Podcast Summary: Economic Update – Capitalism: Changed by its Contradictions

Host: Richard D. Wolff (Democracy at Work)
Date: December 27, 2018

Overview

In this episode, Richard D. Wolff critically examines how capitalism creates and amplifies contradictions that destabilize both society and politics. Using recent data and case studies (California poverty, childhood obesity, Trump’s tariffs), he illustrates how these contradictions are inherent to the system rather than incidental. In the second half, Wolff unpacks the deep connections between economic class structure in the US and the strategic oscillation between the Democratic and Republican parties, arguing that both work to sustain capitalism at the expense of systemic reform.

Main Discussion Points & Insights

1. The Contradiction of Poverty in Wealthy Places

[00:10 – 07:45]

• California’s Paradox: Despite being one of the richest states, 40% of Californians live at or near the poverty line; nearly half of children are in poverty.
• Latinos’ Disproportionate Poverty: Latinos are 39% of California’s population but make up 53% of the poor.
• Consequences for Children:

  “Children carry the effects of poverty throughout their lives. It affects their education, their training, their mental and physical well-being.”

• Critique of Redistribution Alone:
  Wolff warns that simply redistributing wealth after it has been unequally distributed fuels resentment and doesn’t address the root structure that generates inequality.
• Systemic Critique:

  “This is a system that shouldn’t be distributing it that way in the first place.”
  (07:00)

2. Poverty, Health, and Systemic Dysfunction

[07:45 – 11:50]

• Childhood Obesity as Symptom:
  Poorer areas have significantly higher rates of overweight and obese children, which in turn predicts adult obesity and a lifetime of health issues (diabetes, cancer, etc.).
• Policy Superficiality:
  Government policies banning unhealthy snacks at checkouts or restricting TV ads target symptoms, not underlying economic deprivation.

  "It isn’t the supermarket shelf and it isn’t the TV. It’s that you’re poor.” (10:45)

• Broader Implications:
  The costs of treating the consequences (health care burden, lost productivity) are “enormous” and are a direct result of systemic inequality.

3. Capitalist Contradictions: Trump’s Steel and Aluminum Tariffs

[11:50 – 22:30]

• Tariff Rationale & Mechanisms:
  Trump imposed tariffs on steel and aluminum, claiming national security – a rarely-invoked law not used by previous presidents.
• Winners and Losers:
  • Domestic steel producers (like US Steel, Nucor) benefit via price increases.
  • Downstream industries (auto, can manufacturers) lose, facing higher materials costs.
  • 20,000+ companies apply for waivers, while major producers lobby administration to block these waivers, maximizing their gain.
• Not About Jobs:

  "This has nothing to do with jobs. It has nothing to do with wages. It has nothing to do with working people at all.” (19:40)

• Global Side-Effects:
  The world’s largest steel company, ArcelorMittal (based in Luxembourg), has profited the most—with profits up 40%—by selling at higher prices in both the US and Europe, following retaliatory tariffs.
• Profit Flows Abroad:

  “The profits that ArcelorMittal gets from the Trump tariffs... can and will invest anywhere in the world. There’s no commitment here.” (21:00)

• Core Message:
  Tariff fights are intra-capitalist battles; ordinary people “just see where the chips fall.”

4. Politics as Capitalism’s Handmaiden

[24:00 – 44:30]

a. Historical Function of Politics

• Every economic system, Wolff argues, has “politics alongside it that supports it, that keeps it going.”

  “It’s the job of politics to fix the kinds of problems that an economic system can get itself into that it can’t get out of on its own.” (25:55)

• Politics does not always succeed in this supportive role—when it fails, the economic system is threatened.

b. The Three-Class Model

Wolff divides US society for analysis:

• Top 10%: Own and operate businesses; richest and most powerful.
• Middle 45%: Comfortable but not wealthy.
• Bottom 45%: Economically vulnerable; worst jobs or unemployed.

c. How the Parties Harness Economic Contradictions

The Democratic Party

• Traditionally speaks to the bottom 45%; promises welfare, job training, child support.
• Argues that the top 10% should support these programs for social stability.
• Divides internally:
  • Left flank: Wants to tax the rich to fund support for the poor.
  • Moderate/Right flank: Fears taxing the rich will lose essential donor/big business support.
• Pragmatic Solution: Provide some support to the bottom—but fund it mainly by taxing the middle 45%, keeping the rich happy.

The Republican Party

• Tells the middle 45% that Democrats are unfairly taxing them to benefit “the takers” at the bottom.
• Stokes resentment toward the poor, never suggesting taxing the wealthiest.
• No “left” exists within the GOP to challenge this narrative.

Oscillation & Systemic Stability

• Political power shifts between parties as each coalition’s strategy runs its course:
  • Democrats are voted out when the middle resents being taxed; Republicans are voted out when the bottom gets too angry at cuts.
• Key Point:

  “Both of them making sure that the top 10% is untouched, free to get richer and richer.” (40:30)

• This oscillation, Wolff asserts, is not a flaw, but the method by which American capitalism survives its own contradictions.

d. The Need for Political Transformation

• Wolff concludes that a new political party with a new agenda is the only real way forward:

  “To get beyond this system, we can’t anymore have a politics whose only existence, whose function is to reproduce capitalism, to sustain it by keeping the flow between Republicans and Democrats…” (43:55)

Notable Quotes & Memorable Moments

• On redistribution:

  “We shouldn’t be angry at one another as those who have get taken from to give who those who don’t have. Because guess what that leads to: tension, bitterness, anger, envy and maneuvers by those who have who don’t want to lose.” (06:15)

• On root causes:

  “Come on, you just told us in the report that well-off areas don’t have these problems. They go to supermarkets too, and they watch TV too. So apparently if you’re well off, it isn’t the supermarket shelf and it isn’t the TV. It’s that you’re poor. There’s a problem.” (10:35)

• On jobs and tariffs:

  “No one knows for sure whether the jobs gained in steel and aluminum will be more or less than the jobs lost in all the industries that cut back because they have to pay higher prices for steel and aluminum. No one has done that work. No one knows, because it doesn’t matter. This is a fight among capitalists and their government. For you and me, we’re just going to see where the chips fall.” (19:25)

• On politics and class:

  “So the Democratic Party goes to the top 10% and it says, you should support us in our taking care or at least helping the bottom 45% because it’s in your interest. It prevents the society from blowing up because capitalism creates a bottom 45% that live a pretty pinched life economically. And that’s dangerous for the system to survive. And that’s what the Democratic Party offers.” (31:25)

• On the oscillation between parties:

  “Oscillation between the two parties is how capitalism survives. It’s how it deals with its rough edges, with the people it doesn’t take care of, with the people it overtaxes by going back and forth and back and forth.” (41:30)

• On the need for new politics:

  “To get beyond this system, we can’t anymore have a politics whose only existence, whose function is to reproduce capitalism… To get out of this disaster requires a new political party with a new agenda.” (43:55)

Important Timestamps

• 00:10: Opening and framing: California poverty study
• 05:45: Systemic critique of redistribution
• 07:45: Link between poverty and childhood obesity
• 10:45: Critique of policy approaches to obesity
• 11:50: Trump’s tariffs: intra-capitalist conflict illustration
• 19:30: On jobs, tariffs, and what is really at stake
• 21:00: Profits of ArcelorMittal and global capital flows
• 24:00: Introduction to the politics-capitalism relationship
• 31:25: Democratic party role in managing capitalism’s bottom 45%
• 36:40: Taxation dilemmas and party divisions
• 41:30: Political oscillation as system stabilization
• 43:55: Concluding call for political transformation

Tone & Style

Richard D. Wolff’s style is direct, explanatory, and critical. He blends empirical analysis with systemic critique, often layering facts with commentary that underlines the urgency and dysfunction he sees in contemporary capitalism. Humorous quips (“You’ll love this…”) and rhetorical questions keep the delivery accessible and engaging for listeners not versed in economics.

Conclusion

This episode offers a sharp, critical perspective on how capitalism generates its own crises—social, political, and economic—by producing inequality and then using a two-party political system to paper over rather than truly resolve those crises. Wolff argues that only a new political approach, rather than the ongoing oscillation between Democrats and Republicans, can address capitalism’s deep-seated contradictions.