Forum Post: chomsky on the virtual senate

QUESTION: In a text of yours you say that the world is ruled by a "virtual senate". Can you tell me something more about this?

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.