2. The Deeper Roots

The review of the planning record that follows might be faulted for keeping too close to the surface, ignoring the deeper roots of policy. That is fair enough. Policy flows from institutions, reflecting the needs of power and privilege within them, and can be understood only if these factors are recognized, including the case now under examination.

Every age of human history, Adam Smith argued with some justice, reveals the workings of "the vile maxim of the masters of mankind": "All for ourselves, and nothing for other People." The "masters of mankind" in the half-millenium of the European conquest included Europe's merchant-warriors, the industrialists and financiers who followed in their path, the supranational corporations and financial institutions that are creating what the business press now calls a "new imperial age," and the various forms of state power that have been mobilized in their interests. The process continues today as new governing forms coalesce to serve the needs of the masters in a "de facto world government": the IMF, World Bank, G-7, GATT and other executive agreements.¹⁰

Institutional structures guided by the vile maxim tend naturally towards two-tiered societies: the masters with their agents, and the rabble who either serve them or are superfluous. State power commonly perpetuates these distinctions, a fact stressed again by Adam Smith, who condemned mercantilism and colonialism as harmful to the people of England generally, but of great benefit to the "merchants and manufacturers" who were the "principal architects" of policy. State policy often incurs great social costs, but with rare exceptions, the interests of the "principal architects" are "most peculiarly attended to," as in this case. The lesson holds as we move on to the modern era, often applying, in an internationalized economy, even after military defeat. Consider, for example, how the interests of the Nazi collaborators in the corporate and financial worlds were "most peculiarly attended to" as the US occupation restored them to their proper place.¹¹

In the "new imperial age," trade is increasingly becoming a form of centrally-managed interchange, guided by a highly "visible hand" within particular Transnational Corporations, phenomena of great importance in themselves, which also bear on the ideological trappings. World Bank economists Herman Daly and Robert Goodland point out that in prevailing economic theory, "firms are islands of central planning in a sea of market relationships." "As the islands get bigger," they add, "there is really no reason to claim victory for the market principle" -- particularly as the islands approach the scale of the sea, which departs radically from free market principles, and always has, because the powerful will not submit to these destructive rules.¹²

The current phase of the global conquest is described with various euphemisms: the world is divided into "North and South," "developed and developing societies." Meanwhile, the basic contours remain, even becoming clearer as the gap between masters and victims increases, sharply in recent years. Within the rich societies, the effect has been most notable in the US, UK, and Australia, the three countries that flirted (in limited ways) with the neoliberal doctrines they preach, with predictably damaging results. Internationally, the gap -- better, the chasm -- has doubled since 1960 in the course of a major catastrophe of capitalism that swept over much of the traditional colonial domains, apart from the periphery of Japan, where standard economic doctrines are not taken seriously and the state was powerful enough to control capital as well as labor. In significant measure, the deterioration of conditions in the South is attributable to the neoliberal policies imposed by the de facto world government while the industrial world pursued the opposite path, becoming increasingly protectionist (notably Reaganite America) in tandem with free market bombast.¹³

Neoliberal theology, to be sure, gets a good press in the Third World. It is highly popular among elites who stand to benefit by policies that enrich them while the general population sink into misery and despair, but don't write articles about their fate. Western ideologues may therefore speak of the grand victory of the doctrines we uphold (for others, rejecting them for ourselves at will).

These processes sometimes yield cheerful macroeconomic statistics, in which case the result is hailed as "an economic miracle": Brazil under the neo-Nazi Generals who took power with the help of the JFK-LBJ administrations is a well-known case. Meanwhile, as the Third World model extends to the rich industrial world, we observe again Smith's lesson at work: wealth accrues to the wealthy and the business press ponders what it calls "The Paradox of '92: Weak Economy, Strong Profits."

¹⁰ James Morgan, lead article, Weekend FT, Financial Times (London), April 25/26, 1992.

¹¹ See Simpson, Splendid, for a comprehensive review for Germany. On the parallel accomplishments elsewhere, see DD, ch. 10.

¹² Daly and Goodland, "An Ecological Economic Assessment of Deregulation of International Commerce Under GATT," Draft, Environment Department, World Bank, 1992.

¹³ In addition to references of note 1, see Edward Herman, "Doublespeak," Z magazine, Nov. 1992, and my "`Mandate for Change,' or Business as Usual," Z, Feb. 1993.