Economic Update with Richard D. Wolff
Episode: Capitalism’s Worst Nightmare
Date: October 29, 2020
Host: Richard D. Wolff (Democracy at Work)
Overview: Main Theme
In this episode titled “Capitalism’s Worst Nightmare,” Richard D. Wolff responds to listener questions about the future trajectory of the U.S. (and global) economy in the face of the COVID-19 pandemic and associated economic collapse. Wolff uses historical analysis, drawing parallels between the decline of feudalism in the 14th century (amid the Black Death) and the current moment, arguing that we are witnessing a profound and transformative crisis for capitalism—one that challenges the system’s very foundations and may give rise both to increased state intervention and to alternative, post-capitalist modes of organizing economic life.
Key Discussion Points & Insights
1. The Nature of the Crisis: Capitalism’s “Worst Nightmare”
- Recurring Instability: Capitalism, according to Wolff, has always been an unstable system, experiencing periodic downturns every four to seven years, resulting in massive job losses and business collapses (01:24).
- Compounding Crises: The true “nightmare” scenario occurs when an economic downturn coincides with a non-economic disaster—such as war, climate disaster, or, crucially, a pandemic. COVID-19 has created this “worst case” (03:45).
- Failed Coping Mechanisms: The usual measures for managing economic crises—monetary stimulus, limited government relief—are insufficient for this scale of overlapping disaster (04:20).
"We are living through what really should be called capitalism's worst nightmare...an economic downturn as bad as the Great Depression, and at the same time, a global health catastrophe."
—Richard Wolff (02:00)
2. Systemic Inequality as Shock Absorber
- Blame & Burden Deployment: Capitalism historically protects its core by shifting the brunt of downturns onto the most marginalized—African Americans, Latinos, women, and immigrants, who are most quickly hired during booms and fired during busts (06:20).
- Scale of Crisis Overwhelms Old Patterns: Even these strategies of shifting pain are overwhelmed; the scale of the pandemic and economic collapse has spread suffering more broadly and deeply (09:05).
3. Historical Parallel: The Collapse of European Feudalism
- Feudalism and the Black Death: The 14th-century crisis in Europe combined economic decline with a deadly pandemic (the Black Death), resulting in huge societal disruption and the death of a third of Europe’s population (12:09).
- Who Suffered and Systemic Vulnerability: The majority of deaths were among the serfs—the working masses. Their deaths and illness drove manors and cities into further chaos, revealing the inadequacies and vulnerabilities of the system (12:55).
"The serfs...the mass of people who died were serfs. Like the mass of people who are dying now are working class people, not employers, employees."
—Richard Wolff (13:30)
4. Feudal Responses: Centralization and Emergence of a New Economic System
- First Response—Centralization: To restore order, feudal society centralized power, creating the institution of the monarchy or the “super lord” to enforce order and stop systemic collapse. This marked the rise of absolute monarchies (16:27, 26:12).
- Second Response—Birth of Capitalism: Discontented serfs flocked to cities, escaping their traditional bonds, and began wage labor. This was the embryonic stage of capitalism—the employer/employee system—growing within the shell of feudalism (20:05).
"They took one of the bigger lords and made him the super lord...and that's the beginning of this kind of monarchy system that then became the so-called absolute monarchies of late feudalism."
—Richard Wolff (16:57)
5. Reapplying Historical Lessons to Today
- State Power Resurgent: Just as feudalism created the powerful central state, today’s failure of laissez-faire approaches is pushing societies towards greater government intervention and planning (28:37).
- Cites the relative success of countries with strong state responses to COVID-19 as opposed to the failures of decentralized, market-driven states like the U.S., U.K., Brazil, and India.
- Predicts a “return to a government actively involved,” reminiscent of the Roosevelt New Deal during the last major capitalist crisis of the 1930s (30:40).
"We're going to demand that the government get us ready for the next economic downturn, get us ready for the next pandemic, get us ready for the worst nightmare of their happening together."
—Richard Wolff (29:12)
- Seeds of a New System: Interest in Worker Co-ops/Alternative Economies:
Parallel to the historical move from feudalism to capitalism, Wolff describes a growing interest in non-capitalist alternatives, especially worker cooperatives—collective, democratic workplaces that reject the employer/employee division (33:00).- Critiques the irrationality of capitalist unemployment and underutilized productive capacity, proposing a worker co-op economy as an alternative that wouldn’t tolerate such waste and instability.
- Data point: U.S. capacity utilization rate is only 70-71%, meaning nearly a third of productive resources stand idle while tens of millions are unemployed (35:29).
"A worker co-op economy would never allow unemployment because it is so irrational...We could make a great society. It's the capitalists who hold us back."
—Richard Wolff (35:55)
Memorable Quotes & Moments
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On the uniqueness and severity of the crisis:
“Not to downplay it and not to pretend that solution is around the corner, it isn’t. This is as bad as this kind of crisis for capitalism can get.” (04:12)
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On the historic function of marginalized groups in capitalism:
“You know who those people were, you really do. They're the African American community, they're the Latino community, they're women and they are immigrants...you throw the immigrants back to where they came from. You throw the women out of the labor force, back into the household...and you throw African Americans into the pool of the unemployed. I mean, we do know that is our history as a nation.” (07:26)
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On why the downturn today is different:
“We are in trouble. And we can't rely on what the system has also done, which is a tragedy. But I have to speak to you about it. Capitalism has been unable...to cope with its recurring crises. Capitalists with half a brain have always known that their worst nightmare could happen...That you could have one of these downturns at the same time as you had a non-economic crisis, and then where would you be? And the answer is where we are now.” (05:24)
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On historical significance:
“The system was falling apart hard. So what did they do? Well, in the time remaining for the first half of the show, I'm going to tease you by telling you one of the things they did, and then we'll talk about the second one and how capitalism is now looking to go down a similar road.” (16:00)
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On alternative futures:
“Just as in their way, the serfs of feudalism voted with their feet to go to the cities and to get out of the Lord Serf relationship. And that pressure built and it didn't take all that long, historically – couple hundred years...to get to the point where, where the new system threw the old one into the dustbin of history.” (38:10)
Timestamps of Important Segments
- 00:10 — Opening; framing the question: Where are we going?
- 02:00 — Introduces concept of “capitalism’s worst nightmare”
- 06:20 — Explains use of marginalized groups as shock absorbers
- 12:09 — Historical parallel: Feudalism and the Black Death
- 16:27 — Centralization and the rise of monarchies as a response
- 20:05 — Birth and growth of early capitalism inside feudalism
- 26:12 — Completion of feudal responses: King as super-lord
- 28:37 — Today: Contrast of government responses to crisis
- 30:40 — Reference to the Roosevelt New Deal
- 33:00 — Critique of capitalism’s continued instability, turn to worker co-ops
- 35:29 — U.S. capacity utilization rate & underemployment
- 38:10 — Alternative futures, conclusion: potential for systemic change
Conclusion
Richard Wolff argues that the current crisis is both an indictment and a historical turning point for capitalism, paralleling the collapse of feudalism in the 14th century. The pandemic exposes and compounds capitalism’s chronic instability, inability to protect public health, and systemic marginalization. Based on historical precedent, Wolff foresees two likely transformations:
- An increase in state power and economic planning to restore order,
- The emergence and growing attraction of alternative economic models—especially worker cooperatives—that address fundamental inequities and instability.
Both the severity of the crisis and society’s responses, Wolff insists, will resonate for decades to come, shaping the next era of economic life.