Chomsky Offers Insight Into IMF, World Bank
Business-Controlled Economy Criticized
Institute Professor and noted political dissident Noam Chomsky gave a talk on Tuesday entitled “IMF and World Bank: Tools of the Neoliberal Onslaught” sponsored by the Social Justice Cooperative.
This talk was given on what political activists call S26, the international day of action against the International Monetary Fund (IMF) and the World Bank.
Chomsky provided insight into the emerging international economic order as a result of globalization. “The international economy is dimly understood,” Chomsky told the audience. 26-100 was full as usual, with latecomers watching on a live video feed outside.
Chomsky gave several examples to support his claim that the World Bank and the IMF continue to make erroneous predictions about economic situations. He even poked fun at the tendency the organizations have for writing new theorems without empirical data. “Every crisis spawns new models,” Chomsky quipped.
However, Chomsky was quick to clarify his criticisms of the IMF and World Bank, citing the problem not as the failure of predictions, but as predictions made with “high confidence” and then implemented in economic policies. Chomsky likened this practice to “hitting a system you don’t understand with a sledgehammer .... It’s bound to cause damage.”
Chomsky explained the “neoliberal onslaught” of globalization brought about by the IMF and World Bank through the resultant shift of power away from governments and towards markets. He said that the “virtual Senate” of corporate special interests causes a conflict of interest between business and social welfare.
“International order has been designed for capital, not people,” Chomsky said. Chomsky referred to a “dual constituency” of voters and speculators, arguing that this undermines democracy. The situation, Chomsky continued, is one that causes “moment-by-moment referenda on public policy” whereby the speculators control policy with their capital.
Chomsky pointed out that the system of globalization widens the gap between the rich and the poor because the agreements themselves are made strictly for and between the rich. This chasm lies not only between individuals, but between rich and poor countries as well.
His arguments were backed by eye-opening figures of the social indicators and unaccounted effects of the global economy, called externalities.
One example provided was the situation when rich countries like the United States, that have more sophisticated technology due to research and development, flood foreign markets. This often devastates the working, producing population of these countries, which Chomsky attributed to much of the social unrest in Third World countries.
On the domestic side, Chomsky said that the United States today is suffering from the results of “globalization.” According to his data, poverty, debt, and volatility have increased in the United States while international trade, labor rights, and the average middle class income have all decreased.
Chomsky refuted trends used to laud the current “fairy tale” United States economy. For instance, pundits often use the apparent prosperity of the stock market as evidence of a robust economy. However, Chomsky cited the statistic that one percent of the U.S. population owns fifty percent of the stock, while eighty percent of the population owns four percent of stock. The economy, Chomsky said, “is a fairy tale for the rich.”
Throughout his lecture, Chomsky often made his points with a wry sense of humor. An example of this was his interpretations of some commonly used economic buzzwords such as “labor market flexibility.” Chomsky defined it as “not knowing whether you’ll have a job tomorrow” and therefore being ready to switch jobs at any moment. Chomsky attributed Chairman of the Federal Reserve Board Alan Greenspan with emphasizing that this “flexibility” is good and the World Bank with stating that increasing it is “essential.”
Following the talk, Chomsky answered questions that were mostly geared towards the effect of technological advances on the global economy.
Among the concerns of the members of the audience were the future of the commercialization of the Internet, corporate patenting of the human genome, and what actions to take against human rights violations around the world.
A brief melÉe occurred when a disgruntled audience member rose and shouted at Chomsky, accusing him of being a “Joe McCarthy,” referring to the 1950’s Senator whose anti-Communist paranoia sparked political censorship and blacklisting of those suspected to be Communists. This comparison was made after Chomsky interrupted a man who recited a prewritten speech under the guise of asking a question. The heckler was removed, screaming and flailing, from 26-100.
Despite this bizarre turn of events, Chomsky encouraged the audience to voice their concerns in order to bring about change.
“It depends on what the public decides to do, but it will not happen easily,” Chomsky said.