'The Masters of Mankind': Notes on NAFTA (North American Free Trade Agreement)

By Chomsky, Noam | The Nation, March 29, 1993 | Go to article overview

'The Masters of Mankind': Notes on NAFTA (North American Free Trade Agreement)


Chomsky, Noam, The Nation


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 peculiarly 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 from 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 of jobs. Of the limited gain in total wealth in the eighties, "70% accrued to the top 1% 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.E, 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.

One valuable feature of these institutions is their immunity from popular influence. Elite hostility to democracy is deeprooted, 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.

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