Assaf Kfoury: The economic crisis is felt acutely in the US, but has now spread to the entire world, even to countries (in South America, for example) that initially thought they would be spared. And the American presidential campaign and elections cannot but concern people everywhere, given the dominant role of the US globally. The simultaneous unfolding of the two — the crisis and the presidential campaign — has naturally elicited considerable discussion outside the US. In the Middle East, in particular, there has been a kind of speculation, perhaps wishful thinking, be it from the left or from the right. Some Arab commentators have speculated that an Obama administration will follow less aggressive policies. Some other Arab commentators want to see the economic crisis as the sign of an imminent American global decline, and warn pro-American governments and parties to stop doing the bidding of a doomed North American hegemon. What is your response to this kind of thinking? More generally, in relation to the Middle East, what direction is US policy likely to take with the coming Obama administration in the wake of the economic crisis?

Noam Chomsky: I think that US hegemony will continue to decline as the world becomes more diverse. That process has been underway for a long time. US power peaked at the end of World War II, when it had literally half the world’s wealth and incomparable military power and security. By 1970, its share of global wealth had declined by about half, and it has remained fairly stable since then. In some important respects, US domination has weakened. One important illustration is Latin America, Washington’s traditional “backyard.” For the first time since European colonization 500 years ago, South America is making significant progress towards integration and independence, and is also establishing South-South relations independent of the US, specifically with China, but elsewhere as well. That is a serious matter for US planners. As it was discussing the transcendent importance of destroying Chilean democracy in 1971, Nixon’s National Security Council warned that if the US cannot control Latin America, it cannot expect “to achieve a successful order elsewhere in the world” — that is, to control the rest of the world. Controlling Latin America has become far more difficult in recent years. (more…)

Well, let’s begin with the elections. The word that the rolls off of everyone’s tongue is historic. Historic election. And I agree with it. It was an historic election. To have a black family in the white house is a momentous achievement. In fact, it’s historic in a broader sense. The two Democratic candidates were an African-American and a woman. Both remarkable achievements. We go back say 40 years, it would have been unthinkable. So something’s happened to the country in 40 years. And what’s happened to the country- which is we’re not supposed to mention- is that there was extensive and very constructive activism in the 1960s, which had an aftermath. So the feminist movement, mostly developed in the 70s-–the solidarity movements of the 80’s and on till today. And the activism did civilize the country. The country’s a lot more civilized than it was 40 years ago and the historic achievements illustrate it. That’s also a lesson for what’s next.

What’s next will depend on whether the same thing happens. Changes and progress very rarely are gifts from above. They come out of struggles from below. And the answer to what’s next depends on people like you. Nobody else can answer it. It’s not predictable. In some ways, the election—the election was surprising in some respects.

Going back to my bad prediction, If the financial crisis hadn’t taken place at the moment that it did, if it had been delayed a couple of months, I suspect that prediction would have been correct. But not speculating, one thing surprising about the election was that it wasn’t a landslide. By the usual criteria, you would expect the opposition party to win in a landslide under conditions like the ones that exist today. The incumbent president for eight years was so unpopular that his own party couldn’t mention his name and had to pretend to be opposing his policies. He presided over the worst record for ordinary people in post-war history, in terms of job growth, real wealth and so on. Just about everything the administration was touched just turned into a disaster. (more…)

Der Spiegal: Professor Noam Chomsky, cathedrals of capitalism have collapsed, the conservative government is spending its final weeks in office with nationalization plans. How does that make you feel?

Noam Chomsky: The times are too difficult and the crisis too severe to indulge in schadenfreude. Looking at it in perspective, the fact that there would be a financial crisis was perfectly predictable, its general nature, if not its magnitude. Markets are always inefficient.

DS: What exactly did you anticipate?

NC: In the financial industry, as in other industries, there are risks that are left out of the calculation. If you sell me a car, we have perhaps made a good bargain for ourselves. But there are effects of this transaction on others, which we do not take into account. There is more pollution, the price of gas goes up, there is more congestion. Those are the external costs of our transaction. In the case of financial institutions, they are huge.

DS: But isn’t it the task of a bank to take risks?

NC: Yes, but if it is well managed, like Goldman Sachs, it will cover its own risks and absorb its own losses. But no financial institution can manage systemic risks.
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Signataire du manifeste du Forum social de Porto Alegre (”Douze propositions pour un autre monde possible”), en 2005, vous êtes considéré comme l’un des inspirateurs du mouvement altermondialiste. Vous avez fondé et dirigé le Centre Fernand-Braudel pour l’étude de l’économie des systèmes historiques et des civilisations de l’université de l’Etat de New York, à Binghamton. Comment replacez-vous la crise économique et financière actuelle dans le “temps long” de l’histoire du capitalisme ? Immanuel Wallerstein : Fernand Braudel (1902-1985) distinguait le temps de la “longue durée”, qui voit se succéder dans l’histoire humaine des systèmes régissant les rapports de l’homme à son environnement matériel, et, à l’intérieur de ces phases, le temps des cycles longs conjoncturels, décrits par des économistes comme Nicolas Kondratieff (1982-1930) ou Joseph Schumpeter (1883-1950). Nous sommes aujourd’hui clairement dans une phase B d’un cycle de Kondratieff qui a commencé il y a trente à trente-cinq ans, après une phase A qui a été la plus longue (de 1945 à 1975) des cinq cents ans d’histoire du système capitaliste.

Dans une phase A, le profit est généré par la production matérielle, industrielle ou autre ; dans une phase B, le capitalisme doit, pour continuer à générer du profit, se financiariser et se réfugier dans la spéculation. Depuis plus de trente ans, les entreprises, les Etats et les ménages s’endettent, massivement. Nous sommes aujourd’hui dans la dernière partie d’une phase B de Kondratieff, lorsque le déclin virtuel devient réel, et que les bulles explosent les unes après les autres : les faillites se multiplient, la concentration du capital augmente, le chômage progresse, et l’économie connaît une situation de déflation réelle. (more…)

We were promised a “New Economy” of high-tech tradable services to take the place of the offshored manufacturing economy. Wondering what had become of the “New Economy,” Duke University’s Offshoring Research Network searched for it and located it offshore. Yes, the activities of the “New Economy” are also outsourced offshore.

Call centers, IT operations, back-office operations, and manufacturing have long been moved offshore. Now high-value-added proprietary activities such as research and development, engineering, product development, and analytical services are being sent offshore. All that’s left is finance, and it is crumbling before our eyes.

Independent broker-dealers are disappearing: Merrill Lynch, Bear Stearns, Lehman Brothers. These venerable institutions were too thinly capitalized for the risks that they took. Merrill Lynch is now part of the Bank of America, and Lehman Brothers is history. (more…)

When Members of Congress or the Administration or the corporate CEOs or the empirically starved right-wing ideologues start whining about regulation the right-wing echo chamber goes wild. When the absence of adequate regulation lets an industry wreak havoc, Congress and the Administration meekly admit a bit of regulation might have averted disaster. The corporate CEOs, expelled with their lucrative golden parachutes, have “no comment.”

The taxpayers, who are too often the guarantors of last resort and who are stuck with the tab, are asking each other why their public watchdogs were asleep at the switch. The Washington merry-go-round is something to behold.

As the recent headlines note, the Federal Government has taken over the giant companies Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) is using the legal process of a “conservatorship” to “stabilize” Fannie Mae and Freddie Mac. Talk about regulation! (more…)