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Chomsky on 'The Invisible Hand'

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Radio Free Maine
presents
Noam Chomsky
speaking on
The Militarization of Science and Space

Response from Noam Chomsky to a question about the
invisible hand in capitalistic market forces.
Recorded by Roger Leisner on February 15, 2004.
To order this recording, go to www.radiofreemaine.com
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First of all, you know what we have today does not remotely resemble what's supposed to be capitalism. Capitalism is supposed to be what Jagdish Bhagwati was discussing in this abstract model he had in mind in the op-ed this morning. And what you study in neo-classical economics with free markets and entrepreneurial initiative and consumer choice, what Greenspan is talking about, but we don't have anything resembling that.

I should say that even that one quote I gave about oligarchic competition, strategic integration, etc., etc. It said that's what we have, not the "invisible hand" of the market.

Well, I don't know how many of you have ever read "Wealth of Nations", the famous, what you're supposed to worship at. The phrase "invisible hand" does appear in "Wealth of Nations", exactly once. And it's an argument against what's now called "globalization". It's an argument against free movement of capital. Smith argues that argument that although it would be very harmful to England, what he cared about, it will be stopped by an "invisible hand" because merchants and manufacturers will have a home bias. They'll prefer to invest at home. So, don't worry about it, even though it's dangerous. That's the one use of the term in "Wealth of Nations".

You know, so what we have is nothing like capitalism. But can we have a system in which the poor benefit and the rich don't have to be made happy. Why not?!?

There's not a law of nature that the economy, hence most of the society and the political system, are in the hands of high concentrations of capital which are granted by the state. They're granted by state power, enormous rights. You know rights that are granted to corporations are an incredible blow against classical liberalism and classical economics. Adam Smith would turn over in his grave to see what's been granted to these basically totalitarian systems. And they have basically been granted the rights, not only of persons, which is outlandish, but of pathological persons. They're required by law to be utterly pathological. It's a legal requirement, deeply embedded in anglo-american corporate law. That the managers of corporations must be brutal. They must be the kind of persons who we would lock up if they were flesh and blood. They got to, they're only, they are legally required to maximize profit and market share and not to do anything decent. The only exception, and it's a long history of corporate law, is they're allowed to do something decent if it's hypocritical. So, if a pharmaceutical corporation wants to improve its image by giving free drugs to people in Africa or something, it's allowed to do it as long as it's pure hypocrisy. That is, it is a way to improve your image to increase profit. Otherwise, it's legally culpable. You're much more likely to get thrown in jail for that than, you know, ENRON style corruption. And I think that's really the core of the system.

Well, you know, that's just, it's not even legislation, these are just decisions by courts. Which have become the core. Do we have to accept that?!? Almost like saying that people had to accept bolshevism or fascism or other kinds of totalitarianism. Of course not!!!

posted by JWL at 11:01 PM |