This article was last modified on November 17, 2009.

Chomsky Conversations: Capitalism and Neoliberalism

On Neoliberalism (October 8, 2009)

GS: Simple question: can you clarify the difference between neoliberalism and laissez-faire capitalism? Also, what would the opposite doctrine be called (one where the government increased regulation and nationalization, though not to the point of complete state control)?

NC: Neoliberalism is a specific set of doctrines about economic management. Laissez-faire capitalism is an ideal case that would never be tried by any state or other social structure that has control over its own fate. The existing societies are all state capitalist, with varying degrees of state intervention in the economy and social life. There’s no “opposite.” Just many dimension of variation. Take what we’re now using: computers and the internet. Like most high tech, these come primarily from the state sector of the economy, but here it’s often called “free market.”

GS: Allow me to rephrase what I mean by “opposite”. The doctrine(s) of neoliberalism, as you’ve laid out in various lectures and books, seems to me a rather odious business.

What would be the preferred alternative doctrine?

NC: Again, hard to answer. The really preferred doctrine (at least by me) would be economic democracy, that is, control over workplaces and other economic institutions by participants and communities. There are many such proposals, and some have been implemented. It also has a rich history of popular support.

Within the framework of existing institutions, there are a great many alternatives, ranging from simple proposals by Nobel laureates to control the ravages of free financial markets (the only real approximation to a free market) to more far-reaching ideas about how to reverse the state-corporate social engineering projects designed to maximize fossil fuel consumption, which may do us all in. There are so many options I can’t even hope to try to list them.

GS: One last thing, so we’re clear: by “economic democracy”, you’re referring to some form of syndicalism?

NC: Syndicalism is one of the many proposals about popular control over workplaces and other economic institutions. There are quite a few others.

GS: Would you suggest using the workers of Orwell’s Catalonia as an inspiration or model?

NC: Orwell’s “Homage to Catalonia” is a great book, but he’s not a good source on this, as he himself stresses. What happened in Catalonia was impressive, until destroyed by co-optation and mainly force (Communist-led, but supported by the West), but that was only part of the story. Collectivization of peasants in Aragon was maybe even more impressive (destroyed by a Communist army). I wrote about it 40 years ago, reprinted a number of times (readers, etc.). Few sources were available then in English, but by now most of the ones I cited are, and there’s a lot of new scholarship, which I haven’t kept up with properly. I’m told that Paul Preston’s work is quite good, but haven’t read it.

GS: Alright, a related but unrelated question: you’ve used the tomato market as an example of how the government praises the “free market” but then blocks imports from Mexico to “protect” Florida workers.

I agree completely that it’s hypocrisy to promote free markets but not actually support them. And I also agree that it’s wrong to cut off the Mexican imports if they are competing fairly and their exclusion leads to poverty and worse.

But I wonder: is protectionism, the creation of tariffs, etc. wrong? Doesn’t a government have an obligation to protect local jobs over global jobs, or does the moral equality of people overrule this? Also, if we opened up markets to be actually free, wouldn’t that be worse for the average worker — driving benefits and wages to an even lower standard?

It seems to me that either way we have negative consequences for someone on the bottom.

NC: There are good reasons for tariffs. Without them, the scattered population of the US would now be pursuing their comparative advantage in exporting fur and fish, as Adam Smith urged, following essentially the same principles being demanded of the third world today.

The example was about hypocrisy, not about free markets. That’s a different matter, a long and complicated one.

On Capitalism (October 23, 2009

GS: How do you feel about capitalism in general? There has been a resurgence of anti-capitalist rhetoric, thanks to the Wall Street debacle and the new Michael Moore film. Should capitalism be thrown out completely, or are there forms that are compatible with social justice and other ideals?

NC: The question reminds me of what Gandhi is alleged to have said when he was asked what he thought about Western Civilization. His answer was: “It might be a good idea.”

I doubt that capitalism would be a good idea, but it won’t come to the test. The business world would never allow it, just as in the past. They have always demanded a powerful nanny state — for themselves.

I don’t think it would be a good idea, even if it didn’t quickly collapse. But that’s another story.

GS: Point well taken. I suppose what I mean is, our current system is profit-driven, with all other concerns being secondary or worse. Can we work within this framework, or should the profit motive be eliminated altogether (if that’s even possible)?

A while back, Howard Dean appeared on television and compared our system to a hockey game. His point was that while everyone competes and wants to gain the highest score, the game only works well when there are rules. By no means am I endorsing Howard Dean, but I thought this was a valid suggestion: don’t stop the so-called capitalists from playing hockey, but implement plenty of rules and referees to keep them from being unsportsmanlike.

Not unlike certain European countries, I can see a profit-driven system that protected the lower class and had built-in mechanisms to keep the winners from (literally) killing the losers.

So, again, can we keep our system and modify it, or would the real goal be to dismantle the entire system?

NC: No one really knows what’s possible. There are fundamental inefficiencies in market systems even in narrow capitalist terms, and a lot more wrong (a value judgment) in the kinds of values they foster. How much change there can be, no one knows. In the 18th century, no one knew whether parliamentary democracy was possible.

The US version of state capitalism happens to be particularly cruel, for a lot of reasons. Other industrial societies, for example, have functioning national health care systems of one or another sort. So sure, there can be softening of the edges — like the New Deal, or Great Society, or the Nordic countries.

Whether the goal should be to dismantle the system depends on ambition, goals, values. And venturing into unknown territory, as throughout history.

GS: Speaking for yourself, would YOUR ambitions, goals and values call for a dismantling of the system? Mine would be more for a blunting/softening reform.

NC: In the foreseeable future, there’s no alternative to your proposal. Even those dedicated to revolution should recognize that. If a revolution is not just a prelude to tyranny, it would have to have mass popular support by people who are convinced that reform within the system cannot be carried forward. We’re very, very far from that.

GS: Wall Street and the stock market: do they offer any real benefit to society and simply need the proper regulations, or are they a den of thieves that should be permanently shut down? (Or somewhere in the middle?)

NC: It’s a good question. It’s by no means obvious. You might be interested in a good book by Doug Henwood, called Wall Street. Goes into this.

GS: One last question: do you agree with Paul Krugman’s assessment that we need another, bigger stimulus?

NC: Definitely. I think it was clear from the beginning. Won’t happen though with the current business-run rightwing onslaught.

Also try another article under Political
or another one of the writings of Gavin.

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