In a recent interview in Jacobin, linguist, philosopher, and political activist Noam Chomsky gave an interesting answer to a question about the American capitalist system. He basically said we don’t have one. We have something else, more akin to “state capitalism.”
And by not being engaged and involved in the political process, we’ve allowed corporations and banks to “run things,” to take over government. We’ve felt powerless to effect change, and we’ve allowed them to suck up resources that should be going to fund projects and policies that directly help us and the communities where we live.
Chomsky’s comment on our so called “capitalist system:”
What’s called “the capitalist system” is very far from any model of capitalism or market. Take the fossil fuels industries: there was a recent study by the IMF, which tried to estimate the subsidy that energy corporations get from governments. The total was colossal. I think it was around $5 trillion annually. That’s got nothing to do with markets and capitalism.
I think Chomsky is saying that our form of capitalism is not one Adam Smith would recognize. In our version, fossil fuel companies fund politicians, who then vote for industry subsidies. Even though the industry is a big contributor to climate change, the government continues to promote fossil fuels. Bought senators and congressmen continue to give away money to a highly profitable industry that doesn’t need it. Money in politics has a life of its own, and it’s not benign. If a senator or congressperson stops voting for subsidies, there’s hell to pay when he or she is up for reelection. Not only will they no longer get campaign donations, they will have money being spent against them. We live under the illusion that we have a “free-market” economy, when its more akin to a mafia-run protection racket.
Chomsky turns the conversation to banks:
And the same is true of other components of the so-called capitalist system. By now, in the US and other Western countries, there’s been, during the neoliberal period, a sharp increase in the financialization of the economy. Financial institutions in the US had about 40 percent of corporate profits on the eve of the 2008 collapse, for which they had a large share of responsibility.
There’s another IMF study that investigated the profits of American banks, and it found that they were almost entirely dependent on implicit public subsidies. There’s a kind of a guarantee—it’s not on paper, but it’s an implicit guarantee—that if they get into trouble they will be bailed out. That’s called too-big-to-fail.
And the credit rating agencies of course know that, they take that into account, and with high credit ratings, financial institutions get privileged access to cheaper credit, they get subsidies if things go wrong and many other incentives, which effectively amounts to perhaps their total profit. The business press tried to make an estimate of this number and guessed about $80 billion a year. That’s got nothing to do with capitalism.
It’s clear that without massive subsidies and bailouts, the banks would be insolvent. In a real capitalist system they would have been failed businesses. Chomsky is not the first to point this out. For nearly imploding the world economy, banks were rewarded with access to free money, which they use, not for repairing the damage they did to main street, but for speculation. Thanks to Bill Clinton removing the wall between traditional and investment banking, big banks continue to operate like gambling casinos.
Corporations, too, have been borrowing money at very low, or no interest for stock buy-backs, which raises stock prices and CEO pay. Profits are off-shored and tax-sheltered. Nothing big banks and big corporations are doing right now is helping middle class and working people. Chomsky continues:
It’s the same in many other sectors of the economy. So the real question is, will this system of state capitalism, which is what it is, survive the continued use of fossil fuels? And the answer to that is, of course, no.
By now, there’s a pretty strong consensus among scientists who say that a large majority of the remaining fossil fuels, maybe 80 percent, have to be left in the ground if we hope to avoid a temperature rise which would be pretty lethal. And, unfortunately, that’s not happening. Humans may be destroying their chances for a decent survival. It won’t kill everybody, but it would change the world dramatically.
This is Chomsky’s conclusion if the current situation were to continue. But there’s a rebellion brewing against the status quo. Bernie Sanders in the US, Jeremy Corbyn in the UK, Alex Tsipris in Greece, and Pablo Iglesias in Spain are openly challenging the corporate/bank/billionaire grip on their respective governments. And in Canada, the Liberal Party just won back control of Parliament after nine years of the conservative Harper government. So, there’s reason for hope.
Getting a person or party elected is not enough
We can’t pin all our hopes on another Wall Street-funded candidate. Chomsky thinks it will take pressure from a large popular movement to effectively challenge the grip of money and power on government. The job of activists and organizers, he says, is to help people understand they have power, and even though they feel powerless, they’re not powerless. “People feel impotent, but that has to be overcome.”
About Bernie Sanders, Chomsky feels it’s pretty unlikely in a system of bought elections that he could win. And even if he won, he would be abandoned by both corporate parties, In other words, he couldn’t get much done. But, even if he loses he will have made a positive contribution. Chiomsky says:
In fact, the Sanders campaign I think is valuable—it’s opening up issues, it’s maybe pressing the mainstream Democrats a little bit in a progressive direction, and it is mobilizing a lot of popular forces, and the most positive outcome would be if they remain after the election.
It’s a serious mistake to just to be geared to the quadrennial electoral extravaganza and then go home. That’s not the way changes take place. The mobilization could lead to a continuing popular organization, which could maybe have an effect in the long run.
A little history
In 2009, newly elected President Barack Obama could have nurtured and expanded his extremely effective Obama for America organization to be exactly the kind of popular organization Chomsky calls for—one standing behind him and supporting him in demanding real change—but he funneled everyone into the newly formed “Organizing for America.” Organizing for America served to neutralize and eventually shut down the enthusiasm and populist energy stirred up by his campaign, thwarting any threat to the big money interests that bankrolled his election. As Gloria Bilchik wrote in 2010, OFA became a propaganda machine for the President and a subsidiary of the Democratic National Committee.
The best outcome of the coming election will be if Bernie’s followers form a truly progressive organization independent of the Democratic Party. It’s purpose would be to keep pressure on politicians to do the right thing for the American people.