"Mr. Summers is asking questions that the World Bank would rather ignore," the Economist observes, but "on the economics, his points are hard to answer." We have the choice of taking them to be a reduction ad absurdum argument and thus abandoning the ideology, or accepting the conclusions: on grounds of economic rationality, the rich countries should export pollution to the Third World, which should cut back on its misguided efforts to promote economic development and protect the population from disaster. That way, capitalism can overcome the environmental crisis. Free market capitalism is, indeed, a wondrous instrument. Surely there should be two Nobel prizes awarded annually, not just one.

Confronted with the memo, Summers said that it was only "intended to provoke debate"—elsewhere, that it was a "sarcastic response to another World Bank draft." Perhaps the same is true of the World Bank consensus study. In fact, it is often hard to determine when the intellectual productions of the experts are intended seriously, or are a perverse form of sarcasm. The huge numbers of people subjected to these doctrines do not have the luxury to ponder this intriguing question.

Though not intended for us, "free trade does, however, have its uses," Arthur MacEwan observes in a review of the uniform record of industrial and agricultural development through protectionism and other measures of state intervention: "Highly developed nations can use free trade to extend their power and their control of the world's wealth, and businesses can use it as a weapon against labor. Most important, free trade can limit efforts to redistribute income more equally, undermine progressive social programs, and keep people from democratically controlling their economic lives." It is hardly surprising that the "New Evangelists of neoliberal theology" have won an overwhelming victory within the doctrinal system. The evidence about successful development and the actual consequences of neoliberal doctrine is dismissed with the contempt that irrelevant nuisance so richly deserves. "The carrying out of God's plan is the history of the world," Hegel explained: "That which does not accord with it, is negative worthless existence."

In the post-affluence period, the ideological institutions have dedicated themselves with renewed vigor to convincing the intended victims of the great benefits of the Higher Truths designed for subject peoples. The wonderful news about the marvels of free market economies is broadcast to the people of the south who have been devastated by these doctrines for years, and east Europeans are invited to share in the good fortune as well. Elites in the targeted countries are quite supportive, anticipating that they will benefit, whatever happens to the lesser orders.

One aspect of the internationalization of the economy is the extension of the two-tiered Third World model to the core countries. Market doctrine thus becomes an essential ideological weapon at home as well, its highly selective application safely obscured by the doctrinal system. Wealth and power are increasingly concentrated among investors and professionals who benefit from internationalization of capital flow and communication. Services for the general public—education, health, transportation, libraries, etc.—become as superfluous as those they serve, and can therefore be limited or dispensed with entirety. Some, it is true, are still needed, notably prisons, a service that must in fact be extended, to deal with useless people. As care for the mentally ill declines, prisons become "surrogate mental hospitals," a study of the National Alliance for the Mentally Ill and Ralph Nader's Public Citizen observes. The psychiatrist who led the research observes that "there were far fewer psychotic people in jail 100 years ago than we have today," as we revert to practices reformed in the 19th century. Almost 30 percent of jails detain mentally ill people without criminal charges. The drug war has also made a major contribution to this technique of social control. The dramatic increase in the prison population in the late 1980s is largely attributable not to criminal acts, but to cocaine dealing and possession, as well as the harsher sentencing favored by "conservatives". The US has by far the highest rate of imprisonment in the world, "largely because of drug-related crimes" (Matheo Falco). How fortunate we are not to be in China, where the "lingering police-state mentality leaves little room for the kinds of creative solutions the west favors in addressing social maladies such as drug addiction," the Wall St. Journal explains.

Prisons also offer a Keynesian stimulus to the economy, both the construction business and white collar employment; the fastest growing profession is reported to be security personnel. They also offer a method of economic conversion that does not infringe on corporate prerogatives and hence is acceptable. "Fort Devens top pick for US prison," a front-page Boston Globe headline happily proclaims; the new federal prison may overcome the harm to the local economy when the army base closes.
High on the list of targets for the New Evangelists is public education, dispensable, since the rich can buy what they want in the "education market" and the thought that one might be concerned about the larger society has been relegated to the ashcan of history along with other ancient prejudices. An upbeat story in the liberal Boston Globe describes an experiment in the "desperate city of Baltimore", where schools are collapsing. Several schools are being handed over to a for-profit company that will introduce the "entrepreneurial spirit": "private-sector efficiency and a new educational model means, for example, hiring nonunion custodians and placing special education students into mainstream classrooms." The former special education teachers, and the union custodians with their higher benefits, will be picked up by the schools that remain public. Another achievement of the "entrepreneurial spirit" is to replace high-cost teachers with low-wage interns and volunteers (parents). These miracles of capitalism should "provide valuable lessons as America seeks ways to improve its education system."

A central feature of the recent ideological offensive has been the attack on "big government" and pleas for relief for the poor taxpayer—undertaxed in comparison with other developed countries, a major reason for the steady deterioration of education, health, highways, indeed anything that might benefit the irrelevant public. At the same time, protectionist devices, subsidy, bail-outs, and other familiar elements of the welfare state for the rich are quietly extended, while praise for the free market resounds to the skies. The combination is a major achievement of the state-corporate-media alliance.

RESHAPING INDUSTRIAL POLICY

The world is complicated; even the most successful plans carry hidden costs. "The Reagan nightmare of supply side economics and military keynesianism" had no more enthusiastic champion than the Wall St. Journal, which now complains about the predictable effects as they impinge on wealth and power. "Public higher education—one of the few areas where America still ranks supreme—is being pounded by state spending cuts," the Journal reports, echoing the concerns of businesses that "rely heavily on a steady stream of graduates." This is one of the long-predicted consequences of the cutback of federal services for all but the wealthy and powerful, which devastated states and local communities. Class war is not easy to fine tune.

The economic managers of the 1980s not only left the US with a legacy of unprecedented public and private debt, but also with the lowest rate of net private investment of any major industrial economy. Net new investment in the 1980s fell to its lowest level since WWII. In 1989-90, the US fell behind Japan in absolute level of industrial development, with a population twice as large. The US position in high-tech industry also declined. Another legacy of "the nightmare" is a decline of spending for research and development—like health and education, "investment" for the future. R&D has fallen to "perilous" levels, the policymaking arm of the National Science Foundation reported in a 1992 study. Corporate spending, which had risen steadily before, virtually leveled from 1985. These trends, if continued, would be "fatal to the technological competitiveness of the US," the co-chairman said. Blaming bad management practices and corporate debt, the NSB reports that the US falls below its major trade competitors in total R&D, and 25 percent below in non-military industrial R&D. Corporate debt reached such levels that "by the time the recession began in July 1990, corporate interest rates were absorbing 44 percent of pretax profits, more than double the average for the 1960s and 1970s," economist Robert Pollin writes. Borrowing was used for consumption and financial speculation, including $1 trillion spent on mergers and acquisitions, with no indication of economic rationalization but ample evidence of a heavy debt burden, and a decline of 5 percent in corporate R&D as compared to a 5 percent increase for companies not involved in these practices, the NSF reported for 1986-87.

For 40 years, US industrial policy has been based on the Pentagon system, with its regular stimulus to high-tech industry and state-guaranteed markets to cushion management decisions. When a government stimulus was needed, a threat to our existence could readily be concocted: the Korean war, Kennedy's "missile gap", the impending Russian takeover of the world and the "window of vulnerability" of the Carter-Reagan years. The fakery was evident in each case, but Soviet power and tyranny were real enough, and that sufficed. Massive state intervention in the economy provided the US with a comfortable lead in advanced sectors of technology. It served as "an important pillar of the economy," ideologists and business leaders now concede as they lament the passing of the Soviet threat, which could always by invoked to keep the government crutch in place. In the post-WWII period, military spending has led the way out of recession, a senior economist at the Boston Federal Reserve Bank observes, and "There has never been a time when a rise in defense spending would mean more for the economy than now." Many economists consider the major factor in the bush recession to be the cutback in military procurement—orders placed with factories, which have not only accounted for a healthy segment of the output of goods and services but have had a substantial multiplier effect, creating jobs in companies that produce consumer goods for the relatively high-paid workers in companies that are profitable thanks to the taxpayer subsidy. "The impact is bigger than you can see by just looking at the numbers," conservative economist Herbert Stein of the American Enterprise Institute notes. "The abrupt dissolution of the Soviet Union has undermined the device instituted to maintain the economy after WWII," Times economics correspondent Louis Uchitelle reports, and "leading military companies like General Electric" are in trouble, as is high-tech industry generally.

At the same time, the cutting edge is shifting towards other areas, notably biotechnology. Like other competitive sectors of the economy, the pharmaceutical and health industries and agribusiness have always benefited from a state-organized subsidy for research, development, and marketing. These areas are now gaining a greater role in planning for the years ahead. In the early postwar years, research would "spin off" electronics and computer firms. Today, biotech firms are springing up around the same research institutions, by rather similar mechanisms.

The US National Institutes of Health are engaged in what the Wall St. Journal calls "the biggest race for property since the great land rush of 1889," in this case, "staking US patent claims to thousands of pieces of genetic material ­DNA—that NIH scientists are certain are fragments of unknown genes." The purpose, the NIH explains, is to ensure that US corporations dominate the biotechnology business, which the government expects "to be generating annual revenue of $50 billion by the year 2000," and vastly more beyond. We are now speaking of control of the essentials of life. By comparison, electronics deals with mere conveniences.

Foreign governments that are able to intend to retaliate. The scientific community at home and abroad has also expressed it opposition to these efforts. One cynical researcher remarked that as government-industry efforts are proceeding, some day parents might have to pay royalties for having children.

These developments give new urgency to the US demand for increased protection for "intellectual property"—including patents—at the ongoing GATT negotiations. "America's interest in intellectual property is by no means altruistic," the Economist observes. "From movies to microchips, America ran a healthy $12 billion surplus on its trade in ideas in 1990," while most other developed countries ran a loss, and the Third World is not even in the game. The new protectionist measures are intended to ensure that US corporations dominate the health and agricultural industries, thus controlling the essentials for human life; and to guarantee to US pharmaceutical corporations huge profits. Prices of the 20 most used prescription drugs rose at four times the inflation rate from 1984 to 1991, a 1992 study revealed, yielding skyrocketing profits for the drug companies; nearly half the 10 percent annual increase was devoted to marketing, profits, and administrative expenses.

"Basic biomedical research has long been heavily subsidized by US taxpayers," the New York Times business pages observe, and "high-tech pharmaceuticals owe their origin largely to these investments and to government scientists," funded by billions of taxpayer dollars. But drugs created with a public subsidy are priced beyond the reach of those who pay for their development, let alone the bulk of the world's population. Protection of "intellectual property" is designed to guarantee monopoly profits to the publicly-subsidized corporations, not to benefit those who pay; and the south must be denied the right to produce drugs, seeds, and other necessities at a fraction of the cost.

On similar grounds, the US refused to sign a treaty on preserving the world's biological species. The assistant secretary of state for the environment, Curtis Bohlen, said that the treaty "fails to give adequate patent protection to American companies that transfer biotechnology to developing companies," and "tries to regulate genetically engineered materials, a competitive area in which the US leads," the Times reports.

The US international trade commission estimates that US companies stand to gain $61 billion a year from the Third World if "intellectual property" rights are protected in accord with US demands, a cost to the south of somewhere between $100-300 billion when extrapolated to the other industrial countries, dwarfing the debt service flow of capital from south to north. The same US demands will require poor farmers to pay royalties to TNCs for seeds, denying them the traditional right to re-use seeds from their harvests. Cloned varieties of commercial crops exported by the south (palm oil, cotton, etc.) will also be commercial property, subject to increased royalties. "The main beneficiaries will be the core group of less than a dozen seed and pharmaceuticals companies which control over 70 percent of world seeds trade," and agribusiness generally, Kevin Watkins observes.

While the US seeks to ensure monopoly control for the future, the drug companies it protects are cheerfully exploiting the accumulated knowledge of indigenous cultures for products that bring in some $100 billion in profits annually, offering virtually nothing in return to the native people who lead researchers to the medicines, seeds, and other products they have developed and refined over thousands of years. "The annual world market value for medicines derived from medicinal plants discovered from indigenous peoples is US $43 billion," ethnobotanist Darrel Posey estimates. "Less than .001 percent of the profits from drugs that originated from traditional medicine have ever gone to the indigenous people who led researchers to them." Profits of at least the same scale derive from natural insecticides, insect repellents, and plant genetic materials, he believes. The international seed industry alone accounts for some $15 billion a year, based in large measure on genetic materials from crop varieties "selected, nurtured, improved and developed by innovative Third World farmers for hundreds, even thousands of years," Maria Elena Hurtado adds. Only the knowledge of the rich and powerful merits protection.

The director of India's Working Group on Patent Laws comments that "the levels of contradiction and hypocrisy are breathtaking." The rich "call for competitiveness, but what they want is monopoly. It is blackmail. They are seeking to do through economic rules what formerly the powerful did through armies of invasion and occupation." The manager of a Bombay drug company adds that the west "protected their own infant industries, and they pirated the world to create wealth; and they now preach to other countries to practice what they never did themselves." The developed countries "only permitted product patents after their domestic industry and infrastructure were well established. Germany allowed product patents in pharmaceuticals only in 1966, Japan in 1976, Italy in 1982." The effect of the new economic rules will be to prevent such countries as India from manufacturing life-saving drugs at a fraction of the cost charged by the state-subsidized corporations of the rich countries.

Like other developed countries, the US did not abide by the rules it now seeks to impose. In the 19th century, the US rejected foreign claims to intellectual property rights on grounds that they would hamper its economic development. Japan followed the same course. And today, the concept of "intellectual property rights" is finely crafted to suit the needs of the powerful. Exactly as in the case of "free trade," Churchill's disruptive "hungry nations" with their indecent clamor are to be denied the methods that were used by the "rich men dwelling at peace within their habitations" (Churchill).

The array of plans of the rulers is viewed from the south as "an act of unbridled piracy," Watkins observes, given that the genetic materials used by the western corporations to create their patented and protected products are derived from Third World crops and wild plants, cultivated, refined, and identified over countless generations. The seed and pharmaceutical companies thus "reap monopoly profits, while the genius of the Third World farmers, past and present, in selecting and developing individual seed strains goes unrewarded." The New World Order as a whole is described by Egypt's leading newspaper, al-Ahram, as "codified international piracy," referring in this case to bush administration maneuvers to set up a confrontation with Qaddafi for domestic political purposes in the routine manner. The terminology is apt enough.

The unbridled piracy takes on increased urgency as indigenous agriculture and knowledge are undermined by pressures on the south to abandon production needs in favor of ecologically unsustainable agro-export in the interests of the TNCs. One consequence is that the world's biological resources—mostly in the south—are in decline, raising the danger of disease and blight to potentially quite serious levels. To whatever extent biotechnology may provide a remedy, the effect again will be to transfer power and wealth to the world rulers, if the demands of the corporations for increased protection are implemented. That they will be is almost a foregone conclusion, given the distribution of power and the insulation of decision-making from public interference in the new imperial age of Year 501. (1992).

HOME: