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Market Democracy in a Neoliberal Order: Doctrines and Reality
Z Magazine, November, 1997
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| I have been asked to
speak on some aspect of academic or human freedom, an invitation that
offers many choices. I will keep to some simple ones.
Freedom without opportunity is a devil's gift, and the
refusal to provide such opportunities is criminal. The fate of the
more vulnerable offers a sharp measure of the distance from here to
something that might be called "civilization." While I am speaking,
1000 children will die from easily preventable disease, and almost
twice that many women will die or suffer serious disability in
pregnancy or childbirth for lack of simple remedies and care.[1]
UNICEF estimates that to overcome such tragedies, and to ensure
universal access to basic social services, would require a quarter of
the annual military expenditures of the "developing countries,"
about 10% of U.S. military spending. It is against the background of
such realities as these that any serious discussion of human freedom
should proceed.
It is widely held that the cure for such profound
social maladies is within reach. The hopes have foundation. The past
few years have seen the fall of brutal tyrannies, the growth of
scientific understanding that offers great promise, and many other
reasons to look forward to a brighter future. The discourse of the
privileged is marked by confidence and triumphalism: the way forward
is known, and there is no other. The basic theme, articulated with
force and clarity, is that "America's victory in the Cold War was a
victory for a set of political and economic principles: democracy and
the free market." These principles are "the wave of the future - a
future for which America is both the gatekeeper and the model." I am
quoting the chief political commentator of the New York Times,
but the picture is conventional, widely repeated throughout much of
the world, and accepted as generally accurate even by critics. It was
also enunciated as the "Clinton Doctrine," which declared that our
new mission is to "consolidate the victory of democracy and open
markets" that had just been won. There remains a range of
disagreement: at one extreme "Wilsonian idealists" urge continued
dedication to the traditional mission of benevolence; at the other,
"realists" counter that we may lack the means to conduct these
crusades of "global meliorism," and should not neglect our own
interests in the service of others.[2] Within this
range lies the path to a better world.
Reality seems to me rather different. The current
spectrum of public policy debate has as little relevance to actual
policy as its numerous antecedents: neither the United States nor any
other power has been guided by "global meliorism." Democracy is
under attack worldwide, including the leading industrial countries; at
least, democracy in a meaningful sense of the term, involving
opportunities for people to manage their own collective and individual
affairs. Something similar is true of markets. The assaults on
democracy and markets are furthermore related. Their roots lie in the
power of corporate entities that are totalitarian in internal
structure, increasingly interlinked and reliant on powerful states,
and largely unaccountable to the public. Their immense power is
growing as a result of social policy that is globalizing the
structural model of the third world, with sectors of enormous wealth
and privilege alongside an increase in "the proportion of those who
will labor under all the hardships of life, and secretly sigh for a
more equal distribution of its blessings," as the leading framer of
American democracy, James Madison, predicted 200 years ago.[3]
These policy choices are most evident in the Anglo-American societies,
but extend worldwide. They cannot be attributed to what "the free
market has decided, in its infinite but mysterious wisdom," "the
implacable sweep of `the market revolution'," "Reaganesque rugged
individualism," or a "new orthodoxy" that "gives the market full
sway."[4] The quotes are liberal-to-left, in some
cases quite critical. The analysis is similar across the rest of the
spectrum, but generally euphoric. The reality, on the contrary, is
that state intervention plays a decisive role, as in the past, and the
basic outlines of policy are hardly novel. Current versions reflect
"capital's clear subjugation of labor" for more than 15 years, in
the words of the business press,[5] which often
frankly articulates the perceptions of a highly class-conscious
business community, dedicated to class war.
If these perceptions are valid, then the path to a
world that is more just and more free lies well outside the range set
forth by privilege and power. I cannot hope to establish such
conclusions here, but only to suggest that they are credible enough to
consider with care. And to suggest further that prevailing doctrines
could hardly survive were it not for their contribution to
"regimenting the public mind every bit as much as an army regiments
the bodies of its soldiers," to borrow the dictum of the respected
Roosevelt-Kennedy liberal Edward Bernays in his classic manual for the
Public Relations industry, of which he was one of the founders and
leading figures.
Bernays was drawing from his experience in Woodrow
Wilson's State propaganda agency, the Committee on Public Information.
"It was, of course, the astounding success of propaganda during the
war that opened the eyes of the intelligent few in all departments of
life to the possibilities of regimenting the public mind," he wrote.
His goal was to adapt these experiences to the needs of the
"intelligent minorities," primarily business leaders, whose task is
"The conscious and intelligent manipulation of the organized habits
and opinions of the masses." Such "engineering of consent" is the
very "essence of the democratic process," Bernays wrote shortly
before he was honored for his contributions by the American
Psychological Association in 1949. The importance of "controlling the
public mind" has been recognized with increasing clarity as popular
struggles succeeded in extending the modalities of democracy, thus
giving rise to what liberal elites call "the crisis of democracy" as
when normally passive and apathetic populations become organized and
seek to enter the political arena to pursue their interests and
demands, threatening stability and order. As Bernays explained the
problem, with "universal suffrage and universal schooling,...at last
even the bourgeoisie stood in fear of the common people. For the
masses promised to become king," a tendency fortunately reversed - so
it has been hoped - as new methods "to mold the mind of the masses"
were devised and implemented.[6]
Quite strikingly, in both of the world's leading
democracies there was a growing awareness of the need to "apply the
lessons" of the highly successful propaganda systems of World War I
"to the organization of political warfare," as the chairman of the
British Conservative Party put the matter 70 years ago. Wilsonian
liberals in the U.S. drew the same conclusions in the same years,
including public intellectuals and prominent figures in the developing
profession of Political Science. In another corner of Western
civilization, Adolf Hitler vowed that next time Germany would not be
defeated in the propaganda war, and also devised his own ways to apply
the lessons of Anglo-American propaganda for political warfare at
home.[7]
Meanwhile the business world warned of "the hazard
facing industrialists" in "the newly realized political power of the
masses," and the need to wage and win "the everlasting battle for
the minds of men" and "indoctrinate citizens with the capitalist
story" until "they are able to play back the story with remarkable
fidelity"; and so on, in an impressive flow, accompanied by even more
impressive efforts, and surely one of the central themes of modern
history.[8]
To discover the true meaning of the "political and
economic principles" that are declared to be "the wave of the
future," it is of course necessary to go beyond rhetorical flourishes
and public pronouncements and to investigate actual practice and the
internal documentary record. Close examination of particular cases is
the most rewarding path, but these must be chosen carefully to give a
fair picture. There are some natural guidelines. One reasonable
approach is to take the examples chosen by the proponents of the
doctrines themselves, as their "strongest case." Another is to
investigate the record where influence is greatest and interference
least, so that we see the operative principles in their purest form.
If we want to determine what the Kremlin meant by "democracy" and
"human rights," we will pay little heed to Pravda's solemn
denunciations of racism in the United States or state terror in its
client regimes, even less to protestation of noble motives. Far more
instructive is the state of affairs in the "people's democracies" of
Eastern Europe. The point is elementary, and applies to the
self-designated "gatekeeper and model" as well. Latin America is the
obvious testing ground, particularly the Central America-Caribbean
region. Here Washington has faced few external challenges for almost a
century, so the guiding principles of policy, and of today's
neoliberal "Washington consensus," are revealed most clearly when we
examine the state of the region, and how that came about.
It is of some interest that the exercise is rarely
undertaken, and if proposed, castigated as extremist or worse. I leave
it as an "exercise for the reader," merely noting that the record
teaches useful lessons about the political and economic principles
that are to be "the wave of the future."
Washington's "crusade for democracy," as it is
called, was waged with particular fervor during the Reagan years, with
Latin America the chosen terrain. The results are commonly offered as
a prime illustration of how the U.S. became "the inspiration for the
triumph of democracy in our time," to quote the editors of the
leading intellectual journal of American liberalism.[9]
The most recent scholarly study of democracy describes "the revival
of democracy in Latin America" as "impressive" but not
unproblematic; the "barriers to implementation" remain
"formidable," but can perhaps be overcome through closer integration
with the United States.[10] The author, Sanford
Lakoff, singles out the "historic North American Free Trade Agreement
(NAFTA)" as a potential instrument of democratization. In the region
of traditional U.S. influence, he writes, the countries are moving
towards democracy, having "survived military intervention" and
"vicious civil war."
Let us begin by looking more closely at these recent
cases, the natural ones given overwhelming U.S. influence, and the
ones regularly selected to illustrate the achievements and promise of
"America's mission."
The primary "barriers to implementation" of
democracy, Lakoff suggests, are the "vested interests" that seek to
protect "domestic markets" - that is, to prevent foreign (mainly
U.S.) corporations from gaining even greater control over the society.
We are to understand, then, that democracy is enhanced as significant
decision-making shifts even more into the hands of unaccountable
private tyrannies, mostly foreign-based. Meanwhile the public arena is
to shrink still further as the state is "minimized" in accordance
with the neoliberal "political and economic principles" that have
emerged triumphant. A study of the World Bank points out that the new
orthodoxy represents "a dramatic shift away from a pluralist,
participatory ideal of politics and towards an authoritarian and
technocratic ideal...," one that is very much in accord with leading
elements of twentieth century liberal and progressive thought, and in
another variant, the Leninist model; the two are more similar than
often recognized.[11]
Thinking through the tacit reasoning, we gain some
useful insight into the concepts of democracy and markets, in the
operative sense.
Lakoff does not look into the "revival of democracy"
in Latin America, but he does cite a scholarly source that includes a
contribution on Washington's crusade in the 1980s. The author is
Thomas Carothers, who combines scholarship with an "insider's
perspective," having worked on "democracy enhancement" programs in
Reagan's State Department.[12] Carothers regards
Washington's "impulse to promote democracy" as "sincere," but
largely a failure. Furthermore, the failure was systematic: where
Washington's influence was least, in South America, there was real
progress towards democracy, which the Reagan Administration generally
opposed, later taking credit for it when the process proved
irresistible. Where Washington's influence was greatest, progress was
least, and where it occurred, the U.S. role was marginal or negative.
His general conclusion is that the U.S. sought to maintain "the basic
order of...quite undemocratic societies" and to avoid
"populist-based change," "inevitably [seeking] only limited,
top-down forms of democratic change that did not risk upsetting the
traditional structures of power with which the United States has long
been allied."
The last phrase requires a gloss. The term "United
States" is conventionally used to refer to structures of power within
the United States; the "national interest" is the interest of these
groups, which correlates only weakly with interests of the general
population. So the conclusion is that Washington sought top-down forms
of democracy that did not upset traditional structures of power with
which the structures of power in the United States have long been
allied. Not a very surprising fact, or much of a historical novelty.
To appreciate the significance of the fact, it is
necessary to examine more closely the nature of parliamentary
democracies. The United States is the most important case, not only
because of its power, but because of its stable and long-standing
democratic institutions. Furthermore, the United States was about as
close to a model as one can find. America can be "As happy as she
pleases," Thomas Paine remarked in 1776: "she has a blank sheet to
write upon."[13] The indigenous societies were
largely eliminated. There is little residue of earlier European
structures, one reason for the relative weakness of the social
contract and of support systems, which often had their roots in
pre-capitalist institutions. And to an unusual extent, the
socio-political order was consciously designed. In studying history,
one cannot construct experiments, but the U.S. is as close to the
"ideal case" of state capitalist democracy as can be found.
Furthermore, the leading Framer of the constitutional
system was an astute and lucid political thinker, James Madison, whose
views largely prevailed. In the debates on the Constitution, Madison
pointed out that in England, if elections "were open to all classes
of people, the property of landed proprietors would be insecure. An
agrarian law would soon take place," giving land to the landless. The
system that he and his associates were designing must prevent such
injustice, he urged, and "secure the permanent interests of the
country," which are property rights. It is the responsibility of
government, Madison declared, "to protect the minority of the opulent
against the majority." To achieve this goal, political power must
rest in the hands of "the wealth of the nation," men who would
"sympathize sufficiently" with property rights and "be safe
depositories of power over them," while the rest are marginalized and
fragmented, offered only limited public participation in the political
arena. Among Madisonian scholars, there is a consensus that "The
Constitution was intrinsically an aristocratic document designed to
check the democratic tendencies of the period," delivering power to a
"better sort" of people and excluding "those who were not rich,
well born, or prominent from exercising political power."[14]
These conclusions are often qualified by the
observation that Madison, and the constitutional system generally,
sought to balance the rights of persons against the rights of
property. But the formulation is misleading. Property has no rights.
In both principle and practice, the phrase "rights of property"
means the right to property, typically material property, a
personal right which must be privileged above all others, and is
crucially different from others in that one person's possession of
such rights deprives another of them. When the facts are stated
clearly, we can appreciate the force of the doctrine that "the people
who own the country ought to govern it," "one of [the] favorite
maxims" of Madison's influential colleague John Jay, his biographer
observes.[15]
One may argue, as some historians do, that these
principles lost their force as the national territory was conquered
and settled, the native population driven out or exterminated.
Whatever one's assessment of those years, by the late 19th century the
founding doctrines took on a new and much more oppressive form. When
Madison spoke of "rights of persons," he meant humans. But the
growth of the industrial economy, and the rise of corporate forms of
economic enterprise, led to a completely new meaning of the term. In a
current official document, "`Person' is broadly defined to include
any individual, branch, partnership, associated group, association,
estate, trust, corporation or other organization (whether or not
organized under the laws of any State), or any government entity,"[16]
a concept that doubtless would have shocked Madison and others with
intellectual roots in the Enlightenment and classical liberalism -
pre-capitalist, and anti-capitalist in spirit.
These radical changes in the conception of human
rights and democracy were not introduced primarily by legislation, but
by judicial decisions and intellectual commentary. Corporations, which
previously had been considered artificial entities with no rights,
were accorded all the rights of persons, and far more, since they are
"immortal persons," and "persons" of extraordinary wealth and
power. Furthermore, they were no longer bound to the specific purposes
designated by State charter, but could act as they chose, with few
constraints. The intellectual backgrounds for granting such
extraordinary rights to "collectivist legal entities" lie in
neo-Hegelian doctrines that also underlie Bolshevism and fascism: the
idea that organic entities have rights over and above those of
persons. Conservative legal scholars bitterly opposed these
innovations, recognizing that they undermine the traditional idea that
rights inhere in individuals, and undermine market principles as
well.[17] But the new forms of authoritarian rule
were institutionalized, and along with them, the legitimation of wage
labor, which was considered hardly better than slavery in mainstream
American thought through much of the 19th century, not only by the
rising labor movement but also by such figures as Abraham Lincoln, the
Republican Party, and the establishment media.[18]
These are topics with enormous implications for
understanding the nature of market democracy. Again, I can only
mention them here. The material and ideological outcome helps explain
the understanding that "democracy" abroad must reflect the model
sought at home: "top-down" forms of control, with the public kept to
a "spectator" role, not participating in the arena of
decision-making, which must exclude these "ignorant and meddlesome
outsiders," according to the mainstream of modern democratic theory.
I happen to be quoting the essays on democracy by Walter Lippmann, one
of the most respected American public intellectuals and journalists of
the century.[19] But the general ideas are
standard and have solid roots in the constitutional tradition,
radically modified, however, in the new era of collectivist legal
entities.
Returning to the "victory of democracy" under U.S.
guidance, neither Lakoff nor Carothers asks how Washington maintained
the traditional power structure of highly undemocratic societies.
Their topic is not the terrorist wars that left tens of thousands of
tortured and mutilated corpses, millions of refugees, and devastation
perhaps beyond recovery - in large measure wars against the Church,
which became an enemy when it adopted "the preferential option for
the poor," trying to help suffering people to attain some measure of
justice and democratic rights. It is more than symbolic that the
terrible decade of the 1980s opened with the murder of an Archbishop
who had become "a voice for the voiceless," and closed with the
assassination of six leading Jesuit intellectuals who had chosen the
same path, in each case by terrorist forces armed and trained by the
victors of the "crusade for democracy." One should take careful note
of the fact that the leading Central American dissident intellectuals
were doubly assassinated: both murdered, and silenced. Their words,
indeed their very existence, are scarcely known in the United States,
unlike dissidents in enemy states, who are greatly honored and
admired; another cultural universal, I presume.
Such matters do not enter history as recounted by the
victors. In Lakoff's study, which is not untypical in this regard,
what survives are references to "military intervention" and "civil
wars," with no external factor identified. These matters will not so
quickly be put aside, however, by those who seek a better grasp of the
principles that are to shape the future, if the structures of power
have their way.
Particularly revealing is Lakoff's description of
Nicaragua, again standard: "a civil war was ended following a
democratic election, and a difficult effort is underway to create a
more prosperous and self-governing society." In the real world, the
superpower attacking Nicaragua escalated its assault after
the country's first democratic election: the election of 1984, closely
monitored and recognized as legitimate by the professional association
of Latin American scholars (LASA), Irish and British Parliamentary
delegations, and others, including a hostile Dutch government
delegation that was remarkably supportive of Reaganite atrocities, as
well as the leading figure of Central American democracy, Jos Figueres
of Costa Rica, also critical observer, though regarding the elections
as legitimate in this "invaded country," and calling on Washington
to allow the Sandinistas "to finish what they started in peace; they
deserve it." The U.S. strongly opposed the holding of the elections
and sought to undermine them, concerned that democratic elections
might interfere with its terrorist war. But that concern was put to
rest by the good behavior of the doctrinal system, which barred the
reports with remarkable efficiency, reflexively adopting the state
propaganda line that the elections were meaningless fraud.[20]
Overlooked as well is the fact that as the next
election approached on schedule,[21] Washington
left no doubt that unless the results came out the right way,
Nicaraguans would continue to endure the illegal economic warfare and
"unlawful use of force" that the World Court had condemned and
ordered terminated, of course in vain. This time the outcome was
acceptable, and hailed in the U.S. with an outburst of exuberance that
is highly informative.[22]
At the outer limits of critical independence,
columnist Anthony Lewis of the New York Times was overcome
with admiration for Washington's "experiment in peace and
democracy," which showed that "we live in a romantic age." The
experimental methods were no secret. Thus Time magazine,
joining in the celebration as "democracy burst forth" in Nicaragua,
outlined them frankly: to "wreck the economy and prosecute a long and
deadly proxy war until the exhausted natives overthrow the unwanted
government themselves," with a cost to us that is "minimal,"
leaving the victim "with wrecked bridges, sabotaged power stations,
and ruined farms," and providing Washington's candidate with "a
winning issue," ending the "impoverishment of the people of
Nicaragua," not to speak of the continuing terror, better left
unmentiond. To be sure, the cost to them was hardly "minimal":
Carothers notes that the toll "in per capita terms was significantly
higher than the number of U.S. persons killed in the U.S. Civil War
and all the wars of the twentieth century combined."[23]
The outcome was a "Victory for U.S. Fair Play," a headline in the
Times exulted, leaving Americans "United in Joy," in the style of
Albania and North Korea.
The methods of this "romantic age," and the reaction
to them in enlightened circles, tell us more about the democratic
principles that have emerged victorious. They also shed some light on
why it is such a "difficult effort" to "create a more prosperous
and self-governing society" in Nicaragua. It is true that the effort
is now underway, and is meeting with some success for a privileged
minority, while most of the population faces social and economic
disaster, all in the familiar pattern of Western dependencies.[24]
Note that it is precisely this example that led the editors to laud
themselves as "the inspiration for the triumph of democracy in our
time," joining the enthusiastic chorus.
We learn more about the victorious principles by
recalling that these same representative figures of liberal
intellectual life had urged that Washington's wars must be waged
mercilessly, with military support for "Latin-style
fascists,...regardless of how many are murdered," because "there are
higher American priorities than Salvadoran human rights."
Elaborating, editor Michael Kinsley, who represented "the left" in
mainstream commentary and television debate, cautioned against
unthinking criticism of Washington's official policy of attacking
undefended civilian targets. Such international terrorist operations
cause "vast civilian suffering," he acknowledged, but they may be
"perfectly legitimate" if "cost-benefit analysis" shows that "the
amount of blood and misery that will be poured in" yields
"democracy," as the world rulers define it. Enlightened opinion
insists that terror is not a value in itself, but must meet the
pragmatic criterion. Kinsley later observed that the desired ends had
been achieved: "impoverishing the people of Nicaragua was precisely
the point of the contra war and the parallel policy of economic
embargo and veto of international development loans," which "wreck[ed]
the economy" and "creat[ed] the economic disaster [that] was
probably the victorious opposition's best election issue." He then
joined in welcoming the "triumph of democracy" in the "free
election" of 1990.[25]
Client states enjoy similar privileges. Thus,
commenting on yet another of Israel's attacks on Lebanon, foreign
editor H.D.S. Greenway of the Boston Globe, who had
graphically reported the first major invasion 15 years earlier,
commented that "If shelling Lebanese villages, even at the cost of
lives, and driving civilian refugees north would secure Israel's
border, weaken Hezbollah, and promote peace, I would say go to it, as
would many Arabs and Israelis. But history has not been kind to
Israeli adventures in Lebanon. They have solved very little and have
almost always caused more problems." By the pragmatic criterion,
then, the murder of many civilians, expulsion of hundreds of thousand
of refugees, and devastation of southern Lebanon is a dubious
proposition.[26]
It would not be too hard, I presume, to find
comparable examples here in the recent past.
Bear in mind that I am keeping to the dissident sector
of tolerable opinion, what is called "the left," a fact that tells
us more about the victorious principles and the intellectual culture
within which they find their place.
Also revealing was the reaction to periodic Reagan
Administration allegations about Nicaraguan plans to obtain jet
interceptors from the Soviet Union (the U.S. having coerced its allies
into refusing to sell them). Hawks demanded that Nicaragua be bombed
at once. Doves countered that the charges must first be verified, but
if they were, the U.S. would have to bomb Nicaragua. Sane observers
understood why Nicaragua might want jet interceptors: to protect its
territory from CIA overflights that were supplying the U.S. proxy
forces and providing them with up-to-the-minute information so that
they could follow the directive to attack undefended "soft targets."
The tacit assumption is that no country has a right to defend
civilians from U.S. attack. The doctrine, which reigned challenged, is
an interesting one. It might be illuminating to seek counterparts
elsewhere.
The pretext for Washington's terrorist wars was self-defense,
the standard official justification for just about any monstrous act,
even the Nazi Holocaust. Indeed Ronald Reagan, finding "that the
policies and actions of the Government of Nicaragua constitute an
unusual and extraordinary threat to the national security and foreign
policy of the United States," declared "a national emergency to deal
with that threat," arousing no ridicule.[27]
Others react differently. In response to John F. Kennedy's efforts to
organize collective action against Cuba in 1961, a Mexican diplomat
explained that Mexico could not go along, because "If we publicly
declare that Cuba is a threat to our security, forty million Mexicans
will die laughing."[28] Enlightened opinion in
the West takes a more sober view of the extraordinary threat to
national security. By similar logic, the USSR had every right to
attack Denmark, a far greater threat to its security, and surely
Poland and Hungary when they took steps towards independence. The fact
that such pleas can regularly be put forth is again an interesting
comment on the intellectual culture of the victors, and another
indication of what lies ahead.
The substance of the Cold War pretexts is greatly
illuminated by the case of Cuba, as are the real operative principles.
These have emerged with much clarity once again in the past few weeks,
with Washington's refusal to accept World Trade Organization
adjudication of a European Union challenge to its embargo, which is
unique in its severity, and had already been condemned as a violation
of international law by the Organization of American States and
repeatedly by the United Nations, with near unanimity, more recently
extended to severe penalties for third parties that disobey
Washington's edicts, yet another violation of international law and
trade agreements. The official response of the Clinton Administration,
as reported by the Newspaper of Record, is that "Europe is
challenging `three decades of American Cuba policy that goes back to
the Kennedy Administration,' and is aimed entirely at forcing a change
of government in Havana."[29] The Administration
also declared that the W.T.O. "has no competence to proceed" on an
issue of American national security, and cannot "force the U.S. to
change its laws."
At the very same moment, Washington and the media were
lauding the W.T.O. Telecommunications agreement as a "new tool of
foreign policy" that compels other countries to change their laws and
practices in accord with Washington's demands, incidentally handing
over their communications systems to mainly U.S. megacorporations in
yet another serious blow against democracy.[30]
But the W.T.O. has no authority to compel the U.S. to change its laws,
just as the World Court has no authority to compel the U.S. to
terminate its international terrorism and illegal economic warfare.
Free trade and international law are like democracy: fine ideas, but
to be judged by outcome, not process.
The reasoning with regard to the W.T.O. is reminiscent
of the official U.S. grounds for dismissing World Court adjudication
of Nicaragua's charges. In both cases, the U.S. rejected jurisdiction
on the plausible assumption that rulings would be against the U.S.; by
simple logic, then, neither is a proper forum. The State Department
Legal Adviser explained that when the U.S. accepted World Court
jurisdiction in the 1940s, most members of the U.N. "were aligned
with the United States and shared its views regarding world order."
But now "A great many of these cannot be counted on to share our view
of the original constitutional conception of the U.N. Charter," and
"This same majority often opposes the United States on important
international questions." Lacking a guarantee that it will get its
way, the U.S. must now "reserve to ourselves the power to determine
whether the Court has jurisdiction over us in a particular case," on
the principle that "the United States does not accept compulsory
jurisdiction over any dispute involving matters essentially within the
domestic jurisdiction of the United States, as determined by the
United States." The "domestic matters" in question were the U.S.
attack against Nicaragua.[31]
The media, along with intellectual opinion generally,
agreed that the Court discredited itself by ruling against the United
States. The crucial parts of its decision were not reported, including
its determination that all U.S. aid to the contras is military and not
humanitarian; it remained "humanitarian aid" across the spectrum of
respectable opinion until Washington's terror, economic warfare, and
subversion of diplomacy brought about the "Victory for U.S. Fair
Play."[32]
Returning to the W.T.O. case, we need not tarry on the
allegation that the existence of the United States is at stake in the
strangulation of the Cuban economy. More interesting is the thesis
that the U.S. has every right to overthrow another government, in this
case, by aggression, large-scale terror over many years, and economic
strangulation. Accordingly, international law and trade agreements are
irrelevant. The fundamental principles of world order that have
emerged victorious again resound, loud and clear.
The Clinton Administration declarations passed without
challenge, though they were criticized on narrower grounds by
historian Arthur Schlesinger. Writing "as one involved in the Kennedy
Administration's Cuban policy," Schlesinger maintained that the
Clinton Administration had misunderstood Kennedy's policies. The
concern had been Cuba's "troublemaking in the hemisphere" and "the
Soviet connection," Schlesinger explained.[33]
But these are now behind us, so the Clinton policies are an
anachronism, though otherwise unobjectionable, so we are to conclude.
Schlesinger did not explain the meaning of the phrases
"troublemaking in the hemisphere" and "the Soviet connection," but
he has elsewhere, in secret. Reporting to incoming President Kennedy
on the conclusions of a Latin American Mission in early 1961,
Schlesinger spelled out the problem of Castro's "troublemaking" -
what the Clinton Administration calls Cuba's effort "to destabilize
large parts of Latin America:" it is "the spread of the Castro idea
of taking matters into one's own hands," a serious problem,
Schlesinger added, when "The distribution of land and other forms of
national wealth greatly favors the propertied classes...[and] The poor
and underprivileged, stimulated by the example of the Cuban
revolution, are now demanding opportunities for a decent living."
Schlesinger also explained the threat of the "Soviet connection":
"Meanwhile, the Soviet Union hovers in the wings, flourishing large
development loans and presenting itself as the model for achieving
modernization in a single generation."[34] The
"Soviet connection" was perceived in a similar light far more
broadly in Washington and London, from the origins of the Cold War 80
years ago.
With these (secret) explanations of Castro's
"destabilization" and "troublemaking in the hemisphere," and of
the "Soviet connection," we come closer to an understanding of the
reality of the Cold War, another important topic I will have to put
aside. It should come as no surprise that basic policies persist with
the Cold War a fading memory, just as they were carried out before the
Bolshevik revolution: the brutal and destructive invasion of Haiti and
the Dominican Republic, to mention just one illustration of "global
meliorism" under the banner of "Wilsonian idealism."
It should be added that the policy of overthrowing the
government of Cuba antedates the Kennedy Administration. Castro took
power in January 1959. By June, the Eisenhower Administration had
determined that his government must be overthrown. Terrorist attacks
from U.S. bases began shortly after. The formal decision to overthrow
Castro in favor of a regime "more devoted to the true interests of
the Cuban people and more acceptable to the U.S." was taken in secret
in March 1960, with the addendum that the operation must be carried
out "in such a manner as to avoid any appearance of U.S.
intervention," because of the expected reaction in Latin America and
the need to ease the burden on doctrinal managers at home. At the
time, the "Soviet connection" and "troublemaking in the
hemisphere" were nil, apart from the Schlesingerian version. The CIA
estimated that the Castro government enjoyed popular support (the
Clinton Administration has similar evidence today). The Kennedy
Administration also recognized that its efforts violated international
law and the Charters of the UN and OAS, but such issues were dismissed
without discussion, the declassified record reveals.[35]
Let us move on to NAFTA, the "historic" agreement
that may help to advance U.S.-style democracy in Mexico, Lakoff
suggests. A closer look is again informative. The NAFTA agreement was
rammed through Congress over strenuous popular opposition but with
overwhelming support from the business world and the media, which were
full of joyous promises of benefits for all concerned, also
confidently predicted by the U.S. International Trade Commission and
leading economists equipped with the most up-to-date models (which had
just failed miserably to predict the deleterious consequences of the
U.S.-Canada Free Trade Agreement, but were somehow going to work in
this case). Completely suppressed was the careful analysis by the
Office of Technology Assessment (the research bureau of Congress),
which concluded that the planned version of NAFTA would harm most of
the population of North America, proposing modifications that could
render the agreement beneficial beyond small circles of investment and
finance. Still more instructive was the suppression of the official
position of the U.S. labor movement, presented in a similar analysis.
Meanwhile labor was bitterly condemned for its "backward,
unenlightened" perspective and "crude threatening tactics,"
motivated by "fear of change and fear of foreigners"; I am again
sampling only from the far left of the spectrum, in this case, Anthony
Lewis. The charges were demonstrably false, but they were the only
word that reached the public in this inspiring exercise of democracy.
Further details are most illuminating, and reviewed in the dissident
literature at the time and since, but kept from the public eye, and
unlikely to enter approved history.[36]
By now, the tales about the wonders of NAFTA have
quietly been been shelved, as the facts have been coming in. One hears
no more about the hundreds of thousands of new jobs and other great
benefits in store for the people of the three countries. These good
tidings have been replaced by the "distinctly benign economic
viewpoint" - the "experts' view" - that NAFTA had no significant
effects. The Wall Street Journal reports that "Administration
officials feel frustrated by their inability to convince voters that
the threat doesn't hurt them" and that job loss is "much less than
predicted by Ross Perot," who was allowed into mainstream discussion
(unlike the OTA, the Labor movement, economists who didn't echo the
Party Line, and of course dissident analysts) because his claims were
sometimes extreme and easily ridiculed. "`It's hard to fight the
critics' by telling the truth - that the trade pact `hasn't really
done anything'," an administration official observes sadly. Forgotten
is what "the truth" was going to be when the impressive exercise in
democracy was roaring full steam ahead.[37]
While the experts have downgraded NAFTA to "no
significant effects," dispatching the earlier "experts' view" to
the memory hole, a less than "distinctly benign economic viewpoint"
comes into focus if the "national interest" is widened in scope to
include the general population. Testifying before the Senate Banking
Committee in February 1997, Federal Reserve Board Chair Alan Greenspan
was highly optimistic about "sustainable economic expansion" thanks
to "atypical restraint on compensation increases [which] appears to
be mainly the consequence of greater worker insecurity" - an obvious
desideratum for a just society. The February 1997 Economic Report of
the President, taking pride in the Administration's achievements,
refers more obliquely to "changes in labor market institutions and
practices" as a factor in the "significant wage restraint" that
bolsters the health of the economy.
One reason for these benign changes is spelled out in
a study commissioned by the NAFTA Labor Secretariat "on the effects
of the sudden closing of the plant on the principle of freedom of
association and the right of workers to organize in the three
countries." The study was carried out under NAFTA rules in response
to a complaint by telecommunications workers on illegal labor
practices by Sprint. The complaint was upheld by the U.S. National
Labor Relations Board, which ordered trivial penalties after years of
delay, the standard procedure. The NAFTA study, by Cornell University
Labor economist Kate Bronfenbrenner, has been authorized for release
by Canada and Mexico, but not by the Clinton Administration. It
reveals a significant impact of NAFTA on strike-breaking. About half
of union organizing efforts are disrupted by employer threats to
transfer production abroad; for example, by placing signs reading
"Mexico Transfer Job" in front of a plant where there is an
organizing drive. The threats are not idle: when such organizing
drives nevertheless succeed, employers close the plant in whole or in
part at triple the pre-NAFTA rate (about 15% of the time).
Plant-closing threats are almost twice as high in more mobile
industries (e.g., manufacturing vs. construction).
These and other practices reported in the study are
illegal, but that is a technicality, on a par with violations of
international law and trade agreements when outcomes are unacceptable.
The Reagan Administration had made it clear to the business world that
their illegal anti-union activities would not be hampered by the
criminal state, and successors have kept to this stand. There has been
a substantial effect on destruction of unions - or in more polite
words, "changes in labor market institutions and practices" that
contribute to "significant wage restraint" within an economic model
offered with great pride to a backward world that has not yet grasped
the victorious principles that are to lead the way to freedom and
justice.[38]
What was reported all along outside the mainstream
about the goals of NAFTA is also now quietly conceded: the real goal
was to "lock Mexico in" to the "reforms" that had made it an
"economic miracle," in the technical sense of this term: a
"miracle" for U.S. investors and the Mexican rich, while the
population sank into misery. The Clinton Administration "forgot that
the underlying purpose of NAFTA was not to promote trade but to cement
Mexico's economic reforms," Newsweek correspondent Marc Levinson
loftily declares, failing only to add that the contrary was loudly
proclaimed to ensure the passage of NAFTA while critics who pointed
out this "underlying purpose" were efficiently excluded from the
free market of ideas by its owners. Perhaps some day the reasons will
be conceded too. "Locking Mexico in" to these reforms, it was hoped,
would deflect the danger detected by a Latin America Strategy
Development Workshop in Washington in September 1990. It concluded
that relations with the brutal Mexican dictatorship were fine, though
there was a potential problem: "a `democracy opening' in Mexico could
test the special relationship by bringing into office a government
more interested in challenging the US on economic and nationalist
grounds"[39] - no longer a serious problem now
that Mexico is "locked into the reforms" by treaty. The U.S. has the
power to disregard treaty obligations at will; not Mexico.
In brief, the threat is democracy, at home and abroad,
as the chosen example again illustrates. Democracy is permissible,
even welcome, but again, as judged by outcome, not process. NAFTA was
considered to be an effective device to diminish the threat of
democracy. It was implemented at home by effective subversion of the
democratic process, and in Mexico by force, again over vain public
protest. The results are now presented as a hopeful instrument to
bring American-style democracy to benighted Mexicans. A cynical
observer aware of the facts might agree.
Once again, the chosen illustrations of the triumph of
democracy are natural ones, and are interesting and revealing as well,
though not quite in the intended manner.
Markets are always a social construction, and in the
specific form being crafted by current social policy they should serve
to restrict functioning democracy, as in the case of NAFTA, the W.T.O.
agreements, and other instruments that may lie ahead. One case that
merits close attention is the Multilateral Agreement on Investment
(MAI) that is now being forged by the OECD, the rich men's club, and
the W.T.O. (where it is the MIA). The apparent hope is that the
agreement will be adopted without public awareness, as was the initial
intention for NAFTA, not quite achieved, though the "information
system" managed to keep the basic story under wraps. If the plans
outlined in draft texts are implemented, the whole world may be
"locked into" treaty arrangements that provide Transnational
Corporations with still more powerful weapons to restrict the arena of
democratic politics, leaving policy largely in the hands of huge
private tyrannies that have ample means of market interference as
well. The efforts may be blocked at the W.T.O. because of the strong
protests of the "developing countries," notably India and Malaysia,
which are not eager to become wholly-owned subsidiaries of great
foreign enterprises. But the OECD version may fare better, to be
presented to the rest of the world as a fait accompli, with the
obvious consequences. All of this proceeds in impressive secrecy, so
far.[40]
The announcement of the Clinton Doctrine was
accompanied by a prize example to illustrate the victorious
principles: What the Administration had achieved in Haiti. Since this
is again offered as the strongest case, it would only be appropriate
to look at it.
True, Haiti's elected President was allowed to return,
but only after the popular organizations had been subjected to three
years of terror by forces that retained close connections to
Washington throughout; the Clinton Administration still refuses to
turn over to Haiti 160,000 pages of documents on state terror seized
by U.S. military forces - "to avoid embarrassing revelations" about
U.S. government involvement with the coup regime, according to Human
Rights Watch.[41] It was also necessary to put
President Aristide through "a crash course in democracy and
capitalism," as his leading supporter in Washington described the
process of civilizing the troublesome priest.
The device is not unknown elsewhere, as an unwelcome
transition to formal democracy is contemplated.
As a condition on his return, Aristide was compelled
to accept an economic program that directs the policies of the Haitian
government to the needs of "Civil Society, especially the private
sector, both national and foreign": U.S. investors are designated to
be the core of Haitian Civil Society, along with wealthy Haitians who
backed the military coup, but not the Haitian peasants and
slum-dwellers who organized a civil society so lively and vibrant that
they were even able to elect their own president against overwhelming
odds, eliciting instant U.S. hostility and efforts to subvert Haiti's
first democratic regime.[42]
The unacceptable acts of the "ignorant and meddlesome
outsiders" in Haiti were reversed by violence, with direct U.S.
complicity, not only through contacts with the state terrorists in
charge. The Organization of American States declared an embargo. The
Bush and Clinton Administrations undermined it from the start by
exempting U.S. firms, and also by secretly authorizing the Texaco Oil
Company to supply the coup regime and its wealthy supporters in
violation of the official sanctions, a crucial fact that was
prominently revealed the day before U.S. troops landed to "restore
democracy,"[43] but has yet to reach the public,
and is an unlikely candidate for the historical record.
Now democracy has been restored. The new government
has been forced to abandon the democratic and reformist programs that
scandalized Washington, and to follow the policies of Washington's
candidate in the 1990 election, in which he received 14% of the vote.
The prize example tells us more about the meaning and
implications of the victory for "democracy and open markets."
Haitians seem to understand the lessons, even if
doctrinal managers in the West prefer a different picture.
Parliamentary elections in April 1997 brought forth "a dismal 5
percent" of voters, the press reported, thus raising the question
"Did Haiti Fail US Hope?"[44] We have sacrificed
so much to bring them democracy, but they are ungrateful and unworthy.
One can see why "realists" urge that we stay aloof from crusades of
"global meliorism."
Similar attitudes hold throughout the hemisphere.
Polls show that in Central America, politics elicits "boredom,"
"distrust" and "indifference" in proportions far outdistancing
"interest" or "enthusiasm" among "an apathetic public...which
feels itself a spectator in its democratic system" and has "general
pessimism about the future." The first Latin America survey,
sponsored by the EU, found much the same: "the survey's most alarming
message," the Brazilian coordinator commented, was "the popular
perception that only the elite had benefited from the transition to
democracy."[45] Latin American scholars observe
that the recent wave of democratization coincided with neoliberal
economic reforms, which have been very harmful for most people,
leading to a cynical appraisal of formal democratic procedures. The
introduction of similar programs in the richest country in the world
has had similar effects. By the early 1990s, after 15 years of a
domestic version of structural adjustment, over 80% of the U.S.
population had come to regard the democratic system as a sham, with
business far too powerful, and the economy as "inherently unfair."
These are natural consequences of the specific design of "market
democracy" under business rule.
Natural, and not unexpected. Neoliberalism is
centuries old, and its effects should not be unfamiliar. The
well-known economic historian Paul Bairoch points out that "there is
no doubt that the Third World's compulsory economic liberalism in the
nineteenth century is a major element in explaining the delay in its
industrialization," or even "deindustrialization," while Europe and
the regions that managed to stay free of its control developed by
radical violation of these principles.[46]
Referring to the more recent past, Arthur Schlesinger's secret report
on Kennedy's Latin American mission realistically criticized "the
baleful influence of the International Monetary Fund," then pursuing
the 1950's version of today's "Washington Consensus" ("structural
adjustment," "neoliberalism"). Despite much confident rhetoric, not
much is understood about economic development. But some lessons of
history seem reasonably clear, and not hard to understand.
Let us return to the prevailing doctrine that
"America's victory in the Cold War" was a victory for democracy and
the free market. With regard to democracy, the doctrine is partially
true, though we have to understand what is meant by "democracy":
top-down control "to protect the minority of the opulent against the
majority." What about the free market? Here too, we find that
doctrine is far removed from reality, as several examples have already
illustrated.
Consider again the case of NAFTA, an agreement
intended to lock Mexico into an an economic discipline that protects
investors from the danger of a "democracy opening." Its provisions
tell us more about the economic principles that have emerged
victorious. It is not a "free trade agreement." Rather, it is highly
protectionist, designed to impede East Asian and European competitors.
Furthermore, it shares with the global agreements such anti-market
principles as "intellectual property rights" restrictions of an
extreme sort that rich societies never accepted during their period of
development, but that they now intend to use to protect home-based
corporations: to destroy the pharmaceutical industry in poorer
countries, for example - and, incidentally, to block technological
innovations, such as improved production processes for patented
products; progress is no more a desideratum than markets, unless it
yields benefits for those who count.
There are also questions about the nature of
"trade." Over half of U.S. trade with Mexico is reported to consist
of intrafirm transactions, up about 15% since NAFTA. For example,
already a decade ago, mostly U.S.-owned plants in Northern Mexico
employing few workers and with virtually no linkages to the Mexican
economy produced more than 1/3 of engine blocks used in U.S. cars and
3/4 of other essential components. The post-NAFTA collapse of the
Mexican economy in 1994, exempting only the very rich and U.S.
investors (protected by U.S. government bailouts), led to an increase
of U.S.-Mexico trade as the new crisis, driving the population to
still deeper misery, "transformed Mexico into a cheap [i.e., even
cheaper] source of manufactured goods, with industrial wages one-tenth
of those in the US," the business press reports. Ten years ago
According to some specialists, half of U.S. trade worldwide consists
of such centrally-managed transactions and much the same is true of
other industrial powers,[47] though one must treat
with caution conclusions about institutions with limited public
accountability. Some economists have plausibly described the world
system as one of "corporate mercantilism," remote from the ideal of
free trade. The OECD concludes that "Oligopolistic competition and
strategic interaction among firms and governments rather than the
invisible hand of market forces condition today's competitive
advantage and international division of labor in high-technology
industries,"[48] implicitly adopting a similar
view.
Even the basic structure of the domestic economy
violates the neoliberal principles that are hailed. The main theme of
the standard work on U.S. business history is that "modern business
enterprise took the place of market mechanisms in coordinating the
activities of the economy and allocating its resources," handling
many transactions internally, another large departure from market
principles.[49] There are many others. Consider,
for example, the fate of Adam Smith's principle that free movement of
people is an essential component of free trade - across borders, for
example. When we move on to the world of Transnational Corporations,
with strategic alliances and critical support from powerful states,
the gap between doctrine and reality becomes substantial.
Free market theory comes in two varieties: the
official doctrine, and what we might call "really existing free
market doctrine": Market discipline is good for you, but I need the
protection of the nanny state. The official doctrine is imposed on the
defenseless, but it is "really existing doctrine" that has been
adopted by the powerful since the days when Britain emerged as
Europe's most advanced fiscal-military and developmental state, with
sharp increases in taxation and efficient public administration as the
state became "the largest single actor in the economy" and its
global expansion,[50] establishing a model that
has been followed to the present in the industrial world, surely by
the United States, from its origins.
Britain did finally turn to liberal internationalism -
in 1846, after 150 years of protectionism, violence, and state power
had placed it far ahead of any competitor. But the turn to the market
had significant reservations. 40% of British textiles continued to go
to colonized India, and much the same was true of British exports
generally. British steel was kept from U.S. markets by very high
tariffs that enabled the United States to develop its own steel
industry. But India and other colonies were still available, and
remained so when British steel was priced out of international
markets. India is an instructive case; it produced as much iron as all
of Europe in the late 18th century, and British engineers were
studying more advanced Indian steel manufacturing techniques in 1820
to try to close "the technological gap." Bombay was producing
locomotives at competitive levels when the railway boom began. But
"really existing free market doctrine" destroyed these sectors of
Indian industry just as it had destroyed textiles, ship-building, and
other industries that were advanced by the standards of the day. The
U.S. and Japan, in contrast, had escaped European control, and could
adopt Britain's model of market interference.
When Japanese competition proved to be too much to
handle, England simply called off the game: the empire was effectively
closed to Japanese exports, part of the background of World War II.
Indian manufacturers asked for protection at the same time - but
against England, not Japan. No such luck, under really existing free
market doctrine.[51]
With the abandonment of its restricted version of
laissez-faire in the 1930s, the British government turned to more
direct intervention into the domestic economy as well. Within a few
years, machine tool output increased five times, along with a boom in
chemicals, steel, aerospace, and a host of new industries, "an unsung
new wave of industrial revolution," Will Hutton writes.
State-controlled industry enabled Britain to outproduce Germany during
the war, even to narrow the gap with the U.S., which was then
undergoing its own dramatic economic expansion as corporate managers
took over the state-coordinated wartime economy.[52]
A century after England turned to a form of liberal
internationalism, the U.S. followed the same course. After 150 years
of protectionism and violence, the U.S. had become by far the richest
and most powerful country in the world, and like England before it,
came to perceive the merits of a "level playing field" on which it
could expect to crush any competitor. But like England, with crucial
reservations.
One was that Washington used its power to bar
independent development elsewhere, as England had done. In Latin
America, Egypt, South Asia, and elsewhere, development was to be
"complementary," not "competitive." There was also large-scale
interference with trade. For example, Marshall Plan aid was tied to
purchase of U.S. agricultural products, part of the reason why the
U.S. share in world trade in grains increased from less than 10%
before the war to more than half by 1950, while Argentine exports
reduced by two-thirds. U.S. Food for Peace aid was also used both to
subsidize U.S. agribusiness and shipping and to undercut foreign
producers, among other measures to prevent independent development.[53]
The virtual destruction of Colombia's wheat growing by such means is
one of the factors in the growth of the drug industry, which has been
further accelerated throughout the Andean region by the neoliberal
policies of the past few years. Kenya's textile industry collapsed in
1994 when the Clinton Administration imposed a quota, barring the path
to development that has been followed by every industrial country,
while "African reformers" are warned that they "must make more
progress" in improving the conditions for business operations and
"sealing in free-market reforms" with "trade and investment
policies" that meet the requirements of Western investors. In
December 1996 Washington barred exports of tomatoes from Mexico in
violation of NAFTA and W.T.O. rules (though not technically, because
it was a sheer power play and did not require an official tariff), at
a cost to Mexican producers of close to $1 billion annually. The
official reason for this gift to Florida growers is that prices were
"artificially suppressed by Mexican competition" and Mexican
tomatoes were preferred by U.S. consumers. In other words, free market
principles were working, but with the wrong outcome.[54]
These are only scattered illustrations.
One revealing is example is Haiti, along with Bengal
the world's richest colonial prize and the source of a good part of
France's wealth, largely under U.S. control since Wilson's Marines
invaded 80 years ago, and by now such a catastrophe that it may
scarcely be habitable in the not-too-distant future. In 1981, a USAID-World
Bank development strategy was initiated, based on assembly plants and
agroexport, shifting land from food for local consumption. USAID
forecast "a historic change toward deeper market interdependence with
the United States" in what would become "the Taiwan of the
Caribbean." The World Bank concurred, offering the usual
prescriptions for "expansion of private enterprises" and
minimization of "social objectives," thus increasing inequality and
poverty, and reducing health and educational levels; it may be noted,
for what it is worth, that these standard prescriptions are offered
side-by-side with sermons on the need to reduce inequality and poverty
and improve health and educational levels, while World Bank technical
studies recognize that relative equality and high health and
educational standards are crucial factors in economic growth. In the
Haitian case, the consequences were the usual ones: profits for U.S.
manufacturers and the Haitian superrich, and a decline of 56% in
Haitian wages through the 1980s - in short, an "economic miracle."
Haiti remained Haiti, not Taiwan, which had followed a radically
different course, as advisers must surely know.
It was the effort of Haiti's first democratic
government to alleviate the growing disaster that called forth
Washington's hostility and the military coup and terror that followed.
With "democracy restored," USAID is withholding aid to ensure that
cement and flour mills are privatized for the benefit of wealthy
Haitians and foreign investors (Haitian "Civil Society," according
to the orders that accompanied the restoration of democracy), while
barring expenditures for health and education. Agribusiness receives
ample funding, but no resources are made available for peasant
agriculture and handicrafts, which provide the income of the
overwhelming majority of the population. Foreign-owned assembly plants
that employ workers (mostly women) at well below subsistence pay under
horrendous working conditions benefit from cheap electricity,
subsidized by the generous supervisor. But for the Haitian poor - the
general population - there can be no subsidies for electricity, fuel,
water or food; these are prohibited by IMF rules on the principled
grounds that they constitute "price control." Before the "reforms"
were instituted, local rice production supplied virtually all domestic
needs, with important linkages to the domestic economy. Thanks to
one-sided "liberalization," it now provides only 50%, with the
predictable effects on the economy. The liberalization is, crucially,
one-sided. Haiti must "reform," eliminating tariffs in accord with
the stern principles of economic science - which, by some miracle of
logic, exempt U.S. agribusiness; it continues to receive huge public
subsidies, increased by the Reagan Administration to the point where
they provided 40% of growers' gross incomes by 1987. The natural
consequences are understood, and intended: a 1995 USAID report
observes that the "export-driven trade and investment policy" that
Washington mandates will "relentlessly squeeze the domestic rice
farmer," who will be forced to turn to the more rational pursuit of
agroexport for the benefit of U.S. investors, in accord with the
principles of rational expectations theory.[55]
By such methods, the most impoverished country in the
hemisphere has been turned into a leading purchaser of U.S.-produced
rice, enriching publicly-subsidized U.S. enterprises. Those lucky
enough to have received a good Western education can doubtless explain
that the benefits will trickle down to Haitian peasants and
slumdwellers - ultimately. Africans may choose to follow a similar
path, as currently advised by the leaders of "global meliorism" and
local elites, and perhaps may see no choice under existing
circumstances - a questionable judgment, I suspect. But if they do, it
should be with eyes open.
The last example illustrates the most important
departures from official free trade doctrine, more significant in the
modern era than protectionism, which was far from the most radical
interference with the doctrine in earlier periods either though it is
the one usually studied under the conventional breakdown of
disciplines, which makes its own useful contribution to disguising
social and political realities. To mention one obvious example, the
industrial revolution depended on cheap cotton, just as the "golden
age" of contemporary capitalism has depended on cheap energy, but the
methods for keeping the crucial commodities cheap and available, which
hardly conform to market principles, do not fall within the
professional discipline of economics.
One fundamental component of free trade theory is that
public subsidies are not allowed. But after World War II, U.S.
business leaders expected that the economy would collapse without the
massive state intervention during the war that had finally overcome
the great depression. They also insisted that advanced industry
"cannot satisfactorily exist in a pure, competitive, unsubsidized,
`free enterprise' economy" and that "the government is their only
possible savior" (Fortune, Business Week, expressing a general
consensus). They recognized that the Pentagon system would be the best
way to transfer costs to the public. Social spending could play the
same stimulative role, but it has defects: it is not a direct subsidy
to the corporate sector, it has democratizing effects, and it is
redistributive. Military spending has none of these unwelcome
features. It is also easy to sell, by deceit. President Truman's Air
Force Secretary put the matter simply: we should not use the word
"subsidy," he said; the word to use is "security." He made sure
the military budget would "meet the requirements of the aircraft
industry," as he put it. One consequence is that civilian aircraft is
now the country's leading export, and the huge travel and tourism
industry, aircraft-based, is the source of major profits.[56]
It was quite appropriate for Clinton to choose Boeing
as "a model for companies across America" as he preached his "new
vision" of the free market future, to much acclaim. A fine example of
really existing markets, civilian aircraft production is now mostly in
the hands of two firms, Boeing-McDonald and Airbus, each of which owes
its existence and success to large-scale public subsidy. The same
pattern prevails in computers and electronics generally, automation,
biotechnology, communications, in fact just about every dynamic sector
of the economy.[57]
There was no need to explain this central feature of
"really existing free market capitalism" to the Reagan
Administration. They were masters at the art, extolling the glories of
the market to the poor at home and the service areas abroad while
boasting proudly to the business world that Reagan had "granted more
import relief to U.S. industry than any of his predecessors in more
than half a century" - in reality, more than all predecessors
combined, as they "presided over the greatest swing toward
protectionism since the 1930s," shifting the U.S. from "being the
world's champion of multilateral free trade to one of its leading
challengers," the journal of the Council on Foreign Relations
commented in a review of the decade. The Reaganites led "the
sustained assault on [free trade] principle" by the rich and powerful
from the early 1970's that is deplored in a scholarly review by GATT
secretariat economist Patrick Low, who estimates the restrictive
effects of Reaganite measures at about three times those of other
leading industrial countries.[58]
The great "swing toward protectionism" was only a
part of the "sustained assault" on free trade principles that was
accelerated under "Reaganite rugged individualism." Another chapter
of the story includes the huge transfer of public funds to private
power, often under the traditional guise of "security," a "defense
buildup [that] actually pushed military R&D spending (in constant
dollars) past the record levels of the mid-1960s," Stuart Leslie
notes.[59] The public was terrified with foreign
threats (Russians, Libyans, etc.), but the Reaganite message to the
business world was again much more honest. Without such extreme
measures of market interference, it is doubtful that the U.S.
automotive, steel, machine tool, semiconductor industries, and others,
would have survived Japanese competition or been able to forge ahead
in emerging technologies, with broad effects through the economy.
There is also no need to explain the operative
doctrines to the leader of today's "conservative revolution," Newt
Gingrich, who sternly lectures 7-year old children on the evils of
welfare dependency while holding a national prize for directing public
subsidies to his rich constituents. Or to the Heritage Foundation,
which crafts the budget proposals for the congressional
"conservatives," and therefore called for (and obtained) an increase
in Pentagon spending beyond Clinton's increase to ensure that the "defense
industrial base" remains solid, protected by state power and offering
dual-use technology to its beneficiaries to enable them to dominate
commercial markets and enrich themselves at public expense.
All understand very well that free enterprise means
that the public pays the costs and bears the risks if things go wrong;
for example bank and corporate bailouts that have cost the public
hundreds of billions of dollars in recent years. Profit is to be
privatized, but cost and risk socialized, in really existing market
systems. The centuries-old tale proceeds today without notable change,
not only in the United States, of course.
Public statements have to be interpreted in the light
of these realities, among them, Clinton's current call for
trade-not-aid for Africa, with a series of provisions that just happen
to benefit U.S. investors and uplifting rhetoric that manages to avoid
such matters as the long record of such approaches and the fact that
the U.S. already had the most miserly aid program of any developed
country even before the grand innovation. Or to take the obvious
model, consider Chester Crocker's explanation of Reagan Administration
plans for Africa in 1981. "We support open market opportunities,
access to key resources, and expanding African and American
economies," he said, and want to bring African countries "into the
mainstream of the free market economy." The statement may seem to
surpass cynicism, coming from the leaders of the "sustained assault"
against "the free market economy." But Crocker's rendition is fair
enough, when it is passed through the prism of really existing market
doctrine. The market opportunities and access to resources are for
foreign investors and their local associates, and the economies are to
expand in a specific way, protecting "the minority of the opulent
against the majority." The opulent, meanwhile, merit state protection
and public subsidy. How else can they flourish, for the benefit of
all?
To illustrate "really existing free market theory"
with a different measure, the most extensive study of TNCs found that
"Virtually all of the world's largest core firms have experienced a
decisive influence from government policies and/or trade barriers on
their strategy and competitive position" and "at least twenty
companies in the 1993 Fortune 100 would not have survived at all as
independent companies, if they had not been saved by their respective
governments," by socializing losses or simple state takeover when
they were in trouble. One is the leading employer in Gingrich's deeply
conservative district, Lockheed, saved from collapse by $2 billion
government loan guarantees. The same study points out that government
intervention, which has "been the rule rather than the exception over
the past two centuries,...has played a key role in the development and
diffusion of many product and process innovations - particularly in
aerospace, electronics, modern agriculture, materials technologies,
energy and transportation technology," as well as telecommunications
and information technologies generally (the Internet and World Wide
Web are striking recent examples), and in earlier days, textiles and
steel, and of course energy. Government policies "have been an
overwhelming force in shaping the strategies and competitiveness of
the world's largest firms."[60] Other technical
studies confirm these conclusions.
As these examples indicate, the United States is not
alone in its conceptions of "free trade," even if its ideologues
often lead the cynical chorus. The gap between rich and poor countries
from 1960 is substantially attributable to protectionist measures of
the rich, the UN Development Report concluded in 1992. The 1994 report
concluded that "the industrial countries, by violating the principles
of free trade, are costing the developing countries an estimated $50
billion a year - nearly equal to the total flow of foreign
assistance" - much of it publicly-subsidized export promotion.[61]
The 1996 Global Report of the UN Industrial Development Organization
estimates that the disparity between the richest and poorest 20% of
the world population increased by over 50% from 1960 to 1989, and
predicts "growing world inequality resulting from the globalization
process." That growing disparity holds within the rich societies as
well, the U.S. leading the way, Britain not far behind. The business
press exults in "spectacular" and "stunning" profit growth,
applauding the extraordinary concentration of wealth among the top few
percent of the population while for the majority, conditions continue
to stagnate or decline. The corporate media, the Clinton
Administration, and the cheerleaders for the American Way generally,
proudly offer themselves as a model for the rest of the world; buried
in the chorus of self-acclaim are the results of deliberate social
policy during the happy period of "capital's clear subjugation of
labor," for example, the "basic indicators" just published by
UNICEF,[62] revealing that the U.S. has the worst
record among the industrial countries, ranking alongside of Cuba - a
poor Third World country under unremitting attack by the hemispheric
superpower for almost 40 years - by such standards as mortality for
children under five, and also holding records for hunger, child
poverty, and other basic social indicators.
All of this takes place in the richest country in the
world, with unparalleled advantages and stable democratic
institutions, but also under business rule, to an unusual extent.
These are further auguries for the future, if the "dramatic shift
away from a pluralist, participatory ideal of politics and towards an
authoritarian and technocratic ideal" proceeds on course, worldwide.
It is worth noting that in secret, intentions are
often spelled out honestly, for example, in the early post-war II
period, when George Kennan, one of the most influential planners and
considered a leading humanist, assigned each sector of the world its
"function": Africa's function was to be "exploited" by Europe for
its reconstruction, he observed, the U.S. having little interest in
it. A year earlier, a high-level planning study had urged "that
cooperative development of the cheap foodstuffs and raw materials of
northern Africa could help forge European unity and create an economic
base for continental recovery," an interesting concept of
"cooperation."[63] There is no record of a
suggestion that Africa might "exploit" the West for its recovery
from the "global meliorism" of the past centuries.
If we take the trouble to distinguish doctrine from
reality, we find that the political and economic principles that have
prevailed are remote from those that are proclaimed. One may also be
skeptical about the prediction that they are "the wave of the
future," bringing history to a happy end. The same "end of history"
has confidently been proclaimed many times in the past, always
wrongly. And with all the sordid continuities, an optimistic soul can
discern slow progress, realistically I think. In the advanced
industrial countries, and often elsewhere, popular struggles today can
start from a higher plane and with greater expectations than those of
the past. And international solidarity can take new and more
constructive forms as the great majority of the people of the world
come to understand that their interests are pretty much the same and
can be advanced by working together. There is no more reason now than
there has ever been to believe that we are constrained by mysterious
and unknown social laws, not simply decisions made within institutions
that are subject to human will - human institutions, which have to
face the test of legitimacy, and if they do not meet it, can be
replaced by others that are more free and more just, as often in the
past.
Skeptics who dismiss such thoughts as utopian and
naive have only to cast their eyes on what has happened right here in
the last few years, an inspiring tribute to what the human spirit can
achieve, and its limitless prospects - lessons that the world
desperately needs to learn, and that should guide the next steps in
the continuing struggle for justice and freedom here too, as the
people of South Africa, fresh from one great victory, turn to the
still more difficult tasks that lie ahead.
Notes
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