NOAM CHOMSKY, internationally renowned MIT professor, has been a leading voice for peace and social justice for more than four decades. The Guardian calls him, "One of the radical heroes of our age." He is the author of Profit Over People: Neoliberalism and the Global Order, Power and Terror and Middle East Illusions, among many others. His latest book is Hegemony or Survival. JEFF WEBBER conducted this interview with him on June 5, 2001.

JW: In writings where you have discussed neoliberalism's role in the diminishment of democracy, you emphasize the role of corporations, or "private tyrannies." You write in your book Profit Over People: "The 'principal architects' of the neoliberal 'Washington Consensus' are the masters of the private economy, mainly huge corporations that control much of the international economy and have the means to dominate policy formation as well as the structuring of thought and opinion." (p. 20). Can you give me some examples of ways that multinational corporations are consolidating their power in the neoliberal era, say in the international sphere.

NC: Well, first of all, I should say that if you look back you'll find that those words are mostly drawn from people like Adam Smith, referring to the "principal architects" in his day, merchants and manufacturers, and their capacity to impose policies on governments. I was essentially paraphrasing it for the twentieth century, because there are different forms of social organizations, but the same principles.

With regard to corporations, there is an increasing consolidation within the corporate system. So most of the economy, most of the international economy, is moving towards a kind of oligopoly through mergers and acquisitions and strategic alliances among firms. They work together even if they're theoretically competing.

And other devices, for example, outsourcing which allows a corporation to hand out tasks to subsidiaries that are not technically a part of it, and that don't have to meet labour standards, environmental standards, and others, but that survive by virtue of their interactions with big corporations. Well, that's a sort of economic management as well. Through all these devices we have a highly managed international economy.

You look at things like, say, trade, meaning cross border interactions. Probably, if you think of the whole range of them - interactions internal to a firm, involving strategic alliances, so when corporations are selling parts to another under some administered arrangement, outsourcing, which is a way of farming out tasks but under central management - the few estimates that people have tried to make indicate that maybe seventy percent of what's called trade is actually centrally managed. As the number of participants decreases through mergers, acquisitions, conglomerates, and so on, it's more power, more integrated, and, more control over the international financial institutions, are more closely linked to state power. It's a continuing process, which the neoliberal programs are intended to enhance.

JW: Can you talk about some of the roles of those international financial institutions, like the World Bank and the International Monetary Fund (IMF).

NC: They're different. The IMF functions very largely as a kind of free-risk insurance agency. If, say, Indonesia gets into a situation in which it can't pay its debt, the IMF comes in and does two things, basically. It socializes the debt. It wants to make sure the investors and lenders get paid off. The way it does that is by transferring the debt to Northern taxpayers through bailouts of various kinds that pay off the investors. Then, since somebody's going to have to pay for it, it has to be the people of Indonesia, who are subjected to harsh structural adjustment programs to ensure that any production will be for export to pay off the investors' debt, no matter how much they suffer.

So, what you have is a system of free-risk insurance for investors, punishing the people of Indonesia, who incidentally never contracted the debt in the first place. They're not the borrowers. The borrowers were, in this case, a couple of hundred rich people who sent it abroad, or used it for consumption, or whatever, and they're not paying it. That's a primary function of the IMF. It's also supposed to do things like help to stabilize the currency when the country gets into trouble. But this is one of its main functions.

The World Bank's more complicated. It's done many things over the years. You'd have to look through a range of it's projects to comment on it.

JW: Do you think it's a shift, in any way, in the position of the World Bank with their latest report on poverty? [World Development Report 2000/2001: Attacking Poverty (Oxford: Oxford University Press, 2000)]

NC: There's certainly a rhetorical shift. There have been many in the past. They have often shifted course substantially. There was a time when the World Bank supported Import Substitution Industrialization. Then it shifted in the seventies, particularly towards encouraging lending and borrowing, as did the IMF. And when that turned into a total catastrophe, as it did in the early eighties, they switched again and shifted towards imposing structural adjustment programs and neoliberal policies. All throughout there have been big dams, and other big projects. That's turned into various disasters. And recently they have shifted again, and are now taking poverty alleviation to be a major concern and commitment. How much of this is rhetoric and how much will be policy, we'll have to see.

It's hard to doubt that a large part of the reason has been public protest and pressure that has been building over many years, and has now become very hard to ignore. So hard to ignore, for example, that they just called off a major meeting in Barcelona because they didn't want to face the public pressure. How much that's influencing their choices and decisions you can only know if you're inside the World Bank, but probably significantly.

And they have their own internal problems. Their own internal critics have been dealt with rather harshly. Their chief economist, a very distinguished economist, Joseph Stiglitz, was basically kicked out about a year ago because he was raising too many criticisms about the directions they were going. The editor of their main publication on world development, Ravi Kanbur, was also removed, as he was apparently moving too far towards issues like poverty alleviation for the management, for the states. Remember, the World Bank is an instrument of states, primarily the United States, which is the biggest funder. You can't go too far from what those who provide the funds are willing to accept. All that reflects significant internal conflicts over the directions in which they should be going.

But I think it's really hard to make a blanket comment about the World Bank. They've done many, many different things over the years.

(Part two of the interview with Noam Chomsky, including updates on the current situation, will run in the next issue of New Socialist.)

Jeff Webber is a PhD student in Political Science at the University of Toronto. He is active in social justice, anti-war, and Third World solidarity movements.