Economic Update: Socialism vs. COVID-19: A Very Different Story

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On this week's show, Prof. Wolff explores what a socialist response to COVID-19 would have looked like. US has 5% of world's population but 30% of world's Covid-19 deaths. US capitalism did poorly against the virus. Today's program explores how socialism could and would prepare for and respond to Covid-19 differently. We include both the logic of socialism's different policies and examples of socialist-influenced policies in other countries.

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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: jobs, debts, incomes – our own, our children's.  And I'm your host, Richard Wolff.

I want to talk today about a topic many of you have written to me and spoken to me about, with all the attention to the COVID-19 pandemic, and the attention to what is being done, well or badly, by those in charge. The question keeps coming up: How would a socialist response to the virus – preparations for it, managing of it – how would it be different from what it is we've seen, particularly in the United States, but in so many other capitalist countries? In other words, what is the socialist alternative, here in a very practical way, with a problem facing us now? And that's what today's program is about. I want to answer that question, to leave you with a fairly clear sense of how a socialist response would have been different and why, therefore, it's worth discussing more.

So let me begin with hard, concrete realities right now. The United States has five percent, roughly, of the world's population. And we have 30 percent of the world's deaths from the coronavirus. Something is wrong. Because not only do we have five percent of the world's people, but we are one of the richest countries in the world; we boast all the time that we have one of the best health systems, greatest doctors – I won't quote President Trump further, but you know what I'm saying. If we're the best country in the world in terms of health care, and we have five percent of the population, why in the world do we have 30 percent of the world's deaths? And the answer is, what we're suffering from is not so much a virus – bad and dangerous as that is – we're suffering from a system that isn't working when it comes to managing, to preparing for, such a virus.

Number two. Focal issue: we are now in the midst of a class war. I've said that before, and I've gotten funny stares. Now, in the aftermath of protests across the United States, the eyebrows don't get raised so much. But it's not really the street protests I want you to think about. I want you to think about class war in the way that it's actually unfolding. Here in the United States we have roughly now, according to The Washington Post, 40 million people who have lost their jobs in the last nine or ten weeks – the time of this pandemic. That is a staggering number. It's roughly a quarter of the entire labor force of the United States, numbering roughly 160 million. So let's see: 40 million people out of work, and 120 million people still in work, or at least employed. Why do I call this a class war? And the answer is simple.

If you have 40 million people unemployed, it is a crisis not only for them, but for every employed person as well. Why? Because every employer understands what mass unemployment means. It means you can go to your workers and cut their wages, and cut their benefits, and make them work longer hours, and make them work at a hectic pace. You know why? Because every one of those workers is related to an unemployed person, has them all around him and her. If you don't do or accept what the employer dishes out, you too can join the unemployed because there are loads of unemployed people more than happy to grab the job, with the cut wages, and the cut benefits, and the extra time, because it's better than being unemployed, with all the anxiety of what happens when you run out of unemployment benefits, when you want to go back to a job that may not be there. Every employer is going to be doing this. They're going to use the excuse of the pandemic. They're going to use the excuse that they've lost a lot of money in recent weeks – which, by the way, many have – and they have to make economies. And you, the employee, are going to be a prime target for the economizing.

Put it all together, and the level of wages and the level of benefits is going to be cut. The people who run the economy, the employers, are going to take care of themselves first and you, the employee, later, if at all. Wealth will be further unequally distributed, and the inequalities we had at the beginning of this pandemic will be worse at the end. That's a class war in which the employers are likely going to come out the winners, unless the employees get together and change this story.

So now let me turn to how socialists would have, could have, and in some places did, handle this whole situation better. Okay, to do this I need to distinguish between three kinds of socialism, because they're the three kinds in the world today. The first kind simply means that the government takes a more active role intervening in the economy. It regulates more, it taxes more, it redistributes wealth through the tax system, it manages a social safety net – all of that. That's one kind of socialism, often called "democratic socialism," or "social democracy," or "capitalism with a human face," or "the welfare system" – lots of words for it.

Then there's a second kind of socialism, which often goes by the name "communism." Here there's a difference because the government does more than tax and regulate. The government actually owns and operates enterprises – stores, factories, offices. Prime example: the Soviet Union.

Okay, and then there's a third kind of socialism, which doesn't focus on the state. It's not so much focused on the state as regulator, nor is it focused on the state as owner/operator. It's focused, rather, on a transformation of the workplace from a top-down hierarchy in which a very few people – the owner, the board of directors – make all the decisions, the transformation of that into a democratic enterprise, one in which all the workers – one person, one vote – make the decisions. It's no longer employer/employee, neither private nor state. It is the workers themselves who take over and operate the enterprises.

Now, let's take a look at how they would have responded differently. And we're going to begin, in what remains of the first half of today's program, by talking how they would have prepared differently for the pandemic. Okay, and I'm going to start with the moderate socialists, where the government regulates. Here's what they would have done. And we know this, in part because it's the logic of the kind of socialism they are, but it's also what was done in a number of countries governed by socialist parties. Spain is governed by a socialist party. Portugal is governed by a socialist party, and so on. 

Here's what the socialist regulatory state would have done. It would have purchased the masks, the ventilators, the medicines – everything that was needed to handle a pandemic. And the government would have done that – bought them, stored them, made sure they were kept in proper condition, monitored them, fixed them, repaired them, replaced them, as needed – so if and when a virus hit, of the sort we have from time to time, we would have been ready. 

And you know the model of that kind of socialism is, ironically, the American defense system, the military system. It's not profitable for private companies to make ventilators and store them – or masks, or gloves – and just keep them somewhere, maybe for years, until a virus comes. So they don't do it. That's why the socialist state comes in and compensates for the limits and failures of private capitalism. And that's exactly the story with defense, because it's not profitable to make a tank, or a missile, or a plane, or a gun, and have it sit in a warehouse getting rusty over a long period of time until you have a war where you need it. So the government comes in and socialistically buys all the military equipment. It could do the same for medical equipment. A number of countries do that.

Number two: A socialist economy could be a bit more like a communist economy. It could go beyond regulating; it could run it. And here again we have examples in many countries. One of the systems that are run by governments are medical systems – medical insurance, medical care. And that creates a government-wide national system in place that can deal with any crisis a lot better than a disorganized, atomized system that is different in one city from another, in one town from another. Our private, capitalist medical system has to then be coordinated to deal with a crisis, a medical crisis – much less efficient, takes longer, than if the government itself does it. Likewise, converting from peacetime production to wartime production, government owning and operating enterprises can and will do that quickly. And the same is true for medical. If the government runs the enterprises that could make ventilators, they could decide on Monday to switch from airplanes to ventilators, from automobiles to ventilators. It took weeks of people dying before that transition was partially accomplished, with the government pleading with private enterprises in the United States to do it.

But perhaps the most fundamental difference, and the one that we will focus on when we begin the second half of today's show, is what would happen if you had prepared for the pandemic with a system based on worker co-ops. Every workplace would then be operated by workers. They, themselves, would be concerned. They know what a pandemic will mean. You know what it will mean? What it is meaning now: masses of people threatened by illness, masses of people threatened by joblessness. Worker co-ops wouldn't want any of that, and they wouldn't allow it. They would take the steps, because it's in their interest, long before the virus hits, to have in place the training, the materials – everything the collective of workers in each office, in each store, in each factory, need to cope. They would have had training sessions. How do we create social distancing in this workplace? How do we help each other get through a difficulty? There's no split between the employers who want profit out of the business and the workers who want wages and safe conditions because it's the same people. And they would take care of something that is equally important because the decision-makers are the people who get both the profits and the wages. 

What we have now, in capitalism, is the people who make the decisions are focused on the profits, and the people who focus on wages, and being healthy, are not a decision-maker. That problem has hobbled the response to COVID-19. And a worker co-op society, as we will talk more, doesn't have those problems – could have, likely would have, prepared much better than the way we haven't prepared and then get those results with which I began: the US with five percent of the world's people and 30 percent of the world's deaths from coronavirus.

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Welcome back, friends, to the second half of today’s Economic Update. Today’s program is devoted to analyzing how socialists might respond differently, how they did in some cases. In the first half of our show, we talked about the preparation for the pandemic. Now I want to talk more about how you handle the pandemic once it’s here. And again, I want to dramatically shape the conversation, if I can, by showing you how capitalism has managed it, particularly, using the United States as an example to underscore how differently the socialist response would look. And again, I’m going to use some examples from countries where, at least, there’s some socialist influence even though these are capitalist countries like the United States.

First of all, what socialist would not allow, absolutely, is the exploitation of a pandemic: the hustling of medicines at inflated prices, the using of people’s desperation to squeeze extra profits out of it—none of those things would be legal or allowed, I won’t go into the details, most of you, I think, know from your own personal life what I’m talking about. But even more importantly, we would not have in a socialist system the kind of pressure that existed in American capitalism over the last several months. And the core of that pressure is the unemployment—the decision in the midst of a dangerous disease threatening us all that we do not face that disease together as a people, working together, equally sharing the burden of minimizing the death and destruction. We talk like that but we don’t do it, because nothing makes you less capable than your fellow American citizen to fight this disease than being unemployed: not having the income you need, not having the job you need, not having the resources available, being more anxiety ridden about whether you’ll have a job when it’s done. Putting 40 million Americans in that situation makes it harder for them than the rest of us to deal with this disease. It is unfair on a scale that ought to make folks even those who like capitalism shamefaced—nicest way I can put it.

So let me come to the nodule of horror here. Every employer, as I mentioned the beginning the program, is now going to see a possibility to cut wages and benefits, because of people with jobs are terrified that they’ll lose them. And so you can get away with it, so that will diminish the incomes and the wealth of the vast majority of Americans just when they have to deal with a pandemic or get over the effects of the pandemic. That isn’t fair either and that isn’t just. But that is how capitalism works, as you well know and as I know, making the inequalities worse in our society. And then the final horror. If you are unemployed and are desperate to get back to work, you will, of course, face this so-called “trade-off”—should you keep safety, number one, protect yourself, your loved family members and so on from disease and stay unemployed or go back and risk the disease, because you can’t tolerate the unemployment? When you add being sequestered in your household because of pandemic reasons, the pressures to go back means that the employer can get you back even though the employer hasn’t spent the money to make the workplace safe as much as he could have. Socialism would reject all of this. To give you an example, in France, in Germany where the power of the Socialist Party and Socialism in general much stronger than in the United States, there is no unemployment of 50 million people, or 40 million, or 5 million, or 10 million, or anything like that. There’s been no mass increase in unemployment, because in those societies you can’t do that. That’s the power of a socialist party, of a socialist presence, of a socialist culture. They don’t have mass unemployment. They keep paying their workers 60, 70, 80, 90 percent—it varies from country to country—for not working. “You’re not unemployed. You still have that job. That job is yours. You will get it back and the full salary as soon as we get through this. We’re not going to make you unemployed.” Wow. That’s a socialist response, at least partly, “We are not going to treat the working class of people—the majority—that way.” And that would be a difference of how Socialism handles the situation. But it’s only the beginning. If you had a more advanced kind of socialism of the communist kind where the government owns and operates everything, they would have reacted sooner and probably better. They would have both quickly understood what the issues are. They would have responded or, at least, they could have—there’s always the possibility that the leaders in a communist state apparatus will have their own reasons to behave badly or ineffectively. That can happen. But at least they have the capacity to react much more quickly and in a much more coordinate way to produce what’s needed to manage a pandemic like the one we’re living through.

But I want to focus mostly on the third kind of socialism, the kind that involves a transformation of the workplace into a worker co-op. If the people making the decisions in the workplace are the workers, not a small group of owners who live and work far away, or board of directors, ditto; if it’s not that kind of group who make decisions based on profits—because that’s what they’re in the business to get—but instead, the decisions are made by the workers who have to live the daily reality in the workplace, you can be very sure they’ll make sure that workplace is safe. The absurdity of a group of workers coming back to work risking their lives would be apparent in a worker co-op. They wouldn’t hesitate the way employers do to spend the money, and the time, and the energy to make the workplace safe. They would allocate, because it’s their own hide unlike an employer who wonders, “Do I have to spend money, which isn’t going to make me a profit, making the workplace safe for the other people who work there?” That’s a different decision than people who run the enterprise making it safe for them to be there. Wow. Of course, they would act differently. They would have prepared differently as I tried to say in the first half of the program. They would have trained their members to react to any kind of emergency, “How do we quickly get social distancing here? How would we handle any kind of threat to our business, to our health, to our wellness, to our ability to get to and from work?” Managing the crises is something the workers would do in their own self-interest. They would be concerned. They would never fire half of themselves. They’d always find something else to do.

And that reminds me also. Suppose, in a pandemic the government provides money to help everybody through. Let’s see. Everybody in the United States and in most capitalist countries, what happened back in 2008 when we also had a capitalist crash without a virus, and now again in 2020 when we have a capitalist crash with a virus, money is given by the state to the capitalist enterprises, to the people who run the enterprises—but that’s a tiny minority of employers. And now we have the honor system, don’t we? The employer is supposed to use the billions, or this year the trillions given to them for the benefit of all of us. But of course, they are free in a free enterprise system to use the government help, they beg for and get, to make their businesses more profitable. That’s why you see companies firing large numbers of people. You see companies using the money they get to improve their technology to automate so that many of the people who are out of work will never have a job when the pandemic passes. We’re giving money, we the people who give the government to taxes are allowing that government to give that money to a tiny minority of employers who will use it to further the interests of the business as they see it, which means profit, not the business as the working people see it, which has to do with quality of work, quality of income, safety, health—all the things that working people prize. How do you justify a capitalist system bailing out the tiny minority of employers? In a worker co-op socialist system were they be a crisis, were the government to bail people out, which might very well happen, they would be bailing out the working class, because they would run the businesses in a worker co-op-based economy. They wouldn’t be giving them help to the people at the top. The bailouts wouldn’t be going to the board of directors, to the major shareholders, to the owners—a small minority of our population. They would be going to the majority—the working people—those 160 million members of the American labor force grouped into the co-ops that run the stores, the factories, and the offices. It would be a radically different way of operating and coping with a crisis like this pandemic.

We know some of this because we can see how differently co-ops have reacted. They haven’t thrown people out of work around the world. Where they’re strong enough, the socialists have made sure that even in capitalist societies, like Germany and France, they don’t dare throw the millions of people out of work that happen here in the United States. A socialist movement and a socialist organization has lots of influence in a society even without being the government, even before it gets to be the government, because it can say, as I have been saying to you over these last few minutes, that a socialist response would be radically different from what you see. A socialist influenced response would also be very different. That’s why France and Germany, with long powerful socialist traditions, didn’t have massive unemployment. At the beginning of pandemic, the coronavirus unemployment in Germany was 5%. Today, 10 weeks in—6%. That’s all. Not the 20% or 25% we have in the United States. You want to see how socialism differs? There’s a glimmer. And if the money that the government is paying out to cope with this pandemic went to worker co-ops, you would see that they will have done what we know should have been done—make the workplace safe as the number one priority. Because that’s the most important thing for the majority of people that they earn an income in a safe place and they would have all—they might have stopped producing what they were producing normally, because the economy is dislocated—and then they would immediately have gone to work to make those workplaces safe. We didn’t do that in the United States. We didn’t use the 40 million people to make our workplaces safe. We told them to go and sit, stew, be upset, be worried about your future. What an absurdly inefficient way to deal with a pandemic! But it’s the capitalist way and that’s what we have. And the socialist way or the socialist ways would be different in ways, I think, you and I can agree are something we need to talk about and face in the United States.

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


Transcript by Aleh Haiko & Marilou Baughman
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