Ch 1 : The Matrix : Sections 10


Richard Moore

* The neoliberal project

In the late 1800s - the era of 'Robber Barons' like J.D.
Rockefeller, Andrew Carnegie, and J.P. Morgan - the economic
philosophy of laissez-faire prevailed in America and Britain.

    The laissez-faire school of thought holds a pure capitalist or
    free market view, that capitalism is best left to its own
    devices; that it will dispense with inefficiencies in a more
    deliberate and quick manner than any legislating body could.
    The basic idea is that less government interference in private
    economic decisions such as pricing, production, and
    distribution of goods and services makes for a better economy.
    - Wikipedia

In America, this era marked a period of economic growth and
industrialization, and the laissez-faire polices enabled the
Robber Barons to dominate this process and amass great
fortunes by monopolizing markets and establishing trusts and
cartels - unfettered by government interference. In Britain on
the other hand, where laissez-faire was combined with free-
trade policies, this was an era of economic decline and
deindustrialization, as the London banks moved their
investments into global markets - again unfettered by
government interference. For ordinary people in both nations,
this was an era of sweatshops, the exploitation of child
labor, the suppression of workers generally, widespread
poverty, and early mortality for mine and factory workers.

In the twentieth century laissez-faire thinking fell into
general disrepute. After the Great Depression of the 1930s,
Keynesian economics in Britain and the New Deal in America
ushered in an era of government intervention in economic
affairs, aimed at providing greater economic stability, higher
employment levels, and better working conditions. Monopolies
were broken up and corporate regulations were introduced to
curb the worst excesses of the laissez-faire era. This trend
toward progressive reform culminated in the postwar blueprint,
with its emphasis on general Western prosperity.

The abandonment of Bretton Woods stability, and the
establishment of the petrodollar era, began a process by which
all of the twentieth century economic reforms were to be
undone. The next major step in this retrograde process came in
1980, with the programs of Ronald Reagan in America and
Margaret Thatcher in Britain. These programs were in fact the
reintroduction of discredited laissez-faire economics, but
disguised by new packaging.

Whereas in the laissez-faire era people were told that
government should not interfere with capitalism, with Reagan
and Thatcher we were told that government should stop
interfering with us - ordinary people: the new policies were
allegedly aimed at 'getting government off our backs.'

    Government is not the solution to our problems;  
    government is the problem.
    - Ronald Reagan, Inaugural Address, 1981

But packaging aside, Thatcherism and Reaganomics were nothing
more than warmed-over laissez-faire economics. While the
rhetoric was about individualism, the reality was about
reducing corporate taxes, giving corporations free reign,
exploiting workers, suppressing unions, and selling off public
assets at below-value prices - in a scam called
'privatization.' Every family knows that owning a home is
better than renting one, and yet Reagan and Thatcher were able
to convince most people that publicly-owned infrastructures
were a bad idea, and that we would be better off renting our
infrastructures - forevermore and at whatever price - from
private corporations. The farm was being sold out from under
us, and most of us were believing that we were being somehow
liberated. Such is the power of the Matrix.

Economists, being academics, needed an esoteric term for this
newold economics, and they couldn't use laissez-faire because
it had been discredited. 'Neoliberalism' is the label they
generally adopted, referring to the reintroduction of
'economic liberalism,' which was another label they used in
the 1900s for laissez-faire economics. This not-very-deep verbal
disguise was sufficient to distract most observers from
noticing the retrograde reality - that we had regressed a full
century in a few short years, under the cover of
Reagan-Thatcher propaganda, as designed by Milton Friedman and
his 'Chicago School' of 'economists.'

In the 1900s, as mentioned above, there were two versions of
laissez-faire. In Britain it was combined with free trade, in
order to allow domestic disinvestment and deindustrialization,
while in America it was combined with a considerable degree of
protectionism, in order to facilitate industrialization. Like
laissez-faire, neoliberalism initially also encompassed both
protectionist and free-trade policies, and still does today as
regards, for example, Western farm subsides. But by the end of
the Reagan-Thatcher era, in the early 1990s, it became clear
that 'free trade' was to be a core element of the neoliberal

In 1995, the series of treaty conferences known as GATT
(General Agreement on Tariffs and Trade) was transformed by
the creation of the World Trade Organization (WTO). Whereas in
the earlier GATT conferences the representatives of sovereign
nations reached agreements, and then went home to seek
ratification, the WTO is a permanent institution, with a big
headquarters in Geneva, and a large staff. Not only does the
WTO provide a forum for treaty negotiations, but it also has
the power to adjudicate trade disputes between member nations,
and to prescribe sanctions for violators of WTO decisions.

The powers that have been granted to the WTO by socalled 'free
trade' treaties extend a great deal beyond any reasonable
definition of the term free trade. The legitimate scope of
free trade, as articulated by economist David Ricardo in the
early 1900s, was limited to policies regarding tariffs and
import quotas: the free trade doctrine was mainly about
eliminating protectionism. If Portugal can produce wine more
efficiently than Britain, and Britain can produce fabrics more
efficiently than Portugal, Ricardo argued that it would
benefit both nations to allow those goods to be traded without
tariffs or quotas. Even this strict version of free trade is
open to considerable criticism - when all economic factors are
taken into account - but the neoliberal 'free trade' treaties
have expanded the notion of free trade beyond all reason.

    Restrictions on goods must be the leasttraderestrictive
    possible and the restrictions must be "necessary." To prove
    that a regulation is "necessary," a country must prove that
    there is a worldwide scientific consensus on the danger, and a
    WTO tribunal of corporate lawyers must agree that the proposed
    regulation is a reasonable response to the danger.
    Furthermore, any regulation must be the "least trade
    restrictive" regulation possible. Obviously, this puts an
    almostinsurmountable burden of proof on any government that
    wants to protect its citizens and its environment from harm

In one case, California had a law prohibiting certain
cancer-causing additives in gasoline. A Canadian manufacturer
claimed this law was "protectionist" and the WTO agreed,
forcing California to rescind its law. There is no appeal from
such absurd WTO decisions, nor is their any reasonable kind of
due process involved when the decisions are made. Under the
guise of 'free trade,' the WTO provides a forum in which
corporate representatives can arbitrarily eliminate national
regulations aimed at protecting the environment or public
health, or ensuring safe working conditions, whenever those
regulations reduce corporate profits.

Each new round of WTO negotiations is aimed at extending still
further the power of the WTO over nations, and many third-world
members of the WTO have, quite understandably, resisted this
process and have managed to slow it down - encouraged to some
extent by the energy of the anti-globalization movement. Not to
be deterred, the neoliberal project has proceeded outside the
official WTO process, with initiatives like NAFTA (North
American Free Trade Agreement). As with neoliberalism
generally, such initiatives are sold on the basis of promised
benefits to individuals, while in reality they are nothing
more than wholesale transfers of power from governments to
corporations. Corporate profits go up as a result, while the
promised individual benefits seldom materialize, and worsening
conditions for people generally are instead the typical

Privatization is a central agenda of the neoliberal project,
and it is being pursued on several fronts. With Thatcher and
Reagan we saw examples of the national political process being
used to advance the agenda. The 'free trade' agreements, and
the WTO, also contribute to the agenda by declaring an
increasing number of government-provided services as being
'unfair competition,' and seeking to open up these 'markets'
to private operators. Perhaps the most effective vehicle for
moving the privatization agenda forward, at least in the third
world, has been the IMF. By setting conditions on nations
seeking critically-needed loans, the IMF has been able to carry
privatization to extreme lengths.

In some cases water itself has been privatized, making it
illegal for someone to dig a well in their own backyard - that
would be 'stealing from the company.' Water becomes just
another commodity, to be sold at all the market will bear, or
to the highest bidder. If a wealthy multinational agribusiness
operator buys a lot of the water, the local population can be
left without enough to survive. When famines result, the
Matrix media tells us the cause was something else, like low
rainfall. They don't mention that the available water went for
commercial purposes, rather than being used to enable people
to survive.

Neoliberal claims about 'more efficient services' under
privatization are dubious at best,  as exemplified by a
comparison of Britain's deteriorating and accident-prone
privatized rail network with France's excellent state-run
system. Flawed as our governments frequently may be,
government-provided services are for the most part aimed at
serving the needs of the public, and there is some degree of
public accountability. Privatized services, on the other hand,
are subject to little or no accountability, and their aim is
always to maximize operator profits.

    Few trends could so thoroughly undermine the very foundation
    of our free society as the acceptance by corporate officials
    of a social responsibility other than to make as much money
    for their shareholders as possible.
    - Milton Friedman, Capitalism and Freedom

Free trade, as envisioned by Ricardo, is aimed at improving
national economies by means of mutuallybeneficial trade. 'Free
trade' as interpreted by the WTO is aimed at maximizing
corporate profits by removing the ability of nations to
enforce sensible and necessary regulations. Rather than being
beneficial, the effect of 'free trade' on national economies,
and on public health and welfare, is more likely to be

Privately run businesses are a very good idea when there is
real competition, leading to good products and services at
fair prices. Neoliberalism's privatization agenda, however, is
aimed more at taking over industries and infrastructures that
are natural monopolies, such as energy and transport networks,
prison systems, schools, etc. In pursuit of maximum profits,
costs are cut, maintenance is deferred, prices are set at
whatever the market will bear, and there is no incentive to
provide quality of service beyond minimum acceptable levels.
Furthermore there is 'cherry picking': in the case of rail
this means that investments are more likely to be made in the
most profitable urban routes, leaving outlying areas with
inadequate service or no service at all.

As adverse as the economic and humanwelfare consequences of
the neoliberal project may be, perhaps even more alarming are
the political implications. What the neoliberal project is
really about, at the most fundamental level, is the
transference of economic sovereignty from elected governments
to the globalist institutions (WTO et al) that represent elite
corporate and financial interests. While neoliberalism is
generally considered to be an economic philosophy, the
neoliberal project is at its core a political project, aimed
at undermining the sovereign nation state, and replacing it
with an institutionalized form of global corporate governance.

    Mussolini said, "Fascism should more properly be called
    corporatism, since it is the merger of state and corporate
    - Harper's Magazine, January 2002, p. 7

The essential bond between capitalism and nationalism was
broken in 1945, with the establishment of the Pax Americana
regime. The postwar blueprint nonetheless provided stability
and prosperity in the West, artificially preserving the nation
state system by means of the Bretton Woods framework. As a
consequence, the broken bond was not noticed by most

When the Bretton Woods framework was fatally undermined in
1971, with the abandonment of the dollar gold standard, the
stage was set for the broken bond to manifest itself, for
capitalism to pursue its own path independent of the
destabilized nationstate system. The neoliberal project has
accelerated this destabilization process with a frontal
assault on the nation state, and has established a system of
global governance, under elite control, to replace the
sovereign-nation-state system which has prevailed since 1648.
The WTO, IMF, and World Bank can be seen as the 'Department of
Finance and Commerce' of the emerging corporatist world

This leaves the system of world order in a bit of a lopsided
condition. Are nation states sovereign or not? They still have
the trappings of political sovereignty, and yet that is little
but an empty shell with no power over economic and regulatory
matters. Under such conditions, how can nations be adequately

The neoliberal economic regime can be expected to lead to
discontent and unrest among Western populations, as we've
already begun to see with the anti-globalization movement. That
movement, however, represents only the activist tip of a
larger political iceberg. As conditions continue to worsen,
the base of discontent is likely to broaden considerably.
Stripped of its economic and regulatory sovereignty, the
disempowered nation state will have few resources available to
alleviate this discontent. The seeds have thus been sown for a
crisis of governance in the West, a crisis of policing and
public order.

As it turns out, the neoliberal project represents only part
of the elite blueprint for world order in the new millennium.
In subsequent developments we shall see that the full
new-millennium blueprint will complete the process of
disempowering the nation state, transferring political
sovereignty as well to centralized, elite-controlled
institutions. The full blueprint also includes new schemes for
maintaining public order and geopolitical order - both of
which were launched upon the world under the banner of the
'War on Terrorism.'


"Apocalypse Now and the Brave New World"

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