This is a shorter and slightly revised version of an interview with Noam Chomsky which appeared on Sunday, Dec. 8 in the Syriza-aligned paper Avgi in Greece.
C.J. Polychroniou and Anastasia Giamali: Neoliberal ideology claims that the government is a problem, society does not exist and individuals are responsible for their own fate. Yet, big business and the rich rely, as ever, on state intervention to maintain their hold over the economy and to enjoy a bigger slice of the economic pie. Is neoliberalism a myth, merely an ideological construct?
Noam Chomsky: The term neoliberal is a bit misleading. The doctrines are neither new, nor liberal. As you say, big business and the rich rely extensively on what economist Dean Baker calls “the conservative nanny state” that they nourish. That is dramatically true of financial institutions. A recent IMF study attributes the profits of the big banks almost entirely to the implicit government insurance policy (“too big to fail”), not just the widely publicized bailouts, but access to cheap credit, favorable ratings because of the state guarantee and much else. The same is true of the productive economy. The IT revolution, now its driving force, relied very heavily on state-based R&D, procurement and other devices. That pattern goes back to early English industrialization.
However, neither “neoliberalism,” nor its earlier versions as “liberalism,” have been myths, certainly not for their victims. Economic historian Paul Bairoch is only one of many who have shown that “the Third World’s compulsory economic liberalism in the 19th century is a major element in explaining the delay in its industrialization,” in fact, its “de-industrialization,” a story that continues to the present under various guises.
In brief, the doctrines are, to a substantial extent, a “myth” for the rich and powerful, who craft many ways to protect themselves from market forces, but not for the poor and weak, who are subjected to their ravages.
What explains the supremacy of market-centric rule and predatory finance in an era that has experienced the most destructive crisis of capitalism since the Great Depression?
The basic explanation is the usual one: It is all working quite well for the rich and powerful. In the US, for example, tens of millions are unemployed, unknown millions have dropped out of the workforce in despair, and incomes as well as conditions of life have largely stagnated or declined. But the big banks, which were responsible for the latest crisis, are bigger and richer than ever, corporate profits are breaking records, wealth beyond the dreams of avarice is accumulating among those who count, labor is severely weakened by union busting and “growing worker insecurity,” to borrow the term Alan Greenspan used in explaining the grand success of the economy he managed, when he was still “St. Alan,” perhaps the greatest economist since Adam Smith, before the collapse of the structure he had administered, along with its intellectual foundations. So what is there to complain about?
The growth of financial capital is related to the decline in the rate of profit in industry and the new opportunities to distribute production more widely to places where labor is more readily exploited and constraints on capital are weakest – while profits are distributed to places with lowest [tax] rates (“globalization”). The process has been abetted by technological developments that facilitate the growth of an “out-of-control financial sector,” which “is eating out the modern market economy [that is, the productive economy] from inside, just as the larva of the spider wasp eats out the host in which it has been laid,” to borrow the evocative phrase of Martin Wolf of the Financial Times, probably the most respected financial correspondent in the English-speaking world.
That aside, as noted, the “market-centric rule” imposes harsh discipline on the many, but the few who count protect themselves from it effectively.
What do you make of the argument about the dominance of a transnational elite and the end of the nation-state, especially since its proponents claim that this New World Order is already upon us?
There’s something to it, but it shouldn’t be exaggerated. Multinationals continue to rely on the home state for protection, economic and military, and substantially for innovation as well. The international institutions remain largely under the control of the most powerful states, and in general the state-centric global order remains reasonably stable.
Europe is moving ever closer to the end of the “social contract.” Is this a surprising development for you?
In an interview, Mario Draghi informed The Wall Street Journal that “the Continent’s traditional social contract” – perhaps its major contribution to contemporary civilization – “is obsolete” and must be dismantled. And he is one of the international bureaucrats who is doing most to protect its remnants. Business has always disliked the social contract. Recall the euphoria in the business press when the fall of “Communism” offered a new work force – educated, trained, healthy and even blond and blue-eyed – that could be used to undercut the “luxurious lifestyle” of western workers. It is not the result of inexorable forces, economic or other, but a policy design based on the interests of the designers, who are rather more likely to be bankers and CEOs than the janitors who clean their offices.