% 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.nation.nafta
% Title:       Notes of Nafta: ``The Masters of Man''
% Author:      Noam Chomsky
% Appeared-in: The Nation, March ? 1993
% Source:      nation@igc.org, Philip Feeley 
% Keywords:    NAFTA, Clinton, Mexico
% Synopsis:    NAFTA not free trade, but protectionist agreement
% See-also:    articles/chomsky.z.clinton-vision, articles/chomsky.z.clinton-vision-update

              NOTES OF NAFTA: ``THE MASTERS OF MAN''
                         Noam Chomsky
                  _The Nation_, March ? 1993


Throughout history, Adam Smith observed, we find the workings of
``the vile maxim of the masters of mankind'': ``All for
ourselves, and nothing for other People.'' He had few illusions
about the consequences. The invisible hand, he wrote, will
destroy the possibility of a decent human existence ``unless
government takes pains to prevent'' this outcome, as must be
assured in ``every improved and civilized society.''  It will
destroy community, the environment and human values generally---
and even the masters themselves, which is why the business
classes have regularly called for state intervention to protect
them from market forces.

The masters of mankind in Smith's day were the ``merchants and
manufacturers,'' who were the ``principal architects'' of state
policy, using their power to bring ``dreadful misfortunes'' to
the vast realms they subjugated and to harm the people of England
as well, though their own interests were ``most peculiarly
attended to.'' In our day the masters are, increasingly, the
supranational corporations and financial institutions that
dominate the world economy, including international trade---a
dubious term for a system in which some 40 percent of U.S. trade
takes place within companies, centrally managed by the same
highly visible hands that control planning, production and
investment.

The World Bank reports that protectionist measures of the
industrialized countries reduce national income in the South by
about twice the amount of official aid to the region---aid that is
itself largely export promotion, most of it directed to richer
sectors (less needy, but better consumers). In the past decade,
most of the rich countries have increased protectionism, with the
Reaganites often leading the way in the crusade against economic
liberalism. These practices, along with the programs dictated by
the International Monetary Fund and World Bank, have helped
double the gap between rich and poor countries since 1960.
Resource transfers from the poor to the rich amounted to more
than $400 billion from 1982 to 1990, ``the equivalent in today's
dollars of some six Marshall Plans provided by the South to the
North,'' observes Susan George of the Transnational Institute in
Amsterdam; she notes also that commercial banks were protected by
transfer of their bad debts to the public sector. As in the case
of the S&Ls, and advanced industry generally, ``free-market
capitalism'' is to be risk free for the masters, as fully as can
be achieved.

The international class war is reflected in the United States,
where real wages have fallen to the level of the mid-1960s. Wage
stagnation, extending to the college-educated, changed to sharp
decline in the mid-1980s, in part a consequence of the decline in
``defense spending,'' our euphemism for the state industrial
policy that allows ``private enterprise'' to feed at the public
trough. More than 17 million workers were unemployed or
underemployed by mid-1992, Economic Policy Institute economists
Lawrence Mishel and Jared Bernstein report---a rise of 8 million
during the Bush years. Some 75 percent of that is permanent loss
of jobs. Of the limited gain in total wealth in the eighties,
``70% accrued to the top 1% of income earners, while the bottom
lost absolutely,'' according to M.I.T. economist Rudiger
Dornbusch.

Structures of governance have tended to coalesce around economic
power. The process continues. In the London Financial Times,
James Morgan describes the ``de facto world government'' that is
taking shape in the ``new imperial age'': the I.M.F., World Bank,
Group of 7 industrialized nations, General Agreement on Tariffs
and Trade (GATT) and other institutions designed to serve the
interests of transnational corporations, banks and investment
firms.

One valuable feature of these institutions is their immunity from
popular influence. Elite hostility to democracy is deep-rooted,
understandably, but there has been a spectrum of opinion. At the
``progressive'' end, Walter Lippmann argued that ``the public
must be put in its place,'' so that the ``responsible men'' may
rule without interference from ``ignorant and meddlesome
outsiders'' whose ``function'' is to be only ``interested
spectators of action,'' periodically selecting members of the
leadership class in elections, then returning to their private
concerns. The statist reactionaries called ``conservatives''
typically take a harsher line, rejecting even the spectator role.
Hence the appeal to the Reaganites of clandestine operations,
censorship and other measures to insure that a powerful and
interventionist state will not be troubled by the rabble. The
``new imperial age'' marks a shift toward the reactionary end of
the antidemocratic spectrum.

It is within this framework that the North American Free Trade
Agreement (NAFTA) and GATT should be understood. Note first that
such agreements have only a limited relation to free trade. One
primary U.S. objective is increased protection for ``intellectual
property,'' including software, patents for seeds and drugs, and
so on. The U.S.  International Trade Commission estimates that
American companies stand to gain $61 billion a year from the
Third World if U.S. protectionist demands are satisfied at GATT
(as they are in NAFTA), at a cost to the South that will dwarf
the current huge flow of debt-service capital from South to
North. Such measures are designed to insure that U.S.-based
corporations control the technology of the future, including
biotechnology, which, it is hoped, will allow protected private
enterprise to control health, agriculture and the means of life
generally, locking the poor majority into dependence and
hopelessness. The same methods are being employed to undermine
Canada's annoyingly efficient health services by imposing
barriers to the use of generic drugs, thus sharply raising
costs---and profits to state-subsidized U.S. corporations. NAFTA
also includes intricate ``rules of origin'' requirements designed
to keep foreign competitors out. Two hundred pages are devoted to
rules to insure a high percentage of value added in North America
(protectionist measures that should be increased, some U.S.
opponents of NAFTA argue).  Furthermore, the agreements go far
beyond trade (itself not really trade but in large part
intracompany transfers, as noted). A prime U.S. objective is
liberalization of services, which would allow supranational banks
to displace domestic competitors and thus eliminate any threat of
national economic planning and independent development. The
agreements impose a mixture of liberalization and protection,
designed to keep wealth and power firmly in the hands of the
masters of the ``new imperial age.''

NAFTA is an executive agreement, reached on August 12, 1992, just
in time to become a major issue in the U.S. presidential
campaign. It was mentioned, but barely. To give just one example
of how debate was precluded, take the case of the Labor Advisory
Committee (L.A.C.), established by the Trade Act of 1974 to
advise the executive branch on any trade agreement. The L.A.C.,
which is based in the unions, was informed that its report on
NAFTA was due on September 9. The text of this intricate treaty
was provided to it _one day before_. In its report, the L.A.C.
notes, ``the Administration refused to permit any outside advice
on the development of this document and refused to make a draft
available for comment.'' The situation in Canada and Mexico was
similar. The facts are not even reported. In such ways, we
approach the long-sought ideal: formal democratic procedures that
are devoid of meaning, as citizens not only do not intrude into
the public arena but scarcely have an idea of the policies that
will shape their lives.

One can readily understand the need to keep the public ``in its
place.'' Though the scanty press coverage is overwhelmingly
favorable to NAFTA in its present form, the public opposes it by
nearly 2 to 1 (of the 60 percent who have an opinion). Apart from
some meager rhetoric and a few interventions by Ross Perot, that
fact was irrelevant to the presidential campaign, as were health
reform and a host of other issues on which public opinion remains
largely off the spectrum of options considered by the
``responsible men.''

The Labor Advisory Committee concluded that the executive treaty
would be a bonanza for investors but would harm U.S. workers and
probably Mexicans as well. One likely consequence is an
acceleration of migration from rural to urban areas as Mexican
corn producers are wiped out by U.S. agribusiness, depressing
still further wages that have already dropped sharply in recent
years and are likely to remain low, thanks to the harsh
repression that is a crucial element of the highly touted Mexican
``economic miracle.'' Labor's share of personal income in Mexico
declined from 36 percent in the mid-1970s to 23 percent by 1992,
reports economist David Barkin, while fewer than 8,000 accounts
(including 1,500 owned by foreigners) control more than 94
percent of stock shares in public hands.

Property rights are well protected by NAFTA, the L.A.C.  analysts
and others note, while workers' rights are ignored. The treaty is
also likely to have harmful environmental effects, encouraging a
shift of production to regions where enforcement is lax.  NAFTA
``will have the effect of prohibiting democratically elected
bodies at [all] levels of government from enacting measures
deemed inconsistent with the provisions of the agreement,'' the
L.A.C. report continues, including those on the environment,
workers' rights, and health and safety, all open to challenge as
``unfair restraint of trade.''

Such developments are already under way in the framework of the
U.S.-Canada ``free trade'' agreement. Included are efforts to
require Canada to abandon measures to protect the Pacific salmon,
to bring pesticide and emissions regulations in line with laxer
U.S.  standards, to end subsidies for replanting after logging
and to bar a single-payer auto insurance plan in Ontario that
would cost U.S.  insurance companies hundreds of millions of
dollars in profits.  Meanwhile Canada has charged the United
States with violating ``fair trade'' by imposing E.P.A. standards
on asbestos use and requiring recycled fiber in newsprint. Under
both NAFTA and GATT, there are endless options for undermining
popular efforts to protect conditions of life.

In general, the L.A.C. report concludes, ``U.S. corporations, and
the owners and managers of these corporations, stand to reap
enormous profits. The United States as a whole, however, stands
to lose and particular groups stand to lose an enormous amount.''
The report calls for renegotiation, offering a series of
constructive proposals. That remains a possibility if the
coalition of labor, environmental and other popular groups that
has been calling for such changes gains sufficient popular
support [see Amy Lowrey and David Corn, ``Mexican Trade Bill:
Fast Track to Unemployment,'' The Nation, June 3, 1991].

An October 1992 report from the Congressional Office of
Technology Assessment reached similar conclusions. A ``bare''
NAFTA of the form now on the table would ratify ``the
mismanagement of economic integration'' and could ``lock the
United States into a low-wage, low-productivity future.''
Radically altered to incorporate ``domestic and continental
social policy measures and parallel understandings with Mexico on
environmental and labor issues,'' NAFTA could have beneficial
consequences for the country. But the country is only of
secondary concern to the masters, who are playing a different
game.  Its rules are revealed by what The New York Times called
``Paradox of `92: Weak Economy, Strong Profits.'' As a
geographical entity, ``the country'' may decline. But the
interests of the ``principal architects'' of policy will be
``most peculiarly attended to.''

One consequence of the globalization of the economy is the rise
of new governing institutions to serve the interests of private
transnational economic power. Another is the spread of the Third
World social model, with islands of enormous privilege in a sea
of misery and despair. A walk through any American city gives
human form to the statistics on quality of life, distribution of
wealth, poverty and employment, and other elements of the
``Paradox of `92.'' Increasingly, production can be shifted to
high-repression, low-wage areas and directed to privileged
sectors in the global economy. Large parts of the population thus
become superfluous for production and perhaps even as a market,
unlike the days when Henry Ford realized that he could not sell
cars unless his workers were paid enough to buy cars themselves.

Particular cases fill out the picture. G.M. is planning to close
almost two dozen plants in the United States and Canada, but it
has become the largest private employer in Mexico. It has also
opened a $690 million assembly plant in eastern Germany, where
employees are willing to ``work longer hours than their pampered
colleagues in western Germany,'' at 40 percent of the wage and
with few benefits, as the Financial Times cheerily explains.
Capital can readily move; people cannot, or are not permitted to
by those who selectively applaud Adam Smith's doctrines, which
crucially include ``free circulation of labor.'' The return of
much of Eastern Europe to its traditional service role offers new
opportunities for corporations to reduce costs, thanks to
``rising unemployment and pauperisation of large sections of the
industrial working class'' in the East as capitalist reforms
proceed, according to the Financial Times.

The same factors provide the masters with new weapons against the
rabble at home. Europe must ``hammer away at high wages and
corporate taxes, short working hours, labor immobility, and
luxurious social programs,'' Business Week warns. It must learn
the lesson of Britain, which finally ``is doing something well,''
the Economist observes approvingly, with ``trade unions shackled
by law and subdued,'' ``unemployment high'' and the Maastricht
social chapter rejected so that employers are protected ``from
over-regulation and under-flexibility of labour.'' American
workers must absorb the same lessons.

The basic goals were lucidly described by the C.E.O. of United
Technologies, Harry Gray, quoted in a valuable study of NAFTA by
William McGaughey of the Minnesota Fair Trade Coalition: ``a
worldwide business environment that's unfettered by government
interference'' (for example, ``package and labelling
requirements'' and ``inspection procedures'' to protect
consumers). This is the predominant human value, to which all
else must be subordinated. Gray does not, of course, object to
``government interference'' of the kind that allows his
corporation, an offshoot of the Pentagon system, to exist.
Neoliberal rhetoric is to be selectively employed as a weapon
against the poor; the wealthy and powerful will continue to rely
on state power.

These processes will continue independently of NAFTA. But, as
explained by Eastman Kodak chairman Kay Whitmore, the treaty may
``lock in the opening of Mexico's economy so that it can't return
to its protectionist ways.'' It should enable Mexico ``to
solidify its remarkable economic reforms,'' comments Michael Aho,
director of Economic Studies at the Council on Foreign Relations,
referring to the ``economic miracle'' for the rich that has
devastated the poor majority.  It may fend off the danger noted
by a Latin America Strategy Development Workshop at the Pentagon
in September 1990, which found current relations with the Mexican
dictatorship to be ``extraordinarily positive,'' untroubled by
stolen elections, death squads, endemic torture, scandalous
treatment of workers and peasants, and so on, but which saw one
cloud on the horizon: ``a `democracy opening' in Mexico could
test the special relationship by bringing into office a
government more interested in challenging the U.S. on economic
and nationalistic grounds.'' As always, the basic threat is
functioning democracy.

The trade agreements override the rights of workers, consumers,
and the future generations who cannot ``vote'' in the market on
environmental issues. They help keep the public ``in its place.''
These are not necessary features of such agreements, but they are
natural consequences of the great successes of the past years in
reducing democracy to empty forms, so that the vile maxim of the
masters can be pursued without undue interference.

[Noam Chomsky is Institute Professor in the department of
linguistics and philosophy at M.I.T. His latest book is Year 501
(South End).]

[Reprinted with permission---granted by The Nation magazine/The Nation
Company, Inc. Copyright 1992]

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