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. Part One of this interview ran in the last issue of New Socialist. Part Two includes a more recent exchange, discussing the current situation and the significance of the World Social Forums.

JW: In your book Rogue States you have a chapter called “Socioeconomic Sovereignty.” What is socioeconomic sovereignty, first, and how is it related to democracy in terms of defending democracy, and deepening democracy?

NC: If democracy means at least the ability to participate in controlling your own destiny, making decisions and plans about things that matter to you, that will surely include the socioeconomic sphere – the nature of work, what’s produced, what’s distributed, what kind of social arrangements there are, what kind of educational and health systems there are. These are things that people care about, you know, must. If they have an ability to play a role in determining how these things run, well, then they have a degree of democracy.

Socioeconomic sovereignty just means, the sovereignty of the state over these realms, and insofar as the state is democratic, it means popular control over these realms. You can have socioeconomic sovereignty and a dictatorship if other states don’t interfere with it. Say, the Kremlin, back in Stalin’s day. It had socioeconomic sovereignty, there wasn’t much interference from the outside, but it wasn’t popular sovereignty. It was from the top down. If you have socioeconomic sovereignty and popular participation, then you have democratic control over the socioeconomic system, which is, in fact, just about all of life. So, that’s socioeconomic sovereignty.

JW: So, it’s linked....

NC: I should add that for much of the world there is none. So, about half of the population of the world doesn’t even have formal economic sovereignty. Their socioeconomic policies are made in Washington in the offices of the World Bank and the IMF, and so on. They’re in receivership. These countries are basically in receivership. And since the countries, the states, don’t have socioeconomic sovereignty, even if they were democratic, which they aren’t, there would be no popular socioeconomic sovereignty.

These are never one hundred percent, incidentally, no matter how powerful the state is. It’s limited by its position in the world, but it can vary over quite a range.

JW: With the IMF, it’s linked to this. Since the collapse of the Bretton Woods system in the early 1970s you’ve seen a dramatic increase in capital flows in and out of countries. What effect does that have on popular sovereignty, in the sense of, say, union organizing and so on? How is that linked to democracy?

NC: It diminishes it. It was understood very well by the people who framed the Bretton Woods system back in the late forties that if they allowed free capital flow, free exchanges of capital across borders, and freely fluctuating currencies, that would sharply reduce the possibility of independent government action, therefore of democracy insofar as the government’s democratic. If investors and lenders don’t like certain policies that a government is undertaking, say, full employment or expenditures on health and welfare. Suppose that investors don’t like that, or maybe the local wealthy don’t like it, which is very likely, well they send their capital away, or they attack the currency, speculating against the currency, driving it down for higher interest rates and so on. And that compels the government to retract the policies.

The way it’s commonly put, in fact by the international economics literature, is that investors and lenders, and those who control capital , become what’s sometimes called a virtual parliament. They’re kind of like a parliament. They make decisions. The actual states have two constituencies: their voters, and the constituency of those who control capital, those who invest, those who lend. The second constituency carries out a moment by moment referendum on government policies. If it doesn’t like them, it can undermine them by the device of capital flight or currency attack. And these are lethal. No country, even rich countries, have the resources to withstand the astronomical movements of capital, short term speculative capital and foreign exchange. They overwhelm an individual economy by now, since the seventies when the system was liberalized. The scale has just expanded astronomically. It’s probably about a trillion dollars a day, mostly very short term speculation. Estimated about eighty percent of it is, within a week, return time between investment and withdrawal. That’s withdrawing a huge amount of capital from the productive system, first of all. It undermines democratic freedom, and it also drives down growth rates. Countries are forced to keep interest rates much higher to try to protect their currencies, keep interest rates higher so there’s a decline in growth. Interest rates have been much higher over all during this so-called globalization period after the financial liberalization. Growth rates are down almost everywhere. There are some exceptions, like East Asian countries that didn’t follow the rules, so they continue. But where the rules were followed in most of the world, growth is down. Economic and productivity growth are down. Even growth of trade is down. It’s been a period in which the major macroeconomic indicators have generally declined relative to the earlier period, at least where the rules were followed.

Now, that’s true in the United States right through the 1990s. I mean, this is called a period of historic economic boom, but it’s just not true. For a couple of years in the late nineties it caught up to the steady level for the Bretton Woods period, which is not so impressive. But through the nineties, relative to the Bretton Woods period, it was a poor period of economic growth. Furthermore, such growth as there was was highly skewed. It’s very highly concentrated in a small sector of the population. In the United States, for the majority of the population, wages have not even caught up to their level of twenty years ago. Let’s take Massachusetts, one of the stars of the new economy, low unemployment and so on. In Massachusetts median wages declined about ten percent in the 1990s. In California, purchasing power for family reduced about a thousand dollars in the nineties. For most of the population it’s been a period of stagnation, or in some cases, even decline. For a small sector, it’s been a period of enormous wealth concentration. That’s called a great fairy-tale economy, but that’s a value judgment, not an economic judgment.

JW: So, you said that there’s growing inequality at the same time as there’s not spectacular growth. In a piece in the Economist (April 28, 2001), Robert Wade, a political economist from the London School of Economics, using World Bank data from 1988 to 1993, pointed out that global inequality has risen extremely rapidly. He criticized the World Bank for only concerning itself, at least rhetorically, with poverty alleviation, but not inequality. Why does inequality have to be something we’re concerned about?

NC: Well, for one thing, inequality is harmful in itself. It has all sorts of bad effects. In fact, the World Bank itself points out that relative equality is a factor that contributes to growth. Higher inequality harms growth. Also, inequality and poverty are very closely related. Poverty is not an absolute thing. Relative to the Stone Age, nobody’s in poverty. Nobody in the Stone Age could walk in a street, let’s say. So, by some measures we’re all richer than we were in the Stone Age. But your level of poverty depends on what the conditions are for a decent life where you are. That’s a social judgment. In most countries, poverty is measured by relation to the median. It’s a relative poverty measure. Well, the greater the inequality the greater the poverty is going to be, and the deeper the poverty.

And quite apart from it, it’s just a value that should not be accepted. Here there’s differences of opinion throughout the world, I should say. The United States is kind of off the spectrum in the last twenty years. In recent years the United States is virtually alone in the world, aside from a few client states like Israel and Taiwan, in willingness to accept inequality. In most of the world its considered not something that should be accepted. And it’s even harmful for health. Health measures go down the greater the inequality because of all kinds of psychic reasons.

It’s pretty hard to argue. It’s just like asking, should there be slaves. It ought to be a value that people just accept. You go back to classical liberalism, for example Adam Smith. He just took it for granted that you were trying to achieve equality. So, for example, Adam Smith’s arguments for markets, which were somewhat nuanced, not like claimed, but he did argue for markets. But his main argument was that under conditions of liberty, markets would lead to equality, which he took for granted as something you were trying to achieve.

In fact, you can’t have political democracy without equality. If people are highly unequal in what’s available to them, they’re going to be very unequal in the way they can participate in the political process. It’s almost a truism. So, if you are interested in human rights, in political rights and so on, that puts you in favour of relative equality. Even if you’re interested in economic growth. As I say, the World Bank’s own statistics have shown consistently, and they’ve pointed out, they’re not concealing it, that relative equality leads to growth. It’s part of the reason they argue why East Asia has so much better a record than Latin America. It’s not an egalitarian society, but it’s much less unequal than Latin America.

JW: How important are popular movements like the movement against the Multilateral Agreement on Investment, protests in Seattle and Quebec City, and even Third World movements like the Zapatistas in Mexico, in terms of making democracy more meaningful? And, also, linked to that, with the rise of global communications, the internet and so on, is there more of a chance for international solidarity between various diverse movements?

NC: Well, first of all, I would question the word “even” Third World movements, because they’re usually way ahead. The major mass movements protesting the neoliberal reforms that have been imposed were mostly in the Third World. Throughout the Third World in the 1980s, in India, Brazil, all over the so-called South there were major protests. They have spread to the North.

NORTH-SOUTH SOLIDARITY

By the late nineties it became difficult to ignore them, because once they spread to the rich countries they become more visible. One of the important elements of them is that they have, actually for the first time, developed a significant degree of North-South solidarity at the grassroots level. That’s very important. It hasn’t happened before. It’s true of the labour movement. It’s true of the environmental movements. Another form of solidarity that’s developed that’s extremely important is across sectors of the population that in the past didn’t have much to do with one another, or were outright hostile, say, labour and environmental groups which have been pursuing joint interests, which they indeed have.

And in the cases you mentioned, the successes were dramatic. The Multilateral Agreement on Investment (MAI) had to be withdrawn by the OECD [Organization for Economic Cooperation and Development] rich countries, largely under popular protest.

The FTAA is a major agreement. There’s no doubt about this. It will have large scale effects on the lives of people throughout the hemisphere. We know in countries like the United States where there are careful polls, that a large majority of the population is opposed to provisions that are being introduced into it. We have every reason to believe that that’s true in other countries like, say, Brazil and elsewhere, Mexico, and so on. It’s not discussed. It didn’t come up in the November 2000 elections. There was no discussion of the FTAA, even though the negotiations, which had been going on for years, were reaching a definitive level at that time. If you did a poll in the United States only a minority would agree with it. There’s virtually nothing in the press. Where there is a mention, it’s called a free trade agreement, which is not true. If it was a free trade agreement we could negotiate it in an hour. It would take a page to write down. It’s been going on for years because it’s not a free trade agreement. There are numerable other factors that make it an investors’ rights agreement.

DEMOCRACY IN QUESTION

In Quebec in April 2001, it had to break through. There was too much of a fuss, so yes there was some discussion about it, but not the issues. So, the crucial issues involved in the FTAA were not discussed in the coverage of Quebec. There was a lot of talk about the commitment of the leaders to democracy, but that didn’t extend as far as letting the public know what was going on, or letting them participate in any fashion. It’s Stalinist-style democracy, where you talk about how democratic you are and then you keep everything secret. There was no discussion of core elements, like the efforts to open up services to private control. It’s called Trade in Services. It has nothing to do with trade. It has to do with opening up services to private control. Services means just about anything that’s in the public arena. Anything that would be under democratic control, that’s services. So, education, health, security, resources, and so on, those are services. That has to be privatized, that is handed over to the hands of private tyrannies, taken out of the public arena. Now, that virtually eliminates democracy.

Human Rights Watch investigated labour rights under NAFTA. They found that they had deteriorated in all three countries because the governments, crucially the U.S. government, were undermining the weak wording of the side agreements on labour rights.

The Economic Policy Institute did a country-by-country analysis of the three participants in NAFTA, and concluded that in all three countries the majority of the population had been harmed by NAFTA. It’s important information when NAFTA’s being presented as the model that we now have to extend to the hemisphere. These two studies were on every news desk in the country, but editors understand that this is not what you tell the public at a time when we are trying to ram down their throats something that they don’t want. Well, that tells you a lot about democracy. People have found out about it, but through other mechanisms, because of the purposeful destruction of modes of democracy in the interest of transferring power to private tyrannies. It’s as simple as that.

JW: What is the significance of the World Social Forum as a means of building resistance internationally against neoliberalism?