Profit shift from Keynesian policies to economic liberalization

Profit Over People: Neoliberalism and Global Order is book that was
originally written by Noam Chomsky in 1999. It was revised by Chomsky and
republished by Seven Stories Press in 2011, featuring a detailed introduction
written by Robert McChesney. Chomsky is a professor in linguistics, political
activist, cognitive scientist, philosopher, and historian. For over five
decades, Chomsky has been one of the most outspoken critics of American foreign
policy ranking amongst the leading intellectuals of the American left.  In 175 pages, his book puts together a
comprehensive analysis of the modern neoliberal system and the prevailing
neoliberal economic and political policies. Focusing on the contradictions
between market and democratic principles, Chomsky argues that neoliberalism results
in a system of corporate tyranny that significantly hinders democracy.

Neoliberal policies foster the concentration of private wealth in the hands of
a few powerful corporations while ignoring the resulting social and ecological
impacts. This book appealed to me for two reasons; my strong interest in
critically analyzing the social consequences of economic policies and the
relevance of neoliberalism in studying the future of work.

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Throughout the
book, Chomsky distinguishes the concept of neoliberalism from classical
liberalism. While classical liberalism is about protecting individual rights
from governments, neoliberalism is about increasing economic productivity by
protecting corporations from government regulation. Neoliberalism prioritizes
economic productivity and holds that any interference with the free operation
of the market will make it less efficient and hinder its productivity. Starting
in the 1980’s, neoliberalism marked the shift from Keynesian policies to
economic liberalization policies. Such policies include deregulation, cuts in
government spending, privatization, austerity, low corporate tax rates, and
free trade. Together they have created a system that increasingly concentrates
capital at the very top of the spectrum, giving rise to the wealthy 1% and the
unprecedented power of corporate entities. Chomsky notes that the “principal
architects” of neoliberalism were large American corporations that had the
“means to control policy formation as well as the structuring of thought and
opinion” (Chomsky 20). As the American political system makes politicians
dependant on corporate campaign contributions, corporations can influence and
control policy making. Similarly, the concentration of mass media in the hands
of a few corporate conglomerates enables corporations to shape the opinions of
the general populace. 

Having assumed the
responsibility for the welfare of the international economy following WW2, the
U.S found itself in a historically unprecedented position of power. Chomsky
suggests that the principle architects of American neoliberal policies have
used this position to design a global economic system in favour of their own
interests (Chomsky 21). Through institutions such as the WTO and the IMO, the
U.S has pushed multilateral free trade agreements down the throats of other developed
and developing nations. These agreements embody neoliberal principles, making
it easier for large corporations to dominate the economies of countries around
the world (Chomsky 19). As a result, these economies have become heavily
dependent on corporations for employment and productivity.

Chomsky argues
that neoliberalism has shifted the balance of power and capital between
corporations and the working class. Free trade agreements have minimized the
role of the state and transferred the decision-making power from the public
arena into the hands of large corporations (Chomsky 133). While they have
increased protection for corporate and investor rights, the agreements have
undermined the rights of workers. Using the threat of shifting production to
third-world countries, large corporations have successfully reduced
unionization rates while deterring governments implementing policies to protect
workers (Chomsky 110). This has resulted in weakening the bargaining power of
working classes and reductions in labour and employment regulations across both
developing and developed nations. Although corporations have been experiencing
spectacular profit growth for decades, Chomsky notes that they have
continuously cut work forces, outsourced jobs, and reduced wages (Chomsky 28). Their
ability to reduce labour costs by shifting jobs abroad has also led to the
erosion of stable employment and a rise in flexible non-standard work
arrangements. These jobs are low-paying, instable, part-time, and don’t require
employers to provide benefits (Chomsky 28). As most employment and labour regulations
are meant to cover standard work arrangements, non-standard employment is less
frequently covered by such regulations.      

The arguments
presented by Chomsky accurately explain the changing nature of work in Canada. Since
2000, Canada has lost 23% of its factory jobs while employment fell from 2.2
million to 1.7 million (Tencer 2016). Much of this can be accredited to
Canada’s involvement in free trade agreements, namely the North American Free
Trade Agreement which has led to the outsourcing of hundreds of thousands of
manufacturing jobs. Between 1997 and 2015, non-standard employment in Canada increased
by a striking 30% (Busby and Muthukumaran 2016). While Canadian workers are
increasingly concerned about the growing share of precarious work, federal and
provincial governments have been reluctant to counter the changes and provide
adequate protection for workers. The global neoliberal order predetermines the
weakening of worker, state, and citizen power while empowering corporations to
increase their concentration of wealth. This, I believe, exemplifies what
Chomsky means by “profit over people”.

 

            Towards
the end of the book, Chomsky shifts the reader away from feelings of outrage
and despair by offering a strong sense of hope in restoring the balance of
power back into the hands of citizens. He argues that citizens can reclaim
their rights through popular movements and social activism. In doing so, he
turns to the success of citizens in preventing the highly secret implementation
of the Multilateral Agreement on Investment. This was agreement drafted by the
members of the OECD which aimed at developing multilateral rules to govern
international investment. Strongly backed by large corporations and financial
institutions, it would make it illegal for governments to restrict foreign
investment and would allow investors to sue governments for implementing
policies that hinder their profits. As a result, labour and environmental laws
would be reduced to the lowest common denominators. The agreement was countered
by a widespread international movement. Despite the lack of resources and
limited organization, the popular movement was successful in effectively preventing
the adoption of the agreement (Chomsky 164). Using this example, Chomsky
suggests that citizens around the world can counter neoliberalism and corporate
power through collective action.

Chomsky’s overall critique of neoliberalism is
comprehensive, convincing, and backed by strong evidence from reliable sources.

He shows, quite successfully, how neoliberal policies have led to a system of
corporate tyranny and reduced democracy. After doing so, he presents a very
plausible and optimistic solution. Nonetheless, the book does have some
shortcomings in terms of clarity and structure. When talking about the
“principle architects” of neoliberalism, Chomsky makes it seem like there is an
outright conspiracy between American corporations and the American government.

This off course, is not what he means to imply. Readers familiar with Chomsky’s
other works would know that he is really referring to the ability of American
corporations to strongly influence policy-making through campaign donations and
lobbying efforts. Similarly, Chomsky employs a sarcastic tone throughout the
book. Again, readers that are familiar with Chomsky’s work would catch the
sarcasm but new readers might be left confused. Furthermore, Chomsky could have
accomplished a stronger criticism of neoliberalism if he challenged the
fundamental assumptions made by its advocates. For example, he could have
attacked the assumption that free markets are the most efficient. Instead, he chose
to only focus on the consequences brought about by neoliberal policies.

Finally, the structure of the book makes it quite difficult to follow along. I
find that since the book is a collection of speeches and essays by Chomsky, it
does not flow as well as it could have. All in all, Chomsky’s book is worth the
read as it succeeds in providing an insightful, well-researched, and persuasive
perspective on neoliberalism that leaves the reader feeling intrigued