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Speech by Noam Chomsky, “The Corporate War on Working People”

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The phrase “Class Warfare” has been coming up a lot in recent months. It seems that the charge is leveled against any public official who speaks honestly about the economic realities facing millions of Americans. Usually it’s Democrats, or people on the left, who are accused of waging class warfare when they push for an increase in the minimum wage, fight for labor rights, or commit the ultimate heresy of acknowledging there’s something fundamentally wrong with the growing gap between rich and poor in the U.S. Class Warfare is going on in America, says Noam Chomsky, but its the corporations who are waging that war and their targets are working people, struggling to get by in a time when corporate profits are skyrocketing, government is turning its back and the American dream is slipping away.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: House Speaker Newt Gingrich, reacting sharply to recent intraparty snipings, says in an interview that Republican malcontents should redirect their fire at President Clinton. Naming names, he specifically responded to recent remarks by former Education Secretary Bill Bennett, New York Senator Alfonse D’Amato and various group and various Republican state chairs, some of them critical, at least by implication, of Gingrich’s leadership tactics and image, and others worried about what they perceive as the lackluster campaign style of Senator Bob Dole. Gingrich said, “My point to party members is simple: You have an opponent. It’s called Bill Clinton. You have an opposition group. It’s the trial lawyers and labor leaders.”

And last night, Democrats celebrated President Clinton’s lead in the polls at a gala dinner that helped raise a record $12.3 million for their party. Those seated at the head table with the Clintons and the Gores included the presidents of the Communication Workers of America and other unions, as well as business leaders. Those named benefactors or patrons of the main event included the American Health Care Association, the American Petroleum Institute, Raytheon and Microsoft Corporation.

The phrase “class warfare” has been coming up a lot in recent months. It seems that the charge is leveled against any public official who speaks honestly about the economic realities facing millions of Americans. Noam Chomsky says it’s the corporations who are waging that war, and their targets are working people, in this country and around the world. Chomsky is a professor of linguistics at the Massachusetts Institute of Technology. He is considered a leading intellectual of our time. Here’s an excerpt of a recent speech he gave at Harvard University at a day-long conference organized by Jobs with Justice. His speech is called “The Corporate War on Working People.”

NOAM CHOMSKY: Well, there are four sort of obvious topics to discuss, and I’ll try to say something about each of them. One is the question: What kinds of social policy are being designed and applied to the American population right around now? Two, what are the likely consequences of these policies? Three, why is it now, not, let’s say, 30 years ago? And, four, what can we do about it?

Well, the first one, what kinds of policies are being designed, they have a name, although it’s not usually applied here. They’re a variant of what is sometimes called the Washington Consensus or structural adjustment or neoliberalism or various other similar names. These are the policies that are rammed down the throats of most of the Third World. That includes now the restored Third World in Eastern Europe. And the policies of the Washington Consensus are, first, to reduce the size of government — it’s called fiscal conservatism or something like that — have small balanced budgets, cut public expenditures, social spending, health, education. The general principle is cut any use of public funds to benefit the public. I mean, that’s the essential principle number one. You could give it various fancy names, but it’s what it comes down to.

The second feature of the Washington Consensus is to make the tax system more regressive. It’s already very regressive. So, for example, in the United States — it’s been flat for years, but the idea is to make it more regressive. So, for example, as applied to the United States — I’m saying in the Third World. As applied to the United States, the next big thing on line is to reduce taxes on financial gains. That’s about half the income for the top 1% of the population, and obviously declining very fast as you move down the wealth level.

Third part of the Washington Consensus is deregulation.

Fourth part is privatization.

Fifth part is stronger government guarantees — the Washington Consensus involves both strengthening and weakening government — stronger government guarantees for property rights.

The sixth part is reduction of trade barriers. Well, I’ll come back to what those mean.

But the general consequences are reasonably clear. If you take a look at the Third World, you see the general consequences. One consequence is that the designers of the experiment — namely, the designers of the Washington Consensus — the IMF, the World Bank, the major transnational corporations that lie behind them, and so on — the designers of the experiment come out doing very, very well. They gain very greatly from the experiment. Actually, that’s about as near to a universal principle as history provides. These experiments go back hundreds of years, and I have yet to find one where the designers didn’t come out very, very well off. That’s kind of like an accident which you’re not supposed to notice.

What about the experimental animals, who are very rarely asked for permission? Well, they tend to do very badly. In the Third World, you have to be — it’s a little nuanced. There’s a small sector — namely, those who cooperate with the experiment — they do very well, too. So, a typical Third World country has a small sector of the population which lives in extraordinary wealth and opulence, and they’re kind of connected with the ongoing experiments. And they’re the ones who write the articles and the books and so on, so they think it’s all great, and they advocate it and so on.

For the rest of the population, outside of that small sector — this runs across any Third World society you look at — they live somewhere between suffering and misery. You know, depends on the society. Most of them, it’s closer to misery. And as the experiments proceed, it gets closer and closer to that. Then there’s another part of the population which is simply superfluous. I mean, they don’t contribute anything to wealth creation, and you’ve got to do something with them. Like, if it’s, say, Colombia, which gets half of U.S. military aid for the hemisphere and has the worst human rights record in the hemisphere, then what you do with them is send out the military forces or the paramilitary forces to murder them. Now they’re called disposable people. In other places, you do it in various other different ways, but somehow you just get rid of them. So, that’s a typical Third World society: small sector of great wealth, a large mass of the population facing one or another problem, from down to misery and then disposable people. That’s fairly uniform. And that’s been a uniform consequence of these experiments, which, in general, have been going on for hundreds of years. So, the general principle is, designers do great; the ones who cooperate with them do great; the experimental animals, only by accident do they gain anything, mostly they suffer quite a bit.

One standard consequence of contemporary structural adjustment programs — in fact, universal — is that the share of labor in national income declines. That’s a regular property of them. Well, this, again, is something you’re not supposed to notice. You know, it just sort of happens.

Incidentally, another thing that happens is, after the experiments are over, you know, like some years down the road, there is a kind of an analysis, and they’re called a failure. For some strange reason, they failed — although, oddly, they always succeeded in something that might be thought of as success, namely enriching the designers and the people who collaborated with them. They’re called a failure for everyone else on a tacit assumption, which is that everything the rich and powerful people do is only designed for the benefit of everyone. How could it be otherwise? Because we’re so perfect. So, therefore, since it seemed to harm everyone, it must have been a failure, and just by accident it benefited us and our collaborators.

Well, actually, I know a lot of you are students, so if there happens to be somebody who’s looking for a really good dissertation topic, one where you know the answer in advance — that’s the best kind — all you have to do is fill in the details, and one that has another predictable outcome: You’ll never get a job. If you want a topic like that, then what you might do is do a study of the experiments that have been carried out, say, starting with the British Permanent Settlement in India in 1793 and going up to, say, USAID’s project of turning Haiti into the Taiwan of the Caribbean in the 1980s, or the shock therapy in, say, Bolivia or Eastern Europe. Just run through the whole series and find out and just check off how many times this consequence fails — the consequence, great for the designers, great for the collaborators, disaster for the experimental animals, a wrap-up later which says, “Gee, we don’t understand it, but it seems to have failed.” That’s the job of the academics and intellectuals and so on. Interesting topic, I’d leave it to you.

Well, point is that these policies are by no means new. I mean, it’s now called the Washington Consensus, but one or another variety of it’s been going on for hundreds of years. If you go back to the 18th century, what is today the First World and the Third World were much more similar than they are now — far more. You can argue about the reasons for the split, but I don’t think there’s very much doubt that one of the reasons for the split, and probably a rather significant element in it, was that neoliberal programs of one or another variety were forced on what is now the Third World, while the First World adhered to strong protectionism, a, you know, powerful state, to protect the wealthy, for the most part, but often much of the population, from market discipline and so on. That split is certainly a factor — you could argue how much; I would think a major factor — in leading to this very sharp difference.

Classic example is Britain in India, first big case. India was the manufacturing center of the world, from, say, 1600 to 1800. It was deindustrialized by force. The British forced on it what are now called neoliberal policies, and turned it into a backward, ruralized, impoverished country. And that’s been replicated elsewhere. So, for example, in Europe, Germany developed exactly the same way — high protectionism, state intervention and so on. Same is true of France and Italy. If you look outside of Europe — and the rest — pretty much the rest of Europe.

If you go outside of Europe, there are two areas of the world that have developed, namely the two that resisted European colonization. One is the United States, after the colonies freed themselves from Europe, British colonization. They were able to follow the British model, in fact even more intensively. The United States was the model of the interventionist, protectionist developmental state, tariffs way higher than anybody else, you know, powerful state intervention to keep cotton cheap by massacring the Indigenous population and bringing in slaves. That’s incidentally not usually included in economic history for some reason, though it’s plainly a kind of a market interference of a rather serious sort. And so it goes, from textiles to steel and on to computers and electronics and aviation and the rest of it. That’s the United States.

The other area that developed was Japan, which also resisted European colonization and then followed pretty much the same direction that Europe and the United States did, with some of its colonies in tote. That’s a pretty general principle: The parts of the world that were able to develop were those that were able to protect themselves from the neoliberal model that’s imposed on everyone else. Simply, just if you look at the details, it’s even more — becomes even more clear. OK, that’s pretty much the history, I think you’ll find. And coming back to what’s happening here, we’re getting — well, there is something new going on. What’s new that’s going on is now these policies are also being applied, in a certain sense, to the industrial societies themselves.

Well, for those who are interested in the real world, a look at the actual history suggests an adjustment, a modification of free market theory, to what we might call really existing free market theory — that is, the one that’s actually applied, not talked about. And the principle of really existing free market theory is free markets are fine for you, but not for me. That’s, again, near a universal. So, you, whoever you may be, you have to learn responsibility and be subjected to market discipline. It’s good for your character. It’s tough love, and so on and so forth. But me, I need the nanny state to protect me from market discipline so that I’ll be able to rant and rave about the marvels of the free market while I’m getting properly subsidized and defended by everyone else through the nanny state.

And also this has to be risk-free. So, I’m perfectly willing to make profits, but I don’t want to take risks. If anything goes wrong, you bail me out. OK, so, if Third World debt gets out of control, you socialize it. It’s not the problem of the banks that made the money. When the S&Ls collapse, same thing: Public bails them out. When American investment firms get into trouble because the Mexican bubble bursts, you bail out Goldman Sachs, and — the Mexico bailout. And on and on, I mean, there’s case after case of this. In fact, of the leading top 100 leading transnationals in the Fortune list of transnationals, there was a recent study of how they related to the states in which they’re — they’re all somewhere, you know, so they’re all mostly here in some national state. Turns out that all hundred of them had benefited from industrial policies, meaning state intervention in their behalf. All hundred had benefited from the state in which they’re based, and 20 of the 100 had been saved from total disaster — that is, collapse — by just state bailout. When people talk about globalization of the economy, remember that the nanny state has to be very powerful in order to bail out the rich. And nothing is changing in that regard. Twenty out of a hundred, again, were saved from collapse by this, including a number here.

Well, that’s really existing free market theory. There are many examples of it quite close to home, so we could start with our own governor, Governor Weld, who’s described by The Boston Globe as a libertarian with a religious belief in free markets. And then, a couple of days later, they reported that through various scams, his administration was able to sharply increase federal subsidies to Massachusetts so that — way beyond what they were before, so that he could parade as a fiscal conservative.

And that’s pretty common. Just a year before, you may recall if you have long memories, they had to close Georges Bank, the richest fishing area in the world, because it was being overfished, thanks to a combination of deregulation and subsidies to the fishing industry, which have that odd consequence that you tend to get overfishing. So, it looked as if the groundfish were wiped out, and they had to close it off. It didn’t take long for the religious libertarian fanatic William Weld to take the next jet plane down to Washington, hat in hand, asking for a federal bailout. He wanted the national federal government to declare it a natural disaster. And the reason was, as he explained with presumably some scientists in tow, that there was some strange kind of predatory fish, which no one had yet found, but they would find it, don’t worry. So, some kind of predatory fish had come and sort of wiped out all the cod and the haddock and all those things, so it was a natural disaster, and therefore the general public had to sort of pay off the results of deregulation and subsidizing the fishing industry. Well, that’s the way to be a libertarian with religious fervor.

Another one is the leader of the conservative revolution, Newt Gingrich. Nobody’s more passionate about the market than he is, particularly about his own district, which he calls a Norman Rockwell world of jet planes and fiber optics, as indeed it is, except if you ask where jet planes and fiber optics came from, you discover that the public paid for them and still pays for them. And, in fact, he manages to get more federal subsidies for his district than any suburban county in the country, outside the federal system, so you can have conservatism flowering among the malls and so on.

Or you can go back to the Reaganites, who are also very passionate about free markets for everyone else. Meanwhile, they boasted to the American business community, correctly, that they had done more — that they had instituted more protection than any postwar American administration — in fact, more than all of them combined. They had doubled import restrictions, blocking — and helped and poured public funds into major industries to enable them to recapitalize, to protect — in fact, reconstruct — the steel industry and the automotive industry and semiconductors and so on, which would have disappeared if they had opened the market. The Thatcherites in England were about the same. Government expenditures relative to GNP stayed pretty constant, although anything that went to the general population collapsed. Meanwhile, military industry shot up, arms sales are booming — that’s all publicly subsidized stuff — arms sales to nice guys like Saddam Hussein and General Suharto and others. Well, that’s really existing free market theory.

AMY GOODMAN: Noam Chomsky is professor of linguistics at the Massachusetts Institute of Technology. His speech, given at a daylong conference organized by Jobs with Justice, is called “The Corporate War on Working People.”

In the last segment of the show, we’ll be talking about a new bill in Congress that would prevent gay marriage. You’re listening to Democracy Now! I’m Amy Goodman.

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