Economic Update: Criticizing Capitalism

Summary

Economic Update with Richard D. Wolff

Episode: Criticizing Capitalism (June 28, 2018)

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Episode Overview

This episode is devoted to a sharp critique of capitalism—both in its historical forms and as it operates today. Host Richard D. Wolff opens with current economic developments, legal challenges to worker welfare, and systemic inequality, before sitting down for an in-depth interview with renowned Marxist scholar David Harvey. Their discussion covers the ongoing relevance of Marx’s analysis, the persistent instability and inequality of capitalism, the manufactured nature of consumer “needs,” and the social consequences of alienation—particularly under the Trump administration.

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Key Discussion Points and Insights

1. Worker Co-ops and Legal Frameworks

• Colorado as a Pioneer ([00:10]):
  • Wolff highlights Colorado as a uniquely friendly state for worker co-operatives, contrasting it with Delaware's longstanding favoring of capitalist corporations through pro-business laws.
  • The need for a political party dedicated to leveling the playing field for worker co-ops is emphasized.

2. Worker Suicide and Societal Responsibility

• Cab Driver Suicides in New York ([03:45]):
  • Wolff discusses the recent suicides of six New York City cab drivers, linking their despair to the rise of ride-sharing companies (Uber, Lyft) and the dramatic depreciation of taxi medallions.
  • He draws parallels to historical examples where competitive capitalism harmed workers until societal intervention occurred (e.g., child labor, mine safety).
  • France is cited as a contrasting model: executives at Orange (formerly France Telecom) are being prosecuted for workplace harassment leading to 19 worker suicides, reflecting a legal system that holds corporate leaders accountable.

3. California Rent Control and Public Housing

• Ballot Initiative Signature Drive ([07:40]):
  • Over 407,000 Californians sign a petition to address skyrocketing rents via ballot initiative.
  • Wolff critiques the real estate industry’s threat to halt construction if rent increases are limited—countering that the public sector could and should provide public housing as an alternative.

4. Tariffs and Trade Wars

• Trump Administration Tariff Policy ([09:10]):
  • Trump's tariffs and trade threats are positioned as the latest stage in ongoing US efforts to secure economic advantage, much like the voluntary export restraints imposed on Japanese automakers in the 1980s.
  • Consequence: American consumers ultimately pay more (e.g., $1,200 per car) when foreign competition is curtailed.

5. Corporate Promises and Broken Commitments

• General Electric’s Jobs Pledge in France ([12:10]):
  • GE promised to create 1,000 jobs after acquiring France’s Alstom but only delivered 323, risking substantial fines.
  • Wolff notes such corporate commitments often evaporate in the US due to lack of follow-through, while French political pressure—bolstered by labor and left parties—forces greater accountability.

6. Detroit’s Decline and Corporate Responsibility

• Michigan Central Station ([14:41]):
  • Detroit’s decline is traced to auto industry decisions to maximize profits by relocating production, leading to urban collapse.
  • Wolff is critical of the narrative celebrating Ford’s acquisition and planned renovation of a decayed Detroit landmark, reminding listeners of corporate culpability in the city’s destruction:

    “We were all supposed to celebrate the renewal of Detroit and conveniently forget that the renewer was the destroying monster not that long ago.” ([15:40])

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In-Depth Interview: Richard D. Wolff and David Harvey

On the Critique of Capitalism and Marx’s Relevance

1. Marx’s Lasting Insights ([16:21])

• David Harvey:

  “He [Marx] came up through a critique of classical political economy with a way of understanding the dynamics of capitalism... how capital accumulates, how it circulates and how it produces crises periodically. And I think those insights are still with us... Capital is still creating crises and doing all those things that Marx said it was going to do.”
  [16:21–16:53]

2. Instability as a Systemic Problem

• Wolff’s Framing:

  “All my life I’ve always wondered how my colleagues focus so much on Keynesian economics... recognizing that it’s an unstable system, a cyclical, crisis-prone system. But it has never... been able to fix it...”
  [17:44]

• Harvey’s Response:

  “Most economists seem to like equilibrium... Marx says, no, it diverges all of the time. So he’s looking at it... saying it creates disequilibrium.”
  [18:55]

3. Inequality as an Inherent Tendency

• Harvey:

  “Under conditions of pure competition, the rich are going to get much richer and the poor are going to get much poorer... That is an inevitable consequence of free market capitalism.”
  [20:41–21:34]

• Harvey (on Piketty):

  “There’s something inherent within the system... in a perfect market situation there is nothing more unequal than the equal treatment of unequals.... the gap between us goes higher, higher and higher.”
  [20:59–21:34]

4. Why Defend a Flawed System?

• Harvey:

  “Capitalism has not been all bad. It’s technologically very dynamic... That’s, I think, how a lot of people have a fetish belief almost in the beauties of a capitalist system... [but] it produces homelessness. It produces less and less capacity to educate people. It makes students go into debt...”
  [22:11–23:18]

• Wolff:

  “What an advertiser does is try to get you to part with your money for some object. And so the logic of advertising: present all the positives and obliterate all the negatives.”
  [23:18–24:24]

5. Production of Wants, Needs, and Desires

• Harvey:

  “One of the things about capital is the production of wants, needs and desires in such a way as to define a whole way of life... The whole style of life has political consequences.”
  [24:24–25:39]

6. Technological Contradictions: The Promise and Reality of Time-Saving

• Harvey:

  “We have household technologies now which are time saving... And if you ask people, yeah, does anybody, how do you feel these days? Do you have a lot of free time? And the answer is no.”
  [26:34]

7. Trump, Alienation, and Political Consequences

• Harvey:

  “Marx has a very good analytic concept... alienation. People are alienated in their work... We have a mass alienation of populations right now... I think Trump is the president of alienation.”
  [27:34–28:40]

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Notable Quotes & Memorable Moments

• On holding corporations legally responsible for worker suicide:

  “In France, you prosecute people who impose suicidal conditions. Here in the United States, you pretend it doesn’t count.” – Richard D. Wolff ([06:30])

• On the emptiness of corporate promises:

  “It’s an empty promise that no one follows up on in France, partly because of the power of the labor movement and... socialist, communist... parties. You can’t do that the way you do that in this country.” – Richard D. Wolff ([13:40])

• On manufactured needs and suburban life:

  “The system is producing us rather than serving us. It’s almost the Frankenstein monster, our creation comes back and dominates us.” – Richard D. Wolff ([25:39])

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Timestamps for Key Segments

• Colorado & Worker Co-ops: [00:10–02:40]
• NY Cab Driver Suicides/French Law: [02:40–06:45]
• California Rent Control: [06:45–09:10]
• Tariffs & Trade Wars: [09:10–12:10]
• GE’s Job Promises in France: [12:10–14:41]
• Detroit’s Collapse & Corporate Accountability: [14:41–16:21]
• Interview Introduction (David Harvey): [16:21]
• Marx’s Insights & Instability: [16:21–18:55]
• Inequality & Market Logic: [18:55–21:34]
• Systemic Defenses & Contradictions: [21:34–25:39]
• Technology’s Contradictions: [25:39–26:59]
• Harvey on Trump & Alienation: [26:59–28:40]
• Closing Remarks: [28:40–28:49]

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Tone and Language

The episode is forthright, critical, and at times impassioned, blending accessible explanations with polemical urgency. Both Wolff and Harvey speak as both scholars and activists, illuminating capitalism’s flaws while urging systemic alternatives and deeper public engagement.

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For listeners and readers new to the show or Marxist economic critique, this episode provides both timely news-driven examples and foundational economic theory—showing precisely why alternative analyses of capitalism remain vital to understanding contemporary crises.

Transcript

[A]

Welcome friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, jobs, incomes, debts, our own and our children's. I'm your host, Richard Wolff. I've been a professor of economics all my adult life and I hope that that's prepared me to offer you these economic updates about what's in the news. I want to begin by a kind of shout out to the state of Colorado. It turns out that Colorado is for worker co ops what Delaware has been for capitalist corporations. That is the laws in Colorado, thanks to all kinds of folks in our state's history, are very friendly to the formation and the growth and the development of the worker co op kind of enterpr. And the reason it's interesting to me has to do with the fact that I recognize that the Republican and democratic parties for 250 years have been busy pushing states around the country and above all Delaware, to be especially friendly to capitalist enterprises. You know, the kind of enterprises with a few people who are their shareholders and a tiny number of people they elect to be the board of directors to run businesses that way. Those two parties were useful to set up the laws to make that happen. If there were a political party in the United States committed to worker co ops as a better democratic alternative, they would be running around the country doing for the country as a whole what Colorado has taken the initiative to begin to do. I want to recognize what the Colorado folks did, but I also want to make us aware that a political party is needed to give worker co ops a level playing field with what the capitalist enterprises have gotten done for them for centuries. I also want to follow up in a separate update with the problem of worker suicide. Recently there have been several, actually six, suicides among cab drivers in the city of New York. It has become impossible for them to be cab drivers. The arrival of Uber, Lyft and other services has put an incredible pressure on workers. They don't get the money they once did. They have to work unbelievable hours. And here in New York, where a taxi medallion, the legal right to have a taxi, was very expensive and purchased by cab drivers over recent decades, they're now discovering that those medallions are virtually worthless, as Uber and Lyft have destroyed their value and they're killing themselves. You know, it's the responsibility of a society not to have that happen. We don't need to have a system in which competition among capitalists is something that kills workers. You know, we've had that in our history. We didn't permit it. There was a Time when we allowed mines to be operated in a way that killed miners. We allowed all kinds of enterprises to be run in a way that stunted or even killed small children that were working there. And we had movements to protect minors, to make child labor illegal. We didn't permit corporations to say, oh, we need to compete, we need to have cheap child labor, or we need to save money on taking care of the miners. We can do the same thing to prevent suicide. And. And we ought to have done it long ago. My attention was caught also by France. It turns out in France, there are laws that hold top executives accountable if below them in the corporation, suicides are occurring. One of the biggest corporations in France used to be called France Telecom. It's their basic phone company. It's now called Orange, like the color telephone company. Well, their two top executives are on trial now, held to be accountable for the harassment of workers, leading to, count them, 19 suicides among those workers. In France, you prosecute people who impose suicidal conditions. Here in the United States, you pretend it doesn't count. My hat's off. Also today to the people of California, petitions were circulated among Californians and over 407,000 of them signed. And that was more than enough to get a ballot question put on the election for this coming November. And here's what it says. Rents have gone up sky high in California. Six of the 11 most rapidly rising rent areas in America are in that state alone. California led by Los Angeles, and particularly the Bay Area around San Francisco. More than half of the income, which is way more than you're supposed to spend for rent, is the burden of 1.7 million families in California. Now, of course, the housing industry says if you limit how much we can squeeze out of the renters, and, boy, they have gone up spectacularly in the last few years. Well, then we won't build houses if we can't make a lot of money off of them. That's a threat. That's a threat of one industry against the millions of people who depend on it. We ought to respond to those threats with a counter threat. You don't build the buildings, fine. The public sector will build and maintain decent quality public housing. And then there won't be the ability for you to raise those rents at all. Will there be? I want to talk to you about another story that's much in the news right now. President Trump and the Republican Party are busy slapping tariffs and punishments of all kinds on our trading partners. You know, it's part of the assault on foreigners. First of all, we Bash immigrants. Those are people who come from a foreign country into ours. And now we're also going to bash foreigners who don't trade with us under conditions we would prefer because they're more profitable to us. Is this new? Here's my answer. Not at all. The last time the United States tried to rearrange world trade to its own advantage was in the 1980s. In those days, Americans were reacting, much as they are today, to noticing that there were lots of Japanese cars on the road here in the United States and that Americans were preferring them over their American competitors, you know, Toyotas, Datsuns and all of that, rather than Ford's Chevys and all of that. Mr. Trump's top trade negotiator, Robert Lighthizer, was actually involved in the deal that was made then the United States threatened Japan. You have to limit the number of cars you sell here, not by how many Americans want to buy, but by a number we'll give you. You have to agree not to send more cars here, otherwise we will really close this country off to you. The Japanese caved. They agreed to the quotas. And according to the perc. A. Excuse me, the perc. My apology. A think tank that's independent. The cost to the Americans of having no cheaper Japanese cars worked out to about $1,200 a car. We all paid more because the American company could charge more since the Japanese couldn't compete because they had been closed out. The cost of a tariff war like the quotas will be higher prices for all of us to pay. And that's something you ought to think about, since you can be sure that the people pushing this. Leave that part of the story out. My last two updates are important because they're the kinds of things you might not think about, but you ought to. The French government is threatening to fine the American giant corporation, General Electric. Why? Well, it turned out that in 2014, the General Electric Company petitioned the French government to be able to buy a very large electric company in France called Alstom. And a deal was arrived at in which the French government, then led by a socialist president, said, okay, you can buy the French company, but you have to create 1,000 jobs in exchange for doing that. The French government recognized that the coming together of these two companies would eliminate many jobs, but at least some jobs would be created. And General Electric committed to hire 1,000 more people as part of this deal. And it was to be done by the year 2018. Well, here it is, 2018, and the French government says you've hired exactly 323 of the thousand jobs you promised. The penalty that you signed the contract to commit you to pay it is €50,000 per job, not created. That would come to 34 million euros for the total jobs you didn't create. For General Electric. That's a tiny amount of money. It's like change in your pocket. So now there's a problem. General Electric, of course, doesn't want to pay. It hopes that what usually has happened in the past will happen again, namely that no one will really follow up. No one will keep an exact track. And even if they do, nobody will bother them about this. It will all go away. And believe me, General Electric is right to have assumed that, because this kind of thing happens in the United States literally every day. I can't tell you the number of times I have sat in a public hearing listening to a corporation make wonderful promises about what it's going to be allowed to do. If only it gets this tax break. If only it gets this subsidy. If only it gets the road rerouted so it's more convenient for them. If only, if only, if only. Knowing full well that the politicians who will say, okay, then, we'll do it because of these good things. They won't be there in the four years when this is supposed to happen. They will have long forgotten it. The press will not pay attention. It will disappear. It's an empty promise that no one follows up on in France, partly because of the power of the labor movement and the power of socialist, communists and other parties. You can't do that the way you do that in this country. So the French government, even though the socialists are gone and a quite right wing government sits in power now, they have to at least look like they're doing something to keep track of all of this, because it's too dangerous for them politically to let this go. France is different from the United States. My last update has to do with the Ford Motor Company and the city of Detroit and the dilapidated, broken down old Michigan Central Railway Station in the middle of that city. The last train to leave that station left in 1988. That's right. 30 years of decay, of breaking down, of broken windows and heaves in the floor. You get the picture. Why did that happen? Because the city of Detroit was destroyed. What do I mean? Well, back in 1988, the population wasn't that far off of 2 million. The population today is, is under 700,000. That's called urban collapse. That's when everybody leaves. That's when there are thousands, tens of thousands of empty abandoned homes and stores and yes, railway stations. And why? Because three companies, Ford, General Motors and Chrysler, decided it was more profitable to to produce somewhere else in the American south where wages were lower, in Canada and Mexico, where they were still lower, and now in India and China, where they are still lower. It's all about the profit for a tiny number of companies that destroyed that city, destroyed the lives of hundreds of thousands of people and destroyed, yeah, the Michigan Central Station. So imagine how happy I was and how happy Americans were expected to be when Ford Corporation announced it was buying for next to nothing the building its decisions helped to destroy to make up a new tech center for themselves. We were all supposed to celebrate the renewal of Detroit and conveniently forget that the renewer was the destroying monster not that long ago. But I don't want anyone to forget. Well, we've come to the end of the first part of the show. Before meeting my exciting guest, Professor David Harvey, that many of you know, I want to remind you to subscribe to our YouTube channel if you possibly can, to follow us on Facebook, Twitter and Instagram, and to go to our website, democracyatwork.info for more of what we do and how you can get involved. As a special thank you to our Patreon community, I also want to say, really thank you for the support you provide. It is crucial. Stay tuned. We'll be right back. Welcome back, friends, to the second half of Economic update. It is my pleasure and indeed an honor for all of us, I think, to have our guest today, Professor David Harvey, a foremost Marxist thinker and critic and writer for many decades, to be our guest and to talk with me for the next little while. Professor David Harvey is at the Graduate center of the City University of New York, perhaps best known for how he has been able to teach us, a whole generation of students like myself, what Marx's contribution is to understanding the capitalist system that we depend on and that we live in. He has written many, many books and articles, and his most recent, which I urge you to take a look at, is called Marx Capital and the Madness of Economic Reason. Thank you very much, David, if I can call you that, for joining us. Of course. Okay. All right. Here's the basic question, the opener, if you like, what is the major contribution of Marx? Why is he the important thinker we should be reading and whose work we should be using right now?

[B]

Because he came up through a critique of classical political economy with a way of understanding the dynamics of capitalism, that is, of understanding how capital accumulates, how it circulates and how it produces crises periodically. And I think those insights are still with us in exactly the same way that Marx saw it back in the middle of the 19th century. Capital is still with us and capital is still creating crises and doing all those things that Marx said it was going to do.

[A]

So that the argument which I hear so often that capitalism has changed from Marxist time in the middle of the 19th century to today is both obviously true and not really terribly relevant, since the basic dynamic of the system, which is what he tried to figure out.

[B]

Absolutely. I mean, that's why it's so, I think, relevant today. Which is not to say that the details are not very different, because they have certainly changed and we should take those into account. And we also have to remember that Marx didn't complete all of his work, so we have some work to do to complete it. But nevertheless, the basic laws of motion of capital, as he defined them in the middle of the 19th century, are still with us, and they're still creating mayhem and creating contradictions and creating havoc wherever we look.

[A]

Certainly it's all around us in the world today. Let me pick up on a couple of things you said and go after them a bit more. Instability. The fact that this is an economic system which, if I have the numbers correctly, every four to seven years has a downturn, and that these downturns can sometimes be deep and long lasting, like in the 30s and really like the one after 2008, is this in a sense a sign that this is a systemic problem? Because for me, as a professional economist, all my life I've always wondered how my colleagues focus so much on Keynesian economics. Because it is the recognition that it's an unstable system, a cyclical, crisis prone system. But it has never, including the Keynesians themselves, never been able to fix it, or to solve it, or to end it. It's a kind of testimony. And I wanted your reaction to the validity of Marx's focusing on instability, on this bizarre quality.

[B]

I think one of the things that separates Marx from most economists is that most economists seem to like equilibrium and think there's something called equilibrium to which everything converges somewhere down the line. Marx says, no, it diverges all of the time. So he's looking at it from the other direction, saying it creates disequilibrium. And the disequilibrium are the sorts of things we see in a crisis in which capital and labor sit side by side and nobody knows how to employ them in productive ways, because somehow or other the market has not cleared and will not clear. And so that is then the mark of a genuine crisis.

[A]

What about the other critique in a way of capitalism, that besides being unstable, it is prone to inequality and indeed extreme inequality of the sort we see around us today. How does Marxism go after or get at this inequality?

[B]

Well, Marx did an analysis which relied very much on the idea of perfect competition and pure competition. And what he showed was that under conditions of pure competition, the rich are going to get much richer and the poor are going to get much poorer. Now, we've had historic periods under capitalism where there's been some intervention from outside for political reasons and state reasons, so that we actually ended up with less inequality. Today, of course, the neoliberal period since the 1970s, everybody's been saying, let the market do the work and everything's going to be okay. And of course the rich get richer and hand over fist and it's getting even worse by the minute.

[A]

Yeah. So that. Would you agree, for example, with Thomas Piketty and others like him, that there's some intrinsic logic to capital that produces inequality unless and until the very reaction to that inequality stops or reverses it for a while?

[B]

Yeah, no, there's something inherent within the system. And I best. I guess the best way to summarize it is that in a perfect market situation there is nothing more unequal than the equal treatment of unequals. Because everybody says the market is an egalitarian device, and it is. But if you start off much better endowed than me, then bit by bit the gap between us goes higher, higher and higher. And so that is what Marx showed brilliantly, I think, in volume one of Capital is that is an inevitable consequence of free market capitalism.

[A]

So then, you know, departing a little bit. But let me ask your opinion. How is it possible that capitalism has had defenders, past, present and likely future, who seem either unable or unwilling to contend with these two central flaws, you might say instability and inequality. How is it possible for a system with those flaws to present itself almost as the opposite of them?

[B]

I think one of the things we should recognize though is that capitalism has not been all bad. It's technologically very dynamic and it's given us a lot of possibilities to organize life in a very, very different kind of way. And that's one of the big contradictions of the present situation. The technologies around us are fantastic, labor saving technologies, time saving technologies, and of course people are fascinated by that. And that's, I think, how a lot of people have a fetish belief almost in the beauties of a capitalist system. Because it does all of those things. Marx's point is to say, yes, it does all those things, but then what does it do? It produces homelessness. It produces less and less capacity to educate people. It makes students go into debt in order to get an education, does all of these things. And Marx is therefore emphasizing the contradictions. And I think that the trouble with conventional thinking is that it emphasizes the positives and it refuses, refuses to pay any attention to the negatives or assumes they're external accidents. They are not integral to the system.

[A]

Yes, it always bothered me from my earliest times as a student, I used to make this comparison. I wonder how you think about it, that capitalism produces the problem of selling all the value that has come out of their assembly lines. So they invent something called advertising to promote the purchase. What an advertiser does is try to get you to part with your money for some object. And so the logic of advertising present all the positives and obliterate all the negatives. And this, which is a distortion of human communication for a profitable end, then seeps into the rest of our consciousness so that we begin to think in terms of either or, rather than the unity of the positive and the negative. It's a kind of capitalism coming back and obstructing its own analytical capabilities through this advertising imagery.

[B]

Yes. I don't think it's only advertising, though. I think to me, one of the things about capital is the production of wants, needs and desires in such a way as to define a whole way of life. For example, I think of suburbanization after World War II and the creation of the American suburb. And I think of the way in which that was supported by all of these sitcoms, I Love Lucy, the Brady Bunch, all this kind of stuff. It was advertising in a sense. Not in the crass sense, but in a real sense, a whole style of life. And then the whole style of life has political consequences. If you are an affluent person living in the suburb and you become a homeowner, you will get concerned about the value of your home. And you don't want people moving in who might depress the value of the home. And so you get exclusionary and you start to get exclusions and segregations and gated communities. And it's a destructive way of life which is actually created around the organization of wants, needs and desires, which are not necessarily the ones we would freely choose, but are those which are necessary for the accumulation of capital to continue.

[A]

Yeah, the system is producing us rather than serving us. It's almost the Frankenstein monster, our Creation comes back and dominates us.

[B]

Right. But at the same time, there are possibilities. We see this in the Internet. I mean, the Internet came as a great sort of avatar of freedom and communication and all the rest of it. And now look what we've got. Net neutrality disappears. All of a sudden, we find we are being surveyed through Google and everything else. So everything which was really positive about the Internet suddenly gets turned by commercialization and capital accumulation into something that's negative.

[A]

Yes. And I remember growing up with these inventions, all of which were going to be labor saving.

[B]

Absolutely.

[A]

And my students today give me descriptions of their 60 and 70 hour weeks as a kind of mockery of all those claims.

[B]

The same thing in the household. We have household technologies now which are time saving, time saving, time saving, time saving. And if you ask people, yeah, does anybody, how do you feel these days? Do you have a lot of free time? And the answer is no. And of course, one of Marx's ideas about a really, really good socialist society was one which was characterized by massive amounts of free time where you could do what the hell you liked.

[A]

Let me ask you a question that jumps forward, but I know it's in the minds of viewers and listeners. How do you view this Trump phenomena here in the United States? Is this a capitalism in trouble, flailing around with an extreme reaction, or is this a capitalism confident in some sense of its capability and therefore willing to indulge a naughty person in leadership? How do you square your Marxist analytics with what you see?

[B]

Marx has a very good analytic concept which I like a lot and is not used enough. And the concept is alienation. People are alienated in their work for the most part. A lot of work is meaningless these days. People are alienated in their daily lives because they're dealing with a telephone company and all of these other things and credit cards and all the rest of it. People are alienated politically. We have a mass alienation of populations right now, and alienated populations generally act in ways which are violent and angry or they sulk. And I think actually we're in a political situation where we have mass alienation right now. And until we address the roots of that alienation, which are the redefinition of labor processes by capital accumulation, the redefinition of daily life through the processes of capital accumulation. Until we deal with all of those kinds of questions, and of course, the buying and selling of political power by capital, until we deal with all those questions, I think we're not going to go anywhere. And I think Trump is the president of alienation.

[A]

Wow. Well, David, as always, thank you. It's never enough time. I want to thank you for staying with us.

[B]

Well, it was my pleasure.

[A]

Good. And I want to thank you all for partnering with us. I look forward to meeting and speaking with you again next week.