Encirclement
Neo-Liberalism Ensnares Democracy
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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
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
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?
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?
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