d@w Contributor:

Richard Wolff

May 13, 2021

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1. Changes in Government Spending and Taxing
2. Joe Biden and Franklin Roosevelt: Differences and Similarities
3. Historic Decline of US Capitalism: Reality vs Denial

Transcript has been edited for clarity.

Good evening, friends, and thank you for joining me. This is another one of our bi-monthly lecture series, Global Capitalism: Live Economic Update. It's brought to you by three organizations: Democracy at Work, and its co-sponsors, the Left Forum and the Judson Memorial Church in New York City. It is a fundraising event for Democracy at Work, and so I need, at the outset, to ask for you, listeners, viewers, to support us if you can. The ways to do that are both a one-time donation, or a monthly donation, and the links that enable you to do that, directly and indirectly, are available to you on the video below.

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Sometimes for these lectures I begin with a few short updates. I’m going to dispense with that because so many of you have communicated to us that you would like a kind of comprehensive assessment, now that the first 100 days are behind him, of the new United States government of Joseph Biden, and what its economic plans are, its programs, its proposals, to put them in the context of American history, and the context of American capitalism and the deepening crisis that it faces. So that's what I’m going to concentrate on. It's important, not only, of course, for those who are in our audience from the United States, but because of the outsized impact of the United States on the world economy, I believe it will be of interest to all of you from around the world who watch or listen to this lecture.

Okay, let's begin, and I’m going to begin by looking first at the proposals to spend money and do new things that President Biden has announced, and his program of taxation to pay for at least part of it. Before talking about what President Biden is doing, I want to remind everyone of an old, established pattern in the United States, which has parallels in many other countries.

The capitalist system is served by two different political parties in the United States, the republicans and the democrats. They disagree about how to support and to sustain capitalism. They do not disagree about whether it's appropriate to do so, and that has been true for a long time. The republicans, typically, support profit, profit-making enterprises, the leadership of the economic system, in a straight-forward manner, by cutting taxes, for example, as President Trump did in December of 2017, when he provided a tax cut mainly to wealthy people and to corporations. And I should underscore, to make the point, that this support for business and the wealthy, typical of the republican party for decades, came at the end of a 40-year period, roughly the 80s, 90s, and the first two decades of this century, when the business community and the wealthy had become more profitable and wealthier than ever before in American history.

In other words, the republican party's support for corporations and the rich came at the end of a 40-year period which was a period indicating that a major tax cut was less needed by them than ever in American history. They got it anyway, because the republicans controlled both the White House and the Congress and were in a position to give them even more than they normally do.

The democrats take a different tack. They are the party that says, “Wait a minute. It is dangerous for capitalism to keep supporting the rich even after they have become richer, which is exactly what Trump's tax cuts did. It is dangerous to have that level of inequality. It produces bitterness, envy, tension, conflict, and thereby threatens the capitalist system. It is wiser to be a little less generous with those at the top and compensate those at the bottom for their misfortune of having low incomes, low wealth, by providing them with public services, by providing them with supports in the form of unemployment insurance, public school financing, food stamp programs, and a whole host of other accommodations that soften what would otherwise be the hard edges of capitalism.”

Republicans do it their way, and when they provoke opposition, it goes to the democrats, to do it their way. The problem for the democrats, of course, has been that to pay for the social services provided to the public, they are often induced to tax corporations and the rich, not a lot, not very much, but more than corporations and the rich wish. So, after a bit of democratic government, the pendulum swings back to the republicans. And so, we have the very comfortable oscillation, back and forth, that characterized, for example, up until now, the last 75 years of American history, roughly, or nearly, a century.

So now an extreme republican, Trump, has been ousted, went too far, provoked too much envy, bitterness, tension and conflict. So, the pendulum swings to the democrats and Mr. Biden. And he's doing what democrats usually do. He's proposing a whole raft of social programs for the public, with particular emphasis on making life a little easier for poor people, for wage earners, for the elderly, for women and minorities, who've had it particularly rough. Very typical for what the democratic party has done. It's a bit dramatic this time, not so much because what Mr. Biden is doing is remarkably generous, as I'll show you in a few moments, it isn't. But it comes after a republican who was remarkably the other way. So, the bar is very low for a democrat, and Mr. Biden, to be fair, has done what democrats in the past have done, and maybe he's done it a bit more.

Let me go further. Given Mr. Biden's long political history, as AOC pointed out in a recent statement she made, given his long history of being a spokesperson for the corporate elite that based their corporations in his home state of Delaware, given his votes on a whole host of issues, foreign policy in particular, one didn't expect much from Joseph Biden, a centrist democrat, the partner of the Clintons, Obama, and all the rest.

So, let's be clear. He is doing better and more than his history would have led us to expect. And that brings me to an important comparison that many have made. Is he, that is Mr. Biden and his government, another Franklin Delano Roosevelt? Well, I want to answer that very directly, but with an answer that may frustrate some of you. The answer is yes and no.

There are similarities and there are differences, big differences. First the similarities. When Franklin Roosevelt ran and won the presidency in 1931 and 1932, he was a centrist democrat rather like Joseph Biden. His race for the presidency that he won was based on a proposal for a balanced budget. He didn't want the government, even though we were then three years into a severe depression, what turned out to be the greatest depression in capitalism's history, even then he was for a balanced budget, not having the government step in and try to repair what was clearly a badly broken capitalism. But once he got into office and saw how bad it really was, he went further than he had been. So, there's a similarity. Both Biden and Roosevelt were centrists, and both went further once they got in and took the full measure of how bad the crash of capitalism was, back in the 1930s, and the one we are still in now.

And just a footnote, as a matter of historical record, these are the two greatest crises of capitalism as a system, both in the United States and globally, [the] 1930s and 2020-2021. These are historic times. But that similarity has to be offset by the differences between what Mr. Biden is proposing and what Roosevelt did. Nothing Mr. Biden is proposing has the scope, the size, and the social impact of what Roosevelt did. Very briefly, let's see.

Roosevelt established, in the depths of the depression, the social security system, at a time when the government had no money, and every American family was stressed beyond anything anyone had planned on. The president announced that somehow, somewhere, he would get the money so that every person reaching the age of 65 in the United States would qualify and receive from the government a significant check every month for the rest of their lives. We had never had anything like such a public pension program in the United States, an incredible breakthrough.

Number two, the federal unemployment compensation program. If you lose your job, through no fault of your own, the government will give you a check every week for 6 months, 12 months, 18 months, it varies. [We] never had that before in American history. He passed the first minimum wage. And finally, and most importantly, he initiated a public jobs program for the millions of Americans who were unemployed in the 1930s. He hired 15 million [people] and gave those people income, security, self-esteem, a future, and not just for them, of course, but for their families, and the communities which they sustain by being able to have a job and earn income. [These were] staggeringly large programs. Mr. Biden is not doing anything comparable to that. Or maybe I should say, not yet, and I'll come back to that.

Now let's turn to taxes. When it comes to taxes, I would argue that the similarities are smaller and the differences even larger. How is Mr. Biden going to pay for the social programs, in the trillions of dollars, that he has proposed around covid, around the American family plan, around the infrastructure updating, and so on? Well, he's proposed to raise corporate tax rates from 21% of profit, that's what Mr. Trump lowered it down to from the 35% it was when Trump became president. Mr. Biden wants to bring it back up. He's proposed to 28%.

Please note, Mr. Biden is proposing to take it only halfway back to where it was. And let me recall for you, it was dropped at a time when corporate America needed it least, because we'd had 40 years of redistributing wealth and income from the bottom and the middle, to the top, from individuals to business. That's a very modest proposal, and the republicans have already indicated they will not support a 28% corporate profits tax. So, the compromises are beginning. Mr. Biden has suggested he will compromise, so best guess is 24%-25%. So, notice then: dropped as of the year 2018 by Trump from 35% to 21%, ending up with Mr. Biden [at] 24%, maybe 25%. That is modest, and way less than the kinds of tax rate increases that Roosevelt imposed on corporate America.

And the same is true of personal income tax. Mr. Biden has proposed to raise the personal income tax, the basic one, from roughly 37% to roughly 39%, 39.5%. Okay, that's an increase, but it's modest. Let me in contrast mention the proposal made by President Roosevelt in one of his last messages to the Congress, his State of the Union message. He proposed a 100% tax on the richest Americans. That's right. In the middle 1940s, the president proposed that every dollar over the top rate, which in those days was $25,000 a year, if you adjust for prices, it would be roughly $400,000 a year [today], every dollar you earn over that, said the president, would be taxed at 100%. That is, you wouldn't keep any of it. In effect, it's a maximum income that is being created by such a tax.

When it went to Congress, the republicans went ballistic, as they always do, and yelling and screaming, as always happens, and a compromise [was] reached, which is typical. And what was the compromise? 94%. Every dollar over $28,000 that a rich person earned in the mid-40s in this country, [the] United States, 94 cents of that dollar went to Uncle Sam, and the rich person kept 6 cents. That was the law agreed to by republicans and democrats, and signed by Franklin Roosevelt, the president. Compare a 94% top rate to the current 39% or 39.5% top rate. They're not even close. What Mr. Biden is proposing is light years from what we achieved in the 1940s under Roosevelt.

So please understand. Is Mr. Biden more progressive than Trump? No question. Is he more progressive than Mr. Biden had been up until this point? No question. He is. AOC was exactly right in noting that, and giving him that recognition, as [she] did to the democratic party. But comparing Mr. Biden to Mr. Roosevelt is crazy. There is no real comparison here, beyond the similarities I’ve noted, because the differences are overwhelming.

And now, let me get to one more point that is just as important. Both Biden and Roosevelt failed. Let me explain what that means. While Mr. Roosevelt went much further, raising taxes on those most able to pay, corporations and the rich, way more than Mr. Biden proposes, while Mr. Roosevelt did that, and while Mr. Roosevelt created social security, unemployment compensation, the first minimum wage in American history, and a federal jobs program the likes of which we had never seen, and that we have never seen since, either, while Mr. Roosevelt did that, here's what he didn't do, and what Mr. Biden isn't doing, either.

Neither Roosevelt nor Biden have tampered with, have questioned, have challenged, let alone done away with, the power of a tiny minority, those who own and run the businesses of America, the employer class, [a] tiny minority. They have the power in this economic system. They gather into their hands the profits that all of us help to create. And they decide what to do with the profits all of us helped to produce. And you know what they do with their profits? Well, sure you do. They use them to hire expensive lawyers. They use them to pay for advertising. They use them to expand their businesses.

But here's something else they do. They use them to donate to politicians, to fund the two political parties. And they get the result they want. Nobody messes with their control. And they use their money to put into power the very politicians, and here comes the punchline, the very politicians that undid what Roosevelt achieved after Roosevelt died.

Let's look at the lesson of the last 50 years. The New Deal, those things Roosevelt did, well, they were either eliminated, never touched again, or weakened. The minimum wage was allowed to sit there while prices kept going up, so it stopped being the effective minimum wage it had been intended to be. Just to give you one example, the [federal] minimum wage today, in the United States, [is] $7.25 an hour, one of the lowest minimum rates in the industrialized world. One of the richest countries, the US, has one of the lowest minimum wages. [That] tells you a lot.

But it's even worse. The minimum wage has not been increased since 2009. That's 11 years ago, 12 years ago. Every one of those years, prices went up in America. And every one of those years, if the prices went up, but the minimum wage stayed the same, it meant the minimum wage could afford to buy less and less. It was a torture of the workers on minimum wage, nothing short. And why was that done? Why wasn't the minimum wage raised at least to keep level with the rising prices?

Because the power of those who control the corporations went to keep in power the people who don't allow the minimum wage to be raised, who don't want it. They undid the New Deal. And by not challenging them, not changing the way we organize our businesses, Mr. Roosevelt failed to do what would have been necessary to make the New Deal stick, to keep it, to make it an enduring change, rather than a temporary one.

Here's a second example of the same disaster. We are now in the second worst collapse of capitalism. The level of unemployment in our society challenges that of the Great Depression. In the Great Depression, 1933, unemployment [was] officially 25%. Wow. One out of four of the American working class out of work at the same time. We haven't hit that number yet, but we have another number, true for the last 16 months, and it's almost as bad.

Over the last 16 months, 82 million Americans had to file for unemployment compensation. Some were only unemployed a few weeks. Some were unemployed the entire 16 months. But here's what we know. When you're unemployed, you dip into whatever savings you have, because you have to. You make all kinds of adjustments in your life. You may need to tap your relatives, your friends, your neighbors. You become burdensome on people. You don't want to be burdensome, too. It's very hard.

Now the total labor force in the United States numbers 160 million Americans. If 82 [million] of them were unemployed for some time over the last 16 months, it means that the majority of workers were suffering unemployment over the last year and a half. That's a staggering number.

And during that time, here's what was never done: No government jobs program. Franklin Roosevelt had a big one. We didn't have a big one. We didn't have a medium one. We didn't even have a small one. We had no federal jobs program. Staggering. What could be brought down. The politicians didn't debate a program. They didn't fight over one. They didn't compromise over one. All of what they did in the 1930s, they didn't do. That's what happens if you don't challenge those who sit at the top of the capitalist pyramid, the owners, the major shareholders, the boards of directors, the CEOs. Roosevelt didn't change and challenge them. And so, what he achieved was undone after he died in 1945.

And Mr. Biden, whatever he does, since he, like Roosevelt, never questions the organization of capitalism, he, too, is leaving in place the people who will fight him at every step. And even if they lose, and some of the things he proposes become real, they will go to work as soon as the ink is dry on whatever proposals of his get through, and undo Biden just as effectively as they undid Roosevelt. See, the lesson of the New Deal, which the democrats never learned, and Mr. Biden neither, is that you can't stop with a good proposal to spend money. And you can't stop with a good proposal to tax those who have it. Because if you don't change the structure of this system, even the things you accomplish will become temporary and will be undone, because you haven't taken that last step, because you were afraid to do so.

Okay. Might it be the case that Joseph Biden will become a Franklin Roosevelt even if it's understood that he certainly hasn't done it yet? And I think the answer to that question is, yes, he might. And why? Because these things have nothing to do, these questions of how far a president will or will not go, have very little to do with the individual, or for that matter, the political party. What makes the thing happen or not are the larger social conditions that force certain courses of action and block others. So, let's take a look at that.

Two things are crucial to understand why Roosevelt did what he did, and why Biden hasn't, and probably won't, unless similar conditions develop that are not here in the United States yet. Let me explain. Two social conditions confronted Mr. Roosevelt that made him act the way he did. One I have mentioned, the collapse of the capitalist system after 1929. It was severe. It was unanticipated. Economists, politicians, academics, people thought that America was an exceptional place where everybody would do better year after year, generation after generation, that the problems of capitalism had been solved in the 19th century, and that the 20th century would be spectacularly growing. They weren't prepared for the collapse of 1929. They didn't know what to do. They were disorganized. They were depressed. It was a cataclysmic break.

In a short amount of time, a quarter of the labor force was unemployed. That means every American family had mother, or father, or sister, or brother, or cousin, or uncle, out of work, leaning on the others who were worried about their jobs. Nobody had prepared the culture. You really have to go back and read the novels of John Steinbeck or all the others who wrote about the catastrophe. That was one condition. We have serious economic problems now, but they aren't quite at the level that Mr. Roosevelt confronted. But could they get there? You bet, and I will come back to that. But we're not there yet.

But there's a second, even more important difference in the social conditions of Mr. Roosevelt compared to Mr. Biden. When capitalism collapsed in 1929, the American political consciousness went to the left. There was a spectacular growth of criticism, not just of the unemployment, not just of the poverty, not just of the suffering of families and children, and all the rest. There was that. But there was something more than that. There was a recognition that the system was the problem. And, therefore, people decided to take extraordinary steps. Millions joined labor unions, the CIO. These were people who had never been in a union before, whose parents had never been in a union. They knew nothing about unions, but they were bitter, and angry, and they were willing to join with other workers to confront the people who represented capitalism to them: the bosses, the owners, the operators, the corporate leaders, the big bankers, you know.

And so, there [were] masses, millions, who joined labor movements, but even more to the point, millions joined either one or the other of two socialist parties and the American Communist Party, whose membership, whose social influence, whose spirit at that time, was more expansive, more powerful, more wide-ranging than at any time before or since in the history of American socialism and American communism.

And finally, there was a coalition, a coalition of cooperation between the Communist Party, both socialist parties, and the CIO. They worked together. They had disagreements. They had fights. But they had a powerful, effective coalition. And they went to the president, Roosevelt, and they basically said to him, “You have to help the mass of people. You have to. If you do, you will become a hero. And if you don't, we won't vote for you, and we, communists, socialists, and CIO, we control millions of votes. You won't be elected dog catcher.” It didn't have to be said, Mr. Roosevelt was a smart politician, he understood the message. And to make a long story short, that's why we have the New Deal.

Roosevelt had to respond. He had no choice. He was forced to by the push from below demanding social security, unemployment compensation, a minimum wage, and federal jobs, and to make corporations and the rich pay for it, because the government couldn't, with millions out of work, with businesses belly up, the government wasn't receiving taxes. It couldn't function. So, the money had to come from the rich and the corporations because nobody else could have paid for it. So that's why it happened.

Now we go to Mr. Biden. He doesn't have that. First of all, the system hasn't crashed quite so badly. Crashed a lot. Could crash more. But, for the moment, not quite so bad. So, the democrats are hoping they can slither through without having to do what Roosevelt did. But, more important again, is the key difference. There is now nothing comparable, politically speaking, to the coalition of the CIO, the two socialist parties, and the Communist Party. The two socialist parties and the Communist Party exist, but they're so weak and so small they have no appreciable social influence these days, with the possible exception of the DSA, which has been growing quickly, and I'll come back to that.

The labor movement is on a 50-year decline. It once represented a third of American laborers. Today, it represents barely 10%. And in the private sector, it represents 6.5%. That's all. So, the coalition that made it happen under Roosevelt doesn't exist now. And, therefore, there is no comparable pressure on Mr. Biden, and that makes all the difference. He has the space and the time to do very little, a pale imitation of Roosevelt, and hope, maybe, that's enough, because there isn't the dog nipping at his heels to do more.

But that leaves open two possibilities with which I want to end this section of my talk. The economic crisis of American capitalism, for reasons I'll come to in a few minutes, is getting worse, and it could become worse enough to make it more like what Mr. Roosevelt had to deal with. And, likewise, the growth of socialism in America, the fact that Bernie Sanders could be a socialist, run for office for president, both in 2016 and again in 2020, and get millions and millions of Americans to feel okay about voting for a socialist, that's a change, a big one, from the last 75 years. And the election of more socialists.

But, boy, do they have a long way to go before they get the kind of power, strength, and coalitional unity that existed in the 1930s. So, we're going in the direction to support the progressives, to support their effort, is what we should do to build comparable pressure. But we also have to keep an eye on how bad the economic crisis becomes. And we also have to keep an eye on the failure that was also Roosevelt's, not to reproduce it, not to leave intact the corporate structure with that tiny group, that capitalist class of employers at the top, who will undo anything Mr. Biden does even faster than they did it to Roosevelt, because that was the experiment that taught them how to do it faster the next time, and we're at the next time.

I want to go, in the second part of today's talk, to the question of the broader context. And I want to make crystal clear, and I know this is a difficult concept, I want to make clear that American capitalism continues its decline. And, more so than ever before, at least in my lifetime, the signs are all around us, and that, too, is going to determine what the problems are President Biden will face, and what solutions will occur to him, and will be possible or not, as he struggles with it.

But I want to go through just some of the indicators of decline which are, at the same time, signs of the growing problems Mr. Biden faces, problems which, if he wants to solve them, he'll have to go much further towards Mr. Roosevelt than he has dared to do. And likewise, problems which if he doesn't solve them, if he doesn't go toward Mr. Roosevelt, will pave the way for another oscillation as his efforts to mollify, and to tax corporations and the rich at least a bit to do that, don't have the apparent desired effect, then they'll go back and try the more repressive republican method, because that's how American politics works. So, it's very important to understand this decline, because of the stark either/or it is imposing on whoever sits in the White House.

Okay. I’m going to start and go through some facts, some statistics, but to make a basic point, let's call this “signs of US capitalism's decline.”

At the beginning of Mr. Trump's presidency, foreign central banks, every other country has a bank in charge of keeping its currency reasonably stable, making its economy work, and thereby securing its people's food, clothing, and shelter. Every country has a central bank, and the central bank keeps reserves to back up its currency that people will buy and sell in that country's currency, because if they have to, they can cash in that country's currency for one of the world's great currencies that is safe.

The US dollar used to be, basically, the world's reserve currency. Every bank kept dollars. Well, let's now see. When Mr. Trump becomes president, other countries were keeping 65% of their reserves in US dollars. That's already down from what it was, but it's still sizable. But in the four years that Mr. Trump was president, during which he proclaimed, “America first,” three or four times an hour, and how everything he was doing was going to “bring the United States back,” during that time the percentage of reserves in foreign central banks held in the form of dollars shrank every year. It's now 59%. It dropped six points from 65% to 59% just across the Trump presidency. That was the reality of a declining US footprint in the world's economy. The rhetoric from Trump was the opposite. The promise of a dramatic recovery from Mr. Biden is the opposite. But that is the reality.

Second index, covid-19. 100 ways to say it, I’m just going to do one. The United States has 4% of the world's population and accounts for 20% of the world's deaths from covid. One of the richest countries in the world, the US, one of the countries with the most developed medical care system, the US, could not get its wealth or its medical system around the problem. That's not a failure of doctors. That's not a failure of medication. That's a failure of this system to be able to mobilize the resources and the people to defeat a disease. Many other countries much poorer than the United States, with much less developed medical care systems, did much better. Sure, some of them were communist countries, socialist countries, the People's Republic of China, [being] perhaps the most dramatic. But also, Taiwan, which is quite different. Vietnam and Cuba did very well. But then again, so did New Zealand, and so did a whole bunch of other countries. This is a failure of a system. And we have to see and understand what it means that American capitalism could not protect the public health of the United States as well as so many other countries could and did.

Inequality. The inequality of the United States was a contributor to the breakdown of our economy. In its way, it was also a contributor to our vulnerability to covid. But even more amazing is that during the last 16 months, when our political leaders told us, over and over again, “We're all in this pandemic together. We must all work together to be safe, to take care of each other, to get the proper testing, to get the proper mask-wearing, and the social distancing,” and all the rest, “We're all in it together.”

Here's the reality, as I pointed out, more than half, 82 million out of 160 million, more than half of the American working class suffered unemployment, an extreme economic cost. And at the same time that more than half of the workers suffered unemployment, the 650 billionaires that the United States has, the 650 richest people, saw their combined wealth go up just shy of one trillion dollars. Or to say it in simple English: the rich got richer and everybody else didn't. What kind of a system would organize its national response to a disease that threatens everyone by managing to make serious inequality even worse? That's a system that is stretching its tolerance. The mass of people will not continue to allow this. It's not a question of whether they won't, it's just a question of when.

Here's another signal. The United States cannot get its allies to do what it wants. Its position as the dominant capitalist power, which really starts with the end of World War II, when all the competitors, potential and actual, were destroyed: the Japanese, the Germans, the British, the French, whoever, the Russians. They had been decimated by the war. Not the United States. Other than Pearl Harbor, no bomb fell on the United States. The number of Americans killed, a small fraction of what many of these other countries suffered.

But here are two examples of how the world is changing. Germany's industry needs energy. They have given up nuclear energy. They're the first major economy in the world to close its nuclear power plants and say we will not be reliant on nuclear energy. We will not allow any of it. It's too dangerous for the human race. Remarkable. And that makes them dependent on oil and gas and so forth. And they made a deal with the Russians, who have enormous reserves of gas, to build a pipeline in the northern part of Europe, to bring the gas from Russia to Germany. The United States does not like it because it'll make the Germans dependent, in a key way, upon the Russians, and that may lead to all kinds of collaboration and cooperation between these two. The Russians need the income from selling the gas, and the Germans need the energy from consuming the gas.

The United States said, no. And the Germans said, sorry, we're not closing this deal with Russia. We're going to continue and finish it. The United States jumped up and down, yelled, threatened to sanction any company that participated in laying the pipes, etc… it made no difference. The Germans said, you can do whatever you want, we're doing this, go away.

The second example is literally a few days old. The United States has not exported hardly any of the vaccines it has produced. In contrast, the Europeans are major global exporters of vaccines. So, guess what? When the pressure has risen, which it has all over the world, about the unspeakably unjust and immoral behavior of the rich countries of the world in not sharing vaccines with the poor, let me just give you one statistic from the New York Times in early May. In rich countries, 1 out of 4 people has been vaccinated as of mid-April; in poor countries, 1 out of 500. Wow. Turns out if you're poor, you're gonna die, you're gonna get sick. Whatever the morality is any of us endorses doesn't make room for that, as far as I know.

So, a cry has been raised by the United Nations and by the vast majority of the world's countries, share the information, give us the formulas so that we can make a vaccine, temporarily suspend your patent protection, because companies like Pfizer and Moderna and AstraZeneca that make vaccines have the formula. They have a patent. Patents mean you can't use the formula unless they give you permission and you can pay them whatever they demand. They don't want to because they want to make a lot of money off of these vaccines.

So, at first the United States said, “Okay, well, we don't believe… you need to… give the private enterprise a… mumble mumble…” But the pressure was too much, and Mr. Biden changed. He will allow a suspension of the patent on vaccines. The Europeans say, “Oh, no, no, no, no, no, no. You're only doing that because you don't export your vaccines. You don't have an external market that's important, so you don't mind sharing the vaccine because you can still control your own market, which is overwhelmingly served by your companies.” No other vaccine in this country is, so far, significant other than American produced [vaccines]. The Europeans are not in that situation. They don't want to share. They want their exports to provide the vaccine. They have a disagreement. They have a conflict, and they're not going to budge. And they've told Mr. Biden, the power, the influence of the United States, is not what it was in the past.

Then there's the matter of three wars. Americans don't see their own participation in wars the way other countries do. So let me tell you how the vast preponderance of foreign newspapers, radio, television, view the following three wars that the United States has been engaged in: Vietnam, Afghanistan, Iraq. Those are considered, in the rest of the world, [as] defeats of the United States. It went in with a set of objectives it could not achieve, and it left before it had achieved those objectives. Therefore, it is a defeat.

Americans can't handle this. I won't belabor it, but I would like you to understand that when Mr. Biden says everybody's coming out of Afghanistan in September, no conditions, that to the rest of the world, this is a defeat. And it's a sign of a society that cannot continue to do the kinds of things it thought it could, and maybe once it could, but in decline it cannot.

Next item. We have not been able to overcome the economic cycles that beset US capitalism, and indeed, capitalism everywhere in the world. Every 4 to 7 years, the cycles are upon us. The downturn happens, the recession, the depression, the crash, the bust, whatever you want to call it. Here we are in the 21st century, 20 years into it, we had the dot-com crisis of 2000, the subprime mortgage crisis of 2008, and the so-called covid crisis that we're in now. 20 years, 3 crises, average 7. Right on time.

A successful economic system like capitalism, could have, would have, should have, and tried, to overcome its cycles. Even giving them a name like dot-com, or subprime mortgage, or covid, is an attempt to suggest that the crash isn't the problem of capitalism, but of these other things: mortgages, dot-com prices under market shares, or a disease. It isn't. This average of every 4 to 7 years has happened with or without viruses, with or without mortgage failures, with or without booming prices on stock markets. It's a dodge. It's a desire not to face the fact that this system cannot exist without these periodic collapses that cause so much pain, suffering, and tension.

I’ve left for last, because it's another subject and we don't have time, the fact that the United States, for the first time really in a century, has a major, powerful, global competitor. There is no way around this, even as American commentators try their damnedest to find some way not to face this. The People's Republic of China is an extraordinary economic experiment. A powerful communist party sits at the top. It's making the basic economic, strategic decisions. Under it, controlled by it, partly a private, capitalist enterprise sector, part chinese, part not, and next to that, a big, powerful sector of state-owned and operated enterprises. A mixed system, partly capitalist, partly not, in the conventional sense. All of the enterprises are organized with employers and employees. Some employers are private, some employers are state.

Whatever you want to call that system, here's what it has achieved over the last quarter century. For the 25 years, on average, the United States GDP, output of goods and services, grew 2-3% [per year]. Over the same period of time, the total output of goods and services in China grew 6-9% [per year]. In other words, two to three times faster. Over the last 25 years, real wages in the United States, stagnant. They're roughly today what they were, growing maybe, on average, 0.5% a year, virtually nothing.

Over the same 25 years, the average real wage in China quadrupled. There's no parallel here. There's nothing close here. These are wildly diverging performances. And what I’m saying has nothing to do with endorsing, supporting, criticizing, or not criticizing, China. They have their strengths; they have their weaknesses. But when it comes to a powerful, capitalist competitor of the United States, China is it, and that changes everything.

When you put all this together you have a declining US capitalism confronting a crisis, partly a pandemic, partly your typical business cycle crash. These are very serious situations not easily repaired. It is extremely unlikely that the modest steps taken by Mr. Biden, even though they're dramatically better than what Mr. Trump did, and even though they conform to the typical republican-democratic difference, it is extremely unlikely that the extraordinary difficulties of the declining American capitalism can be handled, managed, by the modesty of what Mr. Biden has done.

So, either the progressives in the democratic party, and outside it, push much, much harder in the direction of becoming like the CIO, socialist, and communist coalition of the 1930s, and/or the situation deteriorates really quickly. One or the other, or both, of those things have to happen if there's even going to be a chance that Mr. Biden rises to the historical level that FDR achieved, and I’ve gone over what the limits of that, as well, are.

So, the prognosis here is not good. And I would not be useful to you, nor honest, if I pretended otherwise. But I will say this, and I believe it 100%. Every crisis is also an opportunity. This crisis of capitalism, and of the democratic party, and of the way the United States has handled, or not handled, its problems, is also an opportunity to make the kinds of changes that can solve our problems. So, we don't kick them down the road again. So, we don't do what's necessary but leave in place the people who can, and will, undo what we can achieve. Let's learn those lessons. Let's not have a minority running our economic system and taking us back when they're not happy with having to pay some of the costs of the system they sit at the top of. A change in the organization of our enterprises so there aren't a tiny minority sitting at the top.

As you know, we advocate for worker co-ops as the substitution for hierarchical, capitalist enterprises. They might form the basis of a different way of organizing the economy so it doesn't continuously put us in the kinds of dead ends that Roosevelt faced, that Biden faced, and that now has reached levels and proportions that confront this society with an accumulation of problems it cannot solve. It is a time for radical thinking, radical action, and radical change, not because of some abstract commitment, but because of the practical realities that have brought us to a point where no other solutions make sense.

Thank you very much for your interest. Thank you for joining us, and I look forward to the next lecture two months from now, the evening of the second Wednesday of the month of July. Thank you, and have a very good evening, and remember, if you can be supportive, go to our website, www.democracyatwork.info.

Thank you, and good night.

Transcript by Scott McCampbell
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