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Democracy and Power

Noam Chomsky

3. The Vicissitudes of Democracy: Part 21

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  • 1 Lecture delivered at the Delhi School of Economics on 13 January 1996.

1Yesterday, I was talking about James Madison’s vision for the country, and his distress shortly afterwards, when he saw the fate of the constitutional system he had devised. I recalled that in Madison’s pre-capitalist vision, power was to be put in the hands of more capable people, the wealthy, but they were not supposed to act as gangsters and robbers. They were supposed to be benevolent gentlemen and wise philosophers and act for the benefit of all, while of course understanding that the prime responsibility of the government is “to protect the minority of the opulent against the majority,” and to ensure that property rights are privileged. In principle, all people (at least, free white males) were to have the same rights, but property owners were granted special rights, misleadingly called “rights of property.” They were expected to understand that, but in an enlightened fashion. And he was concerned, as I mentioned, with the threat of democracy. That’s the basis on which the modern democratic states are established. They are founded on the basis of the threat of democracy, and the need to contain it, and to ensure that the prime responsibility of the government is fulfilled.

2Madison, as I said, was concerned about the levelling spirits among the growing number of people who “labor under all the hardships of life, and secretly sigh for more equal distribution of its blessings.” And then he lamented when he saw that the powerful behaved in the way one would expect, deploring “the daring depravity of the times” as the rising business classes became at once the “tools and tyrants” of the government, overwhelming it with their power and benefiting from its bribes and largesse. I mentioned this because these are the standard views of classical liberalism – anti-capitalist in spirit and in character, very much in favor of insisting upon equality of condition, and also opposed to the division of labor which will destroy people, critical of capital export, and nuanced with regard to trade. There is a big difference between the actual ideals of classical liberalism with their Enlightenment roots and the modern version, called neo-liberalism, which is virtually the opposite in most important respects. This is why the early Marx drew quite heavily on the French and German Enlightenment and also on Romantic philosophy, which was imbued with much the same spirit.

3Apart from the stateliness of Madison’s rhetoric, what he said about the rising business classes as the tools and tyrants of government, and the daring depravity of the times is a good description of Washington or London or other capitals today. To see the way it’s described in modern terms, I’ll just quote from BusinessWeek, reviewing the year since the electoral triumph of the Gingrich army in November 1994. BusinessWeek reports that most CEOs feel that “the 104th Congress represents a milestone for business: Never before have so many goodies been showered so enthusiastically on America’s entrepreneurs,” who are by now quite openly designing the legislation, without even the usual pretenses. The number of corporate lobbyists has exploded. There is no secret about it anymore.

4The headline of the BusinessWeek article is “Return to the trenches.” In other words, yes, we’ve got more goodies than ever before in history, but it’s not enough, you can get more. The article goes on to describe “the more” that we’ve got to get, now that we’ve got so much. The first thing is a reduction of taxes on financial gains – that’s extremely important in countries where taxes are collected. For the wealthiest one percent of the population, financial gains are about half their income. So half their income has to be completely exempt from taxes. Now, this is supposed to be necessary to stimulate investment. But that doesn’t make any sense from an economic point of view. If you want to stimulate investment, the obvious way to do it is to put money in the pockets of working people, so they can consume and increase demand, and that would stimulate investment. That’s particularly true when the country is absolutely awash in capital. It’s not that there is any shortage of investment capital, it’s just that there is weak demand and there are better ways to make money (by financial speculation and so on), and promoting those can’t help to increase investment.

5The real purpose is quite different – it is to increase the Third World, to stimulate the development of a society of the Third World structural type. That is, to increase the enormous inequality that has been growing steadily since the mid-1970s, but spectacularly so since the Reagan takeover in the 1980s. The level of inequality in the US is now back to what it was around the 1920s – right before the big crash in 1929. By 1980, which was the turning point, the level of inequality in the US was comparable to the worst in the industrial world – it was among the worst, but not off the spectrum. Now, it’s completely beyond any other industrial society, as is the proportion of people living under conditions of poverty, the incidence of starvation among children and the elderly, and other standard indices which are familiar to the Third World. Those conditions are being established, of course, at higher levels, since it’s a rich society. But the conditions are structurally quite the same, and the point of the reduction of taxes on financial gains is simply to accelerate these developments. It’s striking when you look at it case by case. Take New York City – the richest city in the world. Over forty percent of children live below the official poverty level, which means they are deprived of any possibility of a productive future life. The level of inequality in New York City is the same as in Guatemala, which is the worst in the world for any country where there are statistics.

6Guatemala is an interesting case, because you may recall that they had a brief experiment with democracy until 1954, when it was overthrown by a US government-backed military coup. At that time the US was going to turn Guatemala into a showplace for capitalism and democracy. A couple of hundred thousand corpses later, Guatemala has perhaps the worst inequality in the world and child starvation. And yes, tremendous wealth. It is a showcase of a kind, and New York City now has approximately the same level of inequality.

7The second major task for which business has to go back to the trenches is deregulation. It is important – it imposes very severe costs on the population and, of course, on future generations. Because deregulation has obvious costs, but it’s good for short-term profits. And if there is trouble, you can go to the taxpayer to bail you out. That’s taken for granted. In fact, if you look at the cases and see what happens, deregulation is being done in a very intelligent fashion. They are not dismantling the system piece by piece – they want to destroy it all at once. So the technique that is being used is to introduce what economists call cost-benefit analysis, risk analysis. As any honest economist will tell you, that it is something you can’t do. The situation is much too complex. And you can’t carry out any sensible measure of things like cost-benefit analysis in a complex system. That’s very significant. Because the current legislation is that before any regulatory legislation is introduced, it must be demonstrated that the gains are not exceeded by the cost, in terms of growth or profits or whatever. Any corporate lawyer with half his brain functioning can keep the courts tied up for years trying to work out what that means. This essentially means no regulation, by the highest scientific principles. Of course, to carry any of this out requires a huge government bureaucracy. But that’s no problem, that’s not funded. So yes, we have enormous bureaucratic costs, but we don’t fund them, so they can’t be carried out. We impose tests on regulatory processes which can’t possibly be met. This means the system collapses. Now, when it collapses, it leads to disasters, but there is an answer to that too, you turn to the public to bail you out, that’s what happens in case after case.

8The Savings and Loan crisis in the US was a perfect example of that. In the early 1980s, the government deregulated these Savings and Loan banks, but it also gave them incentives to carry out very high-risk loans, by increasing the insurance for the banks. It doesn’t take a genius to figure out what will happen – huge scandals, great profits, collapse, hundreds of billions of dollars of losses, but that’s simply passed over to the taxpayer. Another example is right in the works now; the securities markets are being deregulated. The head of the Securities and Exchange Commission under Reagan, a great liberal who was in charge during the 1987 crash, points out this is going to be a disaster. What they are doing is reducing liabilities, freeing brokers from liabilities for fraudulent practices when they sell stocks, which is just an invitation to disaster. The Congressional Budget Office, which is a very conservative outfit, estimates that in order to deal with the fraud that is going to follow from this they will have to double or triple the case load against the Securities and Exchange Commission. Again, a huge bureaucracy. But that’s no problem because they are cutting the budget for it, so they won’t be able to do these things. And then when the collapse comes, very simple – you just go back to the taxpayer to bail you out.

9That just happened again in Mexico. Mexico was what is called an economic miracle: disaster for the majority of the population, but a dream for the rising number of billionaires who were being given state assets for a fraction of their value under privatization, and for foreign investors (mostly speculators). And when the bubble bursts, as obviously it is going to – very simply, go to the American taxpayer who will end up paying 30-40 billion dollars’ worth of pay-offs. Not to the Mexicans – it doesn’t go to them. It goes to the investment bankers and speculators to protect them from losses. They incidentally happen to be the same kind of people who, by and large, staff Clinton’s cabinet. And so on, in case after case.

10There is a dramatic case right now. In the middle of this frenzy about deregulation, last December the Commerce Department in the US had to close down Georges Bank. Georges Bank is the richest fishing area in the world. It had to be virtually closed to commercial fishing. The reason was that, in the early 1980s, under the excitement about deregulation, they deregulated the fishing industry. But they did it in the way it is done in “really existing free markets”: they also gave the fishing industry subsidies to increase the fishing. So you subsidize the fishing industry and you deregulate it, and again it doesn’t take a genius to figure out what will happen – over-fishing. They destroyed the ground fish, and now there is a danger of wiping out the edible fish. Today, New England is importing cod from Norway. It is just like Australia importing kangaroos from Central Asia. But nobody can understand why. Something went wrong. Actually, one person did understand why – the Governor of Massachusetts, William Weld, a rising star of conservatism. He went to Washington, hat in hand, asking for a federal handout to pay the costs at the expense of the taxpayer. His argument was that the government should declare this a national disaster, which means that federal funds then pour in. And as to why it is a national disaster, he found some scientists who were willing to tell him that some predatory fish had probably come to Georges Bank and was eating all the ground fish. He said that they hadn’t been able to find it yet, but they were pretty sure it was there, so therefore the taxpayer ought to pay off the cost – because it is a national disaster.

11This goes on, in case after case. The Reagan administration bailed out the Continental Illinois Bank, the biggest nationalized bank in American history. They got into trouble, and the taxpayer bailed them out. This is a standard feature of neo-liberal economics. Take Chile, which is hailed as one of the greatest economic miracles in history since the Pinochet takeover in the 1970s. It was an economic miracle run by the smartest economists around, the “Chicago boys” as they were called, who followed all the rules. They were able to do this very easily, because the fascist dictatorship was able to murder, torture, and imprison those who objected to the human consequences. That made it easy to carry out the neo-liberal agenda, and it was considered a huge economic success until 1982, when everything collapsed, and Chile had the worst economic disaster in fifty years. At that point, libertarian think-tanks simply advised the government to take over the assets of all the failed banks, and industries, and so on, which they did, and it turned out that the Chilean government acquired more control over the economy than at the peak of the Allende government. Until, of course, the taxpayer had resolved the crisis, at which point the giveaway began again, and you return to the principles of neo-liberalism. It’s an awful scam, but that’s exactly what you’d expect when power is transferred, more and more, into the hands of those who have every reason to make law and government the combination of the rich against the poor – exactly what’s happening. So, that’s deregulation.

12The third major policy to be pursued is devolution – reducing power down from the federal government to the state level. There have been philosophical debates about federalism versus central government, and so on and so forth, and the idea of devolution is supposed to be that the conservatives believe in moving power to the people, and that means getting it down to the state level. Well, that’s just shameless cynicism as everyone knows, but nobody will say. The point of giving power to the state (say, by giving block grants to the state governments instead of specified funding for health, and education, and so on, at the federal level) is very straightforward. State governments are much weaker than the federal government, which means that even medium-sized business can play one state against the other: say, threaten to transfer across state borders if you don’t give them some extra benefits. Only the really big guys can play that game with national states (say, by moving from Mexico to Poland unless some benefits are given), but moving from Massachusetts to Tennessee is quite easy.

13Take the Raytheon Corporation, which is the biggest employer in Massachusetts and is part of what’s called the defense industry – meaning, the public pays for it but the profits are privatized. The only defense that anybody can detect is defense of the minority of the opulent against the majority at home – that is apparently the function. It’s part of a system where the public pays the cost of high-tech industry. Anyway, Raytheon recently informed the state of Massachusetts that it would move to Tennessee unless it got more tax benefits and subsidies. The legislature passed laws that exempt the defense industry from taxes, even more so than before, and gave other amenities amounting to 80 billion dollars a year. That’s the kind of thing that a middle-sized business can do. As I say, only the big corporations can do that with national states. That’s exactly the point of devolution: if you can devolve power down to the state level, you can be more confident that the limited funding going to education, health, shelter, transport and other economically irrational things will not trickle down (as it sometimes does) to people who need it, but will be transferred by some combination of regressive fiscal measures and outright subsidies into the very deep pockets of the opulent minorities. That’s devolution in the real world.

14The next thing that has to be pursued is total reform – change the legal system. That means elimination of liability for criminal action by corporations, and that’s important because they carry out plenty of criminal action. In fact, the biggest corporate funder for the Gingrich army happens to be Philip Morris Corporation, the biggest tobacco firm, which needs protection from its many millions of victims. It is killing people on a scale that the whole narco-trafficking industry in the world can’t come close to. There are all sorts of legal cases demanding compensation for this, and the idea is to cut them off, similarly to other forms of corporate crime. Not only must private tyranny be publicly subsidized, its activities also have to be decriminalized – this is total reform.

15The next priority is a very interesting one – it is health care. Business is running back to the trenches to change the health care system. As I mentioned yesterday, the US is unusual in a lot of ways for historical reasons. One of the effects of this somewhat different history is that the US is the only major industrial country without any comprehensive national health care system. In the 1960s, two programs were introduced – Medicare and Medicaid – to provide health support to the elderly and the poor. The idea now is to get rid of those programs. The nature of the reforms being introduced has been described pretty accurately in a headline of the Wall Street Journal. The headline says, “Unequal treatment – Medicare Bill would end egalitarian approach,” and the story reports that the wealthy stand to gain, the poor may be hurt and there will be trade-offs for the middle class. This is more or less true, but you have to understand what these words mean. First of all, it’s not that the poor may be hurt, they are almost certain to be hurt. That’s the point of it – to eliminate support for medical aid to the poor. Approximately 40 million lack any insurance at all. They are dumped. There are dumping grounds for them called public hospitals. The poor and the uninsured are taken care of in public hospitals, but public hospitals have to be eliminated. That’s part of the system, and in fact, the same day, in the New York Times the lead headline was “Public Hospitals Facing Deep Cuts in Medicare Bill.” The subhead reports that there will be “less for teaching programs and for services to the poor.” Some may have to close down, and others will lose resources, because we don’t want these dumping grounds around. These are disposable people, in the Third World sense. It doesn’t make sense to keep them alive. Therefore, cutting back the limited medical aid that they have makes a good deal of sense. Any economist can explain that to you, and in the Third World domains of the West, say Latin America, that is done all the time. So it is the poor who will be hurt – not may be hurt.

16As for the middle class, it is getting a trade-off. The term “middle class” does not mean the people around the median. It means the almost very rich, but not quite very rich. So the middle class is all those right below the top, but well above the median. And for them, there will be a trade-off. So the wealthy will gain, and for the ones below them, there will be tradeoffs. The poor, which are a large majority of the people – they’ll be hurt. Furthermore, the health care system which remains mostly for the rich is being handed over much more than before to private businesses. And as Milton Friedman – or anyone else sensible – says, they are not benevolent organizations. They are in the business of making profits. Now, if you are a health-maintenance management organization, and you want to make profits, what you do is micro-manage the doctors. Introduce extensive levels of managerial bureaucracy to make sure that the patients get the least possible care and attention, and at minimal costs. You don’t need to go to a school of management to understand that. That’s the point of micromanagement, and the costs are enormous. There are all sorts of costs which wouldn’t be there in a rational system – and aren’t there in the national health care system, say, of Canada next door. For one thing, a large part of the health cost which will increase is just high profits. Another is the high level of bureaucratization, micro-management, complex accounting procedures, and so on. Right now, the administrative costs and profits of the HMOs (Health Management Organizations) are about seven times as high as the comparable costs of Medicare or any public system anywhere. There is a huge amount of advertising – open the newspaper in the US and you will see big advertisements for joining some HMO. Well those are costs – of course, they are not real costs to the corporation because advertisements are tax free, so the public pays part of the cost of the propaganda. Another cost is lobbying, which is also tax deductible. So the lobbying which gets these things through is partially paid by the public, who suffer from it. Then there are huge salaries, stock options, and so on. Well, all these are ways of transferring costs. They don’t cut costs, they transfer costs from the hands of some private power to the public, and that’s understood.

17There is a conservative commission called the Bipartisan National Leadership Coalition, chaired by a couple of ex-presidents, which estimates that the current costs in the government health programs are going to take 67 billion dollars out of wages or income, hitting mostly the poorer people because it takes a much bigger percentage from them. They also estimate that these programs may raise the number of uninsured to about 54 million or so individuals in the next seven years. It will be 46 million with no cuts, which is bad enough. Well, those are among the costs and they are extreme. Medicare has been the major support so far for nursing homes for the elderly, etc. If Medicare disappears, the elderly will have nowhere to go unless private families take care of them. Right now, there are laws which say that if you put your parents under nursing care, you can apply for federal support without losing your personal assets – that means your house, car, etc., won’t be taken. If that legislation is eliminated, people will be faced with agonizing choices like, do I lose my home and send my children out in the streets in order to keep my parents from dying? But that is not the kind of thing that counts when you use the yardstick of economic rationality and other forms of lunacy that we are told to admire. Well, that’s a part of the cost-shifting that goes on, which will give figures showing that medical costs are being controlled, but only by transferring them over to the public.

18Take deregulation, again. Deregulation has already allowed increased pollution – so you can dump toxic wastes, and somebody else pays the costs. By dumping wastes you damage sewage and water systems. How do you deal with it? You raise the cost of using water. But that simply transfers the cost to private families and individuals and takes it away from the industrial polluters. Deregulation is then described as being economically very efficient – look how it’s cutting costs, and so on. In fact, it’s just shifting the cost, in a highly regressive fashion, to people who pay it themselves. This has become so brazen that the new legislation requires the taxpayers to reimburse industrial polluters who have created toxic wastes and have been compelled to clean them up to meet federal standards. They now have to be reimbursed by the taxpayer for the cost of cleaning up the toxic wastes they have created. And so it goes on.

19The City and State of New York have announced big tax cuts. If you take a look at them, almost all go to business and the wealthy. But tax cuts are good for the economy. The only trouble is while they have introduced tax cuts, they have also introduced tax hikes to compensate for the tax cuts, except that they don’t called them tax hikes – they call them reduction in subsidies for mass transportation and education. This is a funny notion, that when people’s money goes to enable them to have a transportation system and a school, it is a subsidy. What happens when we reduce subsidies to mass transportation and public education? What happens is that the costs of mass transportation, which were already very high, get higher – they just shot up by twenty percent. But those costs are paid by poor people. People who drive limousines don’t care if subway rates go up. But the children who have to get to school and poor people trying to get to work – they care a lot. If costs go up at city colleges, poor people are hit. The rich are sending their kids to private institutions. So all this is another radically regressive shift in taxes. It’s called a tax cut, but it is really tax shifting, taxes becoming more regressive than they already are. There is a lot of talk about flat taxes, overlooking the fact that they are already flat, and they’ve been flat since the Reagan years, if you take a look at the whole tax system. So making them flat simply means making them radically regressive, instead of just very regressive. All this is very familiar in India’s own history: sixty-five years ago the British had to raise funds for the Indian government and had a choice of raising income tax or salt tax; you know the choice they made, and that is exactly the same thing. Income tax hurts the rich, salt tax just hurts the poor – that’s the kind of tax you want, with consequences I’m sure you remember.

20It is instructive to see how all this stuff is portrayed. Here is one example. The mayor of New York City (a well-known conservative) had a press conference in which he explained that the city is just not wealthy enough to support poor people anymore. The basis for that judgment, repeated as front-page story in the New York Times, was an investment report by JP Morgan Bank, the fifth largest financial institution in New York. JP Morgan was suffering from, I think, a mere 1.4 billion dollars in profit last year, and they came out with this report saying New York is not rich. So it’s necessary to cut things like transport and education subsidies, care for the disabled and elderly, all this stuff. The headline under which this appeared was “Giuliani Sees Welfare Cuts Providing a Chance to Move.” The article explains that Giuliani’s welfare cuts really are for the benefit of the poor: the cuts “enable them to move freely around the country.” At last, they are liberated from their chains – homes to live in, food to eat, and medical care if they get sick – so they are free to go somewhere else. It’s straight benevolence: free to move, the chains are gone! Well, that is one way to do it.

21Turning to another example, there was a recent op-ed by a specialist at the Hoover Institute at Stanford (a very respectable and conservative academic institute) talking about the health care problem and describing a philosophical flaw in the President’s position on health care. Why? Liberals favor a nationally-guaranteed level of benefits and redistribution of income through entitlements. Conservatives prefer to transfer power to the states in the belief that policies should be closer to the people. These are profound philosophical differences, he says. But for reasons I’ve already mentioned, no sane observer can fail to understand that when you move closer to the people, i. e., states, you are actually transferring power away from the people into the hands of private institutions that can manipulate and control the state. And if anyone is unable to understand this, he or she can turn to the report released the same day explaining that Fidelity, the biggest investment firm in Massachusetts, is demanding a cut in state taxes and warning that unless it gets even more subsidies it will move next door to Rhode Island, where it would have a much lower tax burden, though it wouldn’t be so easy to move, say, to Zurich. Massachusetts capitulated, and that means tax rates increase for the poor, so that Fidelity can make use of the services of the city, but the poor people pay for it. That’s called creating a better environment for business, being more economically rational and so on. And that’s the philosophical difference.

22There is one real success story – an economic miracle – in the US (not just Mexico or Brazil). It’s the state of Wisconsin. That’s the state that pioneered creative approaches to getting rid of welfare, eliminating all these horrors of a welfare state. And it is praised by liberals for its achievements. In fiscal 1994, the state of Wisconsin spent 1.16 billion dollars on what BusinessWeek calls “the goodies” showered on entrepreneurs – that whole array of subsidies and benefits. That kind of corporate welfare has grown astronomically since the 1970s, when the conservative experiment began. Meanwhile, the state economy has scarcely grown at all. Real wages have dropped for non-supervisory workers. They are now the lowest in the entire Midwest manufacturing region. The tax burden has shifted dramatically to individual households. But all these huge gifts to corporations have not led to any expansion of employment, and the reason is very simple: there are better ways to make money – speculation, mergers, and all kinds of things.

23The day I left the US, there was a little news item in the back pages, which reported a study of educational expenditure in Wisconsin. It said that there has been a big increase in public funding for wealthy communities and sharp cutbacks for the working class and the poor. Well, that’s an economic miracle – that’s what the term means in its technical sense. Just about every place that’s called an economic miracle has those properties – they are quite familiar throughout the Third World. Now we’ve got a couple of such miracles at home – New York, Wisconsin, and so on. There are, of course, similar tendencies at the national level, but it all gets sharply accentuated when you move down to the state level, where there are weaker public defenses against private power.

24Let’s go back to that BusinessWeek message, “back to the trenches, we haven’t got enough.” Who does that go to? Well, it goes to the 23,000 corporate lobbyists in Washington, as compared with less than 700 of them in 1970. That’s one reflection of the massive attack on democracy and rights that has taken place during this period. The number of corporate lawyers has expanded at a similar rate. The business press is absolutely euphoric about what the BusinessWeek commentary calls “spectacular profits.” Last year was the fourth straight year of double-digit profit growth. There was very little sales growth, and very little change in employment, but return on capital has skyrocketed, executive pay has gone up about sixty-six percent since 1980, and capital gains about the same. Just as I was about to leave the US, the record came up for 1995. The New York Times reported record profits, while real wages and benefits decline – so the frenzy continues.

25As I left the city, I had to pick up some cash from the bank. So I went to the Bank of Boston, the biggest bank in Massachusetts, and picked up a little leaflet they had for people. Record net-income earnings, up by about twenty to twenty-five percent over 1994, which was a bumper year. They’ve just become the biggest foreign bank in Argentina. They quote the chief economist of the Bank of Boston saying the economy is doing just great – there is low growth, huge profits. Inflation is under control and “fortunately” wage increases have been remarkably restrained. That means they’ve declined, indeed median wages have been declining steadily since around 1980. The decline continued through the Clinton recovery – that’s unprecedented. There’s been an economic recovery in the last couple of years, growth has been faster than in the Reagan years, but the median real wages have kept going down. That’s the “fortunate” fact, that they’ve been remarkably restrained. The Wall Street Journal called it “a welcome development of transcendent importance,” no less. Labor costs in the US have reached the lowest level in the industrial world, next to England, where Thatcher did an even better job in crushing poor people. In 1985, they were the highest, but now they are the lowest next to England, so that’s of transcendent importance.

26All this has been happening at a time of spectacular profits, double-digit growth of profits, and so on. I should add that aside from the loss of income and wages, there is also much less security. Since 1980 or so, the number of workers under contracts has declined, unions have declined, and the number of temporary workers has shot up. One of the biggest employers in the US now is called Manpower Incorporated – its sales are temporary workers. People who don’t get benefits, and don’t need to be given a job tomorrow, and so on. In the technical literature, this lowering of wages and elimination of contracts is called “flexibility of labor markets,” which is good for the health of the economy.

27On the other hand, it’s not that the government is being cut back. The taxes are just being shifted. So there are parts of the government that are going up. The biggest and most important one is the Pentagon. The Gingrich army and the Heritage Foundation (the right-wing libertarian foundation that more or less sets the agenda) have called for and have got an increase in the Pentagon budget. The Pentagon budget is roughly at Cold War levels in absolute terms, but it’s going up. Not because the country is under any risk or threat – nobody can believe that. But because of the function of the Pentagon system, which is well understood. It is not studied in the academic literature, but it is well understood in the business community. In the late 1940s, business understood very well that, as Fortune magazine put it, high-tech industry cannot survive in an unsubsidized, competitive, free-enterprise economy. The government must do something about it. BusinessWeek added that the government must be the savior. The natural mechanism to save big business was the military system. There are many reasons for this, but one reason is that defense is easy to sell to the public – frighten the public and then they’ll pay for it.

28The first Secretary of the Air Force under Truman, a liberal Democrat, pointed out that the word to use is “security,” not “subsidy.” So when you give a subsidy to a high-tech industry you call it security, and that goes through the Pentagon system. It is kept away from any public control or public scrutiny, because it is secret, and has every possible advantage. It goes up under more statist elements like the Reaganites, just as protection did. Maybe the most dramatic example of this influence is Gingrich himself, who heads a conservative revolution. You can find many press reports on the new rise of conservatism in the US that focus on the fiery leader of the revolution, Newt Gingrich, who is full of enthusiasm about entrepreneurial values and how people want to get the nanny state off their back. Gingrich describes the Georgia county he represents as a Norman Rockwell world – Rockwell is a painter who paints happy middle-class people – “a Norman Rockwell world with fiber optic computers and jet planes,” just a wonderful place – “A Suburban Eden Where the Right Rules,” a New York Times headline tells us, and where “conservatism flowers among the malls,” where happy people shop. That’s what happens when you’re a free entrepreneur, liberated from the nanny state. There is a little footnote to that, sort of in the background somewhere, which is that this very affluent district right outside of Atlanta gets more federal subsidies than any suburban county in the country, with the exception of the federal system itself (Arlington, Virginia, across the river from Washington, where the Pentagon and other federal agencies are located, and Brevard County, Florida, the home of the Kennedy Space Center). And the computers, fiber optics, and jet planes are also primarily a gift of the nanny state. The county’s largest employer is Lockheed Corporation, which it would be inaccurate to describe as state-subsidized, since it is closer to a part of the federal government which happens to record private profits. It’s really easy to talk about getting the nanny state out of your hair, to triumphantly proclaim libertarian values, and so forth, as long as you are feeding at the public trough. But it’s not enough – back to the trenches.

29In fact, things have reached a point where the concept of capitalism has disappeared from the business world. They don’t understand it any more. You can see this if you read the business press, like the Wall Street Journal. A couple of weeks ago, it had a lead story about business strategies. It compared the business strategies of two different states, Virginia and Maryland. They had different approaches (just like India and Brazil), different methods of bringing in investment and having development. And the article talked about which approach is better, which one worked and which one did not. It turned out that for a while Maryland was better and now Virginia is better. Maryland had been banking on biotechnology, and genetic engineering, and the biology-based industries. And Virginia, which they said had a better business climate and more supportive individual entrepreneurs, was developing computers and telecommunications: Virginia is doing better, and that shows the values of capitalism, better business climates, and so on. Now, as it happens, Maryland and Virginia are the two states next to Washington, and if you read the story, it turns out that these investment efforts are not being made by Maryland and Virginia but by areas around Washington (suburbs of Washington). And the difference in business strategy is that Maryland was banking on putting its hand in the public pocket through the parts of the federal government that subsidize biology-based industries, while Virginia had the smarter idea of putting its hands into the deeper pockets of the part of the federal government which pays the costs of the high-tech industry – namely the defense system. Well, that turned out to be a better strategy, so the better technique for private enterprise is to make sure you smartly pick the public funds you’re going to rob. That’s regarded, without comment, as the way capitalism should work. And that is the way it does work. If you look back in history, that is the way it generally worked. All this continues and expands on and on.

30There is a lot more to say about this, but I’m going to save time for discussion. Let me just say that this is not the first time we find ourselves in this situation. About a hundred years ago, William Morris, the famous British revolutionary socialist writer, told an Oxford audience that, “I know it is at present the received opinion that the competitive, or ‘Devil take the hindmost’, system is the last system of economy which the world will see; that it is perfection, and therefore finality has been reached in it; and it is doubtless a bold thing to fly in the face of this opinion, which I am told is held even by the most learned men.” And he goes on to say that if history is really at an end as most learned men proclaim, then “civilization will die.” But all of history tells us, he says, that it is not so. And despite what the learned men tell him he will continue to fly in the face of this opinion. And he was right. History was not over. There were continuing popular struggles, many achievements; the world is, in many ways, a much better place today than it was then.

31That pattern has been repeated. In the 1920s again, in the US there was a belief that perfection had been reached, finality had come, with a utopia for the masters. But the masters and learned men turned out to be wrong – a couple of years later there was mass mobilization, coming close to worker takeover of factories, later moves into the welfare state system, and so on. And so it continues. There is still plenty of leeway for action; these human institutions are under control. If “the daring depravity of the times” does last, and history comes to an end, and civilization dies, we’ll know exactly who is to blame – namely ourselves, because there is plenty that can be done about it.

Question and Answer Session

32Question: As you know, countries like India, China and Indonesia are competing for capital and hoping to become part of this wonderful system that you just described. California and other states are competing with them, too. But do you see any signs of popular struggle a hope of democracy? Do you see any struggle emerging that we can gain some hope from?

33Chomsky: There are plenty of people like William Morris who don’t accept the opinion of the most learned men. Sure, there are struggles all over the place. France just had big general strikes. The poorest country in the western hemisphere is Haiti, which had a remarkable example of democratization a couple of years ago. It is really an instructive lesson. This is a highly impoverished country – I was there at the height of the terror, and the poverty is incredible. You see it in India, but there it is everywhere. Incidentally, Haiti used to be a rich country – a source of a good deal of Europe’s wealth. But now it’s miserable and impoverished. A couple of years ago, to everyone’s surprise, the general population (people in slums, peasants in the hills) had succeeded on their own in developing a vibrant and lively civil society with grassroots organizations, popular initiatives, and so on. A lot of it was impelled by liberation theology, which has had a big effect in the region. And to everyone’s amazement, they managed to sweep their own president into office with quite a popular program. Of course, a coup came along and it got crushed. The US pretended to oppose it, but in fact backed it. Finally the US came back in and re-instituted the program that the population had thrown out. That was the condition under which the president was allowed to return: that he adopt the harsh neoliberal program of the defeated US candidate in the election, who received fourteen percent of the votes. That is what is now hailed as proof of Washington’s awe-inspiring dedication to democracy. However, the Haitian population, despite three years of terror and lots of killings, are still resisting it. This is another country that has resisted structural adjustment, resisted it to the extent that the World Bank and the US government have started cutting off the aid they were giving. But Haiti is much too small to be able to resist. In France too, the working class and general public are not strong enough to resist on their own. Everywhere you look, there are these signs of resistance and they do involve the overwhelming majority of the population. And this struggle is going to require a level of mobilization and commitment beyond what happened in the past. Society is much more globalized today and that means struggle has to be more international, solidarity has to be across borders. That is coming too, but the question is, is it fast enough?

34Let me give you another example closer to home for me – the North American Free Trade Agreement (NAFTA). To start with, NAFTA is misnamed. It certainly was not an agreement, least of all an agreement involving the general population of the three countries (Mexico, Canada and US). The population was strongly against it. So if it was an agreement, it was between somebody else and not the population of these countries. And it was not about free trade. It was about strengthening investor rights, which is quite different from free trade. In fact, at that time, about half of US exports to Mexico didn’t even enter the Mexican economy. They are called “trade” by economists, because it happens to cross national boundaries. But if the Ford Motors company shifts components across the border to employ cheaper labor and evade environmental restrictions, and then sends them back across the border for adding more value, that is not trade in any meaningful sense of the word.

35Coming back to NAFTA, the purpose was to raise investor rights. In order to get it through (the partners are democratic countries), they had to put in some side provisions about labor rights and environmental protection and so on. They are not meant seriously, but they are there. Right after NAFTA was enacted, General Electric and Honeywell, two big investors in Mexico, fired a good part of the labor force that was involved in union organizing. This is a radical violation of labor rights. Well for the first time ever, the American labor unions (which have had quite a reactionary leadership) stepped in and insisted that a case be brought before the US Labor Department. They instituted proceedings against these firms. Of course they lost: this is just cosmetic. But it happened, for the first time ever. A labor-based organization which until recently has been pretty marginal has been organizing pressures to demand elementary labor rights in the areas where US investments go. It’s by now fairly successful. They have just compelled GAP, the big clothing manufacturers, to modify labor practices in Central America, where women are miserably exploited by textile manufacturers and the electronics industry. This may turn out to be cosmetic again (we don’t know yet), but they have created a national scandal about it, and a lot of public pressure. GAP had to do something. They may find a way around it, but those things are happening more and more. This is the kind of international, cross-country solidarity that can compete with transnationals.

36But it has to go much further, to the extent of realizing that the whole system is fundamentally illegitimate. There is no justification for private corporations to exist. They would have horrified classical liberal opinion. You can already see that insofar as classical liberals (like Jefferson) still existed at the time when the corporations were rising, they were bitterly condemned. They came to power in the early part of this century and they have no right to that power, and certainly no right to the transnational power that they have. They have to be dismantled. That is going to take a big effort. But it’s no bigger an effort than overthrowing feudalism. These things take long, committed, dedicated popular struggle. There are plenty of signs of it all over the place. But it is certainly not going to be simple. Anyone who wants a general strategy to do it by tomorrow had better look somewhere else. There is no new one, just the old strategies which worked in the past. There is no reason why they should not succeed again.

37Question: Those of us who were students forty years ago admired Nehru’s socialism – which meant a state-controlled, or at least state-regulated, economy. Now we have moved consciously or unconsciously to a liberalized regime, where we are welcoming multinational companies. Even Jyoti Basu and Laloo Prasad Yadav, champions of the poorer sections, are welcoming this new regime. What is your advice for a country like ours? Is it just that we alternate between state control and multinationals, until some balance emerges?

38Chomsky: I don’t presume to give advice to other people, and in particular, to other countries. They have their own complicated problems, which you have to work out yourself. Advising you about it would be ridiculous, as you know more about it than I do. However, there is something general going on. It was pointed out rather well by Bakunin about 150 years ago. He made one of the few significant predictions in the social sciences that’s ever come true, and it ought to be studied for that reason alone. He predicted that within the rising industrial world there would be a new class of intelligentsia. They would fall into two categories. One category, he said, would try to use popular struggles to gain power for themselves and become a “red bureaucracy.” It would create the most brutal tyrannies that humanity had ever seen, all in the name of the people (state socialism). The other category of intellectuals would recognize that instead of taking power to exploit popular struggles, it makes more sense to serve people who already have power. As he put it, they would “beat the people with the people’s stick,” in what we would now call state capitalist democracies. These would be the two major categories of intellectuals. For one of them, the way to beat the people is to take power and introduce something called socialism which means smashing every popular organization and keeping people under control. That’s the red bureaucracy. The other category prefers to serve the powerful and beat the people with the people’s stick, called democracy.

39I think his prediction was right – those have been the two methods of beating the people. But do we need either of them? Why? If we look way back at the origins of modern democracy, if you look at the English revolution in the seventeenth century when you have the first modern democratic revolution, you find a pattern which has shown up again and again in every popular struggle I know of (and it goes further back in history). When you study in school about the English revolution, you learn that it was a conflict between King and Parliament as to who was going to take power, which is not false. But it is only partially true, because as in every other civil conflict that I’ve ever heard of, it wasn’t just two parties contesting for power. It was three. There was also the general population, which didn’t want either. As they put it in their own pamphlets, they wanted to be ruled by “countrymen like ourselves.” They wanted to take control over their own institutions, without knights, gentlemen, parliaments, etc. They made some gains, and what there is of English democracy reflects these gains. The same happened with the American Revolution.

40Are there alternatives to the two forms of tyranny? Sure there are – democratic control by ordinary people of every institution, whether it is industry, colleges, commerce, etc. There is no reason why these institutions can’t be under popular control. It’s true that this would not leave any place for the intellectuals. They wouldn’t be able to take power as a red bureaucracy, or to serve private power and get the benefits that it offers for the service. Therefore intellectual opinion is overwhelmingly opposed to popular control, which makes good sense given their class interests. But there is no particular reason why anybody should accept this.

41Question: I think the whole debate is misplaced. Some people support the concentration of wealth in a few hands, others the concentration of rights. Both believe in concentration. The debate should shift from there, and the state should be called upon to eliminate injustice.

42Chomsky: The rights that are concentrated in the existing society relate primarily to the right to property. There are plenty of other rights, and they are important and have been won by popular struggle. For instance, freedom of speech is an extremely important one, which has been achieved in the US beyond any other country in the world. And it was achieved recently. It is written in the Bill of Rights, but that’s meaningless. All sorts of things are written in the Constitution. Freedom of speech was actually achieved in the 1960s, even formally when the Supreme Court struck down the law of seditious libel – the law which protected the state against criminal assault by words. Just about every society has that in some form. England still has it, so does Canada – in fact everyone I know of. But it was finally struck down in the US, which means that state authorities are no longer protected from assault by words. The courts went on to achieve further libertarian standards, also unique to my knowledge, while allowing certain narrow departures from full protection of freedom of speech, which I think are legitimate, namely that speech ought to be protected up to incipient criminal action. For instance, if someone comes to a store with a gun and you tell him “shoot,” that speech is not protected. But up to criminal action, freedom of speech exists and it’s a very important right. Those kinds of rights are not concentrated – they are general rights to, say, freedom of speech. Everybody can use it. Now in fact, only a few people can use it, namely the people who have property, but that’s because of property rights which allow other rights to be actually enjoyed by people who are privileged. It’s no argument about other rights. It’s an argument for getting rid of the concentration of power. So I don’t see the conflict you described. Some rights ought to be general, and other rights that are concentrated, like property rights, ought to be eliminated so that all rights become general.

43As to calling upon the state to eliminate injustice, I don’t understand what that means. States are exactly the way Adam Smith described them, combinations of the rich and the government to oppress the poor. You don’t call upon that combination to get rid of injustice, what you do is dismantle it. This doesn’t mean tomorrow. What you want to do is to place power and authority, ability to make decisions, in the hands of popular groups. That doesn’t mean calling on the state to eliminate injustice, it means getting enough power either through or over the state, or after the state is dismantled in anything remotely like its existing forms, so that people can eliminate injustice – like instituting freedom of speech. But you don’t call on a power system to eliminate injustice – that’s like calling on a corporation to be benevolent. It doesn’t make sense.

44Question: There are of course many examples of organized resistance to global liberalization outside the US. But since your primary concern has been with the US, what are the possibilities for organized resistance within the US?

45Chomsky: I mentioned yesterday that, in all this talk of mass depoliticization in the US, there is one oversight – namely that there has been a lot of organization and politicization, though it’s rarely studied. In fact, there has been a tremendous amount in the past thirty, thirty-five years, and that’s quite important. What the elite calls “the crisis of democracy” is very real. There has been considerable change from the apathy and obedience of 1960 to much more activism today, and it shows up in all sorts of areas. It started in the 1960s, and took off in the 1970s and 1980s. The big popular movements that have made a lot of difference, like the feminist movement or the environmentalist movement or the solidarity movements, are movements of the 1970s and 1980s. There is little talk about them, because you are not supposed to let it be known that there is resistance. Remember, you’re supposed to make people believe that everything is hopeless. But these movements take place, on an enormous scale. And they have led to major changes in the country; outside educated circles – which are mostly untouched for obvious reasons – the general population is simply very different.

46The Vietnam War is a striking example. In 1962, J.F. Kennedy started sending the US Air Force to bomb South Vietnam. Before that, South Vietnam had been a standard Latin American-style terrorist state. The US had instituted a terror state there, which was slaughtering the population but couldn’t control popular resistance, so the US had to move in directly. So the US Air Force started bombing, and Americans went into combat operations. And nobody batted an eyelash. You couldn’t get two people together in a living room to talk about it. It’s not that it was a secret. You could read in the New York Times about the bombing missions carried out by the US Air Force. But so what, we want to bomb another country, that’s their problem. In fact, the operation was so widely supported, not only in the US but all over the world, including India, that people do not know that the US attacked South Vietnam. Ask your sophisticated friends when the US attacked South Vietnam, and very few will know what you are talking about, because the idea that the US was attacking South Vietnam was inconceivable to general opinion at that time. If the US wanted to attack another country, that’s its prerogative. In the US this was unquestioned. And it remained unquestioned among elites. So among educated sectors, opposition to the war was always on “pragmatic” grounds. A noble cause, but costs too much, can’t get away with it. The whole flak about McNamara’s book was about that. He says it cost us too much. And then the whole debate was – did he go too far? Maybe it was right for him to say that? A total scandal. It doesn’t matter how much it costs you. It matters how much it cost those several million people you killed. But that’s not an issue among educated sectors. On the other hand, that’s not true among the population. Since around the early 1970s, when polls started asking people about their attitude towards the Vietnam War, about seventy percent steadily said that the war is fundamentally wrong and immoral, not a mistake. That is the position which everyone holds on their own. Nobody says it, they’ve never heard it. The most that anyone who has got a good education can say is, the war was a mistake, but for seventy percent of the population it was not, it was “fundamentally wrong and immoral.” That runs right through the Reagan years into the early 1990s. Those are big differences, compared with the situation in 1961, and they show up in everything else.

47When Ronald Reagan came in 1980, he was trying to duplicate Kennedy, his model. I should say, when people talk about Reagan they have to remember that he was like the Queen of England – who opens Parliament with a message, but nobody cares that she understands it, it’s a symbolic position. When Reagan came in, they tried to duplicate the Kennedy operations, this time in Central America where the same situation had developed: they had terror states which couldn’t control the resistance any longer. It looked like the US would have to invade, just like in South Vietnam. In fact, they announced it. As soon as they came in, they duplicated what Kennedy did, but the reaction was very different from 1961: there was a public uprising. There were spontaneous demonstrations all over the place, many of them centered on church and solidarity organizations. In fact, there was so much resistance that they had to back off. They told the press, forget it, we didn’t mean it seriously. Instead, they moved to clandestine terror. That’s bad enough, a couple of hundred thousand people got slaughtered, and four countries were nearly destroyed. But B-52s were far worse. The difference between B-52s and clandestine terror doesn’t look like a great advance, but it is. So the Central American terror of the 1980s was not direct aggression, and it wasn’t like Vietnam, where they sent the American army to wipe the place out. It was clandestine terror, and resistance was far beyond the 1960s. I mean, not only was it much broader, but it was deeper, rooted in the population and right in the mainstream. The main resistance was coming from churches, people in the Southwest – many were culturally conservative. But it happened all over the place, and at a level that was far beyond not only the 1960s but anything in the history of western imperialism. Remember, thousands of well-to-do mainstream Americans went to Central America to do things like living in villages, on the assumption that a white face around might restrict the terror against these people. That has never happened in the history of imperialism. Nobody ever dreamed of going to live in a Vietnamese village to protect people against marauding soldiers in the 1960s.

48There was another dramatic example in 1992. It was 500 years since the “liberation” of the hemisphere, and they counted on a big celebration. They couldn’t do it, not because of the radicals, but because the population just would not tolerate it – treating the initiation of mass genocide as liberation of anything. So they had to back off. Had it been thirty years earlier, no doubt there would have been a great extravaganza. In fact, all this hysteria about political correctness developed right at that time, and I suspect this was the reason for it. Among educated elites there was a real outrage that the population would simply not accept this, and the reaction was hysteria about the left takeover, political correctness and all that.

49Well, those are very substantial changes. The country is very different from what it was, a lot more civilized in many ways. On the other hand, it is also a lot more irrational and hysterical. There has been destruction of resistance, the reaction has been very powerful and effective, but it is still there. That’s what conflicts are like; much is going on on both sides. The people in paramilitary organizations etc., they could very easily switch. They could be a mass base for fascism, or a popular base for very constructive developments. It’s like Germany in the 1930s – it could have gone either way.

50Question: The business world, if not the poorer classes, knows it’s all class war. Do you think that any non-violent resolution of this class war is possible? Secondly, you have been a persistent critic of both the capitalist world and socialist countries. Would you like to elaborate on the alternative system you propose and how to achieve it?

51Chomsky: No sane person wants violent change. Of course, pathological people may want violence, but not people in their right minds. You do want to see more freedom, justice and democracy, but not violence. So when does it get violent? Well, it becomes violent if people who have power refuse to respond to calls for justice and freedom, and use violence to protect their power. So the question becomes whether it is possible to expand the realm of freedom and justice without running into state terror and other forms of repressive violence. That is not in the hands of people who are trying to expand the realm of freedom and justice. Naturally, they will try to do it non-violently and hope that they can. Many times, it has been done. If you look at the history of Scandinavian social democracy, they got that way quite fast, from pretty reactionary systems, and it has been done non-violently. Sometimes it’s done with violence, and sometimes without. Generally, resorting to violence has very negative consequences for everybody. So if it does happen, it’s a regressive step. It depends on the response you get from people with power. If people with illegitimate power use violence to protect their power, yes, there will be violent conflict.

52Regarding the second question, about what alternative society will look like, I think you can sketch it out at various levels of detail, but it’s not a particularly wise move. We do not understand enough about complicated systems. Incidentally, that begins around the level of big molecules – from that level on, understanding tails off very fast. So there is no point trying to design complicated systems, like alternative societies, in any detail. You can talk about principles they should try to realize. And you can debate the principles they ought to follow, and think of ways of implementing them in particular places. I think there are reasonable principles, which have been discussed for centuries. For example, workers’ control over industry – that’s perfectly reasonable. There is no reason why industrial enterprises should not be under the control of working people and the communities in which they live.

53How would you work that out? We can give all sorts of details. First, we can find examples which partially realize workers’ control, and think of ways to modify them. And then, to an extent, market principles should be allowed to operate. I have friends who are very confident about it and have very strong beliefs. But I don’t see how they know, how anybody can be smart enough to know, whether we can completely eliminate market principles or just allow them free reign. You can see the consequences of some of those extreme choices, they are pretty bad. But there’s a big range where you have to experiment. Should you use market principles for shadow pricing – not affecting what gets to people but determining where demand is? Maybe. I don’t see that there is a principled argument about that. You have to explore and see what happens when you try. You are talking about extremely complex and poorly understood mechanisms, namely human society. And here, I think, it makes sense to be conservative – to try changes and see what happens. If they work, fine. But hitting a system you don’t understand with a monkey wrench and saying it will get better usually doesn’t work well.

54So we can talk quite reasonably about principles and explore ways to implement them. In concrete situations, where we have a specific problem to deal with, we can work out detailed tactics – but they might be quite different in the next situation, and I think these are just learning experiences. You try and hope to do better the next time.

55Question: How do you place the war with Iraq or, more generally, against Muslim fundamentalism? Do you see it as a popular struggle? Do you see it as a democratic movement or something of that kind?

56Chomsky: Well, some sort of “clash of civilizations” is supposed to be going on between the civilized West and uncivilized Muslim world – that’s the new enemy. However, let’s be a little careful. First of all, the US has absolutely nothing against religious fundamentalism. It’s probably the most religious fundamentalist society in the world. I’m not exaggerating. If you look at fanatical religious belief, it’s hard to find any country that has more of it than the US. Literally half of the population in the US (an educated country where people go to school) believes that the human species was created a couple of thousand years ago. I don’t know what the figure is in Iran, but it’s unlikely to be higher. People in the US have born-again experiences, religious cults, and so on – it’s beyond belief. So the US has absolutely nothing against fundamentalism. Does it have anything against Islamic fundamentalism? Again, certainly not. The most extreme Islamic fundamentalist state in the world, and another monstrosity, happens to be a great US ally – namely Saudi Arabia. Does the US have anything against Saudi Arabia? No, as long as they do their job, and their job is to make sure that the wealth of oil production goes to the West instead of the population of the region. As long as they do that job, they can be as fundamentalist as they like. Nobody cares.

57So what the US is against is independence. If an Islamic fundamentalist state or movement happens to be independent, yes sure, they’re against it. But they’re just as much against the Catholic Church. The war in Central America in the last decade (in the 1980s) was primarily a war against the Church, the Catholic Church. If you think about it, it’s kind of symbolic (but more than symbolic) that the decade of the eighties in Central America began with the murder of an Archbishop and ended with the murder of six leading Jesuit intellectuals – in both cases by elite forces trained and armed by the US. This went on right through the period, and a very substantial part of that war was in fact a war against the Church. Why? Well, the Church had shifted from its historical vocation of serving the rich, and a very impressive section of it sided with the poor. As an old atheist, this is odd for me to say, but I ended up staying in the Jesuit House in Nicaragua when I visited (at the invitation of the Jesuit university, incidentally). These were really marvelous and courageous people who undertook what they called “the preferential option for the poor,” meaning the Church would work for the poor and not the rich. That called forth a war of terror and slaughter, not because there is a clash of civilizations between the US and the Catholic Church, but because they were just working for the wrong people. That’s the background for the story of Islamic fundamentalism. The real issue is that efforts to extricate oneself from a global system of domination are unacceptable, whether they are Islamic or Christian or right-wing or left-wing or parliamentary.

58So, what was going on in the Iraq war? First of all, Iraq was a secular state. Saddam Hussein was considered a great guy by the US. He was a major friend and ally. If he wanted to gas Kurds, and purge dissidents, and so on, that was his own problem, but it was certainly not going to stop the US. The US intervened directly in the Iran-Iraq war in order to make sure that Iraq won, as it did. In fact, that intervention turned really extreme towards the end of the war. If you recall, the US naval forces in the Persian Gulf intervened openly on the side of Iraq, and even carried out one of the major acts of terrorism. The U.S.S. Vincennes shot down an Iranian airliner in commercial Iranian airspace. Incidentally, this is no secret. There have already been two major articles in the US Naval Institute Proceedings, the official journal of the Navy Department, going through that incident in close detail and giving enough evidence to indicate that it was an act of state terrorism: they shot down the plane purposely and seem to have known what they were doing. That’s the point at which Iran finally backed off. They realized that the United States is not going to stop. After that, Saddam Hussein remained a leading trading partner and ally, getting big credits from the US to purchase more agricultural goods, and so on, and everything was just fine until 2 August, 1990, when he made a mistake that a lot of dictators make. One of the dangers of being so dictatorial is that, because you are totally isolated from any interaction, you develop a completely distorted view of the world. So Saddam Hussein thought that he was free to go on and do anything he felt like. He completely misinterpreted some instructions that came from the State Department. I don’t believe, as many people do, that the US instigated the war. I think that if you look back at those April Glaspie exchanges, and so on, what happened is that the US was telling Saddam Hussein, look, if you want to rectify the border with Kuwait and do something to raise oil prices, we’re not going to make a fuss. And this was perfectly true, because the US did not care about any of those things. Saddam Hussein misinterpreted that to mean “take Kuwait.” Well, that’s not permitted.

59It is not permitted, because of something that the intellectuals of the world have been very careful to conceal. If you look at the literature on the Iraq war, it’s enormous, but one thing is missing from it – even in the scholarly studies – and that is a look at the declassified records. We have a rich declassified record of British and American planning documents that bear quite directly on this, and they’re the first thing that any sane person would look at. These records are very interesting, they’re about thirty years old, but they go through the relevant period, namely the late fifties, when Iraq broke out of the Anglo-American system of domination of oil, causing a huge uproar in Washington and London. The British Foreign Secretary flew to Washington: they had big consultations. We have records of those, and the records lay out the background for the Iran-Iraq war. It took considerable discipline for scholarship and journalism not to look at any of this stuff. When you look at it, what you find out is that they took crucial decisions. One decision was to grant nominal independence to Kuwait. Kuwait had been a total colony, but they were worried that this nationalism from Iraq might spread to Kuwait, and the way to contain it was to grant them nominal independence. Kuwait would remain under British rule, but with various trappings of independence which would dampen the nationalist fervor.

60They made various other plans, and one of them was that Britain reserved the right “ruthlessly to intervene” (that was the phrase they used) if anything happened to upset the order in Kuwait. Why Britain? Well, in the postwar international settlement the US took over the Middle East for itself, but Britain was considered our “lieutenant,” as a high Kennedy advisor put it, adding that “the fashionable word is ‘partner.’” The British prefer to hear the fashionable word, so they have various illusions about a “special relationship,” but in fact it was our lieutenant. With all its history of knowing how to smash Third World people in the face, Britain would be a useful lieutenant. So Britain was allowed to take control of some of the smaller things like Kuwait. Kuwait has a lot of wealth, but it’s not like Saudi Arabia. US took over the big stuff, so Saudi Arabia – that’s ours. But Britain gets the small things like Kuwait, and that was quite important. If you look at the planning records, you see that both Britain and the US recognized that profits from Kuwait were critical to maintain sterling, and the British economy, and so on, just as the profits from Saudi Arabia and Gulf oil are critical for maintaining the US economy. It’s not the oil that they care about so much, but the profits from it, and if anything happens to disrupt this arrangement Britain would ruthlessly intervene in Kuwait. The US reserved the right to intervene ruthlessly in the region if anything more happened. That’s the basis for what went on. Something happened that was going to disrupt the arrangement, so they ruthlessly intervened, as they said they were going to do, and for exactly those reasons. That had nothing to do with any threat to the control of oil, nobody was going to change that, but it definitely had to do with a threat to the profits from oil.

61There’s something pretty striking about the history of oil. In fact, some economic historians have suggested it’s the reason why the oil companies were never much interested in India. Oil development happens mostly in countries where you don’t have to worry about the domestic population, so that they’re not going to get the wealth from it. If you look at the prospects in India, the wealth may go to the people in India, which is just not worth it. On the other hand, the Persian Gulf region is fine in that respect. Profits have to go to the West, that’s the arrangement. The West means the US and its lieutenant, primarily, and the big oil companies that are mostly American, though some are British, Dutch, and so on. That’s the background.

62Now as soon as he invaded Kuwait, Saddam Hussein realized that he had made a bad mistake. One of the things we know about this by now is that, within a couple of days, Iraq started offering to withdraw. But the US and England did not want Iraq to withdraw. In fact, what they called the “nightmare scenario” was that Iraq would withdraw and leave behind a kind of puppet regime, which would mean that the arrangements for control over the system would have changed. Notice that if Iraq had withdrawn and left behind a puppet regime, it would have done exactly what the US had just done in Panama a couple of months earlier – invaded, stuck in a puppet regime and withdrawn. But of course, that’s the prerogative of power. It’s fine if the US does it, but certainly not Iraq or anybody who disrupts an area that’s so crucial to the health of the international economy, which means the wealth of the powerful in the West. That’s like readjusting the arrangements for distribution of oil profits. Therefore, things were set up from that point on to make sure that there would be a war, that Iraq would not withdraw. Withdrawal offers were blocked, negotiations were blocked, the international press (including the European press) had to completely conceal this, and it did. There were a few leaks in the US, virtually none in Europe. Discipline was perfect, to my knowledge, except a couple of articles – I wrote one in the Guardian, and there were a couple of others, but virtually nothing on the Iraqi withdrawal offers and the refusal to accept them.

63Finally, they got the war they wanted, and that established, as George Bush put it pretty frankly, that “what we say goes” and people ought to understand that. You don’t step on the toes of real power. If you do, you get smashed. And that’s going to continue. The reason why the sanctions are so severe is that you have to make an example. That’s something any mafia don would understand perfectly well. Suppose that somebody from the mafia runs a particular neighborhood and gets protection money from the local storekeepers. Then some store-keeper refuses to pay protection money. First of all, you send in the goons to take the money. But you don’t stop there; you have to make an example of it. So you beat him up or kill him, or kill his family, or something like that, so that others get the idea that this is not the way to behave. The same lesson applies in the international arena. That’s the reason for the almost hysterical hatred of Cuba, Nicaragua, Vietnam – anybody who stands up and does anything wrong really has to be punished.

64So that’s the Iraq war. Not that Saddam Hussein is a nice guy. He is a murderous killer, but that’s not the reason for the war. His crimes were mostly committed during the period when he was a great friend and ally. It’s not the crimes that matter, and it was the same with Stalin, Hitler, and everyone else. If you look back at the records, Truman and Churchill had no objection to Stalin’s crimes. In fact, they admired him. In internal discussions, they were defending him; they talked about him as a man of honor, and that sort of thing. The question is, will he subordinate his domain to western interests? If he does, he can rule any way he likes. If not, he is an enemy.

Notes de fin

1 Lecture delivered at the Delhi School of Economics on 13 January 1996.


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