Economic Update: Imagining a Different Economy

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On this week's show, Prof. Wolff presents updates on his recent debate with Ayn Rand Institute on capitalism vs socialism, inflation in Europe, an analysis of right vs left splitting in US today, and real vs fake causes of energy price inflation. The second half of the show features an interview with David McNally, Prof. University of Houston, on lessons of capitalism's history.

Transcript had 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 those of our children. I'm your host, Richard Wolff.

I want to start today by telling you about a debate I participated in a few weeks ago. It was with the head of the Ayn Rand Institute, a Professor Yaron Brook, and it took place at the University of Pennsylvania. And I came away with this thought: Libertarians — of which the Ayn Rand followers are a part — are an interesting group of people. They have decided, and they articulate the idea, that everything that is wrong in our economic and political system stems from the government. The government is the evil doer. The government is the source of our problems. And if only we could get the government out of our way, out of our hair, out of our lives, things would be so much better, because then capitalism (because they are enthusiastic about it) could really do all the wonderful things they think come from capitalism.

And I realize that these libertarians perform a very useful function for capitalism and capitalists because they explain to all of us that the things that are no good about this capitalist system are never the fault of the capitalists or of the system they call capitalism. It's always only the government. So if indeed the employer fires you, it's not really the employer you should be upset at; it’s the government. And if the bank throws you out of your home because you can't pay the mortgage, you shouldn't be angry at bankers; you should be angry at the government.

Any group that does such wonderful service to the capitalist system is, I hope, paid well for the service it performs. Here's a footnote: In 2020 the Trump administration approved a paycheck protection program loan of $1 million to save the 35 jobs at the Ayn Rand Institute. The government is evil, but you want to get some help, don't you, when you need it.

My second update is a comment on the way mass media in the United States are handling the inflation we are now living through. And one of the remarkable points (and we're going to be talking about inflation more later), one of the remarkable points is the comment that I have now heard from 10 different sources: Well, the Europeans have inflation too. And so I thought it would be worth a moment if I explained to you that that's not correct. That is just a throwaway line so that we absorb and don't resist the inflation imposed on us the way we might otherwise because we think, oh well, it's happening everywhere. Well, let's see.

Let's take Europe, because that was the example used. The current European inflation rate is 3.4 percent per year — roughly half of what it is in the United States. Let me give you a better example. The inflation in Germany is two percent. And the average wage increase of workers in Germany, over the last year when prices went up two percent, was 5.5 percent. What does that mean? It means that inflation is much lower in Germany than it is in the United States. It's one-third the rate here. And the rate of increase of wages is much higher in Germany than it is here, which is why German workers are enjoying a rising standard of living. Their increase in wages is not undone by an equivalent increase in prices, whereas here in the United States, it's the reverse. Prices are going up faster than wages, which means workers are falling still further behind. Inflation here, not in Europe. Don't be comforted by that. It is BS. And I'm polite, and I'll leave it there.

I want to now talk about the difference — which isn't as great as you might think — between the right wing and the left wing in much of American politics around an issue many of you have asked me to comment on. So let's start with the right. As those libertarians I just spoke to you about have been very effective in shaping the discourse, people on the right in the United States tend to think it's the government that's the evil force. If you want to understand why we don't have the good jobs, the good incomes, the social standing many of us once had, well it's because the government is terrible. And especially now that the government is Democratic, with Mr. Biden and all of that, you can really let rip with your hostility to the government.

Hence the notion that the government is busy trying to replace us. “The Great Replacement” it's called. The nasty government is bringing in foreigners (you know, immigrants), non-whites, women. All the people that vote Democratic are being used to replace us in the good jobs, in the good incomes, that have been taken from us. Wow.

And what are we going to do? We're going to resist. We're going to not let the government, the bad guy, do these things to us. One of the signs of that, one of the forms of that, was to vote for a guy like Donald Trump, to resist being replaced. Here's another one: to get furious at the immigrants being brought in by the government. The government lets them in, and helps them in. And then they vote Democratic, you see, and they do the dirty work of the government. And so you resist, by having the immigrants blocked, the immigrants thrown out by ICE, Mr. Trump voted in.

And what is the form now? You resist the government mandating a mask, or a vaccine. You're resisting the evil government that is imposing dangerous, bad, evil, awful things and has been doing it for a long time. You'll go so far as to risk your job, as many are discovering. If you don't get a vaccine and your employer insists on it, you're going to lose your job. It has already begun to happen; it will happen some more.

Let's take a look at the left. On the left, people don't think it's the government that's the evil. They tend to think it's the big corporations in the business community that's the evil force. When they hear the libertarians, they say, hey, you're mistaking the puppet for the puppeteer. It isn't the government that's the problem; the government is a puppet. Who pays the government calls the tune. And the payers of the government are the rich and the corporations.

And so they resist too. They don't like it when the corporations do it. They blame the corporations for the lost jobs, and the lost incomes, and the decline in their standard of living. And you know what they're doing? They're taking an interesting chance. They're quitting in record numbers. And they're striking. Now about a hundred thousand is the latest number that I've heard of total strikers in the United States, an enormous wave. This is resistance — sort of like the people on the right, but they're resisting to something they understand differently.

So here's my comment, as many of you have asked. The answer for both of these people is it really isn't the government versus the corporation. It's a system that is the shell within which there's a very cozy relationship between the government and the corporate leadership and the rich. There's a reason why most of the people who sit at the top of the government were, before they sat there, corporate executives and will be, after they're done, corporate executives. It's like the top ranks of the military. It's the top; it's a “power elite,” a famous sociologist C. Wright Mills once called it.

I prefer a different language. There's a system here. There's a cozy, developed, complicated system. The government is part of it. The corporate structure of our economy is the key core part of it. But it's a cozy relationship. And in the end, does it matter to you, each of you, whether I analyze it as the government did it to you, or the corporations maneuvered into place the kind of politician who would do that to you?

Here's a thought. If you really want the government to serve the people, the first thing you have to do is change the corporations. Stop them from being hierarchical, top-down institutions led by a tiny number of people who sit on the board of directors, etc. That's why we advocate for worker co-ops. You democratize the workplace, and you're well on the road to getting back a democracy of the government too. And the obverse holds. If you don't democratize the enterprise, your efforts to get a democratic government will be no more fruitful in the future than they were in the past.

The last economic update I have time for today has to do with global energy prices. First of all, let's be clear on the reality. It is going on. That is, we have an inflation of oil price, gas price, and so on. It is severe, it is large, and it is happening all over the world. It is not limited to the United States, but it is severe in the United States. And it is a problem, first of all in the sense that I've just been speaking about. The higher energy price is, the higher everything else is. So it feeds the inflation. Everything that you and I buy, that we pay a price for, has in that price the cost of energy used to transport that object from wherever it was produced to the store where we bought it. If the cost of energy rises, the prices sooner or later will be raised for recouping what the producer had to lay out for the rising energy cost. There's no way around that.

Okay, but let's now see what's being done about it. Well, first of all — and this is so typical of our country — there's the question of blame. So I have seen: Blame the Russians. Mr. Putin is doing something to gas prices. That's a big one in Europe. Blame the Chinese. That's a more favorite demon here in the United States. The Chinese have, well, I don't know, soaked up the world's energy because they're a big energy importer, because they need it, because their economy is booming. And so there's not enough left, and we all have to pay more because of China. Then there are the people who don't like environmentalism, and they accuse the transition to renewables. You see, everybody's making wind power, and water power, and all the rest, and so they're not producing the energy of the old-style fossil fuels. And so the prices are going up.

I love this. I love this because it's all nonsense. Here's the problem. We allow a tiny group of companies — and you know their names: Gulf, Shell, Exxon, Mobil; you all know them — and a tiny group of countries — and I'm talking tiny; ten of one, ten of the other — they get together and they decide the production and pricing of oil and gas. We allow that. We, the people. And guess what. They price it to make a profit. And if it's profitable to jack the price up, they do that. They don't ask permission. They don't worry about us. Our job is to pay and to shut up.

And they didn't plan this very well. They didn't take into account the pandemic, the shutdowns of oil and gas, the failure of shipping to be available with the tankers when you need them. They didn't take care of what they run as a business. And now they want to blame everybody else but the system that puts them in the position of controlling the energy we all need. It's outrageous, and don't be fooled.

We've come to the end of the first part of today's show. And, as always, I want to thank all of you whose support makes this show possible each week. To learn more about the different ways you can support Economic Update, please go to Or visit our website, Additionally, we just released a new hardcover edition of Understanding Marxism, and that book is available now, just in time for the holidays. To learn more, or to get a copy before the holidays, visit our website Please stay with us; we'll be right back with today's special guest, David McNally.

WOLFF: Welcome back, friends, to the second half of today's Economic Update. It is with great pleasure that I bring to our cameras and our microphones a friend. A friend of some time. He is Professor David McNally. He's a Cullen Distinguished Professor of History and Business at the University of Houston in Texas. He is the author of the following two books, plus the one we're going to be talking about today. The older books are Monsters of the Market: Zombies, Vampires, and Global Capitalism; and Global Slump: The Economics and Politics of Crisis and Resistance. Dr. McNally will host the inaugural George Floyd Memorial Lecture in Houston this coming May.

So first of all, David McNally, thank you very much for joining us.

MCNALLY: It's my pleasure, Rick. It's great to see you and to be with your audience.

WOLFF: Thank you. Let's jump right in. You have a new book. And, indeed, your work is noted because of its wonderful mixture of the history and the economics of capitalism as a system. And in your most recent book, which I would recommend to everyone — Blood and Money: War, Slavery, Finance, and Empire — one of the key points of that book is about the light it sheds on our understanding of what money is and what the origin of money is. And since money is what makes the world go around, I want you to briefly tell us what your key idea there is. And then tell us why now was a time you decided this book deserved to be written and gotten out there.

MCNALLY: Well, you're absolutely right, Rick. There's a sense in which the book Blood and Money is really meant to challenge the dominant narrative as to what money is and where it came from. As you well know, the dominant story that everyone gets in the mainstream is that money emerged because it made the exchange of goods and services more convenient. As Adam Smith would tell us in The Wealth of Nations, it's awkward to exchange rabbits for deer in adequate quantities, and so money comes in to mediate that, to give everyone some means of exchange that they can share in common. And it's a nice myth, and the story of convenience. And it suggests to us, I think implicitly, that all societies will be regulated by money, that every economy will revolve around money. As you said, money makes the world go ‘round.

And I was struck in doing my own research that the actual historical origins of what we tend to call general purpose money — money that's used in every conceivable transaction for goods and services — that that kind of money emerged for purposes of war finance, historically, and for purposes of long-distance trade in human beings — the buying and selling of enslaved persons. And I think when we begin to look at money not as a convenience created for individuals but as a technology of power and domination, it allows us then to think about, well, what would a society without relations of exploitation and domination look like? And would it revolve around money? Would we have to have money as the regulator of all transactions for food, housing, health care, etc.? And my argument is no.

And that really brings you to your second question: why now? My concern, in terms of sketching this argument now — this alternative account of money as drenched in blood and exploitation — my concern really was to resist the contraction of our political imaginations. I think that the long night of neoliberalism has often led many of us to lower our sights, to let our horizons of the possible contract. And I wanted to say, no; if we tell a much more historically accurate story of what money is and where it came from, maybe we can then also put back on the agenda how would we reorganize a rational society in ways that money wouldn't be the regulator of economic life? So that was really the political inspiration for this moment.

WOLFF: That's wonderful. It reminds me of my effort in what I teach to explain to people, who are all trained in revering the market and money, to remember that inside their household all kinds of transactions are organized, all kinds of sharing is organized, all kinds of exchanges — there is no money. And the notion that one would put a numerical value makes no sense to people. And it's, again, this opening up of the imagination so that we're not so narrowly ideologically hooked into the existing system.

Okay, I want your thinking, because of the way you wrote the book, to ask you a couple of questions that my readers, my viewers, are sending in all the time. So I know it's on their minds, and I want them to hear your take. There is a notion gaining currency now that the US capitalist system, and the empire it has presided over for more or less the last century, has now peaked and that we are in a period of the decline of American capitalism/empire. How do you respond to that notion?

MCNALLY: Well, I think the challenge for us is not to be too linear in these discussions. And by that, what I mean is there are lots of criteria by which we could say that US capitalism has lost its robustness from the post-World War Ⅱ period. By which I mean it's obvious to all of us: the growth rates are down, investment rates are down, real wages aren't rising the way they did in the 1950s and ‘60s, and so on. But it doesn't necessarily follow that we couldn't just be in a long period of low growth, stagnation, compression of wages, and so on, without a collapse of US capitalism and US empire.

The transition to some kind of real decline, to me, depends on two things: One is, well, are there political challenges, by the way of growing labor and social movements, capable of charting an alternative course for society? And, what competitors are out there in the world system, geopolitically, to the United States? And I see right now, yes, I think it's probably true that the US empire has peaked. It's not able to expand its reach and its dominance. I think that is true. It's more constrained and contained. But I would also say, right now it doesn't face imminent challenges. And so the task for those of us who would like a new arrangement of society, of course, is to figure out how to build those oppositional movements that can begin to pose alternatives.

WOLFF: Exactly what I was looking for to hear how you think about it. Another question: How do you situate — especially with your historical interest in slavery and all of that — how do you situate, or understand, the resurgence of white supremacy that we have seen since Trump got elected? Not that it wasn't there before, but there is something percolating there, and I wondered how you thought about that.

MCNALLY: Yes, and I think you're absolutely right precisely the way you've put it, which is it was there, but it has been activated and reactivated, through the Trump period in particular, in odious and frightening ways. And I think as we're talking here in the first instance about the United States, we're really discussing this profound historical problem that has confronted the labor movement in the United States for a long time — what W.E.B Du Bois called “the problem of the color line.” And that is the danger that as conditions of life deteriorate, at least some white working-class and middle-class people can be pushed towards a politics of resentment towards those who have been pushing for societal gains: access to employment, affirmative-action programs, non-discrimination legislation, and so on.

And so white supremacy is always there, it seems to me, within this racial capitalist system, as a mechanism that enables the displacement of anger and frustration. And with an economy that has been producing so few gains for working-class and many middle-class people, I think it's become, the danger is that it becomes, a default. Instead of working-class solidarity, we get social division, the aggravation of divisions, as white people react hostilely to those who have been more aggressive in fighting for their interests in recent years, in ways that I think we should all support — all of us who are egalitarian and progressive in outlook.

But I would also say, going back to Du Bois, that this is not inevitable. In the moment of the Black Lives Matter upsurge after the murder of George Floyd, we saw some of the largest — perhaps the largest — demonstrations in US history. The New York Times said 26 million people took to the streets in the months after the police murder of George Floyd, under the banner of Black Lives Matter. And that says to me that there are millions — particularly younger, working-class people, but also many, many white, Latino, and so on — who can hear a message of anti-racism and social and racial equality. But white supremacy is an ever-present danger in societies that were constituted racially as capitalism developed.

WOLFF: Given our horrible limits of time, let me ask you a big question, also one that comes to us often, so that folks can hear your take on it. The statistics are clear that this is a capitalist system that keeps driving towards ever greater levels of economic inequality — income and wealth. Tell me, do you think that tells us something about the state of American capitalism, and particularly the future of a system that seems not only bent on this inequality but continues to do so despite more and more voices clearly articulating — even from the ranks of conservatives — that this is dangerous for the society?

MCNALLY: Yes, and it clearly is dangerous, long term, for the society. I mean, we're old enough, Rick, people of our generation, to remember that the greatest rationale used for capitalism in its defense in the post-World War Ⅱ period was yes, it may be an unequal society, but it raises all boats, that everybody is going to benefit; prosperity has a universalizing character. And as you say, that has disappeared for new generations. And that, to me, is the challenge for all of us: to build on the sense of the inherent inequalities of the system and why we need alternatives.

WOLFF: Professor David McNally, it's been a pleasure, as it always has been, to read your work. And I want to again commend this latest book, Blood and Money, to our viewers and our listeners. Thank you very much for being with us, and I hope all of you have learned, as I have, from what David McNally, from Houston, has been able to tell us. Thanks again, David.

And to all of you, I want once again to say I look forward to speaking with you next week.

Transcript by Marilou Baughman
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About our guest: David McNally is the Cullen Distinguished Professor of History and Business at the University of Houston. He is the recipient of the Deutscher Memorial Award for his book, Monsters of the Market: Zombies, Vampires and Global Capitalism, and the Paul Sweezy Award for his book, Global Slump: The Economics and Politics of Crisis and Resistance. Dr. McNally is the host of the inaugural George Floyd Memorial Lecture to be held in Houston next May.

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Showing 3 comments

  • pasqual digesu
    commented 2021-12-09 07:58:08 -0500
    The seven Sisters, Enrico Mattei
  • pasqual digesu
    commented 2021-12-09 07:51:19 -0500
    you can’t democratize corporations without first controlling the government bodyguard, Hoffa could not do it either
  • pasqual digesu
    commented 2021-12-09 07:27:37 -0500
    When we criticize big government in America we criticize Capitalism
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