[Peace-discuss] Crisis and Hope: Theirs and Ours

[C. G. Estabrook]

1. THE CRISIS. "The food crisis plaguing much of the South and the financial 
crisis of the North have common roots, namely the shift towards neoliberalism 
since the 1970s. That brought to an end the Bretton Woods system that was 
instituted by the United States and Britain right after World War II. It had two 
architects: John Maynard Keynes of Britain and Harry Dexter White in the United 
States. And they anticipated that its core principles -- which included capital 
controls and regulated currencies -- would lead to relatively balanced economic 
growth and would also free governments to institute the social democratic 
programs, welfare state programs, that had enormous public support around the 
world. And to a large extent, they were vindicated on both counts. In fact, many 
economists call the years that followed, until the 1970s, the 'Golden Age of 
Capitalism.' That Golden Age led not only to unprecedented and relatively 
egalitarian growth, but also the introduction of welfare state measures."

2. THE WAR. "Prospects become still more ominous with the escalation of drone 
attacks that embitter the population with their huge civilian toll, and with the 
unprecedented authority that has just been granted to General Stanley McChrystal 
-- a kind of a wild-eyed Special Forces assassin. He’s been put in charge of 
heading the operations."

3. THE ECONOMY. "Right now is a propitious time to revive [labor-organizing] 
efforts, although it would be necessary -— and we have to do this -— to overcome 
the effects of this concentrated campaign to drive our own history and culture 
out of our minds."


[From Democracy Now! Noam Chomsky, the MIT professor, author and dissident 
intellectual, just turned eighty years old this past December. He has written 
over 100 books, but despite being called “the most important intellectual alive” 
by the New York Times, he is rarely heard in the corporate media. He spoke 
recently in New York at an event sponsored by the Brecht Forum. More than 2,000 
people packed into Riverside Church in Harlem to hear his address, titled 
“Crisis and Hope: Theirs and Ours.” In his talk, Chomsky discussed the global 
economic crisis, the environment, wars in Iraq, Afghanistan and Pakistan, 
resistance to American empire and much more.]


       NOAM CHOMSKY: ...Well, one way to enter this morass was helpfully 
provided by a current issue of the New York Review, dated yesterday. The front 
cover headline reads, “How to Deal with the Crisis.” It features a symposium of 
specialists. And it’s worth reading, but with attention to the definite article: 
“the” crisis. For the West, the phrase “the crisis” has a clear enough meaning. 
It’s the financial crisis that hit the rich countries and therefore is of 
supreme importance.

       But, in fact, even for the rich and privileged, that’s by no means the 
only crisis or even the most severe of those they face. And others see the world 
quite differently. For example, the newspaper New Nation in Bangladesh. There, 
we read, “It’s very telling that trillions have already been spent to patch up 
leading world financial institutions, while out of the comparatively small sum 
of $12 billion pledged in Rome earlier this year, to offset the food crisis, 
only $1 billion has been delivered. The hope that at least extreme poverty can 
be eradicated by the end of 2015, as stipulated in the UN’s Millennium 
Development Goals, seems as unrealistic as ever, not due to lack of resources 
but to a lack of true concern for the world’s poor.” They’re talking about 
approximately a billion people facing starvation, severe malnutrition, even 30 
or 40 million of them in the richest country in the world. That’s a real crisis, 
and it’s getting much worse.

       In this morning’s Financial Times, British business press, it’s reported 
that the World Food Program just announced that they’re cutting food aid and 
rations and also closing operations. The reason is that the donor countries have 
been cutting back in funding because of the fiscal crunch, and they’re slashing 
contributions. So, a very close connection between the horrendous food crisis 
and poverty crisis and the significant, but less significant, fiscal crisis. 
They’re ending up closing down operations in Rwanda, in Uganda, Ethiopia, many 
others. They have to—20 to 25 percent cut in budget, while food prices are 
rising, and the financial crisis, the general economic crisis, is bringing 
unemployment and cutting back remittances. That’s a major crisis.

       We might, incidentally, remember that when the British landed in what’s 
now Bangladesh, they were stunned by its wealth and splendor. And it didn’t take 
very long for it to be on its way to become the very symbol of misery, not by an 
act of God.

       Well, the fate of Bangladesh should remind us that the terrible food 
crisis is not just a result of Western lack of concern. In large part, it 
results from very definite and clear concerns of the global managers, namely for 
their own welfare. It’s always well to keep in mind a astute observation by Adam 
Smith about policy formation in England. He recognized that what he called the 
“principal architects” of policy -— in his day, the merchants and manufacturers 
-— make sure that their own interests are "most peculiarly attended to," however 
grievous the impact on others, including the people of England, but far more so 
those who were subjected to what he called the “savage injustice of the 
Europeans,” and particularly in conquered India, his own prime concern. We can 
easily think of analogs today. His observation, in fact, is one of the few solid 
and enduring principles of international and domestic affairs well to keep in mind.

       And the food crisis is a case in point. It erupted first and most 
dramatically in Haiti in early 2008. Like Bangladesh, Haiti is a symbol of utter 
misery. And like Bangladesh, when the European explorers arrived, they were 
stunned because it was so remarkably rich in resources. Later it became the 
source of much of France’s wealth. I’m not going to run through the sordid 
history. It’s worth knowing. But the current food crisis traces back directly to 
Woodrow Wilson’s invasion of Haiti, which was murderous and brutal and 
destructive. Among Wilson’s many crimes was to dissolve the Haitian parliament 
at gunpoint, because it refused to pass what was called progressive legislation, 
which would allow US businesses to take over Haitian lands. Wilson’s marines 
then ran a free election, in which the legislation was passed by 99.9 percent of 
the vote. That’s of the five percent of the population permitted to vote. All of 
this comes down to us as what’s called Wilsonian idealism.

       Later, USAID instituted programs in Haiti under the slogan of turning 
Haiti into the Taiwan of the Caribbean by adhering to the sacred principle of 
comparative advantage. That is, they should import from the United States, while 
working people, mostly women, slaved under miserable conditions in US-owned 
assembly plants.

       Haiti’s first free election in 1990 threatened these economically 
rational programs. The poor majority made the mistake of entering the political 
arena and electing their own candidate, Jean-Bertrand Aristide, a populist 
priest. And Washington instantly adopted standard operating procedures: the 
moving at once to undermine the regime. A couple of months later came the 
military coup, instituting a horrible reign of terror, which was backed by Bush, 
Bush I, and even more so by Clinton. By 1994, Clinton decided that the 
population was sufficiently intimidated, and he sent US forces to restore the 
elected president -— that’s now called a humanitarian intervention -— but on 
very strict conditions, namely that the president had to accept a very harsh 
neoliberal regime, in particular, no protection for the economy.

       Haitian rice farmers are quite efficient, but they can’t compete with US 
agribusiness that relies on a huge government subsidy, thanks to Ronald Reagan’s 
free market enthusiasms. Well, there’s nothing at all surprising about what 
followed next. In 1995, USAID wrote a report pointing out, and I’m quoting it, 
that “the export-driven trade and investment policy” that Washington mandated 
will “relentlessly squeeze the domestic rice farmer.” In fact, the neoliberal 
policies rammed down Haiti’s throat destroyed, dismantled what was left of 
economic sovereignty, drove the country into chaos, and that was accelerated by 
Bush Number Two’s banning of international aid, on totally cynical grounds.

       In February 2004, the two traditional torturers of Haiti -— France and 
the United States -— combined to back a military coup and send President 
Aristide off to Africa. The US denies him permission to return to the entire 
region. Haiti had by then lost the capacity to feed itself, making it highly 
vulnerable to food price fluctuation. That was the immediate cause of the 2008 
food crisis, which led to riots and enormous protest, but not getting food.

       The story is familiar, in fact quite similar, in much of the world. So, 
going back to the Bangladesh newspaper, it’s true enough that the food crisis 
results from Western lack of concern -— a pittance by our standards would 
overcome its worst immediate effects -— but more fundamentally, it results from 
the dedication to Adam Smith’s principles of business-run state policy. These 
are all matters that we too easily evade. They happen daily.

       Along with the fact that bailing out banks is not uppermost in the minds 
of the billion people now facing starvation, not forgetting the tens of millions 
enduring hunger in the richest country in the world, well, also sidelined is an 
easy way to make a significant dent in the financial and the food crises. It’s 
suggested by the publication a couple days ago of the authoritative annual 
report on military spending by SIPRI, the Swedish peace research institute. The 
scale of military spending is phenomenal, regularly increasing, this last year 
as well. Now, the US is responsible for almost as much as the rest of the world 
combined, seven times as much as its nearest rival, China. No need to waste time 
commenting.

       This distribution of concerns reflects another crisis here, kind of a 
cultural crisis, that is the tendency to focus on short-term parochial gains. 
That’s a core element of our socioeconomic institutions and the ideological 
support system on which they rest. One example, now prominent, is the array of 
perverse incentives that are devised for corporate managers to enrich 
themselves. And, for example, what’s called the “too big too fail” insurance 
policies that are provided by the unwitting public. And [there are] deeper ones. 
They’re just inherent in market inefficiencies.

       One such inefficiency, now recognized to be one of the roots of the 
financial crisis, is the under-pricing of systemic risk, a risk that affects the 
whole system. So, for example, if you and I make a transaction, say, you sell me 
a car, we may make a good deal for ourselves, but we don’t price into that 
transaction the cost to others. And there’s a cost: pollution, congestion, 
raising the price of gas, all sorts of other things, killing people in Nigeria 
because we’re getting the gas from them. That doesn’t count -- we don’t count 
that in. That’s an inherent market inefficiency, one of the reasons why markets 
can’t work.

       And when you turn to the financial institutions, it can get quite 
serious. So it means that if, say, Goldman Sachs, if they’re managed properly, 
if they make a risky loan, they calculate the potential cost to themselves if 
the loan goes bad, but they simply don’t calculate the impact on the whole 
financial system. And we now see how severe that can be, not that it’s anything new.

       In fact, this inherent deficiency of markets, this inefficiency of 
markets, was perfectly well known ten years ago, at the height of the euphoria 
about efficient markets. Two prominent economists, John Eatwell and Lance 
Taylor, they wrote an important book, "Global Finance at Risk," in which they 
spelled out the consequences of these market inefficiencies, which we now see, 
and they outlined means to deal with them. These proposals were exactly contrary 
to the deregulatory rage that was then being carried forward by the Clinton 
administration, under the leadership of those who Obama has now called upon to 
put band-aids on the disaster that they helped create.

*      Well, in substantial measure, the food crisis plaguing much of the South 
and the financial crisis of the North have common roots, namely the shift 
towards neoliberalism since the 1970s. That brought to an end the Bretton Woods 
system that was instituted by the United States and Britain right after World 
War II. It had two architects: John Maynard Keynes of Britain and Harry Dexter 
White in the United States. And they anticipated that its core principles -- 
which included capital controls and regulated currencies -- would lead to 
relatively balanced economic growth and would also free governments to institute 
the social democratic programs, welfare state programs, that had enormous public 
support around the world.

       And to a large extent, they were vindicated on both counts. In fact, many 
economists call the years that followed, until the 1970s, the “Golden Age of 
Capitalism.” That Golden Age led not only to unprecedented and relatively 
egalitarian growth, but also the introduction of welfare state measures. Keynes 
and White were perfectly well aware that free capital movement and speculation 
inhibit these options. Professional economics literature points out what should 
be obvious, that the free flow of capital creates what is sometimes called a 
“virtual senate” of lenders and investors who carry out a moment-by-moment 
referendum on government policies, and if they find that they’re "irrational" -- 
meaning they help people instead of profits -- then they vote against them, by 
capital flight, by tax on the country, and so on. So the democratic governments 
have a dual constituency, their own population and the virtual senate, who 
typically prevail. And for the poor, that means regular disaster.

       In fact, one of the reasons for the radical difference between Latin 
America and East Asia in the last half-century is that Latin America didn’t 
control capital flight. In fact, in general, the rich in Latin America don’t 
have responsibilities. Capital flight approximated the crushing debt. In 
contrast, during South Korea’s remarkable growth period, capital flight was not 
only banned, but could bring the death penalty, one of many factors that led to 
the surprising divergence. Latin America has much richer resources. You’d expect 
it to be far more advanced than East Asia, but it had the disadvantage of being 
under imperialist wings.

       In "AfPak" (Afghanistan-Pakistan, as the region is now called) Obama is 
building enormous new embassies and other facilities on the model of the city 
within a city in Baghdad. These are like no embassies anywhere in the world. And 
they are signs of an intention to be there for a long time.

       Right now in Iraq, something interesting is happening. Obama is pressing 
the Iraqi government not to permit the referendum that’s required by the Status 
of Forces Agreement. That’s an agreement that was forced down the throats of the 
Bush administration, which had to formally renounce its primary war aims in the 
face of massive Iraqi resistance. Washington’s current objection to the 
referendum was explained two days ago by New York Times correspondent Alissa 
Rubin: Obama fears that the Iraqi population might reject the provision that 
delays US troop withdrawal to 2012. They might insist on immediate departure of 
US forces. The head of the Iraqi Foundation for Democracy and Development in 
London (it’s quite pro-Western) explained, “This is an election year for Iraq; 
no one wants to appear that he is appeasing the Americans. Anti-Americanism is 
popular now in Iraq,” as indeed it’s been throughout, facts that are familiar to 
anyone who’s read the Western-run polls, including Pentagon-run polls. Well, the 
current US efforts to prevent the legally required referendum are extremely 
revealing. Sometimes they’re called “democracy promotion.”

       Well, while Obama’s signaling very clearly his intention to establish a 
firm and large-scale presence in the region, he’s also, as you know, sharply 
escalating the AfPak war, following Petraeus’s strategy to drive the Taliban 
into Pakistan, with potentially awful results for this extremely dangerous and 
unstable state, which is facing insurrections throughout its territory. These 
are at the most extreme in the tribal areas, which cross the AfPak border. It’s 
an artificial line imposed by the British called the Durand Line, and the same 
people live on both sides of it -- Pashtun tribes -- and they’ve never accepted 
it. And, in fact, the Afghanistan government never accepted it either, as long 
as it was independent. Well, that’s where most of the fighting is going on. One 
of the leading specialists on the region, Selig Harrison, recently wrote that 
the outcome of Washington’s current policies, Obama’s policies, might well be 
what he calls “Islamic Pashtunistan,” a Pashtun-based separate kind of 
quasi-state. The Pakistani ambassador warned that if the Taliban and Pashtun 
nationalism merge, we’ve had it. And we’re on the verge of that.

*      The prospects become still more ominous with the escalation of drone 
attacks that embitter the population with their huge civilian toll, and more 
recently, just a couple days ago, in fact, with the unprecedented authority that 
has just been granted to General Stanley McChrystal, who’s taking charge. He’s a 
kind of a wild-eyed Special Forces assassin. He’s been put in charge of heading 
the operations. Petraeus’s own counterinsurgency adviser in Iraq, Colonel David 
Kilcullen, describes the Obama-Petraeus-McChrystal policies as a fundamental 
“strategic error” which may lead to the collapse of Pakistan. He says it’s a 
calamity that would “dwarf” all other current issues, given the country’s size, 
strategic location and nuclear stockpile.

       It’s also not too encouraging that Pakistan and India are now rapidly 
expanding their nuclear arsenals. Pakistan’s nuclear arsenals were developed 
with Reagan’s crucial aid. And India’s nuclear weapons program got a major shot 
in the arm with the recent US-India nuclear agreement. It’s also a sharp blow to 
the Non-Proliferation Treaty. Two countries have twice come close to nuclear war 
over Kashmir, and they’re also engaged in a kind of a proxy war in Afghanistan. 
These developments pose a very serious threat to world peace, even to human 
survival. Well, a lot to say about this crisis, but no time here.

       Coming back home, suppose that, say, fifty years ago Americans had been 
given a choice of directing their tax money to development of information 
technology, so that their grandchildren could have iPods and the internet, or 
else putting the same funds into developing a livable and sustainable 
socioeconomic order. Well, they might very well have made the latter choice. But 
they had no choice. Now, that’s standard. There’s a striking gap between public 
opinion and public policy on a host of major issues, domestic and foreign. And, 
at least in my judgment, public opinion is often a lot more sane. It also tends 
to be fairly consistent over time, which is pretty astonishing, because public 
concerns and aspirations, if they’re even mentioned, are marginalized and 
ridiculed. It’s one very significant feature of the yawning democratic deficit, 
as we call it in other countries. That’s the failure of formal democratic 
institutions to function properly. And that’s no trivial matter. Arundhati Roy 
has a book, soon to come out, in which she asks whether the evolution of formal 
democracy in India and the United States (in fact, not only there) might turn 
out to be the “endgame of the human race.” And that’s not an idle question.

       It should be recalled that the American Republic was founded on the 
principle that there should be a democratic deficit. James Madison was the main 
framer of the constitutional order: his view was that power should be in the 
hands of the wealth of the nation, the more responsible set of men who have 
sympathy for property owners and their rights. And Madison sought to construct a 
system of government that would, in his words, “protect the minority of the 
opulent from the majority.” That’s why the constitutional system that he framed 
did not have co-equal branches. The executive was supposed to be an 
administrator, and the legislature was supposed to be dominant, but not the 
House of Representatives, rather the Senate, where power was vested and 
protected from the public in many ways. That’s where the wealth of the nation 
would be concentrated. This is not overlooked by historians. Gordon Wood, for 
example, summarizes the thoughts of the founders, saying 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.”

       Well, all through American history, there’s been a constant struggle over 
this constrained version of democracy. And popular struggles have won a great 
many rights. Nevertheless, concentrated power and privilege clings to the 
Madisonian conception, changing form as circumstances change.

       By World War II, there was a significant change. Business leaders and 
elite intellectuals recognized that the public had won enough rights so that 
they can’t be controlled by force, so it would be necessary to do something 
else, namely to turn to control of attitudes and opinions. These were the days 
when the huge public relations industry emerged in the freest countries in the 
world, Britain and the United States, where the problem was most severe. The 
public relations industry was devoted to what Walter Lippmann approvingly called 
a “new art” in the practice of democracy, the “manufacture of consent.” It’s 
called the “engineering of consent” in the phrase of his contemporary Edward 
Bernays, one of the founders of the PR industry.

       Both Lippmann and Bernays had taken part in Woodrow Wilson’s state 
propaganda agency -- the "Committee on Public Information" was its Orwellian 
title. It was created to try to drive a pacifist population to jingoist 
fanaticism and hatred of all things German. And it succeeded -— brilliantly, in 
fact.

       And it was hoped that the same techniques could ensure that what are 
called the “intelligent minorities” would rule, and that the general public, who 
Lippmann called “ignorant and meddlesome outsiders,” would serve their function 
as spectators, not participants. These are all very highly respected progressive 
ideas on democracy by a man who was the leading public intellectual of the 
twentieth century and was a Wilson-Roosevelt-Kennedy progressive, as Bernays 
was. And they capture the thinking of progressive opinion. So, President Wilson, 
held that an elite of gentlemen with “elevated ideals” must be empowered to 
preserve “stability and righteousness,” essentially the perspective of the 
founding fathers. In more recent years, the gentlemen are transmuted into the 
“technocratic elite” and the “action intellectuals” of Camelot, “Straussian” 
neocons and other configurations, but throughout one or another variant of the 
doctrine prevails.

       And on a more hopeful note, a popular struggle continues to clip its 
wings, quite impressively in the wake of 1960s activism, which had quite a 
substantial effect on civilizing the society and raised the prospects for 
further progress to a much higher plane. It’s one of the reasons why it’s called 
the “time of troubles” and bitterly denounced -- it had too much of a civilizing 
effect.

       Well, what the West sees as the crisis, namely the financial crisis, now 
that will presumably be patched up somehow or other, but leaving the 
institutions that created it pretty much in place. A couple of days ago, the 
Treasury Department, as you read, permitted early TARP repayments, which 
actually reduce capacity. I mean, it was touted as giving money back to the 
public. In fact, as was pointed out right away, it reduces the capacity of banks 
to lend, although it does allow them to pour money into the pockets of the few 
who matter. And the mood on Wall Street was captured by two Bank of New York 
employees who predicted that their lives and pay would improve, even if the 
broader economy did not. That’s paraphrasing Adam Smith’s observation that the 
architects of policy protect their own interests, no matter how grievous the 
effect on others.

       And they are the architects of policy. Obama made sure to staff his 
economic advisers from that sector, which has been pointed out, too. The former 
chief economist of the IMF, Simon Johnson, pointed out that the Obama 
administration is just in the pocket of Wall Street. As he put it, “Throughout 
the crisis, the government has taken extreme care not to upset the interests of 
the financial institutions or to question the basic outlines of the system that 
got us here.” And the “elite business interests” who “played a central role in 
creating the crisis ... with the implicit backing of the government,” they’re 
still there, and they’re “now using their influence to prevent precisely” the 
set of “reforms that are needed, and fast, to pull the economy out of its 
nosedive.” He says, “The government seems helpless, or unwilling, to act against 
them,” which is no surprise, considering who constitutes and who backs the 
government.

       Well, there’s a far more severe crisis, even for the rich and powerful. 
It happens to be discussed in the same issue of the New York Review that I 
mentioned, in an article by Bill McKibben. He’s been warning for years about the 
dire impact of global warming. His current article is worth reading: it relies 
on the British Stern report, which is sort of the gold standard now. On this 
basis, he concludes, not unrealistically, that “2009 may well turn out to be the 
decisive year in the human relationship with our home planet.” The reason is 
that there’s a conference in December in Copenhagen, which is supposed to set up 
a new global accord on global warming. And he says it will tell us “whether or 
not our political systems are up to the unprecedented challenge that climate 
change represents.” He thinks that the signals are “mixed.” To me, that seems 
kind of optimistic, unless there’s really a massive public campaign to overcome 
the insistence of the managers of the state-corporate sector on privileging 
short-term gain for the few over the hope that their grandchildren might have a 
decent future.

       A couple of days ago, a group of MIT scientists released the results of 
what they describe as “the most comprehensive modeling yet carried out on the 
likelihood of how much hotter the Earth’s climate will get in this century,” 
which “shows that without rapid and massive action, the problem will be about 
twice as severe as previously estimated,” a couple of years ago. And it “could 
be even worse than that,” because their model does not fully incorporate 
positive feedbacks that can occur. For example, the increased temperature that 
is causing a melting of permafrost in the Arctic regions, which is going to 
release huge amounts of methane. It’s worse than CO2. The leader of the project 
says, “There’s no way the world can or should take these risks.” He says, “The 
least-cost option to lower the risk is to start now and steadily transform the 
global energy system over the coming decades to low or zero greenhouse 
gas-emitting technologies.” And there’s very little sign of that.

       Well, furthermore, while new technologies are essential, the problems go 
well beyond that. In fact, they go beyond the current technical debates about 
just how to work out cap-and-trade devices being discussed in Congress. We have 
to face something much more far-reaching. We have to face up to the need to 
reverse the huge state-corporate and social engineering projects of the 
post-Second World War period, which very consciously promoted an energy-wasting 
and environmentally destructive fossil fuel economy; that didn’t happen by 
accident. That’s the whole massive project of suburbanization, then destruction 
and later gentrification of inner cities.

       The state-corporate program began with a conspiracy by General Motors, 
Firestone Rubber, Standard Oil of California to buy up and destroy efficient 
electric transportation systems in Los Angeles and dozens of other cities. They 
were actually convicted of criminal conspiracy and given a tap on the wrist, I 
think a $5,000 fine. The federal government then took over. It relocated 
infrastructure and capital stock to suburban areas and also created a huge 
interstate highway system under the usual pretext of defense. Railroads were 
displaced by government-financed motor and air transport.

       The public played almost no role, apart from choosing within the narrowly 
structured framework of options that are designed by state-corporate managers. 
They were supported by vast campaigns to “fabricate” consumers with “created 
wants,” borrowing Veblen’s terms. One result is the atomization of the society 
and the entrapment of isolated individuals with huge debts. These efforts grew 
out of the recognition, that I mentioned, a century ago that democratic 
achievements have to be curtailed by shaping attitudes and beliefs, as the 
business press put it, directing people to superficial things of life, like 
fashionable consumption. All of that’s necessary to ensure that the opulent 
minority are protected from ignorant and meddlesome outsiders, namely the 
population.

       Let me just add a personal note on that. I came down here this afternoon 
by the Acela, you know, the jewel in the crown of new high-speed railroad 
technology. The first time I came from Boston to New York was sixty years ago. 
And there was improvement since then: it was five minutes faster today than it 
was sixty years ago.

       While state-corporate power was vigorously promoting the privatization of 
life and maximal waste of energy, it was also undermining the efficient choices 
that the market doesn’t and can’t provide. That’s another highly destructive 
built-in market inefficiency. So, to put it simply, if I want to get home from 
work in the evening, the market does allow me a choice between, say, a Ford and 
a Toyota, but it doesn’t allow me a choice between a car and a subway, which 
would be much more inefficient. And maybe everybody wants it, but the market 
doesn’t allow that choice. That’s a social decision. And in a democratic 
society, it would be the decision of an organized public. But that’s just what 
the elite attack on democracy seeks to undermine.

       Now, these consequences are right before our eyes in ways that are 
sometimes surreal. A couple of weeks ago, the Wall Street Journal had an article 
reporting that the US Transportation chief is in Spain. He’s meeting with 
high-speed rail suppliers. Europe’s engineering and rail companies are lining up 
for some potentially lucrative US contracts for high-speed rail projects. That 
stake is $13 billion in stimulus funds that the Obama administration is 
allocating to upgrade existing rail lines and build new ones that would one day 
rival Europe’s.

       So think what’s happening. Spain and other European countries are hoping 
to get US taxpayer funding for high-speed rail and related infrastructure. And 
at the very same time, Washington is busy dismantling leading sectors of US 
industry, ruining the lives of workers and communities who could easily do it 
themselves. It’s pretty hard to conjure up a more damning indictment of the 
economic system that’s been constructed by state-corporate managers. Surely, the 
auto industry could be reconstructed to produce what the country needs using its 
highly skilled workforce. But that’s not even on the agenda. It’s not even being 
discussed. Rather, we’ll go to Spain, and we’ll give them taxpayer money for 
them to do it, while we destroy the capacity to do it here.

       It’s been done before. So, during World War II, it was kind of a 
semi-command economy, government-organized economy. Industry was reconstructed 
for the purpose of war, dramatically. It not only ended the Depression, but it 
initiated the most spectacular period of growth in economic history. In four 
years, US industrial production just about quadrupled, as the economy was 
retooled for war. And that laid the basis for the Golden Age that followed.

       Well, warnings about the purposeful destruction of US productive capacity 
have been familiar for decades, maybe most prominently by the late Seymour 
Melman, whom many of us knew well. Melman was also one of those who pointed to a 
sensible way to reverse the project. The state-corporate leadership, of course, 
has other commitments. But there’s no reason for passivity on the part of the 
public, the so-called stakeholders, workers and community. I mean, with enough 
popular support, they could just take over the plants and carry out the task of 
reconstruction themselves. It’s not a very exotic proposal. One of the standard 
texts on corporations in economics literature points out that “Nowhere ... is it 
written in stone that the short-term interests of corporate shareholders in the 
United States deserve a higher priority than ... all other corporate 
stakeholders” -- workers and community. State-corporate decision has nothing to 
do with economic theory.

       It’s also important to remind ourselves that the notion of workers’ 
control is as American as apple pie. It’s kind of been suppressed, but it’s 
there. In the early days of the Industrial Revolution in New England, working 
people just took it for granted that those who work in the mills should own 
them. And they also regarded wage labor as different from slavery, only in that 
it was temporary. Also Abraham Lincoln’s view. There have been immense efforts 
to drive these thoughts out of people’s heads, to win what the business world 
calls “the everlasting battle for the minds of men.” On the surface, they may 
appear to have succeeded, but I don’t think you have to dig too deeply to find 
out that they’re latent and they can be revived.

*      And there have been some important concrete efforts. One of them was 
undertaken thirty years ago in Youngstown, Ohio, where US Steel was going to 
shut down a major facility that was at the heart of this steel town. And there 
were substantial protests by the workforce and by the community. Then there was 
an effort, led by Staughton Lynd, to bring to the courts the principle that 
stakeholders should have the highest priority. Well, the effort failed that 
time. But with enough popular support, it could succeed.  And right now is a 
propitious time to revive such efforts, although it would be necessary -— and we 
have to do this —- to overcome the effects of this concentrated campaign to 
drive our own history and culture out of our minds.

       There was a very dramatic illustration of the success of this campaign 
just a few months ago. In February, President Obama decided to show his 
solidarity with working people. He went to Illinois to give a talk at a factory. 
The factory he chose was the Caterpillar corporation. Now, that was over the 
strong objections of church groups, peace groups, human rights groups, who were 
protesting Caterpillar’s role in providing what amount to weapons of mass 
destruction in the Israeli Occupied Territories.

       Apparently forgotten, however, was something else. In the 1980s, after 
Reagan had dismantled the air traffic controllers’ union, the Caterpillar 
managers decided to rescind their labor contract with the United Auto Workers 
and to destroy the union by bringing in scabs to break a strike. That was the 
first time that had happened in generations. Now, that practice is illegal in 
other industrial countries, apart from South Africa at the time. Not now. Now 
the United States is in splendid isolation, as far as I’m aware.

       Well, at that time, Obama was a civil rights lawyer in Chicago, and he 
certainly read the Chicago Tribune, which ran quite a good, very careful study 
of these events. They reported that the union was stunned to find that 
unemployed workers crossed the picket line with no remorse, while Caterpillar 
workers found little moral support in their community. This is one of the many 
communities where the union had lifted the standard of living for entire 
communities. Wiping out these memories is another victory in the relentless 
campaign to destroy workers’ rights and democracy, which is constantly waged by 
the highly class-conscious business classes.

       Now, the union leadership had refused to understand. It was only in 1978 
that UAW president Doug Fraser recognized what was happening and criticized the 
leaders of the business community (I’m quoting him) for waging a “one-sided 
class war” in this country, a “war against working people, the unemployed, the 
poor, the minorities, the very young and the very old, and even many in the 
middle class of our society,” and for having “broken and discarded the fragile, 
unwritten compact previously existing during a period of growth and progress.” 
That was 1979.

       And, in fact, placing one’s faith in a compact with owners and managers 
is a suicide pact. The UAW is discovering that right now, as the state-corporate 
leadership proceeds to eliminate the hard-fought gains of working people while 
dismantling the productive core of the economy and sending the Transportation 
Secretary to Spain to get them to do what American workers could do, at taxpayer 
expense, of course.

       Well, that’s only a fragment of what’s underway, and it highlights the 
importance of short- and long-term strategies to build -— in part, resurrect -— 
the foundations of a functioning democratic society. One short-term goal is to 
revive a strong independent labor movement. In its heyday, it was a critical 
base for advancing democracy and human and civil rights. It’s a primary reason 
why it’s been subjected to such unremitting attack in policy and propaganda. An 
immediate goal right now is to pressure Congress to permit organizing rights, 
the Employee Free Choice Act legislation. That was promised but now seems to be 
languishing. And a longer-term goal is to win the educational and cultural 
battle that’s been waged with such bitterness in the one-sided class war that 
the UAW president perceived far too late. That means tearing apart an enormous 
edifice of delusions about markets, free trade and democracy that’s been 
assiduously constructed over many years and to overcome the marginalization and 
atomization of the public.

       Now, of all the crises that afflict us, I think my own feeling is that 
this growing democratic deficit may be the most severe. Unless it’s reversed, 
Arundhati Roy’s forecast might prove accurate, and not in the distant future. 
The conversion of democracy to a performance in which the public are only 
spectators might well lead inexorably to what she calls the “endgame for the 
human race.”

       Thanks.

http://www.democracynow.org/2009/7/3/noam_chomsky_on_crisis_and_hope