Noam Chomsky: To begin with, I think terms like "capitalism" and "socialism" have been so evacuated of any substantive meaning that I don't even like to use them. There's nothing remotely like capitalism in existence. To the extent there ever was, it had disappeared by the 1920s or '30s. Every industrial society is one form or another of state capitalism. But we'll use the term "capitalism," since that is more or less its present meaning.

Well, what happened in the last 10-15 years is that capitalism underwent an enormous, murderously destructive catastrophe. There was a serious international crisis around 1980. Of the three major sectors of state capitalism -- the German-led European community, the Japan-based sector and the U.S.-based sector -- the German- and Japan-based sectors pulled out of the decline, but without regaining their previous rate of growth. The United States also pulled out, but in a very distorted fashion, with huge borrowing and very extensive state intervention....

The rest of the world didn't pull out, especially in the Third World. There was a very serious crisis, amounting to catastrophe, in Africa, parts of Asia within the Western system and Latin America. That's what's called the crisis of the South, and it's a catastrophe of capitalism.

Now in the Second World of the Soviet Union's dominance, there was also economic collapse... a stagnation of the command economy system, which has even less to do with socialism than our system has to do with capitalism. This was combined with nationalist pressures for independence and social pressures attacking the tyrannical system, which by the early 1980s turned into the crisis that has now become the collapse of the Soviet Union.

All this had little to do with Western policy, but primarily with internal problems and also the general crisis of debt to the West. And there was a crisis of Soviet production, though again not as severe as in the Third World. This is a victory for the West in the Cold War, but that outcome was never seriously in doubt if you look at the relative economic and other forces.

Finkel: Explain a little more what you mean by state capitalism.

Chomsky: The victory of the West in the Cold War is combined with both this enormous catastrophe of capitalism, and with the move toward one kind or another of state-interventionist forms. As an example, the Reagan-Bush administrations are the most protectionist since World War II, doubling the percentage of imports subject to various forms of restriction.

If you take a look at those Third World countries that pulled out of the crisis of 1980, it's the NICs [Newly Industrialized Countries] in the Japanese periphery. The comparison with Latin America is striking: Up to around 1980 they had similar patterns, then Latin America went into a free fall while the East Asian economies did well. That's because Latin America was opened up to international capital, while East Asia wasn't. You don't have capital flight from South Korea, because you get the death penalty for that. They not only discipline and terrorize the workers in the usual way, they regulate the capitalists, too. In general it's a move toward one end of the spectrum of state capitalism -- the fascist end -- that turned out to be effective in warding off the general crisis of the 1980s.

Finkel: How do you assess the Bush administration, especially in terms of domestic policies? Where does it continue the Reagan era and where is it a departure?

Chomsky: It's a continuation of the Carter-Reagan policies. Remember that the Reagan policies were proposed by Carter, who didn't have the muscle to push them through. Carter proposed essentially the military buildup that Reagan carried through, except that Reagan escalated it more rapidly in the beginning and leveled it off later.

The Carter administration also proposed to attack welfare spending and the social support system for the poorer sectors, which the Reagan administration then carried through with bipartisan support. What these policies amounted to is turning the state, even more than before, into a welfare state for the rich: a much more interventionist state that pours public resources into high-technology industry and distributes resources away from the poor, combined with attacks on labor and civil rights.

It's objectively a sound policy, I believe, for the privileged and powerful in an internationally complicated environment. They've internationalized capital to take advantage of cheap labor abroad, and intensified the class war that business has always waged against labor and the disadvantaged.

The program of the Bush administration is largely non-existent in education, energy or the environment. There's rhetoric about the "education president" and whatnot, but policies remain the same, because nobody has figured out how to maintain high-tech industry without a state subsidy or without the Pentagon to provide a guaranteed market for its waste products.

Since nobody has an alternative, this system will doubtless continue. The same applies to fiscal policies, which are driving the United States itself toward a country with a Third World look in infrastructure, services, the disgraceful state of health and mortality standards -- a two-tiered society with enormous wealth and privilege amidst poverty and suffering. It's not like Brazil, because it's a wealthier society -- but fundamentally of the same type, created with bipartisan agreement.

The issues in presidential elections are virtually non-existent, as are the presidents. We went through the Reagan years with basically no president at all. He could barely read his lines. Bush is an executive, but in a very narrow sense. There is a lot of image creation -- the Great Communicator for Reagan, or for Bush it's the Master Statesman who manipulates international politics. It's a complete fake: The only thing he knows is how to beat up people who can't fight back.

Finkel: In your traveling since the disaster of the Gulf slaughter, what hopeful signs do you see in the grassroots movements?

Chomsky: For some time now, I've been going out of my way to go to the least organized, most reactionary places where I can get invited. During the Gulf war, I was talking in areas like Georgia, Appalachia and Northern California -- places that people who are organizing regard as hostile territory, and where during the war everybody was wearing fatigues.

Yet I always find that people come out, and are interested. I think people are mainly cynical; they don't believe in anything. That can take the form of hysterical jingoism, but it's paper thin. Another form it takes is religious revivalism, which I think is on a scale in this country that's unique outside of places like Iran. Or it can take the form of immersion in something else, like football games.

I listen to the sports talk shows when I drive. It's incredible: People have long, sophisticated arguments about what the New England Patriots should have done last Sunday. It reminds me of when I was 12 years old and I could tell you who was the quarterback for Texas Christian in 1937. A major radio station here in Boston just changed its format from 24-hour news to 24-hour sports.

Finkel: Do you think the Vietnam Syndrome is dead?

Chomsky: Not only don't I believe that, the administration doesn't believe it either. Somebody leaked to Maureen Dowd, who's basically a gossip columnist for the New York Times, a very important document -- the first international policy review of the Bush administration in its early months -- which she quoted in a column.

It said that in confronting much weaker opponents we must defeat them rapidly and decisively. There cannot be classic intervention anymore -- U.S. soldiers slogging in Vietnam for years -- it must be either clandestine warfare as in Peru now, where not one American in a thousand knows there are U.S. troops, or the Panama-Iraq game, with enormous propaganda about the enemy ready to destroy us, then a quick victory without any fighting. There was no war, really, in the Gulf -- no fighting -- simply a slaughter, just as in Panama.