Economic Update with Richard D. Wolff

Episode: Economics of Socialism
Date: July 27, 2017
Host: Richard D. Wolff

Overview

This episode of Economic Update explores the "Economics of Socialism," diving into the meaning, historical evolution, and contemporary relevance of socialism. In the first half, Richard Wolff provides updates and critical commentary on current economic events—sanctions, healthcare, CEO pay, and the public-private divide—before dedicating the second half to an in-depth, nuanced discussion on socialism: why interest is on the rise, what the term has meant and means now, and the varieties of socialist thought and practice. The tone is direct, informative, and passionate, with an underlying call to deepen the public dialogue about economic alternatives.

Key Discussion Points & Insights

1. Economic Updates and Commentary (00:00–27:54)

Economic Sanctions: The Case of Russia

• Sanctions on Russia (01:40):
  Wolff explains that sanctions are largely "political theater" designed to appear tough but rarely achieve their stated goals.
  • "They are mostly a political theatre designed to persuade...but in terms of what they really do, it's fake." — Richard Wolff (03:44)
• Sanctions and Multinational Corporations:
  Example of ExxonMobil being fined $2 million for violating sanctions—insignificant for a company with $216 billion in annual revenue.
  • "That's as if you did something really bad and the government came to you and said...you must pay this fine – $0.03 – right now." (04:30)
  • Pointed out irony: Rex Tillerson (then Secretary of State) was CEO of Exxon during the violation.

Privatization in Healthcare and Its Failures

• Opioid Epidemic (07:44):
  McKesson Corporation, the nation’s largest drug distributor, repeatedly failed to report suspicious opioid shipments, leading to fines easily covered by CEO compensation.
  • "90 Americans die every day from opioid overdoses." (08:51)
  • "Leaving the distribution of drugs in private hands...becoming downright immoral." (11:17)
• Fraud in Pharma:
  Calgene fined $280 million for promoting unapproved drugs (13:18).
• Corporate Price Gouging:
  Boots (owned by Walgreens) charges £40+ for emergency contraception, double competitors; public scrutiny leads to apology (14:45).
  • "That sort of thing works in England...Whereas here in the United States, we don’t have this thing." (16:33)
  • The UK’s National Health Service provides these drugs for free, exemplifying superior public provision.

Public vs. Private Services

• Cable Monopolies and Municipal Response (18:30):
  Consumer Reports finds Comcast and Spectrum score low on service, mainly due to lack of competition. Some municipalities provide their own broadband to break the monopoly.
  • "500 municipalities across America either provide this service themselves or do so in partnership with private companies." (19:43)
• Legislative and lobbying barriers by private corporations restrict the expansion of public alternatives.

Executive Compensation

• CEO Pay Inequity (21:08):
  Average big-company CEO now earns 271 times what their workers do.
  • Top earners: Mark Lore (Walmart) at $244 million/year; Sundar Pichai (Google/Alphabet) at $200 million/year, amounting to $4–5 million/week.
  • "Pay has risen much faster than the profits of the companies that they lead." (22:17)

Academic Freedom & Ideological Influence

• University of Utah and the Koch Brothers (23:10):
  Only a few U.S. universities offer dissenting (Marxist) economic perspectives. Koch-funded initiatives now explicitly aim to counteract such teaching, threatening intellectual diversity.
  • "This is hysteria masking itself as reasonable behavior." (25:03)
  • "The people donating the money have no ambiguity...they get a return on what they donate." (26:35)

2. Main Theme: Economics of Socialism (30:21–End)

Why Discuss Socialism Now?

• Rising Interest Among Youth (30:30):
  Recent polls show people under 35 increasingly favor socialism—often out of dissatisfaction with capitalism, not clear understanding of socialism.
  • "Huge numbers, sometimes majorities, are saying they prefer socialism... It's more a reflection of people’s dissatisfaction with the capitalism they live in." (31:00)
• Need for Honest Debate:
  Society has been denied open, balanced discussion due to Cold War taboos.
  • "We’ve had a generation of people unexposed to what socialism is." (31:54)

Defining Socialism—and Its Varieties

• Why "Social"-ism? (34:18):
  Socialism asserts the interests of society as a whole, counterposed to capitalism’s prioritization of private interests.

• How Capitalism is Organized:
  Employers (minority) make the decisions; employees (majority) do the work and have no claim over profits or decision-making.

  • "In a capitalist system...the vast majority of people...go home; they leave behind whatever it is they help to produce, because that belongs...to the employer." (34:58)

• Other Systems:

  • Slavery: Masters and slaves.
  • Feudalism: Lords and serfs.
  • Self-employment: No employer-employee distinction.
  • Communal/collective systems: Shared roles and voice.

• Popular Definitions:

  • U.S.: Socialism often equated to government intervention—regulation, ownership, or planning—contrasted with private property, private enterprise, markets.
    • "Many people...believe that for them, socialism is when the government limits the wage you pay, or...interest rates, or...install mechanisms that clean the air...." (38:30)
  • Examples range from regulatory socialism (Western Europe) to command socialism (Soviet Union and China).

The Deeper Debate: Reform vs. Revolution

• Reformist Socialism:
  • Government regulations to make capitalism humane—minimum wages, safety standards, progressive taxation.
  • "Capitalism with a human face." (41:12)
• Radical Socialism:
  • Argues reform is insufficient; as long as employers command employees, fundamental inequalities persist and reforms can be rolled back.
  • The real alternative is ending the employer-employee relationship—democratizing the workplace.
  • "Employer/employee is too close to master/slave and lord/serf." (54:40)

Worker Cooperatives: The Microeconomic Alternative

• Worker Co-ops (49:23, 53:10):

  • Directly democratic production organizations—businesses owned and operated by workers, who set policy, share profits, and make decisions collectively.
  • Existing American examples highlight this is not an alien model.

• Historical Parallel—Abolition & Emancipation:

  • Reform (better treatment of slaves) vs. revolution (ending slavery altogether).
    • "The parallel...is with capitalism: Socialists can be easily divided into those who favor reform and those who want something more." (46:05)

• Contemporary Socialism Shifts:

  • More socialists now focus on democratizing the workplace, asserting this goes to the root of inequality and undemocratic structures inherent to capitalism.

On Progress, Change, and Democracy

• All systems—slavery, feudalism, capitalism—have lifespans; socialists argue it's time to move to the next system.
• "The point is for you to understand the argument, and then we can have a debate and discussion and change it, and that’s all a healthy society should do." (54:05)

Notable Quotes & Moments with Timestamps

• On Sanctions as Political Theatre:

  • "They are mostly a political theater designed to persuade whoever they want to that they're being tough and going after the bad guy. But in terms of what they really do, it's fake." (03:44)

• On CEO Fines and Accountability:

  • "That's as if you did something really bad and the government fined you and came to you and said right in your face, you must pay this fine – $0.03 – right now or we will be mighty angry." (04:30)

• On the Failure of Privatized Healthcare:

  • "Leaving the distribution of drugs in private hands under a revelation of this sort that I've just provided seems to me beyond inappropriate and becoming downright immoral." (11:17)

• On the Superiority of Public Provision:

  • "The National Health Service in Great Britain distributes the exact same drugs for free all over England." (17:30)

• On Academic Dissent:

  • "This is hysteria masking itself as reasonable behavior." (25:03)
  • "The people donating the money have no ambiguity whatsoever in making sure they get a return on what they donate." (26:35)

• On the Need for Open Conversation About Socialism:

  • "We’ve had a generation of people unexposed to what socialism is, unaware that over the last 50 years, like everything else, socialism has changed." (31:54)

• On the Core of Socialism:

  • "For these socialists, socialism means an alternative economic system of production. The end of employer versus employee and the substitution of a democratic, socialized ownership and operation of enterprises." (44:00)

• On the Modern Vision of Socialism:

  • "The socialists of today, the emerging socialism is one that says if we want to overcome the problems capitalism bequeaths us, we hold on to what capitalism achieves...but we also recognize its flaws and its failures, and we go to the root...and we change the relationship in production." (54:40)

Important Segment Timestamps

• Sanctions & Exxon Example: 01:40 – 06:45

• Opioid Crisis & Privatization: 07:44 – 13:18

• Drug Pricing & Public Health: 13:18 – 17:30

• Cable Monopolies/Public Broadband: 18:30 – 20:30

• CEO Compensation Disparity: 21:08 – 22:43

• Academic Freedom & Koch Influence: 23:10 – 27:54

• Introduction to Socialism: 30:21 – 32:32

• Definitions of Capitalism & Socialism: 34:18 – 41:45

• Reform vs. Revolutionary Socialism: 41:12 – 47:55

• Worker Coops as Socialist Practice: 49:23 – 54:40

• Modern Socialism’s Focus on Democracy in Production: 54:00 – End

Conclusion

Richard Wolff challenges listeners to rethink socialism not as a dictatorial, foreign concept but as a living, evolving alternative with deep roots in democratic governance—particularly in the workplace. He advocates moving beyond Cold War taboos, emphasizing debate and education. The episode is a dense yet accessible primer on socialist economics, current policy failures, and the democratic possibilities of worker cooperatives, ultimately inviting a more engaged, informed public conversation about our economic future.

For further resources, visit:

• democracyatwork.info
• rdwolff.com