Cynicus Chomsky-us

Tiberius recently posted a comment piece regarding a recent article by Cynicus Economicus.

Though the two agree in most respects, the comment attempted to identify the root cause of their diverging viewpoints via a tasty analogy.

Cynicus himself was kind enough to respond to the post directly and what follows is an attempt to clarify (and rebut) some of the points he makes – so unless you’ve read the original comment and Cynicus’ reply, it will mean very little to you (but you can catch up here)

In his reply, Cynicus (politely) suggests that the difference in approach is due to a misunderstanding on Tiberius’ part:

The error in your critique is as follows; the current system of interventions and bailouts is what allows the unholy alliance. Take away the guarantees, the special position of particular banks, the bailouts and so forth, and you have a different situation. That is a situation where the politicians and banks at the top do not have the power to win.

However, while Tiberius understands that the “system of interventions and bailouts is what allows the unholy alliance”, what he disagrees with is that this system is ‘current’ – if this word is used to imply that there used to be a different system.

Tiberius does take this to be Cynicus’ meaning as he goes on to say: “Take away the guarantees, the special position of particular banks, the bailouts and so forth, and you have a different situation” – which, by implication again, suggests that these phenomena are new and that, by removing them, we shall be returning to another system which Cynicus regards as preferential (the ‘different situation’)

If this is indeed what Cynicus is implying then it is,  Tiberius believes, an error – an understandable error no doubt, as many people (especially economically-minded people) believe in the myth of the free market – but an error nonetheless.

What Cynicus calls the ‘current system’ of Capitalism is in fact the only system of Capitalism that has ever existed in the Western economies; the ‘unholy alliance’ he identifies is, therefore, not a new arrangement, but rather, as old as Capitalism itself (and, in differing forms, a great deal older that that).

Taking, for the sake of argument, this to be Cynicus’ position – that this system of interventions and bailouts is new – Tiberius will now attempt to show why he believes it to be a mistake. Or rather,  he’ll get the world’s leading intellectual to do it for him.

Cynicus Chomsky-us

In a recent interview , Noam Chomsky discusses the bailouts in the US and the need for the newly-nationalised banks to become more regulated. At one point the interviewer, agreeing with Chomsky, adds: “Especially when it’s all public money that at this point is running the system!”. Chomsky’s response [starting 4m39s in] is revealing:

Chomsky: Well the fact of the matter is that it almost always is public money. So take, say, the richest man in the world, Bill Gates, how did he become the richest man in the world? Well a lot of it is public money. In fact, places like where we’re sitting right now [MIT – Massachusetts Institute of Technology] – that’s where computers were developed, the internet was developed, software was developed – either here on in similar places it was almost entirely publicly funded…

The way the system works fundamentally is that the public bears the cost and takes the risks, and the profit is privatised

Interviewer: Which is what we’re seeing now with the whole banking bailout…

Chomsky: Well there’s alot of talk about it now because it’s the financial institutions and it’s very visible – but it happens all the time.

So, Chomsky is suggesting that the bailouts to which Cynicus objects – far from being a bastardisation of the current system- are in fact an integral part of that system; they are endemic to it; the system could not have gotten to this point without them.

That most people do not recognise this is testament to the propagandised view of the world that these Captains of Industry and Barons of Finance would have us believe in. It is, nonetheless, a fantasy and Chomsky elaborates on this basic point at some length in a lecture called ‘Free Market Fantasies’ which you listen to here.

So, when Cynicus says:

As such, ‘yes’, the freemarket system does work. ‘Yes’, those at the top are profiting. ‘No’, they do not do so due to a freemarket system but as the result of interventions and distortions by the government.

He is creating a false dichotomy – there is no ‘freemarket system’ in the West; never has been, probably never will be. This is not to say that a freemarket system has not been tried elsewhere – it is forced on the developing world through IMF conditionalities – but it is not what we have here.

Furthermore, when Cynicus says:

…it has nothing to do with free markets. It is the close relationship between banks built upon regulation, and the mutual interdependence of the government and banks that is the problem

He is only half right: he correctly identifies the problem, but mistakenly (Tiberius believes) implies that it is due to an error in the system, rather than something that is, in reality, integral to it. Simply put: No Western Capitalist system exists (or has ever existed) other than the one he (correctly) identifies as problematic.

Chomsky again, elsewhere:

As for Adam Smith and the Wealth of Nations, well, first of all the idea of an unsubsidised – not state-subsided – capitalism we don’t even bother talking about that. It has existed: it exists in a good part of the third world – which is why the third world looks the way it does.

It has never existed in any developed society for a very simple reason: the wealthy and the powerful won’t allow it – just as Adam Smith understood. They will use the levers of power to make sure that State power subsidises them – that’s why England developed, that’s why the United States developed, that’s why France developed, that’s why Germany developed, that’s why Japan developed; and in fact every developed society has developed just that way. That’s one of the clichés of economic history.

So we don’t talk about that anymore – because it’s non-existent, it never will exist except for people who have it rammed down their throats.

Now am I in favour of it? That’s another question – like in some mythical world would I like to see laissez-faire capitalism?

Well, only under the conditions described by Adam Smith [..] and, if you look at his argument for markets it’s pretty clear (maybe the argument’s right, maybe it’s wrong) but it’s clear what it was: that under conditions of perfect liberty markets will lead to perfect equality – that’s why markets are good; they will lead to perfect equality and they will not force people to subject themselves to outside orders – so they become less-than-human

Well, if that were possible, maybe so. But it’s not on the cards – and I don’t know if that argument works anyway, it probably doesn’t; the argument was fallacious.

But the goal was clear: the goal was a society based on enlightened values..

There is no way that Cynicus can say “‘yes’, the free-market system does work” because, the fact of the matter is, we don’t have one – so how could he possibly know? He may add the words ‘in theory’ to the statement, but then ‘in theory’ can even make Communism seem plausible.

So, while Cynicus says:

Take away such interference and there is no unholy alliance.

Tiberius would say:

“such interference” is the system, “the unholy alliance” are the system; and no one with the institutional power to do so is going to ‘take away’ anything – you may as well hope for a turkey to organise your Christmas dinner this year!

To put this in the most simple way possible:

Cynicus & Chomsky both agree that the current system stinks.

Where they disagree is that while Cynicus thinks this is due to political interference with what is a healthy underlying economic model, Chomsky would says it is that very economic model itself (when seen for what it truly is and not what academic text books may propagandise it to be) that is the root of the problem (and that the problem is exacerbated by the creation of a political system that the economic model favours, i.e. fascism, totalitarianism, sham-democracies, etc.).

In this respect, Chomsky out-cynics Cynicus.

But let us turn finally to Tiberius’ cornflake box (for he knows, Weary Surfer, that you are hungry for another bowlful)

Cynicus states that: “I do believe that the cornflake packet is wrong”  and “My cornflake packet would indeed be different. I would prevent the collusion between banks and government, and also prevent the issuance of debt by the government.”

In other words, he would design a packet where the big flakes do not rise to the top.

The problem is, although Cynicus may shun ‘conspiracy theories’, the current box we all live in was actually designed by the bigger flakes themselves:  not necessarily consciously in a ‘lets think of the best design to ensure our dominance’ fashion, but rather slowly and incrementally in more of a ‘this seems to work best for us’ way – though less ‘Blind Watchmaker’, more ‘Short-sighted Bastard’.

Those bigger flakes are very happy with the box as it already is thankyouverymuch, and are not going to change it just because crumbs like us are tired of being last out of the packet.

Which bring us to the last point:  In the final analysis, the current system does work – but the pertinent question is – “Works for whom?” And that’s another story.


All the above is based on Tiberius’ understanding of Chomsky, and, though Tiberius has studied Chomsky’s work in depth and continues to follow it closely, he does not (of course) claim to speak on the great man’s behalf.

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One CommentLeave a comment

  1. Great! Couldn’t have said it better myself (with all respect to CE)

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