The "Vile Maxim of the Masters"

Post date: Nov 22, 2011 6:39:1 AM

From Year 501: The Conquest Continues; Chapter 2 The Contours of World Order

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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

Under existing conditions of social organization and concentration of power, (selective) free trade is hardly likely to increase the general welfare, as it could under other social arrangements. Those who declare their allegiance to Adam Smith are careful not to attend to his words: the principles of economic liberalism can have favorable consequences when implemented with appreciation for fundamental human rights. When shaped by "the savage injustice of the Europeans" and blind obedience to "the vile maxim," the consequences may favor "the architects" of policy, but others only by accident.

The experience of the US-Canada free trade agreement illustrates the process. In two years, Canada lost hundreds of thousands of jobs, many to industrialized regions of the US where government regulations virtually bar unions (the Orwellian term is "right to work," meaning "effectively illegal to organize"). These government policies, natural in a business-run society with the public largely marginalized, leave workers unprotected and much easier to exploit than in Canada, with its more vigorous union movement and its cultural climate of solidarity. The agreement has also been used to require Canada to abandon measures to protect the Pacific salmon, to bring pesticide regulations in line with more lax US standards, to refrain from steps to reduce emissions from lead, zinc and copper smelters, to end subsidies for replanting of forests after logging, and to bar a single-payer auto

insurance plan in Ontario modeled on Canada's health insurance system, which would cost US insurance companies hundreds of millions of dollars in profits, if enacted. All such practices have been judged illegal barriers to free trade. By similar reasoning, the US objects to a GAIT provision that allows countries to restrict food exports in times of need, demanding that US agribusiness must control raw materials no matter what the human cost.

At the same time, Canada, an asbestos exporter, is bringing charges against the US for imposing EPA standards on asbestos use in violation of trade commitments and the ''international scientific evidence" about health risks of asbestos: the EPA has improperly gone beyond the "least burdensome requirements" for the corporations, Canada claims. At the GATT negotiations, the US is backing corporate proposals to restrict environmental and consumer protection to cases supported by "scientific evidence," to be judged by an agency made up of government officials and executives from chemical and food corporations.39

Perhaps the most dramatic current examples of the cynical pursuit of the "vile maxim" in international trade are Washington pressures to force Third World countries to accept US exports of tobacco, the world champion killer among lethal narcotics by a substantial margin. The Bush Administration launched its hypocritical "drug war" (timed nicely to produce the proper mood for the invasion of Panama) simultaneously with steps to force Third World countries to import this leading killer, and to allow advertising aimed at new markets, women and children particularly. GATT backed these efforts. The media, while climbing aboard the "drug war" bandwagon with appropriate fanfare, obliged the Administration further by completely suppressing the major drug story of the day. There were no headlines reading "US Demands to be World's Leading Narcotrafficker," or even a line in the back pages (statistically insignificant dissidents aside).

With Eastern Europe rejoining the Third World, drug pushers are leading the way in investment. "Cigarette makers flock to E. Europe," an upbeat front-page story is headlined in the Boston Globe: "While many American companies have been criticized for not being aggressive in investing in Eastern Europe, American cigarette companies have been trail-blazers." A tobacco executive explains: There is little awareness of health and environmental problems in Hungary. We have about 10 years of an open playing field"—ten years of profits, before PC left-fascists begin to interfere with lucrative mass murder. "Of 30 developed countries," the news report reads, "life expectancy is shortest in Eastern Europe." US corporations will try to improve the statistics further, "trail-blazers for capitalism," basking in applause (56-8).

Noam Chomsky.

Year 501: The Conquest Continues.

Montreal: Black Rose Books, 1993. ISBN 189543162X. [Note: For a more extensive and additional citations from Year 501, including images and active links to some of the sources, go to Guy Duperreault's Book Blog.]

Footnotes:

* "The Vile Maxim of the Masters" is Adam Smith's description of economic hegemony through the ages.

33. G. Rees, Alain Besancon, Encounter, Dec. 1976, June 1980.

34. See below, ch. 7; Deterring Democracy, 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," Financial Times, Sept. 25,1992.

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

37. Sexton, Patricia Cayo. The war on Labor and the Left, 83f. See ch. 11, below.

38. Bamaby Feder, New York Times, May 25,1992.

39. Jim Stanford, "Going South: Cheap Labour as an Unfair Subsidy in North American Free Trade," Canadian Centre for Policy Alternatives, Dec. 1991; Andrew Reding, World Policy Journal, Summer 1992. Edward Goldsmith, Mark Ritchie, The Ecologist, Nov./Dec. 1990; Watkins, Fixing, 103-4. Brief amicus curiae of Government of Canada, US Court of Appeals, "Corrosion Proof Fittings, et al., vs. EPA and William K. Riley," May 22,1990. See ch. 3, n.43.