Economic Update: Instability - Capitalism's Constant

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In this week's Economic Update, Prof. Wolff presents updates on the Twitter-Musk scandals, critique of profit as return to risk, mass European union-led strikes against inflation, economic crisis of 54 poorest nations today, US General Assembly vote against US embargo (sanctions) against Cuba, and an analysis of crypto-currency collapse.

*In this episode, we say 500,000 nurses went on strike from the Royal College of Nursing. After votes, approximately 100,000 members went on strike, although the union represents around 500,00 members.


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 and those of our children. I'm your host Richard Wolff. Today's show is going to be talking about many topics. We're going to have to get right to it, but the topics include Twitter, the claim that profits are justified by the risks investors take, the wave of strikes across Europe against inflation, the poor countries that are now in deepening economic trouble, the embargo against Cuba and the collapse of the crypto-currency economy. So let's get right to it since we have a lot to do.

The scandal around Twitter and its purchase by Elon Musk raises a number of important questions that are not getting the attention in the media and that's why we're going to talk about it now. The first and the biggest problem is this: Twitter is a social institution, it's the way millions of people communicate with one another all kinds of important information. As a social institution upon which our society relies, it is a very serious challenge to democracy if one individual is controlling it, deciding it, deciding what we can and cannot communicate, how, when, where and at what expense. And when you realize that Mr Musk has absolutely no particular qualifications to do any of that, having made money developing an electric automobile, you realize what a strange society we live in.

But in case you haven't thought about it, let me remind you lots of inventions over time made by particular individuals came to be understood as social institutions and therefore taken over by society and run by governments or other kinds of social arrangements but not left in the hands of private entrepreneurs. Schools, there's one. Schools were started, if you go back far enough, by individual private institutions. But we now have a basically public, free education system, at least through high school. Hospitals were once private institutions, driven by the profit of those who ran them, but many, many are now public. Roads, bridges, harbors, trains, soldiers, police, garbage collection, postal systems. You get the picture? Twitter is one of those and it ought to be run by people collectively in communities and subject to governmental and community control. In other words, Twitter ought to be a publicly controlled utility just like all those others are and not run for private profit. When you add that Mr Musk clearly did not understand what he was getting into, having fired thousands of people, having threatened that he may go into bankruptcy when he had a charge of this quite powerful and successful institution only makes it all worse.

There should be no allowance for this. Give the people who develop Twitter some money, if that's a reward for coming up with something useful. And then run it for the public, by the public, of the public, which we're supposed to stand for, but which Twitter is a mockery of doing.

Okay, number two, and it isn't all that different. On November 9th the owner of Facebook, or in its new name Meta, Mr Zuckerberg laid off 11,000 workers. First of all, let's get that clear: one person, figuring out what's profitable for his company, wrecks the lives of 11,000 people. And not just the eleven thousand who lose their jobs, but let's go through it, their spouses, their children, the communities that depended upon them. What happens to all those people? What happens to their lives, to their kids in school, all the rest of it? Smash! Chaos! No one cares, no one does anything. One man's decision; he's obviously made lots of mistakes in his life, those are bad enough. This one costs 11,000 people their job, if it's a mistake, which it probably is. Wow!

But I want to focus on a particular point. People like Mr Zuckerberg are constantly telling us that the enormous wealth they accumulate based on the profits earned by their companies is somehow appropriately given to them. And why? Because they took a risk. Let's be very clear here. The capitalists tell us they take a risk and the profit is the reward to risk. If our capitalist also works in the company he invests in, well, then he gets a salary for that. Work gets you a wage, a salary. Risk gets you profit, that's what they want us to believe. But it is, if you allow me, BS. Why? Because the workers take risks, too. And no one pays them anything for it. The worker who goes to work at Meta or Facebook may have traveled an enormous distance to take that job, moved his/her family across the country, moved his/her kids in and out of school, disrupting their lives, made a decision to take out a mortgage to own a home. They took enormous risks to work at a place that just fired them, eleven thousand of them. They took a risk. And you know there's a difference. The risk a worker takes is that the people who run the business will make a mess of it, like Zuckerberg, and that they'll get fired. Whereas Mr Zuckerberg, who takes a risk, is in charge of the business he's risking his money in, he has some control, the worker has none. And you know if the business goes bad the employer, Zuckerberg, can ease the problem for himself by firing the worker. But the worker, for the risk he took, he can't fire the boss, that's what the word 'boss' means. So here we have it: in capitalism capitalists get rewarded with profits for taking a risk, workers: they get paid for their labor. But what do they get for the risk they took? Nothing. That's not a system that's fair or just. It's the opposite.

And now the last of the first half program's updates. In Greece and Belgium in recent weeks, but also in other countries, as I'll go through, there have been massive union-led strikes. Let me stress, unions have decided to pull their members out by the tens to hundreds of thousands. Greece in the last couple of weeks has had its second of this year - general strikes, in which everything stops in that country. Belgium, not a country given to this sort of thing all that often, likewise.

What is it about? They are very angry in those countries about two or three things. The most important? The inflation and their anger that the wage increases they're getting, if they get any, are systematically less than the inflation. Which means if you're lucky enough and you fight hard enough to get any wage increase - maybe two/four/six percent, if you're really lucky - you're still falling behind. Because prices in Europe are now rising, on average, around 10 percent, some countries more, some countries a little less. So the working class is being told "you're going to have less, you're going to be able to buy less goods and services. Because even if we give you the raise you're fighting for we won't give you enough even to keep up with the prices that are rising." Unions are saying this violates their conditions of work and therefore they're not going to do the work.

But you know you may be surprised to hear the country where the most of this is going on. France has some, Spain has some, Germany has some. But the country where the strikes are really taking off by a coordinated labor union commitment is Great Britain. Yeah, the United Kingdom. The economy has been falling apart for a long time. The Empire is gone, the Queen died, the country separated from Brexit, because it was told by the Conservatives that if only you break away from Europe your economic problems will be solved. That was a straight out lie, meant to deflect the attention of the British working class from their problem, which is the capitalist class, and the difficulties it has worked its way into with the Empire it no longer has.

So what's happening? Well, since the Summer time the strike wave has begun. In the Summer and in the Fall the railway workers took the lead. There's a long tradition of miners and railway workers being union-strong and striking. But now I want to read you some of the other strikes that have been authorized in Britain by the unions: nurses - 500,000 nurses across Britain - going on strike, the National Health Service, where many of those workers - the nurses - work, but have many other kinds of workers - doctors, technicians of all kind - 350,000 voted to strike, seventy thousand university teachers across Britain voted to strike, airport workers, dock workers by the thousands. That's right, labor militancy letting the government know you better do something about inflation, insufficiently rising wages crunching down on the working class. We're not going to take it. And the first way we're going to show it is by our words. And the second way we're going to show it is by our actions. We're not going to work, we're not going to do what we are not adequately paid for. And, of course, the next steps will be political. We'll vote you right out of office, you Conservatives. We'll give a bigger surprise to the Conservatives than the Democrats gave to the Republicans in the just concluded midterm elections.

But perhaps the most important point that I can make by telling you about unions and strikes in a real fight, a class struggle of the working class in Europe against the employer class that has made such a mess there, is: where are the unions here in the United States? Where is the AFL-CIO? Where are the leaders of the unions providing the leadership, the organization, the know-how, the experience to make and mobilize the people for social change, particularly against an inflation? That's the real question.

We've come to the end of the first part of today's show. Which, for those of you who may not know, is produced by Democracy at Work, celebrating 10 years of creating content like this, designed to challenge, analyze and critique the economic system dominating our lives, that is capitalism. For example David Harvey's podcast Anti-Capitalist Chronicles, which looks at capitalism through a Marxist lens. To find out more about his show and more go to our website democracyatwork.info, sign up for our mailing list, follow us on social media. And please stay with us, we will be right back.

Welcome back friends to the second half of today's Economic Update. I want to begin with an update having to do with 54 - count them, 54 - of the world's poorest countries. They have come together loosely to present a picture that we really need to look at carefully. They have been affected, they explain, over the last 20 years culminating right now in 2022 by the following events: fundamental climate change in the world. And these are the poorest countries, they have the least developed infrastructure. They have been in almost all cases former colonies, badly neglected by the colonial masters in Europe and elsewhere that ran them before they became independent. So they weren't equipped to handle climate change.

And what did it mean? It meant that in the last five years they have been beset by unprecedented floods, storms, temperature aberration, droughts. You name it they have suffered it. The importance is not that they suffered it, because the whole world has. But their being the 54 poorest countries have the least capability of coping, of responding, of correcting, of offsetting, of protecting against the economic damage.

Then they had the pandemic, COVID-19. And, once again, they were the least able to cope when the infections reached their countries. And now on inflation, because the whole world has an inflation, or at least large parts of it do. And that impacts what can be afforded by these 54 countries, the poorest 54. And now rising interest rates. I want to stress the inflation and the rising interest rates. Because if they're not whacked by one they're whacked by the other. Even if they're not suffering from an inflation. For example, if they buy a lot of their materials that they import from China or Japan - those are two countries where inflation has been around one to two percent, so they're not affected by the inflation, - being poor countries hit by climate change and the pandemic they like every other country had to borrow. But because they were poor they had to borrow in a currency that the lender would accept. And that usually was the dollar. So they owe money in dollars, yeah, but here's a problem: to get dollars they have to have some way of doing that. And being 54 poor countries that's what they can't do. And with their debts that have to be repaid in dollars, if the dollar interest rate rises, which is what the Federal Reserve has done six times this year, they're stuck with rising debts that there is no way to pay.

One of those 54 has already literally collapsed as an economic entity. It used to be called Ceylon, it's now called Sri Lanka. It is a country that has no budget, can't function. It's debts are overwhelming. But it is only one of 54.

Why am I telling you this? To make you sympathetic to those countries, sure, but that's not the real reason. The real reason is I want to make sure we all understand how things came to be this way. And you won't be surprised by my answer: capitalism. There's a system in the world that dominates everywhere. It's a system that organizes workplaces, factories, offices and stores into the same particular form: [a] tiny group of people at the top - the owners, the board of directors if it's a corporation, the major shareholders, things like that, tiny groups of people who own and operate enterprises. That's how they've organized the whole world. The world is organized in terms of its workplaces. That way we may differ on religion and politics and a whole lot of other things but that way of organizing - that capitalist way, employer/employee - is global. And that means it's fair and reasonable to say this system has produced a situation in which the poorest people, and we're talking billions in these 54 countries of our fellow members of this globe, are suffering terribly. And look to be suffering even more going down the road.

This system doesn't work fairly. It doesn't help those who need it most. It doesn't arrange for transfers of wealth, not simply to offset the poverty but to give these 54 poorest countries the means to develop themselves, to do what other countries have done, instead of blaming them often for things they have no control over; they don't set the interest rates, the FED does, they didn't make global inflation, they didn't cause climate change, they didn't account for the pandemic. Why are we doing this to them? That's capitalism. And that's something we ought to think about.

My next update has to do with another vote at the United Nations that I want to talk to you about. For the 30th year in a row the United Nations General Assembly voted whether they were for or against (all of the countries there, by the way, a total of 187 countries in the world...) Today they voted concerning the United States embargo against Cuba. By the way, embargo is the old word. Nowadays we would call it [a] sanctions regime or sanctions. It's what the United States did to Cuba for the last half century, what it is now doing to China and Russia and Iran and so on. So this Cuban embargo [was] brought to the United Nations. Which is an institution designed to help peace, to avoid war, to make the world a safer and better place. And for the 30th year in a row they voted. And typically the vote was just like this year's - get ready - 185 to 2 - end the embargo against Cuba. Two countries voted against that, in favor of the embargo. One, which will come as no great surprise, is the United States, which is imposing the embargo. And the other one is Israel. I won't make any comment, none is needed.

Okay, why do I bring this up? Because the vote is lopsided? Well, it is every year. Because the rest of the world believes that this is an illegitimate, inappropriate, wrong policy? Yes, I think Americans tend not to want to know if the rest of the world disapproves of something the United States does, even though it's very important, and probably more so than ever before, that we become aware of what the world thinks about us. Because if it thinks that way about the embargo against Cuba, guess what you should not be surprised at? That a majority of the countries in the United Nations wouldn't support the sanctions against Russia and China either, partly because those kinds of sanctions often lead to war and partly because they are not a way to build a peaceful world. But let's be clear: the United States justifies the sanctions against Russia and China - well, not China, but against Russia - on the grounds that Russia invaded Ukraine. Okay, but that doesn't really make much sense, because Iran didn't invade anybody and it's got sanctions. And Cuba didn't invade the United States or anybody else and it's got sanctions. In fact the sanctions against Cuba began right after the United States invaded Cuba, not the other way around. When that Bay of Pigs (it was called the Bay of Pigs) invasion by American-supported Cuban exiles took place in 1961 it was followed by this embargo. Neither of them achieved their objective, which was to weaken and overthrow the Castro government.

Okay, well, if embargoes, sanctions are done to weaken and overthrow a government in Cuba, maybe in Iran, maybe what's going on in Ukraine has really got less to do about the Russians invading Ukraine and a lot more to do about a program that hopes to weaken and overthrow Mr Putin and so forth in Russia than anything else. And it would lead me, and I hope thinking people everywhere, to ask the honest question: just as the U.N wants to prevent war (military war) why wouldn't it include that now to have also economic warfare be just as outrageous? Most of the victims in military war are civilians/bystanders. And you know in economic warfare it's even more that. It's not the leadership of the country, it's not the government, it's not the people who make the policy, it's the mass of people who are victimized. It maybe is time to be honest about these things and to go with 185 who are against embargoes in Cuba, probably against them everywhere else and take the bold step of reducing the risk of war militarily by reducing the legitimacy of applying sanctions.

My last update that I'll have time for (another sub topic I'll come back to) is the collapse of crypto, the dramatic collapse of the entire system of trading cryptocurrencies, producing them, all of it. Dramatic! It's in the headlines every day. Here's the point I would like to leave you with: the impulse behind crypto was a good one and remains a good one; that there ought to be money that we can use as money without the government manipulating and controlling that part of our lives. That impulse (if you like to call it libertarian it's all right with me) is valuable. What went wrong with crypto was not that impulse - that was the good news. The bad news was, yeah, we allowed it again. The capitalist system, the idea that everything that we do in this society has to be profit-driven, has to make money for individuals and incentivizes them to cut corners, to do a little shaky business to get that extra profit to beat the competitor, all of that. That's what ruined the cryptocurrency space, as it has so many other of the productions of goods and services in our country. The problem isn't crypto, the problem is the profit motive.

The crypto scam is likened, correctly, to the tulip bulb scam early in the 18th century. And you know what that marked? The beginning of capitalism. And capitalism has been scamming us with one profit-driven hustle after another throughout its history. Which is why so many of us are critics.

Thank you for your attention. As always I look forward to speaking with you again next week.

Transcript by Brendan Tait

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Showing 3 comments

  • P DiGesu
    commented 2022-12-21 09:39:24 -0500
    Capitalism, if not practiced with the self-control and with a self- management (in Democracy), providing opportunity for the good of all, then must surely be practiced with leadership control in order to serve and “assure” the good of all. Unleashed or uncontrolled capitalism can be as dangerous as nuclear energy unregulated. In the spirit of capitalism or pursuit of personal gain (power, land, territories, finance, money),
    Capitalism in its many forms has been the catalyst for war on one side or
    both sides of every conflict.
    The concept of Capitalism self-controlled successfully is not unlike Democracy self-controlled successfully, it must prove itself when practiced in the realm of freedom, and if through time and time again it fails, then it only exposes and proves itself as a “ failure in the realm freedom”,,, and with it the need to be controlled. (Reflection, Guzziferno 2020 edition)
    Social media and news should be at least monitored and somewhat controlled for assuring truth as it did to a greater degree with the Fairness Doctrine.
    Our unbridled capitalist system harnessed resources from every corner of the earth and then controlled those territories economically by controlling the commerce of those resources. We also provided a new market of essentials to those populations which increased their numbers. These populations are now dependent on this market for survival and when our global factory fails to provide, these populations which could not have expanded using their own local means will now suffer. They do not suffer only from lack of water, grain, medicine, and floods but also from population increases who became dependent on invasive industrial nations.
  • Philip Wood
    commented 2022-12-13 13:47:40 -0500
    You fail to realize that Twitter is a public for profit company that was purchased by Elon Musk. Meaming that he alone owns the company. Not too happy about it but after all, it is his money. A very very rich but increadably intelligent wakko.Secondly, I am firmly in favor of unions, as long as joining the union is voluntary and not a condition of employment.
  • Ken Swanston
    commented 2022-12-09 06:09:15 -0500
    The section on ‘embargos’ and/or ‘sanctions’ implied that the sanctions against Russia were based on a false premise. What was failed to be commented on was the fact that Putin’s (oligarch based) Russia INVADED the Ukraine, not only ongoing since 2014 (Donetsk & Crimea) but in February of 2022 in a blitz attack attempting absorb the whole country to, nominally, ‘eliminate Nazis’…in a country run by a Jewish leader!
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