As a follow-up to Episode 61 of the Crazy Town podcast, Noam Chomsky, the well-known linguist, author, and social critic, joins Asher Miller in Crazy Town to discuss the failures and dominance of neoliberalism — which Chomsky describes as “class war” — since delivery of the Powell Memo 50 years ago. Chomsky responds to George Monbiot’s critique of the political center and left for not, in Monbiot’s view, developing viable alternatives to neoliberalism. Disagreeing with Monbiot’s (and admittedly Post Carbon Institute’s own) views about the limits of Keynesian “green growth” economic policies, Chomsky discusses proposals developed by places like the Political Economy Research Institute (PERI) that he believes would meet the needs of the poor and working classes while tackling the climate crisis. Noam’s emphasis on community power, going back to his childhood experiences, strongly resonates with “Do the Opposite” themes explored in Season 4 of Crazy Town.
So I’ve got two broad questions for you. But before I jump into those, I just wanted to set a little context. In the last season of the Crazy Town podcast, we explored some of the unrecognized and underappreciated watershed moments from human history that led us, at least in our view, to the societal and environmental crises that we face today, and our general failure to respond to them.
One of the moments that we discussed was the creation of the Powell Memo and the dominance of the neoliberal world order, which is a topic I’m sure you have a lot of familiarity with and lots of views about. But I wanted to get your thoughts on something very specific, which is a statement that was made by George Monbiot back in 2016, which I quote:
“Neoliberalism’s triumph also reflects the failure of the left. When laissez faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the seventies, there was an alternative ready, and that was neoliberalism. But when neoliberalism fell apart in 2008, there was… nothing. This is why the zombie walks. The left and center have produced no new general framework of economic thought for 80 years.” End quote.
Monbiot goes on to argue that a return to Keynesian economics wouldn’t work in any case for the realities that we face today, most especially the climate crisis.
So Noam, I just wanted to start by asking if you agree with Monbiot’s critique of the so-called left. And if so, why do you believe there’s been a failure to put forward any viable alternatives to neoliberalism or free market economics?
I have a somewhat different view of the matter, both about the deeper questions of the nature and history of neoliberalism, which I think are misunderstood. But also about the specific question of a left alternative. I think they’re pretty substantial left alternatives. They’re not in the mainstream, but that’s because of power systems.
I mean, the Republican Party is off the spectrum. We can forget about them. The Democrats abandoned the working class in the 1970s, became a party of affluent professionals, Wall Street, Clintonite Democrats, the kind of people who show up at Obama’s parties and so on. So they’re basically not an opposition.
Except that in part they are. The Sanders movement. So the Sanders movement, which is part of the, it’s called the left, whatever that means, but it has put forth pretty reasonable programs. They’ve all been killed by a hundred percent Republican opposition, couple of right wing Democrats, but the programs themselves are quite reasonable, moderately social democratic programs. But there’s much more than that. If you take, say the Political Economy Research Institute. Major research institute associated with the University of Massachusetts, directed by Gerald Epstein, Robert Pollin. They’ve done very extensive work, detailed work.
It’s called kind of neo-Keynesian, heterodox neo-Keynesian, but it’s part of a much larger movement. They have fine staff… Nancy Folbre, Jayati Ghosh, Dan Ellsberg, who remember is an economist by background. Quite substantial work on ways to deal with the current crisis. And specifically on climate change, they are in the lead in developing detailed proposals as to how to deal feasibly with the problems of climate destruction, working them out in extensive detail and even applying them. So, Pollin’s work with the West Virginia miners, for example, Ohio mining groups, has led them to take pretty significant stands. The United Mine Workers, as a result of this work has adopted a transition program from coal to alternate energy with appropriate concerns for the miners who are being displaced, worked out in detail. Mainly Pollin’s work. Picked up by a couple of dozen California unions. This is not a particular innovation. We should remember that Tony Mazzocchi’s Oil, Chemical, and Atomic Workers Union was right on the forefront 50 years ago of pressing for the work on the environment. And Mazzocchi himself was a pretty left, anti-capitalist environmentalist went on to try to start a labor party in the Clinton years. Didn’t work. Well, all of this is there. It’s not that there’s no alternatives, sensible alternatives, worked out an extensive detail, applied in practice with some success, and in particular focused on the climate.
That’s the lead in the studies of climate change. There’s no work that I know of comparable to Bob Pollin’s on this. A lot of it’s reviewed in a joint book of ours, but mainly his work. So there’s things there. Of course, you know, you’re not going to read them in the headlines of the newspapers. You’re not going to… They won’t be in… They are actually discussed in Congress, but marginalized. So for example, Alexandria Ocasio-Cortez in New York has a resolution in the Congress, both House and Senate, which didn’t reach legislation, cause there’s too much opposition, but it’s there. And it’s the basic outline of a quite sensible climate program that the government could adopt and would deal with the essential issues. Would be a way to mitigate the crisis and move on forward. So the things are there. What it takes is large-scale popular pressure to turn them into real implementation.
I should also say that neoliberalism, what’s discussed, the crisis of neoliberalism, its collapse was not in 2008. It was in 1982. That’s when neoliberalism collapsed when in Chile, when the Pinochet government came into power, pushed into power by the United States. Vicious, brutal dictatorship. They’d immediately opened the doors to the top neoliberal economists. They all flooded in there to run the economy. It was perfect for them. It was a vicious fascist dictatorship. There was no dissent. Nobody could could say anything about it, or they, you know, get tossed into a torture chamber. So that was fine.
They had free run to run the economy. During the Allende years, there had been great pressures on the economy to try to undermine and destroy it, by the United States, of course, and the international institutions it controlled. But they all flooded back in as soon as the dictatorship came. Plenty of investment. They were sensible enough, all the so-called Chicago Boys, students of Friedman and others, came to run the economy with all the fine neoliberal principles, perfect experimental conditions. They were smart enough not to privatize the main source of income for the economy, Codelco the world’s largest copper producer, which had been nationalized, that was very efficient, that was bringing in most of the funding for the economy.
So they left that in place. Perfect. What could go wrong? Within about five years, they’d crashed the economy. Literally. More of the economy was taken over by the state than under Allende. People… Economists who had their head screwed on, used to call it The Chicago Road to Socialism. After that they turned it back to the traditional rulers and they sort of ran an economy. So that’s when neoliberalism crashed. Well, they didn’t care. In fact, they, notice the fact that neoliberals love the dictatorship is nothing new. They’re all in favor of state violence. Their guru, Ludwig von Mises, back in the 20s, was a strong supporter of Mussolini. Said Mussolini’s fascism had saved civilization by crushing workers, the labor movement by destroying Austrian social democracy. Of course, Italy too. And saved, just saved civilization. Well, after the collapse in Chile, they moved on to bigger things.
By then it was 1982. That’s Reagan. So they moved on to try to, let’s take over the world, you know, under the Reaganite neoliberal programs. Well, were they a success? Depends who you ask. So there’s a good measure of their success actually, a study by the RAND Corporation, a couple months ago, which tried to calculate the, what they call transfer of wealth from the lower 90%, middle class, working class, to the very top, top 1% over the 40 years of neoliberalism. Now their estimate is close to $50 trillion. So that’s a success. If you’re on the very top, it’s a wonderful success. If you’re the rest of the population it’s a catastrophe.
Real middle wages are probably lower than they were in 1979. So let’s tell the truth about neoliberalism. It’s class war. Furthermore, the talk about the market is mostly a joke. It’s the market for the poor and the working class. It’s massive state intervention for the rich and powerful. Bob Pollin and Jerry Epstein have a study on this, which they call the Bailout Economy.
Starting with Reagan. You start with deregulation. First of all, there’s enormous growth of the financial institutions. They immediately start crashing. You deregulate them, you get crashes. Started right away with Reagan and went through… He left with a major collapse of the housing industry, huge crisis, all bailed out, each one worse than the last.
And it went on until 2008. The worst of them all. We had to have a huge government intervention. Actually, if you look at that intervention, this is now under Obama… started with Bush, continued under Obama. Congress passed legislation, TARP legislation, to overcome the serious crisis. It was almost at the level of The Great Recession [Depression].
So the treasury moved in. They were supposed to overcome it. Well, the TARP legislation had two parts, two components. One of them was to bail out the perpetrators of the crisis. The banks who had made predatory loans and cheating customers, and dispersing them with derivatives that were permitted by the Clinton deregulation system. So nobody knew who owned what, except that they were making plenty of money out of it. So you had to be bail them out.
There was another part of the legislation: support the people who had suffered. The people who were thrown out of their homes with foreclosures and so on. Well, guess which part of the legislation was implemented?
In fact, it was such a scandal that the Inspector General of the Treasury Department, Neil Barofsky, wrote an angry book about it. Well that’s class war. That’s neoliberalism. In fact, same thing with all the slogans. So Margaret Thatcher: there’s no society, just individuals in the market. With one exception, the rich and powerful. They have plenty of society, uh, trade associations, uh, chambers of commerce, Business Roundtable. People like Powell in the background. So they have a rich, complex society. But not the poor and the working class.
In fact, the first moves of the Reagan and Thatcher administrations, instituting modern neoliberalism, were to attack and destroy the labor unions. That’s perfectly in keeping with neoliberal principle. Back to Pinochet and Mussolini. Gotta destroy labor. That’s the one force that can defend people against class war.
So, first of all, let’s be clear about what it is. It’s not markets. You look at the institutions established under the neoliberal programs, like the World Trade Organization. It’s called a free trade organization. It’s highly protectionist. Radical protectionism. That’s why drug prices are far higher than they ought to be because the extensive protectionism built into these investor write agreements, which masquerade as free trade agreements.
So the free trade rhetoric is partially true: markets for you poor guys. Can’t do anything without them, but plenty of protection. Powerful state for us. It’s been neoliberalism since the 1920s. And, of course, it’s called very free. So, Friedrich Hayek, for example, one of the gurus, when he went to Chile under Pinochet, came back and said, literally, he said, literally everyone, he had spoken to said there was more freedom under Pinochet than under the Allende government. Tells you who he was speaking to.
But this is a constant strain that runs right through it. It takes a lot of effort to suppress it. So neoliberalism is rhetorically fraudulent class war. Its first crash was 1982, after perfect experimental conditions. It’s now been applied to the rest of the world. We can see what it’s like. That’s a large part of the reason why there’s such anger, resentment, contempt for institutions in a country like the United States, practically breaking up over it, in Europe and elsewhere.
I think it’s understandable what he says. That’s the way it looks, sort of, from the mainstream view. But there are perfectly clear alternatives, carefully worked down, applying specifically to the climate issue. That’s the central focus for the work at places like PERI.
I want to get back to those alternatives in a second, but I guess I just want to name or flag that maybe there’s a distinction between the failure of neoliberalism, in terms of actual implementation, like in the case of Chile, right? Clear failure. Versus maybe not having failed quite yet in terms of, rhetoric and influence over institutions and kind of collective narrative and worldview beliefs around free markets, and all of that. Right? And I would actually probably even disagree with Monbiot that neoliberalism failed in the Great Recession, because over the last decade plus it’s not gone away, in terms of its hold over, the halls of power and policy.
On the implementation, or on the alternative side, we don’t have to spend a lot of time talking about this, but I think Monbiot’s argument, a bit, is that things like, even though he wasn’t referring specifically to the Green New Deal, but those kinds of policies are a bit neo-Keynesian in the sense that they’re a bit around stoking consumption and production and demand, right? In this case for alternatives to fossil fuels, which is all about still growing the economy. In that you can’t necessarily decouple environmental impact from that, even when you’re building out “clean” alternatives.
Well, let’s look at it more carefully.
So let’s take transportation, a major contributor to pollution and environmental destruction. Well people aren’t going to stay at home. Okay. So there’s gotta be transportation. The question is, what kind will it be? Will it be sitting alone in a SUV, in a traffic jam, or will it be efficient mass transportation? That’s basically the choice. Well, if you have efficient mass transportation, that’s growth. It’s the growth of a mass transportation system, which reduces, which deals with the climate crisis by eliminating… not totally eliminating can’t do that… but by sharply reducing one of the main sources of, uses of energy that are destroying the environment. I suppose you build, like I have… I live in Arizona. Sun shining all the time. When we moved in, we put up solar panels. Now you look around the neighborhood, there’s no solar panels. That’s liberal nonsense. So we don’t pay anything for electricity. The neighbors complain about thousand dollars bills every month, but you can’t put up solar panels. Okay.
If you do put up solar panels, that’s growth. In fact, not trivial growth. If you look into the production of them, it’s quite a substantial amount. But overall it reduces the use of energy and, is a step towards dealing with the crisis. So I think it’s not just growth or non growth. It’s what kind of growth do you have? The kind of growth that actually improves society, improves life and reduces fossil fuels, and destruction of the environment or do you have the kind of growth that exacerbates them?
We’re not gonna go back to preindustrial society. The question is how to deal feasibly with the reality that exists. This extends to agriculture. Much more. The Green New Deal covers a lot of names, a lot of ideas, but if you put it together sensibly, it’s a realistic development of the economy on fundamentally Social Democratic lines.
In my view, also Bob Pollin’s, and Jerry Epstein’s, it should lead to more radical social change. It’s ludicrous that, in order to get the men, the institutions that are destroying the world … in order get them to stop doing it, we have to bribe them.
It happens to be a fact, as the institutions now exist, you’re going to have to bribe them. We might wish it were different, but… We can try to make it different, but if you look at the timescales involved, you don’t have that choice. The timescale involved in moving towards a really democratic economic system, popularly based, workers controlling enterprises, communities controlling their own enterprise, as well. That’s a long way off. We can move towards it, but we have a very short time to deal with the existing crisis. And that has to be within the framework of existing institutions, like it or not. But there are feasible means like Pollin’s estimates, or maybe 2-3% of GDP. A fraction of what’s spent in bailing out the financial institutions, even from the COVID crisis, let alone 2008.
And there are plenty of other things that could be done if there’s popular support for it. Like take 2009 again, after the Great Recession, the near-Great Recession, Obama basically nationalized the automobile industry. The government pretty much bought it out.
And well, there were a couple of choices. One choice was: return it to the former owners. Maybe some new faces, but in class terms the former owners, and have them return to what they were doing. Namely produce more traffic jams. That’s what was done. There was an alternative. You could have turned it over to the workers. Communities. Have them produce what’s needed, like efficient mass transportation. It was pretty close to that. If there had been a popular movement, supporting them, it could have happened. Well, these things are not utopian. You know, they’re within grasp. In fact, right now, for example, again, Bob Pollin has done most of the work on this, has pointed out that the government could buy up the entire fossil fuel industry and turn it to sustainable energy at a cost less than what the Treasury Department poured out to save the financial institutions after the COVID crisis. This is not far out utopianism. It’s very well within reach. No lack of ideas.
So putting aside questions and debates about specific alternatives for a second. You said that those have existed. You sort of disagree with Monbiot’s characterization of that, in that it really does come down to power and influence, right? And organizing. So I am curious about what your personal experience has been seeing this entire process unfold — from, in a sense, the implementation of Keynesian economics all the way through the Reagan era, to today. The lack of those alternatives, gaining any real momentum. I’m curious about what your experience of that process has been. But I’m also curious to hear from you… you said these are not utopian. So for example, nationalizing the fossil fuel sector, right, the energy sector, is not utopian. But how do we actually do that? Considering where we are politically and culturally in this country at this point, especially as things may get more fractured than they even have been to this point.
Well, first of all, I should make it clear that I’m not a big fan of nationalization. I think there’s a much better answer. That is turn the fossil fuel industry over to its workforce and, in fact, that’s actually what is pretty close to happening. Take, say, West Virginia again. And the coal industry. The proposals that Pollin was working out with the mine workers, in fact, were to transfer control of the coal industry over to them. Let them run the industry, close up the mines, move to develop sustainable alternatives. Of course, with some federal support, though not a huge kind of considering the expenditures that are used for other things.
So it’s a kind of mixed story, recognizing that we do live in a state capitalist economy and we can’t wish that away, but you can move to dismantle it piece by piece, partially on the ground, partly at the national level. So, the reason why these ideas are not front and standard is class war. Who holds the levers of power. Okay. They do what they want unless the population is organized to take that power away from them.
Let’s go back to my childhood. I grew up during the thirties. Family was working class, mostly unemployed. Very hopeful. Much poorer than today, but very hopeful, ’cause there was militant labor organizing. The labor unions were not only functioning, but functioning effectively. There was a sympathetic administration. They were able to push through very important changes. Laid the basis for modern social democracy, battling all the way. Can’t go through the details, but the labor unions were more than just sit down strikes in the steel factories. It was also a culture of life. My aunts who were garment workers, unemployed garment workers, were in the Ladies International Garment Workers Union group. That meant cultural activities, social activities, a week in the Catskills. You know, it was a whole life, not just political activity.
Well, that’s been very carefully destroyed. The business world is on a crusade, constantly, to destroy it. Understandably. The business world are Marxists. They are vulgar Marxists. Putting on a vicious class war without a stop. Values inverted, but basically Marxist. And they don’t stop for a minute.
You go back to the Powell Memorandum. Change a couple of words and it’s the little red book. Literally, they’re class conscious. They know what they’re doing. He says straight out, he says, look, we have the power. We own the country. We can force through what we want. We don’t have to let these people pick away at our power. That’s basically the Powell Memorandum. So, and the question is, is the other side going to give up?
Well, at the political level, the Democratic Party partially is a business party, of course, but it did partially reflect working class interests. That ended by the seventies. The last gasp was the Humphrey-Hawkins Full Employment Bill. 1978. Carter, who was pretty anti-labor, didn’t veto it, but he watered it down. So it had no effect. It’s just supposed to be voluntary. It’s about the last gasp of the Democratic Party, as far as the working class was concerned. So there’s no… I mean, it’s picked up again with the Sanders wing of the Democrats, but as you saw the last couple of years, the mainstream Democratic establishment, the party managers, they go all out to try to suppress it any way they can.
And of course, by now, the Republicans are not even… I mean, if you go back, the Republicans also supported the New Deal. Eisenhower, who was the last honest, conservative in the country, he strongly supported the New Deal. You read his speeches today, they go way beyond Sanders.
Anybody who doesn’t support the New Deal doesn’t belong in our political system. You know, anyone who tries to deprive workers of their rights, just, we don’t want to hear from them, the small marginal group of crazies, and it’s Eisenhower. But the neoliberal takeover has been ideological conquest, along with very effective class war. To go back to that $50 trillion figure. It’s not small change.
Do you, do you feel hope or a sense of possibility with what we’re seeing with unionization efforts these days? I mean, where are you in terms of your sense of possibility?
Well, it’s very interesting. There is a small growth of labor activism. A lot of it is outside the union movement. So, you take a look at the strike, the teachers movement. For example, in red states like Arizona, where I live, the teachers have been working very effectively to try to counter the destruction of public education. Remember that Arizona, Arizona is an interesting state. It’s the test case for the right wing assault, going back to Friedman and others to try to destroy the education system. In fact, it’s gone pretty far here. State legislature just passed laws which basically offer people money to leave the public education system. You get a voucher of $7,000 if you leave public education and do something else with it, you know, whatever it may be. Meanwhile, the education system is defunded.
Now. It’s very well understood by the Right that if you want to destroy a public institution, first defund it, so it doesn’t function, then people get angry at it and you say, okay, let’s privatize it. And you make it worse, over and over. So by now, Arizona, which is not a poor state, has the second lowest expenditures for public education in the country, right after Mississippi.
Well, the teacher’s union is fighting against that. It’s not a union. The teachers are fighting against them, and they’re getting a lot of public support. There are mass demonstrations in the legislature, calling not only for improvement in wages — they’re wages are much too low — but also improvement of education. Then we don’t have to teach 40 kids in a third grade class. Let’s have reasonable class size. Let’s have special education. Let’s have cultural art activities, sports and so on. Let’s have a nurse on the premises. They’re fighting for that. Plenty of support. When a referendum comes up, the public overwhelmingly supports more aid to public education. The legislature, run by the right wing republicans kills it. And they’re getting a lot of public support. You drive around Tucson where I live, there are signs on people’s houses saying, you know, support the teachers and so there’s this struggle a lot of it outside the union movement.
There’s also some interesting victories inside Starbucks, Amazon. But it’s a battle going on. There was a big GM strike, which did pretty well, but total unionization is still going down and militant labor activities, basically flat. But outside the institutional structure, that’s happening. And then there’s also the major popular organizations like the Extinction Rebellion, Sunrise movement, others. These things are happening. It’s you know, it’s not organized, it’s not centralized. It doesn’t have the core labor movement at the center, as has always been true in the past. I think unless the labor movement is resuscitated, it’s going to be very hard to do anything.
Going back to the 1930s, that’s a kind of model. The 1920s, the labor movement had been almost totally destroyed. Been wiped out by Wilson, Woodrow Wilson’s repressive measures. There was almost nothing left. The thirties, began to reconstitute. CIO organizing. Militant actions. As I said, a sympathetic administration.
Did that take a crisis, an economic crisis for that to happen?
It was terrible economic crisis. Also, there was a fundamental difference. That’s before… At that point, the US was an essentially industrial economy. Had a solid industrial economy, and that’s where the organizing took place.
Major industries were at the center of it. Well, that was destroyed by neoliberalism, which, perfectly consciously, de-industrialized the country. Now this is mostly Clinton, incidentally, picking up from the Republicans. The point of NAFTA, trade organizations, so on, was de-industrialize the country, in the interest of the private owners. More class war. So, now the industry’s still there, but nothing like what it was in the thirties, the core of the economy. It’s become a service, financialized economy. Substantial. Strongly supported by state intervention. Couldn’t survive otherwise.
Yeah. So what would you say to listeners if this is… I mean, you talk about the labor movement being at the heart of, at least in the past, always being at the heart of positive, progressive change and with the labor movement being so… I wouldn’t call it more abundant, but having been so hampered and hurt for so long and it being harder now to organize, because as you said, we don’t have an industrial based economy anymore. What would you say to listeners is their means of intervention at this point? What do people do in the context of what we face right now?
It depends who you are. If you’re anywhere near the working class, you can participate in direct organization. I can’t do that. You know, I can talk about it, but I can’t participate in it. And you can support it, wherever it is. And there’s plenty being done outside the labor movement. Supporting the teachers in Arizona, for example. Preventing the assault that is aiming to destroy public education. There’s a reason for that. Public education is something that brings people together as a community working together for the common good. The neoliberal ideal is to atomize people, separate them from one another. You look after yourself. Don’t worry about the next guy. Except for the rich and powerful. They, of course, work together. But for the rest be atomized.
Public education is a way to overcome that. I mean, say, my wife and I sent our kids to a public school. It’s not just going to school together. Kids walk to school together. They make friends. They play together in the afternoons. They visit each other’s homes. Neighbors get to know each other. You build a community, which has community interests. That’s very counter to the neoliberal ideal. Which, remember, is class war. Actually Marx understood this. He condemned the authoritarian leaders of Europe in his day for wanting to turn the population into what he called a sack of potatoes. Clearly isolated, victims of power. Can’t get together to do anything out of it. Well, public education is part of that. Do we want a healthy community or do I just want to do the best that I can for myself? It’s a very different attitude towards the world. Actually, we saw it, interestingly, during the COVID crisis.
It’s quite interesting to see, around the world. That in many places, including very poor places, deprived places, neighborhood groups spontaneously coalesced to try to help people in the neighborhood. Some old guy stuck in a room, can’t get food, we’ll bring him food. Sometimes it was done in the most amazing ways like in Brazil, the favelas, the miserable slums, overrun by gangs, criminal gangs and drug wars. And so, the criminal gangs organized in the flavelas. They arranged to bring people water, to try to help them out, and so on. These spontaneous developments were pretty impressive. These are things that can be done at every level. So it’s not that there’s any shortage of things to do.
Rebuild communities. Rebuild the consciousness that we’re in it together, not fighting for a little more of the pie at the expense of the next guy. Joined together. You can work together. This goes all the way up to the federal level. So work, let’s say, to turn the AOC-Markey resolution into legislation. Work to overcome the powerful effort by the far right to just crush any initiative that might help the country.
I mean, we see it at every moment. Like, you read the newspaper today, it points out that the ending of the pandemic relief funding from the government is driving a huge mass of people below the poverty line. It didn’t have to happen. With enough public support, that could have been stopped.
Yeah. I really appreciate what you said about community and solidarity, and mutual aid. And it really struck me what you said about your childhood in the thirties, how being part of a union, this was actually a community and a culture. It wasn’t simply a nuts-and-bolts work environment type of situation. So I think a lot of that does come back to relationship and connection. So I really appreciate those words, and I appreciate you taking the time, Noam, and for all your work over the years. Thanks very much.
Good to talk to you.