Economic Update: Capitalism's Uneven Development

[S10 E06]

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This week’s episode of Economic Update features an introductory discussion by Professor Wolff on capitalism's systematically uneven economic development. From Marx's original criticism of capitalism for producing and reproducing unevenness to the many historical examples, Prof. Wolff argues that there are indeed heavy social costs which flow from capitalism's uneven development. Those costs then become bases for arguing the need to move beyond capitalism.

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Transcript has been edited for clarity.

 

Welcome, friends, to another edition of Economic Update. I’m your host, Richard Wolff.

I want to spend some time with you today talking about a question, a concept, if you like, that many of you have asked me to discuss over the last year or two. And so I decided, for a number of reasons, to devote today’s program to it. It’s called the “concept of uneven development”. It’s an idea that is probably best attributed to Karl Marx, who developed it as part of his criticism of capitalism. So if you have never heard of it, well, that might be, because of where it comes from. But it is a very important insight into something many people miss, because they’ve come to take it for granted, when they should have questioned it all along. Here’s what it means. That built into capitalism as a system is a tendency to develop the world unevenly, to make some parts rich and others poor, and not to fix that problem, in fact, to make it worse over time, whether this is within a community, whether it is between communities or whether it’s even among nations in the world. And here’s the important point. There’s a basic idea, which goes back way before Marx—to Aristotle, Plato, and the ancient Greeks, and so on—that as community will live better, work better, be more of a community if there aren’t extreme imbalances among the people, who make up the community and, particularly, economic imbalances as in rich versus poor or as in advancing growing economic units versus declining collapsing ones. In the language of the ancient Greeks, inequality, imbalance is bad for social cohesion, for holding communities together so that they work with each other, help each other, support each other, and make each other’s lives better. Okay. Capitalism produces uneven development and it reproduces it over time between members of the community, between communities, between nations. And when that happens, you promote, for example, bad results socially. I’ll give you an example. Nothing is more common in human history than warfare and conflict, when one society is doing real well—rich and growing—and the neighboring society is going in the opposite direction. That builds envy, that builds distrust, that builds bitterness—all of the rest of it. And of course, exactly the same thing happens inside an economy. And that happens among them inside a society. If you have rich and poor, developed and underdeveloped parts of the community within a society, it’s hard to hold that society together, because of the different experiences, because of the different needs, because of the jealousies and envies that those situations produce.

So let me give you now some examples of how and where capitalism has produced uneven development. Well, one is the obvious notion of poverty and wealth—that’s a very uneven imbalanced situation. So a statistic for recently, in January of 2020 the World Economic Forum in Davos, Switzerland, gathered to talk about the problem, they call it, of inequality. Well, that’s Marx’s notion that capitalism, the system that we’ve had for 300 years, has produced stunning imbalances. And the irony is at the same time that the World Economic Forum was meeting in Davos, Switzerland, Oxfam International in England, the major international body that measures and studies inequality, released the following stunning statistic. The hundred and sixty-two richest individuals in the world, today, together own more wealth than the bottom half of the population of this planet—roughly three and a half billion people. Wow. That is uneven development taken to an extreme. 162 people dispose of more wealth, make the decision of how to use that wealth and do it that in such a way that half the people of this Earth have to share unequal amount of wealth, which makes that half, the poor half, die earlier than they otherwise would, suffer from diseases that we know how to cure, have food insecurity—that’s the popular name for hunger—and, guess what? Those people are upset, they are angry, they are bitter, with an advent of television and the Internet, they know exactly how other people live and how they don’t. And they wonder, “What is going on?” And they are susceptible—aren’t they?—to being angry. And you can call it populism, you can call it whatever you like, it is a product in good part of the uneven way capitalism has developed, producing such wealth alongside such poverty.

But there are many other examples. Here in the United States, think of the different regions, our two coasts—west and east—are rich, are developed, compared to large parts of the interior, that are not. I remember once visiting the State of Maine, a beautiful place, noticing that on the coast of the Atlantic Ocean, Maine is a developed, prosperous. But the minute you go inside, it’s a very, very different story. And it’s been that way for a long, long time. And you can replicate that all over the world: northern Italy versus southern Italy, Paris versus the rest of France, on and on and on; Eastern Europe versus Western Europe. Capitalism produces really grotesque imbalances. There’s the whole difference in Europe in the role we call “colonizer” and “colonialism”. We have the rich core of Western Europe—North America and Japan—marauding over the rest of the world: Asia, Africa, and Latin America. And capitalism making one part very, very rich, highly developed, and another part—the opposite. This is a system that produces imbalances that are socially disruptive, undermine community, and are bitter causes of war and conflict. Now, it’s true, sometimes there’s a pushback. Sometime the unbalanced, the poorly balanced, the neglected, the downtrodden push back and fight. And then for a small period of time you may have some balancing. Let me give you an example from American history. In the depths of the Great Depression of the 1930s, the gap between rich and poor was extreme as masses of people lost their jobs, lost their incomes, and they pushed back. They forced the New Deal on Franklin Roosevelt, who had to give them jobs, Social Security, unemployment compensation. And for a while the imbalance in the United States between the minority, who are capitalists, employers, and their top executives, and the mass of people was narrowed. But as soon as that temporary adjustment was over, by 1945 you already resumed normal capitalism, the depression was behind us, that World War II was behind us. And what happen? Over the last half century, we resumed the normal capitalism, which is an unbalanced, uneven development.

Let me take the point another step. Capitalism not only reproduces unevenness, but it becomes part of our consciousness. I’m going take a dramatic example that I have used before, but it illustrates this point too. At the beginning of the 20th century, the city we know of as Detroit was a relatively small city, located at the confluence of Three Rivers, which is where cities often develop all around the world, where traders and goods and services move. But it was transformed by capitalism. Capitalists decided, and for a variety of reasons, to build a particular industry that really took off—the automobile industry: Ford, General Motors, Chrysler, most of you know that story. And boom from the 1930s up until the 1970s or 80s, this city went from a small relatively sleepy river town to the great center of American capitalism. Many other parts of the United States fell into one or another kind of long-term depression, but Detroit boomed. Capitalism may development happen there even as other parts of the United States were finding themselves shrinking. New England, for example, which was once the center of a thriving textile industry, saw all the textile plants shut down. To this day, you can travel in many parts of New England seeing empty long brick buildings, where factories once hummed where nothing happens now, many of them been sitting empty for decades. And so the capitalists built Detroit. Then in the 1970s 80’s and 90’s, those capitalists, for the normal reason of capitalism, look to make profits and realize they could make more profits someplace else. So they moved auto production to other parts of the United States, to Mexico, to Canada, and more recently to China, and so on. And what happened to Detroit? The flipside of uneven development from being a boom lifted up from the 1930s to the 1980s, let’s say, they became the story of disaster, Detroit’s declining. The simple way to describe it in 1975, we’re talking about Detroit as a city of two million people. Today Detroit has less than 700,000 people in its population. That’s uneven development. Notice here—this is a very key point—that capitalism, where it builds a part of the society or a part of the world up, seems necessarily to crush another part down. That’s what I mean, when I say, “It reproduces unevenness.” It doesn’t solve the problem of unevenness by giving us even this a balanced development. The best you can hope for is if you’re on the wrong end of imbalance, is that you get moved to the right end. But, of course, you will have to notice, unless you’re blind, that that’s at the expense of some other place that went the other way. Imbalance is capitalism’s normal way of functioning. And it always has been. Even today, if you look at the parts of the American economy of American capitalism that are successful— Amazon, Google—the high techs. Yeah, they produce the Jeffrey Bezos’s, one of those people with one hundred and billion dollars of wealth. But there are vast parts of the United States that have no wealth at all, where people barely get by tens of millions of people like that for everyone Jeffrey Bezos. That’s uneven development within a capitalist framework. And the important thing, the important thing is not to think that it’s necessary. This is not about nature. This is not about automatic. This is not about neutral. This is a product of capitalism.

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Welcome back to the second half of today’s Economic Update. Today’s program is devoted, as I explained earlier, to Marxist concept of uneven development that built into the capitalist system; is this tendency reproduced, now for centuries, to develop parts of the world, parts of the nation, parts of a community very extensively, very productively, quickly, but always at the expense of another area that is pushed down. Even if these places replace one another, if the up one goes down and the down one goes up, the sad reality is the reproduction of unevenness. The system never seems to be able to produce and sustain balanced development. And let me now explore with you what some of the consequences of this are that, maybe, ought to shape our public discussions more than they have. If you function in a system like this, it’s easy to become of the mind, to become of the feeling, in a sense that this is inevitable, that anything that goes up, will produce somewhere else a down; to think as though it’s necessary like being on a seesaw—if you go down, the other end of the seesaw must go up. Even though that’s only a product of capitalism, it can become, if you like, naturalized as if it’s necessary. And that means the following can happen. People, who might otherwise celebrate and welcome lifting up people, who have been downtrodden, people who have been stuck in one of those places, where capitalism doesn’t bring you up, but knocks you down. We might, watching that, welcome people being lifted up so they aren’t in that situation. But, suppose, we believe that the only way they can be lifted up, as if somebody else—and maybe us—is pushed down.

Let me give you a concrete example. Poor immigrants from Central America move towards the United States in hopes of a better life, to find a job, to find a safe place to live, to find a decent school for their children, you know, looking for all the same things you and I do in our lives. And we see them coming hoping to share what our forefathers and foremothers came here to do since we are in the United States, a land of immigrants. But if we believe, having adjusted to capitalism, that the only way poor people, downtrodden people, people, who have suffered from the colonialism of the United States—informal though it was for the last 200 years in Latin America—if we think the only way they can be lifted up is as we are pushed down, then we might be open to being told, “You got to keep them out. You got to push them back.” Not because we’re unsympathetic to their suffering, but because we don’t want to join them. We don’t want to be the victims of a capitalist uneven development that helps them at our expense. If you listen to the rhetoric that right-wing politicians use to mobilize people against immigrants, you will see and you will hear uneven development as the unspoken assumption on which their right-wing activity is based. All around the world you can see that, the anxiety—born of capitalism—that if you have something, and people, who don’t, get some—it’ll be at your expense. You know what’s interesting about that?—is that we don’t think that there could be, that there should be a way in which we can lift up the people, who have been unfairly pushed down, so that they catch up to us, not that we are deprived of what we have. Is that possible? Of course it is. You know how we know that? Because we have all kinds of social institutions that do that, that try to help people: churches in some cases do it, social welfare organizations do it, corporations even do that. You know, a corporation is not so unusual, if it takes a division that’s doing well and take some of the wealth format to help a division that’s suffering. That hasn’t had a breakthrough. That hasn’t had a technical change. All kinds of institutions do that. In a family, if some parts of the family are doing well, and other parts are not, we kind of celebrate the family, where there’s some sharing here, where those, who have can bring up those, who don’t and that, we can have a more balanced arrangement. And you know, if we got some more balance, we would have a lot less tension in our society, a lot less division, a lot less bitterness, a lot less fear, and a lot less hate, because those are all brought out and exacerbated by uneven development.

Let me talk a little bit about uneven development and something we talk about a lot on this program—worker co-ops. How can you make a transition from enterprises that are hierarchical, where a tiny group of people—the owner or a board of directors—make all the decisions that the majority—the workers—have to live with, but have no control over. Decisions made at the top that are unaccountable. Capitalist enterprises are the opposite of democratic. If we want to make a transition, as we do, to a society based on democratic enterprises, with all the workers, who have to live with the results, participate in making the decisions what to produce, how to produce, where to produce, and what to do with the fruits of our labor, we need a context, a larger environment, that is equally democratic or, if you like, democratically equal. We need balanced development. If we allow imbalances to happen outside a worker co-op, you can bet that will infect the worker co-op, and it’ll come inside too. So worker co-ops to survive need to have a supportive environment. And that means balanced development, harmonious communities, communities that get together, because they are more or less the same. Not equal, not everybody identical—not at all. But we limit the amount of unevenness.

Let me get at it at yet another way. Ancient communities in Asia, Africa, Latin America, Europe, North America—all over—ancient communities have been studied by anthropologists, archeologists and others. And they discovered, among many other things, something relevant to uneven development. It was a problem in ancient societies. Let me give you an example. A local tribe over here was able to do quite well, because the rain and the Sun fell on their area better than it did 20 miles away on the other side of the hill with a rainfall and the Sun in these three or four, or five, or six years wasn’t so good. One tribe prospered and the other tribe declined—uneven development. And that led to bitterness. It led to desperation on the part of those, who suffered, who began to look with envy over the mountain to where they were doing real well. You can see where this is going. This suffered, the people suffered—on both sides. Those who didn’t have and those who were threatened by those who didn’t have. They all suffered in various ways until they realized, “Wait a minute. We are suffering from uneven development.” And they took steps to deal with it. Here’s one. They decided that every few years, in some cases every ten, in some cases every fifty, they would reshuffle people and resources so that those, who had done real well, would have to move to the area that hadn’t done so well, and those, who lived in an area that hadn’t done so well, got to move to an area, where the water was better, or the rivers were better, or the Sun was better. Get the picture? Religions picked that idea up. It shows up in the various religions under the word “Jubilee”—a very interesting word. We talk of Jubilee as a time of joy and happiness. Originally, Jubilee was one of those moments, where we reshuffled the resources so that nobody would continue to get richer, richer, richer, while other people got poorer, poorer, poorer. Jubilee was a way of bringing balance into an economy that was unbalanced. We have to also recognize that if we don’t take steps to create balance, capitalism’s uneven development makes itself worse. And you know why? Here’s no mystery here. The people, who do well in capitalism, they take their wealth in order to do well next year, and five years from now, and ten years. And because they have wealth, they’re better able to do that than people, who don’t have wealth. You know how that works. Wealthy people want to leave their wealth to their children. That means their children start off with a golden spoon in their mouth, whereas the children of poor people don’t. Both of them are children, both of them are produced by parents. They don’t deserve more or less. “They deserve an equal opportunity”, most of us think. But if you allow this wealth to develop, one of the first things those, who are wealthy, may try to do. And in capitalism—boy!—are they encouraged and they are enabled is to keep the wealth, and to use the wealth to get more wealth, whereas those, who have no wealth, therefore are suffering as—here we go again—capitalism producing inequality and imbalance. One of the arguments to go to socialism, some kind of society “ism”, some kind of social “ism” beyond capitalism is precisely to finally do in modern society, what those ancient societies did—take concrete steps to overcome the imbalance of capitalism. And one of the ways you would do that—and socialists have always groped their way in this direction—is to say, “The bottom line that governs decisions in enterprises, cannot be profit.” That’s part of what makes for imbalance. The bottom line has to be balanced development. If there are parts of the community that are behind, let’s take some of the wealth produced, where it is successful, and share it in order to make the other parts come up to where we all are. Yeah, recognize our differences, but only up to a point. You know, we already do that. We allow capitalism to work, but it can’t press wages down too far, because we’ve developed the floor. It’s called the minimum wage. We interfere, because there’s a level of imbalance that we can’t tolerate. Just like capitalism once wanted to employ children five and six years old, and we all said at a certain point, “No.” Well, the imbalance of capitalism threatens us as much as child labor did, as much as the ecological wastage capitalism has performed on nature. We ought to do something about uneven development, recognize that capitalism is a major promoter of that sort of thing—always has been—that the social consequences of that are disastrous for us as human beings and in the communities we want to live in, and raise our children in, and develop in. So let’s make a decision. If capitalism is a key cause of uneven development as Marx and everybody studied it since understand that’s an argument to go beyond capitalism, to do better than capitalism by making an explicit commitment, like those primitive folks did—turns out they weren’t so primitive, were they?—to do something about uneven development. And that means to go beyond the capitalism that has trapped us in uneven development, even to the point of making us imagine that the only way to bring some folks up is to crush other folks. We don’t need to do that. If we get beyond the profit motive, we can do it.

Thank you very much. I hope this discussion of this concept of uneven development helps understand the predicament we’re in and the possibilities of getting out of it. Thank you very much to all of you. And I look forward to speaking with you again next week.

 

Transcript by Aleh Haiko
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