ECONOMIC UPDATE: CAPITALISM'S INSTABILITY

Podcast: Economic Update with Richard D. Wolff
Host: Richard D. Wolff (Democracy at Work)
Date: November 1, 2015

Main Theme & Purpose

This episode explores the ongoing instability inherent in capitalism, as evidenced through corporate scandals, inadequate penalties for corporations, deepening income inequality, the refugee crisis, ongoing debates about unemployment, and policy failures by institutions like the Federal Reserve. Richard D. Wolff critically examines current events to expose systemic problems, debunk mainstream economic narratives, and advocate for alternative solutions like worker self-directed enterprises.

Key Discussion Points & Insights

1. Corporate Irresponsibility and Minimal Penalties

• General Motors Recall Scandal
  • GM recalled over 2 million cars for a deadly ignition switch defect.
  • Officials covered up the flaw for over 10 years, causing at least 124 deaths and 275 injuries.
  • GM settlement: $900 million fine and $625 million compensation fund ($1.5 billion total)—less than 1% of GM’s 2014 sales ($156 billion).
• Wolff’s Assessment:
  • "The penalty for 10 years of death, mayhem, danger, hidden flaws, is less than 1% of one year's sales... The punishment is a small bump in the road for General Motors. What kind of society does that?" (04:00)
  • “What kind of message does it send... to all companies in terms of the costs of doing illegal, dangerous things?” (05:10)

2. Income and Poverty: The Reality Behind ‘Recovery’

• Analysis of Census Bureau’s 2014 Income and Poverty Report
  • Only the top 10% have recovered their pre-crisis incomes; 90% have not.
  • Median household income in 2014 was 6.5% lower than in 2006.
  • Poverty rate: 14.8%, or 46.7 million Americans, up 2.3% since before the 2008 crash.
• Media Framing Critique
  • Bloomberg headline: “The Richest Americans Are Winning the Economic Recovery”
• Wolff’s Conclusion:
  • “Let’s stop talking about an economic recovery, because for 90% of the people, there hasn’t been one.” (09:40)

3. Corporate Blackmail and Public Subsidies

• GE Moves Jobs Overseas
  • GE eliminated 500 U.S. jobs due to Congress ending Export-Import Bank funding.
  • Wolff labels corporate threats to move jobs as "blackmail." (14:30)

4. Refugee Crisis: Capitalism’s Global Fallout

• Europe’s Refugee Surge and Its Roots
  • Main source countries: Syria, Libya, Iraq, Afghanistan—all suffering from poverty and war exacerbated by failures and interventions.
  • Trauma and destabilization for both refugees and host countries.
• Economic Dimension
  • "Big businesses passed [crisis] on to little ones,...and in the world of countries, better-off countries stick it to the less well-off... At the bottom are countries like Libya, Iraq, Afghanistan, and Syria." (18:03)
• Labor Market Impact
  • Refugees often take jobs at lower pay, worsening local tensions.
• Moral & Systemic Critique
  • “If you want to avoid the refugee problem... then do something about an economic system that provokes these problems.” (22:35)
• Intervention Consequences
  • Costs of foreign policies never fully account for resulting refugee crises.

5. Unemployment and the Myth of 5% as ‘Full Employment’

• Rejection of Unemployment ‘Norms’
  • The mainstream view that “5% unemployment is the best we can do.”
  • 5% of the U.S. labor force = 7.5 million people out of work.
• Alternative Solution
  • Share unemployment: reduce everyone’s workweek by 5%, employ more people.
• Critique of Disparate Impacts
  • Unemployment hits minorities hardest, stoking social tensions.
• Quote:
  • “Why not share unemployment? Everybody would take a 5% reduction in their work week... The unemployed would get jobs because everybody would have 5% less of a job.” (27:25)

6. Federal Reserve Policy and Instability

• Low Interest Rates, Cheap Money, and Persistent Risks
  • Fed’s response to 2008 crash: unprecedented money printing, near-zero interest rates.
• Risks Created by the Cure
  • Cheap money fosters risky speculation and potential for inflation.
• Wolff’s Core Critique:
  • “Capitalism is an extraordinarily unstable system. If you lived with a roommate as unstable as the economy, you’d have moved out or demanded they get help long ago.” (38:00)
  • Every policy fix creates new problems, showing the system’s inherent fragility.

7. Worker Self-Directed Enterprises (WSDE): Not Mere Reform

• What Are WSDEs?
  • Businesses where workers are their own board of directors—true economic democracy.
• Beyond Traditional Socialism
  • Not just state ownership or planning, but transformation inside the workplace.
• Fundamentally Different from Capitalism
  • In capitalism, a tiny group (shareholders) elects the board; workers just work.
  • In WSDE, “The workers hire the managers... That’s not a reform. That’s a fundamental going beyond capitalism.” (48:00)
• Can Co-ops Compete? Mondragón as Evidence
  • Mondragón Cooperative (Spain): Seventh largest corporation in the country, 50+ years, starting with 6 workers, proving co-ops can outcompete capitalists.
• Collective Ownership Drives Efficiency
  • Workers with “skin in the game” care more, innovate more, and reduce waste.
• Quote:
  • “The identification of person with enterprise is much greater than what exists in capitalism.” (53:10)

Notable Quotes & Memorable Moments

• On GM Penalties:
  "The punishment is a small bump in the road for General Motors. What kind of society does that?" (04:00)
• On Economic Recovery:
  “For 90% of the people, there hasn’t been one.” (09:40)
• On Corporate Tactics:
  "Here we have it. Blackmail, it's called in other circles." (14:30)
• On Capitalism’s Global Fallout:
  “The best thing... is not to have the refugees need to leave. They didn’t want to. They don’t need this trauma in their life.” (19:30)
• On Sharing Unemployment:
  “Why not share unemployment? Everybody would take a 5% reduction in their work week... The unemployed would get jobs because everybody would have 5% less of a job.” (27:25)
• On System Instability:
  “If you lived with a roommate as unstable as the economy, you’d have moved out or demanded they get help long ago.” (38:00)
• On Workplace Democracy:
  “The workers hire the managers. The workers make the final decisions. That’s not a reform. That’s a fundamental going beyond capitalism.” (48:00)

Timestamps for Key Segments

• GM Recall Scandal & Corporate Penalties: 02:30 – 07:00
• Income & Poverty Report / Inequality: 07:10 – 12:50
• GE Offshoring / Export-Import Bank Issue: 14:00 – 16:10
• Refugee Crisis & Capitalism’s Fallout: 16:15 – 25:30
• Unemployment / Sharing Work: 25:45 – 29:40
• Federal Reserve & Capitalism’s Instability: 31:44 – 39:00
• Worker Self-Directed Enterprises: Radical Change: 44:15 – 55:00

Tone & Language

Richard D. Wolff’s tone is urgent, passionate, and unapologetically critical of both corporate and government actions underpinning capitalism’s failures. He uses plain language, clear analogies, and direct challenges to mainstream economic logic, continuously inviting listeners to question the system and consider fundamental alternatives rooted in democratic ownership and worker empowerment.

Summary for New Listeners

This episode of Economic Update lays bare the many layers of capitalism’s instability and injustice in contemporary America and the wider world. From deadly corporate misconduct to government-sanctioned inequality, persistent unemployment, and a global refugee crisis, Prof. Wolff walks through the ways mainstream economics and policy continually let the public down while corporations and elites evade responsibility.

He sharply rebuts the notion that economic recovery has reached most Americans, challenges the very basis of how we handle unemployment, and spotlights the destabilizing ripple effects of current monetary policy. Ultimately, he offers a vision for economic democracy—workplaces run by workers, not bosses—that he sees as not only possible but necessary.

For those disillusioned by corporate scandals, soaring inequality, or the failures of political leaders to address crises meaningfully, this episode makes a case for radical, democratic alternatives to business as usual.