The Global Shift in Power in Politics - Noam Chomsky at TEDxWarwick

Renowned philosopher Noam Chomsky talks about real power shifts happening in the world.

I’ve been asked
to say a few words

about the global shift
in power in politics.

That's a hotly debated topic these days.

There’s a great deal
of speculation about

whether or when China will
displace the United States

as the dominant global power,

perhaps along with India,

which if true would mean that
the global system would be returning

to something like what it was
before the European conquests,

primarily from the 17th century.

Just to illustrate
the mood with unscientific

but probably representative sample,

I was talking recently to
a professor of history

at one of the Massachusetts'
state colleges,

who told me that at the beginning
of every semester she asks

her students what they think
are the richest countries in the world.

And for the last few years,
they've been regularly saying China and India.

Well, you could believe that
if you read the headlines.

A few qualifications may be in order.

First, what about wealth
or the health of the society.

There's a standard measure,

it's the Human Development Index
comes out every year.

With the latest release,

India was ranked at 134th,

slightly above Cambodia,

below Laos and Tajikistan.

That's about where it was
several decades ago.

China was ranked 92nd.

But that's a little uncertain

since the poor areas of China

are not very accessible
in this more closed society.

So it could be lower.

Where it's ranked
it's tied with Belize

as slightly above Jordan

and below the Dominican Republic
and Iran.

By comparison,

Cuba, which has been
under harsh US attack

for 50 years is ranked 52nd.

It's above both of those,

also the highest in the Central America
and the Caribbean,

barely below Argentina and Uruguay.

India and China also have
extraordinarily high inequalities,

some of the worst in the world.

So that means
a well over a billion people

are much further down
in the scale.

Well, what about debt?

Common discussion ideas, it places
the United States enthralled to China's whims.

Well, apart from a very brief interlude,
which is now over,

Japan has been the biggest holder

of the US government debt.

At best, it’s not much of a weapon

for many reasons
that are well understood.

What about prospects?

The United States has
enormous advantages

over both Europe and Asia.

For one thing, it's unified,

has a relatively homogeneous population,
one language,

a huge internal market
and rich resources,

a favorable climate
and much more.

What about military power?

Well, here there's just
no discussion.

The US is about the same
as the rest of the world combined

in military expenditures, much more
if we can add intelligence.

Technologically far more advanced.

It's the only country with
hundreds of military bases,

maybe 800 military bases abroad,

which in fact are regularly used
for the exercise of violence.

So here, there's no comparison.

Actually there’s more
fundamental observation.

The entire framework of discussion,
though conventional,

is pretty misleading.

The global system is not
just an interaction among states,

which pursue some
so-called national interest,

which is abstracted from the distribution
of domestic power within the society.

That’s the way the matter
is usually viewed in commentary

and also in the profession and
professional international relations theory.

Largely dominant views
called realism --

views the international system
roughly in this fashion.

Now, there have always been
critics of this view.

To take one, Adam Smith.

Adam Smith was concerned
primarily with England.

And he described --

He said that in England,

the principal architects
of government policy

are merchants and manufacturers

and they make sure
that their own interests

are most peculiarly attended to,

however, grievous the impact
on others,

including the people of the England,

but of course far worse
of those who are subject to

what he called the savage injustice
of the Europeans.

He was referring particularly
to England and India.

Well, today, pretty much
the same maxim holds.

It's not merchants and manufacturers

in the United States and Europe.

It's primarily multinational corporations
and financial institutions.

The financialization of the economy
has been in a dramatic change

in the last roughly 30 years.

If you go back to about 1970 in the United States,

financial institutions amounted to
maybe 3 percent of gross domestic product.

And now it's approaching a third.

Corresponding fact is
the hollowing out of productive industry

and that has huge effects
on the society,

on political decisions
and on the political system

generally keeping to
Adam Smith's maxim.

In fact we've just seen
a very dramatic illustration of that.

President Obama,
who has gained office,

in large measure through the support
of the financial industry,

huge component of the economy.

And they preferred him to McCain
and that was the core of his funding.

And there was a payoff.

Huge bailouts
to the financial institutions

when the system collapsed.

And they were actually
much more important gifts

that are not so much discussed.

So takes a Goldman Sachs,

which is considered the top dog

in the economy and
the political system.

It made a mint by selling
mortgage-based securities

and more complex
financial instruments

to unwitting buyers.

But Goldman Sachs itself knew
what it was doing.

They knew that they were
likely to go bust.

So the company insured itself
against loss

by betting that
what they're selling would fail

using, what's called,
credit default swaps

through giant insurance agency AIG,

the world's biggest insurance agency.

Well, when the financial system collapsed,

it took AIG down with it.

But Goldman's boys are well-placed
among the architects of power

and they not only arranged
for a huge bailout.

but more importantly,
they got the taxpayer

to pay to save AIG from bankruptcy
by up their collapsed loans

and that incidentally saved Goldman Sachs
from the same fate.

Now, the CEO of Goldman Sachs
Lloyd Blankfein

is hailed as maybe
the greatest genius since Einstein.

Goldman's making record profits,

paying out huge bonuses.

And the other agents
of the financial crisis

are bigger and more powerful
than ever.

Well, the public may not understand
the details, but they are furious.

The banks that created the crisis
are visibly booming,

the population is suffering,

the unemployment is officially
at about 10 percent, actually much higher.

In manufacturing industry,
it's about the level of the Great Depression.

And those jobs
are not coming back

because of the shipping
of productive capacity abroad.

In fact, for the last 30 years,

for the majority of the population,

there has been roughly stagnation,
sometimes decline,

in the real wages as wealth
poured into very few pockets

at highest inequality in US history.

So there's plenty of anger.

And finally President Obama
had to react to it.

And he did a couple months ago.

He reacted first with
the rhetorical shift,

started talking about
bad bankers and so on.

And also a few policy suggestions
that the financial industry didn't like.

But he was supposed to be
their man in Washington.

They'd bought him
and put him in.

And the principal architects
very quickly sent their instructions.

They announced very publicly that
they're shifting funds to the political opposition.

And they poured money
into crucial election in Massachusetts,

which gave the Republicans the power
to block any congressional legislations.

An Interesting story in itself.

And Obama got the message
within days.

Within days, he informed
the business press

that bankers are, I'm quoting now,
"are fine guys."

He singled out for praise
the chairmen of chairs

of the JP Morgan Chase and Goldman Sachs,
the two biggest players.

And he assured the business world
as he put it that,

"I, like most of the American people,
don't begrudge people's success or wealth."

He's referring to the huge bonuses and profits
that are infuriating the public.

"That's part of the free market system,"
Obama continued.

Not inaccurately
as free markets are interpreted

in state capitalist doctrine.

It's a very revealing snapshot
of the Smith's maxim in action.

Well, with Adam Smith's
crucial corrective in mind,

let's take another look
at the global system.

See what's happening to it.

There is a real shift of power
across the world,

namely, from the workforce
to transnational capital.

And China does play a big role in it.

It's basically the assembly plant
for a regional production system.

Japan, Taiwan,
other Asian economies

export high-tech parts
and components to China,

and China assembles
and exports them

using its advantages of extremely cheap
and highly repressed labor and land.

There's much concern
about the trade deficit with China,

-- US trade deficit.

Which is in fact huge and growing.

But there’s less attention to the fact
that there's a compensating factor

that trade deficit with Japan
and the rest of Asia have sharply declined,

as the new regional production system
takes place.

And US manufacturers are
following the same course.

They're providing parts
and components for China

to assemble and export
back to the United States often

for the financial institutions
and the retail giants

and the ownership and management
of manufacturing industry.

And the sectors closely related
to this nexus of power.

It's heavenly.
That's also well understood.

So the head of the very influential
Sloan Foundation,

Ralph Gomory, testified before Congress
a couple years ago

and he explained that, as he put it,

"In this new era of globalization, the interests
of companies and countries have diverged

in contrast to the past.

What is good for America's
global corporations

is no longer necessarily good
for the American people."

Take one striking illustration.

Take IBM,
peak of the computer industry.

Today it employs
about 400,000 people

in its facilities in the United States
and its subsidiaries abroad.

By now, employees
within the United States

have declined to about 30 percent.

Many of the employees here are informed

that they have to go abroad
if they want to keep their jobs.

Well, that's fine for IBM owners
and directors,

but it's grievous for the country
as Adam Smith put it.

And it's worth adding that IBM became
the global giant in computing

in large measure thanks to
the magnificence of the US taxpayer

who substantially funded
the core of the IT revolution

and most of the rest
of the high-tech economy.

But business is not philanthropy.

Corporations are dedicated
to maximizing profit and market share.

In fact, that's a legal obligation
for management.

So it's not good for the country.
It’s too bad.

Well, China became
the world's assembly plant.

The Chinese workers are suffering
along with the rest of the global workforce.

And it's just as we would anticipate in a system

that's designed to concentrate
wealth and power,

and to set working people in competition
with one another worldwide.

Worldwide the share of workers
and national income has been declining

but dramatically so in China,

maybe more than anywhere
else close to it,

which is also leading to growing unrest
in this highly inegalitarian society

one of the most inegalitarian
in the world,

and capable of considerable violence
to suppress dissent.

Well, there's a good deal more
to say about all of this

but just to summarize with few salient points
from a much more complex reality.

There are indeed very important shifts
in global power.

And if we escape from
the doctrinal framework,

we can see what they are.

There's a shift from the general
population worldwide

to the principal architects
of the global power system

that's pretty much as
what any rational person would expect,

particularly when in an era
-- reffering now to the West

particularly the United States and Europe --

large-scale depoliticization,
undermining of functioning democracy.

Where it goes from here depends on

how much the great majority
is willing to endure.