How Free is the Free Market?

By Noam Chomsky
From Lip Magazine
05.15.97

THE FREE MARKET IS SOCIALISM FOR THE RICH. The public pays the costs and the rich get the benefit—markets for the poor and plenty of state protection for the rich.

There's a conventional doctrine about the era we're entering and the promise that it's supposed to afford. In brief, the story is that the good guys won the Cold War and they're firmly in the saddle. There may be some rough terrain ahead, but nothing that they can't handle. They ride off into the sunset, leading the way to a bright future, based on the ideals that they've always cherished: democracy, free markets and human rights.

In the real world, however, human rights, democracy and free markets are all under serious attack in many countries, including the leading industrial societies. Power is increasingly concentrated in unaccountable institutions. The rich and the powerful are no more willing to submit themselves to market discipline or popular pressures than they ever have been in the past.

Basic Rights
Let's begin with human rights, because it's the easiest place to start: they're actually codified in the Universal Declaration of Human Rights, passed unanimously by the United Nations General Assembly in December, 1948. In the United States there's a good deal of very impressive rhetoric about how we stand for the principle of the universality of the Universal Declaration, and how we defend the principle against backward, Third World peoples who plead cultural relativism.

All this reached a crescendo about a year ago, at the Vienna Conference. But the rhetoric is rarely besmirched by any reference to what the Universal Declaration actually says. Article 25, for example, states: "Everyone has the right to a standard of living adequate for the health and well-being of himself and his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood."

How are these principles upheld in the richest country in the world, with absolutely unparalleled advantages and no excuses for not completely satisfying them? The US has the worst record on poverty in the industrialized world: a poverty level which is twice as high as England's. Tens of millions of people are hungry every night, including millions of children who are suffering from disease and malnutrition. In New York City 40% of children live below the poverty line, deprived of minimal conditions that offer some hope of escape from misery and destitution and violence.

Work & Debt in the New World Marketplace
Let's turn to Article 23. It states: "Everyone has a right to work under just and favourable conditions." The International Labor Organization (ILO) has just published a report estimating the level of global unemployment—understood to mean the position of not having enough work for subsistence—in January 1994 at about 30%. That, it says accurately, is a crisis worse than that in the 1930s. It is, moreover, just one part of a general worldwide human rights catastrophe. UNESCO estimates that about 500,000 children die every year from debt repayment alone. Debt repayment means that commercial banks made bad loans to their favourite dictators, and those loans are now being paid by the poor, who have absolutely nothing to do with it, and of course by the taxpayers in the wealthy countries, because the debts are socialized. That's under the system of socialism for the rich that we call free enterprise: nobody expects the banks to have to pay for the bad loans that's your job and my job.

Meanwhile, the World Health Organisation estimates that 11 million children die every year from easily treatable diseases. WHO's head calls it a silent genocide: it could be stopped for pennies a day.

In the US, of course, there is currently a recovery. But it's remarkably sluggish, with less than a third of the job growth of the previous six recoveries. Furthermore, of the jobs that are being created, an enormous proportion more than a quarter in 1992 are temporary jobs and most are not in the productive part of the economy. Economists welcome this vast increase in temporary jobs as an "improvement in the flexibility of labour markets". No matter that it means that when you go to sleep at night you don't know if you're going to have work the next morning it's good for profits, not people, which means that it's good for the economy in the technical sense.

Another aspect of the recovery is that people are working longer for less money. The workload is continuing to increase, while wages are continuing to decline which is unprecedented for a recovery. US wages as measured by labour costs per unit output are now the lowest in the industrial world, except for Britain. In 1991 the US even went below England, although England caught up and regained first place in the competition to crush poor and working people. Having been the highest in the world in 1985 (as one might expect in the world's richest country), US labour costs are today 60% lower than Germany's and 20% lower than Italy's. The Wall Street Journal called this turnaround "a welcome development of transcendent importance". It is usually claimed that these welcome developments just result from market forces, like laws of nature, and the usual factors are identified, such as international trade and automation. To put it kindly, that's a bit misleading: neither trade nor automation has much to do with market forces.

The Myth of Free Trade
Take trade. One well-known fact about trade is that it's highly subsidized with huge market-distorting factors, which I don't think anybody's ever tried to measure. The most obvious is that every form of transport is highly subsidized, whether it's maritime, aeronautical, or roads or rail. Since trade naturally requires transport, the costs of transport enter into the calculation of the efficiency of trade. But there are huge subsidies to reduce the costs of transport, through manipulation of energy costs and all sorts of market-distorting fashion. If anybody wanted to measure this, it would be quite a job.

Take the US Pentagon, a huge affair. A very substantial part of the Pentagon is intervention forces directed at the Middle East, across the whole panoply of intimidation devices to make sure nobody gets in the way if the US tries to intervene. And a large part of the purpose of that is to keep oil prices within a certain range. Not too low, because the US and British oil companies have to make plenty of profit, and these countries also have to earn profits which they can then send back to their masters in London and New York. So, not too low. But also not too high, because you want to keep trade efficient. I'm not even mentioning so-called externalities, like pollution and so on. If the real costs of trade were calculated, the apparent efficiency of trade would certainly drop substantially. Nobody knows how much.

Furthermore, what's called trade isn't trade in any serious sense of the term. Much of what's called trade is just internal transactions, inside a big corporation. More than half of US exports to Mexico don't even enter the Mexican market. They're just transferred by one branch of General Motors to another branch, because you can get much cheaper labour if you happen to cross a border, and you don't have to worry about pollution. But that's not trade in any sensible sense of the term, any more than if you move a can of beans from one shelf to another of a grocery store. It just happens to cross an international border, but it's not trade. In fact, by now it's estimated that about 40% of what's called world trade is internal to corporations. That means centrally-managed transactions run by a very visible hand with major market distortions of all kinds, sometimes called a system of corporate mercantilism, which is fairly accurate.

GATT and NAFTA just increase these tendencies, hence harming markets in incalculable ways. And if we proceed, we find that the alleged efficiencies of trade are to a large extent an ideological construction. They don't have any substantive meaning. With automation, for instance, there's no doubt that it puts people out of work. But the fact of the matter is that automation is so inefficient that it had to be developed in the state sector for decades meaning the US military system. And the kind of automation that was developed in the state sector at huge public cost and enormous market distortion was a very special kind. It was designed in order to de-skill workers and to enhance managerial power. This has nothing to do with economic efficiency; it's to do with power relations.

There have been a number of academic and management-affirmed studies which have shown over and over that automation is introduced by managers, even when it increases costs when it's inefficient just for power reasons.

Take containerization. It was developed by the US Navy that is, by the state sector in the economy masking market distortions. In general, invocation of market forces, as if they were laws of nature, has a large element of fraud associated with it. It's a kind of ideological warfare. In the post WWII period, this includes just about everything; electronics, computers, biotechnology and pharmaceuticals, for instance, were all initiated and maintained by enormous state subsidies and intervention otherwise they would not exist. Computers, for example in the 1950s, before they were marketable were virtually 100% supported by the taxpayer. About 85% of all electronics was state-supported in the 1980s. The idea is that the public is supposed to pay the cost. If anything comes out of it, you hand it over to the corporations. It's called free enterprise!

All of this quite sharply increased under the Reagan administration. The state share of GNP rose to new heights in the first couple of years of the Reagan administration. And they were proud of it. To the public they had all kinds of free-market talk, but when they were talking to the business community, they talked differently. So James Baker, when he was Secretary of the Treasury, announced with great pride to a business convention, that the Reagan administration had offered more protection to US manufacturers than any of the preceding post-war administrations, which was true, but he was being too modest; it actually offered more protection than all of them combined.

One of the reasons why Clinton had unusual corporate support for a Democrat is that he planned to go even beyond that level of market distortion and market interference, for the benefit of domestic-based capital. His Secretary of Treasury, Lloyd Bentsen, was quoted in the Wall Street Journal as saying, "I'm tired of this level playing field business. We want to tilt the playing field in favour of US industry." Meanwhile, there's a lot of very passionate rhetoric about free markets but, of course, that's free markets for the poor, at home and abroad.

The fact is that people's lives are being destroyed on an enormous scale through unemployment alone. Meanwhile, everywhere you turn you find work that these people would be delighted to do if they had a chance. Work that would be highly beneficial both for them and their communities. But here you have to be a little careful. It would be beneficial to people, but it would be harmful to the economy, in the technical sense. And that's a very important distinction to learn. All of this is a brief way of saying that the economic system is a catastrophic failure. There's a huge amount of needed work. There's an enormous number of idle hands of suffering people, but the economic system is simply incapable of bringing them together. Now of course this catastrophic failure is hailed as a grand success. And indeed it is for a narrow sector of privileged; profits are skyrocketing. The economy is working just fine for some people, and they happen to be the ones who write the articles, and give the speeches, so it all sounds great in the intellectual culture.

Globalized Currencies
Looking at these major tendencies, especially in the past twenty years, one crucial event was Richard Nixon's demolition of the Bretton Woods system in the early 1970s. That was the post-war system for regulating international currencies, with the US serving as a kind of international banker. He dismantled that with a lot of consequences.

One effect of the de-regulation of currencies was a huge increase of capital and financial markets. The World Bank estimated it at about 14 trillion dollars, which totally swamps government. And the amount of capital that's being transferred daily is increasing. It's probably now about a trillion dollars a day again swamping government.

In addition to a huge increase in the amount of unregulated capital, there's also a very radical change in its composition. John Eatwell, an economist at Cambridge, and a specialist on finance, pointed out recently that in 1970—before Nixon dismantled the system—about 90% of the capital used in financial transactions, internationally, was for long-term investment trade and about 10% for speculation. Now figures have reversed. It's 90% for speculation, and about 10% for investment and trade. Eatwell suggested that that may be a big factor in the considerable decline in growth rates since this happened in 1970.

The USA is the richest country in the world and it can't carry out even minimal economic planning because of the impact of speculative, unregulated capital. For a Third World country the situation is hopeless. There's no such thing as economic planning. Indeed the new GATT agreements are designed to undercut those possibilities by extending the so-called liberalization, and what they call "services," meaning that big Western banks the Japanese, British and American banks can displace the banks in smaller countries, eliminating any possibility of domestic national planning.

The accelerating shift from a national to a global economy has the effect of increasing polarization across countries, between rich and poor countries, but also, even more sharply, within the countries. It also has the effect of undermining functioning democracy. We're moving to a situation in which capital is highly mobile, and labour is immobile, and becoming more immobile. It means that it's possible to shift production to low- wage, high repression areas, with low environmental standards. It also makes it very easy to play off one immobile, national labour force against another.

During the NAFTA debate in the United States just about everybody agreed that the effect of NAFTA would be to lower wages in the United States for what are called unskilled workers, which means about 70% or 75% of the workforce. In fact, to lower wages you don't have to move manufacturing, you just have to be able to threaten to do it. The threat alone is enough to lower wages and increase temporary employment.

The Growth of Transnational Rule
Consider the matter of democracy. Power is shifting into the hands of huge transnational corporations. That means away from parliamentary institutions. Furthermore, there's a structure of governance that's coalescing around these transnational corporations. This is not unlike the developments of the last couple of hundred years, when national states more or less coalesced around growing national economies. Now you've got a transnational economy, you're getting a transnational state, not surprisingly. The Financial Times described this as a de facto world government, including the World Bank and the IMF, and GATT, now the World Trade Organisation, the G7 Executive, and so on. Transnational bodies remove power from parliamentary institutions. It's important to keep the technocrats insulated—that's World Bank lingo for you want to make sure you have technocratic insulation. The Economist magazine describes how it's important to keep policy insulated from politics.

Power is drifting not only to corporations but into the structures around them—all of them completely unaccountable. The corporation itself has got a stricter hierarchy than exists in any human institution. That's a sure form of totalitarianism and unaccountability, the economic equivalent of fascism which is exactly why corporations are so strongly opposed by classical liberals.

Thomas Jefferson, for example, who lived just about long enough to see the early development of the corporate system, warned in his last years that what he called banking institutions, money and corporations would simply destroy liberty and would restore absolutism, eliminating the victories of the American Revolution. Adam Smith was also concerned about their potential power, particularly if they were going to be granted the rights of "immortal persons".

The end of the Cold War accelerates all this. The Financial Times, for example, had an article called "Green shoots in communism's ruins"; one of the good things it saw going on was that the pauperization of the workforce and a high level of unemployment were offering new ways to undercut "pampered Western European workers" with their "luxurious lifestyles".

A British industrialist explained in the Wall Street Journal that when workers see jobs disappearing it has a salutary effect on people's attitudes. This was part of an article praising the Thatcher reforms for bringing about a low-wage, low-skill economy in England with great labour flexibility, and wonderful profits. Take General Motors, already the biggest employer in Mexico it is now moving into Eastern Europe but in a very special way. When General Motors set up a plant in Poland they insisted upon high tariff protection; similarly, when Volkswagen sets up a plant in the Czech Republic it insists on tariff protection and also externalization of costs. They want the Czech people and the Czech Republic to pay the costs; they just want the profit and they get it. That's the tradition: markets for the poor and plenty of state protection for the rich.

The biggest test is Poland. A country where multinational corporations can get people who are well-trained and well-educated and they'll have blue eyes and blond hair unlike in the Third World, and they'll work for 10% of your wages, with no benefits, because of the effectiveness of capitalist reforms in pauperizing the populations and in increasing unemployment.

That in fact tells us something about what the Cold War was about. We learn a lot about what it was about just by asking a simple question: Who's cheering and who's despairing? If we take the East. Who's cheering? The old Communist Party hierarchy, they think it's wonderful. They are now working for international capitalism. What about the population? Well, they lost the Cold War, they're in despair, despite their victory over the Soviet experiment.

What about the West? There's a lot of cheering from corporations and banks and management firms about the experts who were sent to Eastern Europe to clinch a friendly takeover, as the Wall Street Journal put it, but ran away with all the aid, it turns out. Very little of the aid got there; instead it went into the pockets of the Western experts and management firms. The workers in General Motors and Volkswagen lost the Cold War because now the end of the Cold War just gives another weapon to undermine their "luxurious lifestyles".

These misnamed free trade agreements, GATT and NAFTA, carry that process forwards. They are not free trade agreements but investor rights agreements and they are designed to carry forward the attack on democracy. If you look at them closely, you realize they are a complicated mixture of liberalization and protectionism carefully crafted in the interests of the transnational corporations. So, for example, GATT excludes subsidies except for one kind: military expenditures.

Military expenditures are a huge welfare system for the rich and an enormous form of government subsidy that distort markets and trade. Military expenditures are staying very high: under Clinton they're higher in real terms than they were under Nixon and they are expected to go up. That is a system of market interference and benefits for the wealthy.

Ownership of Information
Another central part of the GATT agreement, and NAFTA, is what are called intellectual property rights which is protectionism: protection for ownership of knowledge and technology. They want to make sure that the technology of the future is monopolized by huge and generally government-subsidized private corporations. GATT includes an important extension of patents to include product patents; this means that if someone designs a new technique for producing a drug, they can't do it because they violate the patent. The product patents reduce economic efficiency and cut back technical innovation. France, for example, had product patents about a century ago and that was a reason why it lost a large part of its chemical industry to Switzerland which didn't, and therefore could innovate.

It means that a country like India, where there is a big pharmaceutical industry which has been able to keep drug costs very low simply by designing smarter processes for producing things, cannot do that any longer.

Right after his NAFTA triumph Clinton went off to the Asia Pacific summit in Seattle where he proclaimed his "grand vision" of the free-market future. Corporations to emulate were the Boeing Corporation, for example, and in fact he gave a speech about the grand vision in a hangar of the Boeing Corporation. That was a perfect choice, as Boeing is an almost totally subsidized corporation. In fact, the aeronautical industry the leading export industry in the 1930s couldn't survive, and then the war came along and it made a huge amount of money, but it was understood right after the Second World War that they were not going to survive in the market. If you read Fortune magazine, it would explain how the aeronautical industry can't survive in the market. The public has to come in and subsidize them, and in fact the aircraft industry, which includes avionics and electronics and complicated metallurgy, is simply subsidized through the Pentagon and NASA. This is the model for the free-market future. The profits are privatized and that's what counts it's socialism for the rich: the public pays the costs and the rich get the profits. That's what the free market is in practice.


Arsenal Of Illusion

Hollywood know-how is helping to create new kinds of military weapons that target the brain—but not with a bullet.

By Jake MacDonald
From The Walrus
2007

Nearly four years after the destruction of the World Trade Center, I surrendered to a long-held curiosity and joined the United States Army. There’s a popular misconception that you can walk into a recruiting station and sign up. But the American army is the most sophisticated fighting force in history and it doesn’t accept just anyone. After a rigorous interview process and several hours studying the materials, I climbed onto the recruiting bus and headed off to basic training at Fort Benning, Georgia.

At boot camp I learned to handle the m16, the fearsome saw, and other modern weapons. After qualifying on the shooting range, I donned night-vision goggles and stalked through the spooky corridors of the urban-warfare facility, firing by instinct at pop-up targets of swarthy enemy soldiers or sometimes a shopkeeper armed only with a bagel. After twelve weeks of training, my outfit, the 22nd Infantry Regiment, shipped out to Iraq. Two days later, I got my first taste of combat. I was on patrol near Baji when my Bradley Fighting Vehicle came under sniper fire. I pursued the gunman into a village before realizing we’d been drawn into an ambush. Bullets whizzed by; a rocket-propelled grenade struck me in the chest, transforming my upper body into a mushroom cloud of pink mist and ricocheting my head off a nearby wall. At this point it occurred to me that fighting the war on terror was going to be more challenging than I expected. With a click of the mouse, I went back to reboot camp and started over, humbled but not discouraged. In this man’s army—a computer game called "America’s Army"—getting killed in action is nothing more than a temporary embarrassment.

"America’s Army" is financed and produced by the United States Department of Defense and is designed to lure young men into the forces. But the technology used to create the video game is at the centre of a much larger question that many Americans are beginning to ask themselves: like the teenage boys seduced into playing America’s Army, are they too going to be corrupted just as subtly by the Pentagon’s growing use of digital technology to create false realities? Digital technology has enabled military scientists working at the intersection of fantasy and reality to develop radical new weapons that will target the brain not with a bullet, but through the creation of a seamless fabricated reality. This tactic will, according to psychological war experts, help the American military not only exert behavioural control over the enemy on the battlefield, but, more ominously, over American public opinion.

The US Army used to call this sort of strategy “psyops” (psychological operations) and it even maintains a department of psychological warfare at Fort Bragg, North Carolina. Once dismissed as an idiot uncle of the military establishment, the Civil Affairs and Psychological Operations Command has mutated into a hydra with tentacles in every level of the military. Psyops can now manufacture eerie simulacra of reality, meaning that in the future it will become increasingly difficult to separate real news from combat footage, communiqués, and hostage videos fabricated by all sides for their own purposes. After all, why influence the news when you can invent it and have a digitally created Dan Rather present it? Thomas X. Hammes, a counter-insurgency expert with the US Marine Corps, says these weapons are being employed today to fight the war on terror and will be used even more in the future. “The notion that we can win this fight with a lot of [conventional] war toys is a fantasy,” he says. “It’s really important for people to understand that we’re no longer fighting foreign wars with guns and bombs. We’re fighting with ideas.”

During the 1980s, President Ronald Reagan increased defence spending by 35 percent, to more than $400 billion (US) a year, and promoted the idea of a futuristic missile shield over North America—a notion some scholars believe was inspired by the Paul Newman movie Torn Curtain. The Soviet Union, burdened by an increasingly inefficient economy, couldn’t keep up with US military spending and by 1991 had collapsed. Many hoped that the demise of communism would usher in a new era of global co-operation, but, with the Soviets vanquished, the United States launched its plan to remake the world in its own image.

In 1997, a number of people who are now top officials in the current US administration, including Secretary of Defense Donald Rumsfeld, Vice President Dick Cheney, and national security strategists Paul Wolfowitz and Richard Perle, launched a think tank called the Project for the New American Century. The group argued that it was time to take pre-emptive action to enforce US interests abroad, including removing unfriendly governments. “As the twentieth century draws to a close,” according to the project’s statement of principles, “the United States stands as the world’s pre-eminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge. Does the United States have the resolve to shape a new century favorable to American principles and interests?”

Reshaping the world in America’s image would not only involve massive funding to produce new futuristic weapons, it would also require the Pentagon to enlist the support of Hollywood, where the arsenal of digital technology is advancing almost daily. Soon after coming to power in 2001, President George W. Bush acted on the first leg of this strategy when he announced that he was pumping hundreds of millions of dollars into such organizations as darpa, the Defense Advanced Research Projects Agency, which grants research money to weapons developers. Since then, development has begun on dozens of weapons that close the gap between old-fashioned military hardware and the virtual future. One of the most promising, in the Pentagon’s view, is the Brain Machine Interface, a system of embedded neural transmitters and computer software that bridges thought and action. It is being developed by Duke University scientists, who have already created a computerized system in which a lab monkey can move a robotic arm in a laboratory 1,000 kilometres away just by thinking about it. In the future, military commanders with brain implants will use more advanced versions of this technology to deploy unmanned gun ships and robotic tanks in battlefields half a world away.

Bush has also revived plans to develop new real-world weapons systems, including fighter jets that do not require pilots and a new generation of smart bombs. And he agreed to spend billions on the missile-defence program envisioned by Reagan twenty years earlier. In support of the plan, defence contractor Lockheed Martin is building an airship twenty-five times larger than the Goodyear blimp. The airship will serve as a communications platform where attacks on enemy missiles will be coordinated.

The military is also planning unmanned spaceships that will carry huge tungsten bolts, nicknamed “rods from God,” that can be dropped with devastating impact on even the smallest target anywhere on the planet. Recently, retired Air Force Secretary James G. Roche described these space weapons as mandatory for any twenty-first-century arsenal. “Space capabilities in today’s world are no longer nice to have,” he said. “They’ve become indispensable at the strategic, operational, and tactical levels of war. Space capabilities are integrated with and affect every link in the kill chain.”

As futuristic and powerful as this new generation of weapons will be, Bush, perhaps more than any other recent president, is guided by an idea once espoused by Napoleon: “There are but two powers in the world, the sword and the mind. In the long run the sword is always beaten by the mind.” According to many strategists, even if the United States wins on the battlefield, it must ultimately win over the minds of the citizens of a country it is invading with propaganda in order to remake the world in its own image. Hammes, who has trained insurgents around the world, believes it was precisely the military’s failure to win over the hearts and minds of its enemies that led to the United States’s defeat in a number of conflicts over the past thirty years. Today, it is no closer to winning over Iraq than it was when it invaded in 2003. “We were defeated in Vietnam, Lebanon, and Somalia, and we’ll lose in Iraq the same way,” says Hammes. “We’ll win the battles, but we’ll lose the war [of ideas].”

With the United States engaged in a protracted war against terrorism and bogged down in Iraq, the Pentagon is keenly aware of these past failures. William Arkin, an author and former military affairs analyst for the Los Angeles Times, says that the military is growing frustrated with its inability to stay ahead of the terrorist threat, and is anxious to enlist Hollywood and its digital expertise in its fight. “Traditionally, the military has been an innovative force in technological development,” he says. “But about ten years ago, with the digital revolution, the civilian world really began pulling ahead of the military. The army just can’t compete with Hollywood or Microsoft when it comes to digital wizardry.” Microsoft alone spent $2 billion (US) developing its Xbox game technology. It is that kind of muscular research spending and product development that has convinced the Pentagon that it must break down the walls between the military and the entertainment industry.

The first of several recent high-profile Pentagon initiatives in Hollywood came in 1996, when top military officers travelled to Los Angeles to brainstorm with executives from Industrial Light & Magic, Intel, and Paramount about storylines for their combat simulators. This wasn’t the first time the military had gone to Hollywood. During the 1960s, the cia was intrigued by the emergence of television and by experiments indicating that moving images produce a shift from left-brain to right-brain neural activity, which in turn induces a sort of chemical trance that suppresses judgment and heightens suggestibility. The researchers learned that once viewers “suspend their disbelief,” they become vulnerable to the values and messages embedded in the drama.

So it wasn’t surprising that soon after the meeting in 1996, the Pentagon proposed a working partnership with Hollywood. Three years later, it announced that it would build a new $45-million (US) production house in Los Angeles and that it intended to hire many of the screenwriters and producers who had attended the meeting. The new facility was designed by Herman Zimmerman, the award-winning designer of a number of Star Trek episodes, and dubbed the Institute for Creative Technologies. The institute soon became a sandbox for forty-five writers, directors, and special-effects technicians, many of them Academy Award nominees.

Their first project was the development of a total-immersion simulator that gives soldiers a preview of real-life combat situations. The simulator consists of a virtual-reality theatre with a 150-degree screen and a Dolby sound system. Inside, young soldiers-in-training can pick their way through a number of spooky combat environments. A typical program recreates a blown-up building strewn with garbage, jagged rebar, concrete, and splintered furniture. Through a hole in the virtual wall the young trainee can peer out at a wasted city, where sparrows dart through the smoke, Arabic music filters up from the street, and a helicopter gunship thunders overhead.

After the attack on the World Trade Center in 2001, the military returned to Hollywood—this time with new urgency—to again meet with studio heads and producers. Their goal: to enlist the entertainment industry in a sweeping campaign to rally public support for the military and the war in Iraq.

According to the entertainment trade paper Variety, those attending the meeting at the Pentagon’s studio included the presidents of cbs, hbo Films, Warner Brothers Television, and prominent producers and writers such as Steven E. de Souza (Die Hard), Joseph Zito (Delta Force One), and Spike Jonze (Being John Malkovich). One of the producers at that October 2001 meeting was Lionel Chetwynd (The Apprenticeship of Duddy Kravitz). “There was a feeling around the table,” he later recalled, “that something is wrong if half the world thinks we’re the Great Satan. Americans are failing to get our message across to the world.”

The meeting was off-limits to the media, and Chetwynd revealed little else. But a White House spokesperson later said that the government was asking movie moguls for their help in selling America’s image to audiences around the world. Said the spokesperson: “The administration will share with studio executives the themes we’re communicating at home and abroad, of patriotism, tolerance, and courage.” Military officials also reminded the producers of certain “resources we might have in government [that would] be helpful to them.”

David Robb, a former investigative journalist with the Hollywood Reporter and author of Operation Hollywood: How the Pentagon Shapes and Censors the Movies, explains what those “resources” might be. “The government,” he said, “is basically offering filmmakers access to expensive military equipment in exchange for editorial control over their scripts.” He sees a dangerous and growing interdependence between the film industry and the military. “It’s all about money,” he says. “If you’re making a movie that requires F-14 Tomcats or combat helicopters, you can save millions of dollars by making a quid pro quo arrangement with the Pentagon. They’ll loan you the equipment for peanuts—for the price of fuel, let’s say—if you let them control the script. Everybody is happy. The filmmakers get access to war toys. And the military establishment gets to flog its pro-war message to millions of moviegoers.”

As a result of this partnership, a string of new movies partially subsidized by the Pentagon will soon be showing up at theatres. In the high-profile No True Glory: The Battle for Fallujah, scheduled for release in 2006, Harrison Ford will play a heroic American general leading his troops into a hornet’s nest of insurgents in the Iraqi city. It’s unclear to what extent the Pentagon influenced the script, but the screenwriter said the movie “will focus on the bravery of our soldiers and point out why our military can be relied upon to do the right thing.”

To ensure their pictures cast US soldiers in the best possible light, producers who want access to military hardware must submit their scripts to the Pentagon. And according to Robb, military censors “always” insist on a rewrite. “They don’t ask for revisions in the script,” he says. “They tell you.” There are countless stories of the Pentagon trying to bully producers. Clint Eastwood, for example, was infuriated when the Pentagon refused to support Heartbreak Ridge because it contained a scene in which Eastwood’s character shoots a wounded Cuban soldier.

Once the revised script satisfies the military, the Pentagon dispatches a “minder” to the set, to make sure the story isn’t changed at the last minute. “Their main criterion,” says Robb, “is that a script has to ‘aid in the retention and recruitment of personnel.’ But Hollywood has crossed the line into the glorification of war. We’re getting a steady diet of this kind of propaganda, and I honestly believe it’s making us into a more warlike people.”

During the 1990s, before aligning itself with Hollywood, the military had conducted digital morphing experiments at Los Alamos National Laboratory in Santa Fe, New Mexico, the birthplace of the atom bomb. They attempted to recreate individual voices by “dragging and dropping” taped words into sentences, but the results invariably sounded phony and robotic. George Papcun, an expert in phonetic synthesis at Los Alamos, later improved the technology and used it to develop several fictive scenarios, including one in which General Colin Powell had been kidnapped by terrorists. Before a group of officers gathered for the demonstration, Powell announced, “I am being treated well by my captors.” In another demonstration, Papcun played an audiotape that had supposedly just been received from General Carl W. Steiner, former commander of the Special Operations Command. “Gentlemen!” said Steiner. “We have called you together to inform you that we are going to overthrow the United States government.”

But these experiments were amateurish compared to the work being done by technicians in Hollywood and Silicon Valley. Their sophisticated digital morphing techniques first appeared on movie screens in 1991, when audiences across the world gasped as a snake-eyed killer robot in a policeman’s uniform morphed out of a tile floor in Terminator 2: Judgment Day. Two years later, Jurassic Park used the same technology. It is the expertise behind the creation of these lifelike digital scenarios that the Pentagon covets. In the movie In the Line of Fire, for example, Clint Eastwood plays an aging Secret Service agent who happened to be on duty in Dallas on the day President John Kennedy was shot. To send Eastwood’s character back to 1963, Hollywood computer specialists used digital morphing to lift Eastwood from an early Dirty Harry movie, gave him a military haircut and a skinny tie, and dropped him into an actual news clip of Kennedy’s assassination, now showing Eastwood rushing to the president’s side.

Ford Motor Company also blurred the boundary between fantasy and reality when it raised Steve McQueen from the dead to advertise its 2005 Mustang. In a scenario cribbed from the movie Field of Dreams, a young farmer builds a winding racetrack on his farm. He circles the track a few times in his new Mustang, then McQueen (who died in 1980) comes sauntering through the cornstalks. The farmer flips the keys to McQueen, who roars off in the car, which Ford designed in homage to the 1968 muscle car McQueen drove in the classic movie Bullitt.

So would the military use similar technology to fabricate news clips, communiqués from insurgent fighters, and videotaped confessions from foreign villains? Perhaps the better question is, why wouldn’t it? Imperial powers have always used disinformation and deceit to advance their military goals. And the American military openly admits that deception will be an important tool in the wars of the future.

Creating virtual worlds to control public opinion and influence the battlefield was the disturbing theme of a paper entitled “Psyop Operations in the 21st Century,” published by the United States Army War College in 2000. The author enthuses over the possibility of using digital morphing techniques to create “simulated and reproduced voices, fabricated provocative speeches delivered by virtual heads of state, and projected images of actual life situations.” The paper concludes ominously that the twenty-first century will be “an amazing place” for achieving “mind and behavior control.”

Imagine, for example, the digitally reproduced president of a small country the United States is fighting appearing on his country’s television network and ordering his army to put down their weapons, or a similarly recreated leader of a democratic faction in Iran inviting the American army into the country to rescue them and dismantle Iran’s growing nuclear program. In fact, Arkin notes that during the Gulf War, this is precisely the technology psychological war planners wanted to deploy in a bid to destroy Saddam Hussein’s reputation with his allies. “They considered faking a video that showed Saddam indulging in sexual perversions, crying like a baby, and exhibiting other types of unmanly behaviour,” he says. “But they backed off because they were concerned about a bad reaction from their Arab partners.” Arkin says the United States also crafted a plan to project a huge holographic image of Allah into the skies over Baghdad, urging Iraqis to overthrow Hussein.

In the end, the military didn’t proceed with these initiatives, but Arkin says the Pentagon’s reservations were strictly logistical. “They scrapped the hologram because it required huge mirrors,” he says. “And there were other concerns, such as what is Allah supposed to look like? I don’t think ethics played any role at all in the decision to back off. These people tend to put military objectives ahead of ethics. And that’s worrisome.” While Arkin says the Pentagon has yet to directly target Americans, it has the growing capability—and perhaps motive—to do so. “There’s no evidence they’ve cooked up faked videos to influence public opinion here at home,” he says. “But there’s a danger that in the ongoing fight for hearts and minds, [it] may prove too tempting to resist.”

There are disturbing precedents. The head of the cia resigned last year after acknowledging that intelligence reports concerning Hussein’s nuclear weapons arsenal, which were used to justify the attack on Iraq, may have been faulty. Some analysts believe they were deliberately fabricated. If such false information can be used to sway public opinion today on such a critical issue, it’s not hard to imagine, for instance, North Korean leader Kim Jong Il appearing digitally on the cbs Evening News boasting about his arsenal of nuclear weapons and his plans to use them against the United States.

Some veteran psychological war operatives believe the military has already crossed that boundary and is moving toward manufacturing virtual newscasts. Retired Army Colonel John B. Alexander is a former intelligence officer with the US Army and author of Future War: Non-lethal Weapons in Modern Warfare. Does he believe that the Pentagon would invent the news Americans are watching to achieve military objectives? “As sure as a heart attack,” he says, without hesitation. “I guarantee they’re doing it already.”

There may not be evidence to prove Alexander’s allegations, but the military to enshroud the American public in a cloud of digital illusion. Clear indications of this surfaced in February 2000, when Colonel Christopher St. John, commander of one of the army’s psychological operations groups, gave a speech in which he called for “greater co-operation between the armed forces and media giants.” With some pride, he revealed that his team had managed to embed some psychological war operatives from Fort Bragg at cnn. They were doing editorial work. While it isn’t clear what the intent of the operation was, they were recalled when their presence at cnn was revealed. Admitted Major Thomas Collins of the US Army Information Service: “They worked as regular employees of cnn and helped in the production of news.”

It’s impossible to run an empire without young men who are willing to risk their lives on foreign shores. With troops stationed in more than 120 nations around the world, the US military is now more widely deployed than at any time since World War II. Virtually every soldier with combat training has been sent overseas, and the Army Reserve, comprised basically of weekend soldiers, makes up about 40 percent of the troops in Iraq. The army estimates that it will need at least 74,000 fresh recruits annually to sustain these troop levels. But since the reinstatement of the draft is widely viewed as politically unworkable, where will all those young recruits come from?

The hope is that such video games as America’s Army, which was the brainchild of United States Military Academy professor Colonel Casey Wardynski, will seduce young men into joining. The army budgeted $7 million to develop the project, and Wardynski partnered up with Michael Capps, a virtual-reality engineer at the United States Military Academy with four degrees ranging from mathematics to creative writing. After three years in the marketplace, America’s Army has proved to be a smash hit, with players having logged more than 60 million hours of online combat.

To promote the game, real soldiers hold tournaments at video-gaming conventions and visit youth-oriented events such as nascar stock car races, where they set up kiosks stuffed with army paraphernalia, real weapons, and computer terminals at which kids can try America’s Army. The US Air Force, the Marines, and the Special Forces have also produced their own games. All this is clearly part of a much broader strategy—one in which digital games, so effective in bringing teenage boys into the army, are expanding to turn the field of battle, and the struggle for the public mind, into a virtual game in which reality and fiction merge.

Of course, as it stands today, reality is still all too real for soldiers in the field. The day Patrick Resta, twenty-six, arrived in Iraq, one of the soldiers in his unit had half his head blown off by a roadside bomb. They bagged his body and set up camp as local villagers shot rocket-propelled grenades at their encampment. “In the confusion,” he says, “this car came down the road, dragging a piece of metal and throwing off sparks. The next thing you know, thirty guys from my unit opened fire on the car, which, as it turned out, contained three innocent civilians, one of them a twelve-year-old boy. This is all in my first three hours in the country. My entire tour of duty was a complete clusterfuck.” He now volunteers for a group of ex-soldiers called Veterans for Peace, visiting schools in the Philadelphia area and telling kids about the reality of war. “It’s not a video game. You’re shooting real human beings, and it’s a horrific thing. These army recruiters show up in their crisp uniforms to talk about adventure, heroism, free college tuition, and so on. The kids are young, and they don’t think their own government would lie to them. But I tell them, ‘Hey, they’re lying, to everybody. Don’t believe any of it.’” - Published July 2005

Jake MacDonald lives in Winnipeg. his latest book, With the Boys (Greystone, 2005), is a collection of essays chronicling the author's experiences among men and nature.