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The "Virtual Senate"

Issue: 6 Section: Accounts Topics: chomsky

August 31, 2003

The "Virtual Senate"

CHOMSKY: The term is not mine. I am borrowing it from the professional literature on international economics. The "virtual senate" consists of investors and lenders. They can effectively decide social and economic policy by capital flight, attacks on currency that undermine the economy, and other means that have been provided by the neoliberal framework of the past thirty years. You can see it in Brazil right now. The "virtual senate" wants assurances that the neoliberal policies of the Cardoso government, from which foreign investors and domestic elites greatly benefit, will not be changed. As soon as international investors, lenders, banks, the IMF, domestic wealth, and so on, recognized that Lula might win the elections, they reacted with attacks on the currency, capital flight, and other means to place the country in a stranglehold and prevent the will of the majority from being implemented. When they regained confidence that Lula would not be able to depart fundamentally from the international neoliberal regime, they relaxed and welcomed him. As they put it, Lula reassured people that he would keep Brazil safe. That specific use of language has two faces: if he keeps it safe for the financial investors, will he keep it safe for the Brazilians? Governments face what economists call a "dual constituency": voters, and the "virtual senate." Lula promised his country that he will keep Brazil safe for the population, but the IMF wants to keep it safe for its own constituency: the "virtual senate." They will act so that the money comes right after the elections and only if Lula keeps up with creditors. This is the effect of financial liberalization and other measures that have established the "virtual senate" as the dominant force in determining social and economic policy within a country. It means the population doesn't have control of the decisions taken by his own country. One consequence of liberalization of capital is rather clear: it undercuts democracy.

QUESTION: This is a big win for the left in the world; Brazil is such a big country ...

CHOMSKY: I have a lot of respect for Lula but the problem is that he has very little space to maneuver. Actually, he has some choices: he can become some sort of figurehead in the hand of the IMF or he can do some good for Brazil. If he doesn't get killed first...

QUESTION: We hope not...

CHOMSKY: Lula could direct resources for internal development but unregulated capital flow can be used very effectively to undermine attempts by individual governments to introduce progressive measures. Any country trying to stimulate its economy or increase its health spending is likely to find this deviant behavior instantly punished by a flight of capital.

QUESTION: It seems to me, with a certain degree of difference, that the concept of a virtual senate is similar to Negri's and Hardt's concept of Empire. [Michael Hardt, Antonio Negri, Empire (Harvard University Press, 2000)]

CHOMSKY: Empire, yes, but I have to say I found it hard to read. I understood only parts, and what I understood seemed to me pretty well known and expressible much more simply. However, maybe I missed something important.

QUESTION: Yes, and the book arrives to the same conclusion as yours but through a more complicated, less readable way...

CHOMSKY: If people get something out of it, it's okay. What I understand seems to be pretty simple, and this is not a criticism. I don't see any need to say in a complicated way what you can say in an easier way. You can make things look complicated, that's part of the game that intellectuals play; things must look complicated. You might not be conscious about that, but it's a way of gaining prestige, power and influence.

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The Dominion is a monthly paper published by an incipient network of independent journalists in Canada. It aims to provide accurate, critical coverage that is accountable to its readers and the subjects it tackles. Taking its name from Canada's official status as both a colony and a colonial force, the Dominion examines politics, culture and daily life with a view to understanding the exercise of power.

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