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More on the controversial NAFTA.
With the critical final vote on NAFTA only three weeks or
so away in the U.S., and so many politicians buckling under
the pressure, I've taken the liberty of reproducing this
brilliant article by Noam Chomsky in full. Read it carefully,
and be warned!
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NOTE: this is a COPYRIGHTED article. It first appeared in
THE NATION, March 29th, 1993, and was later reprinted in the
TORONTO STAR. Please do not infringe upon the author's
copyright by generally copying and distributing this! Please
DO, however, FAX a copy to the Editor of your local paper
and ASK HIM TO SECURE REPRINT PERMISSION from THE NATION
or from NOAM CHOMSKY AT M.I.T. and to reproduce it in
his paper. IT IS FOR THIS REASON ONLY THAT THIS ARTICLE
IS REPRODUCED HERE. It is vital that as many people as
possible read this cogent and brilliant argument against
NAFTA, and write their Congressman to declare their
opposition. If you feel that it would help, upload this
article onto other conferences and BBS's, WITH THE SAME
REQUEST AND STIPULATIONS preceding it.
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NOTES ON NAFTA
"THE MASTERS OF MANKIND"
by
NOAM CHOMSKY
Throughout history, Adam Smith observed, we find the workings
of "the vile maxim of the masters of mankind": "All for
ourselves, and nothing for other People." He had few illusions
about the consequences. The invisible hand, he wrote, will
destroy the possibility of a decent human existence "unless
government takes pains to prevent" this outcome, as must be
assured in "every improved, and civilized society". It will
destroy community, the environment and human values generally
- and even the masters themselves, which is why the business
classes have regularly called for state intervention to protect
them from market forces.
The masters of mankind in Smith's day were the "merchants
and manufacturers' who were the "principal architects" of
state policy, using their power to bring "dreadful misfortunes"
to the vast realms they subjugated and to harm the people of
England as well, though their own interests were "most
parculiarly attended to." In our day the masters are,
increasingly, the supranational corporations and financial
institutions that dominate the world economy, including
international trade - a dubious term for a system in which
some 40 percent of U.S. trade takes place within companies,
centrally managed by the same highly visible hands that
control planning, production and investment.
The World Bank reports that protectionist measures of the
industrialized countries reduce national income in the South
by about twice the amount of official aid to the region
- aid that is itself largely export promotion, most of it
directed to richer sectors (less needy, but better consumers).
In the past decade, most of the rich countries have increased
protectionism, with the Reaganites often leading the way in
the crusade against economic liberalism. These practices, along
with the programs dictated by the International Monetary Fund
and World Bank, have helped double the gap between rich and
poor countries since 1960. Resource transfers trom the poor
to the rich amounted to more than $400 billion from 1982 to
1990 , "The equivalent in today's dollars of some six Marshall
Plans provided by the South to the North", observes Susan
George of the Transnational Institute in Amsterdam; she notes
also that commercial banks were protected by transfer of their
bad debts to the public sector. As in the case of the S&Ls, and
advanced industry generally, "free-market capitalism" is to
be risk free for the masters, as fully as can be achieved.
The international class war is reflected in the United States,
where real wages have fallen to the level of the mid-1960s.
Wage stagnation, extending to the college-educated, changed
to sharp decline in the mid-1980s, in part a consequence of
the decline in "defense spending", our euphemism for the
state industrial policy that allows "private enterprise" to
feed at the public trough. More than 17 million workers were
unemployed or underemployed by mid-1992, Economic Policy
Institute economists Lawrence Mishel and Jared Bernstein
report - a rise of 8 million during the Bush years. Some
75 percent of that is permanent loss ofjobs. Of the limited
gain in total wealth in the eighties, "70% accrued to the
top l% of income earners, while the bottom lost absolutely,"
according to M.I.T. economist Rudiger Dornbusch.
Structures of governance have tended to coalesce around
economic power. The process continues. In the London
Financial Times, James Morgan describes the "de facto world
government" that is taking shape in the "new imperial age":
the I.M.F., World Bank, Group of 7 industrialized nations,
General Agreement on Tariffs and Trade (GATT) and other
institutions designed to serve the interests of
transnational corporations, banks and investment firms.
________________________________
The aim of NAFTA is to keep the
public 'in its place.'
-------------------------------
One valuable feature of these institutions is their
immunity from popular influence. Elite hostility to democracy
is deep-rooted, understandably, but there has been a spectrum
of opinion. At the "progressive" end, Walter Lippmann argued
that "the public must be put in its place", so that the
"responsible men" may rule without interference from
"ignorant and meddlesome outsiders" whose "function" is to be
only "interested spectators of action", periodically
selecting members of the leadership class in elections,
then returning to their private concerns. The statist
reactionaries called "conservatives" typically take a harsher
line, rejecting even the spectator role. Hence the appeal to
the Reaganites of clandestine operations, censorship and other
measures to insure that a powerful and interventionist state
will not be troubled by the rabble. The "new imperial age"
marks a shift toward the reactionary end of the
antidemocratic spectrum.
It is within this framework that the North American Free
Trade Agreement (NAFTA) and GATT should be understood. Note
first that such agreements have only a limited relation
to free trade. One primary U.S. objective is increased
protection for "intellectual property", including software,
patents for seeds and drugs, and so on. The U.S.
International Trade Commission estimates that American
companies stand to gain $61 billion a year from the
Third World if U.S. protectionist demands are satisfied at
GATT (as they are in NAFTA, at a cost to the South that
will dwarf the current huge flow of debt-service capital
from South to North. Such measures are designed to insure
that U.S.-based corporations will control the technoloy
of the future, including biotechnology, which, it is hoped,
will allow protected private enterprise to control health,
agriculture and the means of life generally, locking
the poor majority into dependence and hopelessness.
The same methods are being employed to undermine Canada's
annoyingly efficient health services by imposing barriers to
the use of generic drugs, thus sharply raising costs - and
profits to state-subsidized U.S. corporations. NAFTA also
includes intricate "rules of origin" requirements designed to
keep foreign competitors out. Two hundred pages are devoted
to rules to insure a high percentage of value added in North
America (protectionist measures that should be increased,
some U.S. opponents of NAFTA argue). Furthermore, the
agreements go far beyond trade (itself not really trade but
in large part intracompany transfers, as noted). A prime
U.S. objective is liberalization of services, which would
allow supranational banks to displace domestic competitors
and thus eliminate any threat of national economic planning
andindependent development. The agreements impose a mixture
of liberalization and protection, designed to keep wealth
and power firmly in the hands of the masters of the "new
imperial age".
NAFTA is an executive agreement, reached on August 12,
1992, just in time to become a major issue in the U.S.
presidential campaign. It was mentioned, but barely. To
give just one example of how debate was precluded, take
the case of the Labor Advisory Committee (L.A.C.),
established by the Trade Act of 1974 to advise the
executive branch on any trade agreement. The L.A.C.,
which is based in the unions, was informed that its report
on NAFTA was due on September 9. The text of this intricate
treaty was provided to it one day before. In its report,
the L.A.C. notes, "the Administration refused to permit
any outside advice on the development of this document and
refused to make a draft available for comment." The situation
in Canada and Mexico was similar. The facts are not even
reported. In such ways, we approach the long-sought ideal:
formal democratic procedures that are devoid of meaning,
as citizens not only do not intrude into the public arena
but scarcely have an idea of the policies that will
shape their lives.
One can readily understand the need to keep the public
"in its place".Though the scanty press coverage is
overwhelmingly favorable to NAFTA in its present form,
the public opposes it by nearly 2 to I (of the 60 percent
who have an opinion). Apart from some meager rhetoric and
a few interventions by Ross Perot, that fact was irrelevant
to the presidential campaign, as were health reform and a
host of other issues on which public opinion remains largely
off the spectrum of options considered by the "responsible
men."
The Labor Advisory Committee concluded that the executive
treaty would be a bonanza for investors but would harm
U.S. workers and probably Mexicans as well. One likely
con sequence is an acceleration of migration from rural
to urban areas as Mexican corn producers are wiped out by
U S agri-business, depressing still further wages that
have already dropped sharply in recent years and are likely
to remain low, thanks to the harsh repression that is a
crucial element or the highly touted Mexican "economic
miracle." Labor's share of personal income in Mexico
declined from 36 percent in the mid-1970s to 23 percent
by 1992, reports economist David Barkin, while fewer than
8,000 accounts (including 1,500 owned by foreigners)
control more than 94 percent of stock shares in public
hands.
----------------------------
'Corporations stand to reap
enormous profits.'
----------------------------
Property rights are well protected by NAFTA, the L.A.C.
analysts and others note, while workers'rights are ignored.
The treaty is also likely to have harmful environmental
effects, encouraging a shift of production to regions where
enforcement is lax. NAFTA "will have the effect of
prohibiting democratically elected bodies at [all]
levels of government from enacting measures deemed
inconsistent with the provisions of the agreement",
the L.A.C. report continues, including those on the
environment, workers' rights, and health and safety,
all open to challenge as "unfair restraint of trade."
Such developments are already under way in the
framework of the U.S.-Canada "free trade" agreement.
Included are efforts to require Canada to abandon
measures to protect the Pacific salmon, to bring
pesticide and emissions regulations in line with laxer
U.S. standards, to end subsidies for replanting after
logging and to bar a single-payer auto insurance plan
in Ontario that would cost U.S. insurance companies
hundreds of millions of dollars in profits. Meanwhile
Canada has charged the United States with violating
"fair trade" by imposing E.P.A. standards on asbestos
use and requiring recycled fiber in newsprint. Under
both NAFTA and GATT, there are endless options for
undermining popular efforts to protect conditions of
life.
In general, the L.A.C. report concludes, "U.S.
corporations, and the owners and managers of these
corporations, stand to reap enormous profits. The United
States as a whole, however, stands to lose and particular
groups stand to lose an enormous amount." The report calls
for renegotiation, offering a series of constructive
proposals. That remains a possibility if the coalition of
labor, environmental and other popular groups that has been
calling for such changes gains sufficient popular support
[see Amy Lowrey and David Corn, "Mexican Trade Bill: Fast
Track to Unemployment;'June 3, 1991].
An October 1992 report from the Congressional Office of
Technology Assessment reached similar conclusions. A "bare"
NAFTA of the form now on the table would ratify "the mis-
management of economic integration" and could "lock the
United States into a low-wage, low-productivity future."
Radically altered to incorporate "domestic and continental
social policy measures and parallel understandings with
Mexico on environmental and labor issues", NAFTA could
have beneficial consequences for the country. But the
country is only of secondary concern to the masters, who
are playing a different game. Its rules are revealed by
what The New York Times called "Paradox of '92: Weak Economy,
Strong Profits." As a geographical entity, "the country" may
decline. But the interests of the "principal architects" of
policy will be "most peculiarly attended to."
One consequence of the globalization of the economy is
the rise of new governing institutions to serve the
interests of private transnational economic power. Another
is the spread of the Third World social model, with islands
of enormous privilege in a sea of misery and despair. A walk
through any American city gives human form to the statistics
on quality of life, distribution of wealth, poverty and
employment, and other elements of the "Paradox of'92."
Increasingly, production can be shifted to high-repression,
low-wage areas and directed to privileged sectors in the
global economy. Large parts of the population thus become
superfluous for production and perhaps even as a market,
unlike the days when Henry Ford realized that he could not
sell cars unless his workers were paid enough to buy cars
themselves.
Particular cases fill out the picture. G.M. is planning to
close almost two dozen plants in the United States and
Canada, but it has become the largest private employer in
Mexico. It has also opened a $690 million assembly plant in
eastern Germany, where employees are willing to "work longer
hours than their pampered colleagues in western Germany",at
40 percent of the wage and with few benefits, as the
Financial Times cheerily explains. Capital can readily move;
people cannot, or are not permitted to by those who
selectively applaud Adam Smith's doctrines, which crucially
include "free circulation of labor." The return of much of
Eastern Europe to its traditional service role offers new
opportunities for corporations to reduce costs, thanks to
"rising unemployment and pauperisation of large sections of
the industrial working class" in the East as capitalist
reforms proceed, according to the Financial Times.
The same factors provide the masters with new weapons
against the rabble at home. Europe must "hammer away at
high wages and corporate taxes, short working hours, labor
immobility, and luxurious social programs",Business Week
warns. It must learn the lesson of Britain, which finally
"is doing something well;'the Eonomist observes approvingly,
with "trade unions shackled by law and subdued",
"unemployment high" and the Maastricht social chapter
rejected so that employers are protected "from
over-regulation and under-flexibility of labour."
American workers must absorb the same lessons.
The basic goals were lucidly described by the C.E.0. of
United Technologies, Harry Gray, quoted in a valuable study
of NAFTA by William McGaughey of the Minnesota Fair
Trade Coalition: "a worldwide business environment that's
unfettered by government interference" (for example,
"package and labelling requirements" and "inspection
procedures" to protect consumers). This is the predominant
human value, to which all else must be subordinated. Gray
does not, of course, object to "government interference"
of the kind that allows his corporation, an offshoot of the
Pentagon system, to exist. Neoliberal rhetoric is to be
selectively employed as a weapon against the poor; the
wealthy and powerful will continue to rely on state power.
These processes will continue independently of NAFTA.
But, as explained by Eastman Kodak chairman Kay Whitmore,
the treaty may "lock in the opening of Mexico's economy so
that it can't return to its protectionist ways." It should
enable Mexico "to solidify its remarkable economic reforms",
comments Michael Aho, director of Economic Studies at the
Council on Foreign Relations, referring to the "economic
miracle" for the rich that has devastated the poor majority.
It may fend off the danger noted by a Latin America Strategy
Development Workshop at the Pentagon in September 1990, which
found current relations with the Mexican dictatorship to be
"extraordinarily positive," untroubled by stolen elections,
death squads, endemic torture, scandalous treatment of
workers and peasants, and so on, but which saw one cloud on
the horizon: "a 'democracy opening' in Mexico could test
the special relationship by bringing into office a government
more interested in challenging the U.S. on economic and
nationalistic grounds". As always, the basic threat is
functioning democracy.
The trade agreements override the rights of workers,
consumers, and the future generations who cannot "vote" in
the market on environmental issues. They help keep the public
"in its place". These are not necessary features of such
agreements, but they are natural consequences of the great
successes of the past years in reducing democracy to empty
forms, so that the vile maxim of the masters can be pursued
without undue interference.
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