Economic Update: Capitalism - Slow-motion Implosion?

Summary

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Economic Update: Capitalism - Slow-motion Implosion?

Podcast: Economic Update with Richard D. Wolff
Host: Richard D. Wolff (with guest Dr. Harriet Fraad)
Date: January 3, 2019

Overview

In this episode, Richard D. Wolff critically examines recent global economic events, focusing on the lived realities of capitalism behind mainstream narratives. By analyzing developments from Canada, France, and Italy, Wolff highlights the system’s ongoing dysfunctions. In the second half, guest Dr. Harriet Fraad joins Wolff to unpack the social, psychological, and economic roots underpinning the US 2018 midterm elections, particularly the surge of women and young people in politics. The discussion reframes everyday economic and political struggles as symptoms of deeper systemic issues, while exploring how potential collective shifts might foster real change.

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PART ONE: International Case Studies of Capitalist Contradictions

1. Canada - The "Race to the Bottom" in Corporate Taxation

[00:10 – 05:12]

• Wolff discusses Justin Trudeau’s new budget, which includes corporate tax cuts to keep Canada competitive with Trump’s US tax reductions.
• He stresses this policy is not unique, but emblematic of a global "race to the bottom," where nations lower corporate taxes to attract or retain multinationals—ultimately depriving themselves of revenue for public goods.
• Notable Quote:

  “The only beneficiary here are the corporations who are playing the countries like suckers.” (A/Wolff, 04:13)

• Wolff argues the real effect of these policies is not job creation, but corporations receiving ever-greater benefits at the public’s expense.

2. France – Corporate-Friendly Government, Popular Discontent

[05:13 – 08:56]

• Despite pro-business reforms under President Macron, his popularity among ordinary French people plunges.
• Largest corporations praise France’s business environment, but on-the-ground dissatisfaction explodes into the “Yellow Vests” (Gilets Jaunes) movement, sparked by fuel price hikes.
• Notable Quote:

  “So he's doing what's necessary for the corporations, but not for the mass of people. And boy, the French know how to tell you that.” (A/Wolff, 07:06)

• Wolff details how anger crosses political boundaries, fueling mass protests while Macron and media focus on isolated incidents of violence.

3. Italy – Populist Spending and Social Investment

[08:57 – 12:44]

• Italy’s coalition government breaks European orthodoxy with a bold budget:
  • Lower retirement age to 62 for 400,000 people to improve elder support and open jobs for youth.
  • Introduction of universal basic income (~$900/month) for the most disadvantaged, targeting 6 million Italians.
  • New infrastructure program to spur jobs and rebuild the nation.
• Despite “right-wing populist” labeling, Wolff notes these policies echo classic social democratic reforms.
• Notable Quote:

  “Called a right wing populism. It’s a lot less right wing than you might think.” (A/Wolff, 12:37)

4. The Politics of Scapegoating Immigrants

[12:45 – 13:54]

• Wolff critiques Hillary Clinton’s advice to centrist parties to mimic right-wing anti-immigrant policies, viewing it as both a political and moral failure.
• He points out how both parties use scapegoating to mask capitalism’s failings.
• Notable Quote:

  “Beating up on caravans and sending the army. That’s political theater meant to distract people from the real problem, which is a capitalist system that isn’t delivering the goods to the mass of people.” (A/Wolff, 14:40)

5. Post-2008 Inequality and Quantitative Easing

[13:55 – 15:53]

• Wolff revisits 10 years since the 2008 crisis, describing how monetary stimulus fueled asset inflation, making the rich richer while the majority stagnated.
• Notable Quote:

  “Here in The United States, 10% of our people own 80% of the stocks. So as the stock prices went up, the rich who own the stocks saw their wealth go up. Therein lies the growing inequality.” (A/Wolff, 15:21)

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PART TWO: Social Change in US Politics – The 2018 Midterms

Guest: Dr. Harriet Fraad (mental health counselor, podcast host)
[15:57 – 28:30]

1. The ‘Year of the Woman’—But Not for All Women

[16:34 – 18:29]

• Dramatic increase in progressive female victories in Congress—especially women of color and Democrats.
• Republican women did not see similar gains.
• Fraad sees this not as a superficial ‘Year of the Woman,’ but as a deeper social transformation in gender roles.

2. The "Uncelebrated Revolution" in American Households

[18:29 – 22:32]

• Fraad argues a “revolution” in US households post-1970:
  • Deindustrialization and wage stagnation forced millions of (especially white) women into the workforce.
  • Dual burden: women not only work outside but resist patriarchal structures at home.
  • Surges in divorce and non-marriage arrangements. Majority of women now single.
• Notable Quote:

  “Before the 1970s, women were basically in an economic position of feudal serfs. ...Now the majority of women is single.” (B/Fraad, 19:02, 21:58)

3. Why Women Moved Left

[22:32 – 24:10]

• Women’s new status makes public programs and rights (healthcare, childcare, eldercare, wages) urgent.
• GOP perceived as actively hostile to these needs and women’s autonomy.
• Reaction to events like the Kavanaugh hearings and #MeToo movement further radicalize women.
• Notable Quote:

  “They need something better... it’s a revolution, a class revolution in the household.” (B/Fraad, 23:38)

4. Young People’s Political Awakening

[24:19 – 26:20]

• Voter turnout among the young doubled from last midterm, driven by economic hopelessness:
  • Ballooning student debt
  • Poor job prospects
  • Disenfranchisement from the American Dream
• Young voters overwhelmingly favored Democrats and change.

5. Barriers to True Democracy in the US

[26:21 – 28:30]

• Despite the surge, US voter participation lagged behind other democracies (e.g. Belgium 88%, Sweden 85%, vs US 49%).
• Fraad highlights structural obstacles:
  • Lack of automatic registration
  • Compulsory voting absent
  • Fewer political choices
  • Black and poor people actively kept from voting
  • Elections not held on weekends as in Europe
• Notable Quote:

  “There are choices of a socialist, a communist, a fascist, a capitalist and so on. And so people feel they have a voice. ...that’s very, very different from the pay-to-play system in the United States.” (B/Fraad, 27:23)

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Notable Quotes & Timestamps

• “The only beneficiary here are the corporations who are playing the countries like suckers.”
  — Richard D. Wolff, [04:13]

• “So he’s doing what’s necessary for the corporations, but not for the mass of people. And boy, the French know how to tell you that.”
  — Richard D. Wolff, [07:06]

• “Called a right wing populism. It’s a lot less right wing than you might think.”
  — Richard D. Wolff, [12:37]

• “Beating up on caravans and sending the army. That’s political theater meant to distract people from the real problem, which is a capitalist system that isn’t delivering the goods to the mass of people.”
  — Richard D. Wolff, [14:40]

• “Here in The United States, 10% of our people own 80% of the stocks. So as the stock prices went up, the rich who own the stocks saw their wealth go up. Therein lies the growing inequality.”
  — Richard D. Wolff, [15:21]

• “Before the 1970s, women were basically in an economic position of feudal serfs. ...Now the majority of women is single.”
  — Dr. Harriet Fraad, [19:02, 21:58]

• “They need something better... it’s a revolution, a class revolution in the household.”
  — Dr. Harriet Fraad, [23:38]

• “There are choices of a socialist, a communist, a fascist, a capitalist and so on. And so people feel they have a voice. ...that’s very, very different from the pay-to-play system in the United States.”
  — Dr. Harriet Fraad, [27:23]

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Key Insights

• Global capitalist policy responses consistently favor corporations, fueling international “races to the bottom” and widening inequality.
• Political and economic discontent (France’s “Yellow Vests,” Italy’s unorthodox budget) are direct products of policies that prioritize business over the majority’s welfare.
• In the US, a seismic social change—declining male wages, rising female workforce participation, and new household structures—is remaking the political map, especially among women and youth.
• Barriers to participation, limited choices, and institutional roadblocks hobble American democracy compared to other developed nations.
• Both hosts see hope in growing political engagement, but warn that real change depends on transcending the superficial electoral system and addressing root economic power imbalances.

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For further discussion, including extended interviews, the hosts invite listeners to patreon.com/economicupdate for the Economic Update Extra.

Transcript

[A]

Welcome, friends, to another edition of Economic Update, our weekly program devoted to the economic dimensions of our lives. Jobs, incomes, debts, our own, those of our children. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I hope that that has prepared me well to offer these economic updates to you. Beneath the veneer of all the hoopla and hype that the capitalist economic system that now rules the world is in good shape, which we hear way too often, the reality is really strikingly different. And I'm opening the show today by giving you three examples from three different countries, Canada, France and Italy, because they illustrate each in their own way, the reality and its difference from what the hoopla and the hype suggest. Let me begin with Canada, but before I do, let me speak to one Canadian in particular, Francine G. In the province of Quebec. Please send us your address, your mailing address again, so we can properly answer your last communication. We very much appreciate our Canadian audience as well, and so we want to be in communication, and we have mislaid your address. I want to speak about a statement made this last week by Prime Minister Justin Trudeau. He was introducing the government's new budget, and there we saw tax cuts for corporations. But I'm not so much interested in that. That's sadly, a frequent experience in capitalist countries where corporations wield the kind of power that gets them tax cuts. But I was interested in the justification Prime Minister Trudeau gave. They need to be competitive in Canada, he said, because the United States under Mr. Trump, having cut corporate taxes, might otherwise induce corporations to leave Canada and move to the United States to take advantage of the lower tax rates in the United States. Now, I'd like to comment on this in two ways. First, please notice that the rest of the world is taking steps to. To undo the very goals that Mr. Trump had when he cut taxes on corporations. The purpose, he said, was not just to give a gift to corporations, but to bring jobs. That is, to have companies leave wherever else they are and come to the United States now that we have taxed them less. Anyone who knows how this game is played knows, and knew then that other countries would not sit idly by and watch such a process. They would match. And that's what's happening. Mr. Trump promised results he cannot deliver since he doesn't control the taxes levied in and by other countries. So the first comment, see, we told you so. This is a theater of Mr. Trump's about bringing jobs to. The only concrete reality of the tax cuts on corporations was that they paid less. But here's an even more important this is called the race to the bottom. Every country will now cut taxes on corporations to keep their companies and to frustrate Mr. Trump's purpose. And as each country does it, it gives even more incentive to the countries that haven't done it to do it. And in fact, some countries will take this opportunity to cut taxes even further. So we can expect President Trump or whoever comes next to come back to the Congress, want more tax cuts to compete with the greater tax cuts initiated elsewhere. This races to the bottom. It means every government of every country in the world will have less money for from its corporations to do for its people. The only beneficiary here are the corporations who are playing the countries like suckers. Which reminds me of what we talked about last week when we saw the Amazon corporation playing the states and cities of America against each other and getting five and a half billion out of the states of Virginia and New York for locating headquarters there. This is a system set up to advantage corporations at the expense of public institutions and the public services they provide. My next example of a dysfunctional capitalism comes from France. How stark and so always it is with French politics. Mr. Macron, the prime minister there, president, excuse me, is a leader whose popularity among his people is unspeakably low. And he's been going down like a stone since he took power a year or so ago. But not for corporations. He's made France friendly to corporations. 74% of heads of foreign companies in France say that the country is an attractive place for business. That's according to an annual poll of 200 executives by Ipsos, a major polling operation. That's a 14 point improvement on last year and more than twice the 36% recorded in the same poll in 2016, before Macron became president. So he's doing what's necessary for the corporations, but not for the mass of people. And boy, the French know how to tell you that. Over the last week, a movement known as yellow jackets spread across France to hundreds and hundreds of French cities, where people dressed in yellow jackets went out into the streets, blocking traffic in protest against the government and the big oil companies there jacking up the price of fuel. The French don't like to wait for elections, or when they're angry about something, they want everyone to know it now. And Mr. Macron didn't do anything. Told them shame on them. Took advantage of some fracas in Paris to claim that there was violence. Standard operating procedure when you can't deal with the issue that people are bringing up all political persuasions, left wing and right wing of working people who pay the the exorbitant price of fuel in France were in the streets with their yellow jackets protesting the mass of people letting everyone know for them President Macron is a disaster. He should go. Meanwhile, for the big corporate executives they don't see what the problem is. Should strike Americans with a familiar note. Then there's Italy. Italy has a peculiar coalition government. On the one hand a popular movement, on the other hand, a right wing trying to take advantage of popular discontent. Well, they too recently announced their budget and here's what they're planning to do. They're planning to borrow lots of money, which makes the rest of Europe nervous. But it's interesting what they're going to spend the money on. Three things are taking the bulk of their money. I thought Americans and others might be interested. One, an improvement in pensions for older people. That's right. 400,000 people will newly be able to retire at age 62. They weren't able to do that before. Current law sets retirement at 65. Women will still be able to retire at 58 if they're employed and 59 if self employed. Wow. The government hopes that by making it easier. Hear me please. Easier for people to retire with decent incomes. Jobs will be created for young people aged 15 to 34 since the unemployment rate there is high for them and. And the government wants to do something for them. Oh, how interesting. Then there's a second decision. The government budget provides for a universal basic income. The five star movement, the big populist movement that's a dominant partner in the coalition, made that a promise of its campaign. Roughly $900 a month will be made available to all of those leased off. That together with other similar measures will affect around 6 million Italian citizens and cost a sizable amount of money. And finally, even though there are other aspects that are interesting, an infrastructure program to provide jobs. Rebuilding Italy. Interesting. Called a right wing populism. It's a lot less right wing than you might think. The next item is just a shake of the head. Hillary Clinton gave a speech and an interview in Europe and responded to right wing populism by suggesting that conventional governments, the establishments center left, center right, the Democrats in America and people like that need to realize that right wing populism was stimulated by the migration problem, the immigrants. And so she suggests to her own followers, we've got to refuse to help immigrants too. Wow. The failure of the Democratic Party to come up with anything that can appeal to the American working class angry about what has happened to it in the last 10 years. Anything comparable to the Republican party beating up on immigrants? Not that they had anything to do with that difficulty. Just as a whipping boy and as a scapegoat. The Democrats didn't come up with something. They tried to blame their election loss, Mrs. Clinton's loss, on the Russians. That didn't go real well. So now if you can't beat the Republicans, I guess the strategy is join them in beating up on immigrants. Closing your country to immigrants. A simple reminder. The United States is an economy of 325 million people. Undocumented immigrants, maximum 10 million. Nothing about those 10 million is the basic cause of the economic difficulties of a country of 325 million. Beating up on caravans and sending the army. That's political theater meant to distract people from the real problem, which is a capitalist system that isn't delivering the goods to the mass of people. Politicians like Mrs. Clinton can't criticize capitalism. She never has. Like Nancy Pelosi. We're all capitalists is what she says. So she can't go there. She can't identify the cause. The Republicans, meanwhile, have found a real good scapegoat to blame. And so she proposes to her followers to. To do the same. Shame, shame on her. Finally, in the old story of the rich got richer and the rest of us didn't, I want to look back on the last 10 years of the great crisis of 2008 that we are now 10 years beyond. The major policy response of western governments, including the United States, was monetary easing, called quantitative easing, pumping huge amounts of money, new money, into the economy. The Federal Reserve did it here. Central banks did it in most of the other developed countries, pumping all that money in. Well, where did it go? It didn't go into producing goods and services because the mass of people can't afford them. So the money went instead into the stock market, bidding up the prices of stocks. Well, a tiny minority of mostly rich people own most of the stocks Here in The United States, 10% of our people own 80% of the stocks. So as the stock prices went up, the rich who own the stocks saw their wealth go up. Therein lies the growing inequality. The crash of capitalism hurt the mass of people, but it made the rich richer. Therein lies a big lesson about how capitalism works and why it's having so much trouble around the world, which today's program tried to illustrate. Well, we've come to the end of the first half of economic update. I want to remind you all, please subscribe to our YouTube channel. It's an enormous help for us and it's an easy thing for you to do. If you're looking via YouTube, please also make use of our website, democracyatwork.info. that's all one word, democracyatwork.info and there you can follow us on Facebook, Twitter and Instagram. And of course, our special thanks to the Patreon community that is such an important part of our audience and such a support and encouragement for all we do. Stay with us. We'll be right back. Welcome back, friends, to the second half of Economic Update. Well, it's that time again when I am welcoming with great pleasure, Dr. Harriet Fraad. As many of you know, she's a regular on our program and she's a practicing mental health counselor and hypnotherapist in private practice in New York. Her work explores the intersections of American personal, economic and political life. I want to expand the introduction briefly by saying that Dr. Frad has a new, important project. It's a bi monthly podcast that explores these issues that she's undertaken in her conversations with us. How the economy in particular affects life at home, relationships at work, romance, and dating. The name of this podcast is Capitalism Hits Home, and you can find it on itunes, Google Play, and our website, democracyatwork.info if you would like to support this project and this podcast, Please go to patreon.com/capitalism hits home. So welcome again to our program.

[B]

Thank you. It's also on my podcast, harrietfraud.com is also on my website, the podcast.

[A]

So, all right, we're going to talk about these recent midterm elections. And what I wanted to ask you to do, as always, is look at them through the lens of psychology and economics intertwined. So on that basis, tell us what struck you about these midterm elections that others may not have given so much attention to, but that seem to you to be important things for us to take away from that remarkable outcome.

[B]

One thing I noticed that was widely noticed is that women won in Congress like never before. At least 32 women won. Women of color, Muslim women, Native American women, African American women, Palestinian American women. And so it was called the Year of the Woman. It wasn't really the Year of the Woman because Republican women didn't win. Only one Republican woman won over her, over the incumbent, whereas many, many of the Democrats did. And that is what I think is really significant. How come what's happening with women and men in this society to allow this to happen, to widely support female progressive candidates who are Democrats? Well, one thing that we have to look at is there's been an uncelebrated revolution in American households. Because before 1970, for white people who were much more of a majority before the 1970s, women were basically in an economic position of feudal serfs. They created useful things in the households for which they got a cut of their own labor. They got some cleanliness and order and cooked food, but. And some sexual services and emotional services, but that's what they provided to their husbands on the basis of their gender.

[A]

So let me ask you, why do you think that the Democratic women candidates were so successful against incumbents and breaking in to the Congress and the Republicans, much less so?

[B]

Well, there's been an unregistered, uncelebrated revolution in the American household, which is profound. And I think that's what showed. I'll explain it, which is that before the 1970s, women were basically on an economic position of feudal serfs in the household. They created use values, things you can use. They created order, cleanliness, cooked food, childcare, emotional care and sexual services. And that was a full time job. And luckily it was a full time job because women couldn't earn very much. And that was so for whites. Minority men never got the family wages that supported those families. So that wasn't true of minority men. But the vast majority before the 1970s in this country were white. Then what happened was as jobs became computerized, robotized and sent overseas and outsourced, there was no reason for the capitalists to give white men extra bonuses for being white and being male. So they wildly depressed men's wages, which have been basically flat since the 70s. That forced women out of the household. Millions of women out of the household, particularly white women.

[A]

Right.

[B]

Particularly white women who didn't have to be in the household before. It went from 25% in 1965 of women who worked outside the household to 60% by the year 2000. Very dramatic. And women who work all day are much less willing to then do what Arlie Hochschild called a second shift of taking care of men, taking care of the house and giving men emotional, extra emotional services because they feel bad since they're not making much money taking care of children, doing all the work of cleanliness and order and cooking and arranging for children and taking care of children. And they rebelled. Households split apart. The divorce rate surged. What also surged was the rate of people who don't want to spend money for a divorce, so they just Split. And that's people who don't have goods to fight over, who make private arrangements and call it quits. So marriage became very troublesome, and women are the ones rejecting marriage now, not men. And now the majority of women is single. And those women need different conditions. They need good public health care, Medicare for everyone medicine. They need child care, they need after school care, they need elder care, they need better salaries. They need social benefits like Europe has. And they could see that the Republicans not only are voting against their abortions and birth control, but down the line, denying them what they need while degrading them. And the evangelical movement that supports Trump and his Republican congresspeople has a rule set up by the Baptist Convention on men and women, which the fundamentalists follow, which is that women are subordinate to men, they are not allowed to supervise men in any position, and that men should be nice to women, but women have to subordinate themselves to men's rule. That's why they have a much higher divorce rate than anyone else. Because women, after working all day, are not really wanting to be bossed around by somebody who doesn't earn very much. He no longer has that entitlement.

[A]

So these needs of single women and of women under these circumstances, you're saying push them towards the Democrats?

[B]

Absolutely, because they need communal organization in the household, and they need a series of benefits that supports that and supports their role of homemakers and childcarers and health providers. They need that, and the Republicans won't give it. And they also have a different feeling about themselves as women, because we had a women's movement in the 1960s that let us know that we are full human beings. Recently, the Kavanaugh hearings spurred women to face just what some men think of women. That you can cup your hand over a screaming woman's mouth and laugh while you try to rape her. And that actually means you won among your frat crowd who laugh that there is a humiliation of women with a president who has 22 suits against him for sexual harassment. And they need something better and they need something different, and they need the conditions of existence for a communal household. It's a revolution, a class revolution in the household. The majority of women are single, single women, young mothers, employed women, college educated women voted for Democrats, and that's why they won.

[A]

And that has enormous implications going forward for the whole political culture of the country.

[B]

It certainly does. And it hasn't been recognized. And not that the Democrats are really great ones to deliver these things. They're just a better shot than the Republicans.

[A]

Was there A shift, as I believe the statistics suggest, in young people. Is there something that you can see going on with young voters that has some relationship to what you've just mentioned about women voters?

[B]

Twice as many young people voted in this election than had voted in the one prior. And that's because young people are beginning to realize they have no future here. It's not that global warming is going to consume the planet, which is possible, but it's they're not going to get a job they now, or at least.

[A]

Not the job that they were led to expect or the income they were expecting to earn, et cetera.

[B]

Right. Not a job that'll pay back their colossal student loans. Young people owe a trillion dollars in student loans. The student loan debt has doubled in the last 10 years, and they won't get the kind of job that could pay that loan off. And they're lost. Sometimes they can get an internship which are either badly paid or usually unpaid, so only the rich ones could afford it or go into even more debt. They're in trouble and it's beginning to occur to them they better enter the political arena or they'll continue to lose. And so I think something has happened with young people who also voted majority Democrat and against the incumbent Republicans. That's a very big change. But I must say that we have to remember that still Only just about 49%, this great surge in voter participation was under half the population of eligible voters, which is quite remarkable, particularly because in other democracies it doesn't work like that. I have a list of them, so I'll look down and look at it. So I remember Belgium had an 88% voting rate to our 49%. Sweden had an 85% voting rate.

[A]

Can I interrupt and ask you if we still have the majority of Americans who are eligible to vote, not bothering to do it, feeling so alienated from the whole process that even going for an hour to go cast a ballot in a nearby school or a polling place, and yet we saw a doubling. If you're right, that young people are beginning to recognize that one of the ways to solve their problems isn't some individual act, but rather a collective voting for a different political system or a different political party, then between that and what you've said about the women, then the direction of political change in the United States will at least have some hope attached to it that things could really change on this basis.

[B]

It would. However, one of the things that discourages democracy in the United States and encourages it in all the other democracies is that people are automatically registered to vote in most nations. Voting is compulsory in 22 countries in the world. And there are also choices. There are choices of a socialist, a communist, a fascist, a capitalist and so on. And so that people feel they have a voice. There are lots of different people represented. When I was in France, I was impressed how on television during an election there were eight people on the stage. They each had a limited amount of time regulated by the government, which was their TV time. They're not allowed to have TV ads to state their purpose and they only had two weeks in which to electioneer. So that's very, very different from the pay to play system in the United States where people aren't registered and are actually black people and poor people are driven from the polls.

[A]

We're coming to the end of this. I just wanted to add, I've always been struck that in most European countries elections happen on Sunday. That too, because you're not working and it's easier to go.

[B]

So that's another one.

[A]

We've come to the end of this, but I want to remind all of our viewers and our listeners that you can hear a continuation of this interview by going to patreon.com economicupdate where we will continue on what we call economic Update Extra. And for all of you, I will be talking with you again next week.