Economic Update: Capitalism's Worst Nightmare

[S10 E43] New

Direct Download

On this week's show, Prof. Wolff explores what major social changes will flow from today's combination of major economic crash and the viral pandemic (capitalism's worst nightmare). To answer, we consider how European feudalism changed after its 14th century combination of economic decline and the bubonic plague. The two big changes then were (1) switching from a decentralized to a strong state, monarchical feudalism and (2) transition from feudalism to capitalism. The two big parallel changes now are also (1) switching to a strong state capitalism and (2) transition from capitalism to a worker-coop based economy.

**Economic Update is a d@w production. We make it a point to provide the show free of ads. Please consider supporting our work. Become an EU patron on Patreon: https://www.patreon.com/economicupdate  and help us spread Prof. Wolff's message to a larger audience. Every donation counts!

A special thank you to our devoted EU Patreon community whose contributions make this show possible each week.

If you would like to make a one time or monthly donation, visit our donation page.

Find quick and easy access to past episodes of Economic Update, including transcripts, on our EU Episode List page.

Learn more about Prof Wolff's new book, "The Sickness is the System: When Capitalism Fails to Save Us from Pandemics or Itself", available now at www.democracyatwork.info/books

"Richard Wolff in his new book examines frightening and anti-democratic configurations of corporate power, offering not only a blueprint for how we got here, but a plan for how we will rescue ourselves and create new models of economic and political justice.” - Chris Hedges

Transcript has been edited for clarity.


Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives: jobs, debts, incomes — our own and our children's. I'm your host, Richard Wolff.

I want to devote the entire program today to responding to a series of questions many of you have sent to me. They boil down to this: Where are we going? What is happening to the United States is so profound, so deep in what it means and what its implications are, that the assumption of many of you — and I think you're quite right — is that this will have long-lasting, history-making effects. And I want not only to reinforce your insight on this point but to try to spell it out, to try to use history — because that's all we have — to make an educated guess about where we're going, what some of the major outcomes of this crisis we're going through are likely to be, to enshape our own coping, planning, and understanding.

So let me begin by underscoring something I hope many of you have already understood. We are living through what really should be called capitalism's worst nightmare. What do I mean? Well, capitalism has a problem, as we've discussed on this program many times: It is an extremely unstable system. Everywhere where capitalism has settled, every four to seven years, on average, it has an economic downturn. Millions of people lose their jobs, thousands of businesses collapse, cities and towns don't have the revenue or the government to help us at a time when we especially need it. It's a disaster. It's very, very unstable. We've had three so far in this century — one every six and a half years, on average, in this century — so we're right on target with the history. 

That's bad enough. But the worst nightmare comes in when capitalism has to worry that there might be a coincidence in time between one of these recurring periodic downturns and some sort of non-economic crisis. If that were to happen at the same time, it's your worst nightmare. What do I mean? Well, you could have a war at the same time that your economy tanks, or you could have a climatic disaster — a spectacular flood, a spectacular drought — and all of these things have happened. And there's another kind of non-economic crisis you could have: a health disaster. You know, like a viral pandemic. That's why we're in capitalism's worst nightmare, because we have as bad an economic downturn as we've ever had — on a par with the Great Depression of the 1930s — and at the same time a global health catastrophe, the COVID-19 virus.

So let's be clear that we are going through something spectacular, and not to downplay it, and not to pretend that, you know, a solution is around the corner. It isn't. This is as bad as this kind of crisis for capitalism can get. And that means that some of the mechanisms that help us get through economic crises on other occasions won't work now. They're not big enough. They don't act fast enough. They can't cope with something this bad. That's why all the money being pumped in by the Federal Reserve just isn't doing it. And that's why whatever is being done about our public health isn't really doing it. We're trying. It's better than nothing. But we are in trouble. 

And we can't rely on what the system has also done, which is a tragedy, but I have to speak to you about it. Capitalism has been unable, having tried throughout its history, to cope with its recurring crises. Capitalists with half a brain have always known that their worst nightmare could happen, that you could have one of these downturns at the same time as you had a non-economic crisis, and then where would you be? And the answer is: where we are now. They knew, but they didn't deal with it. They couldn't solve the instability; they never could. That's why we have it again. 

So what they did was kind of a second-best for them, which is to take a part of the population and say, you're going to be where the instability of capitalism hurts the most. You're going to be the shock absorber for this system's periodic, every-four-to-seven-year shocks. And you know who those people were; you really do. They're the African-American community, they're the Latino community, they're women, and they are immigrants — people who you hire when things are good, and then you fire them the minute things turn south, which, as we know, is every four to seven years. You throw the immigrants back to where they came from. You throw the women out of the labor force back into the household, to be the wives, and the mothers, and the caretakers. And you throw African-Americans into the pool of the unemployed. I mean, we do know that is our history as a nation. 

But our crisis now, being capitalism's worst nightmare, is too big for all of that. Women are returning to the household, immigrants have been thrown out of the country, and brown and black people are suffering disproportionately during this crisis, both from the virus and from the unemployment. So, true to form, we're doing everything we can do, but it is not enough, because this crisis is too big.

So what sense can we make? How can I do what this program today is designed to do — give you a sense of where we're going — when we are, in a sense, at such a critical moment in this crisis-ridden system? And here's where the history comes in. Can we find an earlier period when there was a comparable collapse — a worst nightmare, if you like — and can we see what happened, and then ask, well, could that happen again? Or could some form of it happen again? And luckily — not for the folks then, but for us — there was. I've mentioned it before, but I want to spend a little time with you on it today. 

I want us to go back to the 14th century — long time ago, 14th century — in Europe. And there they had a combination, yep, of an economic catastrophe, a collapse of a different economic system — it wasn't capitalism; it was feudalism, the system of lords and serfs — and they had it together in the 14th century with the worst public health disaster that Europe had experienced, as far as we know. It was called — it had two names — the “Black Death,” or the bubonic plague. It was a disease, a virus, carried by fleas that in turn lived on rats, and the rats spread it across Europe. It is reputed to have killed — get ready for this — one third of the population of Europe at that time. Unspeakable disaster. 

Who died? Huge numbers of people. Who were they? Let's go through it. The serfs — the mass of people who died were serfs, like the mass of people who are dying now are working-class people. Not employers; employees. Well, it wasn't lords who were the major people who died, although many of them did; it was the serfs. And when the serfs died or got sick, they couldn't work, which means that the feudal manor, where all kinds of agriculture was produced, and all kinds of food, and clothing, and crafts — and all of the production of the feudal society — couldn't continue. That's why the economic downturn was fed by the disease. 

But it worked the other way too. Part of the reason the disease was so terrible was that feudalism was having more and more problems in Europe already in the century before. Food couldn't be raised, partly because they did not know about soil fertility, and they couldn't raise crops and animals the way they had. The yield per acre was just shrinking, while the population was going up. And that made people hungry, it made people ill, it made people weak. So that when the virus came, they were vulnerable, just as today. If you take a look at who gets sick and who dies from the virus, it tends to be people with pre-existing health conditions because of our society's tendency to have people with bad diets, to have people with diabetes, obesity.  Same parallel then. 

Lords in large numbers died, so there was no one to run the manor, where the serfs were already sick and couldn't function. The system fell apart. There were cities developing in Europe at that time, and they also suffered the Black Death. The people in the cities weren't lords and serfs; they were small craftspeople and merchants. They died too. So there was a disintegration of feudal society, just as I would argue we are in early stages of the disintegration of our capitalism. 

So now comes the interesting part. What did feudal Europe do? Well, it had to do something. The serfs were not keeping the manors going. The serfs were running away from the manors where they and their parents and grandparents had been born and lived. You know the stories of serfs who ran away into the forest to escape the feudal system that was collapsing around them. In the forest they made bands of outlaws, one of whom became real famous. We call that the story of Robin Hood, which is exactly what that was: escaped serfs in the English countryside. So the lords couldn't hold onto the serfs. The lords were sick. The serfs were dying. They were running away. The whole feudal system was shaking. 

Many people ran to the cities to get away from the disease in the countryside, only to discover that the cities had it too. And so the merchants, who had hired people in the city, were losing their employees. So they couldn't move product from one area to another, which is what merchants did. The system was falling apart.

So what did they do? Well, in the time remaining for the first half of the show, I'm going to tease you by telling you one of the things they did. And then we'll talk about the second one, and how capitalism is now looking to go down a similar road.

The first thing that the feudals did — that shaped the whole last century of European feudalism — was to say, we have got to re-establish order in our feudalism. We have to stop the disintegration of the system, and we have to do it even though millions of serfs are dead, even though huge numbers of lords, and merchants, and city dwellers are dead or sick. And the way we're going to do it is, we're going to change feudalism. Up until that time, feudalism — from the end of the Roman Empire, roughly 500 ad, to this point in the14th century — feudalism had been a remarkably decentralized system. A lord here with his servants, the lord over there —  no central government. They had gotten rid of the Roman Empire, which was a central government, and everybody for centuries had been decentralized. 

Well, when decentralized feudalism fell apart, it decided, we need centralization. We need to have a powerful government sitting on top of our society. And they did that. They took one of the bigger lords and they made him the super lord, the lord over all the other lords. And they gave him a name. They called him the “king.” And that's the beginning of this kind of monarchy system that then became the so-called absolute monarchies of late feudalism. Keep that thought in mind: A powerful state is a response to a disintegrating system.

We've come to the end of the first part of today's show. Before we move on, I want to remind you that we recently published my third book for Democracy at Work. It's called The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself. It's a compilation of essays that aims to explain how and why capitalism is the sickness we need to worry about. Please stay with us; we will be right back.

Welcome back, friends, to the second half of today's Economic Update. Before the break I was explaining that we have a model, if you like, an example from the collapse of feudalism that can give us some guidance as to where we are going, now that our capitalist system is tottering the way that it is as we go through this crisis. And I had gotten to the point of beginning to explain one of the two major reactions that happened in European feudalism, when their system collapsed as a consequence of the Black Death, the bubonic plague of the 14th century. 

The decision of the feudal society, accumulated slowly over time, was to go from a decentralized system to a highly centralized system. From a feudalism that from the 5th to the 14th century had been very dispersed — very little contact between the lord and serfs over here and the lord and serfs over there. Relatively little trade between, say, Poland in the north and Portugal in the south. There even weren't places like Poland and Portugal, because those are nation states, and they didn't have that. They had a dispersed feudal society, a kind of reaction to the centralization of the Roman Empire that came before feudalism took over in Europe. 

And so they decided that they needed to re-establish order, that they needed to re-establish the dominance of the lord, the subordination of the serfs. In the collapse of feudalism, lords had turned on each other. They had to stop that. And, by the way, if you're ever interested in understanding how lords fight with one another in feudalism, read Shakespeare's plays. Half of them are all about that. It was a disaster to that society, as it was in Shakespeare's time as well, for feudalism, and order had to be brought. And the way you did that, they decided, was to give one lord a superposition: the super lord, the lord who lorded it over the other lords and had so much concentrated strength that he could protect all the other lords from fighting with one another, and from trouble from their serfs below, and could keep the cities from becoming dangerous in a way I'll explain in a moment. 

And they made that super lord the king. He became the monarch, the most powerful lord and the dominating controller of society. So at the last of what we call late feudalism — the 14th, 15th, 16th, 17th centuries — this was what evolved in European feudalism: highly controlled states, led by an emperor, or a czar, or a kaiser, or a king. These images some of you know from your history, or if not from that, from the movies.

But there was a second thing that happened as feudalism fell apart. The effort to save it was accompanied by an effort to go beyond it. The whole structure of lord and serf was more and more unacceptable. The serfs understood that they hadn't been fed properly, that they didn't live properly, that they had been decimated by disease — in part because of a system that wasn't prepared to handle the disease, that hadn't fed them, or clothed them, or sheltered them in ways that could enable them to survive. Feudalism looked lousy to large numbers of people, and they left. They could because feudalism was falling apart. And they went to the cities. And in the cities they were no longer on the land. They no longer had a feudal lord. They were just “citizens.” And now they were free from the barriers and the limits of life in the countryside.

And a new system developed. Those who had a little bit of wealth approached those who had nothing and said, hey, we'll make you a deal. You come and work with and for me, and I will give you a certain amount of money at the end of the week. We'll call it a wage. And you come and work for me, and everything you produce while you're working for me is mine. And that's the deal. I get from you the fruits of your labor, and I give you a wage. And the reason I'm willing to do it is, the value to me of the fruits of your labor is greater than the wage I have to pay you. So I'm going to accumulate wealth by doing this. The person who worked for a wage had a choice: work for a wage or starve to death. So that was easy too. And they got together. 

But that's a different system. That's not feudalism — lord and serf. That's capitalism — employer and employee. And that system began to grow, inside feudalism, in this town, in that city — decentralized, all over the place. And in some cases, it couldn't survive. Lords would come in, and were frightened by this new system, and could destroy it. 

It took a long time, but slowly capitalism got stronger, until by the 18th century, it wasn't willing to live under a feudal king anymore. And so the mass of workers in the city — employees — together with their bosses, turned on what was left of feudal society. You know what happened here in the United States: We got rid of King George Ⅲ. We didn't just get rid of England as the colonial master. We could have done that and had our own king here. But we didn't want kings. Kings were no good anymore. We wanted the new employer-employee system of capitalism. No kings. And the French did the same thing, only there they took it a step further and literally cut off the king's head, as we all know, with the guillotine. 

So you had two reactions to the collapse of feudalism that happened in the 14th century, the disintegration of the economic system, made much worse by the Black Death, the bubonic plague: You had the strong development of powerful states, instead of decentralized feudalism. And you had the growth of a new system inside the shell of the old.

So now let's do the work. Let's see what part of this applies now. Here we go. Capitalism is in deep trouble. It's capitalism that has made so many people poor, diabetic, overweight, obese, with inadequate medical care, inadequate — you figure it out. It makes them, therefore, very vulnerable to a pandemic. You have a system that didn't prepare. It didn't have the hospital space ready to go, it didn't have the tests, it didn't have the masks, it didn't have — it wasn't prepared, as it could have been. This is not the first pandemic we've ever had. This is not the first economic downturn. We know what the worst nightmare of capitalism always was, and we knew a year ago, but we didn't do, as a society, what was necessary. So capitalism has got a bad reputation, which it deserves. 

So what are we seeing? Interestingly, the failure of capitalism, which is global, was less pronounced where — here we go — the government was active and strongly involved. And it was worse, this pandemic and this crash, where the government wasn't. The more decentralized capitalism, the more laissez faire capitalism, the more libertarian capitalism, the more the government kept a distance because the private capitalists didn't want the government, the more devastating the collapse has been. Look at Boris Johnson in England, look at Donald Trump in the United States, look at Bolsonaro in Brazil, look at Modi in India. These are people who are buyers into the notion that we don't need the government, that private capitalism is an engine of efficiency. And all of that storytelling meant that they weren't prepared. And they're not used to having the government come in and play a major role. They're advocates of the government playing a minor role.

And that's going to be reversed now, just like they did in feudalism. We're going to demand that the government get us ready for the next economic downturn, get us ready for the next pandemic, get us ready for the worst nightmare of their happening together. You're going to see a return to a government actively involved — which for Americans won't be that much of a new thing. Because the last time capitalism started to crumble, in the 1930s, you know what we got? The Roosevelt New Deal, which was a massive increase of the government's intervention in the economy because capitalism was shaking. That's the lesson.

But it's not the only lesson. Remember I told you that there were two big responses within feudalism to the Black Death, the bubonic plague. One was a powerful state apparatus emerging, playing a much more powerful role. But the other one was a development of a new economic system. As people saw that it wasn't just the black plague, it was the feudalism that made the plague so bad. And it was the feudalism that left the society unprepared for that plague. And that the system was as much a problem as ever the Black Death was. And so there was a running away from feudalism, to the city, to this new system of employer-employee called capitalism.

And around the world, we see something parallel too. We see a growing interest, as you know from this program, in worker co-ops. In a new economic system that has neither lord nor serf, or employer-employee, but a radical, different system that says work should be a community affair, that we should do it communally — one person, one vote. A democratic community that understands that it has to be prepared for droughts, for pandemics, and it has to run an economic system that isn't so unstable in the first place.

A worker-co-op economy would never allow unemployment because it is so irrational. Unemployment means people want a job, and society needs what those people can help to produce. So obviously they should be working, because that's a win-win. Why in the world would we ever let people be unemployed? In the United States today, to be very blunt with you, we have something called a “capacity utilization rate.” It's a measurement of how much of the machines and equipment, and factory and office and storage space is being utilized, and how much is sitting gathering rust and dust. Well, today, as I'm speaking to you, the capacity utilization rate in the United States is about 70, 71 percent. You know what that means? Thirty percent of the capacity to produce is not being used. You know why? Because we have 30-plus million people not using it. And therefore we don't have the output that could rebuild our cities, that could make us ecologically independent of the damage we've been doing to the environment, that could deal with our poverty and therefore our social divisions. 

We could make a great society. It's the capitalists who hold us back. They don't want the government to come in and give everybody a job because what does that make them look like? Well, people are seeing this, and they want a different economic system, just as, in their way, the serfs of feudalism voted with their feet, to go to the cities and to get out of the lord-serf relationship. And that pressure built. And it didn't take all that long, historically — a couple of hundred years, because things went slower then — to get to the point where the new system threw the old one into the dustbin of history.

So we're in for what — solution? conclusion? We're going to move towards the state having a much more powerful role dealing with the crisis that capitalism could not handle. And we're going to have growing interest in alternative, non-capitalist economic systems, because capitalism proved it's not a reliable way to produce what we need and secure the public health. And more than that you can't say. An economic system is measured by how well it takes care of our health. That's number one.

I hope you found this analytic interesting as a way to understand the longer-term implications of this capitalist nightmare we are living through. This is Richard Wolff, and I look forward to speaking with you again next week.


Transcript by Marilou Baughman
The original content of this program is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Please attribute legal copies of this work to democracyatwork.info. Some of the work(s) that this program incorporates, however, may be separately licensed. For further information or additional permissions, contact us.

Want to join the volunteer transcription team? Go to the following link to learn more:

: EU Podcast | Apple Podcasts | Google Play | SpotifyiHeartRADIO
SUPPORT: Patreon

Follow us ONLINE:




Shop our Store:  https://democracy-at-work-shop.myshopify.com/

Want to help us translate and transcribe our videos? Learn about joining our translation team: http://bit.ly/



Showing 2 comments

  • Frank Ask
    commented 2021-02-11 05:58:56 -0500
    24:45 I can now see where you are going with this and you can count me out, substistant farming will be the way to go. Sir you are obviouslly advocating comunisum, do you have any idea how many times that has been tried and failed?
  • Henrik Wahren
    commented 2020-11-03 19:06:22 -0500
    Great as usual. Just a minor but important point: the bubonic plague was caused by a bacterium and not a virus. The distinction is important, especially today with widespread and overuse of antibiotics.

Customized by

Longleaf Digital