Straight from Chomsky's Mouth:
[The IMF and World Bank have played various roles since they were founded but let's take the last 30 years, the period of so called neo-liberalism. This new era began in the early 1970's after Richard Nixon dismissed the Bretton Woods system, established by Keynes and White right after the Second World War.
Breton Woods was based on the principle that countries could control capital flow, so you could prevent capital flight. That's what Britain did after the war to allow recovery. Also currencies were fixed within a pretty narrow band, so there was very little speculation against currency.
Those were the fundamental principles, which were eliminated in the early 1970's, first by the Nixon's US, then Britain, Switzerland and other major countries. It was perfectly well understood what this would mean.
Keynes pointed out 70 years ago that if you have financial liberalization and free flow of capital, it will undermine the possibility of democracy for a very simple reason: it creates what economists call a virtual senate.
He refers to Keynes quite a bit, and unlike when he refers to neo-classicists, usually positive.
All you have to do is read Keynes, read Galbraith and read Chomsky and you find a great deal in common. Chomsky's
dreams are certainly different but when it comes to practical applications in the real world there ain't a great deal of difference.
A bit more on Chomsky on Keynes:
Reply from NC,
My own view, which I've discussed a fair amount in print, is that there were also no capitalist societies in anything like a useful sense of the word pre-1930; rather, a number of varieties of state capitalist societies. In the modern world, from Britain, to the US, to the other "developed" societies, state intervention has played a major role from the outset. There are flirtations with markets, but for temporary advantage, for the most part.
I think people are very wise not to "trust" Keynesian theories, or any others. Rather, they should evaluate them. If they do, I think they will discover that the international economy is only "dimly understood" (as Harvard's Jeffrey Sachs observed recently), and that we should approach its properties "with humility" (to borrow from the Bank for International Settlements -- sometimes called "the central bank of central bankers," the ultimate in "respectability"). Particularly with regard to financial markets, a dominant force in the contemporary world, understanding is very thin, and models change very fast. An illuminating recent study is Robert Blecker's "Taming Global Finance." On such crucial matters as the factors in economic growth, have a look, say, at the recent comments of Robert Solow, who won a Nobel Prize for his pioneering work on this topic, in the current issue of "Challenge," a good economics journal -- one of several assessments of the state of the art by leading economists. His conclusion, reasonable to my knowledge, is that little is understood. On Keynesian views vs. current orthodoxies with regard to financial markets and their behavior, there are (in my view) outstanding papers by David Felix, who argues (pretty persuasively I think) that they Keynesian assumptions are much better supported by the empirical data of the last quarter-century of financial liberalization. (end of quote)
I think Chomsky is a bit more rational than most of his followers. Once again read Keynes, read Galbraith, read Chomsky and see how much they have in common. Especially when it comes to the short run. You know, before we are all dead.
A bit more. From Chomsky's "Assaulting Solidarity-Private Education"
QUOTE
And one of the effects, in a way, I think the most important, is the undermining of the conception of solidarity and cooperation. I think that lies at the heart of the attack on the public school system, the attack on social security, the effort to block any form of national health care, which has been going on for years. And, in fact, across the board, and it's understandable. If you want to "regiment the minds of men just as an army regiments their bodies," you've got to undermine these subversive notions of mutual support, solidarity, sympathy, caring for other people, and so on and so forth.
Sounds to me like Chomsky is supporting
government run education,
government pensions and
government run health care. Where is the anarchist here? Sounds like another big government liberal to me.