Capitalism Is the Problem

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This article originally appeared at Truthout.org

Over the last century, capitalism has repeatedly revealed its worst tendencies: instability and inequality. Instances of instability include the Great Depression (1929-1941) and the Great Recession since 2008, plus eleven "downturns" in the US between those two global collapses. Each time, millions lost jobs, misery soared, poverty worsened and massive resources were wasted. Leaders promised that their "reforms" would prevent such instability from recurring. Those promises were not kept. Reforms did not work or did not endure. The system was, and remains, the problem.

Inequality likewise proved to be an inherent trend of capitalism. Only occasionally and temporarily did opposition from its victims stop or reverse it. Income and wealth inequalities have worsened in almost every capitalist country since at least the 1970s. Today we have returned to the huge 19th-century-sized gaps between the richest 1 percent and everyone else. Rescuing the "disappearing middle class" has become every aspiring politician's slogan. Extreme inequality infects all of society as corporations and the rich, to protect their positions, buy the politicians, mass media and other cultural forms that are for sale.

Recent Crises in the History of Capitalism

Capitalism in Western Europe, North America and Japan -- its original centers -- has boosted profits in four basic ways since the 1970s. First, it computerized and robotized, not to lessen everyone's work time, but instead to raise profits by reducing payrolls. Second, it exploited low-wage immigrant labor to offset wage increases won by years of labor struggles. Third, it moved production to lower-wage countries such as China, India, Brazil and others. Fourth, it divided and weakened the labor unions, political party groups and other organizations that pursued labor's interests. As a result, inside nearly every country of the global capitalist system, the rich-poor divide deepened.

The Great Depression provoked economic "reforms," such as FDR's New Deal. These included regulations restricting risky bank and other market practices. Reforming governments also established public pensions, unemployment insurance, public employment systems, minimum wages, monetary and fiscal policies, and so on. Advocates believed that such reforms would end the 1930s depression and prevent future depressions. They dismissed critics who diagnosed depressions as systemic and prescribed system change (or "revolution") as the necessary solution. "Reform versus revolution" was then a hot debate.

In the US, the reformers defeated the revolutionaries as preparation for war -- and then war itself -- finally ended the Great Depression. As capitalism rebounded after 1945, capitalists increasingly evaded the Depression-era reforms, using their growing wealth to buy the political influence needed to gut many reforms. Later, Reagan led the frontal assault, repackaged as "globalization" and "neoliberalism" to undo the New Deal. When that rollback of reforms culminated in the 2008 crash, it exposed capitalism's instability and inequality yet again.

The continuing post-2008 economic crisis has reproduced both the kinds of suffering that happened after 1929 and the reform-versus-revolution debates. The difference this time is that we know what happened last time. While the reformers then defeated the revolutionaries, their reforms failed to prevent the continuation of capitalism's instability and inequality, and their harmful social effects. Reformism today advocates the same (or a slightly varied) set of reforms as last time. It thus represents a refusal to learn from our history. The revolutionary alternative now makes more sense. "Revolutionary," however, need not evoke romantic notions of storming barricades: Today, revolutionary refers to the recognition that system change, not another reform, is our primary task.

What System Change Requires

What differentiates system change from reforms? Reforms refer to government interventions that still leave employers in the exclusive position to make the basic enterprise decisions: what, how and where to produce and what to do with profits. Reforms include minimum wage laws, redistributive tax structures, and enterprises owned and operated by the government. They range from the mildly Keynesian (the New Deal) to the democratic socialist (what we see in Scandinavian countries) to the state socialist (the model of the USSR and People's Republic of China). All such reforms retain the core relationship inside enterprises as that of employer-employee, with private or public directors controlling the mass of workers and making the basic enterprise decisions.

In contrast, system change means reorganizing the core human relationship inside the factories, offices and stores of an economy. That relationship connects all who participate in production and distribution of goods and services. It shapes (1) who produces what, how and where; (2) how much surplus or profits are available; and (3) the disposition of the surplus or profits.

Truly moving beyond capitalism means breaking from the employer-employee core relationship. It means no longer assigning a relatively tiny number of people inside each enterprise to the employer position of exclusively making the sorts of decisions outlined above. In private corporations the employers are the boards of directors selected by the major shareholders. In state or public enterprises of the traditional socialist economies, the employers are state officials. Instead of either kind of employer-employee relationship, system change installs a different core relationship inside enterprises. A different group of people -- all workers in the factory, office or store -- democratically makes those same decisions. The rule is "one worker, one vote," and in general, the majority decides. The difference between employer and employee dissolves.

Such system change beyond capitalism means something quite different from shifting to public directors from private directors, which is a reform. System change entails the democratization of the workplace. The logic governing the economic system, then, would no longer be capital-centric (making decisions (1) through (3) in such a particular way that the capitalist employer-employee relationship in production is reproduced). The particular connecting relationship at the core of capitalism will have been superseded: rather like what happened earlier to the slave-centric core relationship (master-slave) and the feudal-centric core relationship (lord-serf). Instead, the post-capitalist core relationship will be democratically worker-centric, with the central type of workplace being the worker cooperative.

Among the goals driving an economy based on democratic worker coops, job security, quality of workers' lives and reproduction of the worker coop core relationship in production will weigh more heavily than enterprise profits. Because different people will be making the key enterprise decisions and because those people will be driven by different goals, the post-capitalist society will develop very differently from the capitalist. Democratic worker coops will likely (1) not relocate themselves overseas, (2) distribute incomes far less unequally than capitalist enterprise, (3) not install ecologically damaging technologies near where their families and neighbors reside, and so on.

Responding to reductions in demands for their outputs, worker coops will more likely stress sharing any reduced work hours among all workers rather than forcing a few into unemployment. The needless social irrationality of capitalist downturns -- when unemployed workers coexist with unutilized means of production to leave social needs unmet -- will be much more apparent and thus widely unacceptable.

In an economy built on worker coops, children, retired people, people living with disabilities or illness and others outside the labor force would be sustained from the worker coops' "surplus." The latter comprises what the coop labor force produces above and beyond what it consumes and requires to replace used-up means of production. Adults in and out of the coop labor force would together and democratically determine the sizes and recipients of all the distributions of the surplus. They would decide how much of the surplus would go to expanding production, to provisions for future contingencies, to providing for children, for those in other social institutions, and so on. In place of capitalists (a social minority) distributing the surpluses produced by and appropriated from their employees, a genuine democracy would govern that distribution, much as it governs other worker coop decisions.

Worker coops mark a qualitative and quantitative advance beyond capitalism. They represent a system change adequate to key problems capitalism has shown it cannot overcome, even after centuries of failed efforts to do so.


Showing 27 comments

  • commented 2017-03-18 01:29:50 -0400
    I think the powerful know where the true power is and where it lies. It’s in us, and nobody controls our actions but ourselves. We don’t need currency in order to exist, but the other way around entirely, and completely.

    I’m probably the only one who sees a world where we could simply choose to live without thinking any object has a value greater than another. That ideology is the only thing standing in the way of equality itself. I’m not sure if I’m horribly wrong, but something tells me I’m an idiot for ignoring the idea if I’m not.

    We don’t need to kill for things, nobody has reasons to die anymore. The battlefield took the form of a pen long ago, not with what has escalated into cowardly drone strikes as seen a day or so ago in Syria.

    The employer/employees system with Capitalism is a grade above:
    Lord vs Serf
    Master vs Lord

    Let’s try:
    Supply vs Demand
    Producer vs Consumer
    Desire vs Necessity <—- I’m an advocate for that one, but I’m simple in my tastes.

    Let’s think about the homeless and get them into Zombie Homes and take it further.
    We could focus on who’s hungry and get people in society into good health.
    We educate, change our attitude of controlling substances toward harmful ones like pesticides or substances which could be the real danger to cancer leading illnesses.

    You have no idea how easy everything could be if we were managed appropriately and utilized our resources in ways that worked for the people, because it’s going to take the work of the people.

    If Work = Force X Distance then I’m wondering when we decided to see how far people could be pushed to work and sustain a viable system based upon pure manipulation, before enough people catch on.

    I think there are plenty of people who want to work that cannot for either economic reasons, stigma, governmental policy restrictions, and the list goes on. A lot of people working to the bone and not able to see what is going on around them right now is a difficult thing to witness. We’ve grown well beyond our borders, and I think it’s time to bring our troops home while there’s something left to defend. If POTUS has taught US nothing at all, let it be that any fool can be king. Let’s hope it’s not much more than for 100 days. lol

    Let’s all think more kindly about our neighbors. Not saying we don’t, but continuing with what has proven to ‘not’ work probably won’t in the future. Everybody is either feeling the crunch or about to. All we need is a garden and library after all :-) #Peace

    “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” – Aristotle
  • commented 2017-01-16 17:29:38 -0500
    John Reid, you are definitely right we need structures to manage things and some structures are better than others. I much prefer the democratic collective workshop to Capitalism. I can’t tell you examples because I don’t have that exposure. I do recall Professor Wolff mentioning numerous others besides Mondrogon that he thinks are good, so that would be a better question to address him directly. I have heard him address that question in the past, however, I can’t recall names.

    As for the devils and angels within us, non dual psychology points out that they are two sides of the same thing, with the “devil” acting out on deep wounds. Greed is a desperate need for something that material cannot satisfy and only increases the desire like any addiction. That is just an example of the kind of work that must be addressed or even the best of structures will be corrupted and they may not even be allowed to arise. And if we demand they rise through violence we nourish the beast that much more.

    So work for those structures now, but the structures we get are really a reflection of the state of mind we have. So we need to work on that basic state to allow truly healthy and caring community structures to arise.
  • commented 2017-01-16 14:03:06 -0500
    Thanks Steven Kuchinsky for your points. Because the ‘devil’ is in us, metaphorically as you noted, is exactly why I think we humans need structures and systems to manager our inner devil’s. To continue the analogy, we also have inner angles as well, so we need to design ways to manage both for all our mutual benefit.
    To me, the structures used at Mondragon, where workers appoint the board, the board hires managment, and managment runs the Co. This allows the separation needed between the worker-owners, and those that manage them, but still empowers workers to vote out the board, when they think managment is not serving them.
    I think most ESOP’s can be managed this way. An ESOP is just a mechanism for the transfer of ownership.
    Of course we could keep trying the democratic / consensus base managment I was used to in the late 70’s and early 80’s that was fought with so much conflict. Ideally this is better, but practically, especially Americans, are not culturalized enough to manage themselves this way. Maybe as a long term goal, but we need structures that work now.
    But other than Mondragon, what ways are you and others reading this seeing that are generating effective managment systems for worker owned businesses?
  • commented 2017-01-15 20:23:07 -0500
    John Reid, Interesting comments on your part. ESOP is not at all what Richard Wolff is talking about. According to him Mondrogon is working great. Why are others not? Actually, I’m not surprised if they aren’t because this is what I’m talking about. I think you’re partly right, but the devil is not really in the details. The devil is in us. I AM speaking metaphorically.
  • commented 2017-01-15 17:40:05 -0500
    To me Capitalism certainly has it’s issues, but I think the alternatives are equally problematic. I would be curious to hear more about the actually mechanics that are used to manage a post-capitalist world. The devil lives in the details. Details like ESOP structures, or managment structures borrowed from the Mondrogon collectives.
    I spent many years, years ago, arguing inside of failing cooperatives. The idealism, love and passion were great, but the ability to survive as businesses was horrible. I think the point that we need a change is obvious, and much more talk of this is really a waste of time. What are the real alternatives you all have worked with that are working?
    Thanks ahead of time for any and all replies.
  • commented 2017-01-14 10:07:42 -0500
    Where is the photo from?
  • commented 2017-01-13 15:00:23 -0500
    Charlie, I agree that on a certain level, Capitalism is THE problem. However, I believe that on a deeper level there is a problem of which Capitalism is a symptom. And addressing Capitalism alone without addressing the deeper problem will not create lasting change. If you are not aware of a deeper problem that does not mean the problem does not exist. It means that IF it DOES exist, then you are not aware of it.

    So, you have your perception and I have mine.

    As for Liberal Arts, I totally agree that that’s what it should be but that does not mean that’s what it is or even really was. Also the time to begin addressing those issues is not in college but in kindergarten.
  • commented 2017-01-13 15:00:22 -0500
    Charlie, I agree that on a certain level, Capitalism is THE problem. However, I believe that on a deeper level there is a problem of which Capitalism is a symptom. And addressing Capitalism alone without addressing the deeper problem will not create lasting change. If you are not aware of a deeper problem that does not mean the problem does not exist. It means that IF it DOES exist, then you are not aware of it.

    So, you have your perception and I have mine.

    As for Liberal Arts, I totally agree that that’s what it should be but that does not mean that’s what it is or even really was. Also the time to begin addressing those issues is not in college but in kindergarten.
  • commented 2017-01-12 13:51:21 -0500
    These brief comments are dialogue, not attack. Steve Kuchinsky, Capitalism is THE problem! It is a system alien to life whose globalization has now captured and perverted life in all its forms, people to biosphere. Many hanging catastrophes are about to fall.

    As for a liberal arts education, I would think that the goal of such would be to develop well-rounded people who would be able to answer the questions, “What is human nature; What is life,” in their individual ways as they go about their social lives. Instead we exist in a capitalist system we serve in our many ways as a profitable means of our self-destruction.

    Will Cooper and I agree that it will take a revolutionary/transformational movement to change matters.
  • commented 2017-01-12 09:40:17 -0500
    Steven,
    If it didn’t include that “stuff” then it wasn’t a liberal arts education. The central questions of a liberal arts education revolve around what does it mean to be human and how should we live. A person with a liberal arts education is well-read in the humanities.

    Have a great day!
    Adam Jacobs
  • commented 2017-01-11 16:20:24 -0500
    Charlie,

    LOL how cool! Well, in my opinion all ideologies blind us. Nothing wrong with it as long as you realize it’s an aspect of truth rather than Truth.

    I’ve had a liberal arts education as I’m 63. It didn’t include that stuff. Of course those ideas are thousands of years old (possibly some new ones) but I don’t think it’s ever been popular as it would cause people to look within for their authority and rulers don’t like that.

    Steve
  • commented 2017-01-11 16:09:38 -0500
    Steven,
    I’ve used the term “educationalism” to describe my ideology and it’s one I continue to believe in. And the “phenomenal” education you lay out has existed for thousands of years; it’s called a liberal arts education and all humans should be entitled to one.
  • commented 2017-01-11 15:01:51 -0500
    I agree that Professor Wolff is somewhat blinded by his ideology but only because he considers Capitalism THE problem, rather than a problem – and in fact a very big problem. Believing education is THE problem would also be an ideology. You might call it Educationalism. Dr. Wolff seems to speak as if the system creates greed, however, I think greed creates the system. Therefore the real root of the problem lies deeper in the desires and feelings of lack that people carry.

    Meanwhile, I think his ideas on changing the economic structure are excellent. However, the deeper problems cannot be ignored or we will shape whatever structure we create to enslave us to our addictions. We therefore need to focus much more on what are our beliefs, our values, what we hold dear and having cultural self-concepts that serve us. This would be a phenomenal “education.” This would be real and powerful education – rather than pouring in more information and technological know-how. That has its place too, but will never save us. The real education is who are we and what is important in life?
  • commented 2017-01-10 13:52:22 -0500
    Joe Barnwell: I have long held the same view as you, that non-violent civil disobedience is the only possible recourse for revolutionary change, given the power of the dark government, the surveillance apparatus, FBI infiltration of anti-war and anti-capitalist groups, the militarized police, the National Guard and armed forces, etc. The successful non-violent civil disobedience movements that took place in the twentieth century—Gandhi’s movement for Indian independence, MLK’s civil rights campaign, the Singing Revolution in Estonia, etc.—were different in the sense that they were aimed at righting historical wrongs or establishing political freedom. The revolution to overturn capitalism would be far more fundamental in nature; it wouldn’t be a reform movement or a liberation movement for political self-determination. It would involve changing the ownership of the means of production; it would mean eradicating the institutions and organizations that serve capitalism and capitalists; it would entail changing our form of constitutional government. Marx, Engels, Lenin, and Trotsky believed that the proletariat would have to use armed force to wrest control from the capitalist ruling class. Admittedly, they formed this opinion at a time when the powers of the state to control the masses were not as entrenched as modern technology has made them, but their estimation may be no less valid today. Perhaps Dr. Wolff and Gar Alperovitz, among many others working to build an economy based on cooperative enterprises and interdependent community/industry forms of local and regional economic development and control, have moved in that direction because they believe that a 1917 Russian-style revolution is not longer an option for the working class. I don’t know. Trotskyists don’t believe this—the working class needs to be armed to protect itself against totalitarian dictatorship. Whether the toppling of capitalism can occur without violence is question that cannot be answered lightly.
  • commented 2017-01-10 11:59:33 -0500
    Will Cooper, I’m with you on the need for organizing a revolutionary movement, and there will be violence, but it will come from the capitalist state. We now live in a police-surveillance state, and popular revolutionary violence, even if desirable, is impossible. There is also the presently insurmountable problem that almost no one understands the capitalist takeover and makeover of life in all its forms. There can be no revolutionary movement without a revolutionary consciousness. Another topic: I have a problem with a lot of loose talk going on about socialism. The definition for socialism I learned many decades ago is: collective ownership, democratic control of the means of production. The current definition I like for socialism/communism is “association of producers,” taken from the Manifesto’s definition of communism as “an association, in which the free development of each is the condition for the free development of all.” I’m not aware of any government that comes close to either of the two definitions. Socialism doesn’t exist; it must be established, as Will Cooper advocates.
  • commented 2017-01-09 06:50:23 -0500
    Anonymous: You remind me of me before I read any Zig Ziglar the writer of sales motivational books. Might want to read that and then find something worth selling and try to sell it. I hated the idea of making sales to earn a living; Until I sold a great product, that I made, that resulted in repeat business and written compliments.
  • commented 2017-01-08 23:59:27 -0500
    Barrage backatcha,

    Being educated and broke sucks, too. Of course there are outliers (N. Korea) but the general trend remains. (that countries with stronger checks on capitalism have better educational systems)

    I am well-educated, but want of meaningful work and a dignified income have made me more sympathetic with Dr. Wolff’s cause. I like the idea that the correct sociopolitical and economic systems could make work and dignity human rights guaranteed to everyone. In any event, we Americans certainly can and must do better, and a socialist reorganization of the means of production (and/or other economic resources) would likely be a step in the right direction.
  • commented 2017-01-08 23:10:47 -0500
    Chaplin,

    Having been dominant world powers for the last coupla centuries, England and the USA are in fashion. Scholars flock to the prestigious universities in those countries because it is the done thing, despite equally important contributions to the literature occurring in relative backwaters like Seoul, Bangalore, Taipei, Budapest, etc.

    I do not seek to establish causation or provide proof. That countries with socialist economic systems are better at providing for every aspect of the well-being of their citizens (this includes education) is evident to me.

    I don’t always agree with Dr. Wolff, but he’s not blind, and to the extent that he is an ideologue, I prefer his ideology to that of his detractors and opponents.
  • commented 2017-01-08 21:33:15 -0500
    Sorry for the barrage but had a final thought that seemed to tie this all together…

    You’ve pointed to socialist places (although Scandinavia isn’t pure socialism) that focus on education and get results.

    But we have seen, in this discussion, that capitalist nations can have good schools and socialist places can fail miserably to educate.

    Back to my original point: EDUCATION is the most important element when organizing society and NOT the means of production.

    I would rather be in a capitalist nation with a great education system than a socialist one without. I would also rather be in a socialist nation with great schools than a capitalist nation with bad schools.

    Education is the key. Any system can only be as good as the people running and regulating it.
  • commented 2017-01-08 21:28:10 -0500
    Also your assertion that education flourishes under socialist systems isn’t accurate. How’s North Korea doing?
  • commented 2017-01-08 21:23:07 -0500
    Hi anonymous and thanks for the response. I think you’re being a little superficial though and I’d love to see you flush out your ideas a bit more. You have failed to establish the critical causation you seek.

    You say in the 1980s California had the best education system. In the 1980s California was capitalist, which undermines your argument.

    Cuba and Scandinavia have focused very heavily on education but you have provided no evidence that it is “socialism” which causes that.

    Why do many of the best universities exist in the USA and England? Dr. Wolff himself studied at Harvard, Yale and Stanford. He didn’t go to Helsinki or Havana. Why not?
  • commented 2017-01-08 20:26:56 -0500
    In response to the weird assertion that lack of education—not capitalism—is the problem:

    Being a costly social need, education suffers under a capitalist economy but flourishes within socialist systems.

    In the 1980’s my Californian school teachers bragged (correctly) that they worked in the best education system in the world. The best education system in the world is now located in Scandinavia in a socialist country. Likewise, no one would argue that your average Cuban in the 1950’s was a paragon of erudition.

    Having been one of the least educated nations on earth, how did Cuba become one of the most educated? Socialism. That’s how.

    Having been the best educated nation on earth, how did Americans become so ignorant? Capitalism. That’s how.
  • commented 2017-01-08 20:13:13 -0500
    increasingly even young college graduates are living in vans as a way of cutting costs due to education debts coupled with a precarious employment structure…which many are saying is a type of slavery without security.
  • commented 2017-01-08 18:14:14 -0500
    Makes sense to me C.Chaplin. Critical thinking abilities are not handed out equally. Yet with rigorous education some balance can be effected. Have asked for direct responses from Dr. Wolff and get esoteric non-responses. Maybe he’s a bot-supported professor?
  • commented 2017-01-08 18:06:48 -0500
    The government is a tool of the capitalist ruling class. Large corporations control politicians who legislate in their interest usually at the expense of the mass of citizens. What motivation would the ruling class have to give up its privileges? The answer to that is obvious: none. So long as they control the government, no large-scale change in the system will be possible. If a cooperative posed a serious competitive challenge to a major corporation, it could crush its would-be rival through a variety of means. I support the worker cooperative movement, but I am doubtful that it can bring about the profound system change that is needed. As Marx, Lenin, and Trotsky said long ago, revolution is the only way. As the capitalist system continues to disintegrate, the anger and desperation of the working class will eventually create a revolutionary climate. I would love Professor Wolff to speculate about how a peaceful transition to socialism could be possible, given the vastly unequal political and social relationships that exist today.
  • commented 2017-01-08 09:36:23 -0500
    Can you prove that capitalism is the problem and not ignorance? The people of the USA are woefully under-educated and you want to put them in charge of business decisions?

    That isn’t going to work.

    The socialism quote you shared from Einstein a few months ago included a critical provision for education.

    If Education isn’t at the foundation of your “ism” your “ism” isn’t going to work.

    “If a nation expects to be ignorant and free…it expects what never was and never will be.”—Thomas Jefferson.

    I think Professor Wolff is blinded by his ideology.
  • commented 2017-01-08 08:11:33 -0500
    The powerful will never voluntarily give up power. They created capitalism out of pity. The Making of Economic Society; Heilbroner and Milberg They must now be shamed into an educated fair distribution of profits.
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