The German newspaper the Spiegel published an interview with Noam Chomsky. It’s quite an interesting read. Those who agreed beforehand with Chomsky that the free market was mostly to blame for the current crisis will feel strengthened in their beliefs, while those who don’t would notice much to disagree with.

SPIEGEL: Professor Chomsky, cathedrals of capitalism have collapsed, the conservative government is spending its final weeks in office with nationalization plans. How does that make you feel? 

Noam Chomsky, American Philosopher

Chomsky: The times are too difficult and the crisis too severe to indulge in schadenfreude. Looking at it in perspective, the fact that there would be a financial crisis was perfectly predictable, its general nature, if not its magnitude. Markets are always inefficient.

SPIEGEL: What exactly did you anticipate?

Chomsky: In the financial industry, as in other industries, there are risks that are left out of the calculation. If you sell me a car, we have perhaps made a good bargain for ourselves. But there are effects of this transaction on others, which we do not take into account. There is more pollution, the price of gas goes up, there is more congestion. Those are the external costs of our transaction. In the case of financial institutions, they are huge.

SPIEGEL: But isn’t it the task of a bank to take risks?

Chomsky: Yes, but if it is well managed, like Goldman Sachs, it will cover its own risks and absorb its own losses. But no financial institution can manage systemic risks. Risk is therefore underpriced, and there will be more risk taken than would be prudent for the economy. With government deregulation and the triumph of financial liberalization, the dangers of systemic risks, the possibility of a financial tsunami, sharply increased.

Somehow, Chomsky seems to forget that Goldman Sachs is also a typical company operating in the free market.

He also seems to miss that this market is actually very effective; it’s taking care of those who take irresponsible risks and do stupid things quite well, doesn’t it? The market punishes those individual with bankruptcy, meaning that they or their successors will have to perform better in future years, if they want to participate in the market.

SPIEGEL: But is it correct to only put the blame on Wall Street? Doesn’t Main Street, the American middle class, also live on borrowed money which may or may not be paid back?

Chomsky: The debt burden of private households is enormous. But I would not hold the individual responsible. This consumerism is based on the fact that we are a society dominated by business interests. There is massive propaganda for everyone to consume. Consumption is good for profits and consumption is good for the political establishment.

SPIEGEL: How does it benefit politicians when the populace drives a lot, eats a lot and goes shopping a lot?

Chomsky: Consumption distracts people. You cannot control your own population by force, but it can be distracted by consumption. The business press has been quite explicit about this goal.

Although the above is certainly true to a degree, it is also true that this does not mean that individuals do somehow not have any responsibilities themselves. People are more than products of their environment.

SPIEGEL: “Change” is the slogan of this year’s presidential election. Do you see any chance for an immediate, tangible change in the United States? Or, to use use Obama’s battle cry: Are you “fired up”?

Chomsky: Not in the least. The European reaction to Obama is a European delusion.

SPIEGEL: But he does say things that Europe has long been waiting for. He talks about the trans-Atlantic partnership, the priority of diplomacy and the reconciling of American society.

Chomsky: That is all rhetoric. Who cares about that? This whole election campaign deals with soaring rhetoric, hope, change, all sorts of things, but not with issues.

This is the only part of the interview Chomsky and I are in complete agreement.

SPIEGEL: Is there nothing about McCain that appeals to you?

Chomsky: In one aspect he is more honest than his opponent. He explicitly states that this election is not about issues but about personalities. The Democrats are not quite as honest even though they see it the same way.

OK, this is another part.

And then the most important remark, perhaps, Chomsky made:

SPIEGEL: So for you, Republicans and Democrats represent just slight variations of the same political platform?

Chomsky: Of course there are differences, but they are not fundamental. Nobody should have any illusions. The United States has essentially a one-party system and the ruling party is the business party.

I agree and disagree. First, the two parties differ less than most people seem to like to pretend these days. Sure, they have serious policy disagreements, but it’s not the difference between black and white, right and wrong, communist and evil capitalist. The disagreements are, in absolute terms, not that big.

Which should serve as a reminder to all commenting on the campaign to keep their cool. The other side is not evil. The other side is not horrible. In essence, you have more in common with each other than not.

And so, Chomsky, the radical progressive thinker, is actually correct every now and then.