“What happens, now that democracy and the free market have fused into a single predatory organism with a thin constricted imagination that revolves almost entirely around the idea of maximising profit?” asked Arundhati Roy, Indian author at a discussion at the Massachusetts Institute of Technology with Noam Chomsky, professor of Linguistics and Philosophy.
In the discussion, which focused on the threats to democracy in the United States, India, and worldwide, Ms. Roy said that asking such questions about “life after democracy” does not mean we should lapse into earlier discredited models of authoritarian or totalitarian forms of governance. “It is meant to say that in the system of representative democracy too much representation with too little democracy needs some structural adjustment,” she argued.
As an example of some of the inherent risks within democratic systems Ms. Roy touched upon environmental concerns. She asked the audience, “Could it be that democracy is such a hit with modern humans precisely because it mirrors our greatest folly, our near-sightedness, our inability to live entirely in the present, like most animals do, combined with our inability to see very far into the future, making us strange in-between creatures, neither beast nor prophet?”
Ms. Roy also touched upon the institutionalised nature of repressive tendencies in India, saying “Something about the cunning, Brahmanical, intricate, bureaucratic, file-bound, applied-through-proper-channels nature of governance and subjugation in India seems to have made a clerk out of me.” She said that her only excuse was to say that it takes “odd twos to uncover the maze of subterfuge and hypocrisy that cloaks the callousness and the cold calculated violence of the world’s favourite new superpower.”
Ms. Roy also described her recent visit into areas controlled by groups portrayed in the mainstream media as “violent Maoist rebels” that need to be “wiped out.” She argued that in exchange for giving such groups the right to vote, democracy “has snatched away their right to livelihoods, to forest produce and to traditional ways of life.”
She pointed out that the states of Chattishgarh, Jharkhand, Orrissa and West Bengal, had signed hundreds of Memoranda of Understanding worth billions of dollars with large trans-national companies and this inevitably led to moving tribal people from their lands. “We refer to such areas not as the Maoist corridor but the MoU-ist corridor,” she quipped.
Corroborating some of Ms. Roy’s comments with points regarding risks in global financial markets Mr. Chomsky said that even senior officers at the Bank of England and the International Monetary Fund had recently alluded to the high likelihood of future crisis in the global financial system.
Arguing that the problem of market externality posed systemic risks, Mr. Chomsky said “If Goldman Sachs sells complex financial instruments which it knows are no good, it will insure itself against loss by betting that they will fail, but it will not take into account systemic risk – the effect on the whole system – if it is transactions go bad.”
He said that in addition, perverse incentives resulted from the “enormous” power of the financial institutions over the state, with the U.S. now changed from a manufacturing economy to a financial economy. This power over the state has led to “all kinds of guarantees that if something goes wrong they will have no problem. The most famous of them is the government insurance policy called “too big to fail” – if you are too big the taxpayer will bail you out,” Mr. Chomsky said.
He argued that as the senior financial regulators had admitted, “the combination of market inefficiencies and perverse incentives virtually guarantees a doomsday cycle.”