Economic Update with Richard D. Wolff

Episode: China and Inflation: Real Analyses, not BS

Date: October 28, 2021
Host: Richard D. Wolff, Democracy at Work

Overview

In this episode, Richard D. Wolff delivers critical, nuanced analyses on two major topics dominating global and US economic discourse: the rise and role of China in the world economy, and the realities behind inflation in the US. Wolff eschews simplistic, ideologically driven narratives, examining both topics through historical context, economic statistics, and a direct critique of mainstream media explanations.

Part 1: Understanding China’s Economic Transformation and Global Role

Setting the Stage: Context for Discussing China

• Wolff clarifies that his aim is not to defend or attack China, but to provide a balanced understanding (00:36).
• Emphasizes that meaningful debate is hindered by a resurgent ‘Cold War’ mentality—similar to the US-Soviet dynamic—making honest dialogue about China’s strengths and weaknesses rare (03:10).

China’s Economic Achievements

• China has “overcome its position as one of the poorest countries on earth…and it has done so in record time” (05:04).
• No country of China’s size/poverty level has achieved such rapid transformation to a “moderately prosperous developed industrial economy” (05:44).
  • "It took centuries in Western Europe...but the Chinese have the record." (06:02)

China's Unique Economic Model

• Notable economic growth from 1949–mid-1970s: about 6% per year, before market reforms.
• After opening to private capitalism in the late 1970s: short-term growth rose to about 9% per year, but recent slowdown to 6% — despite increased capitalism (09:45).
  • "It is more capitalist today than it has ever been before...so the growth of capitalism cannot possibly explain the rise of China’s importance." (10:24)
• China’s model: state-led economy with significant government oversight, combining private and public (state-owned) enterprises.
  • Private and public enterprises share similar hierarchical structures—“a board of directors hiring the top managers” (12:19).
  • However, neither sector has implemented democratization of the workplace (i.e., worker co-ops) (14:25).

China’s “Hybrid” Position in Global Socialism/Capitalism Spectrum

• Sits between Soviet-style socialism (mostly state enterprise) and Scandinavian models (mostly private, regulated by government) (15:30).
  • "[China] allows much more private than the Soviets ever did, but it has much more state enterprise intervention than the Scandinavians allow." (15:56)
• Its approach “has been so stunningly successful in terms of economic development” (16:24).

Cold War Hot-button Issues: Critique of Western Narratives

• Hong Kong: Not a symbol of lost freedom; context is British colonial rule versus Chinese rule; parallels to Puerto Rico and US congressional oversight (17:15).
  • “To make a big deal of Hong Kong and to forget Puerto Rico…this is a strange kind of argument, you know.” (18:44)
• Uyghur Issue: Criticizes selective outrage considering US record in Muslim-majority countries (19:10).
  • “For a country like ours that has just finished 20 years of continuous warfare destroying two Muslim countries…this is a strange argument to be having” (19:34).
• South China Sea: Views US objections as hypocritical given the region’s geography and history (19:55).
  • "The name tells it all. It’s their area, not ours." (20:00)
• Intellectual Property / Unfair Practices: Rebuts the narrative of Chinese theft, framing technology transfer as an open, up-front business exchange (20:24).
  • "Calling that intellectual property theft after the fact, that's kind of dirty pool." (20:53)

Part 2: Inflation—Myths, Realities, and Who Profits

Defining Inflation and Its Impacts

• Inflation = generalized, not universal, price increases. (22:14)
  • “If your wages were the same this July as last July, you could afford to buy 5.4% fewer goods and services because their prices had gone up.” (23:05)
• Primary sufferers:
  • People on fixed incomes (24:02)
  • The poor (24:23)
  • Working people, wage and salary earners—especially when wage rises are outpaced by inflation (24:40)
    • “Your increase in wages can’t even allow you to keep up.” (25:08)
• Some with pricing power (employers) or capital benefit from inflation.

Debunking Monetary Myths

• Challenges the idea of a direct, necessary link between increased money supply and higher prices (25:54).
  • Money only causes inflation when those who receive it choose to spend in ways that drive up prices.
  • “There’s no necessity that prices go up.” (26:25)
• Key point: Employers, a minority, set prices; inflation is fundamentally about employer decisions to increase prices for profit, not a natural or automatic result of increased money supply (28:35).

Memorable Analogy

• “The government, in most cases, has little or nothing to say. It’s an employer prerogative, and they hold onto it.” (29:10)

The Real Causes of Recent Inflation

• Employers’ PR narratives are often cover for profit-driven price hikes.
  • Quote: “When employers raise prices, they do it for the same reason they do everything else—they want to make more profits.” (29:40)
• “Labor Shortage” and Immigration Policy:
  • “There’s no labor shortage that dropped out of heaven. The labor shortage is a consequence of our immigration policy…” (31:41)
  • The quit rate is high because native workers don’t want jobs at wages and conditions previously accepted by undocumented immigrants (32:23).
  • Employers must pay higher wages, but use it as justification to raise prices beyond those added costs.
• Pandemic & “Making Up Lost Profits”:
  • Many businesses lost profits during COVID-19 shutdowns, now driven to inflate prices to compensate (33:23).
• Global Supply Chains as Excuse:
  • While interruptions in supply chains exist, companies leverage these disruptions to rationalize higher prices (34:07).
    • “Everyone who’s an employer is jacking up the prices. That’s why we have an inflation. They couldn’t have one unless employers did it, because they’re the ones who set prices and they’re doing it for their profits.” (35:42)

The Media and Public Discourse

• The dominant explanation (blaming government money-printing, etc.) distracts from the real culprit: profit-driven business decisions (36:18).
  • “Thank you for your attention. I hope you found these analyses of interest. And as always, I look forward to speaking with you again next week.” (37:20)

Notable Quotes and Memorable Moments

• “I am not here to defend China. China has strengths and weaknesses like every other country...But that's true of all countries in their own way.” (00:48)
• “There is no comparable example of a country that size and a country that poor becoming...a developed industrial economy in a few decades.” (06:00)
• “What’s remarkable about China is the control exercised by the Communist Party of China...mixing private and state enterprises.” (11:40)
• “There is no way to escape the reality that the People’s Republic of China...have not made that move [to democratized workplaces].” (14:20)
• “Employers set the price. Make sure you understand that. That's how a capitalist economy works.” (28:36)
• “When employers raise prices to make more profits, never say that's why you're doing it. Always come up with a story, preferably a plausible BS...” (29:45)
• “The labor shortage is a consequence of our immigration policy...maybe the people who ran the policy never thought it through, and maybe that's because it was politically convenient not to.” (32:05)
• "Everyone who's an employer is jacking up the prices. That's why we have an inflation." (35:42)

Timestamps for Key Segments

| Time | Segment / Topic | |---------|---------------------------------------------------------| | 00:10 | Introduction and explanation of approach | | 03:10 | Cold War dynamics mold the conversation about China | | 05:04 | China’s extraordinary growth record | | 09:45 | Debunking capitalism as sole driver of China's growth | | 12:19 | Comparison of internal corporate structures | | 15:30 | China's position between Soviet and Scandinavian models | | 17:15 | Hot-button issues: Hong Kong, Uyghurs, South China Sea | | 22:14 | Defining inflation and who it hurts most | | 25:54 | Challenging monetary explanations for inflation | | 28:35 | Who really sets prices: the role of employers | | 29:45 | Employer narratives vs. true motives (profit) | | 31:41 | Labor shortage, immigration policy impacts | | 34:07 | Supply chains: real and fictitious explanations | | 35:42 | Price setting and profit: the real story on inflation | | 36:18 | Critique of media narratives |

Summary Table: Major Takeaways

• China’s economic rise is an unprecedented achievement, not adequately explained by capitalism alone, but by a hybrid, state-controlled, strategic approach.
• US discourse on China is shaped by a revival of Cold War narratives, distorting actual analysis and focusing on “hot button” issues for political convenience.
• Inflation is not an unavoidable monetary phenomenon but a consequence of business decisions to raise prices, often excused by misleading narratives about labor shortages, supply chains, or wage increases.
• Across both topics, mainstream media and political discourse obscure underlying economic realities in favor of convenient, interest-serving explanations.

Tone and Style

Wolff’s delivery is simultaneously academic and conversational, mixing data, historical context, sarcasm, and blunt critiques of prevailing narratives. He pulls no punches in pointing out contradictions and self-serving logic in mainstream economics and policy debates.

This summary encapsulates the episode’s critical, in-depth analyses and should serve both as a standalone resource and as encouragement to engage with the full conversation for more nuance.