Is the World Too Big to Fail?

27/04/2011

“Contours Of Global Order: Domination, Instability And Xenophobia In A Changing World” by Noam Chomsky, Institute Professor emeritus in the MIT Department of Linguistics and Philosophy, for TomDispatch, 21 April 2011 (adapted from a lecture given at Westerkerk, Amsterdam, The Netherlands, 13 March 2011):

[…] The democracy uprising in the Arab world has been a spectacular display of courage, dedication, and commitment by popular forces—coinciding, fortuitously, with a remarkable uprising of tens of thousands in support of working people and democracy in Madison, Wisconsin, and other U.S. cities. If the trajectories of revolt in Cairo and Madison intersected, however, they were headed in opposite directions: in Cairo toward gaining elementary rights denied by the dictatorship, in Madison towards defending rights that had been won in long and hard struggles and are now under severe attack.

Each is a microcosm of tendencies in global society, following varied courses. There are sure to be far-reaching consequences of what is taking place both in the decaying industrial heartland of the richest and most powerful country in human history, and in what President Dwight Eisenhower called “the most strategically important area in the world”—“a stupendous source of strategic power” and “probably the richest economic prize in the world in the field of foreign investment,” in the words of the State Department in the 1940s, a prize that the U.S. intended to keep for itself and its allies in the unfolding New World Order of that day.

Despite all the changes since, there is every reason to suppose that today’s policy-makers basically adhere to the judgment of President Franklin Delano Roosevelt’s influential advisor A.A. Berle that control of the incomparable energy reserves of the Middle East would yield “substantial control of the world.” And correspondingly, that loss of control would threaten the project of global dominance that was clearly articulated during World War II, and that has been sustained in the face of major changes in world order since that day.

From the outset of the war in 1939, Washington anticipated that it would end with the U.S. in a position of overwhelming power. High-level State Department officials and foreign policy specialists met through the wartime years to lay out plans for the postwar world. They delineated a “Grand Area” that the U.S. was to dominate, including the Western hemisphere, the Far East, and the former British empire, with its Middle East energy resources. As Russia began to grind down Nazi armies after Stalingrad, Grand Area goals extended to as much of Eurasia as possible, at least its economic core in Western Europe. Within the Grand Area, the U.S. would maintain “unquestioned power,” with “military and economic supremacy,” while ensuring the “limitation of any exercise of sovereignty” by states that might interfere with its global designs. The careful wartime plans were soon implemented.

It was always recognized that Europe might choose to follow an independent course. NATO was partially intended to counter this threat. As soon as the official pretext for NATO dissolved in 1989, NATO was expanded to the East in violation of verbal pledges to Soviet leader Mikhail Gorbachev. It has since become a U.S.-run intervention force, with far-ranging scope, spelled out by NATO Secretary-General Jaap de Hoop Scheffer, who informed a NATO conference that “NATO troops have to guard pipelines that transport oil and gas that is directed for the West,” and more generally to protect sea routes used by tankers and other “crucial infrastructure” of the energy system.

Grand Area doctrines clearly license military intervention at will. That conclusion was articulated clearly by the Clinton administration, which declared that the U.S. has the right to use military force to ensure “uninhibited access to key markets, energy supplies, and strategic resources,” and must maintain huge military forces “forward deployed” in Europe and Asia “in order to shape people’s opinions about us” and “to shape events that will affect our livelihood and our security.”

The same principles governed the invasion of Iraq. As the U.S. failure to impose its will in Iraq was becoming unmistakable, the actual goals of the invasion could no longer be concealed behind pretty rhetoric. In November 2007, the White House issued a Declaration of Principles demanding that U.S. forces must remain indefinitely in Iraq and committing Iraq to privilege American investors. Two months later, President Bush informed Congress that he would reject legislation that might limit the permanent stationing of U.S. Armed Forces in Iraq or “United States control of the oil resources of Iraq”—demands that the U.S. had to abandon shortly after in the face of Iraqi resistance.

In Tunisia and Egypt, the recent popular uprisings have won impressive victories, but as the Carnegie Endowment reported, while names have changed, the regimes remain: “A change in ruling elites and system of governance is still a distant goal.” The report discusses internal barriers to democracy, but ignores the external ones, which as always are significant.

The U.S. and its Western allies are sure to do whatever they can to prevent authentic democracy in the Arab world. To understand why, it is only necessary to look at the studies of Arab opinion conducted by U.S. polling agencies. Though barely reported, they are certainly known to planners. They reveal that by overwhelming majorities, Arabs regard the U.S. and Israel as the major threats they face: the U.S. is so regarded by 90% of Egyptians, in the region generally by over 75%. Some Arabs regard Iran as a threat: 10%. Opposition to U.S. policy is so strong that a majority believes that security would be improved if Iran had nuclear weapons—in Egypt, 80%. Other figures are similar. If public opinion were to influence policy, the U.S. not only would not control the region, but would be expelled from it, along with its allies, undermining fundamental principles of global dominance.

Support for democracy is the province of ideologists and propagandists. In the real world, elite dislike of democracy is the norm. The evidence is overwhelming that democracy is supported insofar as it contributes to social and economic objectives, a conclusion reluctantly conceded by the more serious scholarship. […]

While Grand Area doctrine still prevails, the capacity to implement it has declined. The peak of U.S. power was after World War II, when it had literally half the world’s wealth. But that naturally declined, as other industrial economies recovered from the devastation of the war and decolonization took its agonizing course. By the early 1970s, the U.S. share of global wealth had declined to about 25%, and the industrial world had become tripolar: North America, Europe, and East Asia (then Japan-based).

There was also a sharp change in the U.S. economy in the 1970s, towards financialization and export of production. A variety of factors converged to create a vicious cycle of radical concentration of wealth, primarily in the top fraction of 1% of the population—mostly CEOs, hedge-fund managers, and the like. That leads to the concentration of political power, hence state policies to increase economic concentration: fiscal policies, rules of corporate governance, deregulation, and much more. Meanwhile the costs of electoral campaigns skyrocketed, driving the parties into the pockets of concentrated capital, increasingly financial: the Republicans reflexively, the Democrats—by now what used to be moderate Republicans—not far behind.

Elections have become a charade, run by the public relations industry. After his 2008 victory, Obama won an award from the industry for the best marketing campaign of the year. Executives were euphoric. In the business press they explained that they had been marketing candidates like other commodities since Ronald Reagan, but 2008 was their greatest achievement and would change the style in corporate boardrooms. The 2012 election is expected to cost $2 billion, mostly in corporate funding. Small wonder that Obama is selecting business leaders for top positions. The public is angry and frustrated, but as long as the Muasher principle prevails, that doesn’t matter.

While wealth and power have narrowly concentrated, for most of the population real incomes have stagnated and people have been getting by with increased work hours, debt, and asset inflation, regularly destroyed by the financial crises that began as the regulatory apparatus was dismantled starting in the 1980s.

None of this is problematic for the very wealthy, who benefit from a government insurance policy called “too big to fail.” The banks and investment firms can make risky transactions, with rich rewards, and when the system inevitably crashes, they can run to the nanny state for a taxpayer bailout, clutching their copies of Friedrich Hayek and Milton Friedman.

That has been the regular process since the Reagan years, each crisis more extreme than the last—for the public population, that is. Right now, real unemployment is at Depression levels for much of the population, while Goldman Sachs, one of the main architects of the current crisis, is richer than ever. It has just quietly announced $17.5 billion in compensation for last year, with CEO Lloyd Blankfein receiving a $12.6 million bonus while his base salary more than triples.

It wouldn’t do to focus attention on such facts as these. Accordingly, propaganda must seek to blame others, in the past few months, public sector workers, their fat salaries, exorbitant pensions, and so on: all fantasy, on the model of Reaganite imagery of black mothers being driven in their limousines to pick up welfare checks—and other models that need not be mentioned. We all must tighten our belts; almost all, that is.

Teachers are a particularly good target, as part of the deliberate effort to destroy the public education system from kindergarten through the universities by privatization—again, good for the wealthy, but a disaster for the population, as well as the long-term health of the economy, but that is one of the externalities that is put to the side insofar as market principles prevail.

Another fine target, always, is immigrants. That has been true throughout U.S. history, even more so at times of economic crisis, exacerbated now by a sense that our country is being taken away from us: the white population will soon become a minority. One can understand the anger of aggrieved individuals, but the cruelty of the policy is shocking.

Who are the immigrants targeted? In Eastern Massachusetts, where I live, many are Mayans fleeing genocide in the Guatemalan highlands carried out by Reagan’s favorite killers. Others are Mexican victims of Clinton’s NAFTA, one of those rare government agreements that managed to harm working people in all three of the participating countries. As NAFTA was rammed through Congress over popular objection in 1994, Clinton also initiated the militarization of the U.S.-Mexican border, previously fairly open. It was understood that Mexican campesinos cannot compete with highly subsidized U.S. agribusiness, and that Mexican businesses would not survive competition with U.S. multinationals, which must be granted “national treatment” under the mislabeled free trade agreements, a privilege granted only to corporate persons, not those of flesh and blood. Not surprisingly, these measures led to a flood of desperate refugees, and to rising anti-immigrant hysteria by the victims of state-corporate policies at home.

Much the same appears to be happening in Europe, where racism is probably more rampant than in the U.S. One can only watch with wonder as Italy complains about the flow of refugees from Libya, the scene of the first post-World War I genocide, in the now-liberated East, at the hands of Italy’s Fascist government. Or when France, still today the main protector of the brutal dictatorships in its former colonies, manages to overlook its hideous atrocities in Africa, while French President Nicolas Sarkozy warns grimly of the “flood of immigrants” and Marine Le Pen objects that he is doing nothing to prevent it. I need not mention Belgium, which may win the prize for what Adam Smith called “the savage injustice of the Europeans.”

The rise of neo-fascist parties in much of Europe would be a frightening phenomenon even if we were not to recall what happened on the continent in the recent past. Just imagine the reaction if Jews were being expelled from France to misery and oppression, and then witness the non-reaction when that is happening to Roma, also victims of the Holocaust and Europe’s most brutalized population.

In Hungary, the neo-fascist party Jobbik gained 17% of the vote in national elections, perhaps unsurprising when three-quarters of the population feels that they are worse off than under Communist rule. We might be relieved that in Austria the ultra-right Jörg Haider won only 10% of the vote in 2008—were it not for the fact that the new Freedom Party, outflanking him from the far right, won more than 17%. It is chilling to recall that, in 1928, the Nazis won less than 3% of the vote in Germany.

In England the British National Party and the English Defence League, on the ultra-racist right, are major forces. (What is happening in Holland you know all too well.) In Germany, Thilo Sarrazin’s lament that immigrants are destroying the country was a runaway best-seller, while Chancellor Angela Merkel, though condemning the book, declared that multiculturalism had “utterly failed”: the Turks imported to do the dirty work in Germany are failing to become blond and blue-eyed, true Aryans.

Those with a sense of irony may recall that Benjamin Franklin, one of the leading figures of the Enlightenment, warned that the newly liberated colonies should be wary of allowing Germans to immigrate, because they were too swarthy; Swedes as well. Into the twentieth century, ludicrous myths of Anglo-Saxon purity were common in the U.S., including among presidents and other leading figures. Racism in the literary culture has been a rank obscenity; far worse in practice, needless to say. It is much easier to eradicate polio than this horrifying plague, which regularly becomes more virulent in times of economic distress.

I do not want to end without mentioning another externality that is dismissed in market systems: the fate of the species. Systemic risk in the financial system can be remedied by the taxpayer, but no one will come to the rescue if the environment is destroyed. That it must be destroyed is close to an institutional imperative. Business leaders who are conducting propaganda campaigns to convince the population that anthropogenic global warming is a liberal hoax understand full well how grave is the threat, but they must maximize short-term profit and market share. If they don’t, someone else will.

This vicious cycle could well turn out to be lethal. To see how grave the danger is, simply have a look at the new Congress in the U.S., propelled into power by business funding and propaganda. Almost all are climate deniers. They have already begun to cut funding for measures that might mitigate environmental catastrophe. Worse, some are true believers; for example, the new head of a subcommittee on the environment who explained that global warming cannot be a problem because God promised Noah that there will not be another flood.

If such things were happening in some small and remote country, we might laugh. Not when they are happening in the richest and most powerful country in the world. And before we laugh, we might also bear in mind that the current economic crisis is traceable in no small measure to the fanatic faith in such dogmas as the efficient market hypothesis, and in general to what Nobel laureate Joseph Stiglitz, 15 years ago, called the “religion” that markets know best—which prevented the central bank and the economics profession from taking notice of an $8 trillion housing bubble that had no basis at all in economic fundamentals, and that devastated the economy when it burst.

All of this, and much more, can proceed as long as […] the general population is passive, apathetic, diverted to consumerism or hatred of the vulnerable, then the powerful can do as they please, and those who survive will be left to contemplate the outcome.

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