Economic Update with Richard D. Wolff:

Episode Summary – "Class and Socialism"

Date: July 14, 2015
Host: Richard D. Wolff

Episode Overview

This episode of Economic Update features Richard D. Wolff experimenting with a new, in-depth format: each half delves into a major topic requested by listeners. Wolff dedicates the first half to the concept of “class”—its meanings, evolution, and social implications—and the second half to clarifying the distinctions between capitalism and socialism. He aims to dispel long-standing confusions, tracing the real-world impact of these ideas across history and today’s political debates.

First Half: Understanding "Class" (00:03-29:42)

The Historical Meanings of Class

• Property as Class Distinction

  • The oldest concept: dividing society into rich (propertied) and poor (propertyless).
  • Ancient societies focused on the harmful imbalance: “Too few people were in the class of the rich, and too many were in the class of the poor.” (07:23)
  • Persistent critique: “The gap between rich and poor should be much narrower than it is. The rich are too rich and the poor are too poor...” (09:24)
  • Emergence of a middle class—people neither rich nor poor—as part of early analyses.

• Equality and Societal Well-being

  • Religious and philosophical traditions, from the teachings of Jesus (“throw the money changers out of the temple”) to the slogans of the French Revolution (“liberty, equality, fraternity”), have championed narrowing the rich-poor divide.
  • Memorable quote: “Equality speaks exactly to this notion of class, that societies are divided between rich and poor in ways that are damaging to community, damaging to solidarity, damaging to the long-run well-being of everyone—even the rich, even if they don’t understand it.” (11:28)

• Class as Power

  • A different but ancient view: divide society by power, not wealth.
  • Key distinction: Who gives orders (ruling class) versus who takes orders (the powerless).
  • “By defining class in terms of power, [Obama is] certainly part of the ruling class. By defining class in terms of wealth, he isn’t.” (15:04)
  • The ideal of democracy: “The best way to distribute power was equally: one person, one vote...” (16:50)

Class, Human Effort, and the Elusive Egalitarian Society

• Repeated Human Attempts at Equality and Democracy

  • Across history: efforts to combine wealth and power equality—“one of the central goals of people has been to challenge, to end, to transform class-divided societies...” (19:10)
  • Persistent failure to achieve both fully egalitarian and democratic societies.

• Explaining the Failure

  • Fatalistic argument: “It’s not the human personality, it’s not human nature... There will always be people who grab a disproportionate amount of wealth or power, or both.” (21:38)
  • Wolff’s critique: Fatalism defies history’s spirit of progress, innovation, and social change.

Marx’s Contribution: Class and the Organization of Production

• Transforming Production to Overcome Class Divisions

  • “Marx said... there was something in society we didn’t change that had to be changed if we were ever going to get equal distributions of wealth and equal distributions of power. And that was—the production process...” (24:06)
  • Examples: Slave societies (masters vs slaves), feudalism (lords vs serfs), and capitalism (employers vs workers).
  • “If you organize production [for a few to control and benefit], you will undermine any sustained movement towards an egalitarian society...” (25:29)

• Solution: Worker Self-Directed Enterprises

  • “...if we want a society that is democratic in its equal distribution of power and egalitarian in its equal distribution of wealth, we must begin by making the production process... a democratic, egalitarian way. We call that... worker self-directed enterprises.” (27:07)

Key Insight

• The meaning of “class” evolves from property and power to the way production is organized, urging clear definitions to avoid confusion in social analysis and conversations.

Second Half: Capitalism and Socialism—Clarifying the Distinctions (30:05–End)

Renewed Interest in Socialism

• Drivers:
  • Post-2008 dissatisfaction with capitalism’s crises, bailouts, and injustice.
  • Rising political profiles of open socialists, e.g., Kshama Sawant’s Seattle victory and Bernie Sanders’ 2016 Democratic Presidential primary campaign: “[He is] running in the Democratic primary and doing... rather much better than had been predicted by people who thought anyone who accepted that [socialist] label could not get to first base politically in the United States.” (33:24)

What is Capitalism?

• Defining Capitalism

  • A system where a small group (capitalists, employers) contracts with a large group (workers) for labor.
  • “The contract specifies what each will do for the other... Whatever the workers produce belongs to the employer. That’s the deal. That’s what capitalism is.” (36:20)
  • Workers always produce more value than they receive in wages; the difference is profit for the employer.

• Private vs. State Capitalism

  • Private capitalism: Employer is a private individual or group (e.g., shareholders).
  • State capitalism: Employer is the government or state officials; same employer-employee relationship remains.
  • Examples of state capitalist enterprises: Amtrak, the U.S. Post Office, Tennessee Valley Authority, public colleges/universities.
  • “It is nothing special or unusual that a capitalist economy has private capitalist enterprises alongside state capitalist enterprises.” (40:04)

• Confusion over State Involvement

  • Governmental activity often (wrongly) called socialism by private capitalists: “Sometimes private capitalists have gotten a little sloppy in their language and refer to the state when it runs its own enterprises as somehow socialist.” (41:48)
  • Receiving subsidies is not a distinguishing feature: both private and state capitalist enterprises are subsidized.

What is Socialism?

• The Core Idea

  • Not about state ownership, but about eliminating the employer-employee split.
  • “Socialism has always had the idea the society as a whole should be the employer... the society as a whole should together and democratically make the decisions about production and indeed about everything else.” (45:15)

• True Socialism vs. State Capitalism

  • Socialism = Democratic control of workplaces and economic decisions by workers themselves.
  • “Capitalism is not compatible... with that democratic ideal. Socialism claimed always for itself that it made democracy in the economy, and that without economic democracy there couldn’t be any political democracy worth its name.” (46:32)

• Historical Attempts & Their Shortcomings

  • Early socialists: Seize the state through revolution (e.g., Russia, China, Cuba) or evolution (e.g., current French government) to THEN transform the economy.
  • But in practice: They imposed regulations or created state capitalist enterprises, but didn’t eliminate the employer-employee division.
  • “...neither one of those was able or willing to make the transition. In other words, they got into power but then... could not or would not transform the economies.” (51:43)

• Stalin’s Redefinition and Lingering Confusion

  • Lenin saw the USSR as “state capitalism,” a step towards socialism, not the endpoint.
  • Stalin declared Russia’s state capitalism to be socialism—"what was a state capitalist system... now becomes the socialism everyone had thought was a radical alternative." (54:08)
  • Ever since, many have conflated any government activity or state enterprise with socialism, both in praise and criticism.

Memorable Quotes

• “Please, whatever your views... keep clear in your mind that socialism is a radical, different way of organizing production... that to have a state enterprise that is capitalist doesn’t therefore diminish the capitalist nature of your society.” (59:43)

Key Takeaways and Memorable Moments

• On class:

  • “Class” has been defined by property, by power, and—critically—by how production itself is organized.
  • Achieving equality of wealth and power requires democratically reorganized production (worker self-directed enterprises).

• On capitalism and socialism:

  • Both private and state-run enterprises can be capitalist if they preserve the employer-employee relationship.
  • Socialism, properly understood, means democratic, collective control over production. State capitalism is not socialism unless workers themselves make the decisions.
  • Lasting confusion from historical mislabeling and political maneuvering persists to this day.

Timestamps to Segment Key Content

• Definition and history of class: 00:03–17:05
• Class as property vs class as power: 10:52–17:05
• Democracy and class structure: 16:16–19:09
• Marx's analysis and production: 22:13–29:42
• Today's debate on capitalism/socialism: 30:05–35:00
• Capitalism & its forms explained: 35:00–42:30
• What is socialism? 44:47–49:49
• The socialists’ dilemma—evolution vs revolution: 49:50–51:22
• Failure to complete the transition to socialism: 51:22–57:45
• Stalin’s role and enduring confusion: 54:02–57:45
• Episode close and invitation to give feedback: 59:43–End

Closing Note

Wolff encourages listeners to keep both intellectual clarity and practical skepticism about political labels and economic reforms. Definitions matter; without them, debates on class, capitalism, and socialism devolve into confusion, hampering hopes for real progress.