Podcast Summary: Economic Update with Richard D. Wolff

Episode: Capitalism's Definition is not Innocent
Date: August 13, 2020
Host: Richard D. Wolff

Episode Overview

In this episode, Richard D. Wolff challenges the conventional and widely-taught definition of capitalism. He argues that the standard framing—centered on "private enterprise" and "free markets"—is not an innocent, neutral description but rather a manipulated ideological tool. Wolff seeks to show that the real distinguishing feature of capitalism is the employer-employee relationship and that sidestepping this truth sustains myths about capitalism’s character and virtues. He contrasts this approach with other systems (slavery, feudalism, communism) and delves into why the conventional definition persists, highlighting political and ideological motivations.

Key Discussion Points & Insights

1. Dominant Definition of Capitalism (00:20 - 07:00)

• The textbook definition presented by capitalism’s defenders is "a system of private enterprise and free markets."
  • "Anybody, any private citizen... can start, own, operate a business free of government interference..." (01:05)
  • Capitalism opposes government intervention, equating regulation or government planning with being "unfree"—not true capitalism.

2. Purpose and Role of Definitions (07:01 - 09:30)

• Wolff elaborates on the function of definitions: to meaningfully distinguish something from similar things.
  • Definitions ought to focus on what is unique: "We want to distinguish something," e.g., chair from other furniture. (07:39)

3. A Distinctive Definition: The Employer-Employee Relationship (09:31 - 18:10)

• Wolff proposes that capitalism is uniquely organized around the employer-employee relationship, unlike other systems:
  • "[In capitalism,] a small group of people, very small, are the employers. They decide how many other people they want to have working there..." (10:24)
  • The majority (employees) exchange their labor for wages and are directed by a minority (employers) who own and control production.
  • After work, employees do not own the produced goods or what happens with them. (12:00)

4. Contrasting With Other Economic Systems (18:11 - 22:30)

• Slavery: Masters own the people who do the work; no employer-employee relationship—ownership is the distinction.
• Feudalism: Lords and serfs enter a mutual, ceremonial obligation; again, no employer-employee relationship, no wage system.
• Communism: (Based on Marx) No employer-employee split; production directed by a community of equals—"one person, one vote."
  • "In communism... there is no employer, employee, relationship. That's gone, that's done away with." (16:46)

5. The Flaws in the Conventional Definition (22:31 - 28:10)

• Markets and private enterprise exist in slave, feudal, and communist systems; therefore, they are insufficient as defining criteria for capitalism.
  • "You go to the south in the United States... you will visit in every major city the slave market... They bought and sold what slaves produced..." (22:46)
• Incentives and space for "private" initiative exist in all systems; even capitalism sometimes suppresses new enterprises (e.g., patents, monopolies).

6. State vs. Private: A False Distinction (28:11 - 32:30)

• Every system has displayed both private and state enterprises and a mix of market and regulation. The presence of a state enterprise does not erase the system’s type.
  • "It's bizarre for capitalists... to think that the presence of a state enterprise that hires people just like a private capitalist does, somehow means you don't have capitalism." (29:44)
• Capitalism’s defenders’ focus on "private enterprise" and "state" is thus misleading.

7. Why the Conventional Definition Dominates (32:31 - 44:45)

Wolff identifies three reasons:

a. Concealing Anti-Democratic Structure (33:00 - 36:35)

• The employer-employee relationship is "very clearly and obviously undemocratic... a tiny group of people make all the decisions for a large group... you have no authority at all."
  • "You have a system in which a tiny group of people sitting at the top of the corporate ladders run this society." (36:48)
• Using the accurate definition renders the system vulnerable to critique—capitalism as "the antithesis of democracy."

b. Hiding Parallels With Earlier Systems (36:36 - 39:45)

• Despite differences, all major systems (slave, feudal, capitalist) have a "dominant-subordinate" hierarchy: "The masters control the slaves, the lords control the serfs, and guess what? The capitalists control the working class." (37:50)
• This undercuts capitalism’s revolutionary self-image as an engine for liberty, equality, and fraternity.

c. Celebratory Mythology of Free Enterprise (39:46 - 44:45)

• The "free market" narrative provides positive imagery and justifies the system—stories of self-made successes.
  • "These kinds of stories... are heard every day. They're the kind of storytelling sometimes called mythology, with which a system celebrates itself." (40:47)
• Other systems also allowed for private initiative; capitalism historically and currently thwarts competition (e.g., patents, monopolies).

8. Markets Exist Across Systems (44:46 - 47:10)

• There’s no system in the last 3,000 years that hasn’t had some form of market, whether free or regulated.

9. Conclusion: The Non-Innocence of Definitions (47:11 - end)

• The dominant definition of capitalism isn’t about clarity—it’s about serving the ideology and protecting the status quo:
  • "The only reason you haven't heard before of the employer employee relationship... is because the people who run capitalism are afraid of where that better definition leads." (47:30)
  • "There's nothing innocent about a definition." (47:58)

Notable Quotes & Memorable Moments

• On the purpose of definitions:
  "The point of a definition is to find and focus on something unique about whatever it is you're trying to define..." — Richard Wolff [07:39]

• On the essence of capitalism:
  "In capitalism, that way is the employer, employee relationship, very interesting way of doing things. A small group of people, very small, are the employers..." — Richard Wolff [10:24]

• On the comparative structure of economic systems:
  "The masters control the slaves, the lords control the serfs, and guess what? The capitalists control the working class." — Richard Wolff [37:50]

• On the anti-democratic reality of capitalism:
  "It's worse. It's anti democratic. Why? Because a tiny group of people make all the decisions for a large group of people and the large group of people are excluded from those decisions." — Richard Wolff [33:47]

• On the ideological motivation to maintain the conventional definition:
  "The only reason you haven't heard before of the employer employee relationship... is because the people who run capitalism are afraid of where that better definition leads, so they prefer a poorer one because it serves the ideological function of protecting capitalism." — Richard Wolff [47:30]

Timestamps for Key Segments

| Timestamp | Segment Description | |------------|--------------------------------------------------------------------------------------| | 00:20 | Introduction of the conventional definition of capitalism | | 07:01 | Explaining the purpose and function of definitions | | 09:31 | Employer-employee relationship as defining feature | | 18:11 | Contrasting with slavery, feudalism, and communism | | 22:31 | Critique of markets and private enterprise as defining features | | 28:11 | State vs. private enterprises in various systems | | 32:31 | Three reasons the conventional definition persists | | 33:00 | Anti-democratic nature of employer-employee relationship | | 36:36 | Parallels between capitalism and previous exploitative systems | | 39:46 | Myth-making about free enterprise | | 44:46 | The ubiquity of markets across all economic systems | | 47:11 | Concluding thoughts on the ideological function of definitions |

Summary

Richard D. Wolff’s episode "Capitalism's Definition is not Innocent" dismantles the widespread, seemingly neutral definition of capitalism as "private enterprise and free markets." Wolff asserts this definition fails to meaningfully distinguish capitalism from earlier or alternative systems, all of which have displayed markets and private ventures. He argues the unique and defining characteristic of capitalism is the employer-employee relationship—a fundamentally hierarchical and undemocratic system in which a small group wields economic power over the majority. The persistent use of the conventional definition, Wolff explains, has ideological roots: it hides capitalism’s anti-democratic nature, obscures uncomfortable parallels to slavery and feudalism, and perpetuates self-justifying myths. Definitions, according to Wolff, are never innocent—especially when they serve power.