Review: Noam Chomsky: “Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power”

Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power by Noam Chomsky
My rating: 5 of 5 stars

Noam Chomsky is pretty much an autodidactic intellectual. Instead of relying on old ways to attain knowledge, by which I mean going to school and relying firmly on what he learnt there, he has always undergone a more critical route: why would schools be right? And even if they were right at the time, will not fact change?

The above is merely a ground point, made to illustrate how I love Chomsky’s intellectual thinking. He even criticises himself, and apologises when wrong. However, in this book, there’s simply no real wrong, if you ask me.

This book is made after the documentary film with the same name was made; in it, Chomsky basically produces a monologue where he speaks of the American dream, what is monetarily required to exist in the USA, and perhaps mainly, of the differences between what some institutions and people want us to believe to be real, and what is real.

His style is exquisite:

Since the 1970s, there’s been a concerted effort on the part of the “masters of mankind,” the owners of the society, to shift the economy in two crucial respects. One, to increase the role of financial institutions: banks, investment firms, insurance companies, and so on. By 2007, right before the latest crash, they had literally 40 percent of corporate profits, far beyond anything in the past.

He takes a look on how “class mobility” is not really part of the so-called American Dream anymore, simply because it’s impossible; 70% of the American population cannot contribute to legislature and real changes, due to how plutocracy and capitalism works now.

Increasingly, the business of the country isn’t production, at least not here. You can even see it in the choice of directors. The head of a major American corporation back in the ’50s and ’60s was very likely to be an engineer, somebody who graduated from a place like MIT, maybe industrial management. There was a sense in the ownership and management class that they’d better attend to the nature of the society—that this was their workforce, this was their market, and they had to look forward to the future of their own corporation. That’s less and less true.

More recently, the directorship and the top managerial positions are people who came out of business schools, learned financial trickery of various kinds, and so on. And it’s changed the attitude of the corporation and of the leadership to the firm. There’s less loyalty to the firm and more loyalty to oneself. The way to get ahead now in a major firm is to show the good results in the next quarter. That’s not the long-term future of the firm—it’s what you can get out of the next quarter—and that also determines your salary and bonuses and so on. So if business practices can be designed to make short-term profits and you can make a ton of money and it crashes, you leave—and you’ve got the money and the golden parachute. That’s changed the nature of the way firms are treated very significantly. By the 1980s, say, General Electric could make more profit playing games with money than it could by producing in the United States. You have to remember that General Electric is substantially a financial institution today. It makes half its profits just by moving money around in complicated ways. It’s very unclear that they’re doing anything that’s of value to the economy. So what happened was a sharp increase in the role of finance in the economy, and a corresponding decline in domestic production. That’s one phenomenon, what’s called “financialization” of the economy. Going along with that is the offshoring of production.

Even if you are critical against some of Chomsky’s anti-neoliberal points, such as:

In fact, what are called international “free trade agreements” are not free trade at all. The trade system was reconstructed with a very explicit design of putting working people in competition with one another all over the world. What it’s led to is a reduction in the share of income on the part of working people. It’s been striking in the United States, but it’s happening worldwide. It means that an American worker’s in competition with the super-exploited worker in China. Incidentally, in China the inequality has grown enormously. China and the United States are two of the most extreme in this respect. There are plenty of labor struggles in China trying to overcome this, but it’s a very harsh regime. It’s hard to do, but something’s happening—and that’s global. What the United States is exporting are operative values—the concentration of wealth, tax on working people, deprivation of rights, exploitation, and so on—that’s what’s being exported in the real world. It’s kind of an automatic consequence of designing trade systems to protect the rich and privileged.

…there is so much fact against the critique, that’s it’s impossible (at least for myself) not to take in:

Policy is designed to increase insecurity. Alan Greenspan, when he testified to Congress, he explained his success in running the economy as based on what he called “greater worker insecurity.” Keep workers insecure, they’re going to be under control. They are not going to ask for decent wages or decent working conditions, or the opportunity of free association—meaning to unionize. If you can keep workers insecure, they’re not going to ask for too much. They’ll just be delighted—they won’t even care if they have to have rotten jobs, they won’t ask for decent wages, they won’t ask for decent working conditions, they won’t ask for benefits—and by some theory, that’s considered a healthy economy.

Where great leaders – every great leader, in fact – has pointed to the fact that people must have the power, Chomsky points out to what is:

Now, there have been efforts to restore some form of regulatory measures, like Dodd-Frank. But the business world has lobbied very hard to create exceptions, so that much of the shadow-banking system has been exempted from regulation by lobbyist pressure. And there’s gonna be constant pressure—we can be certain of it—from systems of power to prevent any constraint on expanding their power, and the profit. And the only counterforce is you. To the extent that the public fights back, effective systems can be created—not only to regulate the big banks, but to insist they demonstrate their legitimacy. And that challenge should be imposed on the institutions of the financial system, very broadly. That’s another task for an organized, committed, dedicated population—not just to regulate them, but to ask why they’re there.

Remember, it’s not a law of nature that the United States doesn’t have a manufacturing industry. Why should management make those decisions? Why shouldn’t those decisions be in the hands of what are called “stakeholders,” the workforce and the community? Why shouldn’t they decide what happens to the steel industry? Why shouldn’t they run the steel industry? These are very concrete questions. In fact, we’re constantly seeing cases where, if there were enough popular mobilization and activism, we would have a productive industry manufacturing the right things.

Talk about empowering people.

And what does the plutocracy think about that?

Recently, there was a publication by Citigroup, one of the biggest banks. They put out a study for investors in which they identify a new category in the world—what they call the “plutonomy”—those who have substantial wealth. The plutonomy are the main drivers of the economy—they’re the main consumers, that’s where all the wealth goes—so Citigroup has a “plutonomy investment portfolio.” They’ve had it since the mid-’80s, when Reagan and Thatcher in England drove forward policies of enriching the very wealthy and letting everyone else suffer. And they point out that their plutonomy investment portfolio has far outperformed the market, and urge investors to concentrate on investing for the plutonomy. So the small percentage of the world’s population that’s gathering together in increasing wealth—that’s what you focus on. The rest you can forget about.

Now, the plutonomy is much more rigorously following Adam Smith’s vile maxim: “All for ourselves, nothing for anyone else.” What about the rest? There’s a term coming into use for them, too. They’re called the “precariat,” precarious proletariat—the working people of the world who are living a more and more precarious existence. So we have the precariat living insecure, precarious lives, getting by if they can, many in terrible poverty and suffering in other ways—and the advice of Citigroup (which, by rights, the public ought to own by now, having bailed them out so often—but they’re doing fine, richer than ever) is that they’re asking investors to focus attention on the plutonomy. It’s a really serious problem, and we’re heading toward a cliff. But from the point of view of the masters of mankind, it doesn’t matter much—“as long as we make plenty of profit tomorrow, who cares if our grandchildren won’t have a world to live in?” It’s related to the attitude toward the country altogether. Well, that’s a division the world over. In China, it’s the same—it has an extremely oppressed labor force, no independent unions, tens of thousands of labor protests every year—and super-wealth. In India it’s even more extreme. In other developing countries it’s changing a little bit, like in Latin America. Take Brazil, a most important country, where there have been significant attempts to deal with the tremendous inequality and overwhelming problem of poverty and starvation in the past ten years. But for the most part I think the Citigroup analysis is pretty accurate—there’s a plutonomy that’s very rich, and the rest get by somehow if they can.

One of Chomsky’s fortés is, to me, how he talks of the simple stuff, of how things could be:

We have the only health care system in the advanced world that is based overwhelmingly on virtually unregulated private health care, and that is extremely inefficient and very costly. All sorts of administrative costs, bureaucracies, surveillance, simple billing—things that just don’t exist in rational health care systems. And I’m not talking about anything utopian—almost every other industrial society has them and, in fact, they are far more efficient both in outcomes and costs than the one we have in the United States. That’s a scandal, but also quite apart from the millions of people who have no insurance at all, and are even more insecure.

On how economic institutions, e.g. politicians, banks, and hedge funds work:

Deregulation went on through the Clinton years. Clinton came along, and there was a tech boom—but by the end of the 1990s there was another bubble that broke, the dot-com bubble. In 1999, regulation separating commercial banks from investment banks was dismantled. Bush came along and we had the housing boom, which, amazingly, the policy economists didn’t notice—or they ignored the fact that there was about an $8 trillion housing bubble that held no relation to the relevant facts about cost of housing. Of course, that broke in 2007, and trillions of dollars of capital just disappeared—fake wealth. That led to the biggest financial crisis since the Great Depression. Then comes the Bush and Obama bailout, which reconstructed the powerful institutions—the perpetrators—and left everyone else floating. There was severe harm to people, who had houses taken away from them, jobs diminished, and so on. That’s where we are now. It was done with impunity, and they’re building up to the next one.

…and how the taxpayer – near-unwittlingly, as it’s really used as a pawn – is the one to pay for the problems that our “masters” create:

Each time, the taxpayer is called on to bail out those who created the crisis, increasingly the major financial institutions. In a capitalist economy, you wouldn’t do that. In a capitalist system, that would wipe out the investors who made risky investments. But the rich and powerful, they don’t want a capitalist system. They want to be able to run to the “nanny state” as soon as they’re in trouble, and get bailed out by the taxpayer. They’re given a government insurance policy, which means that no matter how often you risk everything, if you get in trouble, the public will bail you out because you’re too big to fail—and it’s just repeating over and over again. Their power is so enormous that any attempt to deal with it is essentially beaten back. There have been mild attempts, like the Dodd-Frank regulatory proposal, but that’s whittled down in the implementation by lobbyists—and it doesn’t go after the main issues anyway. And the reasons for this are pretty well understood. There are Nobel laureates in economics who significantly disagree with the course that we’re following—people like Joseph Stiglitz, Paul Krugman, and others—and none of them were even approached or consulted. The people picked to fix the crisis were those who created it—the Robert Rubin crowd, the Goldman Sachs crowd. They created the crisis and are now more powerful than before. Is that an accident? Well, not when you pick those people to create an economic plan. I mean, what do you expect to happen? The last bailout was unprecedented in scale. These corporations were kept viable in a period where, in a capitalist economy, they would’ve crashed. But we don’t have a capitalist economy—business wouldn’t accept that, and they have enough power to prevent it—so, therefore, the public comes in to pour literally trillions of dollars into the hands of failing corporations and maintain them. And that’s true in all sorts of ways. There’s one major technical study of bailouts over several years that concludes that probably 25 percent—a study of the hundred biggest corporations on the Fortune list by two well-known economists—25 percent of them survived thanks to public subsidy at some point, and most of the rest gained from it. So while this is unprecedented in scale, there’s nothing new about it. The same is true after all financial crises.

In relation to the above paragraph, here’s a quote from “The Logic of International Restructuring: The Management of Dependencies in Rival Industrial Complexes”, Winfried Ruigrok and Rob van Tulder, 1995:

We assess that at least twenty companies in the 1993 Fortune 100 would not have survived at all as independent companies, if they had not been saved by their respective governments. Some eighteen core firms have been nationalised, many of them during major restructuring periods, sometimes even facing immediate bankruptcy threats.

On what should really matter in thoughts on the US presidential elections – or, really, in any higher-up election, if you ask me:

In my own view, the electoral extravaganza that takes place every four years should take about ten minutes of our time, literally. One minute should be spent on learning something about arithmetic. There’s a very simple point about arithmetic—if you happen to be in a swing state, a state where the outcome is indefinite, and you don’t vote for, say, Clinton, that’s equivalent to voting for Trump. That’s arithmetic. So we take one minute to settle the question of arithmetic, then we take about two minutes to look at the merits of the two parties. Not just the candidates, but the parties. My own view is that under current circumstances it should take about two minutes. And then we take the rest of the ten minutes to go to the ballot box and push a lever. Meanwhile, after we’ve spent those ten minutes, we’ve turned to what really matters, which is not the election, but the continued effort to develop and organize active dedicated popular movements that will continue to struggle constantly for what has to be done. That’s not only demonstrating, pressuring candidates, and so on—but it’s also building an electoral system that means something. You don’t build a better-functioning democracy, or a party for that matter, by voting once every four years. If you want a third party, an independent party, it’s not enough to vote for it every four years. You have to be out there constantly—developing the system that goes from school boards to city councils, legislatures, all the way up to Congress. And there are people who understand that, namely the Far Right. That’s how the Tea Party got organized—with plenty of capital and plenty of thinking—and it has an effect. Those who are interested in an independent progressive party just haven’t done that. They’ve been trapped by the propaganda that says the only thing that matters is the electoral extravaganza. You can’t ignore it—it’s there—but, like I say, it should take about ten minutes. But the other things—the things that really matter—they need to be done constantly.

As part of the first thing I wrote about Chomsky, take this paragraph:

You’ve all studied the first paragraph of Adam Smith’s Wealth of Nations, about the butcher, the baker, everybody works together and division of labor is wonderful. But not many people have gotten to, say, page 450 where he sharply condemns division of labor, because he says it turns people into creatures as stupid and ignorant as can be, because they’re gonna be driven to performing routine, simple tasks, and not developing and exercising their intelligence and creative capacity. So, therefore, he urges that in every civilized society the government intervene to prevent this from happening.

Not many neoliberals pick that up from Smith. In relation to that, Chomsky’s original way of thinking that follows is remarkable, and commonplace:

We’re human beings, we’re not automatons. You work at your job but you don’t stop being a human being. Being a human being means benefiting from rich cultural traditions—not just our own traditions, but many others—and becoming not just skilled, but also wise. Somebody who can think—think creatively, think independently, explore, inquire—and contribute to society. If you don’t have that, you might as well be replaced by a robot. I think that simply can’t be ignored if we want to have a society that’s worth living in. Another unpronounceable word incidentally is “profits,” so when you hear a politician say, “we’ve got to have jobs,” think about it for a minute. It almost always translates into “we have to have profits.” They don’t care about jobs—the same people who are saying “we have to have jobs” are happily exporting them to Mexico and China, because that increases profits—what they’re really after.

Chomsky ventures into propaganda, public opinion, mass media, Donald Trump and, perhaps most importantly, into matters on the environment.

To end:

I think that we can see quite clearly some very, very serious defects and flaws in our society, our level of culture, our institutions—which are going to have to be corrected by operating outside of the framework that is commonly accepted. I think we’re going to have to find new ways of political action. There is a change going on, mainly among young people, but that is where change usually starts. Where’s it gonna go? That’s really up to you. It goes where people like you will direct it. See You Can’t Be Neutral on a Moving Train: A Personal History of Our Times, Howard Zinn, 1994 My close friend for many years, the late Howard Zinn, to put it in his words, said that “what matters is the countless small deeds of unknown people, who lay the basis for the significant events that enter history.” They’re the ones who’ve done things in the past. They’re the ones who’ll have to do it in the future.

Overall, not as succinct and good as a regular Chomsky book, but radiant and crystal clear. Recommended to all.

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Also, here’s a trailer for the documentary:

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