Noam Chomsky on Anarchism

There is always the temptation to think of one’s own era of politics as decisive, a turning point in history. The best way to check this impulse is to seek the perspective of activists who understand how the past has produced the present.

Noam Chomsky has been an incisive voice in the American political discourse for over six decades, writing widely on U.S. foreign policy, the news media, and neoliberalism. In this conversation, he discusses the prospects of progress in a time of reactionary politics and looming climate catastrophe. In the face of these unprecedented challenges, Chomsky maintains that we can either “abandon hope” or fight for a better world. The crucial idea is that working for a better world means more than just resistance: we must build alternatives to replace the current, moribund systems of political and economic power.

Scott Casleton: In the past you’ve suggested that the Democrats and Republicans aren’t too far apart where it counts, such as in their support for corporate power. Do you still think this, or is the small but growing shift in the younger wing of the Democratic Party a promising sign of change?

Noam Chomsky: There have been changes, even before the recent shift you mention. Both parties shifted to the right during the neoliberal years: the mainstream Democrats became something like the former moderate Republicans, and the Republicans drifted virtually off the spectrum. There’s merit, I think, in the observation by Thomas Mann and Norman Ornstein that increasingly since the Newt Gingrich years—and strikingly in Mitch McConnell’s Senate—the Republican Party has become a “radical insurgency” that is largely abandoning normal parliamentary politics. That shift—which predates Donald Trump—has created a substantial gap between the two parties. In the media it’s often called “polarization,” but that’s hardly an accurate description.

Both in the United States and Europe, neoliberal/austerity programs have sharply concentrated wealth while also stagnating wages for the majority, undermining benefits, eroding functioning democracy, and encouraging what former Fed Chair Alan Greenspan hailed as “growing worker insecurity.” These socioeconomic policies, quite naturally, have engendered anger, resentment, and bitterness—which are often exploited by demagogues. As centrist political institutions have declined, sometimes virtually disappearing, both political parties have been affected. The Republican establishment used to be able to crush extremist candidates who rose from the voting base in primaries, but not in 2016. Among Democrats, the Bernie Sanders campaign broke sharply with over a century of U.S. political history by achieving remarkable success both without support from private wealth and corporate power and in the face of disregard from the media and contempt by Party managers. Sanders’s success both reflects and has contributed to the shift among the younger wing that you mention, which has a great deal of promise, I think.

But what Sanders and Alexandria Ocasio-Cortez mean by “socialism” seems to be something similar to New Deal social democracy. Sanders’s platform, for example, wouldn’t have greatly surprised Dwight Eisenhower, who argued strongly that anyone who challenged New Deal programs didn’t belong in the U.S. political system—an indication of how far to the right politics has drifted in the neoliberal years.

SC: Unsurprisingly, there has been a lot of debate trying to define socialism. You have quoted Anton Pannekoek for saying socialism is “workers themselves being masters over production.” Can you elaborate on what this might look like?

NC: Pannekoek is voicing the conventional understanding of socialism in its early years, before it was transmuted to efforts to soften the harsh edges of capitalist oppression and came to be associated with the monstrous perversion of socialism in Bolshevik Russia. A genuine left Marxist and leading figure in the council Communist movement, Pannekoek was one of the “infantile ultra-leftists” against whom Lenin inveighed. The idea that workers themselves should be masters of production is a natural inheritor of core ideals of classical liberalism from John Locke to Thomas Paine to Abraham Lincoln and John Stuart Mill, all of whom regarded wage labor as a form of servitude that should not exist in a free society. The underlying conception was graphically expressed by the great humanist Wilhelm von Humboldt, one of the founders of classical liberalism: “Whatever does not spring from a man’s free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness.” When the laborer works under external control, “we may admire what he does, but we despise what he is,” which is a tool in the hands of others, not a free person.

More significantly, this was the understanding of working people in the early days of the industrial revolution, many of them young women, “factory girls,” driven from farms to work in the mills. They had a lively independent press, in which they condemned “the blasting influence of monarchical principles [of capitalism] on democratic soil.” They recognized that this assault on elementary human rights will not be overcome until “they who work in the mills own them,” and sovereignty is in the hands of free producers. Then working people will no longer be “menials or the humble subjects of a foreign despot . . . slaves in the strictest sense of the word.” Rather, they will regain their status as “free American citizens.” Workers 170 years ago warned, perceptively, that a day might come when wage slaves “will so far forget what is due to manhood as to glory in a system forced on them by their necessity and in opposition to their feelings of independence and self-respect.” They hoped that that day would be “far distant.”

The solution was as clear to working people as to leading political thinkers. Mill wrote that “The form of association, however, which if mankind continue to improve, must be expected to predominate is . . . the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations, and working under managers electable and removable by themselves.”

This thought evolved into Pannekoek’s workers’ councils and is hardly a utopian ideal. As philosopher Elizabeth Anderson has recently emphasized, most people today spend the bulk of their waking lives as subjects of private tyrannies in which their rights are restricted beyond the norm of totalitarian states—when they can go to the bathroom or talk to a friend, let alone play some role in determining the conditions of work or the goals of the enterprise. There are now successful worker-owned enterprises ranging from huge conglomerates such as Mondragon in the Basque country to small-scale firms in the old rust belt, with varying degrees of authentic self-management. There is also a proliferation of cooperatives, localism, and other initiatives that open the way to a revival of the consciousness and could flourish in more free and just societies.

SC: You’ve always considered yourself a traveler in the anarchist tradition. What does anarchism have to offer to a budding movement of younger people interested in socialism?

NC: I’ve always understood the core principle of anarchism to be the recognition that structures of domination and control are not self-justifying. They carry a burden of proof, and when that cannot be met, as is commonly the case, they should be dismantled, a principle that holds from families to international affairs. These general ideals, and their manifold applications, should have broad appeal, and serve as an impetus to action.

SC: You’ve criticized the once-every-four-years voting extravaganza, after which public participation effectively stops until the next election. Do you still find this problematic? What would you suggest replace it?

NC: Highly problematic. Formal public participation keeps to the ritual of pushing buttons in the quadrennial extravaganzas (i.e., elections), which effectively abandons the regular political engagement that is the foundation of functioning democracy.

The U.S. political system is regressive in important ways. Some commentators have argued that if a country with this system sought to join the EU, it would probably be barred by the European Court of Justice. The Senate is, of course, grossly undemocratic, a residue of compromises to ensure ratification of the Constitution, and unchangeable by amendment because of the voting power of the smaller states. Same with the electoral college. This lack of proportional representation virtually guarantees the two-party monopoly.

Worst of all, as research by Thomas Ferguson and his colleagues has shown, electability for both Congress and the Executive is predictable with remarkable precision from the single variable of campaign spending. One consequence is that representatives spend hours a day appealing to donors while corporate lobbyists (whose ranks have exploded during the neoliberal years) meet with staffs to craft legislation. Studies by Martin Gilens and Benjamin Page have shown that the majority of voters are literally unrepresented, in that there is virtually no correlation between their preferences and the legislative actions of their representatives, who are listening to other voices.

I referred above to formal public participation. The public can and should participate in other ways because the effectiveness of public activism has always been evident. Examples are legion, but most recently the young people involved in the Sunrise Movement succeeded in placing a Green New Deal program on the policy agenda. Such a policy—perhaps modified in such a way as economist Robert Pollin has suggested—is a necessity for survival.

Steps towards a more democratic system are possible in many ways, but they will always be limited so long as economic power is highly concentrated, basic decision-making is in the hands of huge private tyrannies with little public accountability, and much of the population is living near the edge of financial disaster.

SC: It is clear climate change is the biggest threat facing humanity, aided and abetted by Republican policies. What kind of radical action is called for?

NC: It is impossible to find words to describe what we are witnessing. Global warming—euphemistically called “climate change”—is the most urgent problem ever faced in human history, with the possible exception of nuclear war. Yet only a quarter of Republicans regard it as an urgent problem. On issues that are important for voting, conservative Republicans rank global warming last, well below such cosmic threats as Russian interference in U.S. elections. These are startling and frightening results.

Major energy players have dedicated great efforts to downplaying the threat, which their own scientists informed them was real and dire, and for a long time, the media barely covered the impending disaster, with portrayals giving equal emphasis to “both sides.” The dramatic actions of such groups as Extinction Rebellion, Sunrise Movement, and School Strike for Climate are of great value in opening minds—but those minds have to be engaged in unremitting action to implement changes on the ground, to pass legislation, to educate and organize.

The task is particularly critical in the United States, not only because of its incomparable power and global influence, but also because under Republican rule it has become the global arch-criminal. Other countries are doing at least something to mitigate the threat, while the most powerful state in world history is vigorously fanning the flames, led by a narcissistic megalomaniac—and consummate political demagogue—who knows exactly what he is doing. Donald Trump appealed to the government of Ireland for a permit to build a wall (he loves walls) to protect his golf course from the anticipated sea level rise.

Under the Trump bureaucracy, the National Highway Traffic Safety Administration released one of the most amazing documents in history—and this is not hyperbole. A detailed environmental impact study, it assumes a 4-degree Celsius rise in temperature by 2100, which would mean the end for organized human life in anything like the forms we know. The argument it makes is in opposition to emission standards for vehicles since we’re going off the cliff pretty soon anyways so why bother? Never mind that transportation is only “the largest source of global warming emissions in the United States,” according to the Union of Concerned Scientists.

Can one find words for this? A historical analogue? I can’t. The only words I know are: there is a lot of work to do in this strange country. And not here alone.

SC: Shifting to foreign policy, you were a vocal critic of scholarship on Vietnam that didn’t focus on the general trend of imperial foreign policy that had been developing for decades. Do you think the same narrowness limits our understanding of our ongoing conflicts in the Middle East?

NC: The Vietnam War was unprovoked imperial aggression. Bernard Fall, the highly respected and bitterly anti-Communist military historian and Indochina specialist, wrote in 1967 (with still worse to come) that “Vietnam as a cultural and historic entity . . . is threatened with extinction . . . [as] the countryside literally dies under the blows of the largest military machine ever unleashed on an area of this size.” Scholarship and other commentary are deeply flawed unless this basic framework is adopted for analysis and discussion—a minimal standard that is rarely met in discussion of the acts of one’s own state and its allies and clients.

The same concerns are very much alive, not least with regard to the Middle East, though there have been some salutary changes. The days are past when much of conventional media fare depicted Israel as “a society in which moral sensitivity is a principle of political life” (New York Times opinion piece) and whose army is “animated by the high moral purpose that has guided Israel throughout its tumultuous history” (Time). Both quotes were from pieces that appeared immediately after the Sabra-Shatila massacre—a massacre that was the coda to Israel’s 1982 invasion of Lebanon, another crime of aggression without credible pretext.

It will be instructive to see whether scholarship and other commentary can depart from today’s norm regarding the U.S. assault against Iran. Stuxnet, for example, was a highly praised cyber attack on Iran that was largely believed to be a joint mission between the United States and Israel. Yet the Pentagon itself defines cyber attacks as acts of war that justify military response. More recently, the current, extremely harsh sanctions against Iran are supposed to punish the country for living up to the terms of the international nuclear agreement (JCPOA) that the United States alone has chosen to undermine.

While the international community fumes, it is too intimidated to defy the global Godfather. Commentary often reflexively parrots the U.S. government propaganda line, sometimes with timid qualifications. Since Washington so declares, Iran is labeled the greatest threat to peace—in contrast to global opinion which, according to the Gallup polling organization, confers that honor on the United States. Iran must cease to “destabilize” the Middle East and learn to behave like a “normal nation” (Secretary of State Mike Pompeo’s mantra, repeated by many others).

A “normal” nation is one like the leading U.S. allies in the region, those peace-loving nations and scrupulous defenders of human rights such as Saudi Arabia, the United Arab Emirates, Egypt’s military dictatorship, and Israel. Or like Iran itself when it was under the rule of the U.S.-imposed dictator, the Shah, who was quite openly seeking to develop nuclear weapons with unremitting U.S. support while compiling one of the worst human rights records in the world according to Amnesty International. At the time, President Carter—one of the lesser U.S. enthusiasts of the Shah—lauded the Shah’s “great leadership” in creating “an island of stability in one of the more troubled areas of the world.” The Shah was basking, according to Carter, in “the respect and the admiration and love which your people give to you”—just months before he was overthrown by a popular uprising. But no accusations of destabilization then, as the Shah’s Iran joined the Saudi dictatorship and Israel as the pillars of U.S. control over what Eisenhower had called the most “strategically important part of the world.”

It would be all too easy to continue.

SC: It is a consistent theme in your writing that Democrats do not hold the moral high-ground over Republicans when it comes to foreign policy. What principles should guide our thinking when we try to formulate a truly progressive approach to foreign affairs?

NC: It’s useful, I think, to begin by imagining a conservative approach to foreign affairs. Such an approach would recognize that we have a Constitution, revered as a sacred text. It includes Article VI, which states that “all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land.” One such Treaty, of unusual contemporary significance, is the United Nations Charter, the foundation of modern international law. Article 2(4) of the Charter forbids “the threat or use of force” in international affairs, with qualifications that we can put aside in the present context.

I recognize that there is a respected profession which assures us that these words don’t mean what they say, but I’ll naively assume that they do.

A conservative approach would be to observe that the supreme law of the land is routinely violated by high officials, including the current president and his predecessor, who declare regularly that “all options are on the table” with regard to Iran, and who not only threaten but resort to force, including such textbook examples of aggression as the invasion of Iraq without credible pretext. Illustrations are too numerous and familiar to mention, as are violations of the OAS Charter ban on any form of intervention “in the affairs of another state.”

For the United States, defiance of international law is not an occasional departure from principle but is principle itself. The United States proudly adopts the stance of a rogue state that is immune to international law (including valid treaties that are the supreme law of the land). U.S. behavior is instead based on the principle enunciated by the respected statesman Dean Acheson, who instructed the American Society of International Law that no “legal issue” arises when the United States responds to a challenge to its “power, position, and prestige.”

Thus, Ronald Reagan’s administration was acting on principle when it rejected World Court jurisdiction over its attack against Nicaragua, dismissed the Court order that it terminate its crimes and pay substantial reparations, and then vetoed a Security Council resolution that affirmed the Court judgment and called on all states to observe international law. As State Department Legal Adviser Abraham Sofaer explained, most of the world cannot “be counted on to share our view [and the] majority often opposes the United States on important international questions” so that we must “reserve to ourselves the power to determine” how we will act and which matters fall “essentially within the domestic jurisdiction of the United States, as determined by the United States”—in this case, the actions that the Court condemned as the “unlawful use of force” against Nicaragua, aka international terrorism.

Conservatives might combine abiding by U.S. law with “a decent respect to the opinions of mankind,” thus rejecting the bipartisan consensus that neither U.S. law nor global norms apply to the United States, not merely defying ICJ rulings (in splendid isolation; its former partners, Libya and Albania, having finally accepted them) but also the legislation that authorizes the president to use force to “rescue” any American brought to the Hague and such actions as revoking the visa of the ICC chief prosecutor if she dares to investigate the actions of the United States and its clients.

Assuming that the United States might become a law-abiding state, it might move on to constructive measures, which readily come to mind. Those would include rejoining the world on confronting the truly existential threats to survival: environmental catastrophe and nuclear war. Or consider the crisis that ranks high among concerns of Americans (and highest among conservative Republicans): securing the southern border. A progressive policy would not only adhere to our international obligations on refugee asylum, but would go on to recognize our responsibility for creating the conditions from which miserable refugees are fleeing and to devote resources (“reparations,” if we were honest) to overcoming the bitter conditions that are the occasion for their flight.

It’s easy to move on to truly progressive policies, but there’s a long way to go before we can even get that far.

SC: Over the course of your life, you’ve commented on everything from the sad defeat of socialism and anarchism in the Spanish civil war to the atrocities in Vietnam. What keeps you working in the face of these miseries? And what sacrifices have you had to make to achieve your success?

NC: We have two choices: to abandon hope and help ensure that the worst will happen; or to make use of the opportunities that exist and perhaps contribute to a better world. It is not a very difficult choice. There are, of course, sacrifices; time and energy are finite. But there are also the rewards of participating in struggles for peace and justice and the common good.

Choosing Hope.  Noam Chomsky and Scott Casleton discuss socialism, anarchism, and the fight for progress in U.S. politics today.  Boston Review , June 4 , 2019. 

So many things have been written about, and discussed by, Professor Chomsky, it was a challenge to think of anything new to ask him:  like the grandparent you can’t think of what to get for Christmas because they already have everything.

So I chose to be a bit selfish and ask him what I’ve always wanted to ask him.  As an out-spoken, actual, live-and-breathing anarchist, I wanted to know how he could align himself with such a controversial and marginal position.

Michael S. Wilson: You are, among many other things, a self-described anarchist — an anarcho-syndicalist, specifically.  Most people think of anarchists as disenfranchised punks throwing rocks at store windows, or masked men tossing ball-shaped bombs at fat industrialists.  Is this an accurate view?  What is anarchy to you?

Noam Chomsky: Well, anarchism is, in my view, basically a kind of tendency in human thought which shows up in different forms in different circumstances, and has some leading characteristics.  Primarily it is a tendency that is suspicious and skeptical of domination, authority, and hierarchy.  It seeks structures of hierarchy and domination in human life over the whole range, extending from, say, patriarchal families to, say, imperial systems, and it asks whether those systems are justified.  It assumes that the burden of proof for anyone in a position of power and authority lies on them.  Their authority is not self-justifying.  They have to give a reason for it, a justification.  And if they can’t justify that authority and power and control, which is the usual case, then the authority ought to be dismantled and replaced by something more free and just.  And, as I understand it, anarchy is just that tendency.  It takes different forms at different times.

Anarcho-syndicalism is a particular variety of anarchism which was concerned primarily, though not solely, but primarily with control over work, over the work place, over production.  It took for granted that working people ought to control their own work, its conditions, [that] they ought to control the enterprises in which they work, along with communities, so they should be associated with one another in free associations, and … democracy of that kind should be the foundational elements of a more general free society.  And then, you know, ideas are worked out about how exactly that should manifest itself, but I think that is the core of anarcho-syndicalist thinking.  I mean it’s not at all the general image that you described — people running around the streets, you know, breaking store windows — but [anarcho-syndicalism] is a conception of a very organized society, but organized from below by direct participation at every level, with as little control and domination as is feasible, maybe none.

Wilson: With the apparent ongoing demise of the capitalist state, many people are looking at other ways to be successful, to run their lives, and I’m wondering what you would say anarchy and syndicalism have to offer, things that others ideas — say, for example, state-run socialism — have failed to offer?  Why should we choose anarchy, as opposed to, say, libertarianism?

Chomsky: Well what’s called libertarian in the United States, which is a special U. S. phenomenon, it doesn’t really exist anywhere else — a little bit in England — permits a very high level of authority and domination but in the hands of private power:  so private power should be unleashed to do whatever it likes.  The assumption is that by some kind of magic, concentrated private power will lead to a more free and just society.  Actually that has been believed in the past.  Adam Smith for example, one of his main arguments for markets was the claim that under conditions of perfect liberty, markets would lead to perfect equality.  Well, we don’t have to talk about that!  That kind of —

Wilson:  It seems to be a continuing contention today …

Chomsky: Yes, and so well that kind of libertarianism, in my view, in the current world, is just a call for some of the worst kinds of tyranny, namely unaccountable private tyranny.  Anarchism is quite different from that.  It calls for an elimination to tyranny, all kinds of tyranny.  Including the kind of tyranny that’s internal to private power concentrations.  So why should we prefer it?  Well I think because freedom is better than subordination.  It’s better to be free than to be a slave.  It's better to be able to make your own decisions than to have someone else make decisions and force you to observe them.  I mean, I don’t think you really need an argument for that.  It seems like … transparent.

The thing you need an argument for, and should give an argument for, is, How can we best proceed in that direction?  And there are lots of ways within the current society.  One way, incidentally,  is through use of the state, to the extent that it is democratically controlled.  I mean in the long run, anarchists would like to see the state eliminated.  But it exists, alongside of private power, and the state is, at least to a certain extent, under public influence and control — could be much more so.  And it provides devices to constrain the much more dangerous forces of private power.  Rules for safety and health in the workplace for example.  Or insuring  that people have decent health care, let’s say.  Many other things like that.  They’re not going to come about through private power.  Quite the contrary.  But they can come about through the use of the state system under limited democratic control … to carry forward reformist measures.  I think those are fine things to do. they should be looking forward to something much more, much beyond, — namely actual, much larger-scale democratization.  And that’s possible to not only think about, but to work on.  So one of the leading anarchist thinkers, Bakunin in the 19th cent, pointed out that it’s quite possible to build the institutions of a future society within the present one.  And he was thinking about far more autocratic societies than ours.  And that’s being done.  So for example, worker- and community- controlled enterprises are germs of a future society within the present one.  And those not only can be developed, but are being developed.  There’s some important work on this by Gar Alperovitz who’s involved in the enterprise systems around the Cleveland area which are worker and community controlled.  There’s a lot of theoretical discussion of how it might work out, from various sources.  Some of the most worked out ideas are in what’s called the “parecon” — participatory economics — literature and discussions.  And there are others.  These are at the planning and thinking level.  And at the practical implementation level, there are steps that can be taken, while also pressing to overcome the worst … the major harms … caused by … concentration of private power through the use of state system, as long as the current system exists.  So there’s no shortage of means to pursue.

As for state socialism, depends what one means by the term.  If it’s tyranny of the Bolshevik variety (and its descendants), we need not tarry on it.  If it’s a more expanded social democratic state, then the comments above apply.  If something else, then what?  Will it place decision-making in the hands of working people and communities, or in hands of some authority?  If the latter, then — once again — freedom is better than subjugation, and the latter carries a very heavy burden of justification.

Wilson:  Many people know you because of your and Edward Herman’s development of the Propaganda Model.  Could you briefly describe that model and why it might be important to [college] students?

Chomsky: Well first look back a bit — a little historical framework — back in the late 19th-, early 20th century, a good deal of freedom had been won in some societies.  At the peak of this were in fact the United States and Britain.  By no means free societies, but by comparative standards quite advanced in this respect.  In fact so advanced, that power systems — state and private — began to recognize that things were getting to a point where they can’t control the population by force as easily as before, so they are going to have to turn to other means of control.  And the other means of control are control of beliefs and attitudes.  And out of that grew the public relations industry, which in those days described itself honestly as an industry of propaganda.

The guru of the PR industry, Edward Bernays — incidentally, not a reactionary, but a Wilson-Roosevelt-Kennedy liberal — the maiden handbook of the PR industry which he wrote back in the 1920s was calledPropaganda.  And in it he described, correctly, the goal of the industry.  He said our goal is to insure that the “intelligent minority” — and of course anyone who writes about these things is part of that intelligent minority by definition, by stipulation, so we, the intelligent minority, are the only people capable of running things, and there’s that great population out there, the “unwashed masses,” who, if they’re left alone will just get into trouble:  so we have to, as he put it, “engineer their consent,” figure out ways to insure they consent to our rule and domination.  And that’s the goal of the PR industry.  And it works in many ways.  Its primary commitment is commercial advertising.  In fact, Bernays made his name right at that time — late 20s — by running an advertising campaign to convince women to smoke cigarettes:  women weren’t smoking cigarettes, this big group of people who the tobacco industry isn’t able to kill, so we’ve got to do something about that.  And he very successfully ran campaigns that induced women to smoke cigarettes:  that would be, in modern terms, the cool thing to do, you know, that’s the way you get to be a modern, liberated woman.  It was very successful —

Wilson:  Is there a correlation between that campaign and what’s happening with the big oil industry right now and climate change?

Chomsky: These are just a few examples.  These are the origins of what became a huge industry of controlling attitudes and opinions.  Now the oil industry today, and in fact the business world generally, are engaged in comparable campaigns to try to undermine efforts to deal with a problem that’s even greater than the mass murder that was caused by the tobacco industry; and it was mass murder.  We are facing a threat, a serious threat, of catastrophic climate change.  And it’s no joke.  And [the oil industry is] trying to impede measures to deal with it for their own short-term profit interests.  And that includes not only the petroleum industry, but the American Chamber of Commerce — the leading business lobby — and others, who’ve stated quite openly that they’re conducting … they don’t call it propaganda … but what would amount to propaganda campaigns to convince people that there’s no real danger and we shouldn’t really do much about it, and that we should concentrate on really important things like the deficit and economic growth — what they call ‘growth’ — and not worry about the fact that the human species is marching over a cliff which could be something like [human] species destruction; or at least the destruction of the possibility of a decent life for huge numbers of people.  And there are many other correlations.

In fact quite generally, commercial advertising is fundamentally an effort to undermine markets.  We should recognize that.  If you’ve taken an economics course, you know that markets are supposed to be based on informed consumers making rational choices.  You take a look at the first ad you see on television and ask yourself … is that its purpose?  No it’s not.  It’s to create uninformed consumers making irrational choices.  And these same institutions run political campaigns.  It’s pretty much the same:  you have to undermine democracy by trying to get uninformed people to make irrational choices.  And so this is only one aspect of the PR industry.  What Herman and I were discussing was another aspect of the whole propaganda system that developed roughly at that period, and that’s “manufacture of consent,” as it was called, [consent] to the decisions of our political leaders, or the leaders of the private economy, to try to insure that people have the right beliefs and don’t try to comprehend the way decisions are being made that may not only harm them, but harm many others.  That’s propaganda in the normal sense.  And so we were talking about mass media, and the intellectual community of the world in general, which is to a large extent dedicated to this.  Not that people see themselves as propagandists, but … that they are themselves deeply indoctrinated into the principles of the system, which prevent them from perceiving many things that are really right on the surface, [things] that would be subversive to power if understood.  We give plenty of examples there and there’s plenty more you can mention up to the present moment, crucial ones in fact.  That’s a large part of a general system of indoctrination and control that runs parallel to controlling attitudes and … consumeristic commitments, and other devices to control people.

You mentioned students before.  Well one of the main problems for students today — a huge problem — is sky-rocketing tuitions.  Why do we have tuitions that are completely out-of-line with other countries, even with our own history?  In the 1950s the United States was a much poorer country than it is today, and yet higher education was … pretty much free, or low fees or no fees for huge numbers of people.  There hasn’t been an economic change that’s made it necessary, now, to have very high tuitions, far more than when we were a poor country.  And to drive the point home even more clearly, if we look just across the borders, Mexico is a poor country yet has a good educational system with free tuition.  There was an effort by the Mexican state to raise tuition, maybe some 15 years ago or so, and there was a national student strike which had a lot of popular support, and the government backed down.  Now that’s just happened recently in Quebec, on our other border.  Go across the ocean:  Germany is a rich country.  Free tuition.  Finland has the highest-ranked education system in the world.  Free … virtually free.  So I don’t think you can give an argument that there are economic necessities behind the incredibly high increase in tuition.  I think these are social and economic decisions made by the people who set policy.  And [these hikes] are part of, in my view, part of a backlash that developed in the 1970s against the liberatory tendencies of the 1960s.  Students became much freer, more open, they were pressing for opposition to the war, for civil rights, women’s rights … and the country just got too free. In fact, liberal intellectuals condemned this, called it a “crisis of democracy:”  we’ve got to have more moderation of democracy.   They called, literally, for more commitment to indoctrination of the young, their phrase … we have to make sure that the institutions responsible for the indoctrination of the young do their work, so we don’t have all this freedom and independence.  And many developments took place after that.  I don’t think we have enough direct documentation to prove causal relations, but you can see what happened.  One of the things that happened was controlling students — in fact, controlling students for the rest of their lives, by simply trapping them in debt.  That’s a very effective technique of control and indoctrination.  And I suspect — I can’t prove — but I suspect that that’s a large part of the reason behind [high tuitions].  Many other parallel things happened.  The whole economy changed in significant ways to concentrate power, to undermine workers’ rights and freedom.  In fact the economist who chaired the Federal Reserve around the Clinton years, Alan Greenspan — St. Alan as he was called then, the great genius of the economics profession who was running the economy, highly honored — he testified proudly before congress that the basis for the great economy that he was running was what he called “growing worker insecurity.”  If workers are more insecure, they won’t do things, like asking for better wages and better benefits.  And that’s healthy for the economy from a certain point of view, a point of view that says workers ought to be oppressed and controlled, and that wealth ought to be concentrated in a very few pockets.  So yeah, that’s a healthy economy, and we need growing worker insecurity, and we need growing student insecurity, for similar reasons.  I think all of these things line up together as part of a general reaction — a bipartisan reaction, incidentally — against liberatory tendencies which manifested themselves in the 60s and have continued since.

Wilson:  [Finally, ]I’m wondering if you could [end with some advice for today's college students].

Chomsky: There are plenty of problems in the world today, and students face a number of them, including the ones I mentioned — the joblessness, insecurity and so on.  Yet on the other hand, there has been progress.  In a lot of respects things are a lot more free and advanced than they were … not many years ago.  So many things that were really matters of struggle, in fact even some barely even mentionable, say, in the 1960s, are now … partially resolved.  Things like women’s rights.  Gay rights.  Opposition to aggression.  Concern for the environment — which is nowhere near where it ought to be, but far beyond the 1960s.  These victories for freedom didn’t come from gifts from above.  They came from people struggling under conditions that are harsher than they are now.   There is state repression now.  But it doesn’t begin to compare with, say, Cointelpro in the 1960s.  People that don’t know about that ought to read and think to find out.  And that leaves lots of opportunities.  Students, you know, are relatively privileged as compared with the rest of the population.  They are also in a period of their lives where they are relatively free.  Well that provides for all sorts of opportunities.  In the past, such opportunities have been taken by students who have often been in the forefront of progressive change, and they have many more opportunities now.  It’s never going to be easy.  There’s going to be repression.  There’s going to be backlash.  But that’s the way society moves forward.

Noam Chomsky: The Kind of Anarchism I Believe in, and What’s Wrong with Libertarians.  By  Mchael S. Wilson. Alter Net ,   May 28, 2013

•Anarchism is usually connected to violence and chaos, but as a philosophy, its tenets are more nuanced than mere destruction for destruction's sake.

•It may surprise some to find out that Noam Chomsky, famous for his innovations in linguistics and philosophy, describes himself as an anarchist.

•Whether you agree with him or not, understanding anarchism can lead to a better understanding of our society and its politics.

What comes to mind when we think of an anarchist? Most likely, it's some punk wearing a bandana throwing Molotov cocktails at riot-control officers. We don't typically imagine anarchists as elderly, soft-spoken professors, but there's probably more of the latter than one would think.

Best known for his revolutionary work in linguistics and cognitive science, Noam Chomsky is an avowed anarchist. It seems a like a contradiction. Anarchy is so often portrayed as chaos for chaos's sake, a perverse impulse to implode a society that's the product of thousands of years of social progress. What business does a celebrated thinker have advocating for something that seems so fundamentally thoughtless?

Our conception of anarchy has been colored by its most visible proponents — the black-clad protester breaking shop windows with a baseball bat and spray-painting a circled "A" in red. But, like most philosophies, anarchism and anarchists come in a variety of flavors. Mohandas Gandhi, for instance, has been described as an anarcho-pacifist. Noam Chomsky is an anarcho-syndicalist.

What is anarchism?

While anarchism may not be 100 percent focused on dismantling the current system, it would be disingenuous to say that that is not a fundamental tenet. In a 2013 interview, Chomsky explained how he sees anarchism and its role:

"Primarily, [anarchism] is a tendency that is suspicious and skeptical of domination, authority, and hierarchy. It seeks structures of hierarchy and domination in human life over the whole range, extending from, say, patriarchal families to, say, imperial systems, and it asks whether those systems are justified. Their authority is not self-justifying. They have to give a reason for it, a justification. And if they can't justify that authority and power and control, which is the usual case, then the authority ought to be dismantled and replaced by something more free and just. And, as I understand it, anarchy is just that tendency. It takes different forms at different times."

By labeling himself as an anarchist, Chomsky is stating that he doesn't believe the institutions and systems that underpin our society are just. In essence, this is the heart of anarchism; the current system is illegitimate and must be dismantled to be replaced with something better. Popular culture just has a tendency to focus on the dismantling part rather than the illegitimacy part.

How is anarcho-syndicalism different?

So, what does Chomsky advocate as a replacement to the current system? Here's where the "syndicalism" part of "anarcho-syndicalism" comes in. Chomsky and others in his school of thinking argue that capitalism is inherently exploitative and dangerous: a worker rents their labor to somebody higher up in the hierarchy — a business owner, say — who, in order to maximize their profit, is incentivized to ignore the impact of their business on the society around them. Instead, Chomsky argues, workers and neighbors should organize into unions and communities (or syndicates), each of which makes collective decisions in a form of direct democracy.

Chomsky's arguments, though, like many philosophers' arguments, often fails to dive into the nitty-gritty of how such a world would actually function. Fortunately, we don't have to speculate: an anarcho-syndicalist government has existed before. During the Spanish civil war, eight million Catalonians actually established an anarchist society, albeit briefly. There was no hierarchy; rather, farms, factories, and businesses were all managed by the people who worked them as equals. Writers such as George Orwell described the Catalonian anarchy in glowing terms, but we also have to attribute these sources with a certain amount of bias (Orwell had fought for the anarchists during the war, after all). And, only 10 months after it started, the anarcho-syndicalist society was undermined by Stalinists and promptly dissolved.

Criticisms

Like any revolutionary idea, Chomsky's anarcho-syndicalism has its criticisms. In whatever socialized version of the future it produces, for instance, how would a nation defend itself? First, Chomsky points out that the U.S. Defense Department has very little to do with defense—rather, it preserves American interests abroad and contributes to the economy through the production of weaponry. To this point, Chomsky admits the possible failures of anarcho-syndicalism:

"I don't want to be glib. It might need tanks, it might need armies. And if it did, I think we can be fairly sure that that would contribute to the possible failure or at least decline of the revolutionary force […] That is, I think it's extremely hard to imagine how an effective centralized army deploying tanks, planes, strategic weapons, and so on, could function. If that's what's required to preserve the revolutionary structures, then I think they may well not be preserved."

This problem, though, is just an aspect of a larger issue with the political philosophy. How will a nation-wide collection of unions and communities coordinate to address big issues, like climate change or planning the economy? To deal with this, Chomsky suggests we broaden our concept of what a union or worker's council might be: "Let's take expertise with regard to economic planning, because certainly in any complex industrial society there should be a group of technicians whose task it is to produce plans, and to lay out the consequences of decisions […] They produce plans in exactly the same way that automakers produce autos. The plans are then available for the workers' councils and council assemblies, in the same way that autos are available to ride in."

That's all well and good, but without the promise of a wage, why would anybody want to produce economic plans or build cars? And what about unpleasant work such as garbage collection? Here, Chomsky suggests that most people underestimate how much people value work for its own sake. He suggests that people would do hard work because freely choosing to do hard work can be intrinsically rewarding. As for the truly nasty work like cleaning and garbage collection, Chomsky suggests that every member of a community should contribute equally to accomplishing these unpleasant chores. He also points out that though this would be unpleasant, it would be preferable to the current system, where only those who will starve to death without a wage would choose to undertake such tasks.

The big picture

Whether you agree with Chomsky or not, considering his arguments for a different society can be beneficial. At the core of anarchism is the rejection of unjust hierarchies. Often, defenders of capitalism will say that it may not be the best system, but it's the best one we have. (As a quick note, Churchill is often misattributed as saying "Capitalism is the worst economic system, except for all the others"; he may not have actually said this, but the sentiment of the quote is germane). This might be true, but it's also easy to use this as an excuse to allow its inherent injustices to go unchecked. Understanding how an intellectual giant like Chomsky could reasonably consider a crazy, radical system like anarchy can underscore the failings in our current system — that way, we can at least start working toward making a better society, which is really what all political arguments are about anyhow.

Noam Chomsky: Writer, linguist... anarchist? By Matt Davis. Big Think ,  January 25, 2019.




Noah Chomsky on Anarchism

This video was produced with cooperation from MIT and the Boston Review., filmed and edited by Leigha Cohen. Noam Chomsky spoke at MIT Wong Auditorium on November 18, 2013. The event was sponsored by the Boston Review. This event was based on the topic of Noam Chomsky's new volume, On Anarchism.

What Happened to Barack Obama and His Ideas in the Fall of 2008 ?

A new insider account reveals how the Obama administration’s botched bailout deal not only reinforced neoliberal Clintonism, but also foreshadowed an ongoing failure to fulfill campaign promises.

In November 2008, as a financial mudslide that had slowly been accelerating for months accumulated increasingly persuasive comparisons to the collapse that triggered the Great Depression in 1929, Time magazine ran a cover showing Barack Obama’s smiling face inserted in place of Franklin Delano Roosevelt’s. The soon-to-be forty-fourth president sits in the thirty-second’s open-topped car, wearing Roosevelt’s lucky campaign hat, his grin gripping Roosevelt’s trademark long cigarette-holder. The image suggested Obama, the president-elect who promised hope and change, could follow in his Democratic predecessor’s footsteps. Roosevelt met economic crisis with massive public works programs that gave the dignity of employment to millions of Americans, and—more importantly in that era of rising fascism—helped restore their faith in the U.S. government’s ability to meet their needs.

Time’s article about Obama-as-Roosevelt came a week after a New Yorker feature that sported a similar illustration but took a more tempered view. There, journalist George Packer quoted Cass Sunstein, Obama’s onetime academic colleague and sometime political advisor, describing the newly elected president as post-partisan and a “visionary minimalist”—a man little devoted to great change. This attitude, Packer noted, made Obama “distinctly un-Rooseveltian.” Before long, Packer’s more cautious view was vindicated. By 2009, when the historian William E. Leuchtenburg put out a new edition of his book on the post-1945 presidency, In the Shadow of FDR (1983), adding a chapter on Obama’s first hundred days, Leuchtenburg could already note how frequently “Obama expressed a degree of separation from the age of Roosevelt.” He even quoted the new president as saying, “My interest is finding something that works. . . . whether it’s coming from FDR or it’s coming from Ronald Reagan.”

For the better part of a half century, the Democratic Party has been in this multigenerational crisis over its past. Campaigning against Ronald Reagan in 1980, Jimmy Carter disowned the New Deal’s effort to put Wall Street in harness to Washington, declaring “we believe that we ought to get the Government’s nose out of the private enterprise of this country. We’ve deregulated . . . to make sure that we have a free enterprise system that’s competitive.” Bill Clinton fully assimilated Reaganism in 1996, saying “the era of big government is over.” And now some progressive presidential candidates—together with a base of millennial Democrats—are decrying Obama’s presidency as the last emanation of the Carter-Reagan-Clinton synthesis, a retread of neoliberalism whose weak program for recovery from the economic crisis of 2008 ensured nearly a decade of employment doldrums that aided the rise of Donald Trump.

Reed Hundt, once Clinton’s chair of the Federal Communications Commission and a member of Obama’s transition team, has made the progressives’ argument effectively in his new book A Crisis Wasted. Obama, Hundt believes, made decisions while still a United States senator and then as president-elect that determined the course of his presidency. In the post-election, pre-inauguration winter of 2008–2009, the ordinarily maddeningly self-assured titans of finance—the same ones who, earlier in the year, counseled government inaction in the interest of letting the market discipline its own—were suddenly, and convincingly, prophesying doom unless Washington did something dramatic to avert economic catastrophe. While many voters hoped Obama’s policies might represent a dramatic change along the lines of the New Deal, instead Obama acquiesced to emergency considerations and ideological blandishments aimed at tempering expectations and a return to “normalcy.”

Obama swiftly switched from FDR redux to Clinton reborn because, Hundt points out, he sought experienced advisors to staff his administration-in-waiting, and the Democrats most accustomed to the White House were those who had served Bill Clinton. Obama named Clinton’s chief of staff, John Podesta, to head his transition team, and Podesta brought with him other Clinton appointees who thought their job now was one of restoration. As Hundt writes, “People are policy,” and the incoming Obama team wanted to bring back the policies of the 1990s and with them, the prosperity of that era. The Clinton personnel shared a more Reaganesque than Rooseveltian view, believing their success in the late twentieth century resulted from “a reduction in the size, capacity, and purpose of the public sector.” The Clinton people, following Carter, believed the New Deal had led ultimately to over-regulation and inhibition of capitalism’s great energies, and that the long boom of the 1990s owed to their getting government out of the way of business and banking, while still retaining state programs necessary to promote opportunity for the majority of Americans.

Yet, whatever one may think of the Clinton policies’ effects in the 1990s, the early twenty-first century and its economic calamities called for a profoundly different approach. The embryonic Obama administration’s adoption of Clintonesque neoliberalism was not only an inadequate response to the economic crisis. It also constituted, Hundt argues, a failure of the new president to fulfill his campaign promises. Obama could have chosen to “align himself with democracy, and then aim to help directly the great preponderance of Americans,” Hundt says, but he did not. A critical mass of voters who had chosen hope and change came to believe their president and their government did not represent or even heed them—with consequences we now know.

Hundt’s book makes an invaluable contribution to knowledge about this critical moment in 2008–2009. Because Hundt was there in Obama transition headquarters, he can recall what he himself saw and heard. He has, since then, had access to key figures who were there, too. Hundt’s notes attest to interviews with more than a dozen officials who played important parts in crafting the Democratic policy response to the crisis. At times their testimonies conflict with one another, and Hundt lets them, which probably portrays with considerable accuracy the uncertainty and disagreement that permeated the time.

The banking relief bill, for example, represents how quickly policy was made during these fraught weeks. The administration of George W. Bush had backed the bill in September of 2008 in an effort to forestall a complete collapse of the banking system; it allowed the president to spend large sums of money bailing out the financial sector. The bill’s supporters, including Treasury Secretary Hank Paulson and New York Federal Reserve Bank President Timothy Geithner, did little outreach to Congress, believing the self-evident emergency should make its own case. Geithner took the view, “I just wanted Congress to pass it as fast as possible while screwing it up as little as possible.”

This style of diplomacy initially failed to sway the House of Representatives, which rejected the bill. But Senator Obama and other backers of the bill contacted the White House to lend their support, and then lobbied members of Congress, changing enough minds to get the Emergency Economic Stabilization Act through the House, with a majority of Democrats and nearly half the Republicans lining up behind it. When Obama and his Republican opponent, John McCain, both voted for the bill from their seats in the Senate, Obama’s view that a matter of compelling national concern could garner bipartisan support was vindicated. It was a hope that carried over into the effort to craft a bill for bailing out the entire economy.

Obama, among many others, supported the bank bailouts because private lenders pump the lifeblood of a capitalist economy, and as of the fall of 2008 they had nearly stopped altogether. With the financial markets shut down, housing purchases and business starts followed; unemployment began to rise. It would take time to clear bank balance sheets and get credit circulating once more—time during which Americans would find themselves without work, drawing down savings, unable to pay their bills or ultimately to sustain shelter and food for themselves and their families. They too needed assistance.

The method of providing such aid was well known in economics and history: the government ought to spend money to make up the shortfall, thus ensuring the employment of Americans, continuing their borrowing and spending, and stimulating the slumping economy back to action. As a rule of thumb, spending 2 percent of GDP would bring down the unemployment rate by 1 percent. Economists in 2008 and early 2009 realized that, given the jobless figures, an adequate spending package would run at least $1 trillion and possibly more. Paul Krugman, the economist who had just won the Nobel Prize, explained how to do the calculations in his widely read New York Times column and blog.

Hundt’s book is at its best in demonstrating how the stimulus legislation—the American Recovery and Reinvestment Act—ended up nowhere near that number. Hundt has spoken with Larry Summers, Christina Romer, Peter Orszag, and others who played a critical role in determining the Obama pre-administration strategy for getting stimulus money out of Congress. Hundt places his readers in the room. Romer, a professor of economics from the University of California, Berkeley, who had written considerably on the Great Depression, tried mightily to get the team to support a bigger number; her own calculations suggested the stimulus should run around $1.7 trillion. Summers, the former secretary of the Treasury under Clinton and an estimable academic economist in his own right, did not dispute her substantive conclusions; he simply thought the sum too daunting to get past Congress. Orszag, also a former Clinton economic advisor and then director of the Congressional Budget Office, understood that Obama wanted to keep health insurance as a priority and was leery of ballooning deficits.

It is a rich and frustrating experience re-living these contentious discussions, and in relating them, Hundt shines. He lets his sources speak for themselves, differing sometimes not only on what they say should have happened, but on what they say did happen. The book here is gripping and appalling in approximately equal measure. Hundt clearly sympathizes with Romer and the arithmetic. He also plainly understands that gender was part of the reason she did not prevail. At one point in his narrative, Romer tries to make an impression by swearing in front of the president-elect. Obama uses it as an occasion to get a small laugh by calling her out, and Hundt notes that this remark put Romer off in front of the “male-dominated group.” (Hundt’s interview with Romer, like others, suggests that profanity is not alien to her.) There was a clubbiness among the men who had served in government before and who could claim the hard pragmatism of experience.

Romer was right, but somehow to be merely right was also to be basically unserious. Summers told her not to mention the figure of $1.7 trillion; he talked her down even from $1.2 trillion to something around $800 billion—which would leave unemployment somewhere around 8 percent, the planners then believed. Even with a spending bill that large, Hundt writes, the team’s “strategic goal was to end the recession, but not to guarantee robust growth and a rising standard of living.” The anti-Romer consensus carried the day, on the view that the Democrats should demonstrate fiscal responsibility: “An excessive recovery package could spook markets or the public and be counterproductive.” Congress did give them essentially what they asked for, but barely, an anonymous source tells Hundt. “Getting that 800 was very tenuous. It almost fell apart several times. Krugman and everybody are always talking crap.”

In the end, the stimulus would prove weaker than even Romer thought. Unemployment would remain over 9 percent until late in 2011. The unimpressive recovery surely contributed to the massive vote swing toward the Republicans in the 2010 midterm elections and their takeover of the House of Representatives; the slow hard march back to prosperity left many voters still bitter even in 2016. To the extent that the decision to ask for a smaller stimulus resulted from, as David Axelrod tells Hundt, “political judgments, not economic judgments,” it backfired. The Democrats gained no evident support for their demonstration of restraint in crafting a spending package, and their apparent ineptitude in fighting the recession weakened them when afterward they sought vital environmental and health care legislation.

The question, then, is what the Obama team could, or should, have done differently. They could have asked for more stimulus at the outset; even if it is true that they could not have gotten more, at least they would have been on record as believing more was necessary. Al Gore—among others—warned it would be much harder to get a second stimulus bill after a failed first one than it would be to get a big bill at the start. Romer wanted at least to manage expectations and explain how modest an $800 billion stimulus might prove. “Why can’t we actually say the truth?” she asks, at one point. Instead, the Obama team negotiated against themselves, choosing a lower number, and then saying they believed it to be sufficient.

Hundt also argues that by the time Obama’s team was considering a stimulus bill, they were already in a bad bargaining position. Before the election, Obama had endorsed the bank relief bill without even discussing the need for borrowers’ relief. At the time, Speaker of the House Nancy Pelosi, Hundt says, reacted to the bank relief bill by saying, “You’ve got to be kidding,” and urging that there be “money for Main Street as well as Wall Street.” But the Bush administration, with Obama’s support, deferred the stimulus discussion and, Hundt believes, thus “snared” Obama. The bipartisanship that had so energized Obama vanished once Wall Street got its life preserver.

In the end the comparison to Roosevelt still haunts the Obama team. The economist Austan Goolsbee tells Hundt that the Obama people consciously chose not to emulate Roosevelt who, in their view, deliberately “let things get so bad” by not cooperating with outgoing president Herbert Hoover in the months before his inauguration that he arrived in the White House with a prostrate Congress willing to do any of his bidding. Roosevelt, in their view, sacrificed his countrymen to gain political advantage.

Goolsbee is here echoing Geithner and Obama himself, who have made similar remarks in their defense over the years. Their history of Roosevelt’s behavior in the bad early months of 1933 is so similar, they must have got it from a common source. In any event, Roosevelt did no such thing: Hoover did not offer cooperation to his waiting successor; rather, he demanded capitulation from him. Writing to President-elect Roosevelt, Hoover explained that his successor could combat the Depression only by forswearing inflation, budget deficits, and the massive public works programs he had promised in the campaign, thus proving himself a fiscally responsible Democrat. Only by making these pledges, Hoover said, could Roosevelt restore confidence and allow the easily upset engines of finance and business to resume their proper operations. Privately, to a fellow Republican, Hoover admitted he was not seeking any joint venture; rather, he was asking Roosevelt to trade his own agenda for Hoover’s: “I realize that if these declarations be made by the president-elect, he will have ratified the whole major program of the Republican Administration; that it means the abandonment of 90 percent of the so-called new deal.”

Roosevelt declined the Republican’s request for surrender. In thus evading the trap Hoover had laid out, Roosevelt ensured he could fulfill his campaign promises. Democracy around the world was in a bad position, Roosevelt believed, and he aimed to restore it. That was why he had told voters he would get Congress to adopt unemployment and old-age insurance, minimum wages and maximum hours laws, subsidies for farmers, and also to provide jobs on public works—not merely so that Americans would have incomes, but so they would feel their government worked for them. In building a dam or an airport or a road, in running electrical lines across a landscape to people who never had access to modern energy before, literally bringing power to the people, Washington would “help restore the close relationship with its people which is necessary to our democratic form of government.”

Rather than seeking the chimera of bipartisan cooperation, Obama could have done more to preserve his campaign pledges of progressive hope and change. In so doing, he could have done something to restore Americans’ confidence in our institutions and our democratic form of government. Alas, as Hundt notes, it was a crisis wasted.

Hundt takes up the comparison between Obama and Roosevelt in an extended riff at the end of his book. Unfortunately, he makes an error in dealing with the 1930s that he avoided in dealing with the 2000s and relies on a single—and unusually undependable—source; Hundt draws almost entirely on the memoirs of the disaffected (and Barry Goldwater–supporting) former Roosevelt aide, Raymond Moley, for his account of the New Deal. It is as if Hundt had relied exclusively on Geithner’s memoir to understand Obama’s administration. But nobody will pick up Hundt’s book for his analysis of the Roosevelt era. People should read it when considering which parts of the Democratic Party’s past should be saved, and which are best left behind.

Obama's Original Sin. By Erich Rauchway.  Boston Review , April 23, 2019

Every Democrat who aspires to win the presidency in 2020 (or ever) should already be asking the question: How do we avoid what happened to Barack Obama and his ideas in the fall of 2008?

Obama was, of course, the progressive candidate. He built a lane to the left of Hillary Clinton in the course of 2007 and then expanded it into a broad highway along which he could coast to victory in November 2008. The hope and change he promised was in no way about continuity with the past. Yet what President Obama delivered, over two administrations, was profoundly disappointing—and directly contributed to the rise of dangerous and despotic Donald.

The trite riposte is that Obama was overtaken by events. In mid-September 2008, Lehman Brothers went bankrupt. Lehman was a significant trader of and investor in mortgage-backed securities, with total liabilities of around $600 billion. The knock-on effect of this failure was much larger than expected by officials, quickly threatening to bring down a very large insurance company (AIG), other investment banks (Goldman Sachs, Morgan Stanley, and Merrill Lynch), and even the largest bank in the country (Citigroup), which had total debts close to $2.5 trillion.

It was not immediately obvious that the crisis would derail the Obama agenda. Initially, in fact, Obama seemed calmer and more likely to respond effectively to the disaster than his Republican opponent, John McCain. As Reed Hundt points out in A Crisis Wasted: Barack Obama’s Defining Decisions, a meticulous blow-by-blow reconstruction of Obama’s transition to power, for a brief moment everything seemed possible—including perhaps reforms as profound as the New Deal. Here was a newly elected leader who could produce, no matter how difficult the moment, a just and equitable set of solutions.

Instead, what the country got was Republicans in charge, literally. The three main decision-makers of the moment, Ben Bernanke, Tim Geithner, and Hank Paulson, have a new, jointly written book, Firefighting: The Financial Crisis and Its Lessons. Their slim volume is a further attempt to explain and defend what they did. Combine this volume with their three individual memoirs, and it starts to feel like they doth protest a bit too much in unison.

Bernanke is a Republican who was nominated to the Board of Governors of the Federal Reserve by George W. Bush—before becoming the chair of Bush’s Council of Economic Advisers and then chairman of the Fed. Paulson led Goldman Sachs until being brought in by Bush as Treasury Secretary. Geithner had a more bipartisan career—rising to prominence in the Clinton Treasury, becoming a senior official at the International Monetary Fund, moving to lead the Federal Reserve Bank of New York under the auspices of influential Wall Street Republicans and Democrats, and then hired by Obama to be his first Treasury Secretary. Geithner is a political independent (and former Republican); Bernanke and Paulson are long-standing Republicans.

“Personnel is policy” is a Washington cliché that also happens to be true. Let me venture a corollary: If you hire Republicans, you will get Republican policy.

Of course, there are several kinds of Republicans in the modern era, measured in terms of what they really believe. And it is becoming harder to know what some of them believe. Irrespective of their previously expressed views or votes, most congressional Republicans will turn their backs on anything reasonable if proposed by a Democratic president—and support even the most outrageous expedient if supported by Donald Trump.

However, Bernanke, Geithner, and Paulson are genuine Status Quo Republicans, and this is quite evident in their book. In their view, the world was basically fine before 2007. A modest fire broke out in that year and, despite their best efforts, became an inferno. When fighting a fire, surely, there is no time to argue about redecorating the living room. The fire was extinguished, the world was saved, and they continue to be surprised that we are not all more grateful.

Everything in this interpretation of events—and in their view of history—hinges on the metaphor of fire, chaotic and uncontrolled. No doubt the authors feel they are reaching out to people by popularizing economics; there are no tables or figures in their book, and very few numbers. But the metaphor is a smoke screen. This was not any kind of fire. Extreme financial deregulation allowed blue-chip financial-sector executives to make large bets backed by very thin amounts of equity. The bets went bad, and potential cumulative losses at their banks threatened dire consequences for the economy.

Status Quo Republicans have a simple preference in this situation: use all available central-bank and government resources to cover those losses fully and with no repercussions for those responsible. The accurate name for this approach is Lemon Socialism, meaning in this case: financial sector executives get the upside when things go well; you (the taxpayer, the unemployed, and the dispossessed) own the lemons when the economy turns down.

Bernanke-Geithner-Paulson did not invent Lemon Socialism. They did perhaps take it to a new level. The U.S., contrary to what is (sometimes) claimed by Expedient Republicans, has a strong national balance sheet and a highly credible central bank—so massive amounts of government support could be deployed. As a result, highly compensated bank executives generally did very well from the boom-bust cycle. Investors who had cash in hand were even better placed to snap up distressed assets and experience steep capital appreciation. They (not you) got the upside—and then the Trump tax cuts let them keep more (or perhaps almost all) of those gains.

This is the real reason that Donald Trump’s Treasury Department is currently working hard to undermine financial regulation. It is not at all because they have forgotten what happened and why. The explanation is much simpler: Top current officials made good money in the crisis. If you know how to play the game, the roller coaster of modern finance works just fine. As Trump himself said in 2006, when asked about the prospect of a major fall in house prices, “I sort of hope that happens because then people like me would go in and buy.”

This brings us back  to Reed Hundt, who is asking the important questions. Was there an alternative way forward in the fall of 2008? Why was that not followed? After all, there were plenty of actual Democrats in the White House, including Christy Romer at the Council of Economic Advisers, Larry Summers at the National Economic Council, and Peter Orszag at the Office of Management and Budget.

Reed Hundt was chairman of the Federal Communications Commission (FCC) under President Clinton, and he had a ringside seat for the meteoric political rise of Barack Obama. As a member of the Obama transition team in 2008, Hundt had access to everyone and apparently remains on good terms with the leading players. He argues persuasively that the major Obama-era decisions were all taken in late 2008 and the very beginning of 2009.

Hundt’s book is based on interviews and it sometimes reads like a loose synthesis of oral histories or even depositions. But this is actually refreshing. The articulate protagonists approved the quotes that he uses.

Hundt feels that the underlying political beliefs of Clinton-era officials were part of the problem. He uses the term “neoliberal” rather frequently and not always with great precision, but his general instinct is right. Top officials from the Clinton era retained a greater preference for less regulation and a generally smaller role for government than, for example, Hundt would prefer. Their style of economic governance from the 1990s was to score singles and steal bases, not swing for the fences.

Hundt is right that more could have been done, but it is hard to design a dramatically new policy once you are in office—the press of events tends to dominate, even when there is not a confusing, fast-evolving international crisis. Obama did not bring with him a large, experienced team, and during the campaign he developed only broad-brush ideas. The experts on the details were almost all people who had worked with the Clintons. They were Small Ball Democrats—smart people with admirable ideas, but hardly in a position to stand up to Status Quo Republicans. New Deal–style Democrats were conspicuous by their absence.

The financial sector was saved, largely intact, by unprecedented government support. If homeowners had received the same level of support in 2008-2009—for example, in the form of cheap refinanced mortgages—what would have happened? The American economy would have recovered, house prices would have risen, and everyone involved would have looked like a genius. Modern central banks control the price level and this has a primary, direct effect on asset prices—including housing. In most of the country, house prices bounced back but millions of homeowners could not finance their way through the trough. Powerful people in the financial sector could obtain cheap loans, even in the darkest days, because their access to credit was the top priority for both the Bush and Obama administrations.

The result, in rough chronological order, was: mass unemployment, greater inequality, collapsed opportunity, confused anger, and President Trump. The efforts put into financial reform—making sure this could not happen again—by Messrs. Bernanke, Geithner, and Paulson were weak. They lament that next time the central bank will not have the tools to deal with an incipient crisis. If that proves true, it is because their generation undermined the legitimacy of the Federal Reserve through inattention to regulation, consumer protection, and blatant bad behavior before the crisis, and through subsequently allowing the Too Big To Fail banks to become even larger and more dangerous—the total indebtedness of JPMorgan Chase today is in the range of $2.5 trillion.

What are the implications for people who would like to call themselves progressives? Hundt has a broader vision of what government could do, but the details remain slightly elusive. He argues that the FCC in the 1990s helped create the basis for broader investments in the digital economy, and this benefited many people. He also suggests there are analogies that could be implemented for energy, clean water, and much more. Probably he should develop those ideas more fully in another book—and preferably soon.

You might or might not like the work of the Hamilton Project, organized in 2006 under the auspices of the Brookings Institution, but there is no question that they helped prepare the Small Ball Democrats for another round in power. Not only were their ideas tested in numerous proposals, panel discussions, and debates, but their smart young people were given every possible policymaking opportunity.

When Obama did make progress, for example in terms of extending health-care coverage, it was in part because of these diligent efforts. When Obama struggled, from a progressive point of view, it was primarily due to problems in the financial sector—a blind spot in terms of Hamilton Project preparation. Anyone who thinks that President Obama did all he could to advance a progressive agenda, under difficult constraints, should ponder this: Why were progressive Democrats shut out of almost all influential positions throughout the Obama years?

It is unlikely that the next Democratic president will want to be seen as another reincarnation of the Clinton administration. But are the potential home-run policy ideas being debated and honed in sufficient detail? Who will be hired—and with what experience—to be in charge of implementation? What are the plans for regulating the financial sector, which is more powerful than ever? And who exactly will be in charge when anything starts to go wrong in the macroeconomy? On these questions may turn both the election and the future of American democracy

The Crisis Last Time.  By Simon Johnson . The American Prospect.   March 29, 2019

Review of :  A Crisis Wasted: Barack Obama's Defining Decisions. By Reed Hundt. Rosetta Books

Firefighting: The Financial Crisis and Its Lessons.  By Ben S. Bernanke, Timothy F. Geithner, & Henry M. Paulson Jr.  Penguin Books

In their new book, Ben Bernanke, Timothy Geithner, and Henry Paulson describe fighting the fire of the 2008 financial crisis. But while they did rebuild the burnt towers of Wall Street, they left Main Street to dig out from the rubble.

The Great Crash of 2007–2009 stripped American middleclass families of wealth. It gave rise to nativist politics on the right and socialism on the left, killing credence in neoliberal market capitalism in both the United States and Europe. It buried the Washington consensus that had energized bipartisan support for U.S. leadership around the world. Indeed, China has replaced the United States as the leading country whose investment drives the global economy.

In his 2018 letter to shareholders, Jamie Dimon, CEO of JPMorgan Chase, described the state of the union as follows: “Middle class incomes have been stagnant for years. Income inequality has gotten worse. Forty percent of American workers earn less than $15 an hour, and about 5% of full-time American workers earn the minimum wage or less, which is certainly not a living wage. In addition, 40% of Americans don’t have $400 to deal with unexpected expenses, such as medical bills or car repairs.”

According to Dimon, cumulative economic growth over the last decade has been half of what it would have been in a normal recovery. As a result the economy is $4 trillion smaller than it should be. In his words, that growth “certainly would have driven wages higher and given us the wherewithal to broadly build a better country.”

It is widely recognized that the economic disappointments of the last decade made it extremely difficult for the Democratic presidential nominee in 2016 to run on her predecessor’s record, even though unemployment was at last reaching satisfactorily low levels and wages had begun to increase. Conversely, Donald Trump’s successful campaign is often seen as reflecting voter dissatisfaction with the government’s response to the financial crisis of 2008.

Given the ample volume of hindsight, it takes conviction verging on stubbornness to insist that the United States government under the Bush administration did all it could to prevent the crisis and that both the Bush and Obama administrations did all they reasonably could have done in response. Yet in their three separate memoirs, numerous public statements, and now in their jointly written book, Firefighting: The Financial Crisis and Its Lessons, the trio of President Bush’s Treasury Secretary Hank Paulson, President Obama’s Treasury Secretary Tim Geithner, and both presidents’ Fed Chairman Ben Bernanke have made these claims.

Historians will debate the events of 2007–2009 for decades, and the leading actors, namely the trio of Bernanke, Geithner, and Paulson, should be complimented for their many good steps as well as their willingness to account for their decisions. But they were wrong in 2008, and they are especially wrong now to promote the wrong lessons from their experience. In Firefighting, for instance, they look to the next crisis and correctly assert that the Federal Deposit Insurance Corporation (FDIC) should be able to “fully stand behind” the obligations “of large complicated banks on the brink of failure . . . while winding them down in an orderly fashion.” But in an FDIC resolution shareholders and creditors take some loss. The firefighters rejected that approach in 2008, and they continue now to argue that in a crisis it is wrong “to ensure that risk takers pay a price for their risk taking” such as by “imposing haircuts on creditors.” By arguing that risk takers should be held harmless in the next crisis, they are restating the position that tied President Obama to one of the most unpopular government actions in history—namely, the bail-out. No future president should, or would want, to take this advice.

Notwithstanding many actions by the trio in emergency conditions, their reaction to the recession was not what the country deserved. Indeed, it had at least three serious flaws that we should be revisiting and learning from for next time.

First, they bailed out Bear Stearns in March 2008, let Lehman Brothers go bankrupt on September 15, 2008, and bailed out AIG on September 16, 2008. In the first of these moves, they had another firm buy the failing firm. In the middle decision, they magnified the losses for everyone by implementing no plan in advance. And in the last of these moves, the government took control and fired management.

This unpredictable signaling intensified the dreadful reaction to the Lehman bankruptcy. The government’s sinuous path of decision-making inspired a lack of confidence. That in turn contributed to the over-reaction of the real economy to the financial crisis, leading to excessive reductions in investment and employment.

Second, at all times, the trio’s top priority should have been helping the real economy recover from the economic calamities of the Great Crash. At the time, it was no secret that domestic construction jobs were evaporating and consumer consumption was falling. Housing prices had also plummeted: ultimately, homeowners’ equity fell from nearly $14 trillion to about $6 trillion. But instead of taking actions to help Americans, the trio (and the presidents they advised) chose strengthening the financial sector as their primary objective. The misguided belief was that by instilling confidence in the balance sheets of big financial firms, they could cause benefits to flow through to Main Street.

This error in strategic goals led to a series of bad policies. First, instead of passing what the trio refer to as a “small” fiscal stimulus composed of tax cuts in February 2008, the Republican White House could have joined with the Democratic Congress to jumpstart more spending. Second, instead of protecting firms from having to take write downs on the debt and mortgage securities they held on their balance sheets, the trio could have used the authority of the Housing and Economic Recovery Act (HERA) to re-finance or restructure troubled mortgage loans or constrain foreclosures in a meaningful way. Third, instead of the modest recovery program enacted in February 2009, the trio could have championed a significantly larger recovery program. Geithner, in a memorandum he co-wrote with Larry Summers (likely with Bernanke’s input too) for President-elect Obama on December 15, 2008, recommended that the second economic stimulus to create Main Street jobs not be greater than approximately $800 billion because an “excessive recovery package could spook markets or the public and be counterproductive.” And fourth, instead of returning the $200 billion in unspent bailout money to Congress after the big banks had passed the stress tests in 2009, the trio could have spent the unused bailout money to protect homeowners and jumpstart job creation. 

The third serious flaw in the recovery effort was that the Troubled Asset Relief Program was not a good law. Its principal defect was that Paulson could act with no supervision: he could buy whatever he wanted (including the most spurious assets traded). Moreover, no bank benefitting from the one-sided sale would suffer any limitation on bonuses much less replacement of management, and the actual amount of government funding would prove more than twice what the banking system actually needed for recapitalization.

In Firefighting, the trio acknowledge that the post-Lehman crisis compelled TARP’s passage—indeed, the trio have argued for a decade that Congress would not pass a useful bill without a crisis. But it is more accurate to conclude that the trio’s approach invited an avoidable crisis in order to pass a bad law. Indeed, the smoke of the Lehman explosion was the only reason a bill that awful could be pushed through Congress.

The timing, too, in retrospect is suspect. In September of 2008, for example, the trio had told Congress that the emergency required weekend action. This proved untrue. Moreover, by the time TARP was enacted in October 2008, some of the biggest Wall Street firms in which Paulson insisted on investing did not even need or want the money. The TARP legislation is not a model of what was then or is now desirable. Instead, in 2010, Dodd-Frank Wall Street Reform and Consumer Protection Act wisely used the FDIC to guarantee troubled firms’ obligations while meting out haircuts to equity and debt holders as the method for recovery.

None of this is to argue that drastic times do not call for drastic measures. But when a fire seems poised to break out again in the financial sector, government leaders should throw water on the sparks instead of waiting for a full-fledged conflagration. And if the fire rages anyhow, government should not rebuild the burnt towers of Wall Street while leaving Main Street to dig out from the rubble. The real economy is more important than the financial sector. Indeed, in the next crisis or before, the financial sector should help fund, through taxes or mandated investment, the recovery of the real economy. Perhaps then the financial sector might not grow as dangerously large as it has.

Exactly what needs to be done when the next crisis hits cannot be precisely predicted, but whoever fights that fire must remember that transparent, equitable, and justice-delivering government is not expendable. When the going gets tough, tough-minded government leaders have to trust that the United States can recover from the worst of financial shocks but know that it cannot long survive an ethic of saving the well-off at the cost of the rest of the country. What Theodore Roosevelt called the “malefactors of great wealth” should at least lose some of that wealth as their just desserts are served.

Playing with Fire. By Reed  Hundt. Boston Review . May 10, 2019.