ECONOMIC UPDATE: CAPITALISM VS DEMOCRATIC SOCIALISM

Host: Richard D. Wolff (Democracy at Work)
Date: October 26, 2015

Episode Overview

In this wide-ranging episode, Professor Richard Wolff examines current economic events and then pivots into a detailed discussion on the historical and contemporary debate between capitalism and (democratic) socialism. Against the backdrop of headline news—including mergers, homelessness, and political upsets—Wolff spotlights Bernie Sanders’ embrace of the democratic socialist label as a transformative moment for U.S. politics. The episode unpacks what "democratic socialism" means, why it has been marginalized in American discourse, and why open debate about economic systems is essential for a healthy democracy.

Key Discussion Points & Insights

1. Corporate Mergers and Monopoly Dynamics (01:55–08:09)

• Anheuser Busch InBev and SAB Miller Merger (01:55):
  Wolff discusses the announced $104 billion acquisition, underscoring that a single company will control about a third of global beer supply.

  • “Beer companies like to fool the public by having lots of different brands so that you imagine you have lots of choice, when in fact, you don’t.” (03:10, Wolff)

• Consequences of Monopolies:
  Monopolization leads to a reduced number of producers, less choice for consumers, and greater opportunities for price gouging and tax avoidance.

• Tax Avoidance by Multinationals:

  • Example: Anheuser Busch InBev paid less than 1% in Belgium, far below the nominal 34% rate (04:34).
  • “That’s less than the tax rate being paid by most of the individuals listening to this program as I speak.” (05:50, Wolff)
  • Starbucks is cited for similar behavior in the Netherlands.

2. The Influence of Billionaires in U.S. Politics (08:10–10:20)

• Billionaires and Election Costs:
  A witty exchange between hedge fund manager William Ackman and Michael Bloomberg reveals the triviality of political campaign costs for the ultra-rich:

  • "'It’s just one quarter’s dividend.' ... For them who play in the world of billions, it’s pocket change to throw at an election...where they could stand to do so well for an investment of so little." (09:00, Wolff, quoting Ackman)

• Corruption of Politics by Money:
  This highlights how easily wealth translates into disproportionate political influence, eroding democratic processes.

3. Homelessness in Hawaii: Economic "Recovery" in Question (10:25–14:25)

• Alarming Statistics:
  Hawaii has the highest homelessness per capita of any U.S. state, with a 23% growth in homelessness and 46% growth in homeless families in one year.

• Cynical "Solutions":
  The declared state of emergency and $1.3 million aid amounts to only $179.06 per homeless person for the year.

  • “That’s going to really make a major difference in a homeless person’s life that the state of Hawaii has assigned $179 for the year to help them.” (13:30, Wolff)

• Living Conditions Decried:
  Shelter spaces are converted shipping containers:

  • “Per couple ... 73 square feet. That’s smaller than the prison cells we put people into in jails across the United States.” (14:05, Wolff)
  • Wolff expresses outrage at the contrast between American ideals and the actual response to a crisis.

4. Canadian Federal Election as a Turning Point (14:40–18:45)

• Conservatives Ousted:
  Stephen Harper’s government, rooted in tax cuts for the rich and trickle-down ideology, is decisively defeated.

• Liberals’ Policy Differences:
  The new government commits to:

  • Raising taxes on corporations and the wealthy
  • Supporting the national health system
  • Addressing climate change

• Electoral System Implications:
  First-past-the-post allows Liberals to govern alone, but Wolff warns the people will hold them accountable if campaign rhetoric is not matched by policy action.

• Future of Left Politics in Canada:
  If Liberals fail, voters may turn to the New Democratic or Green parties.

5. Capitalism, Individualism, and the Rise of Socialism (Q&A) (18:50–27:55)

Question from Listener Jamie:

"Is capitalism really about the individual, while socialism is about the collective?"

Wolff’s Response: Historical and Contemporary Analysis

• Origin of the Story (19:25):
  Capitalism emerged trumpeting individual freedom, in contrast to feudalism’s rigid hierarchies.

• Reality Check (21:00):
  Over time, it became clear that capitalism’s promise of individual opportunity was realized only for the few; most people remained subordinate, their potential stunted.

  • “Capitalism provided for the individualism of the few and the subordination ... of the many. And those people’s criticisms became known as socialism.” (21:30, Wolff)

• Socialist Ethos:
  Socialists do value individuals—but for everyone, not just an elite:

  • “So socialists celebrate individuality, but they do it for everyone. And that’s their difference with capitalism.” (22:55, Wolff)

• Implications for Today's Debate:
  As politics heats up (citing the U.S. and Canada), Wolff predicts this fundamental debate will return front and center.

6. The (Re)Emergence of Democratic Socialism in the U.S. (Second Half) (28:25–57:25)

Bernie Sanders’ Historic Candidacy (29:00):

• Significance:
  Sanders’ unapologetic acceptance of "democratic socialist" marks a historic shift in U.S. political discourse:
  • “That’s why it’s so significant that Bernie Sanders calls himself a democratic socialist, because in a sense, his is an historic breakthrough.” (37:20, Wolff)

Why Has Socialism Been Marginalized in the U.S.? (30:35–38:00)

• Historical Roots:
  Early 20th-century Socialist and Communist parties once flourished, especially during the Great Depression.
  During WWII, the U.S. even allied with the Soviet Union.

• Postwar Demonization:
  After WWII, anti-communist hysteria led to repression, marginalization, and stigma—ultimately erasing socialists (and even those slightly sympathetic) from political viability.

• Comparison to Europe:
  In sharp contrast, socialist and communist parties are stable features of European political life.

What is (Democratic) Socialism? (40:00–47:30)

• Socialist Critique:
  Socialists believe capitalism has failed its promise to deliver democracy and individual freedom for all. Instead, it has produced massive concentration of wealth and power.

• Classic Socialist Proposal:
  Transfer ownership of enterprises from private to public (government) hands, and replace markets with planning.

• Problems with State Socialism:
  “When you gave all of this power to the government ... there is a risk you take that the government will become dictatorial.” (45:10, Wolff)

  • This experience led many socialists to question or reject too much centralization.

• Democratic Socialism Defined:
  “Democratic socialists ... were critical of capitalism. They wanted to move in the direction of having people own and operate collectively enterprises ... but they were very careful to make that conditional on a genuine democracy that would hold such a government accountable from below.” (47:05, Wolff)

• Sanders’ Worker Co-op Proposal:
  Rather than more government control, Sanders advocates worker co-ops—enterprise ownership and democratic management by workers themselves:

  • “He wants to marry a democracy in where you live ... together with a democracy in the workplace, and hence his interest in co-ops.” (50:45, Wolff)

7. Why We Must Debate Economic Systems (54:00–57:10)

• Americans Debate Every System Except the Economy:
  Wolff catalogs robust debate on marriage and education, but near silence on capitalism versus alternatives.

• Risks of Silence:
  “If you don’t criticize the systems that make up your society, they rot ... you fail as a society to identify their weaknesses and their flaws, and then, of course, you can’t improve on them.” (55:45, Wolff)

• Bernie Sanders’ Historic Role:
  “Bernie Sanders is changing that. That’s why I call his candidacy historic ... he’s bringing us back. He’s helping America grow up, get out of the childish fear that prevented us from having a proper discussion and debate in our society for 50 years. Come out of the nighttime into the light. Bernie Sanders is helping us do that.” (56:35, Wolff)

Notable Quotes & Memorable Moments

• On Monopoly Mergers:
  “Beer companies like to fool the public by having lots of different brands so that you imagine you have lots of choice, when in fact you don’t.” (03:10, Wolff)

• On Wealth and Democracy:
  “For them who play in the world of billions, it’s pocket change to throw at an election ... You want to understand why money has corrupted American politics? There it is in a casual joking conversation between two New York billionaires.” (09:00, Wolff)

• On U.S. Response to Homelessness:
  “$179 for homelessness in a 7 by 10 foot cubicle for two people with an occasional access to the toilet. I wish I could say you must be kidding, but I know they’re telling the truth.” (14:15, Wolff)

• On Social Democracy’s Global Context:
  “Every European country has a Socialist party. In many ... the Socialist Party is either in the government, or it is the government, or it has been ... and nobody finds this bizarre, weird, strange, or unusual. The French government today is a government of the Socialist Party.” (32:00, Wolff)

• On the Meaning of Democratic Socialism:
  “Democratic socialists ... were critical of capitalism ... but they were very careful to make that conditional on a genuine democracy that would hold such a government accountable from below.” (47:05, Wolff)

• On the Need for Economic Debate:
  “If you don’t criticize the systems that make up your society, they rot ... Bernie Sanders is changing that ... he’s helping America grow up, get out of the childish fear that prevented us from having a proper discussion and debate in our society for 50 years.” (56:35, Wolff)

Timestamps for Key Segments

• Merge News: Anheuser Busch InBev & SAB Miller: 01:55–08:09
• Ackman-Bloomberg/Billionaire Influence in Elections: 08:10–10:20
• Hawaii Homelessness Crisis: 10:25–14:25
• Canadian Federal Election Analysis: 14:40–18:45
• Capitalism vs. Socialism—Q&A: 18:50–27:55
• Second Half Begins – Democratic Socialism & Bernie Sanders: 28:25
• Why Socialism Was Marginalized in U.S.: 30:35–38:00
• What is Socialism/Democratic Socialism: 40:00–47:30
• Worker Co-ops and Sanders’ Platform: 50:15–52:00
• Why Debate Economic Systems: 54:00–57:10

Conclusion

Throughout the episode, Professor Wolff delivers a clear, engaging, and historically grounded exploration of capitalism, socialism, and the specific tradition of democratic socialism that is re-emerging in American politics. Using news stories, international examples, and listener questions, he urges Americans to overcome the cultural taboos around economic debate, arguing that only through open, honest, and inclusive discourse can society address the shortcomings of its economic system. Bernie Sanders’ candidacy is presented not simply as a political contest, but as an essential step in maturing American democracy—reopening essential discussions on how the economy should serve the many, not just the few.