Economic Update: Recession - Capitalism's Failure Invites System Change

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In this week's show, Prof. Wolff defines recession and shows its relation to inflation and stagflation in their respective roles within capitalism's inherent instability. Rooted in the structure of capitalism, recessions represent both costly burdens on employers and employees alike and also strong incentives to question, challenge, and go beyond capitalism. The economics profession has been unable to end recessions despite centuries of trying. The profession often tries to hide the capitalist roots of recession instead. Wolff concludes with how system change might finally "solve" capitalism's intractable instability problem.

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Showing 2 comments

  • Sonny Wiehe
    commented 2022-08-29 19:46:17 -0400
    “Useful things” are subjective. The only objective tasks that are unequivocally useful to humans are the provision of personal food and shelter. The WPA did neither. Building and repairing public buildings and roads competed directly against private enterprise and is not, in any way, shape, or form useful in a capitalist society. In fact, the WPA was cognizent of this inherent economic conflict and was specifically designed NOT to compete with private enterprise. Any of the government built public buildings, roads ,theater, or art houses that were created were an expression of communist social enterprise and were the reason many of the WPA programs came under the scrutiny of the The House Subcommittee on Un-American Activities beginning in 1938.

    If you don’t agree that the WPA enterprises were communist enterprises, then simply look at how “public” schools, hospitals, and roads get built today. While many are paid for (and in many cases partially operated) with public funds, virtually none get built by government employees or are operated by the government. In fact, many expensive motor vehicle express lane projects (used mostly the elite segment of the population that is treated as more equal than others) are not even funded with local, state, or federal tax dollars. They are entirely funded by private enterprises under 75 yr (or more) profit guaranteeing contracts that actually convey some U.S. public property into the hands of private, (mostly international) corporations (i.e. Transurban, with a board of directors all Australian) whose profits contribute absolutely nothing to the U.S. tax base. Indeed, almost all “useful things” (besides food and personal shelter) are subjective…and therefor subjected to propagandist use as seen in this segment by The Professor..
  • Edward Dodson
    commented 2022-08-24 12:34:25 -0400
    Unanswered here by Professor Wolff is whether economic cycles can be eliminated by changes in our socio-political arrangements and institutions. As I have written previously, I would not use the term “capitalism” to describe existing arrangements.

    If, by capitalism, we required that all or almost all persons receive a significant percentage of income from the ownership of capital goods, then the promise of capitalism has never been realized. Societies were all at one time tribal, sharing whatever land they occupied and sharing what they produced. Eventually, hierarchy appeared in all but the most isolated tribal societies. Feudal arrangements formalized hierarchy, softened to some extent by reciprocity. Peasants produced and the feudal lords managed affairs.

    Feudal arrangements broke down with the introduction of money minted out of precious metals. Feudal lords changed the rules of the system. Peasants no longer turned over a portion of their production as “rent”; they were told to take their production to the new markets for sale. Rents would be paid in cash, with new cash payments required as taxes. The other innovation was the establishment of private deeds to nature, to land. From this point on, rents were not contributed to feudal lords entrusted to perform certain societal duties; rents were collected by non-producing rentiers from those who produced. And, in the bargain, government continued to collect taxes from producers, while the landed used their influence to exempt themselves. This, then, was the fundamental structure of the system we think of as “capitalism.”

    As new technologies were invented to increase the efficiencies of producing goods, those who owned both the land and the factories and the equipment quite easily got from government the laws that protected their interests. Landlordism got quite complicated, with all sorts of subsidies, monopoly privileges and exemptions from societal obligations.
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