[Peace-discuss] The Un-Democratic Face of Capitalism

[Morton K. Brussel]

Better to quote the whole final paragraphs of this perceptive analysis.
What Chomsky acknowledges there is something that has too often been  
ignored or considered unworthy.
--mkb

The United States effectively has a one-party system, the business  
party, with
two factions, Republicans and Democrats. There are differences  
between them. In
his study Unequal Democracy: The Political Economy of the New Gilded  
Age, Larry
Bartels shows that during the past six decades "real incomes of  
middle-class
families have grown twice as fast under Democrats as they have under
Republicans, while the real incomes of working-poor families have  
grown six
times as fast under Democrats as they have under Republicans".

Differences can be detected in the current election as well. Voters  
should
consider them, but without illusions about the political parties, and  
with the
recognition that consistently over the centuries, progressive  
legislation and
social welfare have been won by popular struggles, not gifts from above.

Those struggles follow a cycle of success and setback. They must be  
waged every
day, not just once every four years, always with the goal of creating a
genuinely responsive democratic society, from the voting booth to the  
workplace.

On Oct 10, 2008, at 10:40 PM, C. G. Estabrook wrote:

> "Differences can be detected in the current election ... Voters  
> should consider
> them, but without illusions about the political parties, and with the
> recognition that consistently over the centuries, progressive  
> legislation and
> social welfare have been won by popular struggles, not gifts from  
> above."
>
> 	October 10/12, 2008
> 	Exposing the Un-Democratic Face of Capitalism
> 	By NOAM CHOMSKY
>
> The simultaneous unfolding of the US presidential campaign and  
> unraveling of the
> financial markets presents one of those occasions where the  
> political and
> economic systems starkly reveal their nature.
>
> Passion about the campaign may not be universally shared but almost  
> everybody
> can feel the anxiety from the foreclosure of a million homes, and  
> concerns about
> jobs, savings and healthcare at risk.
>
> The initial Bush proposals to deal with the crisis so reeked of  
> totalitarianism
> that they were quickly modified. Under intense lobbyist pressure,  
> they were
> reshaped as "a clear win for the largest institutions in the  
> system ... a way of
> dumping assets without having to fail or close", as described by  
> James Rickards,
> who negotiated the federal bailout for the hedge fund Long Term  
> Capital
> Management in 1998, reminding us that we are treading familiar  
> turf. The
> immediate origins of the current meltdown lie in the collapse of  
> the housing
> bubble supervised by Federal Reserve chairman Alan Greenspan, which  
> sustained
> the struggling economy through the Bush years by debt-based  
> consumer spending
> along with borrowing from abroad. But the roots are deeper. In part  
> they lie in
> the triumph of financial liberalisation in the past 30 years - that  
> is, freeing
> the markets as much as possible from government regulation.
>
> These steps predictably increased the frequency and depth of severe  
> reversals,
> which now threaten to bring about the worst crisis since the Great  
> Depression.
>
> Also predictably, the narrow sectors that reaped enormous profits from
> liberalisation are calling for massive state intervention to rescue  
> collapsing
> financial institutions.
>
> Such interventionism is a regular feature of state capitalism,  
> though the scale
> today is unusual. A study by international economists Winfried  
> Ruigrok and Rob
> van Tulder 15 years ago found that at least 20 companies in the  
> Fortune 100
> would not have survived if they had not been saved by their respective
> governments, and that many of the rest gained substantially by  
> demanding that
> governments "socialise their losses," as in today's taxpayer- 
> financed bailout.
> Such government intervention "has been the rule rather than the  
> exception over
> the past two centuries", they conclude.
>
> In a functioning democratic society, a political campaign would  
> address such
> fundamental issues, looking into root causes and cures, and  
> proposing the means
> by which people suffering the consequences can take effective control.
>
> The financial market "underprices risk" and is "systematically  
> inefficient", as
> economists John Eatwell and Lance Taylor wrote a decade ago,  
> warning of the
> extreme dangers of financial liberalisation and reviewing the  
> substantial costs
> already incurred - and proposing solutions, which have been  
> ignored. One factor
> is failure to calculate the costs to those who do not participate in
> transactions. These "externalities" can be huge. Ignoring systemic  
> risk leads to
> more risk-taking than would take place in an efficient economy,  
> even by the
> narrowest measures.
>
> The task of financial institutions is to take risks and, if well- 
> managed, to
> ensure that potential losses to themselves will be covered. The  
> emphasis is on
> "to themselves". Under state capitalist rules, it is not their  
> business to
> consider the cost to others - the "externalities" of decent  
> survival - if their
> practices lead to financial crisis, as they regularly do.
>
> Financial liberalisation has effects well beyond the economy. It  
> has long been
> understood that it is a powerful weapon against democracy. Free  
> capital movement
> creates what some have called a "virtual parliament" of investors  
> and lenders,
> who closely monitor government programmes and "vote" against them  
> if they are
> considered irrational: for the benefit of people, rather than  
> concentrated
> private power.
>
> Investors and lenders can "vote" by capital flight, attacks on  
> currencies and
> other devices offered by financial liberalisation. That is one  
> reason why the
> Bretton Woods system established by the United States and Britain  
> after the
> second World War instituted capital controls and regulated  
> currencies.*
>
> The Great Depression and the war had aroused powerful radical  
> democratic
> currents, ranging from the anti-fascist resistance to working class
> organisation. These pressures made it necessary to permit social  
> democratic
> policies. The Bretton Woods system was designed in part to create a  
> space for
> government action responding to public will - for some measure of  
> democracy.
>
> John Maynard Keynes, the British negotiator, considered the most  
> important
> achievement of Bretton Woods to be the establishment of the right  
> of governments
> to restrict capital movement.
>
> In dramatic contrast, in the neoliberal phase after the breakdown  
> of the Bretton
> Woods system in the 1970s, the US treasury now regards free capital  
> mobility as
> a "fundamental right", unlike such alleged "rights" as those  
> guaranteed by the
> Universal Declaration of Human Rights: health, education, decent  
> employment,
> security and other rights that the Reagan and Bush administrations  
> have
> dismissed as "letters to Santa Claus", "preposterous", mere "myths".
>
> In earlier years, the public had not been much of a problem. The  
> reasons are
> reviewed by Barry Eichengreen in his standard scholarly history of the
> international monetary system. He explains that in the 19th  
> century, governments
> had not yet been "politicised by universal male suffrage and the  
> rise of trade
> unionism and parliamentary labour parties". Therefore, the severe  
> costs imposed
> by the virtual parliament could be transferred to the general  
> population.
>
> But with the radicalisation of the general public during the Great  
> Depression
> and the anti-fascist war, that luxury was no longer available to  
> private power
> and wealth. Hence in the Bretton Woods system, "limits on capital  
> mobility
> substituted for limits on democracy as a source of insulation from  
> market
> pressures".
>
> The obvious corollary is that after the dismantling of the postwar  
> system,
> democracy is restricted. It has therefore become necessary to  
> control and
> marginalise the public in some fashion, processes particularly  
> evident in the
> more business-run societies like the United States. The management  
> of electoral
> extravaganzas by the public relations industry is one illustration.
>
> "Politics is the shadow cast on society by big business," concluded  
> America's
> leading 20th century social philosopher John Dewey, and will remain  
> so as long
> as power resides in "business for private profit through private  
> control of
> banking, land, industry, reinforced by command of the press, press  
> agents and
> other means of publicity and propaganda".
>
> The United States effectively has a one-party system, the business  
> party, with
> two factions, Republicans and Democrats. There are differences  
> between them. In
> his study Unequal Democracy: The Political Economy of the New  
> Gilded Age, Larry
> Bartels shows that during the past six decades "real incomes of  
> middle-class
> families have grown twice as fast under Democrats as they have under
> Republicans, while the real incomes of working-poor families have  
> grown six
> times as fast under Democrats as they have under Republicans".
>
> Differences can be detected in the current election as well. Voters  
> should
> consider them, but without illusions about the political parties,  
> and with the
> recognition that consistently over the centuries, progressive  
> legislation and
> social welfare have been won by popular struggles, not gifts from  
> above.
>
> Those struggles follow a cycle of success and setback. They must be  
> waged every
> day, not just once every four years, always with the goal of  
> creating a
> genuinely responsive democratic society, from the voting booth to  
> the workplace.
> ____
> Note
>
> * The Bretton Woods system of global financial management was  
> created by 730
> delegates from all 44 Allied second World War nations who attended  
> a UN-hosted
> Monetary and Financial Conference at the Mount Washington Hotel in  
> Bretton Woods
> in New Hampshire in 1944.
>
> Bretton Woods, which collapsed in 1971, was the system of rules,  
> institutions,
> and procedures that regulated the international monetary system,  
> under which
> were set up the International Bank for Reconstruction and  
> Development (IBRD)
> (now one of five institutions in the World Bank Group) and the  
> International
> Monetary Fund (IMF), which came into effect in 1945.
>
> The chief feature of Bretton Woods was an obligation for each  
> country to adopt a
> monetary policy that maintained the exchange rate of its currency  
> within a fixed
> value.
>
> The system collapsed when the US suspended convertibility from  
> dollars to gold.
> This created the unique situation whereby the US dollar became the  
> "reserve
> currency" for the other countries within Bretton Woods.
>
> This column originally appeared in the Irish Times.
>
> <http://www.counterpunch.org/chomsky10122008.html>
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