undermine market
principles as well. But the new forms of authoritarian rule were institutionalized, and along with them, the legitimation of wage
labor, which was considered hardly better than slavery in mainstream American thought through much of the 19th century,
not only by the rising labor movement but also by such figures as Abraham Lincoln, the Republican Party, and the
establishment media.
These are topics with enormous implications for understanding the nature of market democracy. The material and
ideological outcome helps explain the understanding that "democracy" abroad must reflect the model sought at home: "top-
down" forms of control, with the public kept to a "spectator" role, not participating in the arena of decision-making, which
must exclude these "ignorant and meddlesome outsiders," according to the mainstream of modern democratic theory. I
happen to be quoting the essays on democracy by Walter Lippmann, one of the most respected American public
intellectuals and journalists of the century. But the general ideas are standard and have solid roots in the constitutional
tradition, radically modified, however, in the new era of collectivist legal entities.
Returning to the "victory of democracy" under U.S. guidance, neither Lakoff nor Carothers asks how Washington maintained
the traditional power structure of highly undemocratic societies. Their topic is not the terrorist wars that left tens of
thousands of tortured and mutilated corpses, millions of refugees, and devastation perhaps beyond recovery—in large
measure wars against the Church, which became an enemy when it adopted "the preferential option for the poor," trying to
help suffering people to attain some measure of justice and democratic rights. It is more than symbolic that the terrible
decade of the 1980s opened with the murder of an Archbishop who had become "a voice for the voiceless," and closed with
the assassination of six leading Jesuit intellectuals who had chosen the same path, in each case by terrorist forces armed
and trained by the victors of the "crusade for democracy." One should take careful note of the fact that the leading Central
American dissident intellectuals were doubly assassinated: both murdered, and silenced. Their words, indeed their very
existence, are scarcely known in the United States, unlike dissidents in enemy states, who are greatly honored and admired;
another cultural universal, I presume.
Such matters do not enter history as recounted by the victors. In Lakoff’s study, which is not untypical in this regard, what
survives are references to "military intervention" and "civil wars," with no external factor identified. These matters will not so
quickly be put aside, however, by those who seek a better grasp of the principles that are to shape the future, if the
structures of power have their way.
Particularly revealing is Lakoff’s description of Nicaragua, again standard: "a civil war was ended following a democratic
election, and a difficult effort is underway to create a more prosperous and self-governing society." In the real world, the
superpower attacking Nicaragua escalated its assault on the country’s first democratic election: the election of 1984, closely
monitored and recognized as legitimate by the professional association of Latin American scholars (LASA), Irish, and British
Parliamentary delegations, and others, including a hostile Dutch government delegation that was remarkably supportive of
Reaganite atrocities, as well as the leading figure of Central American democracy, Jose Figueres of Costa Rica, also critical
observer, though regarding the elections as legitimate in this "invaded country," and calling on Washington to allow the
Sandinistas "to finish what they started in peace; they deserve it." The U.S. strongly opposed the holding of the elections
and sought to undermine them, concerned that democratic elections might interfere with its terrorist war. But that concern
was put to rest by the good behavior of the doctrinal system, which barred the reports with remarkable efficiency, reflexively
adopting the state propaganda line that the elections were meaningless fraud.
Overlooked as well is the fact that as the next election approached on schedule, Washington left no doubt that unless the
results came out the right way, Nicaraguans would continue to endure the illegal economic warfare and "unlawful use of
force" that the World Court had condemned and ordered terminated, of course in vain. This time the outcome was
acceptable, and hailed in the U.S. with an outburst of exuberance that is highly informative. At the outer limits of critical
independence, columnist Anthony Lewis of the New York Times was overcome with admiration for Washington’s "experiment
in peace and democracy," which showed that "we live in a romantic age." The experimental methods were no secret. Thus
Time magazine, joining in the celebration as "democracy burst forth" in Nicaragua, outlined them frankly: to "wreck the
economy and prosecute a long and deadly proxy war until the exhausted natives overthrow the unwanted government
themselves," with a cost to us that is "minimal," leaving the victim "with wrecked bridges, sabotaged power stations, and
ruined farms," and providing Washington’s candidate with "a winning issue," ending the "impoverishment of the people of
Nicaragua," not to speak of the continuing terror, better left unmentioned.
The methods of this "romantic age," and the reaction to them in enlightened circles, tell us more about the democratic
principles that have emerged victorious. They also shed some light on why it is such a "difficult effort" to "create a more
prosperous and self-governing society" in Nicaragua. It is true that the effort is now underway, and is meeting with some
success for a privileged minority, while most of the population faces social and economic disaster, all in the familiar pattern
of Western dependencies.
We learn more about the victorious principles by recalling that these same representative figures of liberal intellectual life
had urged that Washington’s wars must be waged mercilessly, with military support for "Latin-style fascists,...regardless of
how many are murdered," because "there are higher American priorities than Salvadoran human rights." Elaborating, editor
Michael Kinsley, who represented "the left" in mainstream commentary and television debate, cautioned against unthinking
criticism of Washington’s official policy of attacking undefended civilian targets. Such international terrorist operations cause
"vast civilian suffering," he acknowledged, but they may be "perfectly legitimate" if "cost-benefit analysis" shows that "the
amount of blood and misery that will be poured in" yields "democracy," as the world rulers define it. Enlightened opinion
insists that terror is not a value in itself, but must meet the pragmatic criterion. Kinsley later observed that the desired ends
had been achieved: "impoverishing the people of Nicaragua was precisely the point of the contra war and the parallel policy
of economic embargo and veto of international development loans," which "wreck[ed] the economy" and "creat[ed] the
economic disaster [that] was probably the victorious opposition’s best election issue." He then joined in welcoming the
"triumph of democracy" in the "free election" of 1990.
Client states enjoy similar privileges. Thus, commenting on yet another of Israel’s attacks on Lebanon, foreign editor H.D.S.
Greenway of the Boston Globe, who had graphically reported the first major invasion 15 years earlier, commented that "If
shelling Lebanese villages, even at the cost of lives, and driving civilian refugees north would secure Israel’s border, weaken
Hezbollah, and promote peace, I would say go to it, as would many Arabs and Israelis. But history has not been kind to
Israeli adventures in Lebanon. They have solved very little and have almost always caused more problems." By the
pragmatic criterion, then, the murder of many civilians, expulsion of hundreds of thousand of refugees, and devastation of
southern Lebanon is a dubious proposition.
Also revealing was the reaction to periodic Reagan administration allegations about Nicaraguan plans to obtain jet
interceptors from the Soviet Union (the U.S. having coerced its allies into refusing to sell them). Hawks demanded that
Nicaragua be bombed at once. Doves countered that the charges must first be verified, but if they were, the U.S. would have
to bomb Nicaragua. Sane observers understood why Nicaragua might want jet interceptors: to protect its territory from CIA
overflights that were supplying the U.S. proxy forces and providing them with up-to-the-minute information so that they could
follow the directive to attack undefended "soft targets." The tacit assumption is that no country has a right to defend civilians
from U.S. attack. The doctrine, which reigned unchallenged, is an interesting one. It might be illuminating to seek
counterparts elsewhere.
The pretext for Washington’s terrorist wars was self-defense, the standard official justification for just about any monstrous
act, even the Nazi Holocaust. Indeed Ronald Reagan, finding "that the policies and actions of the Government of Nicaragua
constitute an unusual and extraordinary threat to the national security and foreign policy of the United States," declared "a
national emergency to deal with that threat," arousing no ridicule. Others react differently. In response to John F. Kennedy’s
efforts to organize collective action against Cuba in 1961, a Mexican diplomat explained that Mexico could not go along,
because "If we publicly declare that Cuba is a threat to our security, forty million Mexicans will die laughing. Enlightened
opinion in the West takes a more sober view of the extraordinary threat to national security. By similar logic, the USSR had
every right to attack Denmark, a far greater threat to its security, and surely Poland and Hungary when they took steps
towards independence. The fact that such pleas can regularly be put forth is again an interesting comment on the
intellectual culture of the victors, and another indication of what lies ahead.
The substance of the Cold War pretexts is greatly illuminated by the case of Cuba, as are the real operative principles.
These have emerged with much clarity once again in the past few weeks, with Washington’s refusal to accept World Trade
Organization adjudication of a European Union challenge to its embargo, which is unique in its severity, and had already
been condemned as a violation of international law by the Organization of American States and repeatedly by the United
Nations, with near unanimity, more recently extended to severe penalties for third parties that disobey Washington’s edicts,
yet another violation of international law and trade agreements. The official response of the Clinton administration, as
reported by the Newspaper of Record, is that "Europe is challenging ‘three decades of American Cuba policy that goes back
to the Kennedy Administration,’ and is aimed entirely at forcing a change of government in Havana." The Administration also
declared that the WTO "has no competence to proceed" on an issue of American national security, and cannot "force the U.
S. to change its laws."
The reasoning with regard to the WTO is reminiscent of the official U.S. grounds for dismissing World Court adjudication of
Nicaragua’s charges. In both cases, the U.S. rejected jurisdiction on the plausible assumption that rulings would be against
the U.S.; by simple logic, then, neither is a proper forum. The State Department Legal Adviser explained that when the U.S.
accepted World Court jurisdiction in the 1940s, most members of the UN "were aligned with the United States and shared its
views regarding world order." But now "A great many of these cannot be counted on to share our view of the original
constitutional conception of the UN Charter," and "This same majority often opposes the United States on important
international questions." Lacking a guarantee that it will get its way, the U.S. must now "reserve to ourselves the power to
determine whether the Court has jurisdiction over us in a particular case," on the principle that "the United States does not
accept compulsory jurisdiction over any dispute involving matters essentially within the domestic jurisdiction of the United
States, as determined by the United States." The "domestic matters" in question were the U.S. attack against Nicaragua.
The media, along with intellectual opinion generally, agreed that the Court discredited itself by ruling against the United
States. The crucial parts of its decision were not reported, including its determination that all U.S. aid to the contras is
military and not humanitarian; it remained "humanitarian aid" across the spectrum of respectable opinion until Washington’s
terror, economic warfare, and subversion of diplomacy brought about the "victory for U.S. fair play."
Returning to the WTO case, we need not tarry on the allegation that the existence of the United States is at stake in the
strangulation of the Cuban economy. More interesting is the thesis that the U.S. has every right to overthrow another
government, in this case, by aggression, large-scale terror over many years, and economic strangulation. Accordingly,
international law and trade agreements are irrelevant. The fundamental principles of world order that have emerged
victorious again resound, loud and clear.
The Clinton administration declarations passed without challenge, though they were criticized on narrower grounds by
historian Arthur Schlesinger. Writing "as one involved in the Kennedy administration’s Cuban policy," Schlesinger
maintained that the Clinton administration had misunderstood Kennedy’s policies. The concern had been Cuba’s
"troublemaking in the hemisphere" and "the Soviet connection," Schlesinger explained. But these are now behind us, so the
Clinton policies are an anachronism, though otherwise unobjectionable, so we are to conclude.
Schlesinger did not explain the meaning of the phrases "troublemaking in the hemisphere" and "the Soviet connection," but
he has elsewhere, in secret. Reporting to incoming President Kennedy on the conclusions of a Latin American Mission in
early 1961, Schlesinger spelled out the problem of Castro’s "troublemaking"—what the Clinton administration calls Cuba’s
effort "to destabilize large parts of Latin America: it is "the spread of the Castro idea of taking matters into one’s own hands,"
a serious problem, Schlesinger added, when "The distribution of land and other forms of national wealth greatly favors the
propertied classes...[and] The poor and underprivileged, stimulated by the example of the Cuban revolution, are now
demanding opportunities for a decent living." Schlesinger also explained the threat of the "Soviet connection": "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." The "Soviet connection" was perceived in a similar light far more broadly in
Washington and London, from the origins of the Cold War 80 years ago.
With these (secret) explanations of Castro’s "destabilization" and "troublemaking in the hemisphere," and of the "Soviet
connection," we come closer to understanding the reality of the Cold War. It should come as no surprise that basic policies
persist with the Cold War a fading memory, just as they were carried out before the Bolshevik revolution: the brutal and
destructive invasion of Haiti and the Dominican Republic, to mention just one illustration of "global meliorism" under the
banner of "Wilsonian idealism."
It should be added that the policy of overthrowing the government of Cuba antedates the Kennedy administration. Castro
took power in January 1959. By June, the Eisenhower administration had determined that his government must be
overthrown. Terrorist attacks from U.S. bases began shortly after. The formal decision to overthrow Castro in favor of a
regime "more devoted to the true interests of the Cuban people and more acceptable to the U.S." was taken in secret in
March 1960, with the addendum that the operation must be carried out "in such a manner as to avoid any appearance of U.
S. intervention," because of the expected reaction in Latin America and the need to ease the burden on doctrinal managers
at home. At the time, the "Soviet connection" and "troublemaking in the hemisphere" were nil, apart from the Schlesingerian
version. The CIA estimated that the Castro government enjoyed popular support (the Clinton administration has similar
evidence today). The Kennedy administration also recognized that its efforts violated international law and the Charters of
the UN and OAS, but such issues were dismissed without discussion, the declassified record reveals
The Passion for Free Markets
Exporting American values through the new World Trade Organization
By Noam Chomsky
For more than half a century, the United Nations has been the main forum for the United States to try to create a world in its
image, maneuvering with its allies to forge global accords about human rights, nuclear tests or the environment that
Washington insisted would mirror its own values."
So runs postwar history, we learn from the opening paragraph of a front-page story by New York Times political analyst
David Sanger. But times are changing. Today, the headline reads: "U.S. Is Exporting Its Free-Market Values Through Global
Commercial Agreements." Going beyond the traditional reliance on the UN, the Clinton administration is turning to the new
World Trade Organization (WTO) to carry out the task of "exporting American values." Down the road, Sanger continues
(quoting the U.S. trade representative), it is the WTO that may be the most effective instrument for bringing "America’s
passion for deregulation" and for the free market generally, and "the American values of free competition, fair rules, and
effective enforcement," to a world still fumbling in darkness. These "American values" are illustrated most dramatically by the
wave of the future: telecommunications, the Internet, advanced computer technology, and the other wonders created by the
exuberant American entrepreneurial spirit unleashed by the market, at last freed from government interference by the
Reagan revolution.
Today "governments are everywhere embracing the free-market gospel preached in the 1980s by President Reagan and
Prime Minister Margaret Thatcher of Britain," Youssef Ibrahim reports in another Times front-page story, reiterating a
common theme. Like it or hate it, enthusiasts and critics over a broad range of opinion agree—just to keep to the liberal-to-
left part of the spectrum—about "the implacable sweep of what its exponents call ‘the market revolution’": "Reaganesque
rugged individualism" has changed the rules of the game worldwide, while here at home "Republicans and Democrats alike
are ready to give the market full sway" in their dedication to "the new orthodoxy."
There are a number of problems with the picture. One is the account of the last half-century. Even the most dedicated
believers in "America’s mission" must be aware that U.S./UN relations have been virtually the opposite of what the opening
passage depicts ever since the UN fell out of control with the progress of decolonization, leaving the U.S. regularly isolated
in opposition to global accords on a wide range of issues and committed to undermining central components of the UN,
particularly those with a third world orientation. Many questions about the world are debatable, but surely not this one.
As for "Reaganesque rugged individualism" and its worship of the market, perhaps it is enough to quote the review of the
Reagan years in Foreign Affairs by a Senior Fellow for International Finance at the Council on Foreign Relations, noting the
"irony" that Ronald Reagan, "the postwar chief executive with the most passionate love of laissez faire, presided over the
greatest swing toward protectionism since the 1930s"—no "irony," but the normal workings of "passionate love of laissez
faire": for you, market discipline, but not for me, unless the "playing field" happens to be tilted in my favor, typically as a
result of large-scale state intervention. It’s hard to find another theme so dominant in the economic history of the past three
centuries. The current enthusiasms about the communications revolution that Sanger is reporting are a textbook case.
Reaganites were following a well-trodden course—recently turned into a comedy act by Gingrich "conservatives"—when
they extolled the glories of the market and issued stern lectures about the debilitating culture of dependency of the poor at
home and abroad while boasting proudly to the business world that Reagan had "granted more import relief to U.S. industry
than any of his predecessors in more than half a century"; in fact, more than all predecessors combined, as they led "the
sustained assault on [free trade] principle" by the rich and powerful from the early 1970s, deplored in a scholarly review by
GATT secretariat economist Patrick Low, who estimates the restrictive effects of Reaganite measures at about three times
those of other leading industrial countries.
The radical "swing toward protectionism" was only a part of the "sustained assault" on free trade principles that was
accelerated under "Reaganite rugged individualism." Another chapter of the story includes the huge transfer of public funds
to private power, often under the traditional guise of "security." Without such extreme measures of market interference, it is
doubtful that the U.S. automotive, steel, machine tool, semiconductor industries, and others, would have survived Japanese
competition or been able to forge ahead in emerging technologies, with broad effects through the economy.
"Thatcher’s Britain" is another good choice to illustrate "free market gospel." Just to keep to a few revelations of early 1997,
"during the period of maximum pressure to make arms sales to Turkey," the London Observer reported, Prime Minister
Thatcher "personally intervened to ensure a payment of 22 million pounds was made out of Britain’s overseas aid budget, to
help build a metro in the Turkish capital of Ankara. The project was uneconomical, and in 1995 it was admitted" by Foreign
Secretary Douglas Hurd that it was "unlawful." The incident was particularly noteworthy in the aftermath of the Pergau Dam
scandal, which revealed illegal Thatcherite subsidies "to ‘sweeten’ arms deals with the Malaysian regime," with a High Court
judgment against Hurd. That’s aside from government credit guarantees and financing arrangements, and the rest of the
panoply of devices to transfer public funds to "defense industry," yielding a familiar range of benefits to advanced industry
generally.
A few days before, the same journal reported that "up to 2 million British children are suffering ill-health and stunted growth
because of malnutrition" as a result of "poverty on a scale not seen since the 1930s." The trend to increasing child health
has reversed and childhood diseases that had been controlled are now on the upswing thanks to the (highly selective) "free
market gospel" that is much admired by the beneficiaries.
A few months earlier, a lead headline reported "One in three British babies born in poverty," as "child poverty has increased
as much as three-fold since Margaret Thatcher was elected." "Dickensian diseases return to haunt today’s Britain," another
headline reads, reporting studies concluding that "social conditions in Britain are returning to those of a century ago."
Particularly grim are the effects of cutting off gas, electricity, water, and telephones to "a high number of households" as
privatization takes its natural course, with a variety of devices that favor "more affluent customers" and amount to a
"surcharge on the poor," leading to a "growing gulf in energy between rich and poor," also in water supply and other
services. The "savage cuts" in social programs are placing the nation "in the grip of panic about imminent social collapse."
But industry and finance are benefiting very nicely from the same policy choices. To top it all off, public spending after 17
years of Thatcherite gospel was the same 42 1/4 percent of GDP that it was when she took over.
Not exactly unfamiliar here.
Exporting American Values
Let us put aside the intriguing contrast between doctrine and reality, and see what can be learned by examining the new era
that is coming into view. Quite a lot, I think.
Sanger is celebrating the WTO agreement on telecommunications. One of its welcome effects is to provide Washington with
a "new tool of foreign policy." The agreement "empowers the WTO to go inside the borders of the 70 countries that have
signed it," and it is no secret that international institutions can function insofar as they keep to the demands of the powerful,
in particular, the United States. In the real world, then, the "new tool" allows the U.S. to intervene profoundly in the internal
affairs of others, compelling them to change their laws and practices. Crucially, the WTO will make sure that other countries
are "following through on their commitments to allow foreigners to invest" without restriction in central areas of their
economy. In the specific case at hand, the likely outcome is clear to all: "The obvious corporate beneficiaries of this new era
will be U.S. carriers, who are best positioned to dominate a level playing field," the Far Eastern Economic Review (FEER)
points out, along with one UK-U.S. megacorporation.
Not everyone is delighted by the prospects. The winners recognize that fact, and offer their interpretation: in Sanger’s
words, others fear that "American telecommunication giants...could overwhelm the flabby government-sanctioned
monopolies that have long dominated telecommunications in Europe and Asia"—as in the United States, long past the
period when it had become by far the world’s leading economy and most powerful state. It is also worth noting that major
contributions to modern technology came from the research laboratories of the "flabby government-sanctioned monopoly"
that dominated telecommunications here until the 1970s, using its freedom from market discipline to provide for the needs of
advanced sectors of industry generally by transfer of public funds (in indirect ways, unlike the more direct modalities of the
Pentagon system).
Those who cling irrationally to the past see matters a bit differently. The FEER points out that "jobs will be lost" in Asia and
"many Asian consumers will have to pay more for phone service before they will pay less." When will they pay less? For that
bright future to dawn, it is only necessary for foreign investors to be "encouraged...to act in socially desired ways," not
simply with an eye to profit and service to the rich and the business world. How this miracle will come to pass is unexplained,
though doubtless the suggestion will inspire serious reflection in corporate headquarters.
In the time span relevant to planning, the WTO agreement will raise phone service costs for most Asian consumers, the
Review predicts. "The fact is, comparatively few customers in Asia stand to benefit from cheaper overseas rates" that are
anticipated with the takeover by huge foreign corporations, mostly American. In Indonesia, for example, only about 300,000
of 190 million people make overseas calls at all, specifically the business sector. "It’s very likely the cost of local telecoms
service, in general, will rise" in Asia, according to David Barden, regional telecoms analyst at J.P. Morgan Securities in Hong
Kong. But that is all to the good, he continues: "if there is no profitability in the business, there will be no business." And now
that still more public property is being handed over to foreign corporations, they had better be guaranteed profitability —
telecommunications today, and a far wider range of related services tomorrow. The business press predicts that "personal
communications over the Internet [including corporate networks and interactions] will overtake telecommunications in five or
six years, and telephone operators have the biggest interest in getting into the online business." Contemplating the future of
his own company, Intel CEO Andrew Grove sees the Internet as "the biggest change in our environment" at present. He
expects large-scale growth for "the connection providers, the people involved in generating the World Wide Web, the people
who make the computers" ("people" meaning corporations), and the advertising industry, already running at almost $350
billion annually and anticipating new opportunities with the privatization of the Internet, which is expected to convert it to a
global oligopoly.
Meanwhile privatization precedes apace elsewhere. To take one important case, over considerable popular opposition the
government of Brazil has decided to privatize the Vale Company, which controls vast uranium, iron, and other mineral
resources and industrial and transport facilities, including sophisticated technology. Vale is highly profitable, with a 1996
income of over $5 billion, and excellent prospects for the future; it is 1 of 6 Latin American enterprises ranked among the
500 most profitable in the world. A study by specialists of the Graduate School of Engineering at the Federal University in
Rio estimated that the government has seriously undervalued the Company, noting also that it relied on an "independent"
analysis by Merrill Lynch, which happens to be associated with the Anglo American conglomerate that is seeking to take
over this central component of Brazil’s economy. The government angrily denies the conclusions. If they are accurate, as
one may plausibly surmise, it will fall into a very familiar pattern.
Side comment: Communications are not quite the same as uranium. Where there is even a pretense of democracy,
communications are at its heart. Concentration of communications in any hands (particularly foreign hands) raises some
rather serious questions about meaningful democracy. Similar questions arise about concentration of finance, which
undermines popular involvement in social and economic planning. Control over food raises even more serious questions, in
this case about survival. A year ago the secretary-general of the UN Food and Agricultural Organization, discussing the
"food crisis following huge rises in cereals prices this year," warned that countries "must become more self reliant in food
production," the London Financial Times reported. The FAO is warning "developing countries" to reverse the policies
imposed on them by the "Washington Consensus," policies that have had a disastrous impact on much of the world, while
proving a great boon to subsidized agribusiness—incidentally, also to narcotrafficking, perhaps the most dramatic success
of neoliberal reforms as judged by the "free market values" that the "U.S. is exporting."
Control over food supplies by foreign corporate giants is well under way, and with the agreement on telecommunications
signed and delivered, financial services are next in line.
Summarizing, the expected consequences of the victory for "American values" at the WTO are: (1) a "new tool" for far-
reaching U.S. intervention into the internal affairs of others; (2) the takeover of a crucial sector of foreign economies by U.S.-
based corporations; (3) benefits for business sectors and the wealthy; (4) shifting of costs to the general population; (5) new
and potentially powerful weapons against the threat of democracy.
A rational person might ask whether these expectations have something to do with the celebration, or whether they are just
incidental to a victory of principle that is celebrated out of commitment to higher values. Skepticism is heightened by
comparison of the Times’ picture of the postwar era with uncontested fact. It is further enhanced by a look at some of history’
s striking regularities, among them, that those in a position to impose their projects not only hail them with enthusiasm but
also typically benefit from them, whether the values professed involve free trade or other grand principles—which turn out in
practice to be finely tuned to the needs of those running the game and cheering the outcome. Logic alone would suggest a
touch of skepticism when the pattern is repeated. History should raise it a notch higher.
In fact, we need not even search that far.
An Improper Forum
The same day that the front page was reporting the victory for American values at the World Trade Organization, New York
Times editors warned the European Union not to turn to the WTO to rule on its charge that the U.S. is violating free trade
agreements. Narrowly at issue is the Helms-Burton Act, which "compels the United States to impose sanctions against
foreign companies that do business in Cuba." The sanctions "would effectively exclude these firms from exporting to, or
doing business in, the United States, even if their products and activities have nothing to do with Cuba" (Peter Morici, former
director of economics at the U.S. International Trade Commission). That is no slight penalty, even apart from more direct
threats against individuals and companies who cross a line that Washington will draw unilaterally. The editors regard the Act
as a "misguided attempt by Congress to impose its foreign policy on others"; Morici opposes it because it "is creating more
costs than benefits" for the U.S. More broadly at issue is the embargo itself, "the American economic strangulation of Cuba"
that the editors term "a cold war anachronism," best abandoned because it is becoming harmful to U.S. business interests.
But broader questions of right and wrong do not arise, and the whole affair is "essentially a political dispute," the Times
editors stress, not touching on Washington’s "free-trade obligations." Like most others, the editors apparently assume that if
Europe persists, the WTO is likely to rule against the United States. Accordingly, the WTO is not a proper forum.
The logic is simple, and standard. Ten years ago, on the same grounds, the International Court of Justice was found to be
an inappropriate forum for judging Nicaragua’s charges against Washington. The U.S. rejected ICJ jurisdiction, and when
the Court condemned the U.S. for the "unlawful use of force," ordering Washington to cease its international terrorism,
violation of treaties, and illegal economic warfare, and to pay substantial reparations, the Democrat-controlled Congress
reacted by instantly escalating the crimes while the Court was roundly denounced on all sides as a "hostile forum" that had
discredited itself by rendering a decision against the United States. The Court judgment itself was scarcely reported,
including the words just quoted and the explicit ruling that U.S. aid to the contras is "military" and not "humanitarian." Along
with U.S. direction of the terrorist forces, the aid continued until the U.S. imposed its will, always called "humanitarian aid."
Public history keeps to the same conventions.
The U.S. then vetoed a Security Council resolution calling on all states to observe international law (scarcely reported), and
voted alone (with El Salvador and Israel) against a General Assembly Resolution calling for "full and immediate compliance"
with the Court’s ruling—unreported in the mainstream, as was the repetition the following year, this time with only Israel on
board. The whole affair happens to be a typical illustration of how the U.S. used the UN as a "forum" for imposing "its own
values."
Returning to the current WTO case, in November 1996, Washington voted alone (with Israel and Uzbekistan) against a
General Assembly Resolution, backed by the entire European Union, urging the U.S. to drop the embargo against Cuba.
The Organization of American States had already voted unanimously to reject the Helms-Burton Act, and had asked its
judicial body (the Inter-American Juridical Committee) to rule on its legality. In August 1996, the IAJC ruled unanimously that
the Act violated international law. A year earlier, the Inter-American Commission on Human Rights of the OAS had
condemned the U.S. restrictions on shipments of food and medicine to Cuba as a violation of international law. The Clinton
administration’s response was that shipments of medicine are not literally barred, only prevented by conditions so onerous
and threatening that even the largest corporations here and abroad are unwilling to face the prospects (huge financial
penalties and imprisonment for what Washington determines to be violations of "proper distribution," banning of ships and
aircraft, mobilization of media campaigns, etc.). And while food shipments are indeed barred, the Administration argues that
there are "ample suppliers" elsewhere (at far higher cost), so that the direct violation of international law is not a violation.
As the issue was brought by the EU to the World Trade Organization, the U.S. withdrew from the proceedings on the ICJ
model, effectively bringing the matter to a close.
In short, the world that the U.S. has sought "to create in its image" through international institutions is one based on the
principle of the rule of force. The "American passion for free trade" entails that the U.S. government may violate trade
agreements at will. No problem arises when communications, finance, and food supplies are taken over by foreign (mainly U.
S.) corporations. Matters are different, however, when trade agreements and international law interfere with the projects of
the powerful.
We learn more by investigating the reasons for U.S. rejection of international law and trade agreements. In the Nicaragua
case, State Department Legal Adviser Abraham Sofaer explained that when the U.S. accepted World Court jurisdiction in the
1940s, most members of the UN "were aligned with the United States and shared its views regarding world order." But now
"A great many of these cannot be counted on to share our view of the original constitutional conception of the UN Charter,"
and "This same majority often opposes the United States on important international questions." It is therefore
understandable that the U.S. should be far in the lead since the 1960s in vetoing UN resolutions on a wide range of issues
including international law, human rights, environmental protection, and so on (UK second, France a distant third), precisely
contrary to the standard version repeated in the opening paragraph above. The U.S. advanced its lead another notch
shortly after this account appeared, casting its 71st veto since 1967. When the question (Israeli settlements in Jerusalem)
moved to the General Assembly, the U.S. and Israel stood alone in opposition, again a standard pattern.
Drawing the natural conclusions from the unreliability of the world, Sofaer went on to explain that we must now "reserve to
ourselves the power to determine whether the Court has jurisdiction over us in a particular case." The long-standing
principle, now to be enforced in a world that is no longer obedient, is that "the United States does not accept compulsory
jurisdiction over any dispute involving matters essentially within the domestic jurisdiction of the United States, as determined
by the United States." The "domestic matters" in question were the U.S. attack against Nicaragua.
The basic operative principle was stated elegantly by the new Secretary of State, Madeleine Albright, when she lectured the
UN Security Council about its unwillingness to go along with U.S. demands concerning Iraq: The U.S. will "behave, with
others, multilaterally when we can and unilaterally as we must," recognizing no external constraints in an area deemed "vital
to U.S. national interests"—as determined by the United States. The UN is an appropriate forum when its members "can be
counted on" to share Washington’s views, but not when the majority "opposes the United States on important international
questions." International law and democracy are fine things—but as judged by outcome, not process; like free trade.
The current U.S. stand in the WTO case thus breaks no new ground. Washington declared that the WTO "has no
competence to proceed" on an issue of American national security; we are to understand that our existence is at stake in
the strangulation of the Cuban economy. A WTO ruling against the U.S. in absentia would be of no significance or concern,
a Clinton administration spokesperson added, because "we do not believe anything the WTO says or does can force the U.
S. to change its laws." Recall that the great merit of the WTO telecommunications agreement was that this "new tool of
foreign policy" forces other countries to change their laws and practices, in accord with our demands.
The principle is that the U.S. is exempt from WTO interference with its laws, just as it is free to violate international law at will;
uniquely, though the privilege may be extended to client states as circumstances require. The fundamental principles of
world order again resound, loud and clear.
The earlier GATT agreements had allowed for national security exceptions, and under them, Washingon had justified its
embargo against Cuba as "measures taken in pursuit of essential US security interests." The WTO agreement also permits
a member to take "any action it considers necessary for the protection of its essential security interests," but only in relation
to three designated issues: fissionable materials, traffic in armaments, and actions "taken in time of war or other emergency
in international relations." Perhaps not wishing to be officially on record with an utter absurdity, the Clinton administration did
not formally invoke its "national security exemption," though it did make clear that the issue was "national security."
At the time of writing, the EU and the U.S. are trying to arrange a deal before April 14, when the WTO hearings are
scheduled to begin. Meanwhile, the Wall Street Journal reports, Washington "says it won’t cooperate with the WTO panels,
arguing that the trade organization doesn’t have jurisdiction over national security issues."
Indecent Thoughts
Polite people are not supposed to remember the reaction when Kennedy tried to organize collective action against Cuba in
1961: Mexico could not go along, a diplomat explained, because "If we publicly declare that Cuba is a threat to our security,
forty million Mexicans will die laughing." Here we take a more sober view of threats to the national security.
There were also no reported deaths from laughter when Administration spokesperson Stuart Eizenstat, justifying
Washington’s rejection of the WTO agreements, "argued that Europe is challenging ‘three decades of American Cuba policy
that goes back to the Kennedy Administration,’ and is aimed entirely at forcing a change of government in Havana" (NYT). A
sober reaction is entirely in order on the assumption that the U.S. has every right to overthrow another government; in this
case, by aggression, large-scale terror, and economic strangulation.
The assumption remains in place and apparently unchallenged, but Eizenstat’s statement was criticized on narrower
grounds by historian Arthur Schlesinger. Writing "as one involved in the Kennedy Administration’s Cuban policy,"
Schlesinger pointed out that Under Secretary of Commerce Eizenstat had misunderstood the policies of the Kennedy
administration. Its concern was Cuba’s "troublemaking in the hemisphere" and "the Soviet connection." But these are now
behind us, so the Clinton policies are an anachronism, though otherwise, it seems, unobjectionable.
Schlesinger did not explain the meaning of the phrases "troublemaking in the hemisphere" and "the Soviet connection," but
he has elsewhere, in secret. Reporting to the incoming President on the conclusions of a Latin American Mission in early
1961, Schlesinger spelled out the problem of Castro’s "troublemaking": it is "the spread of the Castro idea of taking matters
into one’s own hands," a serious problem, he added shortly after, when "The distribution of land and other forms of national
wealth greatly favors the propertied classes...[and] The poor and underprivileged, stimulated by the example of the Cuban
revolution, are now demanding opportunities for a decent living." Schlesinger also explained the threat of the "Soviet
connection": "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." The "Soviet connection" was perceived in a similar light far
more broadly in Washington and London, from the origins of the Cold War in 1917 into the 1960s, when the documentary
record currently ends.
Schlesinger also recommended to the incoming president "a certain amount of high-flown corn" about "the higher aims of
culture and spirit," which "will thrill the audience south of the border, where metahistorical disquisitions are inordinately
admired." Meanwhile we’ll take care of serious matters. Just to show how much things change, Schlesinger also realistically
criticized "the baleful influence of the International Monetary Fund," then pursuing the 1950’s version of today’s "Washington
Consensus" ("structural adjustment," "neoliberalism").
With these (secret) explanations of Castro’s "troublemaking in the hemisphere" and the "Soviet connection," we come a step
closer to an understanding of the reality of the Cold War. But that is another topic.
Similar troublemaking beyond the hemisphere has also been no slight problem, and continues to spread dangerous ideas
among people who "are now demanding opportunities for a decent living." In late February 1996, while the U.S. was in an
uproar over Cuba’s downing of two planes of a Florida-based anti-Castro group that had regularly penetrated Cuban
airspace, dropping leaflets in Havana calling on Cubans to revolt (also participating in the continuing terrorist attacks
against Cuba, according to Cuban sources), the wire services were running different stories. AP reported that in South
Africa, "a cheering, singing crowd welcomed Cuban doctors" who had just arrived at the invitation of the Mandela
government "to boost medical care in poor rural areas." "Cuba has 57,000 doctors for its 11 million people, compared to
25,000 in South Africa for 40 million people." The 101 Cuban doctors included top medical specialists who, if they were
South African, would "very likely be working in Cape Town or Johannesburg" at twice the salaries they will receive in the
poor rural areas where they go. "Since the program of sending public health specialists overseas began in Algeria in 1963,
Cuba has sent 51,820 doctors, dentists, nurses and other medical doctors" to "the poorest Third World nations," providing
"medical aid totally free of charge" in most cases. A month later Cuban medical experts were invited by Haiti to study a
meningitis outbreak.
This kind of troublemaking goes back a long way. A leading West German journal (Die Zeit) reported that Third World
countries regard Cuba as "an international superpower" because of the teachers, construction workers, physicians, and
others involved in "international service." In 1985, it reported, 16,000 Cubans worked in Third World countries, more than
twice the total of Peace Corps and AID specialists from the United States. By 1988, Cuba had "more physicians working
abroad than any industrialized nation, and more than the UN’s World Health Organization." Most of this aid is
uncompensated, and Cuba’s "international emissaries" are "men and women who live under conditions that most
development aid workers would not accept," which is "the basis for their success." For Cubans, the report continues,
"international service" is regarded as "a sign of political maturity" and taught in the schools as "the highest virtue." The warm
reception by an ANC delegation in South Africa in 1996, and the crowds singing "long live Cuba," attest to the same
phenomenon.
On the side, we might ask how the U.S. would react to Libyan planes flying over New York and Washington dropping leaflets
calling on Americans to revolt, after years of terrorist attacks against U.S. targets at home and abroad. By garlanding them
with flowers, perhaps? A hint was given by Barrie Dunsmore of ABC a few weeks before the downing of the two planes, citing
Walter Porges, former "ABC News" vice president for News Practices. Porges reports that when an ABC news crew on a
civilian plane attempted to take photographs of the U.S. Sixth Fleet in the Mediterranean, "it was told to move immediately or
it would be shot down," which "would have been legal under provisions of International Law defining military air space." A
small country under attack by a superpower is a different matter, however.
A further look at history may be useful. The policy of overthrowing the government of Cuba does not go back to the
Kennedy administration, as Eizenstat asserted, but to its predecessor: the formal decision to overthrow Castro in favor of a
regime "more devoted to the true interests of the Cuban people and more acceptable to the U.S." was taken in secret in
March 1960, with the addendum that the operation must be carried out "in such a manner as to avoid any appearance of U.
S. intervention," because of the expected reaction in Latin America and the need to ease the burden on doctrinal managers
at home. At the time, the "Soviet connection" and "troublemaking in the hemisphere" were nil, apart from the Schlesingerian
version.
Since Washington is the arbiter of the "true interests of the Cuban people," it was unnecessary for the Eisenhower
administration to attend to the public opinion studies it received, reporting popular support for Castro and optimism about
the future. For similar reasons, current information about these matters is of no account. The Clinton Administration is
serving the true interests of the Cuban people by imposing misery and starvation, whatever studies of Cuban opinion may
indicate: for example, the polls reported in December 1994 by an affiliate of the Gallup organization that found that half the
population consider the embargo to be the "principal cause of Cuba’s problems" while 3 percent found the "political
situation" to be the "most serious problem facing Cuba today"; that 77 percent regard the USA as Cuba’s "worst friend" (no
one else reached 3 percent); that by 2 to 1, the population feel that the revolution has registered more achievements than
failures, the "principal failure" being "having depended on socialist countries like Russia which betrayed us"; and that half
describe themselves as "revolutionary," another 20 percent "communist" or "socialist."
Right or wrong, the conclusions about public attitudes are irrelevant, again a regular pattern, at home as well.
History buffs might recall that the policy actually dates back to the 1820s, when Washington’s intention to take control of
Cuba was blocked by the British deterrent. Cuba was regarded by Secretary of State John Quincy Adams as "an object of
transcendent importance to the commercial and political interests of our Union," but he advised patience: over time, he
predicted, Cuba would fall into U.S. hands by "the laws of political...gravitation," a "ripe fruit" for harvest. So it did, as power
relations shifted enough for the U.S. to liberate the island (from its people) at the end of the century, turning it into a U.S.
plantation and haven for crime syndicates and tourists.
The historical depth of the commitment to rule Cuba may help account for the element of hysteria so apparent in the
execution of the enterprise; for example, the "almost savage" atmosphere of the first cabinet meeting after the failed Bay of
Pigs invasion described by Chester Bowles, the "almost frantic reaction for an action program," a mood reflected in
President Kennedy’s public statements about how failure to act would leave us "about to be swept away with the debris of
history." Clinton’s initiatives, public and indirect, reveal a similar streak of vindictive fanaticism, as in the threats and
prosecutions that ensured that "the number of companies granted U.S. licences to sell [medicines] to Cuba has fallen to less
than 4 percent" of the levels prior to the Cuban Democracy Act (CDA) of October 1992, while "only a few of the world’s
medical companies have attempted to brave U.S. regulations" and penalties, a review in Britain’s leading medical journal
reports.
Considerations such as these carry us from the abstract plane of international law and solemn agreements to the realities of
human life. Lawyers may debate whether the ban on food and (effectively) medicine violates international agreements
stating that "food must not be used as an instrument for political and economic pressure" (Rome Declaration, 1996) and
other declared principles and commitments. But the victims have to live with the fact that the CDA has "resulted in a serious
reduction in the trade of legitimate medical supplies and food donations, to the detriment of the Cuban people" (Joanna
Cameron, Fletcher Forum). A recently released study of the American Association for World Health concludes that the
embargo has caused serious nutritional deficits, deterioration in the supply of safe drinking water, and sharp decline in
availability of medicines and medical information, leading to low birth-rate, epidemics of neurological and other diseases with
tens of thousands of victims, and other severe health consequences. "Health and nutrition standards have been devastated
by the recent tightening of the 37-year-old US embargo, which includes food imports," Victoria Brittain writes in the British
press, reporting the year-long study by U.S. specialists, which found "hospitalised children lying in agony as essential drugs
are denied them" and doctors compelled "to work with medical equipment at less than half efficiency because they have no
spare parts." Similar conclusions are drawn in other current studies in professional journals.
These are the real crimes, far more than the casual and reflexive violation of legal instruments that are used as weapons
against official enemies, with the cynicism that only the truly powerful can display.
In fairness, it should be added that the suffering caused by the embargo is sometimes reported here as well. A lead story in
the New York Times business section is headlined: "Exploding Cuban Cigar Prices: Now Embargo Really Hurts as Big
Smokes Grow Scarcer." The story reports the tribulations of business executives at "a plush smoking room" in Manhattan,
who lament "that it’s really tough to get a Cuban cigar in the States these days" except at "prices that catch in the throats of
the most devoted smokers."
While the Clinton administration, exploiting the privilege of the powerful, attributes the grim consequences of economic
warfare without parallel in current history to the policies of the regime from which it promises to "liberate" the suffering
Cuban people, a more plausible conclusion is more nearly the reverse: the "American economic strangulation of Cuba" has
been designed, maintained, and in the post-Cold War era intensified, for the reasons implicit in Arthur Schlesinger’s report
to incoming President Kennedy. Much as Kennedy’s Latin American Mission feared, the successes of programs to improve
health and living standards had been helping to spread "the Castro idea of taking matters into one’s own hands," stimulating
"the poor and underprivileged" in the region with the worst inequality in the world to "demand opportunities for a decent
living," and with dangerous effects beyond as well. There is a substantial and compelling documentary record, accompanied
by consistent action based on quite rational motives, which lends no slight credibility to this assessment. To evaluate the
claim that the policies flow from concern for human rights and democracy, the briefest look at the record is more than
sufficient, at least for those who even pretend to be serious.
It is improper, however, to have any thoughts or recollections about such matters as we celebrate the triumph of "American
values." Nor are we supposed to remember that a few months ago, inspired by the same passion for free trade, Clinton
"pressured Mexico into an agreement that will end the shipment of low-price tomatoes to the United States," a gift to Florida
growers that costs Mexico about $800 million annually, and that violates NAFTA as well as the WTO agreements (though
only "in spirit," because it was a sheer power play and did not require an official tariff). The Administration explained the
decision forthrightly: Mexican tomatoes are cheaper and consumers here prefer them. The free market is working, but with
the wrong outcome. Or perhaps tomatoes too are a threat to national security.
To be sure, tomatoes and telecommunications are in very different leagues. Any favors Clinton might owe to Florida growers
are dwarfed by the requirements of the telecommunications industry, even apart from what Thomas Ferguson describes as
"the best-kept secret of the 1996 election": that "more than any other single bloc, it was the telecommunications sector that
rescued Bill Clinton," who received major campaign contributions from "this staggeringly profitable sector." The
Telecommunications Act of 1996 and the WTO agreement are, in a sense, "thank you" notes, though it is unlikely that the
outcome would have been very different if a different mix of largesse had been chosen by the business world, suffering at
the time from what Business Week had just called "spectacular" profits in yet another "Surprise Party for Corporate America."
Prominent among the truths that are not to be recalled are the ones briefly mentioned earlier: the actual record of
"Reaganesque rugged individualism" and the "free market gospel" that was preached (to the poor and defenseless) while
protectionism reached unprecedented heights and the Administration poured public funds into high tech industry with
unusual abandon. Here we begin to reach the heart of the matter. The reasons for skepticism about the "passion" that have
just been reviewed are valid enough, but they are a footnote to the real story: how U.S. corporations came to be so well-
placed to take over international markets, inspiring the current celebration of "American values."
But that, again, is a larger tale, one that tells us a lot about the contemporary world: its social and economic realities, and
the grip of ideology and doctrine, including those doctrines crafted to induce hopelessness, resignation, and
despair. <
Market Democracy in a Neoliberal Order:
Doctrines and Reality
Part II of the Davie Lecture, University of Cape Town, May 1997
By Noam Chomsky
As mentioned in part I of this talk, Washington’s "crusade for democracy" was waged with particular fervor during the
Reagan years, with Latin America the chosen terrain. The results are commonly offered as a prime illustration of how the U.
S. became "the inspiration for the triumph of democracy in our time." The most recent scholarly study of democracy
describes "the revival of democracy in Latin America" as "impressive" but not unproblematic; the "barriers to implementation"
remain "formidable," but can perhaps be overcome through closer integration with the United States. The author, Sanford
Lakoff, singles out the "historic North American Free Trade Agreement (NAFTA)" as a potential instrument of
democratization, alongside of other examples of the kind already discussed.
A closer look at NAFTA is informative. The NAFTA agreement was rammed through Congress over strenuous popular
opposition but with overwhelming support from the business world and the media, which were full of joyous promises of
benefits for all concerned, also confidently predicted by the U.S. International Trade Commission and leading economists
equipped with the most up-to-date models (which had just failed miserably to predict the deleterious consequences of the U.
S.-Canada Free Trade Agreement, but were somehow going to work in this case). Completely suppressed was the careful
analysis by the Office of Technology Assessment (the research bureau of Congress), which concluded that the planned
version of NAFTA would harm most of the population of North America, proposing modifications that could render the
agreement beneficial beyond small circles of investment and finance. Still more instructive was the suppression of the official
position of the U.S. labor movement, presented in a similar analysis. Meanwhile labor was bitterly condemned for its
"backward, unenlightened" perspective and "crude threatening tactics," motivated by "fear of change and fear of
foreigners"; I am again sampling only from the far left of the spectrum, in this case, Anthony Lewis. The charges were
demonstrably false, but they were the only word that reached the public in this inspiring exercise of democracy. Further
details are most illuminating, and reviewed in the dissident literature at the time and since, but kept from the public eye. By
now the tales about the wonders of NAFTA have quietly been shelved, as the facts have been coming in. One hears no
more about the hundreds of thousands of new jobs and other great benefits in store for the people of the three countries.
These good tidings have been replaced by the "distinctly benign economic viewpoint"—the "expert's view"—that NAFTA had
no significant effects. The Wall Street Journal reports that "Administration officials feel frustrated by their inability to convince
voters that the threat doesn’t hurt them" and that job loss is "much less than predicted by Ross Perot," who was allowed into
mainstream discussion (unlike the OTA, the Labor movement, economists who didn’t echo the Party Line, and dissident
analysts) because his claims were sometimes extreme and easily ridiculed. "‘It’s hard to fight the critics’ by telling the truth—
that the trade pact ‘hasn’t really done anything’," an Administration official observes sadly. Forgotten is what "the truth" was
going to be when the impressive exercise in democracy was roaring full steam ahead.
While the experts have downgraded NAFTA to "no significant effects," dispatching the earlier "experts’ view" to the memory
hole, a less than "distinctly benign economic viewpoint" comes into focus if the "national interest" is widened in scope to
include the general population. Testifying before the Senate Banking Committee in February 1997, Federal Reserve Board
Chair Alan Greenspan was highly optimistic about "sustainable economic expansion" thanks to "atypical restraint on
compensation increases [which] appears to be mainly the consequence of greater worker insecurity" — an obvious
desideratum for a just society. The February 1997 Economic Report of the President, taking pride in the Administration’s
achievements, refers more obliquely to "changes in labor market institutions and practices" as a factor in the "significant
wage restraint" that bolsters the health of the economy.
One reason for these benign changes is spelled out in a study commissioned by the NAFTA Labor Secretariat "on the
effects of the sudden closing of the plant on the principle of freedom of association and the right of workers to organize in
the three countries." The study was carried out under NAFTA rules in response to a complaint by telecommunications
workers on illegal labor practices by Sprint. The complaint was upheld by the U.S. National Labor Relations Board, which
ordered trivial penalties after years of delay, the standard procedure. The NAFTA study, by Cornell University Labor
economist Kate Bronfenbrenner, was authorized for release by Canada and Mexico, but delayed by the Clinton
administration. It reveals a significant impact of NAFTA on strike-breaking. About half of union organizing efforts are
disrupted by employer threats to transfer production abroad; for example, by placing signs reading "Mexico Transfer Job" in
front of a plant where there is an organizing drive. The threats are not idle: when such organizing drives nevertheless
succeed, employers close the plant in whole or in part at triple the pre-NAFTA rate (about 15 percent of the time). Plant-
closing threats are almost twice as high in more mobile industries (e.g., manufacturing vs. construction).
These and other practices reported in the study are illegal, but that is a technicality, on a par with violations of international
law and trade agreements when outcomes are unacceptable. The Reagan administration had made it clear to the business
world that their illegal anti-union activities would not be hampered by the criminal state, and successors have kept to this
stand. There has been a substantial effect on destruction of unions — or in more polite words, "changes in labor market
institutions and practices" that contribute to "significant wage restraint" within an economic model offered with great pride to
a backward world that has not yet grasped the victorious principles that are to lead the way to freedom and justice.
What was reported all along outside the mainstream about the goals of NAFTA is also now quietly conceded: the real goal
was to "lock Mexico in" to the "reforms" that had made it an "economic miracle," in the technical sense of this term: a
"miracle" for U.S. investors and the Mexican rich, while the population sank into misery. The Clinton administration "forgot
that the underlying purpose of NAFTA was not to promote trade but to cement Mexico’s economic reforms," Newsweek
correspondent Marc Levinson loftily declares, failing only to add that the contrary was loudly proclaimed to ensure the
passage of NAFTA while critics who pointed out this "underlying purpose" were efficiently excluded from the free market of
ideas by its owners. Perhaps some day the reasons will be conceded too. "Locking Mexico in" to these reforms, it was
hoped, would deflect the danger detected by a Latin America Strategy Development Workshop in Washington in September
1990. It concluded that relations with the brutal Mexican dictatorship were fine, though there was a potential problem: "a
‘democracy opening’ in Mexico could test the special relationship by bringing into office a government more interested in
challenging the U.S. on economic and nationalist grounds"— no longer a serious problem now that Mexico is "locked into the
reforms" by treaty.
The threat is democracy, at home and abroad, as the chosen example again illustrates. Democracy is permissible, even
welcome, but again, as judged by outcome, not process. NAFTA was considered to be an effective device to diminish the
threat of democracy. It was implemented at home by effective subversion of the democratic process, and in Mexico by force,
again over vain public protest. The results are now presented as a hopeful instrument to bring American-style democracy to
benighted Mexicans. A cynical observer aware of the facts might agree.
Once again, the chosen illustrations of the triumph of democracy are natural ones, and are interesting and revealing as well,
though not quite in the intended manner.
Markets are always a social construction, and in the specific form being crafted by current social policy they should serve to
restrict functioning democracy, as in the case of NAFTA, the WTO agreements, and other instruments that may lie ahead.
One case that merits close attention is the Multilateral Agreement on Investment (MAI) that is now being forged by the
OECD, the rich men’s club, and the WTO (where it is the MIA). The apparent hope is that the agreement will be adopted
without public awareness, as was the initial intention for NAFTA, not quite achieved, though the "information system"
managed to keep the basic story under wraps. If the plans outlined in draft texts are implemented, the whole world may be
"locked into" treaty arrangements that provide transnational corporations with still more powerful weapons to restrict the
arena of democratic politics, leaving policy largely in the hands of huge private tyrannies that have ample means of market
interference as well. The efforts may be blocked at the WTO because of the strong protests of the "developing countries,"
notably India and Malaysia, which are not eager to become wholly-owned subsidiaries of great foreign enterprises. But the
OECD version may fare better, to be presented to the rest of the world as a fait accompli, with the obvious consequences.
All of this proceeds in impressive secrecy, so far.
@PAR SUB = The announcement of the Clinton Doctrine was accompanied by a prize example to illustrate the victorious
principles: What the Administration had achieved in Haiti. Since this is again offered as the strongest case, it would be
appropriate to look at it.
True, Haiti’s elected president was allowed to return, but only after the popular organizations had been subjected to three
years of terror by forces that retained close connections to Washington throughout; the Clinton administration still refuses to
turn over to Haiti 160,000 pages of documents on state terror seized by U.S. military forces — "to avoid embarrassing
revelations" about U.S. government involvement with the coup regime, according to Human Rights Watch. It was also
necessary to put President Aristide through "a crash course in democracy and capitalism," as his leading supporter in
Washington described the process of civilizing the troublesome priest.
As a condition on his return, Aristide was compelled to accept an economic program that directs the policies of the Haitian
government to the needs of "Civil Society, especially the private sector, both national and foreign": U.S. investors are
designated to be the core of Haitian civil society, along with wealthy Haitians who backed the military coup, but not the
Haitian peasants and slum-dwellers who organized a civil society so lively and vibrant that they were even able to elect their
own president against overwhelming odds, eliciting instant U.S. hostility and efforts to subvert Haiti’s first democratic regime.
The unacceptable acts of the "ignorant and meddlesome outsiders" in Haiti were reversed by violence, with direct U.S.
complicity, not only through contacts with the state terrorists in charge. The Organization of American States declared an
embargo. The Bush and Clinton administrations undermined it from the start by exempting U.S. firms, and also by secretly
authorizing the Texaco Oil Company to supply the coup regime and its wealthy supporters in violation of the official
sanctions, a crucial fact that was prominently revealed the day before U.S. troops landed to "restore democracy," but has
yet to reach the public, and is an unlikely candidate for the historical record.
Now democracy has been restored. The new government has been forced to abandon the democratic and reformist
programs that scandalized Washington, and to follow the policies of Washington’s candidate in the 1990 election, in which
he received 14 percent of the vote.
Haitians seem to understand the lessons, even if doctrinal managers in the West prefer a different picture. Parliamentary
elections in April 1997 brought forth "a dismal 5 percent" of voters, the press reported, thus raising the question "Did Haiti
Fail U.S. Hope?" We have sacrificed so much to bring them democracy, but they are ungrateful and unworthy. One can see
why "realists" urge that we stay aloof from crusades of "global meliorism."
Similar attitudes hold throughout the hemisphere. Polls show that in Central America, politics elicits "boredom," "distrust" and
"indifference" in proportions far outdistancing "interest" or "enthusiasm" among "an apathetic public...which feels itself a
spectator in its democratic system" and has "general pessimism about the future." The first Latin America survey, sponsored
by the European Union, found much the same: "the survey’s most alarming message," the Brazilian coordinator commented,
was "the popular perception that only the elite had benefited from the transition to democracy." Latin American scholars
observe that the recent wave of democratization coincided with neoliberal economic reforms, which have been very harmful
for most people, leading to a cynical appraisal of formal democratic procedures. The introduction of similar programs in the
richest country in the world has had similar effects. By the early 1990s, after 15 years of a domestic version of structural
adjustment, over 80 percent of the U.S. population had come to regard the democratic system as a sham, with business far
too powerful, and the economy as "inherently unfair." These are natural consequences of the specific design of "market
democracy" under business rule.
Let us return to the prevailing doctrine that "America’s victory in the Cold War" was a victory for democracy and the free
market. With regard to democracy, the doctrine is partially true, though we have to understand what is meant by
"democracy": top-down control "to protect the minority of the opulent against the majority." What about the free market?
Here too, we find that doctrine is far removed from reality, as several examples have already illustrated.
Consider again the case of NAFTA, an agreement intended to lock Mexico into an an economic discipline that protects
investors from the danger of a "democracy opening." Its provisions tell us more about the economic principles that have
emerged victorious. It is not a "free trade agreement." Rather, it is highly protectionist, designed to impede East Asian and
European competitors. Furthermore, it shares with the global agreements such anti-market principles as "intellectual
property rights" restrictions of a sort rich societies never accepted during their period of development, but now intend to use
to protect home-based corporations: to destroy the pharmaceutical industry in poorer countries, for example—and,
incidentally, to block technological innovations, such as improved production processes for patented products; progress is
no more a desideratum than markets, unless it yields benefits for those who count.
There are also questions about the nature of "trade." Over half of U.S. trade with Mexico is reported to consist of intrafirm
transactions, up about 15 percent since NAFTA. For example, already a decade ago, mostly U.S.-owned plants in Northern
Mexico employing few workers and with virtually no linkages to the Mexican economy produced more than one-third of
engine blocks used in U.S. cars and three-fourths of other essential components. The post-NAFTA collapse of the Mexican
economy in 1994, exempting only the very rich and U.S. investors (protected by U.S. government bailouts), led to an
increase of U.S.-Mexico trade as the new crisis, driving the population to still deeper misery, "transformed Mexico into a
cheap [i.e., even cheaper] source of manufactured goods, with industrial wages one-tenth of those in the U.S.," the business
press reports. Ten years ago, according to some specialists, half of U.S. trade worldwide consists of such centrally-
managed transactions and much the same is true of other industrial powers, though one must treat with caution conclusions
about institutions with limited public accountability. Some economists have plausibly described the world system as one of
"corporate mercantilism," remote from the ideal of free trade. The OECD concludes that "Oligopolistic competition and
strategic interaction among firms and governments rather than the invisible hand of market forces condition today’s
competitive advantage and international division of labor in high-technology industries," implicitly adopting a similar view.
Even the basic structure of the domestic economy violates the neoliberal principles that are hailed. The main theme of
Alfred Chandler’s standard work on U.S. business history is that "modern business enterprise took the place of market
mechanisms in coordinating the activities of the economy and allocating its resources," handling many transactions
internally, another large departure from market principles. There are many others. Consider, for example, the fate of Adam
Smith’s principle that free movement of people is an essential component of free trade—across borders, for example. When
we move on to the world of transnational corporations, with strategic alliances and critical support from powerful states, the
gap between doctrine and reality becomes substantial.
Free market theory comes in two varieties: the official doctrine, and what we might call "really existing free market doctrine":
Market discipline is good for you, but I need the protection of the nanny state. The official doctrine is imposed on the
defenseless, but it is "really existing doctrine" that has been adopted by the powerful since the days when Britain emerged
as Europe’s most advanced fiscal-military and developmental state, with sharp increases in taxation and efficient public
administration as the state became "the largest single actor in the economy (historian John Brewer)" and its global
expansion, establishing a model that has been followed to the present in the industrial world, surely by the United States,
from its origins.
Britain did finally turn to liberal internationalism—in 1846, after 150 years of protectionism, violence, and state power had
placed it far ahead of any competitor. But the turn to the market had significant reservations. Forty percent of British textiles
continued to go to colonized India, and much the same was true of British exports generally. British steel was kept from U.S.
markets by very high tariffs that enabled the United States to develop its own steel industry. But India and other colonies
were still available, and remained so when British steel was priced out of international markets. India is an instructive case; it
produced as much iron as all of Europe in the late 18th century, and British engineers were studying more advanced Indian
steel manufacturing techniques in 1820 to try to close "the technological gap." Bombay was producing locomotives at
competitive levels when the railway boom began. But "really existing free market doctrine" destroyed these sectors of Indian
industry just as it had destroyed textiles, ship-building, and other industries that were advanced by the standards of the day.
The U.S. and Japan, in contrast, had escaped European control and could adopt Britain’s model of market interference.
When Japanese competition proved to be too much to handle, England called off the game: the empire was effectively
closed to Japanese exports, part of the background of World War II. Indian manufacturers asked for protection at the same
time — but against England, not Japan. No such luck, under really existing free market doctrine.
With the abandonment of its restricted version of laissez-faire in the 1930s, the British government turned to more direct
intervention into the domestic economy as well. Within a few years, machine tool output increased five times, along with a
boom in chemicals, steel, aerospace, and a host of new industries, "an unsung new wave of industrial revolution," Will
Hutton writes. State-controlled industry enabled Britain to outproduce Germany during the war, even to narrow the gap with
the U.S., which was then undergoing its own dramatic economic expansion as corporate managers took over the state-
coordinated wartime economy.
A century after England turned to a form of liberal internationalism, the U.S. followed the same course. After 150 years of
protectionism and violence, the U.S. had become by far the richest and most powerful country in the world, and like England
before it, came to perceive the merits of a "level playing field" on which it could expect to crush any competitor. But like
England, with crucial reservations.
One was that Washington used its power to bar independent development elsewhere, as England had done. In Latin
America, Egypt, South Asia, and elsewhere, development was to be "complementary," not "competitive." There was also
large-scale interference with trade. For example, Marshall Plan aid was tied to purchase of U.S. agricultural products, part of
the reason why the U.S. share in world trade in grains increased from less than 10 percent before the war to more than half
by 1950, while Argentine exports reduced by two-thirds. U.S. Food for Peace aid was also used both to subsidize U.S.
agribusiness and shipping and to undercut foreign producers, among other measures to prevent independent development.
The virtual destruction of Colombia’s wheat growing by such means is one of the factors in the growth of the drug industry,
which has been further accelerated throughout the Andean region by the neoliberal policies of the past few years. Kenya’s
textile industry collapsed in 1994 when the Clinton administration imposed a quota, barring the path to development that has
been followed by every industrial country, while "African reformers" are warned that they "must make more progress" in
improving the conditions for business operations and "sealing in free-market reforms" with "trade and investment policies"
that meet the requirements of Western investors. In December 1996 Washington barred exports of tomatoes from Mexico in
violation of NAFTA and WTO rules (though not technically, because it was a sheer power play and did not require an official
tariff), at a cost to Mexican producers of close to $1 billion annually. The official reason for this gift to Florida growers is that
prices were "artificially suppressed by Mexican competition" and Mexican tomatoes were preferred by U.S. consumers. In
other words, free market principles were working, but with the wrong outcome. These are only scattered illustrations.
High tech industry has always functioned by the same rules. A few weeks ago (September 29, 1997), an honest headline in
the Wall Street Journal read: "In Effect, ITC’s Steep Tariffs on Japan Protect US Makers of Supercomputers." The story
reports the decision of the U.S. International Trade Commission to impose "steep antidumping duties on Japanese
supercomputers," sending "a clear message abroad: Foreign supercomputers, keep out." The ITC ruled that a proposed
sale by Japan’s NEC Corporation "could damage U.S. industry," in particular Cray Research, the main U.S. manufacturer of
supercomputers. Cray is called "private enterprise"; its technology has relied heavily on public subsidy and its market has
been the Pentagon and the Department of Energy, but profits and management are private. Japanese firms have yet to sell
a single supercomputer to agencies funded by the U.S. government, while Japan is regularly bashed — accurately — for its
efforts to protect its own industry and services. The whole farce is standard and natural under the rules of really existing
free market capitalism. The biggest thug on the block basically does what he likes.
One revealing example is Haiti, along with Bengal, the world’s richest colonial prize and the source of a good part of France’
s wealth, largely under U.S. control since Woodrow Wilson’s Marines invaded 80 years ago, and by now such a catastrophe
that it may scarcely be habitable in the not-too-distant future. In 1981, a USAID-World Bank development strategy was
initiated, based on assembly plants and agroexport, shifting land from food for local consumption. USAID forecast "a historic
change toward deeper market interdependence with the United States" in what would become "the Taiwan of the
Caribbean." The World Bank concurred, offering the usual prescriptions for "expansion of private enterprises" and
minimization of "social objectives," thus increasing inequality and poverty and reducing health and educational levels; it may
be noted, for what it is worth, that these standard prescriptions are offered side-by-side with sermons on the need to reduce
inequality and poverty and improve health and educational levels, while World Bank technical studies recognize that relative
equality and high health and educational standards are crucial factors in economic growth. In the Haitian case, the
consequences were the usual ones: profits for U.S. manufacturers and the Haitian superrich, and a decline of 56 percent in
Haitian wages through the 1980s — in short, an "economic miracle." Haiti remained Haiti, not Taiwan, which had followed a
radically different course, as advisers must surely know.
It was the effort of Haiti’s first democratic government to alleviate the growing disaster that called forth Washington’s hostility
and the military coup and terror that followed. With "democracy restored," USAID is withholding aid to ensure that cement
and flour mills are privatized for the benefit of wealthy Haitians and foreign investors (Haitian "civil society," according to the
orders that accompanied the restoration of democracy), while barring expenditures for health and education. Agribusiness
receives ample funding, but no resources are made available for peasant agriculture and handicrafts, which provide the
income of the overwhelming majority of the population. Foreign-owned assembly plants that employ workers (mostly women)
at well below subsistence pay under horrendous working conditions benefit from cheap electricity, subsidized by the
generous supervisor. But for the Haitian poor — the general population — there can be no subsidies for electricity, fuel,
water, or food; these are prohibited by IMF rules on the principled grounds that they constitute "price control." Before the
"reforms" were instituted, local rice production supplied virtually all domestic needs, with important linkages to the domestic
economy. Thanks to one-sided "liberalization," it now provides only 50 percent, with the predictable effects on the economy.
The liberalization is, crucially, one-sided. Haiti must "reform," eliminating tariffs in accord with the stern principles of
economic science — which, by some miracle of logic, exempts U.S. agribusiness; it continues to receive huge public
subsidies, increased by the Reagan administration to the point where they provided 40 percent of growers’ gross incomes
by 1987. The natural consequences are understood, and intended: a 1995 USAID report observes that the "export-driven
trade and investment policy" that Washington mandates will "relentlessly squeeze the domestic rice farmer," who will be
forced to turn to the more rational pursuit of agroexport for the benefit of U.S. investors, in accord with the principles of
rational expectations theory.
By such methods, the most impoverished country in the hemisphere has been turned into a leading purchaser of U.S.-
produced rice, enriching publicly-subsidized U.S. enterprises. Those lucky enough to have received a good Western
education can doubtless explain that the benefits will trickle down to Haitian peasants and slumdwellers — ultimately.
Africans may choose to follow a similar path, as currently advised by the leaders of "global meliorism" and local elites, and
perhaps may see no choice under existing circumstances — a questionable judgment, I suspect. But if they do, it should be
with eyes open.
The last example illustrates the most important departures from official free trade doctrine, more significant in the modern
era than protectionism, which was far from the most radical interference with the doctrine in earlier periods, either, though it
is the one usually studied under the conventional breakdown of disciplines, which makes its own useful contribution to
disguising social and political realities. To mention one obvious example, the industrial revolution depended on cheap
cotton, just as the "golden age" of contemporary capitalism has depended on cheap energy, but the methods for keeping
the crucial commodities cheap and available, which hardly conform to market principles, do not fall within the professional
discipline of economics.
After World War II, the U.S. broke from its protectionist tradition and called for liberalization of the international economy,
recognizing that "the playing field" was appropriately tilted — sharply in favor of U.S. firms. But business leaders intended to
take no chances, as noted, and insisted on crucial reservations. One had to do with public subsidy. It is a fundamental
component of free trade theory that public subsidies are not allowed. It was, however, widely understood that high tech
industry "cannot satisfactorily exist in a pure, competitive, unsubsidized, ‘free enterprise’ economy" and that "the
government is their only possible savior," as the business press put the matter 50 years ago. The Pentagon system was
quickly selected as the most efficient means to transfer public funds to private pockets. It is easy to "sell" to the public under
the guise of security, and does not have the unwelcome side effects of social spending, which tends to be redistributive and
democratizing, and is not a direct subsidy to corporate power.
So the system has functioned to the present, with variations as needed. The peak of market interference was reached by
the Reaganites, who preached the gospel of market discipline to the poor at home and abroad ("Reaganite rugged
individualism") while raising protection for U.S. manufacturers to postwar heights and conducting a "defense buildup [that]
actually pushed military R&D spending (in constant dollars) past the record levels of the mid-1960s," Stuart Leslie notes.
The public was terrified with foreign threats, but the message to the business world was plain and clear.
As soon as the Cold War ended, with the fall of the Berlin Wall in 1989, Washington informed Congress (and the business
world) that military spending must continue with little change, in part to protect the "defense industrial base" — virtually all of
high tech industry — offering dual-use technology to its beneficiaries to enable them to dominate commercial markets and
enrich themselves at public expense.
All understand very well that free enterprise means that the public pays the costs and bears the risks if things go wrong; for
example bank and corporate bailouts that have cost the public hundreds of billions of dollars in recent years. Profit is to be
privatized, but cost and risk socialized, in really existing market systems. The centuries-old tale proceeds today without
notable change, not only in the United States, of course.
Another equally venerable tale is the refusal of the public to accept such outcomes. Despite setbacks, popular struggles
have made the world a far better place. There is no reason to doubt that the cycle can continue its generally upward course.
Right now, popular movements are resilient and growing throughout the world, and can realistically aim for higher goals than
seemed attainable not long ago. Skeptics who dismiss such thoughts as utopian and naive have only to cast their eyes on
what has happened right here in South Africa in the last few years, an inspiring tribute to what the human spirit can achieve,
and its limitless prospects — lessons that the world desperately needs to learn, and that should guide the next steps in the
continuing struggle for justice and freedom here too, as the people of South Africa, fresh from one great victory, turn to the
still more difficult tasks that lie ahead.
Chomsky in The New Statesman
July, 1994
There's a conventional doctrine about the era that we are entering and the promise that it is supposed to afford. In brief, the
story is that the good guys won the cold war shoot-out and they're firmly in the saddle. There may be some rough terrain
ahead, but nothing that they can't handle. They ride off into the sunset, leading the way to a bright future, based on the
ideals that they have always cherished but have not always been able to protect -- democracy and free markets and human
rights...
The reality, however, is very different. Power is increasingly concentrated in unaccountable institutions, and the rich and
powerful are no more willing to submit themselves to market disciplines or popular pressures than they ever have been in
the past. Let's begin with human rights, because they are the easiest place to start: they are actually codified in the
Universal Declaration of Human Rights, passed unanimously by the United Nations General Assembly in December 1948. In
the United States, there has been a good deal of very impressive rhetoric about how we stand for the Universal Declaration,
and how we defend the principle of universality against backward, third-world peoples who plead cultural relativism.
But the rhetoric is rarely besmirched by any reference to what the Universal Declaration actually says.
Article 25, for example, states: "Everyone has the right to a standard of living adequate for the health and well being of
himself and his family" -- this is the terminology of 194 remember -- "including food, clothing, housing and medical care and
necessary social services, and the right to secure that in the event of unemployment, sickness, disability, widowhood, old
age or other lack of livelihood."
How are these principles upheld in the richest country in the world, with absolutely unparalleled advantages and no excuses
for not completely satisfying them? The US has the worst record on poverty in the industrialized world. Tens of millions of
people are hungry every night, including millions of children who are suffering from third world levels of disease and
malnutrition. In New York City, one of the richest cities in the world, 40 per cent of children live below the poverty line,
deprived of minimal conditions that offer some hope for escape from misery, destitution and violence.
This is, moreover, just one part of a general worldwide catastrophe. Unesco estimates that about 500,000 children die every
year as a result of the debt repayment burden alone. Debt repayment means that commercial banks made bad loans to
their favorite dictators, and those loans are now being paid by the poor, who of course had absolutely nothing to do with the
process. Meanwhile, the World Health Organization estimates that 11 million children die every year from easily treatable
diseases. The World Health Organization describes it as "a silent genocide": it could be stopped for pennies a day. And
Unesco estimates that the human cost of what is called "economic reform" in Russia has been some 500,000 excess deaths
a year since 1989. There are comparable figures for elsewhere in eastern Europe.
Let's turn now to Article 23 of the Universal Declaration. It states: "Everyone has the right to work, to just and favorable
conditions of work, and to protection against unemployment, with remuneration ensuring for himself and his family an
existence worthy of human dignity, supplemented if necessary by other means of social protection." Furthermore, "everyone
has the right to form and join trade unions, for protection of his interests."
To take the last point first, in the US, technically, everyone has the right to join a trade union. But the reality is quite
different. In 1992, the International Labor Organization, which rarely has an unkind word for its paymasters, called on the US
to conform to international labor standards on "permanent replacement workers," which were then violated only by the US
and South Africa in the industrial world. "Permanent replacement workers," otherwise known as scabs, are those brought in
to replace sacked unionized workers to break strikes: international labor law condemns the practice, but it is condoned in
the US. There was an article in Business Week last week describing some of the consequences of the American state's
vicious anti-labor activities. Illegal firings for union organizing have gone up sixfold, it reckoned, in the past 25 years. In
particular, thousands of union organizers have been illegally fired since the start of Ronald Reagan's presidency in 1981.
According to the US Labor Department, the destruction of the unions as been the main factor in the decline of real wages
that has continued since the Reagan era. Health and safety standards in the workplace have also deteriorated: there are
laws, but they're simply not enforced, so the number of industrial accidents has risen sharply in the past ten years. Then
there is the effect of the decline of unions on democracy: the unions are one of the few means by which ordinary people can
enter the political arena. Finally, there's a psychological effect. The destruction of the unions is part of a much more general
effort to privatize aspirations, to eliminate solidarity, the sense that we're all in it together, that we care for one another.
Let's go back to Article 23 again: "Everyone has a right to work." The ILO has just published a report estimating the level of
global unemployment in January 1994 at about 30 per cent. That, it says accurately, is a crisis worse than in the 1930s.
Everywhere, there are idle hands, and everywhere there is work to be done, but the economic system is simply incapable of
bringing them together.
In the US, of course, there is currently a recovery. But it's remarkably sluggish, with less than a third of the job growth of
previous six recoveries. Furthermore, of the jobs that are being created, an enormous proportion -- more than a quarter in
1992 -- are temporary jobs, and most are not in the productive part of the economy. Economists welcome this vast increase
in temporary jobs as an "improvement in the flexibility of labor markets." No matter that it means that when you go to sleep at
night you don't know if you're going to have work the next morning -- it's good for profits, which means that it's good for the
economy.
Another aspect of the recovery is that people are working longer for less money. The workload is continuing to increase,
while wages are continuing to decline -- which is unprecedented for a recovery. US wages -- as measured by labor costs per
unit output -- are now the lowest in the industrial world, except for Britain. Having been the highest in the world in 1985 (as
one might expect in the world's richest country), US labor costs are today 60 per cent lower than Germany's and 20 per cent
lower than Italy's. The Wall Street Journal called this turnaround "a welcome development of transcendent importance."
It is fashionable to claim that all this is simply the effect of trade and automation, transmitted through "market forces,"
operating rather like natural laws. In fact, the state has played a decisive part in both trade and automation. Trade is
massively subsidized, particularly through manipulation of energy costs for transport: a realistic assessment of the costs of
trade would somehow have to include, for example, a proportion of the costs of maintaining the US military presence in the
Middle East, a major purpose of which is to keep oil prices within a particular range. Not too low, because the oil companies
need to make plenty of profit, but not too high because trade has to be "efficient."
Similarly, for decades, automation has had to be developed in the state sector (meaning, in the US, the military sector). In
the 1950s, for example, before computers were marketable, they were virtually 100 per cent supported by the taxpayer. The
free enterprise system means that the public bears the cost, and if anything comes out of it, it's handed over to the
corporations.
This is not to say that the state can control market forces. Here, it is worth recalling, after Richard Nixon's death last month,
his demolition in the early 1970s of the Bretton Woods system for regulating international currencies, in which the US served
in effect as international banker. One effect of the deregulation of currencies was a huge increase of the size of capital and
financial markets. And the amount of capital transferred daily is increasing. It's probably now about a trillion dollars a day --
again swamping governments.
There has also been a radical change in the nature of currency transactions. According to John Eatwell, an economist at
Cambridge University, before Nixon dismantled the system, about 90 per cent of international currency transactions were for
long-term investment or trade and about 10 per cent for speculation. Now there's a vastly greater amount, and figures have
reversed. It's 90 per cent for speculation, and about 10 per cent for investment and trade. And this appears to be a major
factor in the decline of growth rates since the early 1970s. A study published in The Wall Street Journal a week or so ago
estimated that about half the decline in growth rates is due to the speculative capital. Bond holders want money to be stable:
they don't want growth because it might lead to inflation.
The increase in speculative capital means that it is now difficult for a nation state -- even the US, the richest economy in the
world -- to carry out even minimal economic planning. (For a third-world country, the position is hopeless.) And the new
GATT agreements are designed to undercut the possibilities for planning even more, by extending so-called liberalization to
what they call services -- meaning that big Japanese, British and American banks can displace the banks in smaller
countries.
While capital is now highly mobile, labor is increasingly immobile -- and that has immediate consequences. It means that it is
easy to shift production to low-wage, high-repression areas of the world with low environmental standards. And it also makes
it very easy to play off one immobile national labor force against another, as happened during the North American Free
Trade Agreement debate in the US, for example, when the media carefully focused on the argument that NAFTA would
mean jobs flowing from Mexico to the United States.
On the other hand, there was another point that just about everybody agreed on across the board; that the effect of NAFTA
would be to cut wages in the United States for unskilled workers (a technical term that means about 70 or 75 per cent of the
workforce). The agreement is expected to have the same effect in Canada and could well cut wages in Mexico, although for
different reasons. To cut wages, you don't have to move manufacturing, you just have to be able to threaten to do it. The
threat alone is enough to lower wages and increase temporary employment.
The shift from national economies to a single global economy also has the effect of undermining functioning democracy.
The mechanisms are pretty obvious. Power is shifting into the hands of huge transnational corporations and away from
parliamentary institutions. Meanwhile, there's a structure of governance that's coalescing around these transnational
corporations.
A couple of years back, the Financial Times described this as "a de facto world government," including the World Bank and
the IMF, GATT, the World Trade Organization, the G7 Executive, and so on. This has the very useful property that it
removes power from parliamentary institutions, which are considered dangerous, naturally, because they might fall, at least
partially, under the influence of the rabble.
The Economist recently described how important it is to keep policy "insulated from politics." If the policy is insulated from
politics, you can have democratic forms, certain that they're not going to harm anything. The insulated technocrats can work
for the health of the economy in the technical sense of that term, meaning low growth and low wages -- but high profits for
that small section of the world's population that already
