[Noam Chomsky]
So we have this kind of vicious cycle in progress.
You know, actually, it's so traditional that it was described by Adam Smith in 1776. You read the famous Wealth of Nations. He says, in England, the principal architects of policy are the people who own the society, in his day, merchants and manufacturers. And they make sure that their own interests are very well cared for, however grievous the impact on the people of England or others.
Now, it’s not merchants and manufacturers, it’s financial institutions and multinational corporations: the people who Adam Smith called the masters of mankind. And they’re following the vile maxim: all for ourselves, and nothing for anyone else. They’re just gonna pursue policies that benefit them and harm everyone else. And in the absence of a general popular reaction, that’s pretty much what you’d expect.
Right through American history there’s been an ongoing clash between pressure for more freedom and democracy coming from below, and efforts at elite control and domination coming from above - goes back to the founding of the country.
James Madison - the main framer - who was as much of a believer in democracy as anybody in the world in that day nevertheless felt that the United States should be designed, and indeed with his initiative was designed, so that the power should be in the hands of the wealthy because the wealthy are the more responsible set of men. And therefore the structure of the formal constitutional system placed most power in the hands of the Senate.
Remember the Senate was not elected in those days, it was selected from the wealthy.
Men, as Madison put it, had sympathy for the property owners and their rights.
If you read the debates at the Constitutional Convention, Madison said the major concern of the society has to be to protect the minority of the opulent against the majority and he had arguments. Suppose everyone had a vote freely. Well, the majority of the poor would get together and they would organize to take away the property of the rich. And he said that would obviously be unjust so you can’t have that, so therefore the constitutional system has to be set up to prevent democracy.
It’s of some interest that this debate has a hoary tradition, goes back to the first major book on political systems, Aristotle’s Politics.
He says, of all of them, the best is democracy, but then he points out exactly the flaw Madison pointed out. If Athens were a democracy for free men, the poor would get together and take away the property of the rich.
Well, same dilemma, they had opposite solutions. Aristotle proposed what we would nowadays call a welfare state. He said, try to reduce inequality.
So, same problem, opposite solutions: one is reduce inequality, you won’t have this problem; the other is reduce democracy.
If you look at the history of the United States, it’s a constant struggle between these two tendencies: a democratizing tendency that’s mostly coming from the population, a pressure from below, and you get this constant battle going on, periods of regression, periods of progress.
The 1960s, for example, were a period of significant democratization. Sectors of the population that were usually passive and apathetic became organized, active, started pressing their demands, and they became more and more involved in decision-making, activism, and so on. It just changed consciousness in a lot of ways.
Minority rights,
[Malcolm X]
If democracy means freedom, why aren’t our people free?
If democracy means justice, why don't we have justice?
If democracy means equality, why don’t we have equality?
[Noam Chomsky]
women's rights,
[Gloria Steinem]
This inhuman system of exploitation will change, but only if we force it to change, and force it together.
[Noam Chomsky]
concern for the environment,
[Walter Cronkite]
A unique day in American history is ending, a day set aside for a nationwide outpouring of mankind seeking its own survival.
[Noam Chomsky]
opposition to aggression,
[Dr. Benjamin Spock]
I say to those who criticize us for the militancy of our dissent that if they are serious about law and order, they should first provide it for the Vietnamese people, for our own black people, and for our own poor people!
[Noam Chomsky]
concern for other people,
[Dr. Martin Luther King, Jr.]
One day we must ask the question, why are there 40 million poor people in America? When you begin to ask that question, you’re raising a question about the economic system, about a broader distribution of wealth, the question of restructuring the whole of American society.
[Noam Chomsky]
These are all civilizing effects.
And that caused great fear.
I hadn’t anticipated the power of - I should’ve, but I didn’t anticipate the power of the reaction to these civilizing effects of the ‘60s. I did not anticipate the strength of the reaction to it, the backlash.
There has been an enormous concentrated, coordinated business offensive beginning in the ‘70s to try to beat back the egalitarian efforts that went right through the Nixon years. You see it in many respects.
Over on the right, you see it in things like the famous Powell Memorandum sent to the Chamber of Commerce, the major business lobby, by later Supreme Court Justice Powell, warning them that business is losing control over society and something has to be done to counter these forces. Of course, he puts it in terms of defense “defending ourselves against an outside power,” but if you look at it, it’s a call for business to use its control over resources to carry out a major offensive to beat back this democratizing wave.
Over on the liberal side, there’s something exactly similar. The first major report of the Trilateral Commission is concerned with this. It’s called the Crisis of Democracy. Trilateral Commission is liberal internationalists, their flavor is indicated by the fact that they pretty much staffed the Carter Administration. They were also appalled by the democratizing tendencies of the ‘60s and thought we have to react to it. They were concerned that there was an excess of democracy developing.
Previously passive and obedient parts of the population - what are sometimes called the special interests - were beginning to organize and tried to enter the political arena, and they said that imposes too much pressure on the state. It can’t deal with all these pressures. So therefore they have to return to passivity and become depoliticized.
They were particularly concerned with what was happening to young people. The young people are getting too free and independent.
[young man at rally]
None of us will beget any violence! If there’s any violence it will be because of the police!
[Noam Chomsky]
The way they put it, there’s a failure on the part of the schools, the universities, the churches, the institutions responsible for the ‘indoctrination of the young’ - their phrase, not mine.
If you look at their study, there’s one interest they never mention: private business.
And that makes sense, they’re not special interests, they’re the national interests, kind of by definition. So they’re okay. They’re allowed to, you know, have lobbyists, buy campaigns, staff the executive, make decisions, that’s fine. But it’s the rest, the special interests, the general population who have to be subdued.
Well, that’s the spectrum. It’s the kind of the ideological level of the backlash. But the major backlash, which was in parallel to this, was just redesigning the economy.
Since the 1970s, there’s been a concerted effort on the part of the masters of mankind, the owners of society, to shift the economy in two crucial respects.
One, to increase the role of financial institutions, banks, investment firms, so on… insurance companies. By 2007, right before the latest crash, they had literally 40% of corporate profits, far beyond anything in the past. Back in the 1950s, as for many years before, the United States economy was based largely on production. The United States was the great manufacturing center of the world. Financial institutions used to be a relatively small part of the economy and their task was to distribute unused assets like, say, bank savings to productive activity.
[man on television]
The bank always has on hand a reserve of money received from the stockholders and depositors. On the basis of these cash reserves, a bank can create credit. So besides providing a safe place for depositing money, a bank serves a community by making additional credit available for many purposes: for a manufacturer to meet his payroll during slack selling periods, for a merchant to enlarge and remodel his store, and for many other good reasons why people are always needing more credit than they have immediately available.
[Noam Chomsky]
That’s a contribution to the economy. Regulatory system was established. Banks were regulated. The commercial and investment banks were separated, cut back their risky investment practices that could harm private people. There had been, remember, no financial crashes during the period of regulation.
By the 1970s, that changed.
You started getting that huge increase in the flows of speculative capital, just astronomically increase. Enormous changes in the financial sector, from traditional banks to risky investments. Complex financial instruments, money manipulations, and so on. Increasingly, the business of the country isn’t production. At least not here. The primary business here is business.
You can even see it in the choice of directors. So a director of a major American corporation back in the ‘50s and ‘60s was very likely to be an engineer, somebody who graduated from a place like MIT, maybe industrial management. More recently, the directorship and the top managerial positions are people who came out of business schools, learned the financial trickery of various kinds, and so on.
By the 1970s, say, General Electric could make more profit playing games with money than you could by producing in the United States. You have to remember that General Electric is substantially a financial institution today. It makes half its profits just by moving money around in complicated ways. And it’s very unclear that they’re doing anything that’s of value to the economy. That’s one phenomenon, what’s called financialization of the economy.
Going along with that is the offshoring of production.
The trade system was reconstructed with a very explicit design of putting working people in competition with one another all over the world. And what it’s led to is a reduction in the share of income on the part of working people. It’s been particularly striking in the United States, but it’s happening worldwide - it means that an American worker’s in competition with the super-exploited worker in China.
Meanwhile, highly paid professionals are protected. They’re not placed in competition with the rest of the world, far from it. And of course, the capital is free to move. Workers aren’t free to move, labor can’t move. But capital can.
Well again, going back to the classics like Adam Smith, as he pointed out, free circulation of labor is the foundation of any free trade system, but workers are pretty much stuck. The wealthy and the privileged are protected, so you get obvious consequences, and they’re recognized.
And in fact, praised.
Policy is designed to increase insecurity. Alan Greenspan - when he testified to Congress, he explained his success in running the economy as based on what he called “greater worker insecurity”.
[Alan Greenspan]
A typical restraint on compensation increases has been evident for a few years now, but as I outlined in some detail in testimony last month, I believe that job insecurity has played the dominant role.
[Noam Chomsky]
Keep workers insecure, they’re going to be under control. They are not going to ask for, say, decent wages or decent working conditions or the opportunity of free association, meaning unionize.
Now, for the masters of mankind, that’s fine. They make their profits. But for the population, it’s devastating.
These two processes, financialization and offshoring, are part of what led to the vicious cycle of concentration of wealth and concentration of power.
—-
One place you see it strikingly is on April 15th.
April 15th is kind of a measure, the day you pay your taxes, of how democratic the society is. If a society is really democratic, April 15th would be a day of celebration. It’s a day when the population gets together, decides to fund the programs and activities that they have formulated and agreed upon. What could be better than that? So you should celebrate it.
It’s not the way it is in the United States. It’s a day of mourning. It’s a day in which some alien power that has nothing to do with you is coming down to steal your hard-earned money and you do everything you can to keep them from doing it.
That is a kind of measure of the extent to which, at least in popular consciousness, democracy is actually functioning.
Not a very attractive picture.
The tendencies that we've been describing within American Society, unless they’re reversed, it’s going to be an extremely ugly society. I mean, a society that’s used on Adam Smith’s vile maxim, all for myself, nothing for anyone else. A society in which normal human instincts and emotions of sympathy, solidarity, mutual support, in which they’re driven out.
That’s a society so ugly I don’t even know who’d want to live in it. I wouldn’t want my children to.
