Economic Update: Answering our Critics

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[S10 E02]

Three major criticisms of Economic Update are considered: (1) that we don't praise capitalism for reducing world poverty, (2) that we don't admit that "socialism has never worked anywhere," and (3) that no inventor of a new product or technique who starts a business will ever accept that employees in such a business are equal partners with the inventor, originator of the business. Today's program answers these criticisms, refuting their arguments systematically.

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Transcript has been edited for clarity.

Welcome friends, to another edition of Economic Update. This one for a new year just beginning. This is a program as you know, that comes to you every week, devoted to the economic dimensions of our lives jobs, incomes, debts, our own, those of our children. I'm your host Richard Wolff. Today's program is a little bit unusual. I have pulled together the three most frequently directed criticisms at the kinds of ideas that we develop on this program that Democracy at Work, the organization behind all of this, promotes in its various forms. I thought this would be a good opportunity to mention these criticisms, to recognize them, and to respond in a systematic way to each of them. So that's what we're going to do and I think most of you will probably have heard such criticisms as well and so I hope it will be of interest to you as we go through it. The first one is the criticism that capitalism is great because poverty in the world is less today than it was a hundred years ago. 300 years ago. All kinds of people: politicians, professors, media folks repeat this kind of argument that we shouldn't somehow be critical of capitalism because look what it has done for poverty. So now let me respond because I think that criticism is Ill-advised or to use a simpler term: It's wrong and let me explain why. First, capitalists have resisted virtually every effort to do away with poverty that I am aware of. So it is peculiar to call for credit when you have opposed the very thing that you're taking credit for. Let me give you an example. The capitalists in the United States opposed the minimum wages when they were passed 75 years ago. And consistently ever since right till this minute the Republican Party has worked very hard, unfortunately with good cooperation from many in the Democratic Party, to keep minimum wages from being raised even at the minimum rate of inflation. So that's not a step that shows you're interested in or able to improve on poverty. The reason we have a minimum wage is that the labor unions and the mass of working people pushed real hard to get them? It's not something that capitalists deserve or should get any credit for. The same applies to raising wages and salaries. The business community, the capitalists, are notoriously uninterested in doing that. I'm being polite. They oppose it at every chance. If confronted with rising wages that workers have managed to get, you know what they do? Yes, of course, you know what they do. They move jobs out of the country to where wages are cheaper, don't they? They bring in immigrants who are desperate in order to give them jobs that lower money and if none of those strategies work, they replace people with machines. This is not a way to avoid poverty; this is a way to guarantee it. Finally, every effort to improve the conditions of working people to get them out of poverty have been opposed by capitalists past and present. When Franklin Roosevelt, under the pressure of unions and working people, set up the Social Security system in the 1930s you know who opposed it? Let me tell you, the business community, the chambers of commerce, all of the Capitalist class with a few exceptions were dead opposed and in case you think that's ancient history, let's go to modern France. Starting in December of last year the French people went out millions of them to protest what the effort of their Prime minister their president, Mr. Macron, doing the work of the capitalist class in France wanted to lower the pensions that workers get. That's not a contribution to overcoming poverty, It's the opposite. So what is this bizarre business that the capitalists want us to give them credit for the diminution of poverty when that had to be done over and against their resistance. It's really extraordinary. Let me give you another example. During the 1930s. We had the greatest 

uprising of the American working class in our country's history They threatened to get rid of Mr. Roosevelt as president or maybe even to make a revolution if something wasn't done to help people during the greatest collapse of capitalism in its history: the Great Depression of the 1930s. As a concession to this mass movement and over the objections of capitalists Mr. Roosevelt established social security, the first minimum wage, unemployment insurance for people who lost their job through no fault of their own, and a public jobs program for the millions of people for whom no work was available from the private capitalists in charge of jobs that created the American middle class. There wasn't such a thing before; it was the rich and everybody else. A middle was created not by the generosity of capitalism but over and against the opposition of capitalists. And guess what: to prove it the capitalists after World War two led by the Republican Party and the business community took back step-by-step everything that Mr. Roosevelt had been pressed to give to the American working class. Capitalism doesn't get the credit for eliminating poverty. It has been the opponent of all of that. But let me get to the last step of responding to this criticism. Imagine that somebody was apologizing for slavery and used this argument: Well the slaves in 1840, this apologist might argue, were better fed better clothed and better housed than they were thirty, fifty, or a hundred years ago. Therefore you should credit slavery. You shouldn't be a critic of slavery because the slaves are in better shape than they were before. Hopefully, I think most of you would right away understand that there's something terribly wrong with this argument. Slavery is the problem. How well you could treat the slaves goes up and down at the pleasure of the master. That's what slavery means and that's the problem. You don't justify slavery by pointing out that in certain periods, the slaves’ condition as a slave got better and forget conveniently when it got worse. The problem is slavery. And guess what: the same is said with feudalism and serfs and the same applies to capitalism. The problem here is a system that systematically works to keep down wages, to keep down the quality of working conditions, to boost the income of the capitalists which we call profit. You know it, I know it, and the idea that we should give capitalism the credit for the hard-won escape from poverty that the working class has achieved is an extraordinary and outrageous kind of criticism to offer. 

The next criticism perhaps the second most often goes very simply: socialism, we are told hasn't worked. I have received emails explaining to me that socialism not only hasn't worked, it hasn't worked anywhere. This is said very often by people as if this were one of the universal truths that the human race has learned over eons. Well, it's wrong. It's not correct at all and let me explain. Whether anything capitalism socialism or anything else succeeds or not depends on how you measure it. Let me take an example from capitalism. Has capitalism succeeded> Well, let's see. We are now in the United States capitalism at a level of inequality we haven't seen for a hundred years. That's right capitalism is now steadily worsening the inequality in the United States as every measure left-wing, right-wing, and center indicates. Are we to conclude that capitalism is a great success by that measure. I don't think so. Here's another measure Has capitalism brought people together or is it dividing the country by that standard? Capitalism isn't much of a success Does the United States have a high absolute standard of living? Yes, maybe by that measure you would say capitalism is a success. Simple point: systems whether they're capitalism or anything else have their pluses and their minuses and which ones you focus on 

will lead you to whatever conclusion about success or failure you want to make in a general way. Using that kind of common sense Let's look at socialism to see whether it's a success or not. Is capitalism working? Is socialism working? Let's see. Socialism's most famous examples are of two kinds: one where the government comes in and takes over the industries and the agriculture and runs the literal enterprises producing goods and services, the kinds of examples we have the Soviet Union, China at least for part of its history, Cuba, and so on. What do we want to say about their successes and failures? Well, let's see. If the standard of measure is going to be the rate of growth, how fast these countries were able to escape poverty and to arrive at a standard of living markedly higher than what they had before, then the Soviet Union and China are not just successes. They're great successes because they did that faster and went further than any capitalist country ever did before, that's right the rate of growth of the Soviet Union from 1917 when the revolution happened to 1989 when the country fell apart, that the economic growth they achieved despite deadly participation in two world wars and a revolution and a civil war, and the collectivization of Agriculture that was very disruptive is astonishing. From one of the most backward countries in Europe at the time of the revolution, 1917, by 1975 they were the second global superpower second only to the United States. Extraordinary. The only thing more impressive of economic growth and that is the growth of the People's Republic of China from the time of their Revolution in 1949 to the present moment when they have become also the number two economic power after the United States. So if your goal in establishing socialism was to get out of poverty and to become a modern industrialized economy, then socialism as practiced in the Soviet Union and China is a great success, not a failure at all. Now suppose you measured it in a different way. Suppose you said ‘what is the status of civil liberties, of political divisions and political freedoms of different political parties and so forth’. Well, the Soviet Union wasn't much of a success that way and neither is the People's Republic of China. They had a dominant Communist Party that controlled the government and all the operations of government, so you wouldn't give him a big high grade on that score. Okay fair enough. So they're successful in some ways, not in others, but the notion that they have never succeeded is silly. Let me continue after our break because we've come to the end of the first half of the program and as usual I want to bring a couple of things to your attention. First, this is a project of Democracy at Work and we maintain two websites Democracyatwork.info and RDWolff.com. Please make use of them. You could communicate with us. You can follow us on Facebook, Twitter, and Instagram and so forth. I want to particularly thank the Patreon community that supports us in such an enthusiastic way, very grateful for all of that and I want to remind you that we have just released our new book, Understanding Socialism, and that is in response to many of these kinds of questions, including those we're dealing with today. I would urge you, if you're interested in these questions and getting our answers, to take a look at it. Understanding Socialism just released. Stay with us. We'll be right back. 

Welcome back friends to the second half of today's Economic Update. I wanted to make one short announcement that I didn't get time for in the first half. Many of you have been doing quietly something enormously helpful to us over the years which is to recommend to your local public or community radio station the idea of carrying this program. Indeed, that's the way we 

went from the one program in New York City on station WBAI to more than a hundred stations that now broadcast this program across the United States. I wanted to thank you, but even more, I wanted to ask those of you listening, if you or someone you know would be interested in having this program on a local radio station, the best way to get that to happen is for you a local person, a listener, to let them know in your area that you would like to see this program, you'd like to hear this program and we would appreciate enormously whatever initiative you could take to get this program on more stations across the country. Just communicate with us. Go to the website DemocracyatWork.info. Let us know that there is a radio station that is interested. We will take it from there We need contact information, who to contact and so on but we're always in the market for that and please continue your kind efforts to help us in that regard. Its enormously appreciated. 

Well, we were talking about the pros and cons of socialism, the ways in which it did indeed work and the ways, also which we're gonna go into now, in which it didn't. But before that, I want to get to another kind of criticism, that socialism never worked. People who have in mind Russia or China or Cuba make the comment that they have a lower standard of living than we do here in the United States and they have fewer civil liberties and political freedoms. Well, I think there's something to that argument these countries started at a very poor level of development, to say the least back in the Twentieth century they've had a long way to go. They've gone faster than anybody else did but they're still at a lower standard of living, fair enough. And many of those countries Russia China Cuba have some way to go in terms of civil liberties and political freedoms, so let's take a look at another group of countries that refer to themselves as socialists or at least an awful lot of people do, and I'm talking here about Scandinavia, Western Europe, Norway, Finland, Sweden, Denmark, and in many ways Germany, France, Italy, and so on. What am I meaning by that? Well, socialism has often meant that the government comes in and takes a role to even things out in society to create minimum standards of living that are nice and high to provide all kinds of services at little or no cost to the people. a national health insurance program. free public education, subsidized housing transport, and so on often referred to as the socialist countries of Europe. Let's take a look because if that's what we call socialism as millions of people do then guess what? They have as high a standard of living as the United States or higher. They have political freedoms more or less like the United States: contesting political parties in a spectrum from left to right that's actually wider with more political choice than we have here in the United States. In other words, if you want to use civil liberties, you want to use political freedoms, and you want to use standard of living, then there are parts of the socialist experience that have done really well according to those standards. They haven't grown quickly on the scale of Russia or China, but they have standards of living in civil liberties and political freedoms that they don't have to put second to anybody else. Once again, this is a way in which socialism has worked very well in these countries, which is why they fight so hard to keep their national health service to keep their subsidized education in Germany today. As I've mentioned before, higher education, college and university, is absolutely free, no fees no tuition, and not just for German citizens for anyone in any country who moves to Germany for an education. They don't pay either. That's remarkable service and no politician in Germany dares to work against it. But does socialism, therefore, offer some utopia? Of course not. Does 

socialism have drawbacks? You betcha. I've mentioned some, but here's one that I think is very important. Socialism always meant going beyond capitalism, not making capitalism less burdensome, say by a minimum wage, say buy subsidized housing. It was the idea to go beyond and if that's the kind of notion of socialism you have, then you would find existing socialisms, whether of the Soviet and Chinese variety or the Scandinavian variety wanting. You'd say they weren't successful because they haven't gone beyond what the employer-employee relationship, a system of production that has us all working in factories and stores where a tiny group of people, the owner, the board of directors in a corporation make all the decisions and we have to live with them the absence of democracy in the workplace is a critique of capitalism that socialism has not yet overcome and can be criticized for, but the general idea that socialism hasn't worked is a criticism without merit. 

Let me get them to the third of these classic criticisms that have been leveled at us and this one isn't about socialism, it's about the idea of worker coops. The idea that one individual (This is the way the criticism works.), who invents a new product or a new idea or a new concept would have to share it, Heaven forbid, with the employees as this individual inventor, let's call him or her, works out their invention into a product that we can all use. “I broke through I invented why should I share my great invention with my employees who come on later to work in my enterprise but didn't participate in inventing?” Wow, I find this extraordinary. Let's let's begin with what's wrong with this criticism first. One thing to invent another thing is to exploit workers. You don't need to exploit workers in order to invent and you don't need to give an inventor the incentive of exploitation to get him or her to invent. This is a kind of bizarre argument if what you're saying is we need to give an incentive to people to invent new products new ideas new technologies, I'm with you. Let's give them an award Let's give them lots of public recognition. Let's give them some financial inducement. I'm okay with all of that. That's a way of encouraging people. No problem, but that doesn't require nor does it justify exploiting them later. Suppose I told you of a society in which to give an incentive to investors they were told ‘look, if you will just invent something to invest time in it and build it up, we're so grateful. We're gonna give you three slaves for the rest of your life’, we'd all gasp in horror. We don't need to do that. One doesn't require and it certainly doesn't justify the other. Yes, we want innovative people, but we're not gonna pay for it by going back on our commitment to abolish slavery. Wow. Let's give the inventor a reward, no problem. But that doesn't require that in the company that really makes the invention come alive and become real for us all, we have to allow one person to exploit, make money, off the labor of others. You know a decent inventor wouldn't require wouldn't ask it and wouldn't require it a decent inventor knows they're helping society. They're making it possible for less labor to produce as much output as before. They're helping develop the community that nurtured them. They don't need to be in a position to be the employer who rips profit out of workers whose wages they keep down. Let me get out of the way another argument I hear often. Well, the businessman a woman is taking a risk. They're investing their money into this enterprise to start. It's an inventor who came up with a new idea and they're taking the risk and so something is supposed to follow from that. They're gonna be in charge. I always found this an offensive argument. Here's a reason the workers who go to work for the person who starts a business they're taking risks to. That worker didn't take another 

job to work in this one. That worker may have moved his or her family from one place to another, their kids out of one school to another. They are putting their lives into this company, into the community around this company. We don't pay them for that risk, do we? We pay them for the work they do but not for the risk. If you want to reward the employer for the risk he or she takes, you're gonna have to reward the workers also for the risk they take but this is something the capitalist never wants to do. And you know, there is a difference, the one who takes the risk to start and own a company, he or she is the one making the decisions. The risk taken by the worker is much poorer because they're taking a risk, but the decisions that will determine whether that risk pays off or not is not in their hands because democracy doesn't exist in the workplace. The risk taken by the employer is a risk over which the employer has some control and decision-making. The risk is taken by the employee. They have none. And here's another way of looking at it. Many of the structures of capitalism are an incentive not to invest not to invent. Let me give you just a few examples. You know many of them. Years ago, we learned how to make a light bulb that lasts forever but the companies involved in making light bulbs didn't want that and so there's an incentive in capitalism to block, to prevent, invention that has to be measured in here somewhere. Two years ago we knew that public transportation, trolleys, buses, much cheaper way of moving people than the private automobile, but the companies that were involved in making private automobiles, GM, Ford, and so on, they didn't want that and they took steps to prevent it. There is an example of capitalism and profit being an incentive to block efficiency, to block breakthroughs in public transportation. Let me give you another one. I recently returned from Europe on an airplane. The seats were unbelievable. They were so narrow, I felt like a sardine. Why is an airplane seat rendered less and less comfortable over time? Because there's a profit incentive to the airline companies to make it so uncomfortable that we will all pay extra to have a place where we can stretch our legs, pay extra so we are not developing a new spine as a result of an eight-hour trip, etc. There are incentives that work very perversely in capitalism and we ought to deal with them as well. Yet another example. What incentive is there for workers to figure out new ways of doing things if the result of developing a new machine is that you lose your job? You know what new machines mostly do they automate and automation means when you replace workers with machines and you know what you do to the workers, who are replaced by a machine, you throw them out of work! The prospect of unemployment is a disincentive to invest and to invent for the mass of the working people. If you really cared about incentives to invent you'd create the rewards for everybody. You wouldn't allow unemployment because that blocks the incentive to invent. Everybody would have an incentive if there was no unemployment and we rewarded everybody. Capitalism doesn't do that. It creates an incentive for profitable investment and that doesn't require allowing you to exploit people who take the risk of working with you later. Nor should you want it. The notion that somehow nobody would ever invent anything unless they were allowed to exploit afterward, whether it's a slave or a serf or a worker never held water. Those other systems had their development of new technologies just like capitalism and the future of a democratic workplace will be at least as inventive as anything capitalism has so far achieved. Thanks for your attention. We've come to the end of today's program and I look forward to talking with you again next week. 


Transcript by Connor Bulgrin
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  • neo neo
    commented 2020-01-26 16:12:30 -0500
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  • neo neo
    commented 2020-01-26 15:00:21 -0500
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