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Welcome, friends, to another edition of Economic Update, the weekly program devoted to the economic dimensions of our lives: jobs, incomes, debts—all of that—as it affects us and our children. I’m your host Richard Wolff. 

Today I want to talk to you about an issue that many of you have raised in your communications with me. What you’ve pointed out is that there are now really remarkable polls indicating that majorities, clear majorities, particularly of younger Americans, are critical of capitalism, would rather live in a system that worked better, feel that we can do better than capitalism and so on. And that likewise, we’ve been successful, as had many others, in pointing out that one of the ways we can and should do better is by having an economy not organized—so that the workplaces: offices, stores, factories are organized in an undemocratic top-down hierarchical way—the way we have it in capitalism. And that it would be better if they were run democratically, that the commitment to democracy in the communities where we live should have been extended long ago to the communities where we work, because of the same reasons and logic about that.

So with that understood, the question has become, how do we get from where we are to such a situation? How do we do it? What are the mechanisms that might be available for us, so that we can start thinking about and acting to move from the condition we have now—capitalism—to something better, with a particular focus on changing the organization of production from the hierarchical top-down capitalist way to the democratic workers becoming their own employers’ alternative?

So I want to talk about that. And the way I want to do it is by starting out and exploring how capitalism did it. In other words, capitalism hasn’t always existed. As I hope most of you know, capitalism is relatively young, three or four hundred years, at most, 250 years, probably most people would agree, started in England, spread from there to Northern Europe, Western Europe and then to North America and then to Japan and then to the world as a whole. And that took 250–300 years.

So the question is when did capitalism come from? How did the transition go from feudalism to capitalism? And I wouldn’t bother you with this history lesson, if you like, if it weren’t for the fact that that’s the best guide we have. Let’s see how they did it. And I think you’ll see quickly that the clues, and the suggestions that had come from that transition are very relevant and applicable to the question of how we make the next transition from capitalism to something better, as part of the human progress that takes us out of an ancient village and tribal communities, takes us into, but then out of slavery, and then feudalism, and then capitalism, and then we will discuss it. So let’s look, how did the capitalist evolution, if you’re like, out of feudalism in Europe, how that happen?

Here we go. Feudalism as a system characterized by lords and serfs. The land of Europe was divided up—that comes out of the previous history. And what you have are areas they will call feudal manors, where there’s a feudal lord, who has the total power, controls the land, and under him lots of villages and individuals who do the work, who cultivate the land and raise the animals. They’re called the serfs. Feudal manor: lord—at the top, serfs—at the bottom.

Okay. How did that work? Well, roughly 500 AD to roughly 1500 AD—that’s a 1000 years, a long time—over that time, the system got itself into all kinds of problems. It’s survived. It even expanded, but it also had problems. That’s already a clue. Capitalism is like that. Next clue. As it had more and more problems of all kinds, including conflicts between the serfs, who didn’t want to have to give so much of what they produced to the lord, and the lord who had an endless appetite, the lord’s becoming very rich. You can see how rich if you visit the châteaux in France, or the castles around Europe, those are the remnants of the wealth they had. A few people, very very wealthy, and a mass of people squeezed, so that the few could be wealthy. That order sounds familiar to those of us living in capitalism too.

And to hold on to this system as it started to fall apart, they went from a decentralized feudalism—lots of lords all over the place with their serfs—to a few really big ones. And those big ones took on a new name. We’re not just a big lord with more serfs and the rest of you. We are the number one lord, to which they gave the name “king”—the big shot, the guy at the top. And the others didn’t like one king having all that much. They begrudged him, his power, his wealth, but they also wanted to have the concentration of wealth, and power, and armed men to protect feudalism. Even though they weren’t happy with the big guy, he could help them if their own serfs revolted, for example. So they tolerated the big strong king.

Meanwhile, feudalism kept falling apart and the serfs began running away from ridiculous lords demanding too much. You know the story because one of them is captured in American mentalities called The Story of Robin Hood. Remember? The merry men in the forest. Those were runaway serfs who didn’t want to be serfs anymore, and who had a new way of living, called stealing from the rich, and being outlaws in the woods. Or many other serfs didn’t have that option, because there were no outlaws, there were no nearby forest in which to play outlaw. So they went to the towns. There were a few of them, but they collected their… because they could run away. And in the towns, they had to find a way of living, because they are no serfs anymore. And so they began to develop a new relationship. Some of them became the employees of the others. That’s a completely new relationship. Some, often merchants, would hire runaway serfs to work for them. Now we have a new relationship: employer–employee—not lord, not serf, not in a rural area—in the town. And that’s the beginning of capitalism. Wow, how interesting. Capitalism starts in little towns. That’s right. It starts in little areas, and it has lots of conflict with the lord and serfs, because they see a new system, and they are not sure that ought to be there. And there were difficult tensions between them. But step by step, the problems of feudalism kept making more and more serfs run away, more and more lords overthrown by their serfs who then ran away. And the population in the towns grows, and the number of employers and employees grows alongside it.

And pretty soon these new little enclaves of capitalism within a larger feudalism begin to feel their oats. They’re angry that the feudals run everything, because the feudals try to undo capitalism. They try to snatch the surfs back. They try to make it hard for the capitalists to survive and grow, because they don’t want an incentive for their serfs to run away to work instead for a capitalist. The tension between them gets difficult. And pretty soon these young new developing capitalists begin to want to protect themselves against the lords. And they do it. They get together and they form little associations. And they begin to say, “Wait a minute. We’re paying taxes to the big king just like everybody else, but the big king is a feudal lord. He’s just helping the fuedals. He never helps us. He actually works with the feudals against us. Well, you’re not going to get our taxes if you’re using them against us.” So for example, they invent a phrase like “No taxation without representation”. “Uh-h, we want our tax money to help our economic system here in the towns, our employer–employee arrangement. That’s what we want. And we’re not going to let you keep taxing us to support the system that threatens us.”

And so they got together, and you know what they eventually did? They formed political associations. They could give them lots of different names, they eventually gave them the name of a political party. And they said to the king, “We’ll pay you taxes, but you have to set up a place where we get to talk about what we want to be done with the taxes. And the place where we want to talk is called—the place where, to use the French word “parlé”, where we speak—is called “the parliament” where you go to speak. And who speaks? The capitalists to the king, “We want our share of what goes on.” The king needed the taxes in order to run the big system that he was the king of. So he had to kind of meet them halfway, although he wasn’t happy about it. And we begin to get the capitalists with their own political party fighting against the king and the lord and struggling over power. Because it turned out these two systems didn’t live together real well.

The lords and serfs, particularly the lords, were very suspicious of the capitalists, and vice versa, and for good reason. This kind of tension builds up across the later part of feudalism until the capitalists are strong enough in the cities, where they are based, have enough serfs that they begin to demand that the policies of the king be tilted less towards feudalism more towards capitalism. But that threatens the feudals, because they need that king to protect them and they don’t want to support a capitalism, which is that drawer that pulls people off the country side, who are serfs, because, difficult as it is, their chances are better in that newer system developing in the towns. We know where the story ends. It ends in the French Revolution, when the new emerging merchants-employers in the cities with their employees realize that the future is theirs, and that they need to end this struggle by ending the feudalism, and they make revolutions to do so.

And that’s how capitalism is born. It’s born first within the shell of an old feudalism coming out of the contradictions of that feudalism, making those contradictions, not intentionally, but by their very growth, more acute, struggling now for their own political organizations to have their own political force and power under feudal kings, forcing slowly, with much conflict, compromises and concessions from that king until they are strong enough to push feudalism aside historically and bring the world into the newer arrangement of capitalism; replacing lord and surf system with employer–employee system, replacing assistant, mostly agricultural, with one that’s mostly industrial, replacing a feudalism that’s mostly rural with a capitalism that’s mostly urban.

Why am I telling you this story? Because inside capitalism, the same thing is now happening—a parallel story. What’s happening are worker co-ops—in Spain, in France, in Germany—but now in the United States, and everywhere. Workers are saying, “We don’t want to live in the way capitalism assigns us. It’s too unequal, it’s too unstable, with its every four- to seven-year downturns. It’s not a bearable system. We are looking for alternatives and finding them in starting up our own collective businesses.”

In the second half of today’s show, I’m going to talk about what strategy that implies for going forward.

We’ve come to the end of the first half of today’s show. I want to remind you that we appreciate very much the Patreon community that supports us, that we urge you to make use of our websites to communicate with us and to follow us on Facebook, Twitter, and Instagram.

And finally, reminder. We produced this new book Understanding Marxism. It is a way of dealing with what that contribution is to the struggles and realities we face now. Please think about getting answers to your questions about Marxism from the use of that book. Thank you. We will be right back.

Welcome back, friends, to the second half of today’s Economic Update. Before I continue and discuss how we get from the capitalist economic system we have to the system we’re trying to move toward, I wanted to make—well, it is for us—an exciting announcement.

The store, where we provide interesting objects that you can purchase, is now capable of shipping internationally anywhere in the world. We invite you to take a look at the updated and increased collection of items that are about the work we do, that celebrate the work we do, and that enable you to support the work we do with gifts that you may find interesting for yourself and for the people around you. Every item on our list in our store is made by the WorX cooperative printing outfit, a local Massachusetts space union worker co-op. So please take a look at our website democracyatwork.info and click on Store to see what is available that may be of interest to you.

Let’s turn then to how we can understand from what we did in the first half of today’s show, what might be a workable strategy to move towards an economy based on democratically organized and run worker co-ops. First, just as capitalists were developing employer–employee relationships in feudalism, so it has been now for quite a while that worker co-ops are emerging in capitalism. Here in the United States, it’s remarkable, hundreds of them have been formed and developed in recent years. And the answer is very similar to what happened in feudalism with the early capitalists. People are discovering that they are unwilling and unable to continue as employees and capitalist enterprises.

The pay they get, the conditions they work under are simply unattractive, unbearable as the economy goes through its crashes such as the one in 2008, as we suffer levels of inequality we haven’t seen for 100 years in this country. People are sick and tired and fed up. And the signs of that are everywhere. And one of the new interesting ways of acting on that has been for people to form worker co-ops—alternative ways of living and working in this society. It’s still a capitalist society, but within it are the seeds, the seed institutions that are moving beyond it, just as the urban capitalist move beyond the feudalism, which gave them their strength.

I also think we’re getting to the point where there are enough cooperative activities, not just worker co-ops, which is what we stress, but other kinds of co-ops—consumer co-ops, sales co-ops—ways in which people are learning that the competitive capitalist profit-driven system is not only enough, the only way to organize in economy, it’s not the one we want. I think we’re ready then to take the step that we can learn from the capitalist as they came out of feudalism. It’s time for us to organize the co-ops. We bring them together in a political project. What does that mean?

It means grouping together the actual co-ops that are developing—together with all the people who support and welcome the development of co-ops, together with the labor movement, the unions, so that they can see the co-ops as a force in society to strengthen them in their struggles with capitalists to get better wages and working conditions for workers.

So co-ops, plus the people who support the co-op movement, plus the labor movement, that is the basis to form a new political organization, just as the emerging capitalist did. And in the same way, we can recognize that the co-ops are already paying taxes to a government. The new co-ops developing are paying taxes to a government, the trade unions are paying taxes in their direct and indirect ways, the people who support the co-op movement are paying taxes. But here is the issue and the rub as we learn from the transition from feudalism to capitalism. We’re all paying taxes to a government that is in fact helping capitalists, not worker co-ops. There are hundreds of laws and regulations that make it difficult to form a co-op, that make it difficult to raise money for a co-op, that inhibit the co-op.

At the same time, the government, we’re paying taxes to, is providing subsidy upon subsidy to private capitalist corporations, that year and a half ago gave the capitalist corporations the biggest tax cut they’ve ever seen, which is a support for them etc. etc. It’s long overdue that the government, we’re already paying taxes to, do something it should have done a long time ago. Namely, give the kinds of support to the development of worker co-ops that they have always given to the development of capitalist enterprises. But that’s not going to happen, because it’s fair and reasonable, and just, any more than the capitalists within feudalism got a fair, reasonable or just deal from the kings they had to deal with.

You have to have the political strength to make the state, you’re already funding, help you. And in order to get the American government, for example, to be supportive of worker co-ops, to make it easy for them to form, easy for them to raise money, easy for them to function—in order for those things to happen, that has to be political strength. And that’s why you want to bring together the worker co-ops, the individuals who support a transition in that direction, and the labor movement together to form what?

Well, let’s call it, what it will in the end be, a political party—a unique and different political party. It’ll be different from the Republicans and Democrats on one key issue—those two parties have, for the history of the United States at least over the last 150 years, been parties for capitalism. They both say so. There’s no reason to doubt it. They’ve both acted that way. They’ve been partisans of capitalism. That’s what supports them, the capitalist system. The capitalists give them the big donations. You know the story. If you look at the people who occupy the biggest seats in our government, there are people who were before and will be after their government service corporate executives at the highest level of capitalist corporations. I shouldn’t have to go through more than that. What this new political party will be is different from the Republicans and Democrats on this key and indisputable issue.

This new political party is not a capitalist party, is not interested in supporting capitalism, reinforcing capitalism or anything else. It’s interested, like the capitalist parties were in feudalism, in moving society forward. Its premise is we can do better than capitalism. Its objective is to move society in that direction. And how will they do it? Well, I’ve already implied the answer. They will work for new regulations that make it easier for worker co-ops to form, easier for them to raise capital to build their businesses, easier for them to get orders from the government, so that the government isn’t only buying goods and services from capitalist organizations—which is what they do now—but from worker co-op organizations.

All of these ways that the government can help and build the private corporate sector of capitalism will now be applied to the private worker co-op sector that we’re talking about developing. And there’s a very strong bond that can be created. Those early capitalist political organizations in feudalism, you know where they got their strength? From the capitalists in the towns who supported those political organizations, who helped organize people to be favorably disposed to them, to agree with them, they raise the money that these political organizations needed to grow and get their message out. Exactly the same will now happen with worker co-ops. They will be the source of information about this new political party and how supporting it is a way of supporting your own worker co-op, if you’re in one, or supporting a worker co-op if you see them in the community and you want them to flourish as an option for you either as a consumer of goods produced there or as a worker in one of them.

The worker co-ops will raise the money in part to support the political party. And why? Because the political party will be doing the things at the governmental level that support the worker co-op. Literally, based on how capitalists built the political movements that brought them to dominance in the world, that is what a worker co-op political party combination and alliance can do.

And therein lies the strategy. What we need to do now is to overcome the hesitancy of a political party to take a clear position—we can do better than capitalism and that’s our project. And on the other hand, we need existing and future worker co-ops to recognize that they need the kind of political support, the kind of constant pressure on the government to begin to service the worker co-op sector rather than to discriminate against it, to boost it, rather than suppress it in favor of capitalism. The system doesn’t need parties to do that. It already has the Republicans and Democrats working on it. It needs a new and different political thrust in order to move this project further. That’s what we need. We need to persuade the worker co-ops to make the alliance with such a political movement, and we have to develop a political movement that’s worth the worker co-ops giving it their support, they’re financing and so on. But I think the relationship here is already embryonic in the existence of the United States. Steps like this are going on.

Let me conclude this conversation by addressing an issue that I know is in many of your minds. Am I saying we cannot, we must not work, for example, in or with the Democratic Party in the United States? No. The Democratic Party has for a very long time and to this day been controlled and dominated by folks who are advocates of capitalism. Nancy Pelosi (D-Calif.) said so a year or two ago in a famous video that, I imagine, many of you have seen, when a young man in an audience asks her, what does she think about socialism? And she looks befuddled and says, “We’re all capitalists now.” That was very honest of Mrs. Pelosi. It’s something we all knew, but it is clear that she understands it as well.

So the Democrats have their commitment to capitalism. Yes, there are Democrats who are critical. Of course, the most important Bernie Sanders (I-Vt.) who has run inside the Democratic Party as a socialist, who’s therefore committed in some sense to going beyond and doing better than capitalism. But it’s not the major thrust of what he does. Could it be in some possible scenario that the Democratic Party changes from being a party of by and, ultimately, dependent on capitalists to being a party of the sort I’m describing? Sure. It’s conceivable. It hasn’t been the direction things have taken. It doesn’t look likely to me now, but I don’t rule it out, nor would I rule out, at all, that there are important steps that can be taken by people inside—not just the Democrat, but the Republican Party too—to provide supports for what we’re doing.

But to make a transition of this importance, we do need our own political organizations, just like we need worker co-ops connected to them. That’s the way forward. That’s how capitalism did it. It’s a good way, at least to start the conversation about the strategy to get us toward the goals that already attract Americans both in their thinking and in their actions as they look for different ways to organize their work lives.

I hope you found this interesting. It is a response to many of you asking, “Okay, we understand where you are pointing. But how do we get there?” These are the kinds of considerations of both of history and of our present situation designed to strategize our way forward.

Thanks for your attention. And I look forward to speaking with you again next week.

Transcript by Aleh Haiko
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