% FROM THE NOAM CHOMSKY ARCHIVE
% http://www.contrib.andrew.cmu.edu:/usr/tp0x/chomsky.html
% ftp://ftp.cs.cmu.edu/user/cap/chomsky/
% Filename:    articles/chomsky.loot.free-market-myths
% Title:       Some Truths and Myths About Free Market Rhetoric
% Author:      Noam Chomsky
% Appeared-in: Lies Of Our Times (LOOT), February 1994
% Source:      jaske@abacus.bates.edu (Jon Aske)
% Keywords:    
% Synopsis:    
% See-also:    articles/chomsky.z.clinton-vision, articles/chomsky.z.clinton-vision-update

        SOME TRUTHS AND MYTHS ABOUT FREE MARKET RHETORIC

Letter from Lexington

January 7, 1994

Dear LOOT,

Hardly a day passes without acclaim for the exciting new idea of
the New World Order: free market capitalism that will liberate
the energies of active and creative people, for the benefit of
all. Euphoria peaked as Clinton savored his Nafta triumph at the
Asia-Pacific summit in Seattle, where he expounded his ``grand
vision for Asia,'' bringing leaders together ``to preach the
gospel of open markets and to secure America's foothold in the
world's fastest growing economic community.'' This ``may be the
biggest rethinking of American policy toward Asia'' since World
War II, David Sanger observed. Clinton outlined the ``new
vision'' before a ``cheering throng . . . inside a giant airplane
hangar at the Boeing Company,'' ``a model for companies across
America'' with its ``booming Asian business''---and its plans for
``multimillion-dollar job-creating investments outside the United
States on a scale that would terrify Nafta's opponents'' (R.W.
Apple, Thomas Friedman, Sanger _NYT_, Nov. 21, 1993).

Unmentioned is another fact: Boeing is also the model for radical
state intervention to shield private profit from market
discipline. It would not be America's leading exporter, nor
probably even exist, were it not for a huge public subsidy
funneled through the Pentagon and NASA, institutions in large
part designed to serve that function for high tech industry
generally. Clinton's gospel, then, is that the taxpayer should
provide massive welfare payments to investors and their agents,
safely protected within their totalitarian institutions from
interference by public or workforce, pursuing profit and market
share as they choose, by ``job-creating investments'' abroad if
that suits their interests.

``China alone now buys one of every six of [Boeing's] planes,''
Sanger continued. And lofty rhetoric aside, Clinton's one
achievement at the summit was to open the door to more exports to
China, expected to be ``the magic elixir that can cure many of
the ills of the American economy'' (Apple). Clinton arranged for
sales of supercomputers and nuclear power generators; the
manufacturers (Cray, GE) are also leading beneficiaries of the
state-subsidized private profit system, and the items sold can be
used for nuclear weapons and missiles, Pentagon officials and
other experts observed. A problem, perhaps, because of a ban on
such exports imposed last August ``after American intelligence
agencies produced conclusive proof'' that China was engaged in
missile proliferation, while also continuing ``nuclear
cooperation'' with Iran, probably weapons production. But the
problem was only superficial: Secretary of State Warren
Christopher informed China that Washington would ``interpret an
American law governing the export of high technology to China to
allow the export of two of the seven sophisticated American-made
satellites banned by sanctions imposed on China in August, senior
Administration officials said,'' adding that ``there was no
linkage'' between the supercomputer and nuclear generator sales
and the issue of proliferation (Elaine Sciolino, _NYT_, Nov. 19).

These decisions illustrate the ``very different notion of
national security'' to which Clinton ``is drawn . . . with the
Communist threat having receded,'' reported by Thomas Friedman in
an adjacent column: ``promoting free trade and stemming missile
proliferation.''

There was also ``no linkage'' to human rights, another slight
problem, if only because of Clinton's impassioned campaign
rhetoric denouncing his predecessor for ignoring China's
horrendous record in order to enhance corporate profits (called
``jobs,'' in PC parlance). Just as Clinton's new export
initiative was announced with much fanfare, a fire killed 81
workers in a factory with doors and windows locked ``to keep
people inside the factory during working hours,'' a spokesman
said (Reuters, _NYT_, Nov. 19). Appended to Friedman's lead story
``Clinton Preaches Open Markets at Summit'' the next day was a
brief notice of ``deadly accidents involving fire and poisonous
gas'' that had killed 100 workers ``in booming Guandong
Province,'' widely hailed as a free market model.

Though there was ``no linkage'' to human rights issues or
proliferation, it would be unfair to suggest that the New
Democrats have no qualms about China's bad behavior. ``Clinton
administration officials are considering imposing trade sanctions
against China,'' the _Wall Street Journal_ reported a month
later. The reason is China's ``resolve to withstand U.S.
pressure'' to cut its textile exports. ``Washington is angry over
what it claims are more than $2 billion of Chinese-made textiles
and apparel shipped illegally to the U.S. each year through third
countries'' (Lawrence Zuckerman and Asra Nomani, _WSJ_, Dec. 30,
1993.)

December 31 was the deadline for Chinese submission to U.S.
protectionist demands, and also ``for China to meet promises made
to the U.S. in 1992 to open up its market.'' After China failed
to live up to these paired obligations, ``the Clinton
administration is set to slash China's textile quotas by as much
as a third while also lifting a ban on the sale of two
communication satellites to Beijing,'' the _Journal_ reports
further, describing this as the ``good-cop, bad-cop style``: the
``bad-cop'' will punish China for its brazen defiance of U.S.
barriers to free trade, and the ``good-cop'' will sell them
satellites (despite the ban) to show that the U.S. is ``ready to
reward China if it makes demonstrable progress''---also,
incidentally, rewarding GM's Hughes Aircraft unit, which is
looking forward to $1 billion in future business (Zuckerman,
_WSJ_, Jan. 4; Bob Davis and Robert Greenberger, _WSJ_, Jan. 6,
1994).

Careful students of free trade gospel will have no difficulty
seeing how all this hangs together.

The punishment was duly administered, Thomas Friedman reported in
the lead story the next day. U.S. trade representative Mickey
Kantor announced harsher quotas that should cost China over $1
billion, ``to insure that China abides by its commitments to
follow fair, nondiscriminatory trade practices'' and to show the
Administration's determination ``to stand up for U.S. jobs'' as
demanded by the textile manufacturers' lobby, noted for its
single-minded dedication to ``jobs'' (_NYT_, Jan. 7).

Protectionist measures had been greatly enhanced under Reagan,
who, in his impassioned pursuit of free trade, had ``granted more
import relief to U.S. industry than any of his predecessors in
more than half a century,'' Secretary of Treasury James Baker
proudly informed the business community. Not enough for the New
Democrats, however. As Clintonites announced their National
Export Strategy, which is to surpass the ``less coordinated
efforts'' of Reagan and Bush to undermine free trade, including
new GATT-violating measures, Secretary of Treasury Lloyd Bentsen
explained: ``I'm tired of a level playing field. We should tilt
the playing field for U.S. businesses'' (Keith Bradsher, _NYT_,
Sept. 28; Michael Frisby, _WSJ_, Sept. 29, 30)---as ``we'' have
been doing for 2 centuries.

The contours of the inspiring new gospel come into still sharper
focus.

Though market discipline is not for us, the lesser breeds are to
adhere rigorously to its strictures. The promise and problems are
illustrated by three December 22 stories.

In the _Christian Science Monitor_, Sheila Tefft reported from
Beijing under the heading ``Growing Labor Unrest Roils Foreign
Businesses in China.'' ``Industrial tragedies and labor disputes
are stirring tensions between Chinese workers and their foreign
bosses,'' she reports, giving two examples: the November fire
that killed 81 women trapped ``behind barred windows and blocked
doorways,'' and another a few weeks later that killed 60 workers
in a Taiwanese-owned textile mill. More than 11,000 Chinese
workers were killed in industrial accidents in the first eight
months of 1993, double the 1992 rate, the Labor Ministry
reported. ``Chinese officials and analysts say the accidents stem
from abysmal working conditions, which, combined with long hours,
inadequate pay, and even physical beatings, are stirring
unprecedented labor unrest among China's booming foreign joint
ventures.'' ``The tensions reveal the great gap between
competitive foreign capitalists lured by cheap Chinese labor and
workers weaned on socialist job security and the safety net of
cradle-to-grave benefits.'' Their minds poisoned by socialist
indoctrination, workers fail to comprehend that after their
rescue by the Free World, they are to be ``beaten for producing
poor quality goods, fired for dozing on the job during long work
hours'' and other such misdeeds, and locked into their factories
to be burned to death.

In a _New York Times_ report from Shanghai, Patrick Tyler
ruminates on the problem from a different perspective. The city
``is racing to recapture the glory of capitalism that flourished
here 60 years ago'' when it ``reached the zenith of power and
allure,'' before it ``crumbled under the scorn and persecution of
Communism.'' In those glory days, ``expatriate merchants imported
European architecture and society, living in mansions behind high
walls in the concession areas they were granted'' by China's
rulers---the ``grants'' assisted now and then by foreign guns.
``The masses of Chinese outside these walls suffered the
instability of warlord rule, gang rivalry and political struggle
between the underground Communist movement and the corrupt
Nationalist Government''---though they remained untouched, it
seems, by ``Western imperialism'' (cited in horror quotes, if at
all). ``Old Shanghai had opium dens, cabarets imitating Europe's
best, pink gin, cigars,'' and for ``the masses of Chinese,''
indescribable misery and torment. The city then sank into its
``long decline'' with Japan's conquest and the Communist
takeover, which ``drained the city of its foreign population and
investment'' and ``deflated what capitalist spirit remained.''
While the spirit is now reviving, it is not certain that the
grandeur of yore can be regained: ``Whether Shanghai can rival
its position of old is a much contested question,'' Tyler
observes.

Progress in that direction is reported by Joseph Kahn in the
_Wall Street Journal_. He describes government projects to
``usher out hundreds of thousands'' of people from Shanghai to
``satellite cities created by diktat to make way for office
buildings, hotels and luxury apartments,'' so that Shanghai will
``become a city for the rich and the powerful people,'' an
expelled shopkeeper complains. The representative for a foreign
developer disagrees: ``The people are very happy to move out,''
he says, much like those who enjoy ``urban renewal'' in advanced
capitalist countries. Shanghai may never quite recapture the
``glory of capitalism,'' but perhaps it can at least come to look
more like New York and Chicago.

There are additional signs of progress on that front. ``Murder,
robbery and other violent crimes are sharply on the rise in
China,'' the official press reported, up 17.5% in 1993 (AP,
_Boston Globe_, Dec. 29).

Russia has moved more rapidly towards the ``glory of
capitalism.'' Under Western-prescribed ``shock therapy,'' the
population starves with ``poverty now visible in Russia in ways
that it never was before,'' while more Mercedes 600 SEL's are
sold at $130,000 each than in New York, Celestine Bohlen reports.
Purchasers are the new rich (many of them the old _Nomenklatura_),
who are working for foreign companies or selling off Russia's
resources. Others belong to the criminal syndicates springing up
as ``crime and business have become interwoven in Russia to an
alarming degree.'' ``Crime has risen dramatically . . . as the
controls of the totalitarian state have fallen away and before
the certainties of a law-abiding society have emerged to take
their place,'' though ``Moscow is still lagging behind American
levels of murder and violence,'' with only about half the murder
rate of New York, where capitalist democracy implanted ``the
certainties of a law-abiding society'' long ago. ``Russian
society has begun to break down into social layers, with people
at the top who are extraordinarily rich and people at the bottom
who are poor,'' Bohlen adds; oddly, just the pattern that
prevails where Western guidance has proceeded without
interruption, and increasingly, in the rich industrial societies
themselves (_NYT_, July 31, Aug. 16, Nov. 13, 1993).

Could there be some lessons here?

The great hope in the East is Poland, where the free fall of the
economy since 1989 finally bottomed out. It resembles other Third
World success stories, not only in the divide between great
wealth and mass misery and in providing supercheap labor to allow
Western investors to drive down wages and social services at
home, but down to fine detail. Poland's foreign expert was
Harvard's Jeffrey Sachs, now plying his wares in Russia. He
earned his fame by helping to orchestrate an economic miracle in
Bolivia, a macroeconomic success and human disaster; Bolivians
suffer the social reality, the West applauds the statistics and
the opportunities for enrichment, unconcerned that the
statistical successes are based in large measure on sharply
increased production of illegal drugs, which may have become the
major export earner. Sachs then moved on to Poland, which now
provides Western Europe with its highest-quality illegal drugs,
including 20% of the amphetamines confiscated in 1991, up from 6%
in the late 1980s. Poland may also be the biggest transshipment
point for narcotics from Central America, Afghanistan, and the
Southeast Asian golden triangle, though ``drug trafficking has
also increased sharply throughout the region,'' Raymond Bonner
reports. Costa Rica's Ambassador to Poland was arrested at the
Warsaw airport with almost $1 million worth of pure heroin, and
``a staggering 1.2 tons of cocaine was seized in St.
Petersburg,'' from Colombia, where cartels are hiring Polish
couriers to smuggle cocaine to the West. The former Soviet
regions of Central Asia are expected to become major drug
producers down the road (Rensselaer Lee and Scott Macdonald,
_Foreign Policy_, Spring 1993; Bonner, _NYT_, Dec. 30, 1993.}

This standard pattern under Western tutelage, perhaps the most
persuasive example of maximization of utility and efficient use
of resources under free market conditions, should gain more
respect than it does.

Meanwhile market discipline retains its traditional dual aspect:
rigid for the victims, quite different for the victors. GM
purchased an auto plant near Warsaw, but ``on the under-the-table
condition that the Polish government provide it with 30 percent
tariff protection,'' Alice Amsden observes. Similarly, ``VW is
capitalizing on low labor costs'' to build cars in the Czech
Republic for export to the West, but ``the tortuous journey
towards free markets'' includes ``a very attractive deal'' in
which VW was able to reap the profits and ``to leave the
Government with the debts and with enduring problems like how to
clean up pollution,'' while ``stiff tariffs'' guarantee the
profits of the foreign investors. Daimler-Benz recently worked
out a similar ``attractive deal'' with Alabama, on the Third
World model, the _Wall Street Journal_ noted (Amsden, _American
Prospect_, Spring 1993; Richard Stevenson, ``In a Czech Plant, VW
Shows How to Succeed in the East,'' _NYT_, June 22, 1993; Helene
Cooper and Glenn Ruffenbach, _WSJ_, Sept. 30, 1993).

The former Soviet domains still fall short of Western standards
for Third World dependencies, however. Some of the distance yet
to be travelled was revealed in a Canadian Broadcasting Company
investigation, _The Body Parts Business_, ``a gruesome litany of
depredation,'' reporting murder of children and the poor to
extract organs, ``eyeballs being removed from living skulls by
medical pirates armed only with coffee spoons,'' and other such
entrepreneurial achievements (John Haslett Cuff, _Globe & Mail_
(Toronto), Nov. 20, 1993). Such practices, long reported in Latin
America and perhaps now spreading to Russia, have recently been
acknowledged by one of the most prized U.S. creations, the
government of El Salvador, where the procurator for the defense
of children reported that the ``big trade in children in El
Salvador'' involves not only kidnapping for export, but also
their use ``for pornographic videos, for organ transplants, for
adoption and for prostitution'' (Hugh O'Shaughnessy, _Observer_
(London), Sept. 26, 1993).

The dead hand of socialist values is impeding progress beyond
countries like China that are now reforming. At the Pan-American
games in Puerto Rico, extraordinary efforts were made to lure
Cuban athletes, but though ``ardently courted,'' almost all
``spurned the pleas to jump ship'' despite ``the desperate Cuban
economy and the potential for million-dollar major-league
contracts'' (Peter Applebome, ``Passing Up Big Money and Plea to
Leave Cuba,'' _NYT_, Dec. 3, 1993). Under the heading ``Defects
in the System?,'' referring to the fact that some Cubans did
succumb to the courting, Steve Fainaru reports in more detail on
the ardent efforts and their general failure. Boxer Felix Savon
was offered a $20 million contract, but refused, saying that
``money is not the essential thing for a human being.'' ``Savon
is crazy,'' one of the defectors said: ``He's been reading too
much Communist propaganda.'' The most painful tragedy was the
failure of any baseball players to defect, though scouts from
every major league team were dangling huge contracts in front of
their eyes. ``There's so much wasted talent over there,'' a scout
for the Dodgers complained: ``It really makes me mad when I think
about how these guys could be making millions'' instead of
returning to the country that they say they love: ``But there's
nothing we can do. [Castro] is the one who has the last word,''
his mystic presence forcing the athletes to return to the
``economic despair'' at home (_BG_, Dec. 5, 1993).

Applebome reviews the ``struggle for daily survival in Cuba''
while maintaining a stony silence on the U.S. role, the norm for
respectable commentary. Thus, reviewing a book on Castro, Mark
Uhlig scornfully derides the ``failing regime'' of the ``the Ego
That Devoured Cuba,'' the villain who ``has no one else to blame
for its deepening crisis,'' surely not terror and economic
warfare from Washington and Miami, which merit not a word in this
typical display of moral cowardice (Uhlig, _NYT_ Book Review,
Sept. 19, 1993). Fainaru departed from good taste, at least
mentioning the embargo.

The ``deepening crisis'' for which Castro bears sole
responsibility is driving many women to prostitution, as in the
days before the capitalist spirit was deflated. But whether
Havana ``can rival its position of old'' under the ``glory of
capitalism'' is also ``a much contested question,'' now that
women have been ``schooled in that socialist certainty that she
must bow to no one'' (Tom Mashberg, _BG_, Jan. 25 1993). As the
gospel reaches Cuba, that malady too may pass.

For a deeper understanding of the gospel we should lift our eyes
to the higher reaches of thought. Some help is offered in an
address to a January 1993 conference of the American Academy of
Arts and Sciences by the distinguished philosopher,
anthropologist, and historian Ernest Gellner (Laura Reed and Carl
Kaysen, eds., _Emerging Norms of Justified Intervention_,
Cambridge 1993). He explains that ``humankind in general is
dominated by three types of motivations: honor, interest, and
salvation.'' Honor was displaced by interest after the scientific
revolution and economic growth under capitalism; perhaps that
explains the ``craziness'' of backward Cubans, still in the
primitive grip of honor. The third option is ``salvationism''---
in its modern form, ``secular salvationism (read: Marxism)'':
``the idea of running an industrial society through the
establishment of righteousness on earth,'' the goal to which
Stalin dedicated his every waking moment. That option was
repudiated in 1989, signalling the end of Marxism, which
inevitably leads to totalitarianism, just as ``modern industrial
totalitarianism must be Marxist.'' What remains is ``a kind of
International of Consumerist Unbelievers,'' who understand that
public policies to change the near-perfect social arrangements
geared to private profit and accumulation would lead straight to
the Gulag.

At last all is clear.

Sincerely,


Noam Chomsky