Sharp Read | The yoke of neoliberalism revisited
A new book co-authored by Noam Chomsky updates his critique of capitalism with insightful comment on what has allowed the tyranny of the common sense consensus to flourish for so long.
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16 November 2021
Noam Chomsky has been at the forefront of a radical critique of the United States’ imperialism, militarism and neoliberal global domination for more than five decades. From campaigning against the Vietnam War and exposing the destabilisation of the Middle East to interventions in Latin America and the endless War on Terror, Chomsky’s has been one of the clearest and most steadfast voices of the American Left demonstrating how these US actions have been driven primarily by the interests of the capitalist economy seeking both new markets and global domination.
There is something quite invigorating then in finding a new book by him – at age 92 – and Marv Waterstone, his colleague at the University of Arizona. Titled Consequences of Capitalism: Manufacturing Discontent and Resistance (Hamish Hamilton, 2021), it brings Chomsky’s critique of capitalism up to date and includes the climate emergency, Donald Trump’s reign and the impact of Covid-19 on an already divided and inequitable world. Although the book discusses capitalism as a global phenomenon, it focuses predominantly on the US, the uncontested champion of global capitalism.
The book presents a series of 14 lectures by the two authors (seven each), delivered in January and February 2019. They set out to show how the dominant crises of the modern era – America’s seemingly insatiable appetite for war, the climate crisis, the malignant power of finance capital and growing inequality – are all derived from capitalism’s endless need for growth and profit, no matter the cost.
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Although the formal structure focuses primarily on one of these issues per chapter, each issue surfaces in every chapter. This is not surprising, as the whole point of the book is that they are different manifestations of the logic of capitalism. A brief “coda” places the Covid crisis in this context. However, written very early in the pandemic, it is not able to reflect on inequalities in vaccine access and the profiteering of the pharmaceutical industry, which would certainly match their general narrative very well.
The authors’ purpose is not just to expose the awful state of the global political economy, but to lay a theoretical basis for fundamental change. They start with the question: how is it that a system that has been so destructive, leaving large sections of the population of the richest country in world history struggling to survive, and all but the very richest worse off than they were 40 years ago, continues to exist with the consent of the majority of citizens even while the country is in a state of almost permanent war, with 100 000 soldiers killed in action since World War II?
With specific reference to the climate disaster, they ask how it can be that it is “easier to see the end of the world, than it is to see the end of capitalism”.
The first two chapters seek to understand this conundrum, and the final two point us to how we might begin to organise for change. I will address these two sections after dealing with the historical substance and analysis that form the core of the central chapters.
A gruelling journey
There is an interesting division of labour in the lectures. Waterstone, a self-described Marxist geographer, tends to deal with each topic at a more theoretical level, setting the conceptual scene and marshalling the sweep of history in a way that grounds the ideas he wishes the reader to absorb. This includes a bold and concise summary of the key elements of Karl Marx’s Capital Volume 1. Chomsky, ever both an intellectual and activist, gives us the gory details, in a narrative that is both informative and infused with an anger bubbling below the surface and showing itself briefly in understated, sarcastic asides. One of the 20th century’s great scholars of linguistics and how we make meaning is also a master of language.
The lectures themselves are a gruelling journey through the damage wreaked globally by economic expansionism and military power over several hundred years. Slavery, colonial conquest, genocide in North and South America and the recreation of unpaid labour in the US through criminalising, jailing and then deploying the African-American population as chain gangs are morbid enough. Since the beginning of the 20th century, this brutal history is followed by successive waves of violent union busting, the campaign of legal terror against “communists” by Senator Joe McCarthy and his many allies, and the fostering of and active support for coups and brutal dictatorships around the world when American economic interests are threatened.
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We are also reminded that since World War II the US has been permanently at war: first in Korea and Vietnam to prevent the “dominos falling” in South East Asia, followed by regular military interventions elsewhere. Interestingly, Chomsky argues that despite the apparent defeat in Vietnam, the US secured its greater goal of stopping the spread of economic democracies elsewhere in South East Asia. In recent decades, the country has waged an endless War on Terror, notably conducted in countries from which no aggression against the US was visible at the time. Indeed, it has been rather against regimes that the US supported in previous wars: Iraq against Iran and the mujahideen, who became the Taliban, against the Soviet occupation of Afghanistan.
While the costs of these wars, in dollars and lives, are astronomical, it is also true that there is an enormous arms industry, supplying both the US Armed Forces and its allies (or is that proxies?) in Saudi Arabia, Israel and across the globe, for whom war is a highly profitable business. US companies sold weapons worth about $240 billion in 2017 – a good reason to sustain the impression that the country has endless enemies who must be defeated.
War on the environment
The chapter on militarism is followed by an exploration of capitalism’s war on the environment. There are, of course, other more complete expositions. However, the authors issue a timely reminder that the climate emergency is also inextricably linked to other aspects of environmental disaster that have their own destructive effects. These effects include the world being buried in plastic and the loss of biodiversity, including food varieties as a consequence of industrial farming, monoculture and excess pesticides and herbicides. They remind us that land seizures for these purposes in developing countries drive people off the land and into cities, destroying the commons and increasing food shortages and urban poverty.
The authors point out that this destruction is not incidental to capitalism but fundamental to its nature. Growth is the mantra of all economic policymakers. Without growth, the economy is in a recession or, worse still, a depression. But this endless growth has to take place in a world with limited physical resources, which are being depleted and not replaced. That this has to end in disaster seems so obvious it should not have to be stated. Yet, as Chomsky notes, the reality is a “virtually reflexive decision to race towards destruction with eyes wide open if it yields short-term gain. Right now, profits are spectacular and CEO salaries have skyrocketed to the stratosphere … why care if I (don’t) leave my grandchildren a world in which they have some chance for decent survival?”
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Waterson argues that capitalism’s cavalier approach to the environment is inevitable. Given the focus on profits in a competitive economy, companies will always find ways to reduce costs. One important way is by not paying the cost of the environmental damage they do – “dump it anywhere but in the accounts”, as a friend of mine once put it several decades ago. Thus, environmental damage is an “externality” to be ignored or fixed at the cost of taxpayers. No wonder executives and shareholders think capitalism is the best system.
The period from the Depression of the 1930s to the 1970s saw some “welfare state”-type developments in American society in the interests of social cohesion – “saving capitalism from the capitalists”, as Chomsky puts it. Medicare, Medicaid, unemployment insurance and social security date from this time. From the 1940s, the top marginal tax rate hovered above 80% for three decades. Keynesian management of the economy was in vogue and the improving standard of living of ordinary Americans reflected the benefits.
The gospel according to neoliberalism
The neoliberal revolution was seeded by Milton Friedman, Friedrich Hayek and others in the Mont Pelerin Society as early as 1947. They plotted and conspired to spread the neoliberal gospel until a crisis arose that would allow them to seize the moment. The crisis was rising oil prices and falling profits in the 1970s. By the end of the next decade, Ronald Reagan and Margaret Thatcher had turned neoliberalism from a fringe idea into the new world order.
Top marginal tax rates were reduced to 28% and an assault was launched on anything that constrained the freedom of capital: from regulation, unions and government involvement in the economy to any constraints on the free movement of finance, and where it could make the most profits with the least restrictions. Public goods were privatised, and the whole approach imposed on the global economy through the International Monetary Fund and the World Bank, where possible, and through the destabilisation of socialist governments and the establishment of dictatorships when necessary, as in Chile, Argentina and Nicaragua.
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The authors make the interesting point that US intervention in South and Central America from 1960 to 1990 led to infinitely more tyranny, torture, death and military dictatorship than the much maligned Soviet influence over Eastern Europe in the same period. All in pursuit of American economic interests.
A consequence of this neoliberal revolution is that finance has broken free from its role as the grease in the wheels of the economy to become the dominant factor in late capitalism. Maximising shareholder profit has become the sole purpose of businesses, and money now begets money through complex financial structures and nano-second stock trades without passing through the real economy at all. As the French economist Thomas Piketty has shown, when the returns to capital exceed growth in the economy (as indeed happens) then inequality continues to grow. And that is where we are.
Having some idea of how the world looks through the authors’ eyes, we can return to their understanding of how to change it.
The common sense view
The first two chapters of the book set out to explore the nature of “common sense”, which is the term they use most frequently to express what Marx called ideology and Antonio Gramsci captured in his concept of hegemony. Common sense underpins the ability of the ruling class to govern with consent, even when the political and economic structures objectively serve elite interests and penalise the majority of people in society. As Marx had it, the ideas of the ruling class are the ruling ideas in any epoch.
They trace how this is not surprising: for most people, sanity and survival require that we live by the rules of the society. We imbibe them from our parents and our peer group and our lived experience. On a daily basis we both want and need the products of the economy; we learn that if you work hard, you will do well – and that is the American dream. Never mind that for the vast majority of people, the outcome of this race depends on where you start, and that growing inequality is creating an economy that is more aristocratic than democratic. Their neat summary is that the “common sense view of the world is both home and prison”.
The common sense view that there is no alternative to capitalism may derive from the fact that we are all, in a sense, immersed in its reality. But the authors point out that the survival of the system depends on the view that there is no other way. The authors contend that, for the past century or more, the ruling class has ensured its survival through a set of interventions intended to manufacture consent.
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They trace some 20th and 21st century developments that make the implacable logic of capitalism even harder to escape. Perhaps prime among them is the decline of the labour movement resulting from state and corporate violence 100 years ago, and the Reagan-Thatcher assault in the 1980s right up to Amazon’s refined exploitation of labour and union-busting tactics of the contemporary era.
The argument also takes us through the power of advertising to create captive consumers, the power of corporations to suppress such inconvenient truths as the dangers of smoking and the damage caused by oil and gas (known to the industry since at least the 1980s), and the ability to paint even moderate opposition as “communist” and quell it at home and abroad. And, perhaps above all, the power of the hundreds of millions of dollars spent each year to support neoliberal politicians and quash legislation that might threaten the power of corporations and the finance sector to make profit at will.
At the end of the opening section they suggest that understanding, and then shattering, the common sense consensus that it is capitalism or chaos is an essential step in changing the world and recognising that alternatives such as employee ownership of companies, decent social security, and the provision of housing and healthcare are indeed possible and desirable.
Changing the status quo
The final section of the book discusses how this stranglehold may be broken in order to mobilise sufficient forces to achieve change. On the one hand they point to times when groups like the Black Panthers, the Black Lives Matter movement, Occupy Wall Street, the antiwar movement of the 1960s, feminism and, more recently, the environmental movement have pierced the social consensus. But they also show convincingly how the power of advertising and political lobbies, groups like the National Rifle Association, and the continual mobilisation of fear of “the other” – communists, terrorists, migrants, gay people – have been used to keep the social consensus pretty tight.
The authors emphasise that whatever the particular cause, those working for systemic change need to work together to expose the common capitalist roots of each issue.
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In the teaching course from which the book is drawn, the authors brought community and human rights activists to describe their work, which may have provided the students with ideas about working for change. The book itself is disappointingly vague on both the vision of an alternative society and the strategy for getting there. They talk about an economy in which workers rather than distant investors own the enterprises in which they work, and they emphasise the importance of a labour movement in getting us to a more worker-friendly society. Beyond that there really is not very much.
Perhaps this is unfair, and exploring strategy in more detail would require another whole set of lectures. What they have certainly achieved is to remind us of the catastrophic situation in which the world finds itself at the end of the long arc of capitalist hegemony, and the need to find solutions that are not merely incremental. In making the case, they provide both useful information and surprising insights throughout. The book makes an excellent contribution to its proposition that before you can change the world, you have to fracture common sense and show how necessary it is to change – in a hurry.
