d@w Contributor:

Richard Wolff

November 21, 2022

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In this week's show, Prof. Wolff presents updates on students' solidarity with workers at Smith College; US car industry manipulates supply/demand to inflate prices, profits; Teamsters strike, solidarity defeat Sysco Systems; Starbucks provokes its 250 unionized stores, and why rising wages do not "cause" inflation. In the second half of the show, Wolff interviews Prof. William I. Robinson on global capitalism and its multiple crises he calls "terminal."

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, all of that – for us, and for our children. I'm your host Richard Wolff.

I want to begin today by shouting out to the students at Smith College in Northampton, Massachusetts. They are doing something remarkable that is happening on more and more campuses across the country. They are acting in solidarity with workers at the college, the people who do the work: provide the meals, fix the buildings, clean the property, and all the hard work that goes into it but is rarely recognized. Smith College has been doing what so many have – trying to make more money by understaffing, overworking, underpaying their workers. It's a sad commentary, but it's a way that these kinds of elite schools prepare the young men and women that go there, for their lives later on in a capitalist system that produces people at the top who get very nice service, and people who do all the work and get mistreated. But here's the difference: the students aren't sitting by and simply watching, or ignoring. They're getting out there and they're working with those workers, in particular SEIU Local 211. The solidarity and the commitment of the students and the workers to get a better work program — that will help the students. That'll change their feelings and the atmosphere of that University, and that will be a mark and a blow against the kind of abusive rich versus poor exploitation scenario that Smith should be ashamed of, but that these students are doing something to change. Hats off to the young women, particularly. Smith is a long-standing school that has been focused on educating women, and I wanted to recognize the remarkable solidarity that they're showing and the difference that they're making.

We're also going to be talking about Sysco and a strike there, Starbucks striking, the automobile industry – so let's jump right in. I want to start with the automobile industry because it is such a statement about where we are in the United States today. Here's the basic story. The automobile industry has made a commitment to become a smaller industry – more profitable, but smaller. What do I mean? They're producing many fewer cars. They have no intention of selling the kinds of numbers of new cars that they used to. They are accommodating the change in America: the rich at the top, who can and will be paying a lot more money for a new car, and the rest of us. We are going to be living with used cars from now on. It's a split in the
market – new for the rich, used for everybody else, and boy, does it symbolize what's happening.

But let me give you the numbers. The last two years – the two years of the pandemic that we were told, you were told, I was told, were years of difficulty and compromise – have been the most profitable in the last ten for the automobile industry. You know about how over the last year, we've been hearing about a shortage of chips, and of supply chain disruptions – don't believe it. What we have here is a classic move to reduce the supply of new cars and jack up the price. In the last year, we recorded the highest average price of a new automobile purchase in the United States – forty eight thousand dollars. Since the end of 2019 – that is, before the pandemic – prices are up 30 percent for new cars. You get that? Thirty percent. The production of new cars is way down – twenty two percent. So they cut the production, told us stories about chips, told us stories about supply chain disruptions, but what they were doing is classic elementary economics: cutting the supply, jacking up the price, and guess what? The profits went up. In other words, they got more of a benefit by raising the price than they lost by selling fewer new cars, and that's why they did it. It was the most profitable strategy, which we know because it was the most profitable year for them. And as I believe I've told you more than once, the supply-chain-disruption-nonsense was just cover to make it seem that it wasn't their decision to cut back production (but of course it was) to make more money by charging more (which of course is what they did) and the proof are the profits they now so glowingly show.

The bottom line: it's a decline of the American standard of living. Kiss the new car goodbye. Between the price of the car, and the now-higher interest rates, that means the monthly charge will be even bigger, because the price is higher and the interest charge is higher. We're changing, America, and if you didn't want to face it before now, the very car you're sitting in will be a constant reminder of what the reality of U.S capitalism means to you and me right now.

Sysco Systems is a company that delivers food all over the country, particularly to institutions. There was a strike recently at a number of their plants: Plympton, Massachusetts, Syracuse, New York, and in Arizona, and in each case the drivers of these delivery trucks – members of the Teamsters Union – set up pickets outside. But then something remarkable happened to the normal story of picketing. The workers involved called on other Teamsters in the area around where the strike was going on, and said, “Come help us. Join our picket line. The stronger, the more numerous we are, the better chance each of us has. How about we help each other?”

And they did, and the picket lines swelled from a few dozen, to a few hundred, and then a thousand, and guess what? The company did what it always tries to – do went right into court, because some of the teamsters lined up their trucks so that the scabs driving the trucks in place of the union workers couldn't get to the trucks, or they could get to them and couldn't get out of the parking area. So they went for an injunction, which the courts gave them, to begin to prosecute the truck drivers who did these so-called secondary strikes. And it didn't work. There were just too many Teamsters, and the business began to break down. Without trucks, it can't pick up the food, it can't deliver the food, and it won't get paid by the institutions to whom it doesn't deliver the food. They had to settle, and you know what they did when they settled?

They gave these truck drivers an enormous increase – 30 percent over two or three years, if my information is correct, much better driving conditions, much better working conditions, and here's what I enjoyed the most. As part of the settlement, the company withdrew the injunction. No truck driver threatened with any kind of legal action, because that's what the workers demanded.

The mobilizing of solidarity strike assistance by other Teamsters made all the difference. Workers have the power, if they're willing to realize it and use it. That's the lesson here, folks. I'd love to see the lesson being played out, or at least it could be played out in another venue. You may be surprised to learn – I was – that there are now 250 Starbucks that have been unionized. What would be a trickle at first has become a flood. The old CEO came and is gone again because he couldn't stop it (like he pretended he could) and so he's gone, but the company is doing very classic stuff.

If you lose the vote and your workers now have a union, because they voted it in, you have to sit down and so-called “bargain in good faith.” Well, turns out Starbucks has been stalling – suddenly workers couldn't participate in meetings via Zoom with the management. Why not? We've had two years of doing everything with Zoom – and other kinds of delaying tactics. And so the question is, what is the union – the 250 Starbucks that are union – going to do?

I'm going to take a lesson from what the Teamsters have just told us, and I'm going to take a lesson from what the students at Smith College are showing us. You need solidarity, and you know what? People in the community who understand what's going on – let's go and help the workers at Starbucks. Let's go out front with picket signs and talk about why we're not willing to buy at Starbucks as long as they treat people the way they do. Wow! The workers wouldn't have to take the risk of being fired, because they're not out there. We are, the rest of us are, and that might mean that when we have the issues that we're most concerned with, we could appeal to people at Starbucks to help us, in exactly the way the Teamsters helped each other. It's a very important lesson, this solidarity, and Starbucks is a perfect example.

Then there's the thing we talk about here – worker co-ops. How easy would it be to set up a co-op across the street from a Starbucks, where a bunch of us set up a little business helped by the rest of us, who will go there, not to Starbucks – who will patronize and celebrate what it means to have a decent workplace, not subject to the kinds of pressures Starbucks applies. Here's a chance for the labor force to use a worker co-op and a strike as weapons that against a company that has showed its bad faith over and over again, and it needs the public, doesn't it?

My last update that we'll have time for is about the fakery going on in the media that I always have to deal with: the notion wages going up is the cause of inflation, blaming inflation on rising wages. Let me be very clear about the economics and then the mere factuality. First, the economics. Wages are one of the costs a business has. Every business knows that at any time, any of its costs can go up. The electric company can jack up the rates. The coal that's delivered, if you have that kind of utility – that can go up. The lawyers you hire, they can charge more. The inputs you need – they can go up. Every business does that. It doesn't pass along every increase in higher prices because it can't take that risk. What it does try to do when the price of one thing it buys goes up, is they try to figure out, “Can we squeeze more for less out of somebody else?”

For example, if the lawyers say “we want a bigger fee,” the company says “we don’t want to give you a bigger fee.” “Fine,” say the lawyers. “Then we won't work very hard on your law cases.” See where that gets you? What the lawyers are doing is called a strike. They're threatening a strike, a slowdown, a work stoppage, and they're going to get their money. But the company, if it has to pay the lawyers more, will look for where it can offset the increase, and if the workers are weak and if the union doesn't fight, they'll take it out on the workers. It's exactly the same way if the workers are strong and are powerful and demand a wage increase and get it. That's the job of the company's employers – to find other economies somewhere else.

Don't ever accept the idea that if the wage goes up, then the price must or necessarily does go up. That's never been true. You need an analysis to understand it, but it's a wonderful excuse for employers, who raise the price to make a bigger profit, to blame the workers and say that they're just doing it because the workers demanded wages.

We're currently living in the United States with eight and a half percent inflation, more or less. Workers are getting five percent more. You cannot justify eight and a half percent inflation if all the workers are getting is five percent more. You know what's going up a lot more than eight percent? Profits, and that's why prices get raised. That's what the automobile dealers were doing and that's what the rest of the system does.

We've come to the end of the first part of today's show. Please stay with us. We will be right back with author and professor William Robinson.

Professor Wolff: Welcome back, friends, to the second half of today's Economic Update. I am very pleased and proud to bring both to our microphones and to our cameras an author whose work I have admired for a long time. His name is William I. Robinson. He's a distinguished professor of sociology, affiliated with the Latin American and Iberian Studies Program, and with the Global and International Studies Program at the University of California, Santa Barbara. Among his award-winning books are A Theory of Global Capitalism, Latin America and Global Capitalism, and Global Capitalism and the Crisis of Humanity. I want you to welcome with me, Professor William Robinson. So let me start by thanking you for joining us today.

Professor Robinson: Pleasure to be on. Thank you so much for having me.

PW: Okay, let's jump right in. Your latest book is Can Global Capitalism Endure. Tell us briefly – what do you mean by global capitalism, and what do you mean by the kind of shocking question, “Can it endure?”

PR: Global capitalism is facing simply an unprecedented crisis. We are on uncharted territory. This is a multi-dimensional crisis. First of all, it's obviously economic or structural. The world right now is on the brink of another recession, but I am predicting in this book that it's going to be much more severe. We're facing another collapse, maybe much more serious than the 2008 global financial collapse. But this is also a political crisis of state legitimacy and of capitalist hegemony, and the post-World War II international order is violently cracking up at this time. It's also a social crisis. We've never seen such levels of social disintegration around the world. The social fabric is collapsing in communities and whole countries all around the world. This is what we can call in technical terms a crisis of social reproduction. Hundreds of millions of people – looking at the future, billions of people – will not be able to survive as this crisis deepens. And finally, because we have four dimensions of this crisis, there is the ecological dimension. We're facing a collapse of the biosphere, and because of this dimension, it is existential. It's not clear that we're going to be able to survive. And this crisis can be drawn out for decades, but I'm arguing in this book that the 21st century is the final century for world capitalism.

The big question is, can we overthrow this system before it destroys all of humanity and much of life on the planet. To put this in technical terms, we are facing the historic exhaustion of the conditions for capitalist renewal, so this is a crisis like none other. And let me add that the ruling groups are clueless. They don't know how to resolve this. They've moved into permanent crisis management.

If we take this back just a little bit in history, we can see that over the past 40 years of this neoliberal era, world capitalism has been driven forward by this triple process of globalization, digitalization and financialization, and the outcome of this at the economic level has been the accumulation of enormous, unprecedented amounts of wealth by the ruling groups, by the one percent while the masses have been driven downwards. So we have this problem of surplus capital. The transnational capitalist class – that's what I call it – has accumulated enormous amounts of wealth that it cannot possibly reinvest or even spend, so as you very well know, Richard – you're a brilliant economist – we have this massive fictitious capital. What I mean by that is capital that doesn't correspond to the real economy of goods and services upon which we all depend. We have this unprecedented, massive, predatory finance capital and it is destabilizing the whole system. I'll add one other thing here, and that is the flip side of surplus capital is surplus people, surplus labor. Hundreds of millions, billions, that have been locked out and marginalized – surplus humanity. Those of us that do have employment and can fit into this global economy face these increasing precarious conditions and struggles for survival.

The good news is that there is a global revolt underway. Class and social struggle around the world is intensifying, it's heating up, and so the ruling groups have a dual challenge here. One: how do you continue to make profit in the face of chronic stagnation, and how do you continue to have the global economy move forward while trying to avoid that collapse which is coming anyway? And two: the other big challenge that the ruling groups face is how do you contain this rebellion from below? So we're moving towards a global police state. Actually, we're in that global police state.

I'll end with one other point. I know I've been a little long-winded here. We're facing a collapse, but there can be a temporary recovery from that collapse (although the system won't make it to the next century). The ruling groups are hoping that the introduction of new digital technologies that really took off during the COVID pandemic – that those are going to resolve the crisis and bring about some new period of prosperity. That might happen temporarily, but for that to happen we would need radical reform in the system – radical reform being a distribution of wealth downward on a global scale and a re-regulation of global markets of the global economy. Currently, we don't see that at all.

PW: That was an overwhelming summary and thank you very much for it. Now I want to push you, and I want to draw out how you see certain things given the framework you've just laid out. So in quick order, number one, where do you situate the Ukraine war in all of this story?

PR: What the Ukraine war has done is that it has aggravated all of the conditions of this crisis, but we need to be clear that the Ukraine war did not cause this crisis. It's helped escalate the crisis, but on the contrary it is an outcome of this crisis. It is a consequence of this global crisis.

First, the Ukraine war has aggravated all of these dimensions. We know that it's shot up energy and food prices. It's leading to an intensification of political unrest around the world. We know all of that from reading the headlines, but at a deeper level, also. It's boosted what I call militarized accumulation.

Let me explain what I mean by that. I mentioned that the global economy has been in this long-term stagnation since 2008. The crisis of 2008 has not been resolved at all, but the global economy has been sputtering forward on the basis of several mechanisms pushed by the ruling class. One is debt-driven growth. Right now, worldwide debt is approaching $300 trillion. We've never seen anything like that. That includes corporate debt, consumer debt, and government debt. That can’t continue and it's not going to continue.

The other thing that's pushed the global economy forward in the face of this stagnation is wild financial speculation. Everyone's been talking about it and we should be talking about it. Let me give you one dramatic piece of data. The real economy of goods and services is valued at $75 trillion every year, for the whole world – the production of goods and services – whereas speculation just in derivatives, which is a speculative instrument, is now $1 quadrillion dollars. So this financial speculation can't continue either. That's why we're seeing the collapse, for instance, of the cryptocurrency markets.

So the third mechanism which has kept the global economy going – and this is linked to Ukraine – is what I call “militarized accumulation,” meaning that the ruling groups promote wars, they promote social conflict, they promote and expand systems of transnational social control and repression, just as a way of accumulating profit because it's enormously profitable in the face of stagnation in the civilian economy. So Russia invades Ukraine. I condemned that invasion. We all should be condemning that invasion, but on the other hand, that's given what I refer to as the transnational capitalist class, especially in the United States, the justification to massively expand military spending to further militarize the whole global economy. And not just the United States. The other big countries in the world,from China to the European Union countries to India are all rapidly expanding their military budgets. So the Ukraine invasion has vastly intensified the militarization of the whole global economy and society. It's also accelerated again this violent breakdown of the post-world War II international order. There's one important point to make here, and that is that the invasion is accelerating a shift towards a politically multi-polar world with all of this geopolitical tension, but within a single global integrated economy, no country or no region can withdraw from this globally integrated economy, and actually no country can really stabilize the global economy. Those are some of the issues involved with the invasion of Ukraine when we look behind the immediate headlines.

PW: That's exactly what I was looking for you to contextualize. So let me do it again in another way. There are people who believe that we're at a kind of nodal point. The British Empire is in its
final stages of disintegration and apparently taking England with it. The baton, you might say, was passed to the United States a century ago, and we've had a century of a U.S Empire that now seems to be in decline, and we're looking at what may well be a Chinese empire coming to the fore. So now that we're at some kind of enormous nodal shifting point among empires, how does your view of a global capitalism interact, or what light does it shed, on this notion of shifting empires?

PR: That's a fantastically important question, and this is exactly what's going on behind the headlines. You're right. We've had a long string of what we call in social sciences “hegemons,” a hegemonic center which anchors and tries to stabilize the system, sets the rules for the whole worldwide system. We started with Iberian Peninsula hegemony. It went to Dutch hegemony, and as you just pointed out, we had British hegemony in the late 17th and then throughout the 1800s, and then of course the U.S Empire, the U.S hegemonic power in the 20th century. That is in decline. It's cracking up – you're absolutely right about that, and you are also right that the center of gravity of world capitalism is shifting to China. But here's the difference with earlier hegemonic powers. This is taking place – this shift to China, the Sino-centered world system – within an integrated global economy. No country can withdraw from this global economy and society, so China cannot play the role of a global hegemon that stabilizes the system in the way that the United States did in the 20th century or the British did in the previous century.

There's this intense competition among states. The competition between the U.S and the Chinese state is very real. Those geopolitical tensions are reaching the breaking point. They're even threatening us with nuclear war right now. But I have to stress that given the globalized economy of the 21st century is different than earlier centuries of world capitalism, the extent of worldwide integration and interdependence is such that there's no withdrawal from it. And even if China becomes the political center, the economic center of gravity, of the world economy, politically it's not going to be able to stabilize the system. It's not going to be able to resolve this crisis. This crisis is terminal. Every time there is a big crisis, some of us get it wrong and say that capitalism's now ending. It's always proven more resilient. But this time it is different in the long-term perspective. It can be dragged out if we survive, if we don't have a nuclear war that brings us down. It can survive for a number of decades more, but even if China rises as the new global hegemon, this system is in a terminal crisis. Our grandkids won't survive if they make it to the 22nd century if we haven't overthrown. But yes, what you're saying about China and this crisis of international hegemony is very real and very dangerous.

PW: You have been very generous with your time, and your speed in covering these topics can stand as a model for many of us. Thank you very, very much for your insights. I'm particularly interested and will follow up on this interaction between the globalization of capitalism on the one hand, and these empires that can't be what they were in the past. Thank you very much, Professor William I. Robinson. And to all of you, I hope you learned as much as I did, and as always I look forward to speaking with you again next week.

Transcript by Cindy Mitlo

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About our guest:  Prof. William I. Robinson is distinguished professor of sociology, global and international studies, and Latin American studies at the University of California at Santa Barbara.  He researches globalization, capitalism, and crisis, and is also involved with social movements and anti-capitalist politics in Latin America and the United States.  Among his award-winning books are: Promoting Polyarchy: Globalization, U.S. Intervention, and Hegemony (1996), A Theory of Global Capitalism (2004), Latin America and Global Capitalism (2008), and Global Capitalism and the Crisis of Humanity (2014).

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1. Auto industry: https://fred.stlouisfed.org/series/TOTALSA
   • https://www.axios.com
2. Sysco systems: https://labornotes.org/2022/10/ahead-halloween-sysco-teamsters-give-corporate-ghouls-heebie-jeebies
3. Starbucks: https://truthout.org/articles/starbucks-walks-out-of-union-contract-negotiations-after-months-of-delays/
4. Wage inflation vs price inflation: https://www.cnn.com/2022/10/28/business/workers-wages-third-quarter/index.html