Economic Update: Economics: Where Theories Clash

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On this week's Economic Update, Prof. Wolff provides updates on the exploitation of adjuncts that weakens US higher education and on US's extreme wealth inequality. Major discussion of the three main economic theories (neoclassical, Keynesian, and Marxian) clashing in today's world.


Showing 36 comments

  • Seyedsepehr Samiei
    commented 2017-02-28 06:01:20 -0500
    @charlie Chaplin, it is erroneous to consider Finland as a pure capitalist system. From a historical perspective, these European nations have got “Social Democratic” systems which was originally a movement contending to ultimately pursue Socialism. A pure capitalist system is pretty much similar to what you see in the United States.
    Of course, Finland is neither a pure Socialist system, and that is why Social Democracy is on the decline in Europe.
    In other words, in Europe, Social Democracy failed to get rid of Capitalism, and that is why they are struggling with stagnation, rising inequality and unemployment… And in US, a reversion to deregulated capitalism has produced the same issues: stagnation, rising inequality, unemployment, etc.
    If by a good education system, you mean tuition free education, you should also consider the question, who is going to pay for the expenses of a tuition free education system? The rich are not willing to pay taxes that could make a tuition free education system possible. Keynsianism and the New Deal, which by the way was only possible because of the historical conditions of its own time, tried to force the rich to pay for it. It worked for a while, but then it was undone completely, hence the student debts today.
  • Charlie Chaplin
    commented 2017-02-28 05:35:05 -0500
    Professor Woolf completely contradicts himself. He says capitalism is the root cause of income inequality and then points to capitalist nations such as Finland or the USA of 65 years ago as examples of economies with low levels of inequality.

    His solution is quite clear: increase the political power of workers through unions and political parties.

    My solution is even clearer: educate the people to be citizens.

    Finland has the best education system in the world. THAT is why it has a highly functioning, mostly egalitarian society.

    Capitalism v socialism is very much secondary in importance to education.

    The USA has the worst education system in the developed world and the lowest rate of unionization.

    Woolf’s own arguments undermine his long-held premise that capitalism itself causes our problems. He is just wrong.
  • Seyedsepehr Samiei
    commented 2017-02-28 04:33:14 -0500
    In response to Charlie Chaplin, Professor Wolff simplifies elaborated discussions in order to present them to a wider audience.
    Keynsian economic died in the 1980s, to be precise, when Reagan rose to power. There was a severe and global recession going on, which was partly exacerbated deliberately by the Fed raising interest rate to historic high of over %20. It was in a way a coordinated move between the Fed in coalesce with the biggest American capitalists and corporations. Economy was kept hostage to allow Reagonomics gain popularity. A similar movement was going on in UK under Thatcher. On the academic front, Milton Friedman and Chicago School theorists presented an alternative to Keynsianism. It was a war between American Capitalists and worker on the one side and between US as the sole Imperialist power and the rest of the world on the other side. You could see a detailed account of this history in two great books by Michael Hudson: 1) Super Imperialism, and 2) Global Fracture.
    Professor Wolff summarises all of these into a simple argument: That Keynse tried to reform the economy by redistributing wealth (taxing the rich and providing social services to everyone). But he failed because he allowed the rich to remain on the top of Capitalist hierarchical chain of command and control of industries and work-places.
    This is not at all self-contradicting, but sharp eyes might perceive it that way, because a lot of details are left out.
    When Wolff says Keynsianism failed because we saw 2008 crash, he means:
    1) Keynsianism promised to have found the way out of crises forever
    2) Keynsianism failed to see the possibility of undoing all of its reforms by those who did not like it
    3) 2008 GFC was the proof that Keynsianism was not the end of all crises (because it was pretty undone!)

    Besides, had the United States not entered into WWII, Keynsianism would have failed long before. The main reason the US economy recovered from the Great Depression and rose to the rank of the biggest economic power, was devastation of the rest of the world on the one side and massive military expenditure by US government which drained all of the economic surplus which was the main reason for the Great Depression. This history is diligently analyzed and elaborated by Paul Sweezy and Harry Magdoff in their famous relic, Monopoly Capital.
  • Seyedsepehr Samiei
    commented 2017-02-28 04:06:04 -0500
    In response to Kazalsz Kram, I would like to mention, Capitalism is a reality and Marx famously said that Socialism could only emanate out of this existing reality. There were many Utopian socialists who tried to create an alternative based on purely abstract ideas, and of course they failed.
    Professor Wolff pursues a clear and, in my opinion, practical agenda. Moving out of capitalism and toward Socialism through empowerment and dominance of worker coops. These coops do exist in the context of Capitalism and even Marx was quite interested in the potential these small organizations carry and how they may be the true seeds of Socialism.
    A zero-growth and sustainable economy is impossible under Capitalism. As long as proft motive remains the primary principle of the economic relations of production, growth too remains the only incentive for the circulation of highly concentrated wealth that is accumulated by the top %1.
  • Kazalzs Kram
    commented 2017-02-27 22:19:20 -0500
    It seems to me that neoclassical and Keynesian economics are both just capitalist economics. Marx is just a critic of capitalism. All are just about capitalism. So what about other economic systems where capital does not seek to make more capital? What about steady state or no growth economies. The reason I ask is if there is no alternative to fossil fuels and/or we have such a deeply problematic ecological and environmental situation that requires something very different then what would it be. Alternatively, say artificial intelligence, automation and abundant resource for all exist, where no one has to work for a living, everything is free, kind of like Star Trek, then what kind of economics would that be?
  • Charlie Chaplin
    commented 2017-02-27 20:14:18 -0500
    Professor Woolf contradicts himself. He says capitalism is the root problem, and then points to capitalists nations with low levels of income inequality, whether it’s Finland today or the USA 65 years ago.
    He makes the cause of today’s inequality in the USA abundantly clear: the systemic undermining and diminution of unions.

    Woolf also says Keynsian economics failed because of 2008 but that’s not accurate at all. 2008 happened because of deregulation. Keynsian economics prevented a major economic collapse from happening for over 70 years, by far the longest stretch in the USA’s short history.
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