At least three nice insights by Noam Chomsky: first, the elites organized in state power and corporate power work in tandem most of the time, but sometimes diverge in interests when it comes to implementing foreign policy. Second, he points to the role conflict among members of the elites: that there is a distinction between the role that one embodies doing all sorts of atrocious things positive for the short-term like President Obama signing orders to assassinate dozens of terror suspects without trial (none of them happen to be bankers…), and the kinds of long-term considerations for the society they may have, but never act upon. An oil executive might be personally against increased oil drilling, because it could harm the environment, but he sees himself obliged to increase dividends for his stockholders and profits for his company over the short term. He will not act against his role, even when against his inclinations (if there are any). Third, Chomsky describes the predicament of the so-called ‘virtual parliament’, in which when governments stop controlling capital movements across countries (as happened since the 1970s), bondholders (tiny group of elites) get the unelected power to control the fates of governments, torpedoing social welfare mechanisms for the sake of profit maximization. This creates a huge crisis of capitalism (which Chomsky doesn’t specify; even though he adopts a lot of Marxian themes, he is not expressly a Marxist). The dimunition of the welfare state and the associated weakening of the labor movement weakens the consumer power upon which capital valorization depends on. That is why you currently have US corporations holding $2.2 trillion in cash without any inclination to invest it back into the economy. The systemic weakness of growth is certainly heightened by the fact that with an expectation of economic decline and the associated fall in state revenue collections the bondholders demand higher interest rates that again have to be financed via austerity measures directed against the people that make up the strengths of the economies in the first place.
“Noam Chomsky: As a very broad generalization, you could almost say that governments are agencies of big corporations. Just look at who staffs the executive suites, or the enormous effect of economic decisions on setting parameters for government decisions. On the other hand, there are very interesting cases of conflict between state and corporate interests even when the state is pretty much controlled by the corporations.
In fact, we are in the middle of one such corporate-state conflict right now. The Bush administration is almost an offshoot of the energy corporations. There is a very close relationship. On the other hand, the policies of the Bush administration are opposed by the energy corporations. For a long time Iran has been a dramatic example of conflict between state interests and the interests of the energy corporations, even though the state is very much under the control of the energy corporations.
NC: If you’re a corporate executive or an official in a government that is very much under business influence, your concern is with power, profit, privilege and wealth in the short term future. On the other hand, you may be a person who has grandchildren and you want them to live in a livable world. When you go home, that may be what you’re concerned about, but in the office that’s not your job. Your job, as a CEO of a corporation, for example, is to make sure that the bottom line looks good in the next quarter. There’s very little long term planning in the business system and there are reasons for that. It’s almost an institutional imperative. We don’t have a highly competitive system. It’s an oligarchy in many ways, with some competition.
If governments cannot control capital exchange rates, that sets up what international economists sometimes call a “virtual parliament” of investors and lenders who carry out a moment-by-moment referendum on government policies. That means the government faces a dual constituency – the one constituency is its own population, the other constituency is the virtual parliament. If the virtual parliament decides that some government policy is what they call ‘irrational’, meaning it may help the population but harms profit, they can prevent it by capital flight, attacks on currency and other measures that the government is powerless to prevent unless it has the kinds of built-in conditions established by the Bretton Woods system. When those conditions were dismantled in the 1970s we got the predicted results: a major harm to economic development and an attack on democracy.”