← Economic Update with Richard D. Wolff
Economic Update with Richard D. Wolff
Best Of Series Part 2: The Most Viewed Updates
00:29:01
This week on Economic Update, we revisit two of the most viewed episodes of Economic Update. The first features Professor Wolff's analysis of the key changes driving the emergence of a new economic world order, and the second provides a look at the...
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- [00:19]
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Today's episode is a little different than usual. It is a compilation of segments from previous episodes of, of Economic Update that remain relevant for all of us today. And I hope it provides you with a fresh look at what's changed, how.
- [00:36]
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Far we've come and how far we haven't over the last decade. I want to talk with you about the emerging new world economic order. I do that because enough of the outlines of that new order, enough of the profiles of the key players are now clear that we can take a step back from the daily and weekly events we normally analyze to look at the larger picture for a moment. I almost said darker picture. It isn't all dark, but it is larger. It's an overview, if you like, of what's happening in the world. And I mean it, to inform how our understanding of all the details that we'll be talking about in the future, programs that we will be developing. And the way I'm going to do this today is organize it around four major developments that are happening at the same time, interacting with one another, but together give us a clear sense of where this new world economic order is coming. Okay, we begin over the last 30, 40, 50 years, depending on how you count, we have been involved in what is called neoliberal capitalism, or if you like, global capitalism. And here's really all that that meant, that coming out of the Great Depression and World War II, private led capitalism had a new chance to rebuild after the war, to try to recoup after the Great Depression and to have another growth spurt, which it did. By the 1970s, that growth spurt was beginning to have a problem keeping going, not unusual in the history of capitalism as a system. It is growth spurt driven. But after the 1970s, the growth spurt took an unusual form. Where before, capitalism had spurted from New England to the Midwest, from the Midwest to the Far west, from all of those areas to the American South. Now, after the 1960s and 70s, capitalism's next growth spurt was out of the country to Asia above all else, but also to the other parts of what has come to be called the Global South. More money was to be made there, wages were much cheaper there, environmental protection less there, and governments everywhere eager to provide jobs for their people. And American corporations, just like European and Japanese corporations, eager to have access to cheaper labor, eager to have access to huge Asian markets. And so neoliberal globalization took hold. Huge numbers of jobs moved from the old centers of capitalism, Western Europe, North America, Japan, to the new dynamic centers, China, India, Brazil and So on a remarkable process of explosive growth. And in this situation we find ourselves living with the results of, of that process. The first result, a hollowing out of the old working class in the old centers of capitalism. What do I mean? I mean that jobs left. The jobs that left first, say from the United States were the highest paid. The unionized jobs, the factory jobs where workers struggles had built up decent livelihoods for people. That's where there was the most gain in profit if you could move that production to the cheap labor in other parts of the world. And so we lost our steel factories, our auto factories, our aluminum production, all of the basic industry of the country. Why? Because it was profitable for capitalists to move.
- [05:22]
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And move they did.
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And the middle class fell apart. The jobs disappeared. From being a high paid industrial worker, you became a low paid greeter at Walmart, et cetera, et cetera. Inequality grew because the 10% who own all the shares made all the big profits. And the mass of the working class took a real hit because those in America had to compete with the cheaper labor in China, India. And we all know the result. And it had one more effect. It created capitalist powers outside of the United States, Europe and Japan, who hadn't seen that before? China above all, but also India, Brazil and others emerging so that the western capitalist old centers had a dynamic new center competing with them. These were very new developments. One of the things provoked by it, an upsurge of militant labor movements. No surprise, they were reacting to, to the hard times working classes are facing one after the other all over the world, even in China and India, because of the sudden transformation of agrarian people into industrial working classes. That always shakes people's lives, that always creates tension. And in the west, the disappearing jobs, the disappearing middle class, the disappearing standards of living, the disappearing opportunities for children. Capitalism in the west was under strain. Let me assure you that the rising militancy of the labor movement here in this country, led by service workers among the lowest paid, should be no surprise. The fact that France as a whole country is shut down by the demand of its working classes, not to have the problems of French capitalism to taken out on them by taking away the.
- [07:43]
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Pensions they've already paid for.
- [07:46]
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Or the Germans who last a month shut down the transportation system in their country as a protest against the inflations, attacking the working class, and I'll come back to that. We had a shift from globalized neoliberal expansion to its opposite retraction. Countries fighting against one another. The United States shutting down, hobbling interactions with China, economic Nationalism replaced neoliberal globalization. Europe is caught between trying to figure out what to do. Should it still stay with the United.
- [08:35]
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States doing a lot of its dirty.
- [08:37]
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Work politically, as in Ukraine? Or is the future of Europe better with the news centers? That issue is being fought out in Europe, even if the media in this country pretend otherwise. And then there's the isolation of the United States. This is important to understand and brings us as a transition to another of the four factors. Besides the shift from neoliberal globalization to economic nationalism, we're also seeing the end of a century in which we were told, and many of us believed, that the great struggle was between the state as an owner operator of enterprises and the private sector as the owner operator of the enterprises that produce goods and services. We were told this was the struggle between capitalism and socialism, and we've learned that that was a terrible mistake. Capitalism has a private form and a state form, just like slavery did, just like feudalism did. Let me drive the point home. During slaveries around the world, were there private slavers, masters who were private individuals running a business with slaves? Yes. Were there governments who had and operated slave enterprises? Yes. Nobody thinks that it wasn't slavery because the state was doing it alongside the private sector. Same in feudalism. We had state feudal state lords with serfs and private lords with serfs. And guess what? There's a pattern here. You start off typically with only the private, but the private gets itself into trouble and calls in the state. And so you get state slavery alongside private.
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Same thing.
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You get state feudalism alongside private. And guess what? When private capitalism gets into trouble, it calls in the state. That's why Mr. Trump had to wage tariff wars and trade wars, and Mr. Biden is doing basically the same. You call in the state, and the state then becomes a bigger and bigger factor. We're seeing the end of the big story of private versus state, because in fact, all the societies are combinations, mixtures of those. The United States has a bigger and bigger role for the state. The Republicans complain about it, the Democrats push it, but they all accept it and they all understand it has to be done, even if they give speeches to the contrary on the fourth of July. The greatest example of the hybrid, the combination of private and state capitalist enterprises is the People's Republic of China. By capitalist, I mean the relationship between the employer and the employee.
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That's the issue.
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Socialism wants to change that relationship, make it more collective, make it more democratic, make it more a relation of equals, not a relation of hierarchical, dominant, subordinate. That's not what capitalism allows, neither in its private form nor in its, in its state form. What China has showed is that you can get a more rapid rate of growth with the hybrid understanding its peculiarities than you can if it's all state like Russia, Soviet Russia, or all private, more like the United States and the United Kingdom. So they've become the model. And the United States denounces China as, as it becomes more of a hybrid itself. If you can't beat them, you end up joining them. I think that's an important thing for.
- [13:17]
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Us to understand, that in the new.
- [13:19]
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World order, we have economic nationalism and a hybrid of state and private employer employee capitalism. Whatever names they give themselves, whatever their ultimate goals may be, these are the realities that we face. And that means we also have to face the reality that an immense global working class is emerging, shrinking and suffering in the west, explosively growing in the east and in the global South. And that's going to change everything. As the capitalists in the west hunker down, worrying about how long they can survive, the emerging power of the capitalism of the east, the nationalism gripping them, and the state private hybrid. That is their way of coping with the time ahead. We've come to the end of the first half. In the second half of this program, I'm going to be talking about the two other key factors, the decline of the American empire and the big question, what comes next?
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Okay, why am I devoting this program to China? Is it because China is extremely important in the world today?
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Partly.
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Is it because China is kind of the new thing, changing the world today? Yep, that's another part of it. Is it because China is poorly understood, particularly in the United States, but in the west generally, yes. That's yet another reason China is changing and shaking the world in ways that are going to be central to our experience for the foreseeable future? It deserves a great deal more attention than it's getting. Or to be a bit more precise, it deserves attention that is balanced, that is trying to understand what's going on, and that is not propagandistic. Painting them bad so that we, we in the west look better by comparison.
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It's a childish game.
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It's dangerous. And it's not what we're here to do. What we're trying to do is get an overview that makes some sense. Whether you then end up supporting China, criticizing China, or some mixture that's left to you. Okay, first of all, let's begin by saying it really is a phenomena what China has done. It deserves everyone's awesome recognition of that fact. What do I mean? Well, it's. This is the greatest story of economic growth that we probably have in the history of the human race. Here was a country over the last 70 years, the largest by population in the world, with well over a billion and approaching a billion and a half people in unspeakable poverty. As little as 70 years ago, one of the great horror stories of poverty in the world. And in those 70 years this country has raised a billion or more of those people out of abject poverty and into the modern world with that sized population that's never been done before. If you take all of Europe together.
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Which is a quarter of the population.
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Of China, it took them two to 300 years to do something comparable to the economic growth record of China. And in 70 years it is extraordinary. Many other features of China are less extraordinary. There are good things and bad things one can say about it, no one is denying that. But when it comes to economic growth, to escape from poverty, to produce a modern economic growth reality in terms of the production and distribution of goods and services. That goal, which is the major goal of most people on this planet and has been for the last 70 years, there's one outstanding performer and no one else comes close, that's the People's Republic of China. And whatever else you may think about or decide about this society, pretending that what I just said isn't the case is not going to make your understanding one whit better. It's going to make it worse. And how is it different and unique in still other ways? Well, it's not like the competition for example, that the United States has over with other capitalist countries. We are now competing with China, we in the United States, Western Europe and the United States on one hand, China and its allies, the so called brics on the other. These are the two great competing blocs. And I mean really competing. China outproduces the United States in many commodities. China has achieved levels of technological sophistication with which the United States really has to struggle to keep up. That's why President Biden is throwing money at semiconductor chip producers. That's why we have a 27.5% tariff against the Chinese electric vehicles because they are the dominant electric vehicles being produced by in the world today in terms of quality and price. So there's stiff competition, but it's unlike anything the United States has before because before our competition was in other capitalist countries. Britain, France, Germany, Italy, Japan. Now the competition is with a society that doesn't call itself capitalist, that calls Itself socialist, that has an enormous role for the government and one for a Communist party that is clearly in charge. That's new, that's different, and that's going to produce different outcomes. It's also a competition not like the one the United States had with the Soviet Union.
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Why?
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Because China has, for most of the period of the last 70 years, now for more than half of it, openly welcomed capitalist enterprises to develop inside China, both those owned and operated by Chinese individuals, private capitalist enterprises, and those brought over from Western Europe, Japan, the United States. There is a private sector, roughly half.
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The economy, and there is a state.
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Sector, the other half. This is unlike anything that existed in the relationship between the United States and the Soviet Union.
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So you have a peculiar relationship.
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There's really more collaboration between the United States and China than there ever was economically between the United States and the Soviet Union. But there's also economic competition much more profound than existed between the United States and the Soviet Union. In other words, the Chinese experience, especially in its relationship to the United States and to the larger private capitalist world of Western Europe, North America and Japan, is unique in many, many ways. And that has to be understood, given that China is now the second most developed and powerful influence on the world economy and might very well before the end of this decade, be the number one shaper of world economic events. To get us to understand this extraordinary achievement and this extraordinary reality that we live in, as always, we need to do some history. And the history I'm going to be doing with you briefly in the rest of the first half of today's program is designed to get us set to understand the economics and politics of of China today. Xi Jinping, the current leader in China, speaks of a hundred years of humiliation, roughly 1850 to 1950. A hundred years during which China felt itself to be then and now humiliated as Western countries particularly took over bits and pieces of China, fighting wars, taking over whole cities and plunging the society into levels of poverty much greater than what they had seen before. On the other hand, there never was a full colonialism. China kept its independence, unlike India or Indonesia or most of Africa and so on. So you have a mixture of humiliation and independence. There were never settler colonists, no Europeans settled in to large parts of China. Yeah, they had places in cities along the coast, but they never took over the country the way, for example, they did in South Africa or New Zealand or Australia or the United States or Canada. And I could go on more modern. Once the 20th century came, two terribly interesting things happened almost at the same time. A Final war defeating the Chinese, known as the Boxer Rebellion, saw the Europeans come together to deal a pretty devastating blow and to show that they were the dominant power, even if they didn't settle into a colonial relationship. And not so surprisingly, very few years after the Soviet revolution in China, in Russia, excuse me, in 1917, a few years after that, Chinese do a revolution too. Chinese Communists, inspired in part by the Russian Revolution, begin the Long March, begin the movement led by Mao that would eventually, in 1949, lead to the victory of the Communist Party and its army over the friendly to the west army of Chiang Kai Shek. The little bit of capitalism that had been implanted in China after the Boxer Revolution by the Western powers who apparently hoped over the long run to develop a more complacent, subordinated capitalism in China. Their plans were defeated. A civil war brought the Communists to victory in 1949. They were in alliance with the Soviet Union from 1949 to around 1960. Then the Soviet Union and China split, with bitter, difficult, even occasionally military conflict between them. The Chinese then undertook a development of their own, different from the Soviets in Russia. Yes, socialism has many forms. And for the last 60 years, China has gone its own way to produce its own distinctive version of socialism or communism, depending on which word you think fits better. And it's in these last 60 years, and particularly in the last 40 or so, that the achievements with which I began today's program were made. It became a powerful country. It became a socialism with Chinese characteristics. I'm about to go in them as soon as we go to the second half of today's program. But I want to stress that it was against the humiliation of those hundred years that the Chinese undertook to prioritize becoming once again the UN humiliatable, powerful enough, rich enough, productive enough to not.
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Be humiliated by the west again.
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That is their central theme and that they have achieved. Stay with us. We'll be right back for the economics and politics of this phenomena of China.
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The idea of not another empire, of.
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A collective community, of of nations being the next phase of human history is an idea that inspired the League of Nations and the United Nations.
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But maybe now we actually have it.
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If the Chinese were to go in the direction outlined by brics, of doing this collectively rather than one country like the United States. The United states dominates the G7 in a way the Chinese do not yet dominate the BRICs. Those are the two roads into the future that China is now deciding between. I hope you have understood the value and the worthwhileness of this discussion of the phenomena of China. And as always, I look forward to speaking with you again next week.