The Return of Predatory Capitalism 1 страница

January 31 and February 3, 1995

DBYou just came back from a trip to Australia. Was it your first visit to the country?

It was indeed my first visit to Australia. I was there for eight or nine days, a pretty constant schedule of talks and interviews, the usual stuff. There was the usual range of topics with enormous and very interested audiences. There was a lot of radio and television. The main invitation was from the East Timor Relief Association. There is a substantial Timorese community there. I gave talks primarily on East Timor. That was one major focus. And of course on Australia’s policies towards East Timor and other things, also domestic economic policies.

The timing turned out to be very propitious. A major case opened at the World Court yesterday. I haven’t seen it reported here, but it’s being reported widely in the world press and of course extensively in Australia. The case involves Portugal and Australia. It has to do with the robbery of the oil of East Timor in a treaty signed between Australia and Indonesia. One primary reason (we know from leaked diplomatic cables and so on) for the Western support for the Indonesian invasion of East Timor, which was sort of near genocidal, was the fact that they thought they could make a better deal on robbing the oil resources with Indonesia than they could either with Portugal, which was the administering power, or an

independent East Timor. That was stated very explicitly in diplomatic cables during the period when the governments were pretending that they didn’t know that the invasion was imminent. But of course they did know. So that’s a big issue now. Both the World Court hearing and the very fact that this is taking place, which is kind of as if Libya had made a deal with Iraq to exploit Kuwait’s oil when they hadn’t been driven out. It’s roughly like that. So that was one big issue. And since it is just coming up to the World Court, that was timely.

The other thing was that, in fact as I landed at the airport, the first headline that greeted me in the national newspaper, The Australian, was that Australia agreed to sell advanced assault rifles to Indonesia, which of course are not to be used to defend Indonesia from China. They’re being used for internal repression and the military occupation of East Timor, where the fighting is still going on and the repression is very severe. The point is that Australia found a niche market, because the U.S. had backed away from that, finally, under lots of pressure here, Congressional and popular pressure. The U.S. finally got to the point of withholding some arms, at least small arms, from the killers. Australia instantly moved in. The cynicism of that is a little hard to miss. You have to remember people in Australia know, even if they don’t read about it in schoolbooks, but they remember, that about 60,000 Timorese were killed during the Second World War. The island of Timor was divided, half was a Portuguese colony and half was Dutch. The Portuguese part would have probably remained neutral through the war, like Macao, which was another Portuguese colony. Japan never violated its neutrality. Portugal was a fascist country. It was a semi-ally. So chances are Timor would have remained neutral. Anyhow, Australia invaded, and about ten days after Pearl Harbor the Japanese counter-invaded. There were a couple hundred Australian commandos there. They were able to survive, the ones that did, mostly because of

assistance from Timorese. Otherwise they would have been wiped out instantly. Then they finally were withdrawn, but of course the Timorese were left. The ones that the Japanese thought had supported them were totally slaughtered. That fighting on Timor—if you look at the geography you’ll see how it works. The Japanese might well have gone on to invade Australia. In fact they were going to. They never did. They bombed, but they never invaded. And probably the fighting on Timor stopped them. So 60,000 Timorese dead certainly saved a lot of lives of Australian commandos, and may have saved Australia from being invaded.

To repay that debt by being the only country in the world to officially recognize the occupation, to steal their oil, to arm the murderers, doesn’t go over very well in the population. And there’s also been tremendous cynicism in the government in justifying this. There’s a kind of backlog of resentment and concern, plus the fact that it’s right next door, so they get Timorese refugees. So it’s a big issue.

DBYou also gave a presentation on anarchy. Is there a lively anarchist movement in Australia?

I’m not in much of a position to say. The meeting was at the town hall in Sydney. There were a couple of thousand people there, and it was overflowing. They had had an all-day conference with plenty of people, so something’s lively. You know what these trips are like, you run from one talk to another. I can’t really comment on what the movements are like.

DBI had a glimpse of what you go through. In November l was in Seattle and Olympia. I gave three public talks, three interviews, and a workshop in a day and a half. At the end of that time, my brains were completely fried. I had no idea what I’d said to whom. l was wondering,

how do you keep not just your equilibrium and equanimity, but that separation of what you said?

As far as I know, I have only one talent. I’m not trying to be modest. I think I know what I’m good at and what I’m not good at. The one talent that I have which I know many other friends don’t seem to have is I’ve got some quirk in my brain which makes it work like separate buffers in a computer. If you play around with a computer you know you can put things in different places and they just stay there and you can go back to them whenever you feel like it and they’re there. I can somehow do that. I can write a very technical paper in snatches: a piece on an airplane, another piece three weeks later, six months later finally get back to it and pick up where I left off. Somehow I don’t have any problem switching very quickly from one thing to another. I have some other friends like this. I had one, a well-known logician in Israel, who was a very close friend. We would see each other every five or six years. We would always just pick up the conversation where we had left it off, without any break, without even noticing it, particularly. We didn’t even notice it until people seemed to find it strange.

DBDid your thoughts while you were in Australia ever turn to Alex Carey, the man you dedicated Manufacturing Consent to?

Very much so. In fact, I was there for a book launch. His book of posthumous essays, Taking the Risk Out of Democracy, was published by the University of New South Wales, where he taught. I wrote an introduction to it, in fact. One of the things I did was to go to the launch of the book and talk about it a bit and meet the family. I also met some old friends who I knew through and with Alex when he visited here years back, so there was a lot of personal stuff, too.

DBWhat’s memorable about his work? What was his contribution?

Alex Carey did the pioneering work in an extremely important field which in fact has yet to be investigated. That’s the field of corporate propaganda, which is a major phenomenon in the modern world and almost unstudied. His most important essay “Changing Public Opinion: The Corporate Offensive,” which has been circulating underground for years (I’ve duplicated and circulated endless copies myself) was never published in his lifetime. It’s in the new collection. It opens by pointing out—he says it better than this—that there have been three major phenomena in the twentieth century with regard to democracy. One is the extension of the franchise, which was broad. The second was the growth of corporations. The third was the growth of corporate propaganda to undermine democracy. And he’s exactly right. That’s why we have a public relations industry. It was established approximately at the time that corporations reached their current form early in the century. It was created in order, as they put it, to “control the public mind,” because they recognized that the public mind would be the greatest hazard facing industrialists, and they understood that democracy is a real threat to private tyranny, just as it’s a threat to state tyranny. Now, we are in a system of private tyranny, which was being established early in the century, and very consciously so. In fact it was consciously established as an attack on individual liberty. That’s a part of corporate law which is only known in scholarly circles.

Part of this was to ensure that democracy couldn’t function. And since you have some degree of state violence, but limited degrees, especially with the increase in the franchise and participation, it was understood right off that you have to control opinion. That led to the huge public relations industry and massive propaganda campaigns,

efforts to sell Americanism and harmony and to sell American capitalism. People are deluged with propaganda on this through the Advertising Council and radio and television and other media. It’s very conscious. Carey is the first person to have seriously studied it, and almost the last person. Now there’s a little literature on it coming along, primarily an excellent study called Selling Free Enterprise, by Elizabeth Fones-Wolf published by the University of Illinois Press, focusing on the post-World War II period. Fones-Wolf adds a great deal of new material on the extraordinary scale of the propaganda efforts “to indoctrinate people with the capitalist story,” and the dedicated self-consciousness with which “the everlasting battle for the minds of men” was pursued. It’s a topic of such incredible significance in the twentieth century that it ought to be a major focus. We are immersed in it all the time. It explains a lot. The U.S. is different from other countries in this respect. It has a much more class-conscious business community, for all kinds of historical reasons. It didn’t develop out of feudalism and aristocracy. So there weren’t the conflicting factors you had in other places—the highly class-conscious business community, very Marxist in character, vulgar Marxist, fighting a bitter class war, and very aware of it. You read internal publications and it’s like reading Maoist pamphlets half the time. They don’t spend billions of dollars a year on propaganda for the fun of it. They do it with a purpose. For a long time the purpose was to resist and contain human rights and democracy and the whole welfare state framework, the social contract, that developed over the years. They wanted to contain it and limit it. Now they feel, in the current period, that they can really roll it back. They’d go right back to satanic mills, murdering poor people, basically the social structure of the early nineteenth century. That’s the situation we’re in right now. These huge propaganda offensives are a major part of it.

The real importance of Carey’s work is that it’s the first effort and

until now the major effort to bring some of this to public attention. It’s had a tremendous influence on the work I’ve done. Ed Herman and I dedicated our book, Manufacturing Consent, to him. He had just died. It was not intended as just a symbolic gesture. He got both of us started in a lot of this work.

DBYou just mentioned “rollback.” It’s also the title of a series of essays in Z magazine that you just wrote. That was originally a Cold War term.

I picked it up from there. The standard line, if you read the Clinton Doctrine as announced by Anthony Lake, the intellectual in the administration, is that for years we’ve been involved in containment of a threat to market democracy. Now we’re going to enlarge it. So he’s picking Cold War imagery. And I think that Cold War imagery is appropriate, except that he’s got it backwards. For years we’ve been involved in containment of democracy, freedom, human rights, and even markets, and now we’re going to be able to roll them back. “Rollback” is another Cold War term, as you mentioned. The traditional Cold War policies were that we oscillate between containment and rollback. Containment is Kennan’s policy. You prevent the Soviet power from expanding. That’s containment.

Rollback has been, in fact, official U.S. policy since 1950. NSC-68, the core Cold War doctrine, is an advocacy of rollback. That’s when Kennan was thrown out and Nitze and others came in. Rollback meant we undermine and destroy Soviet power and we reach negotiations with “a successor state or states,” as the NSC put it. These traditional international Cold War notions are, I think, very appropriate, except that they’re misplaced. Containment is in fact correct, but it wasn’t containment of a Soviet threat. It was containment of the threat of

freedom, democracy, human rights, other threats to authority. And now they feel they can move on to roll back and unravel the entire social contract which developed through large-scale popular struggle over a century and a half, which did sort of soften the edges of predatory private tyranny, and often softened them a lot. In Germany, for example, workers have fairly reasonable conditions. So that has to be rolled back, and we have to go back to the days when we had wage slavery, as it was called by working people in the nineteenth century. No rights. The only rights you get are the rights you gain on the labor market. If your children can’t make enough money to survive, they starve. Your choices are the workhouse prison, the labor market, whatever you can get there. Or, if you go back to the early days of the 1820s, the line was, “Or go somewhere else.” Meaning, go to the places where white settlers are massacring the indigenous populations and opening them up, like the U.S. and Australia, for example.

Of course, now that option is gone. You don’t go somewhere else. So the choices are limited to the other two, as the founders of modern economics, like Ricardo and Malthus and others, pointed out: workhouse prison or starvation, or whatever you can gain on the labor market. You don’t have any rights on the labor market. It’s just a market. That in fact is the foundation of the intellectual tradition that is called classical economics now, neoliberalism, and so on.

The idea is to go right back to those choices, with one crucial difference. There’s a little secret that everybody knows but you’re not supposed to say, and that is that nobody who advocated this believed a word of it. They always wanted a very powerful state which intervenes massively, but it’s a welfare state for the rich. That’s the way the U.S. was founded. In fact, the U.S. pioneered that development. It’s been the most protectionist of all the industrial societies. It’s a well-known fact. Alexander Hamilton is the one who invented the concept of infant

industry protection and modern protectionism. The U.S. has always been a pioneer and a bastion of protectionism, which is why it’s a rich, powerful country. Another slight secret of economic history, again well known to scholars, is that the free market policies have been an utter disaster. Anyone who is subjected to them gets smashed, which is why the Third World looks the way it is. They were forced on the Third World. And every single developed society has radically violated those principles, the U.S. more than most. That’s closely correlated with growth. If you look historically, protectionism is actually correlated with trade, even. The more protectionism, the more trade, for a simple reason: protectionism enhances growth, and growth enhances trade. That was generally true over quite a long period. And protectionism is only one form of state intervention.

For poor people and working people, they have to be subjected to market discipline. That part is true. But the other side, which is less said, is that rich people are going to have a nanny state protecting and subsidizing them, and a powerful one.

DBOne of the heroes of the current right-wing revival—I’m not going to use the term “conservative”—is Adam Smith. You’ve done some pretty impressive research on Smith that has excavated, as the postmodernists would say, a lot of information that’s not coming out. You’ve often quoted him describing the “vile maxim of the masters of mankind: all for ourselves and nothing for other people.”

I didn’t do any research at all on Smith. I just read him. There’s no research. Just read it. He’s pre-capitalist, a figure of the Enlightenment. What we would call capitalism he despised. People read snippets of Adam Smith, the few phrases they teach in school. Everybody reads the first paragraph of The Wealth of Nations where he talks about how

wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn them into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits.

He did give an argument for markets, but the argument was that under conditions of perfect liberty, markets will lead to perfect equality. That’s the argument for them, because he thought equality of condition (not just opportunity) is what you should be aiming at. It goes on and on. He gave a devastating critique of what we would call North-South policies. He was talking about England and India. He bitterly condemned the British experiments they were carrying out which were devastating India.

He also made remarks which ought to be truisms about the way states work. He pointed out that it’s totally senseless to talk about a nation and what we would nowadays call “national interests.” He simply observed in passing, because it’s so obvious, that in England, which is what he’s discussing—and it was the most democratic society of the day—the principal architects of policy are the “merchants and manufacturers,” and they make certain that their own interests are, in his words, “most peculiarly attended to,” no matter what the effect on others, including the people of England, who, he argued, suffered from their policies. He didn’t have the data to prove it at the time, but he was probably right.

This truism was a century later called class analysis, but you don’t have to go to Marx to find it. It’s very explicit in Adam Smith. It’s so obvious that any ten-year-old can see it. So he didn’t make a big point of it. He just mentioned it. But that’s correct. If you read through his work, he’s intelligent. He’s a person who was from the Enlightenment. His

driving motives were the assumption that people are guided by sympathy and feelings of solidarity and the need for control of their own work, much like other Enlightenment and early Romantic thinkers. He’s part of that period, the Scottish Enlightenment.

The version of him that’s given today is just ridiculous. But I didn’t have to do any research to find this out. All you have to do is read. If you’re literate, you’ll find it out. I did do a little research in the way it’s treated, and that’s interesting. For example, the University of Chicago, the great bastion of free market economics, etc., etc., published a bicentennial edition of the hero, a scholarly edition with all the footnotes and the introduction by a Nobel Prize winner, George Stigler, a huge index, a real scholarly edition. That’s the one I used. It’s the best edition. The scholarly framework was very interesting, including Stigler’s introduction. It’s likely he never opened The Wealth of Nations. Just about everything he said about the book was completely false. I went through a bunch of examples in writing about it, in Year 501 and elsewhere.

But even more interesting in some ways was the index. Adam Smith is very well known for his advocacy of division of labor. Take a look at “division of labor” in the index and there are lots and lots of things listed. But there’s one missing, namely his denunciation of division of labor, the one I just cited. That’s somehow missing from the index. It goes on like this. I wouldn’t call this research, because it’s ten minutes’ work, but if you look at the scholarship, then it’s interesting.

I want to be clear about this. There is good Smith scholarship. If you look at the serious Smith scholarship, nothing I’m saying is any surprise to anyone. How could it be? You open the book and you read it and it’s staring you right in the face. On the other hand, if you look at the myth of Adam Smith, which is the only one we get, the discrepancy between that and the reality is enormous.

This is true of classical liberalism in general. The founders of classical liberalism, people like Adam Smith and Wilhelm von Humboldt, who is one of the great exponents of classical liberalism, and who inspired John Stuart Mill—they were what we would call libertarian socialists, at least that’s the way I read them. For example, Humboldt, like Smith, says, Consider a craftsman who builds some beautiful thing. Humboldt says if he does it under external coercion, like pay, for wages, we may admire what he does but we will despise what he is. On the other hand, if he does it out of his own free, creative expression of himself, under free will, not under external coercion of wage labor, then we also admire what he is because he’s a human being. He said any decent socioeconomic system will be based on the assumption that people have the freedom to inquire and create—since that’s the fundamental nature of humans—in free association with others, but certainly not under the kinds of external constraints that later came to be called capitalism.

It’s the same when you read Jefferson. He lived a half century later, so he saw state capitalism developing, and he despised it, of course. He said it’s going to lead to a form of absolutism worse than the one we defended ourselves against. In fact, if you run through this whole period you see a very clear, sharp critique of what we would later call capitalism and certainly of the twentieth-century version of it, which is designed in fact to destroy individual, even entrepreneurial capitalism.

There’s a side current here which is rarely looked at but which is also quite fascinating. That’s the working class literature of the nineteenth century. They didn’t read Adam Smith and Wilhelm von Humboldt, but they’re saying the same things. Read journals put out by the people called the “factory girls of Lowell,” young women in the factories, mechanics, and other working people who were running their own newspapers. It’s the same kind of critique. There was a real battle fought by working people in England and the U.S. to defend themselves

against what they called the degradation and oppression and violence of the industrial capitalist system, which was not only dehumanizing them but was even radically reducing their intellectual level. So you go back to the mid-nineteenth century and these so-called “factory girls,” young girls working in the Lowell mills, were reading serious contemporary literature. They recognized that the point of the system was to turn them into tools who would be manipulated, degraded, kicked around, and so on. And they fought against it bitterly for a long period. That’s the history of the rise of capitalism.

The other part of the story is the development of corporations, which is an interesting story in itself. Adam Smith didn’t say much about them, but he did criticize the early stages of them. Jefferson lived long enough to see the beginnings, and he was very strongly opposed to them. But the development of corporations really took place in the early twentieth century and very late in the nineteenth century. Originally corporations existed as a public service. People would get together to build a bridge and they would be incorporated for that purpose by the state. They built the bridge and that’s it. They were supposed to have a public interest function. Well into the 1870s, states were removing corporate charters. They were granted by the state. They didn’t have any other authority. They were fictions. They were removing corporate charters because they weren’t serving a public function. But then you get into the period of trusts and various efforts to consolidate power that were beginning to be made in the late nineteenth century. It’s interesting to look at the literature. The courts didn’t really accept it. There were some hints about it. It wasn’t until the early twentieth century that courts and lawyers designed a new socioeconomic system. It was never done by legislation. It was done mostly by courts and lawyers and the power they could exercise over individual states. New Jersey was the first state that granted corporations any right they wanted. Of course, all the capital in

the country suddenly started to flow to New Jersey, for obvious reasons. Then the other states had to do the same thing just to defend themselves or be wiped out. It’s kind of a small-scale globalization. Then the courts and the corporate lawyers came along and created a whole new body of doctrine which gave corporations authority and power that they had never had before. If you look at the background of it, it’s the same background that led to fascism and Bolshevism. A lot of it was supported by people called progressives, for these reasons: They said, individual rights are gone. We are in a period of corporatization of power, consolidation of power, centralization. That’s supposed to be good if you’re a progressive, like a Marxist-Leninist. Out of that same background came three major things: fascism, Bolshevism, and corporate tyranny. They all grew out of the same more or less Hegelian roots. It’s fairly recent. We think of corporations as immutable, but they were designed. It’s a conscious design which worked as Adam Smith said: the principal architects of policy consolidate state power and use it for their interests. It was certainly not popular will. It’s basically court decisions and lawyers’ decisions, which created a form of private tyranny which is now more massive in many ways than even state tyranny was. These are major parts of modern twentieth-century history. The classical liberals would be horrified. They didn’t even imagine this. But the smaller things that they saw, they were already horrified about. This would have totally scandalized Adam Smith or Jefferson or anyone like that.

DBLet’s make a connection between corporations and East Timor and Indonesia. Nike is the world’s largest manufacturer of sneakers and sportswear. It’s headquarters is in Beaverton, Oregon, right outside of Portland. Some years ago they had set up factories in South Korea. South Korean workers started unionizing and demanding better pay

and better working conditions. Nike moved their operations to Indonesia, where they pay workers $1.35 a day. Nike makes these sneakers in Indonesia for $5.40 and sells them in the U.S. for $60, $70, $80.

Indonesia has been a great favorite of the West, ever since 1965, when a huge massacre took place. They slaughtered maybe half a million or so people and destroyed the one popular political party there, which was, as everyone from right to left agrees, defending the interests of the poor. This slaughter was welcomed with absolute euphoria in the West. I’ve reviewed some of the press coverage. Since Indonesia is a pretty rich country, lots of resources, it’s what’s been called a “paradise” for investors. It is a brutal, repressive state which prevents any labor organizing or anything else, so wages can be very low. Indonesian wages are now half the level of China, which is not exactly high. At the 1994 APEC conference, everybody went to Jakarta to celebrate the free market. As part of cleaning the place up, they threw all the labor leaders in jail. Some of them are in there for long sentences. Some of the sentences have just been increased. They don’t tolerate labor unions. There’s a Stalinist-style labor union run by the government. There have been attempts to create independent unions, but they have been brutally suppressed. So Nike’s happy, because the work force is—although they’re very militant and very courageous—brutally repressed by the state and kept way down. The country’s extremely rich. There’s a lot of wealth around, mostly in the hands of General Suharto and his family and their cronies and foreign investors.

Even the invasion of East Timor, as I’ve mentioned, was motivated to a substantial extent by corporate robbery. A large part of the reason can be seen in an important leak of diplomatic cables from right before the invasion, around August 1975. These Australian cables first of all talked

directly about the complicity of the U.S., of Kissinger ordering the Jakarta Embassy not to report any more on what’s going on because the U.S. was going to support the invasion, as it did. Of course they publicly denied knowing anything about it. The Australian Ambassador said, his words were something like this, We can make a better deal on East Timorese oil with Indonesia than we can with Portugal, the administering power, or with an independent East Timor. In fact, that is now exactly what’s going on. A few years later Australia recognized the occupation, the only Western country to recognize it, in the context of negotiations with Indonesia about the Timor Gap Treaty. There was a big massacre in Dili in 1991 which did focus the world’s attention on the occupation. A couple hundred people were murdered by Indonesian troops who made the mistake of doing it in front of a hidden television camera and beating up two American reporters. You’re not supposed to do things like that. You’re supposed to do massacres in secret while nobody’s looking. They made that technical error, so there was a lot of coverage for a while. Immediately after that—and here the coverage declines, I have yet to see a word about it in the U.S., maybe in some of the business press—Australia and Indonesia granted licenses to major oil companies to begin drilling for Timorese oil. You have to recall that the official reason given as to why East Timor can’t be independent is that it doesn’t have any resources. That reason is given by the people who are robbing it of its oil resources, which are expected to be quite substantial.