Encirclement

Neo-Liberalism Ensnares Democracy

Producer, director, editor

Photography

Sound

Music

In order of appearance

In the ’30s,
the term “totalitarian regime”

was applied to single-party regimes

where the party’s mandate

was to rule over the totality
of a society’s activities -

political, economic, social, cultural.
The state looked after everything.

Unfortunately, we had examples
particularly in Fascism, Nazism …

and Stalinism: totalitarian societies
run by an omnicompetent party.

Today, we live in a democracy,
of course, but we notice that …

single parties have given way
to a single mindset,

and the proponents
of such unilateral thinking

reckon that there is
but one solution -

the one imposed by the market -
to cover all society’s activities.

Whatever the activity -
economic, social, cultural, athletic -

the market is mandated
to regulate it.

We see how the market penetrates
all society’s interstices,

like a liquid, that leaves nothing
and spares nothing.

This is why we can now talk
about “globalitarian” regimes:

because there’s a will to impose

a kind of unique solution
to the plurality of our problems.

I wrote “La Pensée Unique” …

in 1995,

when most of our citizens …

hadn’t yet become totally aware

that we had fallen into an ideology
in which we were now immersed.

Today, we’d call this ideology
“neo-liberal”.

Neo-liberalism
is an economic technique,

a certain set
of economic principles,

but in reality, imperceptibly, it’s
also a veritable ideological yoke.

This is what I was trying
to point out, primarily,

by saying what it
ultimately consists in:

Neo-Liberalism consists in
a certain number of principles,

notably that
the market’s invisible hand

is there to settle problems. People
and States need not get involved,

let the market work.

Establishing principles
like deregulation.

Everything’s over-regulated,
the State’s been too involved.

We need less government.

Capital must prevail over labour.
We must always favour capital.

And we must privatize.

The State’s perimeter must be small,
the private sector’s expansive.

Free trade must be promoted
because commerce is development.

We made this kind of equivalency.

I was trying to show how
these principles weren’t recent,

but had been developed since ’44,
since the Bretton-Woods conference,

which initiated the IMF
and the World Bank.

It arose from all the work the IMF
had done since the ’60s and ’70s

geared towards southern countries,
called “structural adjustment”,

or, in some countries,
“the Washington Consensus”,

namely that State budgets
must necessarily be reduced,

no public deficit, no inflation,

bureaucracies must be reduced,
all public services like health …

and education
must be reduced to a minimum.

The State isn’t to make
that kind of expenditure, etc.

Many southern countries
suffered greatly, of course.

These were basically my points,
and when we add up these elements,

we’re faced with an ideology.

And at the time, France was on
the eve of a presidential election,

which took place
a few months later in May.

So, I was saying that
ultimately, in reality,

we were being proposed this almost
single-party kind of pensée unique.

Leftist Privatization

Shortly after the Iron Curtain fell,
we witnessed in the West

a reframing rightwards by the
vast majority of left-wing parties.

From the British Labour Party to
Germany’s SPD via the Parti Québécois,

they all got into a State “reform”,
“reengineering” or “modernization”

that invariably meant
adopting neo-liberal politics.

From 1997 to 2002 in France,
Lionel Jospin’s socialist government

proceeded to privatize about
10 major national corporations -

the same number as the right-wing
governments before and afterwards.

How has neo-liberalism found its way
into so-called “socialist” parties?

And where is it coming from?

origins

Winnipeg General Strike, 1919

Neo-liberalism appeared …

under particular intellectual
and institutional configurations.

Generally speaking,
from 1914 to 1945,

capitalism went through
an unprecedented crisis.

The crisis was a material one.
In the ’20s,

capitalism had boomed
after Reconstruction,

but the Depression in the ’30s

led to unemployment,
bankruptcy, political disorder.

And intellectually,

the liberal credo yielded
to the claims of economic planning,

interventionism, and
general wariness of laissez-faire.

There was widespread demand
for reinforced State intervention,

state-controlled economies.

This turned into concrete projects,
both in “dictatorships”

and in democracies.

We think of the Soviet 5-year plan

and also the New Deal in the U.S.,

under the National Recovery
Administration (NRA)

and other such structures.

In Nazi Germany, it was
the Reich economics ministry.

In Fascist Italy, it was
the corporations ministry.

Even in France, a national
economy ministry was established -

a totally new thing,
under the rising Front Populaire.

Communist Demonstration
Berlin, 1929

Important to establishing
a neo-liberal network in France

was building a publishing house.

It was called Les Éditions
de la Librairie de Médicis,

founded in 1937.

It was created by a woman,
Marie-Thérése Génin,

which was rare
in this fairly masculine field.

She was connected to a leader
in French business associations,

Marcel Bourgeois,

who encouraged her to establish
a vehicle for intellectual texts

for a public of intellectuals.

Éditions de Médicis published
Walter Lippmann’s La Cité Libre,

the precursor of
the Walter Lippmann colloquium,

as well as texts by Hayek,
Rueff, Ludwig von Mises.

About 40 works
between 1937 and 1940.

They published the proceedings
of the Lippmann colloquium

at the Institut International
de Coopération Intellectuel,

now defunct,
but the forerunner of UNESCO.

This happened
in a fairly official context.

There were 26 participants, whose
significance is now acknowledged:

Friedrich Hayek, future
Nobel Prize winner for economics,

Robert Marjolin, a pillar
of European construction,

the founders of Germany’s
“social market economy”,

Alexander Rüstow and Wilhelm Röpke,

de Gaulle’s financial advisor,
Jacques Rueff,

the mastermind of Ronald Reagan’s
Star Wars, Stefan Possony.

That’s all hindsight. At the time,
they were less famous.

The colloquium lasted 4 days,
during which were discussed

the eventual responsibilities
of liberalism in the Depression,

as well as the means
of renewing liberalism

and building worldwide opposition
to interventionism and socialism.

The Walter Lippmann Colloquium
hosted the avant-garde

of the neo-liberal battle
in preparation.

Among the most ferocious opponents
of collectivism,

Friedrich von Hayek and
Ludwig von Mises stood out.

Hayek and Mises represented
a particular trend in neo-liberalism,

the Austrian School.

They advocated a radical liberalism
that grants the State minimal power.

The minimal State is an expression
used by their disciples.

These two had slightly different
economic ideas.

Liberals often gloss over
their divergent views.

But they also had
certain points in common.

The first is that economic science
was just a fraction of their work.

Mises considered it a branch of the
more general science of human action.

Hayek soon left pure economics

to pursue psychology.
He studied the brain,

political orders, law, etc.
For them, economics …

was their original field, but it
didn’t cover all of the humanities.

Secondly, their conception
of economics was fairly particular.

Austrian School economics
were far from concrete:

no statistics,
no mathematical data, etc.

Everything stemmed from axiomatics.
There were “typical” ideal situations

where one observes
how a rational person acts

in negotiating choices
between work and leisure,

sleeping and getting rich, etc.,

supported by metaphors like
Robinson Crusoe on his desert island.

The third thing they had in common,
significant to neo-liberal history,

is a concept of intellectual work
and its role in socialism.

The thinking of Hayek and Mises
was very elitist and aristocratic:

basically, that the mass
of humanity doesn’t think.

Mises book, Socialism, says,
“The masses do not think.”

Only a few intellectuals think,
and do so on society’s behalf.

So they thought,
intellectuals must think,

and progressively oppose socialism,
which other intellectuals invented

and spread to the masses.
Socialism wasn’t spontaneous.

It was propagated by intellectuals.

Hayek and Mises put the intellectual
at the centre of social change,

and political and economic change.

This led to them founding groups
like the Mont Pelerin Society.

War imposed a hiatus on the
neo-liberals’ militant activities.

The CIRL, a French research centre
for the renewal of liberalism

arising from the Lippmann Colloquium,
disappeared after only a year.

As soon as the war ended,
Hayek took up the torch again.

He invited proponents
of liberal reestablishment

to a meeting that would be decisive
to the future of neo-liberalism.

The Mont Pelerin meeting
took place …

from April 1 to 10, 1947,

in the Hôtel du Parc,
near Vevey, Switzerland.

It was explicitly meant
to bring together

liberal European and
American intellectuals,

and to found an international
organization for liberal ideas.

Hayek had started making contacts
2 years earlier

with Colloquium participants
and the British and Americans.

He invited this circle
to Mont Pelerin,

whence the society’s name.

There were 39 participants
at the first meeting.

Again, there were some major figures:
3 future Nobel winners,

Milton Friedman, George Stigler,
Maurice Allais.

People known for their political
or philosophical essays,

Karl Popper, Bertrand de Jouvenel.

And those with direct political
influence in their country -

the Germans, Wilhelm Röpke
and Walter Eucken,

associated with Germany’s
“social market economy”.

Discussions revolved around
relatively general subjects

like Christianity and liberalism,
the competitive order,

the possibilities of founding
a European economic federation.

It lasted several days.

Hayek thought they needed
a flexible structure

with invited members only,

no offices,
statutes deposited in Illinois,

that would meet biannually
in different countries -

a fairly nebulous structure for
confirmed intellectuals who thought

liberalism was a doctrine primarily
for intellectuals themselves.

at the core
of the neo-liberal network

The Mont Pelerin Society
is not a think tank.

It’s a kind of liberal academy.

Nevertheless, a kind of
division of labour came about

between the Society, which recruited
only the most renowned liberals,

and its members’ national activities,

which could include setting up
associations or think tanks.

This took diverse forms.
In France, they created

the association for economic freedom
and social progress in the ’60s,

the French section of Mont Pelerin,

the members of which were recruited
from business or politics.

This broadened recruitment

into milieux other than
intellectual circles.

The other, think-tank model has been
perennial in Mont Pelerin’s history.

The most famous are Britain’s 1955
Institute of Economic Affairs,

or the Heritage Foundation from 1973,
linked to the U.S. Republican party.

These think tanks
have appointed employees,

people paid to write notes,
produce legislative proposals

that are all laid out
and distributed to politicians

and to journalists with the aim
of creating liberal public opinion.

There are now hundreds of think tanks

that form a veritable cluster
which is fairly disorienting,

to the point where think tanks
like the Atlas Foundation

now have the role
of promoting think tanks

by distributing kits and instructions
on how to form one’s own.

They take very different forms.

Groups focused on an author -
the Hayek Center,

the Mises Institute -

that revolve around
a particular person’s work.

Groups can have a subject
of particular concern -

the environment,
foreign politics, etc.

The quality and power of these
think tanks are very different.

A think tank’s strength comes from
whether it can connect intellectuals,

some businessmen, and a general
trend within conservative parties.

There are think tanks
like the Center for Policy Studies

of Keith Joseph,

which promoted Thatcher
and let her garner …

support to revolutionize
the Conservative Party in the ’70s.

That’s an organization
at the junction of 3 milieux.

A purely intellectual think tank
with general thoughts on liberalism

would have little influence
on political debate.

A whole part of the career
of Mises, Hayek, etc.

can be explained by the affinities
they had with business lobby leaders.

Mises was associated with the U.S.
Foundation for Economic Education,

and thus with business associations.
Hayek got to Chicago

financed by tycoons who wanted him
to write another “Road to Serfdom”,

but on America, not just England.

These intellectuals got more power

by teaming up with
or befriending powerful people.

Hayek’s work may reveal
a utopian quality,

but it’s the Utopia of the strongest,
not the most underprivileged.

Financed by corporations
and vast private fortunes,

neo-liberal think tanks often enjoy
charitable organization status.

Their generous donors thereby
have the right to tax exemptions.

However, the law says
charitable organizations

cannot engage in political acts.

In 1989, Greenpeace was stripped
of its charitable status

by the Canadian government.

The Canada Revenue Agency
concluded that this NGO

did not always act
in the public’s interest.

It contributed, for example,
“to propelling people into poverty

by demanding the closure
of polluting industries.”

On the other hand, no neo-liberal
think tank with charitable status

has ever been interfered with.

During their annual declaration
to the Canadian government,

these “non-partisan” research
institutes solemnly state

that they “do not try
to influence public opinion

or obtain the modification
of a law or policy”.

How can the market promote
individual choice and freedom?

Student seminar,
The Fraser Institute on public policy,

organized jointly with
l’Institut Économique de Montréal …

Saturday, February 10, 2001 ,

sponsored by Fraser Institute
supporters throughout Québec”

When one grants coercive power,

the monopoly on coercive power,

to an agency,
one we call the government,

there will always be a tendency …

to use it, either ignorantly,
or to abuse this power.

And power has a tendency to grow.

What the Fraser Institute tries
to research and emphasize is,

what the proper limits
of government are,

and what are the limits
of private enterprise,

or of voluntary exchanges
between individuals?

Therein lies the nexus, the division,

between coercion and free will
that will inform my discussion …

my lecture today. And you’ll be
seeing lectures by others who came

to participate today.

SPECIAL LUNCHEON PRESENTATION

… from the Foundation for
Economic Education in New York.

In his presentation,
’Cleaned by Capitalism’,

this expert on liberty will discuss
how our rising standard of living

has allowed us the ‘luxury’
of worrying about such things

as global environmental issues.”

This seminar’s not government funded.
It’s financed by private sponsorship.

It’s encouraging to see people put
their money where their beliefs are.

I think there are
far too many services

like unemployment insurance,
health, education,

that fall under a monopoly,

that of the government, which is
the sole producer of these services.

Why not open it up
and have competition?

We could have competition
in the production of services,

and perhaps address
our concern for the poor

by giving them grants
so they can buy these services.

So, divide …

Separate production, which I’d like
to see private and competitive,

from funding, which could be
partly governmental.

I don’t like talking about markets.
They don’t exist without governments.

Every market needs rules.

Every market needs
a certain level of coercion.

And I don’t like talking about
freedom as a value in itself.

Many people don’t want freedom.

l’d like the freedom
to choose my masters.

What I try to …

discuss in my lectures is,

how can we …

have a system of government
that permits us the choice

of what kind of representatives
and restrictions we’ll choose.

We must all live under restrictions,
even the fiercest libertarians.

brief liberal anthology

libertarianism
and the theory of public choice

Le Québécois Libre
Editorial

What must libertarians do?”

Libertarianism is the descendent

of classic liberal philosophy.

It puts the accent
on individual freedom

and its repercussions. Economically,
it’s the free market. Politically,

it’s the minimal State
and the least coercion possible.

The least regulation …

It gives individuals as much
leeway as possible to act

and have willing relationships
with others.

Socially speaking as well, it’s …

the polar opposite of philosophies
that impose some social, religious …

or cultural order. The idea is,

if we are free in a context where
person and property are protected,

everyone will be able to have
voluntary relationships,

which will lead to harmony.
Libertarianism isn’t anarchy,

with individuals fighting,
“wild capitalism”, “wild competition”.

It’s not that at all.

It’s giving people enough space for
peaceful, voluntary relationships.

Neo-liberal, anarchist
or libertarian?

Libertarianism is the descendent
of classic liberalism,

a philosophy that was developed
in the 17th and 18th century

in reaction to the authoritarian
monarchies of the period.

Liberalism said,

to match sovereign power,
individuals must have more freedom.

This developed in subsequent
centuries to give us …

our current philosophy,
which embraces the free market …

But 20th-century libertarians

stand apart from liberals. The
definition of “liberal” has changed.

In the U.S. a liberal
is ultimately the reverse:

a social democrat or a leftist.

Europe keeps the French tradition,
where liberal means liberal.

But there’s a lot of confusion.
The Americans, the classic liberals,

started calling themselves
“libertarians” in the ’20s and ’30s

to stand apart from leftist liberals.

And libertarian philosophy
is more coherent and radical

than classic liberalism,

calling for State reduction,
either to its simplest form,

or certain libertarians even favour
eliminating the State altogether,

privatizing even defence,
security and justice.

Redistributing wealth is immoral

Today, in a society
where the State spends …

State expenditures represent
about 45% to 50% of the GDP.

The State controls such sectors
as education, health.

It controls a lot
and regulates other things.

It subsidizes almost everyone.
Much of the population …

lives only off
the redistribution of money.

They don’t produce goods demanded
by others on the free market.

They just receive State money
confiscated from other taxpayers.

This means there are many people …

who live at the expense of others.
From a libertarian standpoint,

society can be divided in two,
those who produce and those who live

as the producers’ dependents
and are a kind of parasite.

It’s a strong word,
but it’s appropriate.

You can’t favour individual
responsibility and defend that stance.

All who live dependently on others
are really irresponsible.

They don’t do anything required
and they live …

on State coercion, which transfers
wealth from one group to the other.

If we want to promote
freedom and responsibility,

we cannot accept the dependency
of much of the population.

The theory of public choice says
the adoption of government policies

is not motivated
by collective interests

but by the particular interests
of various social groups.

In 1986, James M. Buchanan,
originator of this theory,

who denounces State inefficiency and
advocates limited public spending,

won the “Nobel prize” for economics.

Contrary to the perception
being peddled here,

we in Québec live in a State culture.
People don’t realize

because we’re so inured
to this viewpoint,

that we naturally accept it,
but it’s actually a State culture

that naively perceives …

the State as the instrument
to maximize the common good.

As though the inspiration …

But that view or vision
of the State is perfectly …

angelic. It has nothing
to do with real governments.

Why do we believe our governments,
democratic as they are -

which is an advantage -

will maximize the common good?
They won’t.

Governments obey
the game rules that rule them.

What game rules?
The electoral process.

That’s the virtue of it.

What does this herald?

Primarily that …

we will often witness …

majority dictatorship.

Since the primary, if not sole,
rule in politics is the majority,

a government that can win elections
will first privilege the majority.

The majority’s incomes are weak
relative to the average.

So the sole object
of policies will be …

to redistribute wealth in its favour,

not to maximize wealth
or enhance growth.

Efficiency isn’t a major issue
for a government.

Its priority is redistributing wealth
to the majority that elects it.

That explains
universal social programs.

That explains …

the majority’s predilections
with regard to …

the public health
and education monopolies.

It’s not compassion,
nor a concern …

for sharing wealth
that inspires this position.

The majority wants services paid
by a slightly more affluent minority.

That’s the sense of it.

So, it’s a gigantic lie to say

that compassion inspires …

public health and education
monopolies. That’s not the reality.

The second dimension is that people,
i.e., the majority,

is rather apolitical.

In economics, it’s what we call
“rational ignorance”.

It would be stupid for each of us

to acquire lots of information
on politics,

to get informed on the impact on us
of more than just a few policies.

Because we can’t do anything.
We’re one voter out of X million.

So, informed or not,
whether we vote wisely or badly,

the result’s the same.

So, everyone must aim to minimize
the effort of understanding politics

and political information,
which they do.

People often can’t name their MP.

And they’d be incapable …

of explaining a policy.

To them, this is normal
because, again,

it would cost a lot to get informed,

whereas their potential
influence is nil.

So, people are apathetic, apolitical.
They don’t participate in politics

because it’s not worth it.

This opens the way for intervention
by strategically placed groups.

Interest groups.
That explains their dominance.

Organizations like the CSN or the
Canadian Manufacturers’ Association

are already prepared to do politics,
propaganda and lobbying,

at minimal cost because
they’re already organized.

So that means political decisions
will be dominated

by strategically placed people,
organized groups.

All the world’s great governments -
today’s and yesterday’s -

have merely been gangs of thieves,
come together to pillage, conquer

and enslave their fellow men.

And their laws, as they call them,
represent only those agreements

they deemed it necessary to enter
in order to keep their organization

and act together in plundering
and enslaving others,

and securing to each
his agreed share of the spoils.

These laws impose no more real
obligation than do the deals

that brigands, bandits and pirates
find it necessary to enter into

with each other.”

- Natural Law, or the Science
of Justice, 1882 (paraphrased)

lf we look objectively at the facts,
the State is a coercive institution.

The State can only operate
by forcibly imposing things.

For example,

when the State has
a monopoly like Hydro-Québec,

if I decide to produce
and sell electricity

and I’m outside the monopoly,
ultimately,

they won’t just slap my wrists for
breaking the rules. I’ll go to jail

if I persist in doing something
the State prohibits by regulation.

The State will physically assault me
if I offer a service

that the statesmen
have decided to monopolize.

All the State does
when it steals half our salary -

sorry, but no one asked
my opinion about it,

so half my salary’s stolen …
It could be said that,

democratically, we elected people
who decided that for us,

but democracy is
the “peaceful” organization

of the State’s thievery.

I didn’t vote to have half my salary
lifted, but many are interested -

because they live
at the expense of the State -

in having the State take half
and giving it to them.

So, democracy isn’t true freedom.

I’m not anti-democratic in the sense
of being for an authoritarian State,

When you speak against democracy,
you’re always seen as favouring

an authoritarian State.
On the contrary, I’m for a State

that’s absolutely non-authoritarian,
to the point where

it doesn’t even justify its actions
on the basis of democracy.

Individual freedom does not equal
democratic freedom.

Democratically giving people
the power to take and impose things,

contradicts individual freedom.

A true defence of individual freedom
doesn’t favour more democracy,

more ways of divvying up

resources that have been
stolen from others.

We’re for reducing the State’s role
so individuals are altogether free,

not to decide
which fox they’ll vote in

to raid the hen house, but to decide
what to do with their property.

The incentives incorporated
into social policies are harmful,

both to the poor,
and to the general population.

What I mean by that is,
we have a public social economy

in parallel with
the capitalist market economy.

One is productive. The other is
based on the former-USSR model

and comprises incentives that
hurt everyone. We reward people …

for not working.
We compensate them

for not having stable families.

Welfare for single mothers …

is a way of multiplying births
outside the family.

And we reward poverty.
It’s as radical as that.

Poverty obeys the standard rules:
subsidies make it more prevalent,

because people start liking it.

This has been clear in Ontario
and the U.S. over the past 5 years,

where they really imposed

limits to people’s access

to welfare payments,

and the population of poor people
fell by half in a few years!

Because there was no more money,
conditions changed,

work was imposed on them,
whatever the methods were.

So, there are ways
to foster people’s reinsertion

into the productive economy.

Instead of piling them
into social housing, ghettos,

where everyone’s poor,

if they were given vouchers or stamps
that gave them access to property,

instead of subsidizing unemployment,

as with unemployment insurance.
People are subsidized

to be unemployed.
Otherwise, no subsidy.

We could create
unemployment savings funds,

so people could accumulate a hedge,

sheltered from tax,
even subsidized,

in case they lose their job.
Everyone would then be careful

not to lose their job because
they’d be eating into their own fund,

the beneficiary of their own savings.

Lots of ideas. But our social
policies are really built

to create an industry of poverty,
an industry of dependence,

that benefits all the bureaucrats
who gravitate around it

and encourage dependence
in the population,

as well as political support,

with no long-term effect
across the country.

Social policies
haven’t diminished poverty.

That’s the final diagnosis
of the matter.

We observe …

that growth …

Historically and from
country to country,

the growth of economies’ revenues
is the only means

to help the poor.

We have rigorous data about this.

The only variable that affects …

that reduces poverty

in various countries

is the growth of wealth.

Social policies count for nothing!

So, whoever is concerned

about helping the poor
or underprivileged

must also privilege growth.

Consequently, all those
who oppose free trade

on behalf of poor countries,
or of the poor within countries,

are wrong.
Their observations are mistaken.

The facts contradict their options.

The best help is to open trade
so everyone’s income goes up.

Statistically, the income of the poor
increases as fast as anyone’s

when revenues go up. To achieve this,
the economy must be opened up.

Beyond that,

beyond helping the poor
with measures that might help,

I don’t see any …

basis for redistributing wealth.

The government
redistributes a lot of wealth

in favour of the middle class,
because it’s the decisive majority.

But not on any moral basis.
The only social justice, if I may,

is the respect for property rights.

Libertarians believe
public goods don’t exist.

The notion’s a fallacy
to justify State intervention.

The logic is, there are always
external factors, like pollution.

We cannot produce without making
smoke, which falls on our neighbour,

or residues that will have to …

go into the river.
But the reason this happens is

there’s no property right
over water, for example.

Rivers are public.

Hence,
during the entire 19th century,

companies were allowed
to pollute rivers,

and until very recently
this was done because the State

controlled the river. It was
a public State-controlled resource

and the State let private companies
pollute the river.

But if the river had been privatized
and each of its owners

had had to be consulted
for permission for the company

to put effluents into the river,
we can be quite sure

things would’ve been different.
Or it might’ve happened,

if the company had paid
the true price for polluting,

i.e., paid the owners
for polluting their resource.

Resource allocation
would’ve been very different.

There would’ve been emphasis

on alternative solutions.

Companies would’ve invested more
in technological solutions,

or arranged to pollute
in very targeted places

owned by someone who would accept
pollution in exchange for payment.

Production priorities would’ve been
reorganized differently.

So, “public goods” exist
only because the State

distorts production

by nationalizing certain assets,
or the environment itself.

Historically, liberalism
represented a progression.

But classic liberalism
as championed by Adam Smith,

founder of political economics,
has very little to do

with what’s presently circulating as
the “liberalism” in neo-liberalism.

It has almost nothing to do
with classic liberalism.

So, historically liberalism was
a progression, in that it was …

a way of contesting
absolute monarchies,

and giving individuals rights.

Among these rights,
in the liberalism of Locke and Smith,

were private property rights.
That’s a progression.

But it’s not absurd
to think that even anarchism …

is a child of liberalism. Early
liberalism was somewhat radical,

and today’s “liberal” thinkers would
make Adam Smith roll in his grave,

because he wouldn’t recognize much
in what’s now passing for liberalism.

Take the case of private property.

lf it stems from interactions driven
by transnational corporations,

at the core and in the framework
of classic liberalism,

this is unthinkable.
It’s a fallacy to think

that private tyrannies like GM
or Bombardier can have rights,

either property rights or rights
that transcend human beings.

On the other hand, the question
of property rights is a hard one.

It’s important to ask.
There’s no simple answer.

Nevertheless, I’m sure that,
even in the context of liberalism,

one cannot place current practices,
agents such as transnationals,

and their accepted rights,
within a classically liberal model.

Property rights must be reconsidered.

My opinions about it
are those of classic anarchism:

private ownership of means
of production seems aberrant.

But what Proudhon calls “possession”
has a place.

Ownership rights are healthy.

But the current, ersatz “liberal”
or “neo-liberal” doctrine is absurd.

Let’s suppose that, in our world,

someone can appropriate,

by the means one normally acquires
property rights over anything …

Suppose someone like me
appropriates by accepted legal means

elements that are essential
to everyone’s life.

People like you could die
or sell out to me.

Current neo-liberalism would
recognize such a society as just.

It’s clearly aberrant. Such questions
can’t be answered as simplistically

as our world would have it. But it’s
a tough question. I choose to think

production means can’t be private but
ownership of things we use is good.

Free trade
is a very beautiful concept,

and, as it was imagined
in the 18th century,

it certainly had merits,
because it’s very logical to say

you must produce better
and more cheaply,

and trade with others
who’ll do the same.

Instead of making wine in England,
buy it from Portugal.

The Portuguese
will buy your woollens.

That’s Riccardo’s original example.

But the great 18th-century
theoreticians never imagined

that capital itself would be free
to go where it wanted,

and an American or British company
could go invest in China,

take advantage
of repression in China,

which rejects unions
and so has extremely low wages,

could “externalize”
all the environmental costs,

make society and the whole planet pay
because it pollutes but it’s cheaper.

So, instead of having
a “comparative” advantage -

I make wine cheaper than you,
you make woollens cheaper than me -

it becomes an absolute advantage
because …

my capital is free
to roam wherever it finds

the best conditions for profit.

This is what warps trade practices,

and makes the transnationals
naturally want

the greatest possible freedom
for themselves.

But there’s no question
of labour circulating,

except for our “contemporary nomads”-

highly qualified personnel,

covered under service agreements,
since they have the right

to circulate freely
and set up where they want,

whereas the common mortal does not.

December 17, 1992.
U.S. president, George H. W. Bush,

signed the North American
Free Trade Agreement (NAFTA)

with Canada and Mexico.

Fourteen years later,
on October 26, 2006,

his son, George W. Bush
promulgated the Secure Fence Act.

This law authorizes
the construction of a double wall,

4.5 meters high and 1,200 km long,
along the Mexican border.

It is also outfitted with
the latest surveillance technology:

watchtowers, cameras,
ground sensors, drones, etc.

The theory of comparative advantage
posits international specialization.

It says nations must specialize
according to comparative advantages.

It’s a purely static theory.

Pawns are shifted around a box
without questioning the box’s form,

or whether the box evolves
with the pawn configuration.

The theory’s purely immediate.
So, why doesn’t it work?

Because international trade
isn’t just neutral exchange,

where the nice Natives trade
with the charming conquistadors.

It doesn’t work like that
and it never did.

The conquistadors kill everyone.
Then trade comes in

as Phase Two of pacification.
But in international trade,

which is the matrix of business …
That’s another preconceived notion.

Trade’s not intra-village, then city,
region, nation. Then international.

It never worked that way.
Quite the contrary.

International business
follows the military,

it follows predation. Then comes
an inward pacification process.

The “invisible hand” theory
is quite extraordinary.

First, it wagers that men are bad.

It’s quite lucid. It says,
we’ll work with that.

People are self-centred, greedy,

mean and self-interested.
They dislike collectives.

They’re unsupportive,
anti-social, narcissistic.

Let’s say this kind of flaw
turns into …

an advantage
for the collective and society.

Let them go. Public happiness will
arise from their egoistic antagonism.

That’s the invisible hand.
The idea is that

every time one intervenes,
tries to order this ego antagonism,

the system gets disrupted and worse.
One great reactionary thesis

is the argument of perverse effect.
Hirschmann said it. It’s great.

The reactionary rightists

have always accused leftists
of causing evil by doing good.

You want to do good, help the poor,
you’ll create a lot of poverty.

The Economist published an amazing
picture after the Seattle summit.

It showed starving Third-World people,
African children, labelled,

Victims of the Seattle failure.

That is vile!
Worse than the Benetton ads.

The message was, you played
around at hindering the WTO.

To what end? You created
poor, unhappy, starving people.

Whereas this system creates
the poor, starving, unhappy.

The invisible hand says, let it be.

You can’t fix it. Man is unkind, bad.

Only wickedness can stop wickedness.

Put two bad guys together,
it balances out. Laissez-faire.

Economists have been studying
the invisible hand since 1776.

So they’ve been studying
this problem for quite a while.

For it to work, men have
to be separate. Autonomous.

No relationships, no collectives.
Only their own rationality,

separate from others’, individual.
Absolute individualism.

The second condition
is perfect information.

Omniscience about future events
for centuries to come …

Second condition.
Now, what’s the third …

Perfect information …
and thirdly,

no uncertainty, like a storm,
chance, Ariane breaking down

on the 25th flight and not the 3rd.

The world must be hazard-free,
which is corollary to saying

perfect foresight is necessary.
Under these conditions,

the invisible hand might work,
but it’s not even sure,

for it’s important to know
that liberal economists -

the greatest, most mathematical,
most prestigious, Nobel winners -

have shown for about 25 years,

that the invisible hand theorem
doesn’t work. It’s bullshit.

They’ve shown it.
Many suspected as much.

Keynes suspected it for a long time
because he thought

the idea of equilibrium
was inapplicable to economy,

It was more disequilibrium -
economy was fundamentally chaotic.

But the pure, hard, mean, liberal,
most prestigious economists,

draped in the prestige
of the most hard-nose science,

starting with Nobel winner,
Gérard Debreu, 25 years ago,

have said it doesn’t work. Markets
don’t mean equilibrium or efficiency.

Markets don’t mean equilibrium, so
supply-and-demand means nothing.

And they’re not efficient, so
laissez-faire is the worst solution.

Thank you, liberal gentlemen. Kind of
you to say so. We thought as much.

So anyone who says “invisible hand”,
“supply and demand”, “equilibrium” …

is either a crook (not uncommon),

or hides his eyes (also happens),
someone who’s wilfully blind,

or Sartre’s “bastard” -
who knows but stays silent,

or an incompetent. They exist too.

Adam Smith, David Riccardo,
Karl Marx, John Stuart Mill,

Malthus, more or less -

all the classic figures
in the creation of economics

incorporated social thought.
They were social philosophers

more than “pure” economists.

But the neo-classics - Auguste
and Léon Walras, father and son,

mid- to late-19th century,

inaugurated a kind of economics
that calls itself scientific.

In doing so, it dispenses with
all moral or philosophical thought.

So it evacuates all the concerns
the classics had until Karl Marx,

which were the following:

Who makes money and why?
Has he the right to make so much?

Is this fair? Unfair?

Is it good for the community or bad?
Economics had an ethical dimension.

And this was evacuated
with neo-classical thought.

This neo-classicism opened the way
for neo-liberal thought.

Neo-liberalism then added
to neo-classicism’s kind of …

scientific decree (We are a science,
so we imitate physics.):

We notice money goes
from here to there.

We count, observe, classify.

But we refrain from casting judgment,

because physics, the mother
of all sciences, does not judge.”

Economics’ strength is that it
comes as obvious, neutral truth -

a neutral discourse
that speaks neither good nor evil,

that is scientific,
with all the neutrality of science,

that comes across as normal.

Putting pressure on wages
to cut inflation is obviously normal.

Obviously we can’t have inflation.

No matter if this generated
phenomenal inequality,

led certain peoples into destitution,

created disparities
between north and south,

created a caste of rich people
taking up the foreground,

eradicating State power,
breaking social security.

Despite all this,
there is but one obvious truth:

You can’t be pro-inflation!?

But if we look at truth and history,
we see that those rare times

when capital was muzzled,
as in the glorious ’30s,

were inflationary periods
when wages could increase,

because people who borrowed
for houses, etc., due to inflation,

managed to pay off debt quickly.

Now, it’s an economy of the rich.

One could ask,
“You want the rich to run the world?”

instead of,
“Surely, you’re against inflation?”

To impose their ideology,
neo-liberals have, over the years,

developed a relentless strategy,
thought encirclement.

This strategy rests in large part
on the actions of a global network

of propaganda, intoxication
and indoctrination

that can make its polymorphous voice
heard in all forums.

Largely conceived in think tanks,

neo-liberal propaganda subsequently
branched out in many ways.

Education became
one of the most important branches.

propaganda and indoctrination

propaganda and indoctrination

education

The idea of national education
arose in the 18th century.

In the wake of the French Revolution
and European nation-states,

there arose the idea …

that a public democratic space
implied people who were informed,

and who were skilled
at thinking, discussing,

participating in political discourse.
There were 2 institutions for this

to ensure that people could become
“citizens”, as they said at the time:

Education, one important function
of which was to train citizens,

prepare citizens.
And then, the media.

We’ll discuss that later.
As for education,

one of its mandates - not that it was
implemented or realized very well -

but a mandate of education
was to train citizens,

empower people to take part
in political debate

and reflect on political questions
beyond their own interests.

That was the main thing.
Not to think about politics,

or economic and social debates,
from a self-serving standpoint,

but from the standpoint of the
public good and collective interests.

Education cultivated this.

But in the so-called “neo-liberal”
changes of the past 30 years,

the dominant institutions realized
education was an important issue,

and important to appropriate.
Is what I’m saying right?

Are they penetrating education?
Anyone who looks knows it is.

From primary school to university,
it varies according to country.

It’s different in the U.S.,
Canada, Québec, France.

It depends on the history
of how each system developed.

But we see massive penetration
on the part of private industry

into the education system. Why?

The answers are quite simple.

Education’s a very profitable market.

It’s interesting to appropriate this
piece of social and economic activity

because it’s profitable. And it lets
children’s minds be appropriated.

It’s as blunt as that.
Educating is seizing minds.

Being able to take hold of children’s
minds is extremely crucial, serious.

It requires a strong justification
and I’m not sure we can give it one.

When companies infiltrate education,
they’re aiming for children’s minds,

and to transform the subjects taught.

That’s when training deviates from
citizenship and sense of common good

towards the interests of the
businesses appropriating education.

Seeing the world through culture,
knowledge, outside of oneself,

is different than from the viewpoint
of what a company gives us.

The latter element’s always there.

Appropriation of a market,
of children’s minds,

and preparation for labour.
From this perspective,

education will increasingly
lose its other functions -

preparation for civic life,
openness to the world,

the pure pleasure of understanding
and knowledge for its own sake -

to orient towards
market enslavement,

the preparation of subjects
taught for economic functions.

Education will become

a prelude to mercantile life,
and to employment.

That’s also very troubling.

We’ve seen transformations like this
for about 20 years.

With some resistance.
As this phenomenon arises,

so does resistance to it, luckily.

Channel One is an American company,

now listed on the stock market.
It launched a project

where they go into
underfunded schools and say,

Since you have no supplies,
we’ll furnish you with TV’s, VCR’s

in exchange for which,
you’ll screen for 20 minutes a day

our educational videos.” -
current issues shows for children.

Their interest in this
is the captive clientele.

Throughout the X minutes of
proposed programming, there are ads.

They add a few minutes of publicity

that allows advertisers to address,
in an extremely privileged context,

this captive clientele.

This is strong in the U.S.
Here, it has been tried.

The company in Canada
was called Athena.

It made sustained efforts
for a few years.

By and large,
the school boards refused.

Our public-service funding is not
in the same state as the U.S.’s,

but it’s another assault
being conducted against education.

It takes many forms,
according to country and region.

Mobil has shows on energy. Learn
environmental protection from them.

And nutrition from NutraSweet,
which has a kid’s show on nutrition.

You’ll learn the virtues
of NAFTA with GM,

and about protecting
forests and the environment

from the companies
responsible for deforestation.

This model has repercussions
from primary school to university,

which means, ultimately,
we could have - I’m half joking -

university ecology departments
where pollution will be justified.

That’s the troubling thing.

The loss of meaning in certain
intellectual and human activities …

that this implies.

The more efficient we think
we are economically …

Financially is more precise,
since finance is multiplying money.

The more efficiently we make money,
the less sense it makes.

Does it makes sense to say
that GM, for example, is efficient

because it made $23- or 24-billion
net profit in the last decade,

when it created 300,000 unemployed!

Does that make sense?

We say GM is efficient,
but what is this efficiency?

We say the American economy
is more efficient.

It is, in financial indicators,
yield over capital investment, etc.

But the U.S. has never had so many
people living under the poverty line,

the American poverty line,

or so many people
without access to health care -

40% of the American population has
practically no access to health care.

The U.S. has never had
such a low level of education.

50% of Americans
can’t locate England on a map.

Today, this is aberrant,

when there are at least
50 TV channels per household.

There’s a picture of what
I’m calling lack of meaning.

Materially, economically,
financially, we’re more efficient.

But ecologically, socially,
politically, humanly,

we are steadily losing
our values and quality of life.

Senselessness.

To discuss this, we must eschew
the dominant economic discourse.

To start to make sense of this,
the problem must be reformulated …

from scratch. To do this,
we must go back to Aristotle.

He said, “Do not confuse
the economic -

oikos nomia, the norms
of running home and community,

with chrematistic, krema atos,
the accumulation of money.”

That brings us to education.

In education today,
to what degree is Aristotle taught?

Who knows Aristotle? Who reads him?

I could say the same
of Victor Hugo, Jean-Paul Sartre,

Archimedes, etc.

So, today,

we say we’re in
a knowledge-based economy,

but we’ve never educated
or taught so little.

Yet we’ve never put so much emphasis

on so-called training
and educational institutions.

Now for the paradox and nonsensical.
They’re in the fact that

just about everywhere,
particularly in North America,

schools are being turned into
the system’s servant factories.

In other words, thinking bipeds

must be concerned only about fuelling
this free, self-regulating market

and the mechanics
of production and finance.

We call this “employability”,

training the employable,

reforming education,
from grade school to university -

training people to find their place
in the labour market.

That’s horrible.

Would a Victor Hugo
be employable today?

Would a Socrates be employable?

Would a Paul Verlaine
or a Rimbaud be employable?

No! So, there would be none.

But what would humanity be
without Socrates, Aristotle,

Rimbaud, Verlaine, Hugo?

What would we be without them?
We’d be animals.

Now, on the pretence that they’re
unemployable and unwanted,

we no longer train poets, literary
people, pure mathematicians,

or theoretical physicists.

We only train what industry,
financial enterprise, wants

to fuel the money-making machine.

Who is employable?

The people I see in universities
where I teach, around the world.

In other words, at the highest level
- Master’s, Ph.D. -

they’re what I call “technocrats”,

analytical technocrats,
trained to analyze problems.

We tell them they’re smart
because they do problem-solving.

Problem-solving is not intelligence.
Problem-formulation is.

The person who formulates
the problem is the smart one.

He articulates it, puts it in terms
of links and combinations

that call for a question.

He’s the smart one. The one who
relies on a pre-formulated problem

in order to find the right solution
isn’t intelligent.

Despite what they say.
Analytical technocrats

master techniques
of analysis and calculation,

and confuse thinking
with analyzing and calculating.

They make decisions with no qualms,
like laying off 60,000 in a day,

doubling their salary by a million,
and saying “I’m suffering.”

I make hard decisions.
These are non-humans!

Someone who openly makes
decisions without soul-searching

is saying, “I’m not a human being.”

By what right do we let him make
decisions that affect human beings?

He says, “No soul-searching,
no soul. I’m not human.”

These are highly trained technocrats.
At the intermediate level …

are the producer technicians.
These technicians serve machines,

from the computer
to the digital machine

that cranks out parts
in plastic, steel, aluminum.

These people are there

so the automated mechanics
of production never break down.

The only knowledge required of them

is the logic of the machinery
they’re overseeing. That’s all.

What’s more, they’re merely required
to understand the machine’s demands.

They don’t even dominate the machine,
or possess a kind of …

human superiority, additional soul,
knowledge or sense of the machine.

Instead, the machine says,
if you’re smart enough,

find the bad chip, change the card.
And if he can’t, he’s no good.

And on the lower levels,
what do we train? We don’t.

45% of the labour of multi-nationals,
American in particular,

are completely illiterate.

The multi-nationals
don’t want to change that.

They don’t want these illiterates
to be the least bit trained,

because otherwise
they’ll start asking questions.

lf they read papers and reports,
they’ll start asking questions,

unionizing, thinking.

So, no way.

Today, particularly in North America
and even more in the States,

there are primary
and high school graduates …

in fairly staggering proportions -

up to 25% here in Québec,

and if we looked at U.S. figures,
they’d be the same, if not more -

who graduated, yet are illiterate,
who basically can’t read or write.

They graduated by seniority.

By attendance and age.
This suits the system fine.

Because when your low-level workers

are lobotomized bipeds,

who haven’t even been taught to think
because this would require reading …

lf I want to learn to think,
I must read Victor Hugo, poems …

I must read philosophers.

Writers teach me to think.

I can’t think without putting words
and their permutations into my head.

lf I don’t have this, I cannot think.

But I can become an excellent
reproducer of the system,

who doesn’t think
and who defends the system.

There are now workers who say -
and this has happened to me

in serious situations where
there are closures, layoffs, etc.

and I ask the workers,
“What do you think?”

They often tell me,
“It’s the law of the market.

Competition. We must be more
competitive than the Japanese…”

They defend the very system
that’s crushing them.

We began by examining the networks
by which ideas circulate.

Education’s the same. We find …

ideological justifications, theorists,
people who conceived education,

advocating its transformation
in a way I’ll describe.

There are also
powerful transnational institutions

that entertain the same discourse
and compel agents, governments

and teachers to adopt practices
that conform to these ideals.

Finally, lobby groups, think tanks,
try to accomplish the same thing.

Education is striking.
It has all three.

The most influential education
theorist of the last 50 years

was an economist, not a pedagogue.

The top educational theorist
was probably Gary Becker.

He teaches at
the University of Chicago.

He developed
the theory of human capital.

The idea is …

humans and knowledge
are capital that requires investment

and evaluation from
the standpoint of profitability.

This theory of human capital

allows mathematical economic tools
to be applied to education,

henceforth viewed as a certain order
of capital that can be quantified.

This has been the most influential
theory of the last 50 years,

especially where it counts, in places
where decision-makers are influenced.

Places where States,
education ministers

and education policy-makers
are influenced.

The second theorist who established
the mechanisms that are in play now

is Milton Friedman, the father
of monetary economics,

who proposed a system
of education vouchers,

the idea again being
to inject market mechanisms

into education,
and to make schools compete.

These 2 education theories, never
discussed in education faculties,

are the most influential
recent educational thinking.

These theories circulate to the IMF,
the OECD, the World Bank.

National education systems are
analyzed from their point of view.

Recommendations
are made accordingly.

Think tanks and major media groups
often enjoy privileged connections.

Propaganda naturally circulates
from one group to the other.

Also, it is largely due
to this media transmission

that neo-liberal ideology
attains the status of accepted fact.

propaganda and indoctrination

propaganda and indoctrination

the media

It has traditionally been said
that Hitler invented propaganda.

Journals, etc., describe how Hitler
understood its role in World War II.

It’s true, he understood
it’s societal importance.

But he didn’t invent it.
He learned from us,

the Western democracies,
in particular the English,

and the Americans.

Overall, since the advent
of modern societies,

two trends prevail.

The first calls for participative
democracy with aware people,

who can talk, act
and influence decisions.

The other vision of the world says
some people must be pushed aside.

They must not get involved
in the issues that concern them.

This vision of society,
the world and the economy

also exists in our culture.
It strongly manifested itself

during World War I in the U.S.,
when the government was elected

on a promise
of abstaining from war.

Shortly thereafter, for reasons
pertaining to internal affairs

and the role of the industrialists,

the government decided
to enter into the conflict.

The serious problem it then faced was
confronting an opposed population.

They formed a commission named after
the journalist who presided over it,

Mr Creel.
It was the Creel Commission.

This commission largely invented
modern propaganda techniques,

techniques for shaping
and preparing public opinion.

The Creel Commission magnificently
fulfilled its mandate,

reversing public opinion
in a few months.

The commission engaged very famous
people, renowned intellectuals

and Edward Burnays, founder of
the modern public-relations industry.

These people later
left the commission

and established communication tools
within our societies

that are still present and are among
the propaganda mechanisms.

One very important political aim

is to exclude part of the population,
to shape public opinion

and build consensus within society.

The institutions they invented -
public relations firms -

plus the modern concept of the role
of companies and of P.R. within them,

social communication, media,
the role of the intellectual,

the role of publicity and information
in our society …

This was all set up, and was
the lesson Hitler rightly remembered.

Whence the mechanisms that
led to today’s one-track thinking?

They’re the descendents of what
I’m describing - the Creel Commission

and, further back in time,
of the conception of politics

that says society must exclude
part of its population to function.

We find this too.

But if the agents I’m describing
are very powerful, strong, numerous,

a counter-discourse arises, as do
sites where other analyses blossom,

alternative media, intellectuals,
social and community groups,

where new thought percolates.
There’s a dual phenomenon.

Unfortunately,
pensée unique predominates.

Propaganda is working.

Through such mechanisms
and institutions,

a world vision, a vocabulary, a way
of thinking and conceiving the world

ensure that certain questions
may be asked,

certain answers given,

certain analyses made,
while others are excluded.

Currently, dominant ideology,
which I call ambient ideology,

has its official face,
the pensée unique we spoke of,

and its unofficial face, which is …

this ensemble of behaviours
prescribed by the media overall.

This ideology never appears
as an ideology.

It’s presented as entirely natural,
something we should obviously do.

Owning a TV must be obvious.
“How can one not own a TV

in the late 20th century?”

Accepting the advertising system
is obvious.

Surely, you won’t,

in early 2K, call the advertising
system into question!”

All that is ideological,
all that is choice,

which the system has organized
without consulting us,

is presented to us as self-evident,
given and above discussion.

Interesting. Indeed,
concerning pensée unique,

which is a uniform,
partial and sectarian way

of interpreting and
conducting economy,

Alain Minc said, “Thought
is not unique, reality is.”

From that point on,
forget calling into question

what the liberal or ultra-liberal
economy was doing.

It was given as reality.
Reality had to be followed.

For example,
“Internationalization is a reality.”

Of course it is,
but not necessarily a good one.

The ideology says it’s a reality,
it’s valid, we must go with it.

Globalization, same thing.

Privatization, same thing.

It’s being done, so it must be done.
It had to be done, etc.

They present as faits accomplis,

things people must be made to accept,
instead of asking whether they agree.

Naturally, this pertains to
what I was saying in my book

on the sophism of the ineluctable:

most politicians cover up
their actions, their choices,

because these choices and decisions
are being billed as inevitable.

We couldn’t do otherwise.

It was decreed.
The Americans are doing this.

Everyone knows what happens in France
happened 10 years earlier in the U.S.

It had to be done in France.

Renault closed a factory in Belgium

in order to restructure …

and create factories elsewhere to do
the same work, with cheaper labour.

That was the result
of an economic calculation.

About this closure, the head of the
French state declared the following:

Alas, factory closures are life.

Trees are born, live and die, as do
plants, animals, men and companies.”

That is a good example
of naturalizing

what’s happening,
which is depoliticization.

People are obliged
to accept as natural,

as independent
of the will of politicians,

certain decisions
that are in fact contingent.

That’s how they manipulate citizens

and dissuade them from believing
in their own vote, ultimately.

Today, the functioning
of the media

fosters the creation of truth.

The truth can only appear
as the confrontation,

the verification of a given version

confirmed by a number of witnesses.
We know truth is hard to establish.

We see it with investigating judges,

with analytical scientists
trying to discover truth.

But today,
the way the media functions,

it’s enough that,
in coverage of an event,

all the media - press, radio, TV -
say the same thing

for this to be established as truth,
even if it’s false.

We saw it during the Gulf War,
and recent mega-events.

Consequently, in establishing
this kind of false equation,

repetition equals proof.
I was recently rereading …

Brave New World by Aldous Huxley,

and I found a phrase
about hypnopaedia,

the aural hypnosis they subject
infants to when they’re born

to persuade them to be happy
to be what they are,

and one of the directors of the
Conditioning Centre, as it’s called,

says, “64,000 repetitions
make one truth.”

We’re now in Huxley’s world.

Sustained by incessant
propaganda and proselytizing

that pass repeatedly through
the multiple relays

of a sprawling network
of mind control,

neo-liberal reforms
gradually impose themselves

in the anaesthetized consciences
of Western democracies.

In these countries, in the name
of a necessary “realism”,

all parties, both right and left,
adopt measures

that sap the social State more
every day, to market’s benefit.

But elsewhere, where propaganda
doesn’t enjoy the same success,

especially in developing countries,
other solutions are imperative.

Drastic solutions.

For behind the ideological
smokescreen,

behind the beautiful concepts
of spontaneous order

and harmonized interests
in a free market,

beyond the panacea
of the invisible hand,

what’s really hidden?

What were the true motivations
of the bankers and industrialists

who financed the establishment
of the neo-liberal network?

neo-liberalism or neo-colonialism?

strong-arm tactics
of the financial markets

Before,

nearly all of banks’ operations
until the ’70s were monitored.

All these operations passed
via the French central bank

which kept track.

Now the problem is,
banks transact over the counter.

They’ve taken out just over
half of their business figures -

OTC transactions
outside market control.

It’s as though there were
the normal market,

and a black market.
A grocery with posted prices

and a proper cash register.
Then, a mysterious black market.

In its reports,
the Bank of France says,

when it checks bank reports,

about half of bank transactions
are unreported,

beyond the control
of a superior authority,

like a public treasury
or a central bank.

These unreported activities mean that
governments count for nothing.

There must be …

$500 billion minimum

circulating every day
in off-shore funds, etc.

If a government hassles a bank,

it doesn’t care. It just stocks up
with one of its foreign counterparts,

another multi-national bank,

an off-shore fund or elsewhere.
No problem. Money’s mobile now.

Beyond the control
of any public authority.

OTC transactions

are a very serious problem.

To control the economy,
you must control money.

Over-the-counter operations
are generally effectuated

with relatively new financial
instruments, derivative products:

It’s basically insurance contracts.
In other words,

you get insured
against future fluctuations

in interest rates and currency.

You sign a contract

with someone to pay in 6 months.
The contract is in dollars.

If the dollar rises,
you’re in trouble. In 6 months,

you’ll have to buy dollars at a 10%
premium. So you take out insurance

on the value of the dollar.

A guy takes on the risk. You pay him
3% or 4% extra at the onset.

Whatever the dollar’s rise or fall -
the guy wins if it falls -

you don’t move. You have insurance.
That’s derivative products.

The interesting thing is
it creates a risk economy.

Currency’s no longer controlled,
capital flux isn’t monitored, etc.

So, it’s an economy
where risk is maintained

in order to create
on top of this system,

an insurance system
where risk is covered.

But the difference between this
and risks like car accidents

is that accidents are predictable.
It’s the law of probability.

Whereas the risks
in the financial markets …

are rare epiphenomena that
can’t be statistically quantified.

Absolute risks,
absolutely unforeseeable.

So these insurance contracts
that crown the normal economy

create a 2nd layer
that’s even riskier.

So, sometimes people take out
insurance on their insurance.

It’s Escheresque.
You create a risk pyramid.

And people speculate on that.

You create a purely speculative
economy by sustaining risk.

A trait of contemporary capitalism
is this economy where financial risk

is systematically maintained,
and systematically marketed.

In the 1980s, under the sway
of Thatcher and Reagan,

a number of countries adopted reforms
to deregulate financial markets.

By allowing capital to flow freely,
governments considerably increased

the power
of major institutional speculators:

hedge funds, commercial banks,
pension funds, insurance companies …

Now in a position of strength,

these entities would act as a new
purveyor of neo-liberal ideology,

going so far as to compel
the most recalcitrant States

to accelerate the liberalization
of their economy.

Among the methods used to do this,
speculative attacks proved to be

particularly effective …
and devastating.

Certainly, the emperor’s new clothes
are woven of complex mechanisms

that readily deflect
the most curious minds.

But if colonialism has changed
its look, its goal remains the same:

the concentration of capital.

Speculation …

has several instruments.

Without going into technical details,

I’d like to show what happened
in the Asian Financial Crisis of ’97,

which led to a currency collapse
in several countries,

countries that had been categorized
as “Asian tigers”,

with a successful economy, etc.

There were various factors
in this crisis,

but I think one of
the fundamental elements

was the prior deregulation
of the exchange market.

In certain cases,
this deregulation was imposed,

if not indeed recommended by
the International Monetary Fund.

Now, speculators

got their hands on the reserves
of the central banks

through the following mechanism:

they speculated against
national currencies

by selling short.

Short selling is speculating on
a transferable security’s decrease

rather than on its increase,
as is traditionally the case.

If a security is the object
of massive short selling,

it leads to a collapse in demand
and thus of the security’s price.

This constitutes speculative attack

for, in wagering massively
on a decrease in value,

the speculators themselves
bring about the decrease.

Say I want to short sell
the Korean won.

I start selling huge quantities
of Korean won,

deliverable at some future date.
The contracts are 3 or 6 months.

When the contract comes to term,
I must deliver huge quantities

of Korean won or Thai baht.

But I don’t have them.
I can sell as much as I want,

I can sell billions of dollars’ worth
of Korean won.

Who buys up the Korean won?

The central bank of Korea,

which is obliged through accords
with the International Monetary Fund

to stabilize its currency.

Technically, what happened was,

when the Korean currency fell,

a few months later,

the short-selling contracts
came to term

and that’s when …

there was an appropriation
of the central bank reserves,

because the won was worthless

and speculators had only to buy
Korean won on the spot market,

and then fulfill the terms
of their contracts.

So the central bank’s buying back
its own money - not too profitable.

And in exchange,
its reserves are confiscated

and go into the pockets
of the major Western banks.

That’s the mechanism.

Now the reserves have been sacked,

and this means Korea must now
go to the IMF and say,

Our reserves have been sacked.
We can’t function without them.

We must reimburse…” (The money
hasn’t even gone to creditors yet.)

We must reimburse our creditors
(the speculators).

What’s going on?

When the IMF grants a loan
in the order of $56 billion,

there’s participation
by a number of countries.

There were 24 countries,

because astronomical sums are needed.
The American and Canadian treasuries,

the main Western governments.

For the American
or Canadian treasury

or another Western country
to help give

a $56-billion loan,

they have to raise
their own debt level,

which means they must start selling

and negotiating their debt
on the stock markets.

So, it’s the debt market.
And who controls the debt market

for sovereign Western debt?
The same speculating banks.

There’s a vicious circle here.

Attack Korea, come to its rescue,

confiscate its reserves,
lend it money …

from the public funds
of various Western governments,

and increasing the debt
of these Western countries

requires backing from
these private-sector banks,

the underwriters of national debts.

In the end, everyone goes into debt

except the speculators,

who are creditors of both Korea
and the Western governments

who came to Korea’s rescue

through the intermediary
of the IMF program.

So, what happens?

The Korean economy

is doomed to bankruptcy.

Its bank shares and high-tech
industry are sold at a discount.

What’s in the process of happening

is the transfer of
all this country’s industrial wealth

to American foreign investors,

to the point where …

its shares are practically taken over
for an absolute pittance.

I’ll give you an example

of one of the primary Korean banks

that was restructured
on the recommendation of the IMF,

following this operation,
because it had conditions.

This bank, Korea First Bank,
was sold for $450 million.

It was sold to Californian and
Texan investors for $450 million.

But a condition of sale was

that the Korean government
finance the bad debts of this bank

with grants,

subsidies that were
35 times the purchase price.

Something in the order
of over $15 billion.

These American investors
arrive in Korea,

and overnight they gain control over
the whole local financial apparatus,

the commercial banks,

and they hold the debt
of major Korean companies

like Hyundai, Daewoo, etc.

And they’re in a position to dictate
the break-up of these companies!

Part of Daewoo
has now been sold to GM.

Other Korean companies will be sold.

So, through a mechanism
that was initially based on

manipulating financial markets,

they take possession
of an entire economy.

Korean companies see
credit dried up by bank crisis.

A million people
affected by unemployment

The IMF’s ‘beggars’”

The most serious social crisis
South Korea has faced

since the war began.

Early March, the number
of unemployed surpasses a million”

The economic liberalization campaign
led by the financial markets

wouldn’t have enjoyed
the same success

without the precious collaboration
of the Bretton Woods institutions,

which constitute another major
vehicle of neo-liberal ideology:

the International Monetary Fund
(IMF),

the World Bank

and the World Trade Organization
(WTO, formerly GATT).

The IMF and World Bank
were established in 1944

to ensure the stability of exchange
rates and support the reconstruction

of countries devastated
by World War II.

Over time, however, the U.S. and
Europe have considerably altered

the mandate of the twin institutions,
based in Washington.

Indeed, shortly after the U.S.’s
unilateral decision in 1971

to put an end to
the International Monetary System,

the IMF and World Bank were invested
with an entirely new mandate:

to impose economic liberalization
upon developing countries,

by fixing as a “conditionality”
to granting any loan

the adoption of a series
of neo-liberal measures.

Some have described this set of
economic reforms as “shock therapy”,

while others ironically call it
“the Washington Consensus”.

neo-liberalism or neo-colonialism?

neo-liberalism or neo-colonialism?

strong-arm tactics
of the Bretton Woods institutions

or

the Washington Consensus

Washington, where the World Bank
and IMF are headquartered,

started dictating
to the rest of the world,

especially the poorest,
almost-bankrupt countries,

how to apply sound economic science.

It was called
“structural adjustment measures”.

or “the structural adjustment plan”,
dictated by the IMF,

and bolstered with World Bank loans
to the countries concerned.

Equatorial Guinea, 2006

Many dozens of countries
were thrown into chaos

precisely because of the measures
of the IMF and the World Bank,

of which there are many.
It would take too long to outline

fundamental adjustment measures
vs. short-term cyclical adjustments

but overall,

let’s say the 3 or 4 most important
measures can be summed up.

first measure:
reduce State expenditures

The first measure imposed
on countries approaching default,

i.e., poverty-stricken,

was governmental non-deficit
or deficit reduction:

the reduction of State expenditures.

Shrink the government,
shrink its expenditures.

second measure:
privatization

In privatization, who will buy?

There are no local operators.

If there were enough
local money to buy

entire oil, phosphate
or steel companies,

the country wouldn’t be so poor.

The extraversion of these Third-World
impoverished economies gets so bad,

they sell off their last
national economic interests

to foreign interests.

So, multi-nationals start buying
and relocating to these countries,

due to low wages and dollarization.

It gets cheaper for multi-nationals
to produce there than at home.

But these multi-nationals
can also acquire, dirt cheap,

installations and
production capacities,

like sugar production and refining,

oil or gas production
and pre-refining,

gas liquefaction
or mineral transport, etc.

at low prices, which cost these
national economies years and years.

third measure:
currency devaluation

Devaluing local currency
means, all of a sudden,

for already-poor countries,

anything imported becomes
proportionally more expensive

than the level of devaluation.

When the CFA franc
was suddenly devalued by half

in the early ’90s,

well, suddenly about
a third of Africa or more

that was using the CFA franc,

found itself with half its
purchasing power overnight.

So, your wage, that lets you live
at a certain level,

only gives you half of that.

That’s an immediate 100% inflation.

Add to that manufactured or
semi-manufactured products,

refined products and
everything you’d expect Africa,

West and Central French Africa,
to import.

Suddenly with the franc cut in half,
these things are twice as expensive.

Combine that with the effects
of local devaluation,

and products and services
suddenly cost you 4, 5, 6 times more,

from one day to the next!

Add time, and see what happens.
Local products

made from imported
semi-raw materials,

or that need imported binders,
glues, solvents, paint, etc.,

over a longer wavelength,

1 , 2, 3, 6 months later, they become
2, 3, 4 times more expensive.

fourth measure: reorient
the national economy around export

If we measure the effects
of making the poorest countries,

where the IMF and
World Bank intervene,

boost the production
of exportable products,

we make them compete
with the same products.

Coffee-producing countries
all start producing more coffee.

Cocoa, petroleum, same thing.

Bauxite …

Whatever it is … Sugar, wheat …

All the base products

suffer falling prices
due to over-production.

Not only do their prices fall,
and countries made to compete,

but added to this is the inflation
effect from currency devaluation

and the automatic increase
in anything the country imports.

We witness a kind of reversal
of the countries’ interests -

even as we pretend to defend them -
caused by this initial phenomenon.

All their imports
are increasingly expensive,

while all their exports
bring in less.

They enter a spiral of indebtedness
that means that now, in 2002,

servicing the debt
of most of the poorest countries -

I’m talking about countries like
Bangladesh, Ruanda, Burundi, Togo -

countries like that,
that are already minus 250th …

Their debt servicing alone can be
up to 600 x their export revenues.

fifth measure:
“getting the prices right”

Getting the prices right
goes like this:

no subsidies for basic necessities,
so no more subsidized housing,

no more subsidies
for health, oil, rice …

transportation …
No more subsidies,

in the name of the right price.
What does this mean?

In terms of dollars, all prices
become equivalent world wide.

If you travel with dollars,
as I, a Canadian citizen, do,

wherever you go, products
and services cost the same.

Whether in Cotonou, Benin,
one of the poorest countries,

or Chicago, New York, Paris,

your Holiday Inn or Sheraton room,
your Holiday Inn meal

cost about the same in dollars
throughout the world. Fine.

But in Cotonou, capital of Benin,
one of the world’s poorest countries,

one night at the Sheraton,
where I sleep when I go there,

equals six months’ salary
of a Benin public servant.

One meal in the restaurant
of this Cotonou hotel

is a week’s work
for a minor Benin official.

sixth measure: liberalization
of investment and reverse wage parity

Next comes reverse wage parity.
This consists in …

a succinct formula
that slides all wages

down to the lowest, by sector,

and does so in concert with
the “movement” to liberalize trade.

I’ll explain.

NAFTA is announced: the Mexico,
U.S., Canada free trade zone.

Wages naturally slide from the
American level to the Mexican level.

That’s what happens when Mexican,
Canadian and American labour compete.

Relocation to Mexico means NAFTA
has created employment in Mexico.

But in net terms,
6 or 7 years after NAFTA,

wages in the whole region of Leone,
northern Mexico,

where the American
multi-nationals moved in -

while they shut down
proportionately in the U.S. …

There has been
an elimination of jobs

that were high-paying,
compared to Mexico,

to “create” jobs in Mexico

that are infinitely lower-paid.
So, for the past 5 years,

the average wage in the most
active, richest region of Mexico,

where the American
multi-nationals relocated …

Wages dropped in net terms
of purchasing power by 23%.

Five years ago, a General Motors
worker in northern Mexico

could survive and maintain
a family of 1 or 2 kids.

Today, the same worker
can support only his own needs.

Survive alone.

On the eve of the summit
to be held in northern Mexico,

they’re building in Monterey
a wall to hide the slums.

Three meters high
and kilometers long,

so summit participants
won’t see the poverty there.

That’s reverse parity: sliding wages
from highest to lowest by sector.

And now that the most modern sectors
- like information technology,

electronics, etc. - are increasingly
saleable in the Third World,

you have entire companies -
such as Swissair I think,

and other companies,
the steel industry, whatever -

that do all their accounting,
financial and IT work in Bombay.

A Bombay accountant who does the
same work as a Swiss or Canadian one

costs 100 times less.

A programmer who writes an aviation
program is 200 times cheaper.

And so on.
That’s reverse wage parity.

What bothers me is that
when we combine these measures -

devaluation, export, debt servicing,

privatization,
shrinking public budgets,

forced public lay-offs
making more unemployed …

Combine all these
with the prices and wages,

and we come to the situation
we’re in today:

rich countries are infinitely richer
and poor countries infinitely poorer.

And I’m alarmed to see
the World Bank and the IMF

trying to repeat in Argentina exactly
what massacred the Argentine economy.

It’s like we never learn.
Why not? There’s a reason.

It’s in their interest that this
ideology that explains the world,

continue to survive,
as long as the planet,

in its entirety,
is exploitable this way.

At the International Monetary Fund,
the right to vote is exercised

within the board of directors.

Now, it’s a right based on …

financial participation,

or the financial contribution
of each State.

In fact, it’s the IMF shareholders.

Same for the World Bank.
It’s not like the U.N.

The main shareholders
of the IMF are, of course,

the U.S., Germany, Japan,
Great Britain, France, etc.

But ultimately, that’s just
one aspect, because …

under the political representation
in an intergovernmental organization,

there are other issues.
It’s the backroom.

It’s influence-peddling between
Wall Street, on one hand,

and Washington. It’s the connections
between the IMF and the think tanks:

the Heritage Foundation,
the Brookings Institute.

The American treasury’s involved.
The U.S. Federal Reserve.

This all forms what’s been called
“the Washington Consensus”.

It’s a power game.

In 2005, Paul Wolfowitz,

one of the most radical ideologues
of imperialist politics

and President Bush’s warmonger,
passed directly

from the U.S. Defense Department
to being head of the World Bank.

This appointment put an end

to any ambiguity about
the World Bank’s real goals

and revealed the true face
of the Bretton Woods institutions.

Bretton Woods conference,
Mount Washington Hotel, 1944

After the war,
naturally there was the creation

of the IMF and the World Bank.

In the mind of John Maynard Keynes,
the architect of these institutions,

a third thing was needed.

A third organization,
the International Trade Organization.

This didn’t work.
The Americans didn’t want it.

So, as a fallback position,

GATT was created.

It was created in ’47
and was supposed to take care of

lowering customs duties
on industrial products.

GATT worked fairly well

because during
its 50 years of existence,

there were major reductions
in duties,

which went from
an average of 40% to 50%

down to 4% or 5%.

But that covered only
industrial goods. Products.

So, the need was felt,

primarily by transnational
financial companies

to create an organization

that would cover many more domains

than just industrial products.
That’s why,

at the end of the Uruguay Round,
the final GATT negotiation cycle,

the decision was made to create
the World Trade Organization,

which became a reality
on January 1, 1995,

and covers a multitude of agreements.
Not just the perennial GATT

but the agricultural accord,

the TRIPS accord
on intellectual property,

the general accord on the service
trade, a huge thing that covers

11 main areas and 160 sub-areas,

so that all human activities
are found there,

covered by GATT regulations:

education, health, culture,
environment.

There are other technical agreements

that may seem technical,
but that are extremely political:

the accords on
technical trade barriers,

on sanitary and
phytosanitary measures.

These are accords on standards
that various members, i.e., States,

can put in place

and which declare that certain norms
are technical barriers to trade.

Perhaps lesser known,
but the most important of all

is the Dispute Settlement
Understanding,

which is the very powerful
judicial branch

of the World Trade Organization,

which enables it to settle
disputes among members

and exercise jurisprudence.

So, who judges?

We don’t really know.
Experts are chosen from lists.

Countries may recommend someone
for these lists.

They’re generally private citizens.

Business lawyers or sometimes
former business executives.

But they’re unidentified.
They meet in secret,

generally in three’s.

They decide fairly quickly.

There’s also an appeals process,

but appeals have the same conditions:
a new panel,

and it’s done in secret.

What’s important to know about the
DSB, the Dispute Settlement Body,

is that it’s at once

the legislator, the jurist
and the executive,

because it renders verdicts
and establishes jurisprudence.

It places itself above all the laws

that have been passed

by the countries’
individual legislatures,

but also above international law,
established laboriously over 50 years.

Human rights,

multi-lateral conventions
on the environment,

the basic labour conventions of the
International Labour Organization.

All this is forgotten and verdicts
are rendered at the DSB

that say, “Business trumps all,

and we don’t want to hear about
your environmental conventions.”

And it’s executive because
it has the power to impose sanctions.

When a country disagrees
with its verdict, it’s told, “Fine.

Don’t make your legislation conform
to our verdict, but you’ll pay.

You’ll pay annually,

through customs duties that your
adversary in this settlement process

will determine.”
So when the U.S. decides

to impose duties on Europe,
for France,

on foie gras, mustard
and roquefort,

it’s perfectly within its rights.

And it’s expensive. And few countries
can afford this annual leaching.

At the WTO, various negotiations
go on at the same time.

A country with no ambassador
in Geneva,

or that shares one
with other countries,

as is the case with the Africans
and with many small micro-States …

It’s impossible for them
to follow negotiations.

So, the South doesn’t know
what’s going on in all areas,

and they say so openly.
One Southern ambassador

said, “The WTO
is like a multiplex theatre.

You must pick a film,
you can’t see them all.”

So they pick only what seems
important to their country.

So who really makes the decisions?

They say it’s by consensus.
There’s never been a vote.

And the American ambassador said
a vote would be a very bad precedent.

So much for democracy.

In reality, it’s the Quad.
The Quad is 4 countries -

Canada, the U.S.,
the European Union and Japan -

that meet all the time
and have numerous staff

at the WTO,

and that come to their own consensus

and come back
before the plenary assembly

and say, “Well, you agree,
don’t you?”

And it’s very hard for
Southern countries to say no.

It takes courage
and they must be certain,

because pressure tactics
against them exist.

And don’t delude yourself.

If you’re dependent on the IMF
or have problems with the U.S.,

you know you can’t step out of line.

Certainly, the financial markets
and the Bretton Woods institutions

have become privileged instruments
of the neo-liberal conquest.

But some countries
still obstinately refuse

to join this forced march.

That’s when colonialism
sheds its new suit

and comes forth
in its old warrior gear.

From the break-up of Yugoslavia
to the war in Afghanistan via Darfur,

post-Cold War conflicts
hinge on very different issues

than the ones Western propaganda
presents as new “military humanism”.

Control over resources,
financial flux and geostrategic space -

like the dictates of the IMF,
the World Bank and the WTO -

ensure the domination of mega-
corporations and giant capitalists

over the entire planet.

Also, the colonial governments
that the conquerors have installed

have soon moved to adopt
the dogma of neo-liberal ideology.

And the encirclement is complete.

neo-liberalism or neo-colonialism?

neo-liberalism or neo-colonialism?

strong-arm tactics
of military humanism

or

war is peace

The Dayton Accords were signed in ’95

on an American military base.

And if we consult
the text of these accords,

we see the Constitution
of Bosnia-Herzegovina appended

to the Dayton accords.

This constitution was written by
American consultants and lawyers,

who got together and wrote
a fundamental document

without so much
as a constituent assembly

of Bosnia-Herzegovina citizens.

And we can read
in this constitution

prepared by the United States,

Article X:

The central bank
of Bosnia-Herzegovina

shall not function as a central bank.
It must function as a currency board.

In other words, a colonial bank,

with no chance
of creating money.

Meaning, it’s completely trapped
by its external creditors.

Well, that’s the model that
currently exists in Argentina.

Moreover, in the Bosnia-Herzegovina
Constitution, written in Dayton,

we read that

the IMF will nominate the president
of Bosnia-Herzegovina’s central bank,

and this person …

may not be a citizen

of either Bosnia-Herzegovina
or a neighbouring country.

In other words,
we see that this constitution,

which is totally fabricated

and has no citizen base
within Bosnia-Herzegovina,

is installing a colonial government.

We don’t call it that. We say
it’s the international community …

But ultimately we see that
all the administrative structures

are dominated by foreigners.

Budgets are dominated by foreigners.
Monetary policy is non-existent.

Nevertheless, the Dayton Accords

are now being presented by the
so-called international community

as the answer to the problems
of various countries.

They’d like to establish
the same management model -

colonial administration -

in countries like
Macedonia and Yugoslavia.

Indeed, they talk about a mosaic.

A mosaic of protectorates.

Adaptation: Kathleen Fleming
Anrà Médiatextes, Montréal

srt & ripped by Tokadime