[S12 E28] New
In this week's show, Prof Wolff discusses the unionization efforts by post-doc medical researchers vote union, central bankers mislead on inflation, rising economic footprint and power of BRICS nations, and left victory in Colombia's elections. The second half of the show will feature discussions of the relevance of Marx's Labor Theory of value and the French political shift leftward with wide ramifications.
Transcript has been edited for clarity
Welcome friends to another edition of Economic Update, a weekly program, and I am your host Richard Wolff. I want to begin today with a shout out to a group of workers who have just successfully formed a union. It's happening all across the United States, but this one bears special mention. Why? Well it takes a while for workers to recognize, in many cases, that that's what they are: workers. And one of these stories told by employers to dissuade workers from forming unions is to suggest they aren't really workers, maybe they're different in this way or that way, maybe. And then, of course, after a while it becomes clear you may be different; you may have more education, less education, live over here, do that, have this skill. But in the end you're a source of profit for the employer. And they end up treating you that way. And that's why I'm telling you today's story.
It has to do with the Icahn Mount Sinai School of Medicine. That is a very large, very well-known school of medicine in New York City that has about 500 post-doctoral researchers. Much of the breakthroughs in medicine that we all take for granted or hope for are accomplished by people who've had their training, they're post-doctoral, they've gotten their doctor's degrees and they're doing research in the core of a major medical institution. And Icahn Mount Sinai in New York City is one of those. Well, the 500 post-doc researchers there formed a Sinai post-doc organizing committee and together with the well-established United Auto Workers they went to work to build a union, because they did not like the way the moneyed interests sitting at the top of that hospital and medical school were treating them. And in June of this year they got their vote, supervised by the National Labor Relations Board. All the post docs, all 500 of them, had a chance to vote, and to vote yes for unionization or no. Here was the vote outcome (it's as important to get the numbers as it is to realize what the victory for unionization there means): in favor of unionization 317, opposed to unionization 37. Not close, 10 to 1. Post-doctoral, well-trained, well-educated workers understood they need a union to secure their interests. Alongside of the workers at Staples, at Starbucks, at Amazon and you can fill in the blank, we now have the postdocs. This is only the second such hospital postdoctoral group to unionize, but it will spread. And we all should applaud what that means for working people in general.
Okay, my second update today has to do with a meeting of central bankers, happened very recently at a forum in Portugal. Representing the United States: Mr Powell, the head of the Federal Reserve system. And I want to point out some of the things he said and did and others did and to make a criticism. First of all, there was a great deal by Mr Powell and the other central bankers of blaming Russia and the war in Ukraine for the inflation that is dogging the United States in particular, and I'll come back to that. Number one, anyone who pays attention to inflation statistics knows that the inflation took off many months before Russia entered Ukraine, so this is simply false. And these people know that it's false. You might make a claim, you might, that the inflation is worsened by the war. You could, but you'd have to show that and you'd have to admit that it's a dicey question. But to simply blame the inflation on Russia and Ukraine, that is simply what? That's an attempt to distract people. The Federal Reserve and central banks have some responsibility for the inflation themselves. They pump the economies full of money over the last 20 years, they dropped interest rates to next-to-nothing, flooding the economy with cheap loans. They did that, Russia didn't, Ukraine didn't, this is them.
And then there's the other reality that this kind of conversation seeks to kind of hide: who raises prices? An inflation is when prices go up. The answer is employers raise prices. Nobody else has the authority or the power to do it. Government officials don't set prices and workers/employees don't set prices, employers do. That's one percent of the population, if that, are in a position to raise prices. So if you're looking for the cause of the inflation the first and most obvious cause are the people who make the decision to raise the prices. And those are employers. And there ought to be some discussion of them. But at the meeting of the central bankers not only were all the employers let off the hook, so were the central bankers. You see, it's all about Russia and Ukraine. Who do they think they're fooling? They deal with inflation like it's some kind of mystery, a fog that descends on us at a surprising moment. And then we have a hard time figuring out what we're seeing and where we're going because of this inflation. Stop, this is nonsense. A man who really is good most of the time in hard sharp analysis, Mohamed El-Erian, even he disappoints us by telling us that the Federal Reserve is remiss, they shouldn't be making decisions late in the game when we've had an inflation for a while. They should be leading, he explains, they should be the model, they should set the example. I love this, the Federal Reserve should act sooner, should act later.
Why are we doing this? We are wanting the Federal Reserve and these others to do a better job of what? Of dealing with an economic system that is so out of control that, after failing to deal with the virus in 2020 and failing to deal with the economic crash of 2020, they hit us with an inflation which they couldn't foresee, apparently, and could not prevent. And are now telling us we'll have to raise interest rate to... wait a minute, you're trying to deal with an unstable system. I have a really revolutionary thought. Rather than fixing the unstable system, why don't we talk about moving to a system that wouldn't be this unstable. Not a word, not a word about system change. Not a word about what could be done to stop this instability, which keeps demanding of the central bankers solutions they are notably unable to achieve.
My next update has to do with something called the BRICS. And I want to make sure you all are familiar with the BRICS, because you're going to become more familiar in the years ahead. And it would be good to know it sooner rather than later. First of all what are the initials B-R-I-C-S? And here's what it stands for: Brazil-Russia-India-China and the S is for South Africa. Those five countries I want to talk to you about, because they're having meetings. They've been doing that for years. They're getting their act together. They've been moving quite well along. And they are now a very powerful force. And that's why you need to know about them and to see why they're so powerful. I'm going to tell you a little bit about what they're doing now.
All right, let's begin. These five countries together have a population of 3.23 billion people. That's just shy of half of the people on this planet. So let me be clear with you, those five countries have ten times the population of the United States. We have 325 million, those five countries 3.23 billion. Do the arithmetic, this is an enormous part of this planet, much bigger than the United States. The total GDP, the total output of goods and services by these five BRICS countries: 23 trillion. That's interesting because that's a bigger economic footprint than the United States. So let me do it again, those five countries together produce a quantity of goods and services per year larger than that of the United States. And we're not done. In recent years 50% of the economic growth achieved in this world was achieved in those five countries and by those five countries. They are the engine of the world economy, in a way that was once said of Western Europe, North America and Japan. The engine, the powerhouse, the growth mobile, all of that, that's moved, friends. And it's moved, in large part, to the BRICS.
And now an example of the importance that this alliance, this coalition, this bloc of countries referring to themselves often as emerging economies. Every one of them disagrees with the United States about the war in Ukraine. Every one of them continues to trade with Russia, no sanctions against Russia, none. In fact the opposite, many of these countries are now buying much more from Russia, replacing the West (the United States, Western Europe and Japan) as the major customers to whom Russia looks. That, of course, builds and strengthens the solidarity of the BRICS. They're also developing their own international currency, their own international payments system to get around the blocking that the United States sanctions have imposed on Russia and people who trade with Russia. They are finding the solution by going around, by developing their own alternative system. Watch out, this is part of the decline of U.S capitalism, of the U.S empire and of the subordinate position of Europe and Japan in relationship to that empire. The BRICS is the up-and-comer. Important to see.
The last update that we can do in this first half of the show is a shout out to an election in the Latin American country of Colombia, a remarkable election a few weeks ago in which a former left-wing guerrilla fighter won the election and is the new leader of Colombia, defeating a very wealthy conservative, who lost. Why is this important? Colombia was arguably the most trusted ally of the United States in all of Latin America. After the bizarre and almost clownish Latin American Summit (so-called) in Los Angeles in June, this defeat in Colombia is another sign of a waning U.S empire. The new leader in Colombia will have his work cut out for him. There are nine U.S military bases in that country, U.S and other oil companies are well established. And Washington is very worried about the continuing decline of its global footprint.
We've come to the end of the first part of today's show. And before we move on I want to remind everyone that Economic Update is produced by Democracy at Work, celebrating 10 years of producing content focused on presenting critical system analysis and visions of a more democratic and equitable world. For instance, my book 'The Sickness is the System: When Capitalism Fails to Save Us from Pandemics or Itself' is available, along with other content we produce, on our website democracyatwork.info. I also want to thank our Patreon community for their ongoing and invaluable support. If you haven't yet please visit patreon.com/economicupdate to learn more about all the different ways you can get involved. Please stay with us, we'll be right back.
Welcome back friends to the second half of today's Economic Update. I want to devote part of this second half to a conversation with you about Marx's Labor Theory of Value. Don't worry, this will not be academically abstruse I hope, because I want to make the point that that Labor Theory of Value of Marx has a lot to teach us right now. And the second longer discussion I want is to celebrate with you the remarkable developments in France, consequent upon their election (their legislative election) a few weeks ago, in which the sitting President Macron lost his majority. And the most stunning result was the enormously positive growth and showing of the left in French politics. What France is going through now is a sign of what a difference a unified politically focused French left can achieve. It's already underway, and it's something Americans need to know about, think about and wonder about: the applicability of their lessons on our situation.
Okay let's start with Marx's Labor Theory of Value. One of the things that makes Adam Smith famous in the world of economics, or his follower David Ricardo... the two of them, Smith and Ricardo, are basically considered the fathers of the modern science of economics and recognized by Marx who comes later (a generation later) than them. But I reckon he recognized also the enormous achievement that they had made. And one of the things that made Adam Smith so famous was the following line in his book 'The Wealth of Nations' that the value of anything is in the end determined by - I'm now going to use his words - the toil and trouble needed to produce it. For Marx, as one of the many people who marveled at what Smith had written, here was something spectacular. For Marx it was the linkage of the value of the things that we see produced in the world as linked to, as dependent on, as created by labor. For Marx it put labor at the center of what economics was all about. Adam Smith and the people who follow him saw something very valuable in that line. But it was different from what Marx thought. For them the labor theory of value that Smith articulated explained, if you like resolved, a great mystery. The mystery was why do some things cost a lot of money and others a little? What determines, in short, the prices of things. You know, people had come out of ancient society where most human beings had produced in their little farm yard, in their little house, in their little shop most of the things they needed to consume. They had a garden, made their food, they had chickens and they had a workshop and all of that. And so they didn't go to market very often. They didn't need to, they understood what they needed to produce and they produced it for themselves.
But when society developed beyond a certain point that kind of changed. More and more people didn't produce the things they then consumed. Instead they produced something and then took it to a particular place, ended up being called the market, where they did something bizarre. They exchanged it, they traded it in, if you like, for something else. If you grew potatoes you went to the market where you exchanged them for a shirt that you needed to wear to keep warm. If you made pots and pans you exchanged them with a baker to get bread and so on. And the interesting thing that followed from this development was a mystery. Because you could work just as hard this year as you did last year, you could produce exactly as many sacks of potatoes or loaves of bread or shirts this year as you did last but your standard of living could be radically different even though you worked as hard, produced exactly the same. Because everything depended on what you would get when you went to market to sell what you had produced for money, say, which you then used to buy whatever it is you consumed. If that exchange relationship was different this year from last the fact that you worked just as hard and that you produced the same wouldn't mean you had the same standard of living - could be much higher, could be much lower. Everybody therefore wanted to understand what determines price. And what Adam Smith said is in the end it's all about the labor. But before you get to the end it's all about what we nowadays call supply and demand, all the millions of conditions that determine how much of something is available just when you want to buy it and how much you can afford to pay for it. And then there's all of us competing to get this stuff. And out of all of that comes whatever the price is that we have to live with.
Marx wasn't interested in the labor theory of value for that kind of analysis. I'm going to exaggerate here, but not by much. Marx wasn't interested in exchange of commodities. He wasn't a small businessman or woman, or a big one either for that matter. The mystery of Christ, he understood that, but that wasn't what excited him. What excited him was a completely different question for which he developed his version of the labor theory of value. Because there isn't one, there's half a dozen. There's Adam Smith's, David Ricardo's and Karl Marx's, and still others.
Here's the question Marx asked, which Smith and Ricardo didn't. Marx asked this question: in every society, Marx tells us, there's a core of people who do the work. They use their brains and their muscles to transform nature into finished goods and services. They're the ones who take lumber and make a chair, they're the ones who take wool and make a coat. These people always produce, Marx says, not only enough chairs and coats to take care of themselves but they always produce more than they themselves consume. That 'more' gets translated into English with the word 'surplus.' And Marx says you can understand society by figuring out who's doing the work and who's getting the surplus; who can live off the surplus produced by other people that they themselves don't consume. And you will understand an economy if you understand who's the surplus producer, who gets the surplus into his or her hands. And what do those who get the surplus do with it. That's what shapes society and Marx's Labor Theory of Value develops the analysis that always focuses us on this question of the production and distribution of surplus in a society. Smith and Ricardo didn't understand what surplus was about. And Marx, of course, is a revolutionary. Marx knows that in a slave society slaves produces surplus which the master gets. In a feudal society the serfs produce a surplus that the lord gets. And as Marx's work shows, in capitalist society the working class produces a surplus the employers get.
And out of that Marx shapes his critique. If you're interested in criticizing capitalism you need Marx's Labor Theory of Value. Don't be dissuaded by people who tell you it's not a good thing to understand supply and demand and price. They're right, it's just they're also irrelevant. Because that was not Marx's objective, to explain prices. And my guess is it isn't yours either. You, like me, are more interested in the big picture of what's going on in a society: who's producing this surplus, who's getting it and how is the society shaped by that.
The last discussion we have time for today is, as I told you, about France. I'll begin by reminding you of a remark, a phrase attributed I believe to Margaret Thatcher a long ago Prime Minister in England. TINA, it was called. T-I-N-A: There Is No Alternative. It's the way she celebrated capitalism. By telling us all get used to it, here it is, it's capitalism, there's no alternative. And the answer to that given by France today (and, by the way, by France back then too, but by France today) would be T-A-A-A. Which stands for 'There's Always, Always Alternatives,' 'There Are Always Alternatives,' T-A-A-A. When the election... dust cleared in the election for the National Assembly, the parliament in France a few weeks ago, the sitting President Mr Macron and his political party got about 38% of the vote. They lost their majority. They now have to govern with barely a third of the votes in the congress, in their parliament to get their legislation passed, if they can. The big upset? The unified left: communists, socialists, greens, independent leftists got together. One political party ran for office on a unified program and got about 31, 32% of the vote, just a little behind Mr Macron the President. And just so all of you know, where did the right-wing, the sort of Trump equivalent in France come in? Marine Le Pen, she got 17% of the vote, a very distant place number three in the election.
Well, so what is the left doing? Well the first thing we notice is that very recently Mr Macron announced, to everybody's surprise, what he's now in favor of. You can see he's sweating. He proposed increases in the pensions for the elderly, in welfare payments for those who are poor, he promised not to raise taxes on fuel, in fact to cut them. The left immediately made fun of him and said 'no, no, you have to go much further than that.' For example, he had said he would increase welfare and pension payments by four percent. The left pointed out 'who are you fooling? There's an inflation in France, it's currently running at 5.8%. So your proposal to raise to four percent puts the working class behind where it was before. That's not what they voted for, to be put behind.' So what did they come out with? Get ready! For pensions and for welfare: a 15% increase, not Mr Macron's 4%. All civil servants (France has an enormously large public employee population) an increase of 10% immediately, nearly twice what the rate of inflation is. That's what a left can do and this all has to now be fought out. And looming behind the conversations is a renewal of the yellow vest movement, which will now have allies in the parliament and in the two political wings, the left-wing and the right-wing, who together are almost two-thirds of the electorate. Everything has changed in France. The left has changed the discourse, changed the direction, changed the objectives, changed the agenda. And it's not just in France. It's all over Europe.
A couple of footnotes: you know what plays no role in France today in its new political configuration? Ukraine. Only Mr Macron, with a third of the vote, cares about Ukraine. The other two political parties don't. And they're making it clear they're not going to allow the needs of France to be marginalized for a war they neither understand nor support. Here's another thing that France, a Roman Catholic country, overwhelmingly no opposition to abortion, no initiative to stop it, no initiative to increase police powers, none of the culture wars we have here and none of the agenda, anything like that... wow! They have problems, for sure, with immigration, for example, in a big way. But it is a radical shift to the left. And it is going to change everything that happens in the world. And we need to be on top of it.
Thank you very much. We've run out of time. And as always I look forward to speaking with you again next week.
Transcript by Brendan Tait
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“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”
Check out all of [email protected]’s books: "The Sickness is the System," "Understanding Socialism," by Richard D. Wolff, and “Stuck Nation” by Bob Hennelly http://www.lulu.com/spotlight/democracyatwork
- Icahn Mount Sinai School of Medicine Union: https://twitter.com/spocuaw?lang=en
- Central bank forum in Portugal: https://www.cnn.com/2022/06/29/economy/jerome-powell-inflation-banking-forum/index.html
- BRICS Meeting: https://english.news.cn/20220622/8cb6243c66234e4bb77b4e118c10e4cd/c.htm