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Thursday, February 21, 2008


Instal08, The Arches, Glasgow NEIL COOPER -- February 19 2008

The last time a major counter-cultural figure came to Glasgow was when
Noam Chomsky spoke at the Self-Determination and Power Event in 1990. So
to have Gustav Metzger, the founding father of auto-destructive art, as
the figurehead of this year's three-day festival of left-field music
showed how far Instal is attempting to locate itself from any
old-fashioned notions of a gig.

Metzger was the inspiration behind Self-Cancellation, in which artists,
including harpist Rhodri Davies and sax player John Butcher, explored the
implosive possibilities of sound. With tubas filled with sand and sounds
generated from the building itself, the effect was of an alchemical
cabaret-cum-science class.

There was little science involved in Energy Births Form, Saturday's
three-hour extravaganza in which veteran bassist Alan Silva, sax player
Donald Dietrich, and the cream of Japan's underground players attempted to
blow their minds, as well as the audiences', into a state of transcendent
bliss. It was a good-natured and at times persuasive racket, though Kylie
Minoise's five-minute private shows got there a whole lot quicker.


Lake of Fire (2006)

Cast: Noam Chomsky, Alan Dershowitz, Nat Hentoff,...
Director: Tony Kaye, Tony Kaye
Studio: Velocity / Thinkfilm
Genre: Documentary, Political & Social Issues
Running Time: 152 min.
Languages: English
Subtitles: English

Available on: March 11, 2008


With Lake of Fire, American History X helmer and music video director Tony
Kaye climbs inside of the decades-old abortion debate for a 152-minute
study of the pro-life and pro-choice positions. In the process, he
uncovers not an objective black-and-white issue, but a myriad of
circumstances and sub-issues of tremendous moral complexity and ambiguity.
He then investigates the sub-philosophies and ideas that belie each side,
with generous input and assistance from socialist Noam Chomsky, and via
interviews with Christian theologians, and professors of bioethics,
sociology and philosophy. Kaye also gives substantial consideration to the
violence directed by certain extremists at abortion doctors, nurses, and
clinics. The director worked on the picture for well over fifteen years,
and it serves as a prime candidate for the definitive abortion
documentary. However, be forewarned: Lake of Fire includes lengthy,
graphic depictions of abortion procedures and their physical and emotional
side-effects, and it is not for the squeamish or suitable for younger
audiences. ~ Nathan Southern, All Movie Guide


Fiona Macdonald, Metro 20.02.08

According to Cornelia Parker, her 42min film of philosopher and
linguistics professor Noam Chomsky holding forth on big issues is...

Chomsky compares the US foreign policy of quashing 'successful defiance'
with a Mafia godfather punishing disobedience. He argues that our economic
system is fundamentally flawed.

And he touches on climate change, the reason for Parker's film (the
screening is in partnership with Friends of the Earth and visitors can
leave thoughts on 'poison and antidote' postcards).


Chomskian Abstract, 2007, DVD, 41:48,
Filmed on 9 March 2007 at Massachusetts Institute of Technology, courtesy
the artist.
Co-commissioned by Sharjah Biennial 8 - 2007, UAE and Ikon Gallery,
Birmingham, UK.


Creative Destruction' – The Madness of the Global Economy -Part 1

Watching the corporate media report the 'financial crisis' is instructive.
From the perspective of power, it is important that a steadying hand is
applied to the tiller of news and commentary on the crisis, and the global
economy itself.

And so columnist Martin Wolf took a 'measured' view in the Financial
Times. There have been 100 "significant" banking crises in the past thirty
years, he noted, making them almost routine. Authorities have had to
intervene to "rescue" the US financial system from four crises over that
period: the developing country debt and also the "savings and loan" crises
of the 1980s; the commercial property crisis of the early 1990s; and now
the subprime and credit crisis of 2007-08. As Wolf observed correctly of
the banking sector: "No industry has a comparable talent for privatising
gains and socialising losses."

Wolf's big "fear", though, is that the crumbling financial system will
destroy "the political legitimacy of the market economy itself." Why this
"political legitimacy" should not be challenged is left hanging in the air.

And what Wolf terms the "market economy" is an extreme variant of
capitalism known as 'neoliberalism' which is massively subsidised and
protected by powerful states. Again, all this is left unsaid. Wolf turns
instead to bankers' pay which, he asserts, lies at the root of the problem:

"By paying huge bonuses on the basis of short-term performance [...] banks
create gigantic incentives to disguise risk-taking as value-creation."
Official intervention to regulate bankers' remuneration is a "horrible"
solution. But the alternative, an endless series of financial crises, is
"even worse." (Wolf, 'Why regulators should intervene in bankers' pay',
Financial Times, January 16, 2008)

Wolf's "solution", however, is hugely impractical. Defining a link between
bankers' performance and remuneration would be immensely difficult,
involve unlikely international regulation of global markets and require
complex mechanisms to police. As this simply is not going to happen in the
current political climate, given the certain massive resistance of
financial interests, we can expect similar and maybe worse crises in the

Over at the Times, another useful gauge of establishment thinking, the
title of Anatole Kaletsky's column summed up the required pacifying
message: 'Relax. Our economy isn't manic depressive.' Happily, according
to Kaletsky's "hunch", it will all turn out fine: "a combination of
monetary and fiscal easing, along with some regulatory changes [...] will
lessen the credit crisis and prevent a world recession." (Kaletsky, The
Times, January 24, 2008). The message was buoyant, but it was also

The Independent's economics commentator, Hamish McRae, pinned blame for
the crisis simply on "mistakes":

"Bankers, like the rest of us, make mistakes, but the scale of the
mistakes, particularly in US banks, has been enormous. We won't fully
understand for some time quite how they could persuade themselves that
bundles of housing loans to clearly uncreditworthy borrowers should be
ranked as almost as good as government securities."

The "legitimate question" now, asserts McRae, is "whether the continuing
banking weakness has become so serious as to transfer what is still a
financial market problem into a more general economic problem." His
reassuring conclusion:

"Banking troubles will be a drag on the world economy, slowing it down.
But they won't stop it in its tracks." (McRae, 'The markets are bad, but
don't panic just yet', Independent, January 23, 2008)

This would be comforting news for the 'masters of the universe' who were
meeting in Davos, many of them in sombre mood: 27 heads of state; 113
cabinet ministers; hundreds of chief executives, bankers, fund managers,
economists and journalists: about 2,500 participants in all. Sean O'Grady,
the Independent's economics editor, was enthralled by the "concentrated,
eclectic mix of the top slice of humanity" that "is part of the 'magic' of
this mountain redoubt"; all twinkling under a "sprinkling of stardust"
brought upon proceedings by the likes of Bono.

The stardust was clearly affecting O'Grady's vision as he proposed we
should rely on western political and corporate leaders to "balance the
needs and aspirations of the old economies of the West, the emerging
economies of the east and the still poor billions in the south." (O'Grady,
'Davos. Wealth, power and a sprinkling of stardust', The Independent,
January 22, 2008)

In the Guardian's comment pages there was at least a glimmer of dissent
from columnist Jonathan Freedland. "Turbo-capitalism is not just unfair,"
he wrote, "it is dishonest and dangerous." He pleaded: "surely this is the
moment when Labour and the centre-left can dare to question the neoliberal
dogma that has prevailed since the days of Thatcher."

Freedland's dissection was limited, though, cautiously proposing that "you
could argue" that "capitalism is always [...] parasitical on the state."
What he sought was a kinder, gentler form of capitalism instead of the
"turbo-capitalism" which is happy to rely "on us, the public, and our
instrument, the state, when it gets in trouble." Thin on details, he
concluded weakly: "Now we should demand a say the rest of the time, too."
(Freedland, 'The free-marketeers abhor the crutch of the state - until
they start limping', Guardian, January 23, 2008)

The above sample indicates the narrow spectrum of corporate media opinion
on the 'financial crisis.' Viewpoints are heavily biased towards the
status quo, with only occasional fig leaves of mild dissent. This is a
misleading picture, avoiding scrutiny of an economic system that is both
fundamentally flawed and stacked against the majority of humanity.

Financial and political elites are at pains to convince the public they
+can+ get things 'back on track' by tweaking interest rates, 'stimulating'
the economy and only infrequently having to intervene to make a heroic
"rescue". Thus, although the occasional financial crisis cannot be
prevented - just as a flu virus might afflict a healthy body - the economy
itself is presumed to be "inherently strong." (President George W. Bush,
quoted, Democracy Now!, January 23, 2008;

This is a vital illusion; the required view of wealthy investors and
corporations. After all, a basic requirement for powerful authority to
prevail is the mythical projection of a benign force in control of events.
Western leaders and their faithful retinue in the media are deceptively
reassuring about the global economic situation - because profits and power
demand it. Otherwise they run the serious risk of a huge slump in public
confidence in the current economic system and even in what passes for
'democratic' politics. Corporate reporting of the 'financial crisis',
then, is yet another example of how reality is distorted in service to
power and profit.

Boom And Bust

Despite the huge scale of yet another financial crisis, and the threat of
an impending severe global economic recession, the major political parties
and elite media refuse to address the possibility of fundamental
weaknesses and inequality at the very heart of modern 'capitalism.' In
reality, the current system, driven by private profit far beyond
environmental sanity, is incapable of meeting the needs and aspirations of

The inherently unstable and destructive behaviour of capitalism derives
from its inevitable cycles of "boom and bust." We can see this in both
theory and practice. Corporations operate for the primary benefit of their
shareholders, as demanded by company law. The priority of shareholders is
to maximise profits. The capital that they invest must increase in value
to justify the risk undertaken. Demand for products and services thus
needs to expand. The profits gained, or part thereof, can then be
reinvested to generate further profit.

But the process is unsustainable because markets become saturated as
consumers reach the limit of their demand capacity. Intense competition
impels producers to drive down costs, especially labour, to make a profit.
As profits become squeezed, and dividend-hungry shareholders threaten to
take their investment elsewhere, producers become desperate to push up
total sales. They pump out ever greater volumes of commodities and spend
billions on advertising to boost demand. Inevitably, the flood of
commodities surpasses the capacity of the market to absorb products. Sales
collapse, unemployment rises and a full-blown recession ensues: this is
the 'bust' part of the cycle. Surplus productive capacity then has to be
destroyed before a new 'boom' can begin.

That is the theory, and it is borne out by historical experience. Since
the industrial revolution, around 200 years ago in the West, boom-and-bust
cycles have recurred with varying intensity. The most destructive bust
occurred in the 1930s Great Depression, leading to World War Two and the
deaths of over 60 million people.

Historically, as Karl Marx recognised, capitalism can also be seen as the
driver of technological revolutions and in boosting human powers of
production. And, at least in the West, it has been associated with past
increases in the living conditions of a sizeable fraction of the
population. So perhaps we should accept that capitalism, with all its
flaws, +is+ the best we can do. Perhaps we should believe the official
argument that governments have largely learnt to cope with boom-and-bust
cycles through judicious planning.

For example, a huge crisis +was+ averted in the 1970s. However, this was
only possible because, as British economist Harry Shutt explains: "the
authorities were determined (as never before) to use the forces of the
state - through fiscal and monetary manipulation (including massive but
unsustainable government borrowing) - to try and keep the show on the
road." (Shutt, email, January 28, 2008)

But these were only short-term 'fixes' at best. Gerry Gold and Paul
Feldman sum up:

"Attempts to resolve the simultaneous stagnation and inflation of the
1970s through high interest rates produced a recession in the US in the
early 1980s. Parallel deflationary policies imposed by the UK's Thatcher
government from 1979 led quickly to a recession and a fullblown slump by
1985. Attempts to overcome this only led to a further recession in
1991-2." (Gold and Feldman, 'A House of Cards: From fantasy finance to
global crash', Lupus Books, London, 2007, p. 28)

Moreover, Shutt exposes the "coping strategies" promoted over the past
twenty years by government authorities in cahoots with Wall Street and the
City. These have "all involved pumping up credit bubbles around various
fantasies – 'emerging' markets,, housing - which had about as much
substance as the original South Sea [Bubble] and could only be sustained
even for a few years by a similar level of fraud and misinformation."
(Shutt, email, January 28, 2008)

In 1997, a major financial crisis erupted, starting in East Asia.
Currencies collapsed, businesses went bankrupt and millions of people lost
their jobs. Many Asian enterprises were subsequently snapped up at
rock-bottom prices by corporations and investors in the West. Soon after,
in 2000, the speculative bubble of investment in internet-related
companies burst spectacularly. This 'dot-com' bust saw a lengthy recession
ensue in the developed world.

Historical evidence shows, then, that governments have been largely
powerless to combat capitalism's inevitable and damaging 'business
cycles'. However, this should not be confused with the resiliency of
capitalism; the system has demonstrated a repeated capacity to reform
itself sufficiently to allow renewed growth and to survive further rounds
of business cycles. So it would be wrong to assume that the whole
capitalist system, unstable and unfair as it always will be, is on the
verge of total collapse.

Official Fraud And Propaganda

An alarming symptom of what is wrong with current economics is the
increasingly desperate and cynical measures taken by powerful states,
corporations and investors to maintain faltering public confidence in
global capitalism. Just as Enron, Worldcom and a host of other large
corporations have committed accounting fraud, so governments have
falsified figures on inflation, output and unemployment to present a false
picture of a healthy economy. (See Shutt, 'The Decline of Capitalism', Zed
Books, London, 2005, pp. 104-5)

For example, the US government has deliberately exaggerated GDP growth
rates in order to disguise the economy's poor performance since the
mid-1970s; in the developed world, growth rates have actually declined
over the past three decades. As David Harvey reports, aggregate global
growth rates stood at around 3.5 per cent in the 1960s. Even during the
difficult 1970s, marked by energy shortages and industrial unrest, it fell
only to 2.4 per cent. But the subsequent growth rates have languished at
1.4 per cent and 1.1 per cent in the 1980s and 1990s, respectively, and
has struggled to reach even 1 per cent since 2000. (Harvey, 'A Brief
History of Neoliberalism', Oxford University Press, 2005, p. 154)

In terms of public perception, however, the authorities have largely
succeeded. They have maintained the fiction that they +can+ manage the
economy effectively and that global capitalism is the only game in town.
How has this been possible? Shutt points to a "media campaign of
uncritical propaganda and pro-market hype." This "sustained act of mass
deception (in which the establishment has seemingly come to believe in its
own propaganda) has had disastrous consequences." (Shutt, op. cit., pp.

Those consequences include crushing levels of poverty and inequality; wars
motivated by the desire for strategic control, hydrocarbon resources and
economic markets; climate instability; and the most rapid loss of species
in the planet's history.

The Neoliberal Nightmare

To complement the above picture, and in contrast to corporate media
coverage, we must also critically describe the political-economic process
summed up by that innocuous-sounding word, 'neoliberalisation'. This
serious attack on democracy, the latest stage in advanced capitalism, took
root in the Reagan-Thatcher era of the 1980s, and has accelerated ever
since. Proponents of neoliberalism tell us that human well-being
flourishes best within an institutional framework characterised by strong
private property rights, 'free' markets and 'free' trade. But what has it
meant in practice?

First, recall that after the trauma of the Depression and WW2 in the 1930s
and 1940s, Western governments used Keynesian fiscal and monetary policies
(named after the British economist John Maynard Keynes) to try to dampen
business cycles and to ensure reasonably full employment. There was
significant state-led planning, and even state ownership, of key
industrial sectors such as coal, steel and cars. Governments also made
huge investments in health care, education and infrastructure. As David
Harvey explains, this system of "embedded liberalism" involved "market
processes and entrepreneurial and corporate activities [that] were
surrounded by a web of social and political constraints and a regulatory
environment."(Harvey, op. cit., pp. 10-11)

During the 1950s and 1960s, embedded liberalism delivered high rates of
economic growth in the West. But in the 1970s, given the inevitability of
boom-and-bust, a serious crisis of capital accumulation arose. Inflation
and unemployment soared, and labour unrest threatened business interests.
The free-market and monetarist financial centres, notably the City of
London, had never been enamoured of the postwar welfare state and were
increasingly antagonistic towards state Keynesian policies. As Harvey
notes, "the nationalized industries were draining resources from the
Treasury." (op. cit., p. 57). With the oil shocks and economic stagnation
of the 1970s, powerful business and political forces mobilised to set a
course for the next stage of capitalism: to regain the elite class power
that had been dissipated, to some extent, by postwar policies of wealth
redistribution and social welfare. Neoliberalisation was born.

A wave of deregulation of financial markets swept the world, and
transnational mobility of capital rapidly rose. Corporate pressure
intensified on governments to create a 'good business climate' and to
adopt neoliberal 'reforms' that routinely squeezed state spending. Wall
Street-IMF-Treasury policy measures came to dominate US economic policy
and many developing countries were driven down the neoliberal road,
creating social havoc and environmental disasters. Neoliberalism became
the new economic orthodoxy, exerting a powerful ideological influence in
the media and academia.

The whole process has been a form of 'creative destruction', weakening or
even breaking down existing institutions and state powers, social welfare,
health care, education systems and culture – even modes of human
interaction, behaviour and thought.

In some countries, certainly, there have been 'successes' during the
initial stages of neoliberalisation in lifting people out of poverty and
in raising living standards for many – just as past capitalism generally
did in the West. However, this has certainly not been the motivating
intent of corporations and investors, despite much pious rhetoric about
'solving poverty'. Any localised 'success' has typically been achieved at
the expense of people elsewhere, in regions where neoliberal 'development'
has not been as advanced. China's achievements, for example, have been
gained to the serious detriment of neighbouring economies.

A persistent and deep-rooted characteristic of neoliberalisation has been
its strong tendency to worsen social inequality, as we will see later.
Social progress achieved during neoliberalisation of previously poor
countries has not been sustained. Typically, state intervention has been
required to maintain any semblance of a social welfare safety net – or the
net has simply been left to fray in the chill winds of economic 'progress'.

At the other end of the social spectrum, neoliberalisation has generated
spectacular concentrations of wealth and power that have not been seen
since the 1920s. In China and Russia, new and powerful economic elites
have been created. Harvey sums up:

"The flows of tribute into the world's major financial centres have been
astonishing. What, however, is even more astonishing is the habit of
treating all of this as a mere and in some instances even unfortunate
byproduct of neoliberalization. The very idea that this might be - just
might be - the fundamental core of what neoliberalization has been about
all along appears unthinkable. It has been part of the genius of
neoliberal theory to provide a benevolent mask full of wonderful-sounding
words like freedom, liberty, choice, and rights, to hide the grim
realities of the restoration or reconstitution of naked class power
[...]." (Harvey, op. cit., pp. 118-119)

The above is but a hint of the stark reality underpinning the
'flourishing' of the global economic system; a reality that is shamefully
missing from broadcast headlines and newspaper front pages. The current
system of economics, particularly the latest stage of "turbo-capitalism",
known inoffensively as "neoliberalism", is built upon painful
boom-and-bust cycles fuelled by corporate greed and maintained by cynical
deception of the public. The costs to the planet – in terms of human
suffering and environmental collapse – are staggering.

Exchange With The Independent's Hamish McRae

In Part One of this alert, we noted an observation made by Hamish McRae,
economics columnist at the Independent:

"Bankers, like the rest of us, make mistakes, but the scale of the
mistakes, particularly in US banks, has been enormous." (McRae, 'The
markets are bad, but don't panic just yet', The Independent, January 23,

We asked him why he talked merely of "mistakes", adding:

"Why are the terms of your analysis so narrow; so skewed towards the
perspective of financial power?" (Email, January 23, 2008)

As an alternative, we suggested a few observations made in Part One; in
particular, that the current economic system is both innately unstable and
destructive. We asked McRae why he appears to reject such a rational
analysis. On the same day, he wrote back confusingly:

"Thanks - I see your point. I suppose I feel I should deal with the world
as it is, rather than as it might be. Is that narrow? Well, yes if you are
seeking a discussion of the merits and demerits of the present global
market economy, but no if you are trying to understand and calibrate what
is actually happening. I think I am probably more use doing the latter."

We responded:

"You say: 'I feel I should deal with the world as it is.' Perhaps it would
be more accurate to rephrase this as: 'I feel I should deal with the world
as I see it.'"

His reply, sent as he was about to head for the World Economic Forum in

"Not sure - let me think about it. But in all earnestness I do think that
you should not discount the huge progress made in India and China in
lifting people out of poverty. I visited both in recent months and am in
awe. I shall have to stop this interchange as I have to pack for Davos

But just how accurate is McRae's observation of the "huge progress made in
India and China", a mantra that appears regularly in the corporate media?

India And China: The Latest 'Success Stories' Of Capitalism

Cheerleaders for capitalism are keen to advertise the system's
'successes'. Earlier, model countries were said to include Japan, South
Korea, Malaysia and Thailand. But that was before the East Asian financial
crisis of 1997-98. India and China are today's poster states for

Some progress in these countries is real. However, as we noted before, any
social progress under 'neoliberal reforms' has not been sustained and,
moreover, has been to the detriment of people losing out elsewhere in the
global economy (not to mention the damage to global ecosystems).

Another important factor, glossed over in conventional reporting, is that
massive state intervention and subsidies have been required to ameliorate
the worst consequences of 'shock therapy' in following neoliberal
doctrines of 'market reforms.' Political economist David Kotz notes that
China's strategy of opening up its economy since 1978 "bears almost no
resemblance to the neoliberal approach followed by Russia."

For example, government price controls were lifted only gradually in
China. Also, the large-scale privatisation of state-owned enterprises,
upon which many people depended, did not begin until 1996, 18 years into
the transition. The state continued to direct and support large state
enterprises, only gradually loosening its regulation as experience grew of
operating in a market environment.

Public spending and public investment continued to grow, rather than
shrink as in Russia. China did not privatise its banks, as Russia did, but
retained a state-controlled financial system. And rather than rapidly
eliminating barriers to trade and capital movements, China has retained
significant controls over both. (Kotz, 'The Role of the State in Economic
Transformation: Comparing the Transition Experiences of Russia and China',
Political Economy Research Institute, University of Massachusetts at
Amherst, October 1, 2004;


By keeping strict control of key elements of the economy, China managed
(at least initially) to avoid the disasters that assailed other countries.
India, too, has long pursued interventionist economic strategies, with the
government restricting the attempted access by foreign corporations to
domestic markets and enterprises.

Commentators in the corporate media seem reluctant to acknowledge all this
when they talk of the supposed successes of 'market reforms' in China and
India. Moreover, behind McRae's impression "of huge progress" in these
countries, the reality is far more disturbing.

Take India first. In 2007, the country's rank in the Human Development
Index of the United Nations Development Programme (UNDP) fell two places
to 128. That put India in the bottom 50 of the 177 nations examined. P.
Sainath, rural affairs editor of The Hindu newspaper, points out the
disturbing context of the statistics:

"El Salvador, which saw a bloody civil war for over a decade from the
1980s, ranks 25 places ahead of us at 103. Bolivia, often called South
America's poorest nation, is 11 steps above us at 117. Guatemala, nearly
half of whose citizens are poor indigenous people, saw the longest civil
war in Central America. One that lasted close to four decades and which
saw 200,000 people killed or disappear. That too, in a nation of just 12
million. Guatemala ranks 10 places above us at 118." (Sainath, 'India
2007: High growth, low development', The Hindu, December 24, 2007)

Sainath adds, with grim humour:

"India rose in the dollar billionaire rankings, though. From rank 8 in
2006 to number 4 in the Forbes list this year [...] In the billionaire
stakes, we are ahead of most of the planet and might even close in on two
of the three nations ahead of us (Germany and Russia)."

As India's new billionaires snap up palatial homes and luxury yachts,
desperate conditions for the nation's farmers have led to an epidemic of
suicides. Vandana Shiva, director of the Research Foundation for Science,
Technology and Ecology, refers to the appalling suicides of more than
40,000 Indian farmers since 1997 as "genocide":

"This genocide is a result of deliberate policy imposed by the World Trade
Organisation and implemented by the Government. It is designed to destroy
small farmers and transform Indian agriculture into large-scale corporate
industrial farming."

Farmers are in despair over crippling debts from rising production costs
and falling prices, both linked to the corporate-led imposition of 'free
trade' in agriculture. Shiva warns of the growing forced dependence on
hybrid and genetically modified seeds which are costly and cannot be
saved. These consequences derive from the corporate policy of privatising
seed supply and the drive towards multinational seed monopolies. (Special
correspondent, 'Farmers' suicides nothing but genocide, says Vandana
Shiva', The Hindu, May 9, 2006)

So India's 'success' has come at a huge social price. What about China?

"A Large Statistical Glitch"

A new World Bank study has revealed that China's economy is considerably
smaller than had been thought, perhaps by as much as 40 per cent. "What
happened was a large statistical glitch," reported the New York Times. But
it's a glitch that has huge repercussions:

"Suddenly the number of Chinese who live below the World Bank's poverty
line of a dollar a day jumped from about 100 million to 300 million." That
is the same size as the entire population of the United States. The new
figures mean that the size of India's economy, too, has probably been
exaggerated until now. "And, by the way, global growth has very likely
been slower than we thought." (Eduardo Porter, 'China shrinks', New York
Times, December 9, 2007).

Economist Martin Hart-Landsberg notes that China's alleged success is "at
the expense of economic problems elsewhere":

"[W]hile investment rates are very high in China, they are low and falling
in most of the rest of East Asia. Their economies have become increasingly
dependent on exporting to China and to succeed they have been forced to
keep wages low." (Email, January 26, 2008)

China has largely failed to generate new jobs: an endemic feature of
neoliberalism. Indeed, a 2004 study by Alliance Capital Management
reported that manufacturing jobs are being +eliminated+ faster in China
than in any other country. Between 1995 and 2002, China lost more than 15
million factory jobs: 15 per cent of its total manufacturing workforce.
(Jeremy Rifkin, 'Return of a Conundrum', The Guardian, March 2, 2004)

Even by the World Bank's own analysis, China's poor have been growing
poorer as the country's economy 'booms.' The real income of the poorest 10
per cent of China's 1.3 billion people fell by 2.4 per cent in the two
years to 2003. During this time the economy was growing by nearly 10 per
cent a year. Over the same period, the income of China's richest 10 per
cent rose by more than 16 per cent. (Richard McGregor, 'China's poorest
worse off after boom,' Financial Times, November 21, 2006)

Tragically, studies of China's health indicators show a slowdown or even
reversal of trends. A report in 2005 "concluded that China's rates of
improvement in life expectancy were lower than those of East Asia and the
Pacific region as a whole in every decade other than the 1960s, and fell
below the world average in the 1990s. They observed a similar trend for
infant mortality, noting that China's advances were again outpaced by
those of high income countries and other East Asian and Pacific states."
(Sanjay Reddy, "Death in China, Market Reforms and Health," New Left
Review, 45, May/June 2007, p. 62)

Hart-Landsberg warns that "past health gains from immunizations, water and
sewer infrastructure, education, etc. may now be exhausted. And as
marketization continues, the social infrastructure is being destroyed,
with the consequence that problems are emerging for most Chinese. Social
support/public health care system is not there and health care is now a
market process. Many cannot afford it as they have to pay for access to
it." (Email, January 26, 2008)

On top of this working class misery, inequality between China's rich and
poor is appalling and is actually getting worse. The Asian Development
Bank studied the degree of inequality, using the popular Gini coefficient,
in 22 East Asian developing countries. It found that China had the second
highest degree of inequality, trailing only Nepal (Asian Development Bank,
'Inequality in Asia, Key Indicators 2007, Special Chapter Highlights', p.

China's tragic transformation from one of the most equal, to one of the
least equal, countries is even more striking if we switch our measure of
inequality from the Gini coefficient to income ratios; in particular, the
earnings of the top 20 per cent relative to the bottom 20 per cent of the
population. Using this measure, China had by far the highest growth in
inequality (Ibid., p. 7). Sadly, Hart-Landsberger warns that there is
"every reason to believe that these [official] statistics strongly
underestimate the degree of inequality." (Email, January 26, 2008)

There are further 'hidden' costs to China's rapid growth: rising
pollution, destruction of ecosystems and the heightened threat of climate
chaos. Future generations will bear the brunt of these 'externalities.'
The Worldwatch Institute reported at the end of 2006 that China had slid
down the annual Climate Change Performance Index (CCPI), a measure of a
country's climate protection efforts, due to its rising emissions of
carbon dioxide. China ranked 29th out of 53 countries in 2006, dropping to
54th out of 56 in the 2007 update. (Hua Zhang, 'China's Climate Change
Performance Worsening', Worldwatch Institute, November 23, 2006;

The history of neoliberal 'reforms' suggests things can only get worse.

Concluding Remarks

The dominant system of economics is unstable, inimical to social justice
and lethally damaging to the environmental support systems on which we all
depend. A major failure in professional journalism has been the refusal to
analyse this; or even to report that real growth rates in the developed
world have been declining since the 1970s. Instead, corporate-employed
journalists and mainstream analysts frequently extol the alleged
spectacular achievements of an 'unparalleled' rise in wealth.

We referred in Part One to the desperate attempts by governments to
manipulate official statistics to hype the 'success' of global capitalism.
Do commentators in the media really believe that a civilised society
should tolerate an economic system so dependent on deception to maintain
public 'confidence' in 'free' and 'open' markets?

The media's omission of rational perspectives on the global economy is
particularly galling in the case of the publicly-funded BBC, which
professes a "commitment to impartiality." This "commitment" supposedly
means that "we strive to reflect a wide range of opinion and explore a
range and conflict of views so that no significant strand of thought is
knowingly unreflected or under represented." (BBC, Editorial Guidelines, editorialguidelines/edguide/impariality/;
accessed January 23, 2008). As on so many other issues that we have
examined in media alerts over the years, this is simply BBC rhetoric.

Meanwhile the threat of global economic recession, the horrific divisions
between rich and poor, and worldwide climate chaos, threaten to engulf us

¤ ¤ ¤ ¤ ¤


The goal of Media Lens is to promote rationality, compassion and respect
for others. If you do write to journalists, we strongly urge you to
maintain a polite, non-aggressive and non-abusive tone.

Write to: Hamish McRae, Independent economics commentator

Write to: Martin Wolf, Financial Times columnist

Write to Helen Boaden, BBC news director

Please send a copy of your emails to us


Book review: "Israel and the Clash of Civilisations"

Raymond Deane, The Electronic Intifada, 11 February 2008

Much debate on conflict in the Middle East is beset by contradictions and
unanswered questions. These include: If the war in Iraq was motivated by
oil, then why was it opposed by so many within the oil industry itself?
Was the US incited by the omnipotent Zionist lobby to a war that is
opposed to America's vital interests (and is the lobby omnipotent?)? Or is
Israel merely a tool of the US establishment, seen as a vital defender of
Western interests in the recalcitrant Orient?

In his second book, Nazareth-based English author Jonathan Cook seeks to
cut these Gordian knots, and in the process proposes an uncompromisingly
grim diagnosis of what is happening in the world's most unstable region,
and why it is happening.

Borrowing analysis by Greg Palast, Cook accepts that the oil industry
wished to see Saddam toppled, but maintains that it envisaged "a US-backed
coup by a Ba'athist army general; the new strongman would be transformed
into a democratic leader by elections held within three months." There
would ensue "the creation of an Iraqi state-owned company that would
restrict production, staying within quotas and shoring up Saudi Arabia's
control of OPEC ... The neocons, on the other hand, wanted the Iraqi oil
industry privatized so that the global market could be flooded with cheap
oil and the Saudi-dominated cartel smashed."

Given that Saudi Arabia is "Israel's only Middle Eastern rival for
influence in Washington," the Jewish state had long desired to see the
destruction of OPEC, which would also deprive the Saudis of their "muscle
to finance Islamic extremists and Palestinian resistance movements."
Furthermore, as far back as 1982 the Israeli newspaper Haaretz's legendary
military correspondent Ze'ev Schiff (recently deceased) had written that
Israel's "best" interests would be served by "the dissolution of Iraq into
a Shi'ite state, a Sunni state and the separation of the Kurdish part," a
prescription that the US is attempting to fill a quarter of a century
later. Israel was also wary of "strongmen" who might act as a focus to
awaken the dozing giant of Arab nationalism, although Quislings are always

Clearly Israeli and US neoconservative perceived interests are being met
by the current Iraq war better than by its predecessor, when George H.W.
Bush, advised by the wily oilman James Baker, declined to advance on
Baghdad and oust Saddam Hussein, whose survival was still regarded as
essential for "stability" in the region.

Six months before the 2003 reinvasion of Iraq, the egregious neocon
Michael Ledeen wrote: "We do not want stability in Iran, Iraq, Syria
Lebanon and even Saudi Arabia; we want things to change. The real issue is
not whether, but how to destabilize." Clearly, a cynical travesty of
Schumpeter's "creative destruction" has become the motto for a breed of
militaristic ideologues whose element is chaos.

If Israel is "the region's policeman," then, it is "one spreading discord
rather than order ..." The Israeli army, in reality that country's
"permanent government," is braced for permanent warfare, using Gaza and
the West Bank as laboratories from which to export ideas, techniques and
technologies. "The US Department of Homeland Security was one of Israel's
most reliable markets, buying high-tech fences, unmanned drones, biometric
IDs, video and audio surveillance gear, air passenger profiling and
prisoner interrogation systems." Naomi Klein's The Shock Doctrine may be
read as a complementary account to Cook's, albeit on a broader canvas.

As against "Chomsky's view that the positions of AIPAC and the Israeli
lobby mainly reflected US interests in the Middle East," Cook cites
Chomsky's own view in the early 1980s that Israel sought the
"Ottomanization" of the region, "that is, a return to something like the
system of the Ottoman empire, with a powerful center (Turkey then, Israel
with US-backing now) and much of the region fragmented into
ethnic-religious communities ..." (Chomsky's The Fateful Triangle). What
this would entail is laid out in the words of Hizballah's astute leader
Hassan Nasrallah. In Lebanon, "There will be a Sunni state, an Alawi
state, a Christian state, and a Druze state," although a Shiite state may
well be prevented. Israel, Nasrallah adds, will be surrounded by "small
tranquil states. I can assure you that the Saudi kingdom will also be
divided, and the issue will reach to North African states ... Israel will
be the most important and the strongest state in a region that has been
partitioned into ethnic and confessional states that are in agreement with
each other. This is the new Middle East." Meanwhile, the US and its
accomplices will have obligingly split Iraq into three quiescent
statelets, as we have seen.

But Cook doesn't uncritically adhere to the position of US academics
Stephen Walt/John Mearsheimer that, as he paraphrases it, "much of the
foreign policy making process in the US had been effectively hijacked by
agents of a foreign power, and that it was Israel really pulling the
strings in Washington through its neocon allies and groups like AIPAC ..."
He asks "If such commitment to Israeli interests was simply an effect of
the pro-Israel lobby ..., why had the previous Bush Sr and Clinton
presidencies not pursued similar policies in the Middle East to Bush Jr?"
and cites a number of instances where the US has disregarded Israeli
wishes, including "disputes over Israeli arms sales to China ..., the
current Bush administration's quiet non-response to Israeli requests for
financial compensation for its Gaza 'withdrawal' and its message to the
Olmert government that it should not ask for funding for its 'convergence
plan' ..."

I'm not so sure about Cook's other examples. "Reagan's sale of AWACS
planes to Saudia Arabia" could surely be attributed to the different
conditions of an earlier historical conjuncture. While Reagan in many ways
anticipated the worldview of the neocons (some of whom cut their fangs in
his administration), it's hard to read Cook without becoming convinced
that neoconservatism was the dominant ideology in Israel decades before it
came home to roost in the US. As for "the first Bush administration's
threat to withhold loan guarantees," often cited in similar contexts,
surely the Zionist lobby's subsequent vengeful role in stymieing Bush Sr's
re-election suggests an interpretation of this gesture's consequences more
flattering to the power of the lobby's long arm.

On the other hand, there have been occasions when the Israeli tail has
seemed to be wagging the US dog, most notably the murky case of the USS
Liberty, victim of a deliberate lethal attack during the 1967 War, for
which crime no subsequent US government has held Israel accountable. In
1978, President Carter was humiliated when the Israelis invaded and
occupied south Lebanon against his wishes. Cook seems a little uneasy
about these incidents, and his hypothetical explanations of the US
behemoth's seemingly helpless tolerance are hedged around with many a
"possibly" and a "doubtless" (the latter usually a reliable indicator of
doubt). Yet it is impossible, after reading this short but densely-packed
and unswervingly logical book, to disagree with Cook's knot-cutting
conclusion that "the dog and tail wag each other."

I have described Cook's diagnosis as "uncompromisingly grim," and it must
be said that Israel and the Clash of Civilisations left this reader with a
depressing sense of impotence. Cook attempts to cheer us up in his final
paragraph, concluding that "The most likely outcome [of US-Israeli efforts
to remake the Middle East] ... was the forging of new political, religious
and social alliances across the Middle East whose effects it was almost
impossible to predict or imagine." Perhaps, however, there is more hope to
be gleaned from the preface: "It is not entirely accidental that in
dragging the US into a direct occupation of Iraq that mirrors Israel's own
much longer occupation of the Palestinian territories, Israel has ensured
that the legitimacy of both stands or falls together." Perhaps we are not
too far from the day when the illegitimacy of the Iraq adventure will
become so patent to Americans themselves that their blind support for the
Zionist project will at last evaporate.

Raymond Deane is a composer, and a founding member of the Ireland
Palestine Solidarity Campaign.


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