[March 2023] New
with Richard D. Wolff
Co-sponsored by Democracy at Work & Left Forum
In this lecture, Prof. Wolff discusses the following topics:
- France’s General Strike March 7, 2023
- Women, Unions and Strikes in the US
- Inflation, Profits, Inequality in the US
- State versus Private Capitalism: China
Transcript has been edited for clarity
Welcome friends and thank you for joining me for another Global Capitalism. Global Capitalism is produced by Democracy at Work, a non-profit small donor-funded media organization celebrating 10 years of producing all kinds of media that are critical analyses of capitalism and suggestions for how we can do better, how we can go beyond capitalism to make a much more democratically organized economy and society. Global Capitalism is brought to you by Democracy at Work and it's co-sponsored by The Left Forum.
I want to take a moment to highlight one of the projects of Democracy at Work: a book that I wrote and that was published by Democracy at Work entitled Understanding Socialism. It's a volume that goes through the history and the varieties of socialist theories and practices and comes to a conclusion about the way forward for socialism in the 21st century. It's available as a paperback, an audio book, and e-book. All of the information about how to order it and how to make use of it can be found at our website democracyatwork.info/books.
This evening I'm talking about challenges of capitalism. But it's better entitled 'Challenges to Capitalism.' And I've divided the presentation into four parts because there are four different kinds of challenges I want to draw your attention to, partly in the hope that they will, or my I talking about them anyway, will help them converge into the kind of organized unified challenge that can make the transition to a better system around the world. So I'll be talking first about the general strike in France going on literally as we speak. I will then be turning to the remarkable new role of women in unions and strikes across the United States. Not that it's new that women are doing that, but they're doing that with an intensity and in numbers that deserve a lot more attention than they've been getting. Third, I want to take a look at the American economy right now. There's a remarkable combination of rising inflation rates, rising interest rates, the instability and deepening inequality of our capitalist system. That, too, is a challenge to the system. And finally the fourth challenge will be the challenge represented by China and by the struggle between China and the United States, where I think you'll see a remarkable other way of capitalism being challenged you might not have thought about before.
Let me begin then with a nod to Hegel, with a nod to the notion that everything is a unity of opposites. I want to give an example of someone whose work and project is carefully crafted not to challenge capitalism, to avoid even raising the question of capitalism in her politics. And it's an arresting example of some of the forces that are pushing against the challenging of capitalism that I still think is the major theme of our time. The person I have in mind is the foreign minister of Germany. Annalena Baerbock is her name. You may have heard or watched her speeches. I pick her for several reasons. First of all, Germany is the most powerful economic unit within Europe. Number two, Germany is the only major ally of the United States in the Ukraine. Yes, I know it, we the United States has other allies, but the Germans are by far the richest and the most important of them. And so there's a special role for Annalena Baerbock in the world today. She also announced very recently that the German government, she in particular, are now calling what they are doing a "feminist foreign policy." Thereby she seeks to define something that has very different meanings in many cases than the one she gives to it.
Let me explain: Annalena Baerbock comes out of the Green Party in Germany. The Green Party is a major component of the coalition of three parties that currently governs Germany. Schultz, the man's name you've heard of, as the leading figure in this government comes out of the Socialist Party or the Social Democratic Party of Germany. But a crucial ally of the Socialists there are the Greens. And Annalena Baerbock is a representative and a leader of the Green Party. Now what's remarkable here is that Greens in Germany used to be a party that included in its earlier days a very powerful strong anti-capitalist component. Those were the people who, as in green parties in most of the rest of the world, understand that one of the causes, shapers of the ecological crises of our time is capitalism; the industrialization, the profit-above-all-else mentality, the disregard for the costs to our environment of making a bit more profit if you're a fossil fuel company or if you're a transport company or anything else. That had led greens around the world to consider, in a proper way I would argue, that capitalism is itself one of the major obstacles to solving the problem of climate change, global warming and all the rest. But the Green Party in Germany split years ago. And what remained of the Greens, what took over the Greens were those members of the party that weren't comfortable with challenging capitalism, that weren't willing to be anti-capitalist. They left, many of them formed what's called The Left/DIE LiNKE party in Germany. And others dispersed and the Green Party was left in the hands of people like Annalena Baerbock.
Here's what she means, apparently, by a feminist foreign policy: she is perhaps the most aggressive ally of the United States against Russia in Ukraine that you could point to. More even than Mr... well, let's leave it at that, more even than the British or any of the other countries that are allies of the United States. Annalena Baerbock wants very close to going to war with Russia, has even slipped in on a couple of occasions and talked like that - NATO versus Russia. She's ferociously anti-Russian, ferociously driven to this war, pushing inside Germany for Germany to do more, even recently the decision to send tanks. And, for those of you who don't know your history, the image of German tanks moving against Russia has an effect inside Russia that, really, if you wanted to unify that country behind their leader more than already is the case that would be a good way to do it. And we're watching that unfold now. Annalena Baerbock is a big supporter of abortion and access to abortion everywhere including in the United States. That's clearly part of what she means by a feminist foreign policy - ferocious against Russia and for war over there, ferocious in her support of access to abortion, but determined never to question, to challenge capitalism at all.
In contrast, I now want to focus you on four areas that are the opposite of Annalena Baerbock. People, often women, who are determined to make capitalism a key part of what they think needs to be challenged to make a better world. So let me begin with the first of our four topics: the general strike in France. And here this is going on now. And I want to explain it and draw the conclusion I think it teaches us. Repeatedly in recent French history an effort has been made to take away from the French working class gains and benefits that they have won over the years through strikes, through elections, in countless ways. One of these gains won is a national pension system. In France when you reach the age of 62 you can go on retreat, in the French language 'retrait', you can retire (in English) at age 62. Successive conservative, business-oriented governments have tried in France to take away that benefit. Here's how they've proposed to do it: those who work this way never honestly say what they are doing. They come up with clever wording in the hopes that they can fool elements of the working class not to see the deprivation being imposed on them. So of course they call what they're doing pension reform. What the reform boils down to, details aside, is simple: to raise the age of retirement from 62 to 64. That's the issue. They've tried it before and they have repeatedly been defeated, mostly by workers going out on strike and saying "if you push this the country will come to a stop. You are not going to take away - whatever government you are, whatever president is sitting there... you are not going to take away from the vast majority of the French people a benefit to the quality of their lives that they fought hard for, it's not going to happen. And if you push it we'll push right back." And so the effort to do that failed more than once in recent history.
However, the conditions of modern French capitalism are such that the business community, the conservatives, the wealthy keep pushing whoever is in power to try to get this done. And the reasoning for that is simple. They don't want to pay the taxes that are part of how this gets funded. And so to save themselves having to pay taxes - this is a small minority of the French - they want to deprive the majority of the French of the pension they've won - the right to retire at age 62. And Mr Macron, the current President of France, has vowed that, unlike his unsuccessful predecessors, he is going to go after this, and he's gonna get it. And so a bill to that effect is working its way through the French legislature. It's not done - quite a ways from that. But the unions have decided that they're going to fight it like they have in the past. And they recognize that there's a bigger push on now. French capitalists are having difficulty at home and around the world, as capitalists everywhere are. And they want to squeeze their own working class, of course to help them hold on to their wealth and their dominant position by not having to fund pensions as much as before. But, of course, calling it always reform.
Here's the answer the unions have given. First, the arguments (but you'll see in a moment those are the least of it.) First argument: lower income workers/blue collar workers/factory workers and others do physically exhausting work. They tire people out and they lower life expectancy. And then they show all the statistics to prove that. Therefore they already suffered because they're not going to have as long a retirement as other workers. And they're the low-income people so they need the help the most. Cutting - what? - making them work until 64 rather than 62 is taking away two years. And they don't have very many because of the wear and tear on their bodies from the work that they do. So you're going to people who are already exhausted at the end of a life of working like that. And you're going to take away two of the few years they have in retirement. No, you're not.
Here's the second argument: France has prided itself in recent decades on raising worker productivity. What a nice phrase. You know what it means? It means you get more out of a worker per hour than you used to, you've raised labor productivity. Now you've done that in a number of ways. You have added machinery, you've improved the machinery, you now have AI, you have robotics, you have computers, all kinds of things. But you've also made workers work harder, work faster, etc. And that is wear and tear on the bodies and minds of people. You've made them work harder but you haven't kept up in terms of what it means for the mental and physical capabilities. Therefore you owe the working class some sort of adjustment to what you have pressured them to do. But you're not giving them more retirement as an offset. You're not giving them earlier retirement as an offset, which would make sense if you cared about the mass of your people. You want to take away two years of the retirement that they can look forward to enjoying. Don't call it a reform, you're depriving your working class of two years of retirement. That's what you're asking for: take away two years of whatever you can enjoy in the way of a retired life.
But I stress these are arguments. In France the unions long ago learned a lesson not all that well learned in many other countries. That the arguments are never what win the case. They're important, they're worth developing, they're worth publicizing. And the French are doing all of that. But you've got to get the bodies ou on the street. And that's why the unions declared. All seven or eight of the different federations of unions in France agreed together, cooperating to have a general strike. A general strike - they've been planning it for weeks - scheduled for the 7th of March. That strike is underway already, because different unions start at different points, and so it's sort of a stretched out event, because you're talking about millions of people. It will be not at all surprising if there's more than a million on any given day not working, staying at home and/or in the streets.
The unions in France know that to win this fight they need to be allied, they have to have allies. And the allies are two things in France that are worth our looking at and understanding. First they ally with social movements: movements against racism, movements against the persecution of immigrants, movements. You fill in the blank, the unions work with them. They'll go out and support them in exchange for them supporting the unions. And since everyone has an interest - everyone in the working class - the vast majority of France has an interest in holding on to the pensions they fought for and won this is an alliance that can be built. A bit more interesting in the French context is the fact there's a third player in this alliance: the unions, the social movements and the left-wing political parties. That's right, the unified left-wing political parties who contested in the race. And whose candidate Jean-Luc Mélenchon came a couple of percentage points behind Mr Macron. That's all, not a big difference. They have also mobilized to support and participate in this general strike.
It's a little bit like the next phase of what was called the yellow vest movement a couple of years ago, a movement of enormous power and strength which overturned initiatives by Mr Macron and only came to an end because of COVID and all that it implied for people getting together and marching down the street. So all of these forces are getting together. And unlike Annalena Baerbock in Germany the Greens in France are participating in all of this. Unlike Annalena Baerbock in Germany these people know that capitalism is a big part of their problem. Not all agree it's that, but those who are explicitly anti-capitalists are a recognized, welcomed part of the larger community that's focused on saying "you don't take away our pensions." And it's not lost on anyone that having that anti-capitalist component is a powerful support for the chances they have to win this fight with Mr Macron. They could not do it without the anti-capitalist political parties, without the anti-capitalist militants that are part of all of this. This is a challenge to capitalism. You want to take away working class rights - an effort of capitalists everywhere all the time. It's part of what maximizing profit is all about. It's a clever phrase: we maximize profit. Sounds like you're not hurting anyone. But it is always partly at the expense of workers; whether that means replacing workers with machines, whether that means exporting jobs to places where you can get away with paying workers less. You get the picture. The French are fighting back, they are challenging capitalism.
Not the least lesson of the French challenge to capitalism embodied in this struggle over pensions is the importance of unifying the labor movement; unions, left-wing political parties, including those explicitly anti-capitalist and the social movements, many of which have their anti-capitalist components. More and more it's becoming clear to people that capitalism is part of the problem. And that overcoming and moving beyond capitalism is part of the solution. That is a strengthening glue to bring all these things together. And the French are absolutely pioneers in the past as far back as the French Revolution, in the recent past in the yellow vests and now in this struggle over pensions.
I want to turn next to women labor unions here in the United States where I am speaking from. And I want to point something out. Since 2019 women have become half the labor force in this country. That is by labor force we mean the people who work for a wage at an enterprise etc. or a government office. The notion of women as in the home has long been questionable. And now it is simply a mistake for people to think like that. Women still have the majority of work assignments at home in the household, a leftover of a culture that has not yet adjusted to the economic realities of our time. But women are now half of the paid labor force in the United States, going up or down sometimes. Women inside labor unions have noticed the fact that women in a labor union are earning roughly 30 percent more than women who are not in a union. That's a bigger gap than you would see if you looked at men.
It's really interesting that women are now the leading force in unionization. 60 percent of the unions formed in the last two or three years of a rising militancy of labor organization have been women. Women are not only part of the labor force, they are more and more entitled to be called a leading part or the leading part of American unionization. And it's interesting for us to examine for a moment why that is.
Okay, here's an interesting thought for you to process or process with me. The majority of the workers deemed essential during the pandemic were women workers. Women lost most of the jobs that were lost because of the pandemic and the crash of the capitalist economy that happened together with the pandemic. Women were disproportionately affected because they are still given the majority of child care tasks. Women were disproportionately affected by the collapse of the inadequate child care system the United States already had before the pandemic hit, which was made much worse by the effects of the pandemic. In short, women lost the support they got from child care centers when those were closed. Wow! Women were forced by the pandemic and the crash and the failure of the government to step in and offset those things - a terrible failure of American capitalism. Women have become more militant. They've understood badly and painfully the failure of this society to support its working class. They are discovering through the dense fog of ideology that they need unions and that they need change. And that's why they're becoming leaders; striking, unionizing, teaching one another, their children and all the rest of us what they've learned. Which is there needs to be big challenges either to get capitalism to change itself and perform better for the mass of people. Or to give way to an alternative system that can serve the majority of people better. You can condense all that and think to yourself. It's a radicalization of women. That is indeed what is happening.
The growing inequality that I'm going to speak to in a moment as the third challenge to capitalism plays its role here too. But it plays its role in an interesting differentiation. The strains and stresses of capitalism, the relative decline in real income that we are suffering and have suffered for years now, the instability of an economy that has really crashed now twice in the last 15 years - 2008 and 9, the so-called Great Recession and then the crash of 2020, worsened by the pandemic. It's shaken everybody. That's why this society is riven with so-called culture wars and social divisions and regional divisions and racial divisions, the feeling that so many have that the country's falling apart.
Yeah, but it's playing a particularly interesting gender-different role. A much larger proportion of middle-aged white men find Mr Trump's effort to cope with this collapse more attractive compared to women, who are much more likely to go not in Trump's direction but in a progressive direction. It's quite clear if you look at the progressive Democrats the proportion of women among them is obvious. And that's continuing. This is a very deep fissure opening up underneath the complacent exterior of U.S society. Women are taking a lead. And I think we're going to see more and more that they come to understand, as the French did, that capitalism is a big part of the problem. And going beyond capitalism can and should be a big part of the response and the solution that people find and pursue.
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The third challenge to capitalism going on around us has to do with what I want to call (because I believe that's what it is) the broad-based continuing assault on the American working class. Which has analogs in other parts of the world, too. That's why I believe telling the story about the U.S will have implications for those of you watching from other parts of the world. The last five years have been extraordinary in their assault. Indeed, in the last 30 years the assault on the working class is absolutely remarkable. Here's how one can articulate it briefly: by the end of the 1970s the long historical rise of real wages in the United States came to an end. By real wages of course I mean the relationship between the money wage an average worker gets and the prices that that worker has to pay when he or she or they purchase the goods and services they need. Okay, in that situation it's important to recognize for about a hundred/hundred and fifty years before the 1970s real wages rose every decade in American history. Even during the Great Depression because even though wages fell then (money wages) prices fell even faster, allowing people to at least buy things if they had any money. Of course the unemployed don't count in that relationship. And they were the source of the suffering. Unemployment, you will recall, in 1933 was 25% of the American working class. So since the 1970s wages did not rise faster than prices as they had before. And so real wages didn't go anywhere. The real wage of an American worker in the late 70s is very little different from what it is today. The average growth of what you could afford to buy with your average wage was next to nothing for the last 40 years.
Americans were shaken by that because they had become of the opinion, carefully cultivated by the media and the forces that run this society, they had been told that they lived in an exceptional country whose direction economically was always up and onward. That there was this lovely American dream at the end of the rainbow that they would acquire. If only they studied hard and worked hard they would then be able just to keep on accumulating. Starting in the 1970s that story was no longer true. Now, in an honest society there would have been an honest debate. Leaders would have said "hey we can't raise your real wages anymore, what are we gonna do?" We didn't have honest politicians then, we don't have them now either. So there was no discussion. Everybody had to figure this out on their own, and most didn't. What most families did is try to figure out how to cope with the fact that they still wanted that American dream, they still wanted to give it to their children. But the rising ability to do so from your job was gone.
And you know what American workers did? They knocked themselves out, they tried to solve individually a problem that was a social/economic problem. And that never works out real well. You got to face it, a social problem needs a social solution, a personal problem needs a private solution. What did Americans do? They worked more hours, took on more jobs. But the big solution, terrible one, they borrowed money. Starting in the 1970s, like no working class in the history of the world, we've been borrowing money. We've been living on borrowed money, and that means borrowed time. You can't keep borrowing more if the underlying real wage isn't going anywhere. Because you're not developing the capacity to pay these loans back. And the American working class knew it. And it got more and more anxious about the level of debt: mortgage debt for your home, car payments for your car, credit card debt you build up. And the final one, the new one, 25 years old now, load up the family with debt to send the children to college. That's the basic squeeze on the working class.
But then in the last five years it got much worse. The economy crashed in the year 2008 and 9 because of what? Subprime mortgage. That's a fancy way of saying people couldn't carry their debts - the solution to the end of the working classes rising wages, because American capitalism was unwilling and unprepared to continue to pay. That's why they went overseas to China and India and Brazil, those employers, because they could get work done for less. And that way they screwed the American working class out of further gains by shifting to working classes in other countries. That's why they worked so hard to replace workers with computers and robots and artificial intelligence. That's why they brought in immigrants from poor countries willing to work for less. All of that, the charming ways capitalism has to maximize the profits at the expense of whoever. The last five years it got worse. We had another crash, the 2020 crash, one that started before the pandemic hit here. And then we had the pandemic. And as if that wasn't enough - and let me remind you in 2020/2021 half of all American workers experienced some period of unemployment because of the crash/because of the pandemic/because of both. That's amazing. Half of our working class had some time of unemployment, some a few weeks, some months. A real blow, uses up your savings, stresses the family out. Unbelievable treatment of your working class.
And as if that wasn't enough, before the pandemic is even gone we whacked the American working class with an inflation. And, for those of you who don't know, inflation is particularly bad for food - one of the most basic expenditures all working class families have. And for those who were able to raise their wages across the board the average level of wages going up was much less than the prices going up. Which means that you continued to whack the working class with a harder and harder set of circumstances. And then the Federal Reserve raises interest rates - another burden particularly difficult for the families most indebted. Which are who? The working class families - since the last 40 years accumulating debt which they now have to pay higher interest on.
Here's a point: you cannot do that to a working class without severe psychological, political consequences. You can try to hide it, you can try to blame it on - I don't know - the Chinese or waves of immigrants or whatever scapegoat you can look for. But you can't evade terrible consequences. And the rising shootings in this country every day, the racism and the white supremacy reviving as a desperate effort to cope with what's going on, the development each week of a new conspiracy theory to come up with some wild explanation. Because people are wild with worry. They know the system is in trouble. They feel that it's falling apart. And in many ways it is.
Except, of course, in the world of the mass media, of our corporate leaders and our political leaders. They need to keep the pretense going: oh, the economy is recovering. Really? We have a higher percentage of people living with their parents and grandparents than we have had in decades. The polls all indicate that more than half the American people feel the country is going in the wrong direction and feel that "things are falling apart." And in all of this horrible experience of the working class nothing should be surprising about this fact: those who are criticizing capitalism are getting an audience the likes of which they have not seen for nearly a century - should surprise no one.
Capitalism has not solved its problems. It's bringing them back to us big time. This is a new century. We've had three crashes: Dotcom Crash in 2000, Subprime Mortgage in 2008, COVID, 2020. Every four to seven years in the 20th century, right on schedule in the 21st. All the apparatuses of capitalism: monetary policy, fiscal policy, the Federal Reserve, the tax-and-spend programs, the Congress, the Chairman and Vice Chairman of the Council of Economic Advisors, all the brain power capitalism can mobilize cannot stop its instability and the enormous cost it takes out of the working class. Because those at the top spend their efforts making sure that the instability of capitalism doesn't impact them. It impacts the workers thrown out of work, it impacts the mass of working class people who face the inflation in the supermarket every day. The system is organized to put the burdens of itself onto the mass of people and to keep those at the top rich and comfortable.
But here's the big challenge: there is in the United States a coming together of the critics of capitalism, who've always been there, and the victims of capitalism. They were kept apart in a variety of ways for many decades. That is over, they are coming together again. And that is a powerful threat to capitalism - the coming together, the merging, the alliance between the critics and the victims of the capitalist system. I dare say it is the fundamental challenge that that system is going to have to face. And it's not going to have an easy time coping with it.
Finally, I want to show you a challenge to capitalism coming from yet another direction; not from France and mass mobilizations, not from women discovering their leading positions and possibilities in a labor movement, like in the United States and not from the assault on the working class, whether that's called austerity politics or neoliberalism or you-name-it. Here's another one from another direction. It comes from China. And it has to do with an old traditional anti-capitalism. What do I mean? Well, almost from the beginning of capitalism something was true about it that had also been true about the feudalism before it, the slavery before that and so on. Every economic system of which we know the history displays pretty much across its entire lifetime a combination of people who love it, celebrate it, approve it on the one hand and people who are critical of that same system on the other hand. The critics think we can and should do better. The non-critics - the celebrants - say 'no, no, this is as good as it gets, let's leave it alone.'
You really do know that. You know that there were people, for example in slavery, who thought it was the best system one could have, celebrated it in countless ways. And you know there were also people who said "my God, we can do better." If you ever study American slavery you'll know that there were many forces in the United States right from the beginning who didn't like slavery, who thought it clashed with their Christian morality, who thought it clashed with the Universal Declaration of Human Rights, who were uncomfortable at The Constitution or the Declaration of Independence [which] are full of phrases about all men created equal and all the rest of it. And clearly the slaves weren't equal.
Yeah, there were people who were critical. It took a long time for the their criticism to merge with the victims of slavery to provide the basis to overturn it. Yeah, feudalism had its critics. And, you know, capitalism had its critics, too, right from the beginning - Karl Marx, who developed the criticism to a whole new level that has since inspired 150 years of experiments and practical efforts and theoretical efforts to critique capitalism and go beyond. But even before Marx and alongside of Marx loads of other people had various kinds of criticisms of capitalism. Some of them wanted to make it a better capitalism. Others said "no, that doesn't work, you have to change the system." They had exactly the same debate inside slavery, inside feudalism or any of the others.
So the socialist tradition took off. Basically in the early part of the 19th century it began to develop. 19th century non-Marxists, other people and Marx and the people he inspired, all in their different ways, developed the tradition of criticizing capitalism. And it spread all over the world with capitalism. Because you know what the fundamental cause of the critique of capitalism is? Capitalism itself. Wherever it spreads it brings those who love it and it brings those who are critical. It inspires people to admire it and it inspires people to think we can do better. We're grateful of the people who thought you could do better than slavery, because that helped to get us beyond that. And we're grateful to the critics of feudalism, you know, like Adam Smith, because it helped us get beyond feudalism. And we will likely be grateful someday to the critics of capitalism, myself included I hope, for having enabled us in a little bit of help to get beyond capitalism.
So where does this connect to China? Well, there was a very interesting development in the socialist movement of the 19th and 20th Century. To the surprise of everyone socialists over the century - the 19th century and into the 20th - became steadily more powerful. But they became powerful as a subordinate social force. Yeah, they won the trade unions and they developed the corps of intellectuals and they developed some social movements of various kinds. But the governments were in the hands of the capitalists. That's the story of the 19th century and that's the story most of the 20th. Then something odd happened. In 1917 as a byproduct of a terrible, worst war in human history - World War One - fought among capitalist countries struggling against each other, a byproduct of that was the Russian Revolution. And the Russian Revolution brought to power a socialist government for the first time. That was a real step up for what socialism could claim it could do. It went beyond being a movement of some people in a capitalist society to being the government of a society.
And they had a remarkably smart leader, Lenin. And one of the many things he taught and said about his revolution: two or three years into it he made a famous speech in which he said "you know, what we have here is we've made a revolution against capitalism but it's kind of only gotten halfway to where we need to go." And he had a name for what halfway meant. And you'll see how this connects to China in a moment. He called where Russia had gotten to, say by 1920-21, state capitalism - Lenin's phrase. What did he mean? He said well, we the working class, the Communist Party of Russia, we have captured the state, we made a revolution and we control the state. But what goes on in all of the factories of Russia at that time, in all of the offices, in all of the farms is what was here before. We either have a self-employed person trying to make their little business work or we have an enterprise in which there's a small group of people at the top. You know, like the owner used to be or like the private capitalist board of directors used to be and a mass of people who are the employees. Employers/employees - that's capitalism we don't want. We want to go beyond that. We don't want to keep going this division of the workplace into a few who run it and a mass of people who take orders. That's how slavery works: master/slave. That's how feudalism works: lord/serf. And that's how capitalism works: employer/employee. We don't want that. A revolution beyond capitalism has to go beyond that and we haven't done that.
Lenin was honest. What we've done is replace - here we go now - private capitalism - individuals, boards of directors, shareholders, all those people who have nothing to do with the government, they have all the enterprises. We've changed that. From many of them we took it away. And we now make them state enterprises. The government owns them, runs them. But you know what? We run them like capitalist enterprise; a small group of officials who run it and an army of workers who come for wages - their employees. They notice that the people telling them what to do have changed. But they're still in that position: employee versus employer. We haven't finished our revolution. Wow!
Lenin died very early - 1922-23; brain aneurysm and he died, wasn't leader of the Soviet Union very long. The next leader - more famous probably than Lenin - was Stalin. And he had hope maybe to go beyond, like Lenin did. But other countries didn't go through revolutions like Russia. There was no one to work with on the part of the Russians. So Stalin gave up. And Stalin said I'm going to create socialism in one country. Before that people had thought the world would have to change, you couldn't just do it here or there. Yeah, he gave up.
Now, China looked at what the Soviet Union did with its socialism, were impressed that they were able to take it to the next level, impressed that the government was doing what it was doing. But it also had to face the fact that something in Russia didn't go well. Because in 1989 the Soviet Union collapsed, imploded and went back to a mainly private capitalist system. Gee! And so the Chinese, raised up in the socialist tradition, aware of all of this, made a crucial decision that they were going to produce a different kind of socialism. They call it socialism with Chinese characteristics. What exactly does it mean? It means they're not going to do what capitalism did in its first two or three hundred years - be a private capitalism. You know, the kind of capitalism we have here in the United States or in Great Britain or in Germany, where most of the industrial activity, most of the production of goods and services is handled in enterprises, organized with an employer and an employee, the great division. We're not gonna do it with all private and we're not going to do it with Russia's alternative - the state taken over. That didn't work out.
Here's our solution: we're going to do a hybrid. We're going to give some position for private capitalists, both Chinese and foreign. But we're also going to hold on to a big sector of the state owning and operating. We're going to have a mixture of these two. And we're going to make them all controlled and coordinated by a powerful political force which is called the Communist Party of China. Notice I didn't say a word about private and state capitalism because the Chinese haven't gotten further than Lenin did. Lenin substituted state for private, China substitutes state-private hybrid for the private. That's the difference between the United States and China. The United States is overwhelmingly private, with a small state sector. China is more 50/50 - much bigger state but a huge private sector as well. But China hasn't gotten beyond the employer/employee relationship.
But what China has done is raise a fundamental challenge. Why? Because this hybrid, this combination of a private capitalism and a state capitalism controlled by a communist party has taken China, in half a century, from one of the poorest countries on the face of the Earth to the most serious competitor to the United States in the history of the United States or of the world, an unbelievable accomplishment. China has grown its economy two to three times faster than the United States for the last 30 to 40 years, the years during which the American capitalist system suffered a greater and greater inequality, tension-filled as I spoke about a few moments ago. This was a time when the Chinese soared in terms of their economic achievement.
But the issue remains: is the Chinese a solution? Or is the Chinese the last phase of a capitalism that can't work? If it's all state capitalism - that was Russia - or if it's overwhelmingly private capitalism - that was the United States and still is - is that hybrid the last way you can hold on to a capitalism? Are the difficulties, intentions and contradictions inside China - and there are plenty of them... are they the first signs of the final recognition we've tried everything, including this private/state hybrid, it doesn't work, it's not enough and we need to change the system? By which we mean finally no more minority of employers facing a majority of employees. That's not a sustainable system. Just like in the end slavery went when people basically understood it's not this or that detail of slavery, it's not whether the slaves are whipped or not or whether you separate the family or not or whether you feed the slave adequately or not. The problem is one group of people - a small minority - cannot literally own other human beings, that's got to go and it did. And one group of people doesn't swear to love, honor and obey another, where one is the lord with all the power and the other is the serf with none. That didn't work either.
What may well be happening in the world today is the most profound challenge to capitalism slowly emerging out of these four different kinds of challenge of capitalism. And that challenge is employer/employee organization of the workplace is the problem. It's the problem that lies behind the efforts of the few to deny two years of retirement to the many in France. It's behind the creation of impossible burdens, especially on the women workers of the United States, the creation of impossible burdens on the working class of the United States for the last 40 years. And it's the question emerging out of both the success China has had in outgrowing private capitalism in the United States and everywhere else versus the fact that it has not gone beyond what Lenin recognized as the continuing capitalism. And that socialists now have to, in a way, bite the bullet. They have to understand that it's at best one kind of socialism to play around with what is still a capitalist workplace. And it's another kind of socialism that says that workplace itself has to be revolutionarily transformed if we're going to get beyond the burdens, the flaws, the failures of a capitalism that works for ever fewer people.
Thank you for your attention. I want particularly also to thank you for being an active, engaged audience with us. And I want to close by thanking those of you that are already supporters of Democracy at Work both as partners and also in the case of some of you as people who donate who help us with the financial costs of doing that. And, again, if you are at all interested in joining in the supports our website is the way to do that. And the place to go: democracyatwork.info. Thank you and 'til next time.
Transcript by Brendan Tait
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One reason U.S. households have taken on so much debt is that the cost of land has skyrocketed at a rate that imposes huge stress on both consumers and businesses. On average, every 18-21 years the credit-fueled and speculation driven land markets crash. Those who purchase property at the peak of the market with minimum cash down payments lose whatever equity existed at the time of purchase. If they become unemployed or otherwise lose income, they are soon delinquent on their mortgage loan and end up losing their property to foreclosure. Where to go then? Communities have pulled back on the use of public funds to construct permanently affordable rental or ownership housing. So, many who are evicted end up homeless.
One part of the solution is tax reform: begin taxing economic rent, which is unearned to individuals and private entities. This is not the “rent” one pays to live in an apartment. Rent is a share of aggregate income that comes from natural and societally-created advantages. The University of California economics professor Mason Gaffney identified the many sources of unearned rent that should be publicly captured but remains unjustly in private hands. Search for his writings and videos for a clear understanding of the issues at stake.
I listen every week to Economic Update. Your March 2023 episode of Global Capitalism is the first one I’ve watched. I discovered that I’ve been missing some fascinating material. Thanks so much for sharing this! I particular appreciate the way you speak with slow careful emphasis, because so much of this is new to me, and this helps me tremendously in following you.