Profit Over People: Neoliberalism & Global Order

5 Responses to “Profit Over People: Neoliberalism & Global Order”

1. Hollywood Mogul says:

   October 20, 2010 at 11:24 am

   1) Open book; 2) the U.S. is the root cause of all terrible things in the world; 3) repeat #2 until it’s permanently imprinted on your brain; 4) close book. There, I’ve just saved you $11.
   Reader’s Rating: 1 / 5
2. think says:

   October 20, 2010 at 1:07 pm

   Chomsky is doing us a disservice by perpetuating fake thoughts that make it hard to know what is really going on. The lines are not where Chomsky draws them.

   To clear up the confusion and get a sounder feel for the forces at play, there are books such as Murray Rothbard’s For a New Liberty or Walter Block’s Defending the Undefendable (also at mises.org)
   Reader’s Rating: 1 / 5
3. Oliver Kamm says:

   October 20, 2010 at 2:51 pm

   In this polemic Chomsky attacks `neo-liberalism’ in international political economy. To that effect, he damns every supranational economic organisation and agreement that he can reflect of (the IMF, the World Bank, the World Trade Organisation, NAFTA, MAI etc.), charging them with being the agents or instruments of US multinational corporations intent on raiding the Third World, despoiling the environment, and various additional sins. The book is not so much an argument as an expostulation; and it is undermined at nearly every turn by extravagant speechifying and weak reasoning.

   International political economy is – like all economics – a discipline about trade-offs and the assessment of costs and benefits. There are various criticisms that can plausibly be levelled at all of the bodies or treaties that Chomsky fulminates against, but it is vital in formulating them to have a mind to what these institutions or agreements are designed for. To place mildly, the targets Chomsky denounces are not the same thing and do not pursue the same ends. It serves no purpose and does violence to critical inquiry merely to denounce them all as agents of US huge business and of free-market fanaticism. The IMF, for example – a prime villain in Chomsky’s account – has received much criticism from the school of free market economists that Chomsky believes it represents. These economists (see, for example, Money and the Nation State, edited by Kevin Dowd & Richard Timberlake, and published by the libertarian Independent Institute in 1998) charge the IMF with making `moral hazard’ in international lending, and wish to see the institution abolished. A different view, which I hold, is that the IMF performs a valuable service in allowing troubled economies a breathing space to sort out their difficulties, as was clearly the case with the `tequila crisis’ in Mexico in 1994-5, and in fact ought to be more active in its prescriptions than it has been – consider the case of Argentina’s ruinous currency peg, which the IMF was highly sceptical of and ought to have stood out against. There is room for discussion and disagreement about how far the IMF should loosen conditionality for its loans (and I am something of a dove in this respect), but these are inevitable debates about how to make effective a necessary and valuable part of the global economy.

   Similarly, the World Trade Organisation has nothing whatever to do with free-market fundamentalism or US huge business: it is neither more nor less than a commercial court that tries to eliminate discrimination on grounds of nationality. It is a painstakingly progressive institution whose effectiveness is momentously in the interests of the developing world, as evidenced by its first major ruling when it upheld Venezuela’s complaint against a US levy on foreign petroleum producers. The World Bank, which under its current management – much to my regret – has veered very far from the cause of globalisation, went to immense lengths to support Third World socialist projects (such as the `ujaama’ projects of President Nyerere’s Tanzania), with extremely terrible results for the on the breadline peoples of the countries concerned.

   To subsume these differing institutions, aims and approaches into a catch-all damnation of the machinations of huge business is neither a profound nor a reliable guide to the modern global economy. Reasonably how Chomsky reaches his conclusions is of some interest, but, for it indicates reasonably a lot about the economic reasoning of the anti-globalisation movement. In fleeting, Chomsky just hasn’t acquainted himself with the normative opinion and positive findings of persons he attacks; this is just not excellent enough in a book that aims to scrutinise the global economic order, for economics is a rigorously technical and empirical discipline, and not a matter of opinion. I give just two instances if the book’s deficiencies in this respect, but they could be multiplied at fantastic part.

   Chomsky attacks the advocates of NAFTA, the North America Free Trade Agreement, for supposedly claiming the it would make jobs. In this, Chomsky has just not understood the point – a very fundamental one – about trade. The basic Ricardian argument for trade does not depend on its effect on aggregate employment (which is virtually unaffected by trade: what matters in the fleeting run is the level of aggregate demand, and in the long run is the so-called NAIRU, or Non-Accelerating-Inflation Rate of Unemployment); trade raises not employment but living standards. The chronic poverty that has afflicted Third World nations like Tanzania under a policy of ’self-reliance’ demonstrates the point.

   My second instance of the weakness of this book’s treatment of economics is Chomsky’s throwaway reference to William Greider’s anti-globalisation polemic One World, Ready or Not. The Greider thesis that Chomsky has latched on to is that there is excess supply in the global economy owing to workers’ not getting enough to buy the goods capitalism produces. This aver is absolutely untenable in theory and in practice: wages are not set abstractly, but are pinned to the marginal product of labour. To place it simply, an additional dollar of output must represent an additional dollar of income to a name. The only way the `excess supply’ nostrum could hold is if you aver that the additional dollar of income goes to a name with a privileged marginal propensity to save – and that conclusion requires a study of the facts. This book doesn’t distress with the facts, which are that savings excise in most manufacturing economies have been falling for years, while in the developing countries they have been growing less quickly than investment demand.

   Enough already. Chomsky is not an international economist, and his book is depressingly fleeting on empirical research and economic logic. Indeed the book is nearly a logical fallacy itself, for it exemplifies the anthropomorphic fallacy that one may attribute personality – in this case a wicked and grasping avarice – to an abstraction, namely the `capitalist system’. At any rate, it is a poor book that does nothing to enhance its leader’s reputation in his chosen personal interest – far from his specialist meadow – of politics and economics.
   Reader’s Rating: 1 / 5
4. michael urbach says:

   October 20, 2010 at 2:59 pm

   I reflect that this is a fantastic book for persons out there that reflect that social welfare is an vital thing that should not be destoryed by huge business, and the governments that is owns (including the USA, and the UK).
   Reader’s Rating: 5 / 5
5. M. D. Fonseca says:

   October 20, 2010 at 4:49 pm

   I dont’know if Chomsky is so ignorant or a practiced in Economics. The fact is that the subjects described in his book are real: profits are growing, wages are getting low, the THird World is a slave to the Monetary International Fund, unregulated and especulative capital is destroying countries all around. Everyones know that.
   So the reviewers that say that Chomsky is a “liar”, must be in the rich side of the coin, no doubt about that…
   And to asy that CHomsky is a hyupocrite just because he writes books and then sell them, must be a joke. CHomsky do not fire employees at will. Chomsky do not play schemes behind the scenes with politicians and investors. CHomsdsky do no threat syndicates and simple workers. CHomsky never told that one should get money lacking deserving it and effective for it. And his job is to write books. Of course he’s smart enough to know that his kind of book has a determined audience, and he will write for them. No distress about that!
   Reader’s Rating: 4 / 5