Chomsky Calls ECONNED “Great”

From an interview of Noam Chomsky by Keane Bhatt, “Chomsky: ‘The Business Elites … Are Instinctive Marxists'” in TruthOut. The funny bit is I was reading this piece (per referral by reader May S) and found this section in it:

: In characterizing the U.S. financial crisis, you say that “markets are inefficient … They can be controlled by some degree of regulation, but that was dismantled under religious fanaticism about efficient markets, which lacked empirical support and theoretical basis; it was just based on religious fanaticism.” Was this “irrational fundamentalism” the major factor in the development of the current world economic crisis? I ask because in “Hopes and Prospects,” you direct readers wishing to understand the crisis’s roots to Foster and Magdoff’s “The Great Financial Crisis.” Their thesis is that due to long-run stagnation tendencies in the real economy, “profits were increasingly directed away from investment in the expansion of productive capacity and toward financial speculation.” For Foster and Magdoff, the religious fanaticism was politically expedient and helped feed a series of massive financial bubbles, but this push compensated for the underlying, long-term stagnation tendencies of the real economy.

NC: I think that there’s some truth to that. There are books that are now available that I would’ve also referred to which go way beyond what I said – people from right in the middle of the economics profession going to the point of declaring economists criminals. For example, Yves Smith’s book – which is really good – I mean, she just says that those guys are a plague. The field ought to be dismantled. And she goes into the real details of it and shows what there is in economic theory that is so corrupt that it’s hard to discuss. It’s a great book.

I know his remarks probably make me, in the words of reader Nathan T, ” a radical totalitrian liberal communistic anarchist.” However, if you read his remarks, he depicts me as “right from the middle.” Go figure.

The rest of the interview is very much worth reading, and you can find it here.

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  1. Glenn Condell

    That’s wonderful Yves. We all have our quibbles with the great man, but he will seem to the future as the Road Not Taken.

    High praise indeed.

  2. harminder

    congratulations, Yves.. Maybe Econned will be the book the masses will be gripping as they recover their countries from the financial industry on Dec 7 (or whenever else in the future)

  3. Jesse Frederik

    I got into politics by reading Chomsky and altough I now do not agree with all of his conclusions, I admire the man greatly and have learned a lot from him. On foreign policy I think he’s mostly right, on economics I think he uses too broad a brush and lacks depth, on philosophy and linguistics I think he’s absolutely brilliant.

    I recommend everyone to look up the Richard Perle- Noam Chomsky debate on youtube, I’ve never heard a debate which made me realize how completely incompetent or corrupt our rulers really are, it’s both shocking and revealing.

    1. LeeAnne

      Jesse Frederik,

      Ditto on the recommendation to watch the Richard Perle-Noam Chomsky debate here

      Thank you.

      Contrary to my impression, it is clear from the first few minutes of Chomsky’s introductory remarks to the debate that he has understood the political economy of the United States all too well.

      It is in this context that US Drug Prohibition enforcement policy can also be understood. It is an extension of American economic policy and why Soros is being so brutally attacked by the RIGHT. Soros has been a leader for reform of US Drug Prohibition policy because he is a patriot and KNOWS for whom US drug prohibition, exported to the rest of the world through the UN, stands.

      Its easily understood. Unless you live under the mind cloud of American propaganda.


    If it’s good enough for my “main man” NC, it’s good enough for me….. If there’s one thing that you can accuse Noam of being, it is that he is a thoughtful man.

    I too do not agree with all his conclusions, however, perhaps it is because I don’t have enough time to be as engaged in political thought as I would like to be.

    I have not read your book “Econed” as of yet, a question of time. It is on my reading list and I am looking forward to it with the same anticipation and expectation as a dinner at Bayona, Susan Spicer’s eclectic restaurant in the Quarter, which has long been, one of my favorites in the world.

    Best regards,


  5. Susan

    Good news, Yves.

    I’ve been holding off reading the book in hopes that it would be published in an audio edition. (I have sent the suggestion to Audible.) For some reason I find that I can follow this material more easily when listening to it than reading it on the page. Are there plans for an audio version?

    1. readerOfTeaLeaves

      I heartily concur!
      It didn’t occur to me to contact re: getting an audio version of Econned. If anyone wants to leave contact info here, I’m one reader who’d love to point out to the publisher that they’re missing an opportunity by failing to put out a solid audio version.

      1. readerOfTeaLeaves

        I find that absolutely baffling.
        Also, irritating. But I’ll do my utmost to be civil about that fact.

        From a business perspective, I’m convinced they are missing an opportunity.

  6. Parvaneh Ferhad

    Congratulations. While I don’t have read your book, I am sure the praise is well deserved.
    On the other hand I have to seriously question his grasp on Marx when he calls the elite ‘instinctive Marxists’. It’s a slip I wouldn’t have expected from Chomsky.

    1. gruntled

      Chomsky was probably referring to how “the elite” instinctively know how socialize their losses, as the they are doing now all over the world once again.

  7. gerold k.b. weber

    Foster and Magdoff’s “The Great Financial Crisis” sets the current standard of explanation for the historical process from industrial capitalism to financial capitalism, and to the current crisis. It is an underestimated book which deserves to be discussed more widely, and macro economists could learn something about parameters which should be incorporated in their models.

    Yves Smith’ ECONned tells the best story of the inner workings of US and globalized financial capitalism.

    Tie the two together with Michael Hudson’s and Steve Keen’s perspectives on economic rent, aggregate demand, and the debt economy, and you can see the dawn of a break-through in economic understanding.

    However, the final macroeconomic proof that an increasingly inequal economy MUST lose the capability to sell its goods to increasingly indebted consumers is still outstanding, and therefore we are confused about the right prescriptions.

    Unfortunately, even progressive macroeconomists don’t have the intention or scientific means to let us look ourselves in that mirror, and show us that lower and middle classes – the disaggregation in social classes is absolutely required here – can only buy goods produced by and for them as long as new debt is continuously added to the system.

    Thus we remain acclaiming even small steps into the right direction, such as the introduction of ‘acceptable debt levels’ and ‘patient and impatient kinds of people’ in Krugman and Eggertsson’s new model.

  8. Siggy


    I’ve read your book and it is, indeed, a very good book. I see it as being a perfect companion to Reinhart and Rogoff’s “This Time is Different”.

    There are other books but these two get to the core of the current problem. What has not developed in the literature is an examination of the role that a fiat currency, coupled with frational reserve banking, plays in creating the incentives to profligate credit creation and theft.

    I saw an inflation theme cartoon (the Id one) whose final frame contained the following: “This Dollar Has A ‘Best If Used By’ Date On It.” An amusing piece with profoundly negative implications given that a fiat dollar is only worth what it will buy.

    There is a companion process that operates as an abettor in the creation of the current economic distress and that is the fact that at the Federal and State level there has been been, and continues to be, an egregious abrogation of regulatory responsibility. Through either the absence of prosecution or incompetent effort, there has been no meaningful punishment of the blatant fraud that permiates the financial services industry. One has to wonder, just what deters the effort?

    The plaudits from Chomsky are notable and well earned. Sadly, there is only so much that can be accomplished in a single pass. This reader hopes that you will continue to expose the fraud that fills the halls of finance. Your special skill is that of digging in and finding that which is the condition at hand, not some questionable and unproven hypothesis.

  9. LeeAnne

    Yves, Chomsky depicts you as ‘right from the middle’ because you are; from the prospective of his generation and mine. Although lacking your professional experience in Wall Street and markets, we have a shared understanding of the principles involved. It is those principles resulting from the reform established after the great depression that have been shattered. Your book reveals how it was accomplished.

    I am so glad Chomsky read it and praises your book; he couldn’t have a better teacher. I always thought he had a blind spot when it came to economics and so took him less seriously than he and I deserved because of it.

    Americans of Chomsky’s era, although nationalistic, are not so easily programmed by political propaganda. They are well informed by Nazi era propaganda. But the mind does get clouded and addled by it. IMHO, that is why 1 out of 5 Americans have been found to be mentally ill. (I don’t trust statistics unless they agree with me).

    Just look at videos of people at the airports and its clear Americans don’t know how or where or when to draw the line and defend themselves. They’re like children, incapable of projecting consequences. A man like Chomsky pounding against propaganda in the midst of the most relentless and pervasive propaganda in the world is heroic.

    When we respect the government by ‘obeying’ the law in spite of wanting to do the contrary, we are vulnerable to mental and emotional abuse by the laws’ creators; corporations, governments and criminal organizations.

    Its like ‘taking candy from a baby.’ Unlike a bullet, propaganda aims straight for the mind. With mass media like TV, radio, think tanks, universities and newspapers owned by corporations and financed by governments, there’s no contest about who has the power; and who, in 1-way communications, is at the butt end of that power.

    In Chomsky’s time and mine, Wall Street business was relationship driven. Informed by the criminality and its reform following the great depression, peer pressure upheld standards in the investment industry (with lots of caveats).

    Several things happened to change that; decontrol of stock purchase commissions and the incorporation of banks among them. But the biggest incentive driving the high level of criminality since the mid-1970s occurred because of the explosion of pension and retirement assets owned by workers who are primarily, by anyone’s standards, ‘naive’ investors.

    It was a pool of money, in the trillions, that couldn’t be ignored by the government. It could have been anticipated that the government would not keep its hands off of control of its sovereign treasure albeit held in the names of hundreds of millions of private citizens.

    The corporatocracy took care of that –a kind of chicken and egg proposition. The government entity trusted to protect the people and the people’s property sold out to the corporatocracy dedicated to exploiting those people and their property.

    1. Paul Repstock

      Nice post LeeAnne. I have a slightly different view of the last bit though:
      you wrote: “The corporatocracy took care of that –a kind of chicken and egg proposition. The government entity trusted to protect the people and the people’s property sold out to the corporatocracy dedicated to exploiting those people and their property.”

      I think that the electorate is not yet ready to vote for an obviously corporate entity. So there still exists a tiny separation of ‘church and state’.

      So long as the voter will stand for this autoritarian abuse, the gap will continue to shrink. I am so saddened by the abject surrender of most people to things like the ‘Body Scanner/Grope Up’ dicotomy. Does your life depend on making that flight??

      I do find it interesting that this malevolent agenda is willing to sacrific a major corporate entity (Airlines), just to prove their power.???

  10. Dan

    “I know his remarks probably make me, in the words of reader Nathan T, ” a radical totalitrian liberal communistic anarchist.” However, if you read his remarks, he depicts me as “right from the middle.” Go figure.”

    I think if you look at the rest of the context of “right in the middle of the economics profession” it seems more like he’s saying you’re an economist calling out other economists’ B.S. rather than making a statement about your political affiliation. I could be wrong though. It’s a pretty ambiguous phrasing.

    Congrats on the recommendation by the way. I’ve only been reading the site for a short time but it’s always interesting stuff. Keep up the good work!

  11. James Quigley

    I appreciate that you enjoyed Mr. Chomsky’s praise. He is a strong social Libertarian, and not a leftist, although his criticism of the Vietnam War, our Corporatist system, and the criminality of our financial system has led to people calling him a leftist.

  12. Chris

    Congratulations Yves. I see Naked Capitalism slowly
    becoming what Huffington Post promised to become,
    an alternate for informed and educated people to
    the MSM. H.P. has sadly degenerated into a gossip
    sheet and the blog equivalent of a chick flick.
    Too bad.

    If anyone is not familiar with Chomsky please do
    yourself a favor and listen to him or watch his
    videos–do not read his books, his style in more
    suited to the spoken word than the written.

  13. Kevin

    The Chomsky article is what drew me to your site, and I am now a new subscriber… I’m sure I’ll just be one of many.

  14. Tom HIckey

    Congratulations, Yves, at being called “great” by The Great Man himself, as he will be recognized by history. Just look at the sleaze balls that are his enemies and chief detractors and you can see why. These are the people that are leading the world to ruin, as Professor Chomsky has been documenting for decades. No wonder they hate him so much. He is blowing their cover big time. So you are in good company with him. I wouldn’t apologize for it, or even make light of it. It’s a badge of honor.

  15. chris

    I think he means right in the center (middle) of things economic (i.e. you’re a respected economist), not a centrist politically. But whatever, congratulations. IMHO being cited by Chomsky is the stuff of immortality!!

  16. markincorsicana

    Better “a radical totalitarian liberal communistic anarchist” who insightfully reports that not only does the emperor have no clothes, but exactly what happened to the wardrobe, than a randian teabrained evilgelical sycophant who thinks that water flows downhill because it is in the best self interest of water to do so. And Thank You from a longtime reader.

  17. Paul Tioxon

    Congratulations, as if you weren’t already on the Anarcho Type II Terrorist watch list, you are now. Perhaps the simplicity of your over all argument against the economics profession, that it simply is an ideological enterprise, that has long since abandoned even the patina of being a social science, with gain more appreciation. I don’t like being lied to and I never met anyone who does. People don’t like liars and they hold special contempt for those that do it to our faces, day after day, as if we are too stupid to realize they are not liars. You can’t fool all of the people all of the time, and their day is over. Again, thank you for a well constructed attack on the political nonsense of pseudo-intellectual capitalists.

  18. F. Beard

    Chomsky looks like me, that handsome devil.

    I like what he says too.

    What a pathetically insecure country the US is that it feels the need to bully other countries. Yep, there were the Commies to worry about then but what is our excuse now?

    Sometimes I think we are “Babylon the Great” in The Book Of Revelation. I suggest we repent and let that role fall to someone else.

  19. EmilianoZ

    Congrats! An accolade by Chomsky, that means something. The guy is so clever he must have very high standards.

    The whole interview is a must read. One item caught my eye. It’s actually from the interviewer rather than Chomsky:

    “I talked with an older, honest investor recently, a multi-millionaire. He discussed how, as a social norm, his class had relieved itself of any allegiance or loyalty, in contrast to the Eisenhower-era capitalists in the U.S. and East Asian elites today. If this country were to institute higher marginal tax rates – even if well below the 90 percent marginal tax rates under Eisenhower – he said he’d simply shut down what remains of his productive assets in the U.S., put thousands of his workers out of a job, change his citizenship to the UAE, and live there.”

    That might explain why Obama is so reluctant to raise taxes on the rich. I think it should be done regardless. If those guys don’t leave the US now they will leave it later anyway when they realize there’s nothing left to loot. It’s better to take the pain now (if there’s any pain from their leaving). The US still has the best universities and plenty of enterprising people. You just have to shut down finance so that the MIT, Stanford people go back to producing something useful. The more you wait, the more the situation will deteriorate, the less the wealthy will have to lose.

    I’d be very interested in a cost/benefit analysis of the wealthy leaving in droves. What they contribute in terms of jobs, what they take in the form of rent collection, government subsidies, government bailout,…

    1. Paul Tioxon

      Seriously you MBA types, did you think Dubai, and the other up and coming glitter pleasure palaces were being built for Al-Queda? Our favorite VP drilling equipment company and PMC is already there. The story of the Campbell Soup heir, John Dorrance, who up and left for Ireland with his billions, because of taxes, is instructive of the mobility of capital and the fix that the citizenry is in, labor is not so mobile. In this day and age, how many people from Colorado will be willing to relocate to China or Brazil for a better way of life? We have the methodology to measure the existing capitalist world system and it is at odds with the nation state order that elevated it.

  20. skippy

    Damn you Chomsky!!!

    Just when you think you’ve zeroed in on a perfect x-mas pressie…where in the world will I find a pair of HOT PINK Birkenstock’s and wool socks[?!]…sigh.

    Skippy…Cudos…I always said you were edgy.

  21. Glenn Condell

    ‘Although, see also his interview with Ali G. The man has NO sense of humor.’

    That makes two of them then.

  22. okl

    it is a good book, im planning on a 2nd read after raghuram rajan’s “faultlines”.

    it hasn’t been popular enough to spread in overseas bookstores yet though; i got mine via amazon for 2 reasons, i read your blog quite often… though backdated because of time constraints and the youtube trailer was pretty darn good.

    as a sidenote, i finished General Rupert Smith’s “The Utility of Force” a few weeks back and it sort of struck me that the biggest mistake the Fed is making is that it isn’t convincing anyone that there is a feasible plan for reaching the outcome that is desired; similar to what US did in Iraq upon invasion in 2003, up till today.

    and yet, i somehow also see that with the political context in gridlock, the Fed might have its hands tied up too…

    this just hit me that might have some relevance to this post; i read somewhere this week that in days gone by, the profession of economics used to be understood as “political economy”, but unfortunately, as explained quite clearly in your book and elsewhere by many others, it got twisted into equations and models.

    anyway, cheers!

  23. hibikir

    Now, if you only sold the book in the B&N nook store too, I’d buy it, even though I am a bad, bad RSS reader.

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