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on free trade and markets



The following are excerpts from a 1992 article by Noam Chomsky analyzing
the concepts free trade and markets. The full text can be seen at
http://wwwdsp.ucd.ie/~daragh/articles/a_y501p1.html



. . .
It should be stressed that the economic doctrines preached by the
powerful are intended for others, so that they can be more efficiently
robbed and
exploited. No wealthy developed society accepts these conditions for
itself, unless they happen to confer temporary advantage; and their
history reveals
that sharp departure from these doctrines was a prerequisite for
development. At least since the work of Alexander Gerschenkron in the
1950s, it has
been widely recognized by economic historians that "late development"
has been critically dependent on state intervention; Japan and the Newly
Industrializing Countries (NICs) on its periphery are standard
contemporary examples. The same is true of the "early development" of
England and the
United States. High tariffs and other forms of state intervention may
have raised costs to American consumers, but they allowed domestic
industry to
develop, from textiles to steel to computers, barring cheaper British
products in earlier years, providing a state-guaranteed market and
public subsidy for
research and development in advanced sectors, creating and maintaining
capital-intensive agribusiness, and so on. "Import substitution [through
state
intervention] is about the only way anybody's ever figured out to
industrialize," development economist Lance Taylor observes, adding that
"In the long run,
there are no laissez-faire transitions to modern economic growth. The
state has always intervened to create a capitalist class, and then it
has to regulate
the capitalist class, and then the state has to worry about being taken
over by the capitalist class, but the state has always been there."
Furthermore, state
power has regularly been invoked by the capitalist class to protect it
from the destructive effects of an unregulated market, to secure
resources, markets,
and opportunities for investment, and in general to safeguard and extend
their profits and power; the Pentagon system of public subsidy for high
tech industry is the most glaring example, close to home. 


. . .

The utility of free trade as a weapon against the poor is
well-illustrated by a World Bank study on global warming, designed to
"forge a consensus among
economists" (meaning, the expert advisers of the rulers) in advance of
the Rio conference on global warming in June. New York Times business
correspondent Silvia Nasar reports under the headline "Can Capitalism
Save the Ozone?" (the implication being: "Yes"). Harvard economist
Lawrence
Summers, chief economist of the World Bank, explains that the world's
environmental problems are largely "the consequence of policies that are
misguided on narrow economic grounds," particularly the policies of the
poor countries that "have been practically giving away oil, coal and
natural gas to
domestic buyers in hopes of fostering industry and keeping living costs
low for urban workers" (Nasar). If the poor countries would only have
the courage
to resist the "extreme pressure to improve the performance of their
economies" by fostering development while protecting their population
from starvation,
then environmental problems would abate. "Creating free markets in
Russia and other poor countries may do more to slow global warming than
any
measures that rich countries are likely to adopt in the 1990's," the
World Bank concludes - correctly, since the rich are hardly likely to
pursue policies
detrimental to their interests, and they do have many weapons to wield
against the poor, including selective use of "free trade" (in the small
print, the
consensus economists also recognize that "more effective government
regulation" reduces pollution, but crushing the poor has obvious
advantages). 

The same page of the New York Times business section carries an item
referring a confidential memo of the World Bank, just published by the
London
Economist. The author of the memo is the same Lawrence Summers. He
writes: "Just between you and me, shouldn't the World Bank be
encouraging
more migration of the dirty industries to the [Third World]?" This is
reasonable on economic grounds, Summers explains: for example, a
cancer-producing
agent will have larger effects "in a country where people survive to get
prostate cancer than in a country where under-5 mortality is 200 per
thousand."
Poor countries are "under-polluted," and it is only reasonable, on
grounds of economic rationality, to encourage "dirty industries" to move
to them. "The
economic logic behind dumping a load of toxic waste in the lowest-wage
country is impeccable and we should face up to that." Summers recognizes
that
there are "arguments against all of these proposals" for exporting
pollution to the Third World: "intrinsic rights to certain goods, moral
reasons, social
concerns, lack of adequate markets, etc." But the problem is that these
arguments "could be turned around and used more or less effectively
against every
Bank proposal for liberalisation." "Mr Summers is asking questions that
the World Bank would rather ignore," the Economist observes, but "on the
economics, his points are hard to answer." Quite true. We have the
choice of accepting the conclusions, or regarding them as a reductio ad
absurdum
argument against the "free market" ideology. 

The doctrines, then, are very clear. On grounds of economic rationality,
the Third World should cut back on its "misguided" efforts to promote
economic
development while protecting the population from disaster, while the
rich countries, observing the same principles of economic rationality,
should export
pollution to the Third World. That way, capitalism can overcome the
environmental crisis. Free market capitalism is, indeed, a wondrous
implement. Surely
there should be two Nobel prizes awarded annually, not just one. 

Confronted with the memo, Summers said that it was only "intended to
provoke debate" - elsewhere, that it was a "sarcastic response" to
another World
Bank draft, in the style of Jonathan Swift. Perhaps the same is true of
the World Bank "consensus" study reported on the same page of the Times
business section. In fact, it is often hard to determine when the
intellectual productions of the World Bank and other experts are
intended seriously, or are
a perverse form of sarcasm. Unfortunately, huge numbers of people,
subjected to these doctrines, do not have the luxury of pondering this
intriguing
question. [9] 

Though not intended for us, "free trade does, however, have its uses,"
Arthur MacEwan observes in a review of the uniform record of industrial
and
agricultural development through protectionism and other measures of
state interference, notably in the United States: "Highly developed
nations can use
free trade to extend their power and their control of the world's
wealth, and businesses can use it as a weapon against labor. Most
important, free trade
can limit efforts to redistribute income more equally, undermine
progressive social programs, and keep people from democratically
controlling their
economic lives." [10] Small wonder, then, that neoliberal doctrine has
won such a grand victory within the ideological system. The evidence
about
successful development and the actual consequences of neoliberal
doctrine is dismissed with the contempt that irrelevant nuisance so
richly deserves. 

All of this is a crucial part of the doctrinal and policy framework of
the New World Order, as of the old.