The Banksters are Communists- Noam Chomsky

[Mort Zuckerman]

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Subject: The Banksters are Communists- Noam Chomsky

Date: Oct 10, 2008 5:46 PM

*We* knew that:
http://www.actionlyme.org/AARON_RUSSO.htm
http://www.actionlyme.org/REECE_NON_PROFITS.htm
http://www.sweetliberty.org/issues/regionalism/dodd.htm
http://www.actionlyme.org/DUHAM_BUSH_CRIME.htm
http://www.actionlyme.org/KISSINGER_TERROR.htm
http://www.actionlyme.org/KISSINGER_NAZI_PAPERCLIP.htm

==============================

http://www.commondreams.org/view/2008/10/10-4

Published on Friday, October 10, 2008 by The Irish Times
Anti-Democratic Nature of US Capitalism is Being Exposed
Bretton Woods was the system of global financial management set up at
the end of
the second World War to ensure the interests of capital did not
smother wider social
concerns in post-war democracies. It was hated by the US neoliberals -
the very
people who created the banking crisis writes Noam Chomsky

by Noam Chomsky

THE SIMULTANEOUS unfolding of the US presidential campaign and
unraveling of the
financial markets presents one of those occasions where the political
and economic
systems starkly reveal their nature.

Passion about the campaign may not be universally shared but almost
everybody can
feel the anxiety from the foreclosure of a million homes, and concerns
about jobs,
savings and healthcare at risk.

The initial Bush proposals to deal with the crisis so reeked of
totalitarianism
that they were quickly modified. Under intense lobbyist pressure, they
were reshaped
as "a clear win for the largest institutions in the system . . . a way
of dumping
assets without having to fail or close", as described by James
Rickards, who
negotiated the federal bailout for the hedge fund Long Term Capital
Management in
1998, reminding us that we are treading familiar turf. The immediate
origins of
the current meltdown lie in the collapse of the housing bubble
supervised by Federal
Reserve chairman Alan Greenspan, which sustained the struggling
economy through
the Bush years by debt-based consumer spending along with borrowing
from abroad.
But the roots are deeper. In part they lie in the triumph of financial
liberalisation
in the past 30 years - that is, freeing the markets as much as
possible from government
regulation.

These steps predictably increased the frequency and depth of severe
reversals, which
now threaten to bring about the worst crisis since the Great
Depression.

Also predictably, the narrow sectors that reaped enormous profits from
liberalisation
are calling for massive state intervention to rescue collapsing
financial institutions.

Such interventionism is a regular feature of state capitalism, though
the scale
today is unusual. A study by international economists Winfried Ruigrok
and Rob van
Tulder 15 years ago found that at least 20 companies in the Fortune
100 would not
have survived if they had not been saved by their respective
governments, and that
many of the rest gained substantially by demanding that governments
"socialise
their losses," as in today's taxpayer-financed bailout. Such
government
intervention "has been the rule rather than the exception over the
past two
centuries", they conclude.

In a functioning democratic society, a political campaign would
address such fundamental
issues, looking into root causes and cures, and proposing the means by
which people
suffering the consequences can take effective control.

The financial market "underprices risk" and is "systematically
inefficient",
as economists John Eatwell and Lance Taylor wrote a decade ago,
warning of the extreme
dangers of financial liberalisation and reviewing the substantial
costs already
incurred - and proposing solutions, which have been ignored. One
factor is failure
to calculate the costs to those who do not participate in
transactions. These "externalities"
can be huge. Ignoring systemic risk leads to more risk-taking than
would take place
in an efficient economy, even by the narrowest measures.

The task of financial institutions is to take risks and, if well-
managed, to ensure
that potential losses to themselves will be covered. The emphasis is
on "to
themselves". Under state capitalist rules, it is not their business to
consider
the cost to others - the "externalities" of decent survival - if their
practices lead to financial crisis, as they regularly do.

Financial liberalisation has effects well beyond the economy. It has
long been understood
that it is a powerful weapon against democracy. Free capital movement
creates what
some have called a "virtual parliament" of investors and lenders, who
closely monitor government programmes and "vote" against them if they
are considered irrational: for the benefit of people, rather than
concentrated private
power.

Investors and lenders can "vote" by capital flight, attacks on
currencies
and other devices offered by financial liberalisation. That is one
reason why the
Bretton Woods system established by the United States and Britain
after the second
World War instituted capital controls and regulated currencies.*

The Great Depression and the war had aroused powerful radical
democratic currents,
ranging from the anti-fascist resistance to working class
organisation. These pressures
made it necessary to permit social democratic policies. The Bretton
Woods system
was designed in part to create a space for government action
responding to public
will - for some measure of democracy.

John Maynard Keynes, the British negotiator, considered the most
important achievement
of Bretton Woods to be the establishment of the right of governments
to restrict
capital movement.

In dramatic contrast, in the neoliberal phase after the breakdown of
the Bretton
Woods system in the 1970s, the US treasury now regards free capital
mobility as
a "fundamental right", unlike such alleged "rights" as those
guaranteed by the Universal Declaration of Human Rights: health,
education, decent
employment, security and other rights that the Reagan and Bush
administrations have
dismissed as "letters to Santa Claus", "preposterous", mere
"myths".

In earlier years, the public had not been much of a problem. The
reasons are reviewed
by Barry Eichengreen in his standard scholarly history of the
international monetary
system. He explains that in the 19th century, governments had not yet
been "politicised
by universal male suffrage and the rise of trade unionism and
parliamentary labour
parties". Therefore, the severe costs imposed by the virtual
parliament could
be transferred to the general population.

But with the radicalisation of the general public during the Great
Depression and
the anti-fascist war, that luxury was no longer available to private
power and wealth.
Hence in the Bretton Woods system, "limits on capital mobility
substituted
for limits on democracy as a source of insulation from market
pressures".

The obvious corollary is that after the dismantling of the postwar
system, democracy
is restricted. It has therefore become necessary to control and
marginalise the
public in some fashion, processes particularly evident in the more
business-run
societies like the United States. The management of electoral
extravaganzas by the
public relations industry is one illustration.

"Politics is the shadow cast on society by big business," concluded
America's
leading 20th century social philosopher John Dewey, and will remain so
as long as
power resides in "business for private profit through private control
of banking,
land, industry, reinforced by command of the press, press agents and
other means
of publicity and propaganda".

The United States effectively has a one-party system, the business
party, with two
factions, Republicans and Democrats. There are differences between
them. In his
study Unequal Democracy: The Political Economy of the New Gilded Age,
Larry Bartels
shows that during the past six decades "real incomes of middle-class
families
have grown twice as fast under Democrats as they have under
Republicans, while the
real incomes of working-poor families have grown six times as fast
under Democrats
as they have under Republicans".

Differences can be detected in the current election as well. Voters
should consider
them, but without illusions about the political parties, and with the
recognition
that consistently over the centuries, progressive legislation and
social welfare
have been won by popular struggles, not gifts from above.

Those struggles follow a cycle of success and setback. They must be
waged every
day, not just once every four years, always with the goal of creating
a genuinely
responsive democratic society, from the voting booth to the workplace.

* The Bretton Woods system of global financial management was created
by 730 delegates
from all 44 Allied second World War nations who attended a UN-hosted
Monetary and
Financial Conference at the Mount Washington Hotel in Bretton Woods in
New Hampshire
in 1944.

Bretton Woods, which collapsed in 1971, was the system of rules,
institutions, and
procedures that regulated the international monetary system, under
which were set
up the International Bank for Reconstruction and Development (IBRD)
(now one of
five institutions in the World Bank Group) and the International
Monetary Fund (IMF),
which came into effect in 1945.

The chief feature of Bretton Woods was an obligation for each country
to adopt a
monetary policy that maintained the exchange rate of its currency
within a fixed
value.

The system collapsed when the US suspended convertibility from dollars
to gold.
This created the unique situation whereby the US dollar became the
"reserve
currency" for the other countries within Bretton Woods.


© 2008 The Irish Times