Neoliberals’ Paleomarkets

Neoliberals’ Paleomarkets

In a book of interviews published a few years ago, Chronicles of Dissent, Noam Chomsky recounted a childhood incident that shaped his life.


In a book of interviews published a few years ago, Chronicles of Dissent, Noam Chomsky recounted a childhood incident that shaped his life. One day during first grade, a group began taunting a fat boy from his class. Chomsky wanted to defend him but fled instead. Following the event he was totally ashamed, and he determined never again to run away. “That’s the feeling that stuck with me,” he says. “You should stick with the underdog.” Sixty-five years have passed, and Chomsky remains faithful to that commitment, as evidenced by Profit Over People, his new book.

Since the demise of the cold war, received wisdom suggests that we are witnessing a rapid growth in democratization. Yet, if democracy is not merely a term attributed to a set of political procedures but also involves concrete “opportunities for people to manage their own collective and individual affairs,” then democracy, according to Chomsky, is actually under attack.

Chomsky argues that there is an ongoing conversion of people from participants to spectators, maintaining that this trend is also found in Western industrialized countries. In the United States people have fewer opportunities to influence policies because of what Chomsky calls the “corporatization of America.” By reducing “big government,” decisions are transferred from the one form of power that happens to be somewhat accountable to the public into the hands of corporations, whose CEOs are, politically speaking, like tyrants, having little if any respect for the American public.

The ironic twist about this trend is that corporations have not acquired their power through fair play in the free market but rather as a result of government assistance. By making this claim Chomsky goes beyond Susan Strange’s important book The Retreat of the State: The Diffusion of Power in the World Economy (1996). Strange depicts international political economy as a confrontation between big business, international bureaucrats and insurers on the one side, and state sovereignty on the other. She argues that economic actors have in many ways managed to usurp the power that had previously been in the hands of political actors. Chomsky’s nuanced analysis of current political trends discloses a slightly different picture. He suggests that there is an alliance between the state and economic players. Although corporations support minimizing government, they want governments to maintain a degree of power since government intervention and not the rules of the free market insure a corporation’s dominance.

Thus, contrary to the dominant neoliberal doctrine, which suggests that economic globalization points to the demise of the nation-state and to the free market’s success, Chomsky shows that globalization is the result of ongoing government interference and precipitates poverty and ecological destruction. By disclosing the overarching patterns of neoliberalism, Profit Over People complements a number of studies–for instance, Thomas Klak’s Globalization and Neoliberalism: The Caribbean Context (1997) and Gerardo Otero’s Neoliberalism Revisited: Economic Restructuring and Mexico’s Political Future (1996)–that have examined neoliberalism’s effect on specific areas.

Chomsky’s book comprises a series of articles that analyze some of the mechanisms that make the global economy tick, while underscoring the alarming consequences of globalization. The pages are packed with data and case studies–some not yet published in mainstream media–that are used to debunk prevailing myths.

While explicating the general trends underlying neoliberalism, Chomsky also pays special attention to the United States, analyzing its hegemonic role in world politics. As University of Illinois communications professor Robert McChesney points out in the book’s introduction, the US government pushes “trade deals and other accords down the throats of the world’s people to make it easier for corporations and the wealthy to dominate the economies of nations around the world without having obligations to the peoples of those nations.”

For example, USAID and the World Bank intervened in Haiti’s economy, replacing subsistence farming with agroexports. Chomsky points out that “before the ‘reforms’ were instituted, local rice production supplied virtually all domestic needs,” but “thanks to one-sided ‘liberalization,’ it now provides only 50 percent…. 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.” The consequences, Chomsky concludes, “were the usual ones: profits for U.S. manufacturers and the Haitian super-rich, and a decline of 56 percent in Haitian wages” due to massive unemployment.

The market serves those with money, neglecting those trapped in poverty; and increased poverty, Chomsky points out, has a direct impact on the quality of democratic life. People living under dire conditions–the UN estimates that the disparity between the richest and poorest 20 percent of the world population increased by more than 50 percent from 1960 to 1989–have fewer opportunities for communal and personal development. And freedom without opportunities is like “a devil’s gift.”

While the connection Chomsky draws between the global economic order and the decline in democratic practices is insightful, I have one major reservation. If social justice is the objective, then trade will always need to be constrained, because the market does not have the capacity to make political distinctions, and it invariably treats everyone and everything as a commodity to be exchanged. In this age the state is the only force that can stand up to the market and check it. Chomsky intimates this on a few occasions, but downplays it, because, as a libertarian, he holds that only a minimal state–limited to extremely narrow functions–can be justified. His reticence about what the state’s role should be within the context of a neoliberal world lays bare the tension, if not the contradiction, between his socialist and libertarian leanings.

In one of the rare passages in which he endorses government interference, Chomsky approvingly quotes Adam Smith’s claim that the destructive force of the “invisible hand” must be constrained by the state. By endorsing Smith’s rationale Chomsky also endorses liberalism’s basic premise that the so-called invisible hand is not a product of government regulation–a claim that sits well with a libertarian worldview but appears antithetical to a socialist analysis. Perhaps this explains why Chomsky neglects to note–in this and other books–that on a metalevel laissez-faire is engendered by government intervention. Following Antonio Gramsci, I think it best to see free trade as a form of state regulation, introduced and maintained by legislative and coercive means.

In another sense, however, Chomsky parallels Gramsci, exemplifying the latter’s motto “pessimism of the intellect, optimism of the will.” Chomsky’s analysis of current events does not shy away from the injustice he encounters, but he does not capitulate to a paralyzing despair. The tragedy, he notes, is that if we leave matters to the neoliberal global market, then every two hours “1,000 children will die from easily preventable disease, and almost twice that many women will die or suffer serious disabilities in pregnancy or childbirth for lack of simple remedies and care.” Yet, as Chomsky points out, the market’s oppressive manifestations cannot erase the rich record of popular struggles led by people committed to principles of justice and freedom, achievements that provide hope for a better future.

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