Year 501 Copyright © 1993 by Noam Chomsky. Published by South End Press.
Chapter 2: The Contours of World Order Segment 10/14
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5. The "Vile Maxim of the Masters"

The world economy has not returned to the growth rates of the Bretton Woods era. The decline of the South was particularly severe in Africa and Latin America, where it was accompanied by rampant state terror. It was accelerated by the neoliberal economic doctrines dictated by the world rulers. The UN Economic Commission for Africa found that countries pursuing the recommended IMF programs had lower growth rates than those that relied on the public sector for basic human needs. The disastrous impact of neoliberal policies in Latin America was particularly striking.34

On occasion, developed societies take their own rhetoric semi-seriously and fail to protect themselves from the destructive impact of unregulated markets. The consequences are much the same as in the traditional colonial domains, if not so lethal. Australia in the 1980s is a case in point. Free market experiments carried by the Labor government succeeded in reducing national income by over 5 percent a year by the end of the decade. Real wages declined, Australian enterprises fell under foreign control, and the country advanced towards the status of a resource base for the Japan-centered state capitalist region, which maintained its dynamic growth thanks to the radical departures from neoliberal dogma that had spurred development in the first place. In Britain after a decade of Thatcherism, "prospects remain bleak because of insufficient reinvestment in the physical UK economy," the director of a US investment firm observes, echoing a Japanese counterpart who says, "We think it will take a long time for the UK economy to recover."35

As noted, the rich industrial societies themselves are taking on something of a Third World cast, with islands of extreme wealth and privilege amidst a rising sea of poverty and despair. This is particularly true of the US and Britain, subjected to Reagan-Thatcher discipline. Continental Europe is not too far behind, despite the residual power of labor and the social contract it has defended, and Europe's ability to export its slums through the device of "guest workers." The collapse of the Soviet empire offers new means to establish the North-South divide more firmly within the rich societies. During the May 1992 strike of public workers in Germany, the chairman of Daimler-Benz warned that the corporation might respond to strikes by transferring manufacturing facilities for its Mercedes cars elsewhere, perhaps to Russia, with its ample supply of trained, educated, healthy and (it is hoped) docile workers. The chairman of General Motors can wield similar threats with regard to Mexico and other sectors of the Third World. And East Europe. While GM plans to close 21 plants in the US and Canada, it has opened a $690 million assembly plant in East Germany with great expectations, heightened by the fact that, thanks to 43 percent unofficial unemployment, workers are willing to "work longer hours than their pampered colleagues in western Germany" at 40 percent of the wage and with few benefits, the Financial Times reports. Capital can readily move; people cannot, or are not permitted to by those who applaud Adam Smith's doctrines when it suits their needs.

It is not that Daimler-Benz is greatly suffering from the labor costs that management deplores. Two weeks after issuing the threat to move Mercedes production to Russia, the same chief executive, Edzard Reuter, announced the "excellent result" of an exceptionally strong first-quarter performance for 1992, with a profit rise of 14 percent and a 17 percent increase in sales, largely abroad; German workers are not quite the intended market for the Mercedes division, the chief profit earner for this huge conglomerate, which will slash up to 10,000 jobs in 1992, Reuter added, with another 10,000 to follow. Such facts, however, do not impress the US press, where the news columns bitterly assailed striking German workers for their "soft life," long vacations, and general lack of understanding of their proper place as tools of production for the rich and powerful. They should learn the lessons taught to American workers by the Caterpillar corporation at the same time: profits and productivity up, wages down, the right to strike effectively eliminated by the free resort to scabs ("permanent replacement workers").36

These are the fruits of the fierce corporate campaign undertaken as soon as American workers finally won the right to organize in the mid-1930s, after long years of bitter struggle and violent repression unmatched in the industrial world. Perhaps we may even return to the days when the admired philanthropist Andrew Carnegie could preach the virtues of "honest, industrious, self-denying poverty" to the victims of the great depression of 1896, shortly after he had brutally crushed the steel workers union at Homestead, while announcing that the defeated workers had sent him a wire saying, "Kind master, tell us what you wish us to do and we will do it for you." It was because he knew "how sweet and happy and pure the home of honest poverty is" that Carnegie sympathized with the rich, he explained, meanwhile sharing their grim fate in his lavishly appointed mansions.37

So a well-ordered society should run, according to the "vile maxim of the masters."

It is therefore only natural that when the battered unions finally recognize the reality of the ceaseless class war waged against them by the highly class-conscious corporate sector, the business press should react with wonder at the fact that some unions still cling to outdated "class-warfare ideology" and the "battered Marxist view" that "workers form a class of citizens with shared interests separate from those who own and control business"; and even exhibit such "quirks" as low pay for union leaders, who are treated like other members. The masters, in contrast, keep firmly to this "battered Marxist view," often expressing it in vulgar Marxist rhetoric -- with values reversed, of course.38


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34 See below, ch. 7; DD, ch. 7. Nancy Wright, Multinational Monitor, April 1990, cited in Gar Alperovitz and Kai Bird, Diplomatic History, Spring 1992. See also James Petras, Monthly Review, May 1992.

35 Fitzgerald, Between. Foreign staff, "US and Japan shy from investing in UK," FT, Sept. 25, 1992.

36 Marc Fisher, "Why Are German Workers Striking? To Preserve Their Soft Life," WP service, IHT, May 4; Andrew Fisher, FT, May 20; Christopher Parkes, FT; Kevin Done, FT, Sept. 24 (GM); FT, June 4, 1992. Elaine Bernard, "The Defeat at Caterpillar," ms. Harvard Trade Union Program, May 1992.

37 Sexton, War on Labor, 83f. See ch. 11, below.

38 Barnaby Feder, NYT, May 25, 1992.