ECONOMIC UPDATE: Economics of Worker Cooperatives

Summary

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Economic Update with Richard D. Wolff

Episode: Economics of Worker Cooperatives
Date: August 11, 2016
Host: Richard D. Wolff
Podcast: Democracy at Work

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Overview

In this episode, economist Richard D. Wolff critically explores the economic concepts and realities behind worker cooperatives as an alternative to traditional capitalist enterprises. He contextualizes this discussion with contemporary examples from the retail sector, U.S. politics, global demographic changes, and critiques of mainstream economic institutions. The central thesis: worker self-directed cooperatives present a more democratic, ethical, and potentially more resilient model for organizing production and addressing systemic economic problems.

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Key Discussion Points & Insights

1. The Macy’s Closures and Corporate PR Spin

[01:48 – 05:03]

• Wolff highlights Macy’s decision to close 100 stores after shutting down 41 the previous year, noting it as a symptom of deeper economic problems, not merely “changing consumer preferences.”
• Quote: “We are responding to the changing preferences of our consumers. Okay, that may be really good corporate PR, but it is very bad economics, verging on the dishonest.” (03:40 – 03:47)
• Reality: The shrinking middle class results in declining retail sales; Macy’s pivots to serve the wealthy “top 10%.”
• Wolff critiques the indifference of corporate decision-making to wider societal consequences, such as unemployment and faltering shopping malls.

2. U.S. Election Economics: Trump vs. Clinton on Tax and Debt

[05:15 – 07:39]

• Trump proposes widespread tax cuts; Wolff explains this would require the government to borrow more, often from those same entities whose taxes are cut.
• Quote: “Cutting taxes and borrowing the money instead allows the rich not only to escape taxes, but to get the government … to borrow that money that they used to pay in taxes, which for rich people … is a wonderful solution.” (06:06 – 06:24)
• Clinton, contrary to some expectations, pledges fiscal restraint, worrying about deficits and declining to propose significant stimulus or borrowing.
• Wolff concludes little change will be seen regarding economic stimulation “from the top.”

3. Global Age Demographics and Distributional Options

[07:48 – 13:42]

• UN statistics reveal a decline in young workers relative to retirees, raising doubts about the sustainability of pension systems.
• Quote: “There is an option that means we can honor our obligations… without taxing the younger people. And how would we do that? By redistributing the wealth in our society.” (11:31 – 12:09)
• Stunning wealth inequality (e.g., “the richest 62 people in the world together own more wealth than the bottom half of this planet’s population” [12:33 – 12:49]) offers a solution unmentioned in mainstream debates: tap accumulated wealth at the top to support social goods.

4. The Duke of Westminster and the Young Elite

[14:03 – 16:47]

• Wolff reads from a Bloomberg story about extremely wealthy young inheritors (e.g., Hugh Grosvenor, Lucas Walton, Dustin Moskovitz, Mark Zuckerberg).
• Contrasted with stories about underfunded elderly, Wolff highlights the ethical failings of ignoring gross wealth concentration in social policy.
• Quote: “It is nothing short of shameful… not to talk about [redistribution] if you’re talking about cutting pensions.” (16:47 – 16:49)

5. Think Tanks, Objectivity, and Hidden Biases

[17:04 – 27:32]

• Wolff shares a personal anecdote about the Brookings Institution, once known for objectivity, now revealed by the New York Times to be influenced by major donors with vested interests.
• Example: Reports on urban development favoring big corporate donors (e.g., Lennar Corporation) and political overlap (e.g., Haim Saban as donor to both Brookings and Hillary Clinton).
• Critiques include not just donor corruption but intellectual “taboos” (never questioning capitalism itself).
• Quote: “You know what religion is sacrosanct? Capitalism… It is not to be questioned; it is to be prayed to. And end of story.” (26:56 – 27:32)

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Focus Segment: Economics of Worker Cooperatives

[32:18 – 55:29]

The Historical Systems of Production

[32:50 – 38:32]

• Wolff outlines three historic systems: slavery, feudalism, and capitalism—each dividing producers into a dominant minority and subordinate majority.
• He notes longstanding human resistance to these forms: “People… said, I don’t want any part of this. I want to organize production differently.” (37:32 – 37:51)
• Two ways to escape: self-employment (“be my own boss”) and collective/cooperative enterprises.

Defining Worker Cooperatives

[40:10 – 44:30]

• Worker co-ops: workplaces owned AND democratically directed by the workers themselves.
• Major distinction: “Everything about it is decided collectively and democratically.” (44:01 – 44:04)
• Co-ops are not simply about worker ownership, but democratic decision-making about all aspects of enterprise, including what to produce, how to produce, and profit allocation.
• A worker-directed enterprise is different from just worker self-management within a still-hierarchical structure.

Mythbusting & Empirical Findings on Co-ops

[46:00 – 50:16]

• Wolff reads from research by Virginie Pérotin (Leeds University) summarizing key findings on worker co-ops’ performance:
  • Co-ops are often larger than conventional businesses and not less capital-intensive.
  • They survive at least as long and often have more stable employment compared to capitalist firms.
  • Worker co-ops are more productive than conventional businesses.
    Quote: “Worker cooperatives are more productive than conventional capitalist businesses. Their staffs work better and smarter and production is organized more efficiently.” (49:01 – 49:11)
  • Pay disparities are much narrower in co-ops.
• Conclusion: Co-ops blend efficiency, solidarity, and social justice, countering myths about their practicality or competitiveness.

Co-ops as a Response to Systemic Decline

[51:54 – 55:29]

• Historical pattern: As systems like feudalism or slavery decline, the cooperative impulse grows.
• In today’s capitalism, rising self-employment and cooperative enterprise signal disillusionment with the dominant employer-employee model.
• Co-ops are “not only a healthy new direction, it’s a sign that the system we’re living in … may well be coming to the end of its historical period.” (52:43 – 53:03)
• Capitalism shares flaws with earlier hierarchical systems and, like them, faces potential obsolescence.

Social Costs of Unemployment & Systemic Alternatives

[55:29 – 56:45]

• Wolff emphasizes the vast social cost of unemployment, exacerbated by profit-driven company decisions (e.g., Macy’s layoffs).
• Quote: “To allow the profit calculations of employers to lead them to decide, I need to fire 20% of my people… That a company can provoke the problem of unemployment simply because it's profitable… that's an insane way to organize an economy.” (55:29 – 55:59)
• Argues for immediate public action to employ the unemployed and fund it via progressive taxation on the wealthiest.

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Notable Quotes & Memorable Moments

• “Cutting taxes and borrowing the money instead allows the rich not only to escape taxes, but to get the government… to borrow that money that they used to pay in taxes.” (06:06)
• “There is an option that means we can honor our obligations… By redistributing the wealth in our society.” (11:31)
• “It is nothing short of shameful… not to talk about [redistribution] if you’re talking about cutting pensions.” (16:47)
• “You know what religion is sacrosanct? Capitalism… It is not to be questioned; it is to be prayed to. And end of story.” (26:56 – 27:32)
• “Worker cooperatives are more productive than conventional capitalist businesses. Their staffs work better and smarter and production is organized more efficiently.” (49:01 – 49:11)
• “Unemployment is a scourge. It is one of the worst costs of sustaining capitalism.” (56:45)

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Timestamps for Major Segments

• [01:48 – 05:03] – Macy’s, Retail, and Economic Realities
• [05:15 – 07:39] – U.S. Election and Tax Policy
• [07:48 – 13:42] – Global Demographics and Wealth Redistribution
• [14:03 – 16:47] – Inheritance, Youth, and Inequality
• [17:04 – 27:32] – Think Tanks, Objectivity, and Ideology
• [32:18 – 46:00] – Historical Systems and Worker Co-op Theory
• [46:00 – 51:54] – Empirical Research on Worker Co-ops
• [52:43 – 56:45] – Co-ops, Unemployment, and the Future of Economic Systems

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Tone and Style

Richard Wolff’s tone is incisive, passionate, and often humorous, using clear analogies and direct criticism, especially when debunking corporate narratives or exposing institutional hypocrisy. He combines rigorous economic analysis with rhetorical flourishes and plain-spoken appeals to ethics and democracy.

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For Further Listening or Reading

• Virginie Pérotin’s research: www.uk.coop, “What Do We Really Know About Worker Co-ops?”
• Democracy at Work: democracyatwork.info
• Richard Wolff: rdwolff.com

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This episode is a thorough critique of contemporary economic institutions and an accessible introduction to the practical and ethical promise of worker cooperatives as an alternative to prevailing models.

Transcript

[A]

Sam. Saint gonna change. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs.

[B]

Our incomes, our debts, those of our.

[A]

Children and those looming down the road for them and for us. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I currently teach at the New School University in New York City. Well, it's a hot time in August in most parts of the United States and indeed in most parts of the northern half of this globe of ours. But the hot weather hasn't changed the flow of economic change and the flow of economic news.

[B]

So I'm going to proceed today.

[A]

But there's a theme that I wanted to mention at the outset, and that theme is the difference between what is said publicly and what the economic realities underlying that actually are. So let's begin. One of the most famous department stores in the United States is called Macy's. It's been around a long time and it recently announced some changes that are very interesting in the light that they shed on the American economy and the recovery that isn't there. Let's begin quickly. Last year, 2015, Macy's closed 41 stores. This year, 2016, Macy's intends, as it announced this last week, to close 100 more stores. This is an enormous proportion of the stores they have and suggests that there's trouble in the department store area and indeed there is. Retail sales of the kinds of items Macy's sells, particularly clothing, have been declining in department stores like Macy's for quite a while. And Macy's is really suffering. So what is Macy's going to do about it? Well, they're firing a lot of people. They're closing a lot of stores, which puts all kinds of shopping malls into difficulty. They're doing what's good for their company, but all the consequences for the larger economy are none of their concern. We all have to live with it. They make the decisions. But even that's not what I want to focus on. What I want to focus on is what Macy's is. We are responding to the changing preferences of our consumers. Okay, that may be really good corporate pr, but it is very bad economics.

[B]

Verging on the dishonest.

[A]

Here's the the middle class, the people who earn a good living from a secure job have been the backbone of Macy's shoppers for a long time, but they don't have enough money anymore. You see the recovery that's supposed to have happened because didn't happen for them. And they're having to economize all over the place, including buying clothing at Macy's. So what Macy's is doing, which is what the corporate world does, is say, okay, you folks don't have enough money. We're not keeping our stores open for you. We're going to where the money is. And indeed, that's what Macy's is doing. It's going in the lingo of the trade, upscale. It is going to refashion its stores so that they have more of a glitzy shopping experience.

[B]

The language is breathtaking.

[A]

The reality we're going to where the.

[B]

Money is, the richer folks, the top.

[A]

10%, the ones who actually have recovered.

[B]

With the stock market with profits thanks.

[A]

To the bailouts that we the taxpayer.

[B]

Made possible for the industries upon which their dividends and their salaries depends on.

[A]

It is a sign of what's happening in our economy and it shouldn't be missed. Our next update has to do with the election, of course, and particularly with.

[B]

The battle between Donald Trump and Hillary Clinton.

[A]

Donald Trump has been proposing to cut.

[B]

Taxes, inheritance taxes, corporate taxes and so on.

[A]

And indeed, if you cut the taxes, guess what? The government receives a lot less money. And that the typical thing the government does in those situations, since it dare not cut government spending on all the companies and individuals who count on it.

[B]

At least not enough to offset the cut in revenue from the kinds of.

[A]

Cuts Donald Trump proposes. It'll mean that the government will be.

[B]

Borrowing the money it no longer gets from the corporations.

[A]

And if you follow economics, you might enjoy understanding that when the government needs.

[B]

To borrow because it has cut taxes.

[A]

On big business, it tends to borrow, you guessed it, from those same businesses. In effect, cutting taxes and borrowing the money instead allows the rich not only to escape taxes, but to get the money to get the government, excuse me, to borrow that money that they used to pay in taxes, which of course, for rich people and corporations is a wonderful solution, which is why, no doubt.

[B]

Mr. Trump advocates it.

[A]

What is Mrs. Clinton's response? Well, you might have imagined if you had been paying attention to her liberal.

[B]

Supporters, people like Paul Krugman and others.

[A]

That she would come to a rousing defense. No, she would say, well, we are going to borrow more money.

[B]

We're not going to cut taxes, we're.

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Going to keep that, but we're going to borrow even more at these historic low interest rates to get the government to really stimulate the economy, to get the recovery actually there that we have been faking for these last few years. But no, she's not Doing that, showing how deeply she's affected by Republican ways of thinking. She's worried about the deficits, and so she plans to avoid deficits by keeping the taxes on corporations where they are and not borrowing any money, even though of course that means the very stimulus her liberal supporters want won't be forthcoming. So for those of you who expected.

[B]

An election of Hillary Clinton to give.

[A]

The economy a big boost.

[B]

Maybe not.

[A]

The UN and associated agencies have come up with new information which is the.

[B]

Background to the story I want to tell you next.

[A]

This has to do with the changing.

[B]

Population distribution around the world.

[A]

What do I mean? I mean the balance between people that are over 65 years of age and therefore probably intending pretty soon to retire versus the proportion of our population under 15 years of age. The people who over the years to.

[B]

Come are going to be the workforce.

[A]

And traditionally in society, the young people entering the labor force produce the goods and services that are consumed by folks over 65 who themselves no longer produce. And indeed we have promised in all the advanced countries, and indeed in most countries to give the older people pensions, money, that they will have to live.

[B]

Decent lives after they stop working.

[A]

And that is going to require that the people who produce, the younger folks, produce enough to do that. But if there aren't enough people, if the balance of population is changing, we might have a problem. And, and indeed the latest statistics do.

[B]

There's a fellow, a quite famous fellow.

[A]

Named Joseph Chamie, C H A M I E who used to be at the United nations and now is independent, who does the kinds of studies about this. And he refers to it as this change in the world from the Toys R Us society to the olds are US Society. That is across the world, the proportion of elderly is growing much faster than.

[B]

The proportion of young people entering the.

[A]

Labor Force in 1995. This began in a dramatic way in.

[B]

One country, Italy, where the proportion went really badly in the sense that there weren't enough people to produce in the way of the past, let alone to produce enough to take care of all the large proportion of folks who are over 65.

[A]

So what then does this mean? Well, basically it means that we're not going to have enough stuff being produced.

[B]

By the shrinking proportion of young people.

[A]

All over the world.

[B]

And it's getting really bad. When you look at the numbers between now and 2020, we which isn't that far off.

[A]

So the question is, what's going to happen? And in the articles that are being written, something is assumed which I want to challenge. The assumption is either. If we don't have enough people working, either we can't give the pensioners what has been promised to them, not through any fault of theirs, but just by the way the population's age distribution is changing, or we're going to have to.

[B]

Tax the younger people hugely to raise.

[A]

The money to take care of the old.

[B]

And that of course threatens some kind of wartension, at least between the older parts of our population and the younger.

[A]

And more tension in modern society is.

[B]

Is the one thing I think most of you can agree, we don't need and we don't want.

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Is there no way out? Of course there is. And it's the one that is peculiarly absent in most of the discussions. There is an option that means we can honor our obligations.

[B]

Pensions, contractually agreed upon by employers and employees.

[A]

We can honor those pensions, give the.

[B]

Older folks who've given a lifetime of work a decent retirement for the rest of their lives without taxing the younger people.

[A]

And how would we do that? By redistributing the wealth in our society.

[B]

We have over the last 40 or.

[A]

50 years not only seen a change.

[B]

In the distribution of the age of our population, which is what these studies.

[A]

Focus on, we've also seen something else. A spectacular concentration of wealth at the top. That's why we had Oxfam in England.

[B]

Which I talked about in earlier programs.

[A]

Released that stunning statistic earlier this year that the richest 62 people in the world, the 62 individual persons who are the richest in the world, together own.

[B]

More wealth than the bottom half of.

[A]

This planet's population, roughly three and a.

[B]

Half billion billion people. You know how we can solve the pension problem? Take a good portion, I don't know, let's say half of what the wealthiest in the world have. You know, for someone like Bill Gates, it might mean his wealth goes from 60 to 80 billion to a mere 30 to 40. He'll hardly notice. But meanwhile, the resources that will become available to honor our pledge to the.

[A]

Hundreds of millions of older people who've.

[B]

Given a lifetime of work can be kept.

[A]

No, no, the choice isn't between dishonoring.

[B]

Ourselves in terms of how we treat our elderly or loading up our young people with even more tax burdens.

[A]

No, there's an option. The fact that it isn't spoken about tells you a lot about the culture.

[B]

And the ideology that governs here in the United States. And that's what has to be punctured.

[A]

That takes me to my next update, which talks a little bit about those.

[B]

Rich, rich people A story in Bloomberg.

[A]

On 10 August this month tells us that there's a new Duke of Westminster that has just succeeded to that noble.

[B]

Chair in Great Britain.

[A]

Wow.

[B]

Hugh Richard Louis Grosvenor, I kid you.

[A]

Not, who became the seventh Duke of.

[B]

Westminster after the sudden death of his.

[A]

Father this last week. He joins Bloomberg Billionaires Index as one.

[B]

Of the 400 richest people.

[A]

He's particularly interesting because he is the youngest. He is 25 years old, a single young man, 25 years old, who has, if the numbers are correct, 12 to 13 billion dollars.

[B]

The youngest of the 400 richest people that Bloomberg tracks.

[A]

And so Bloomberg tells us about some of the others. There's a young group and I want your hearts to beat for the tender.

[B]

Ages at which they have wild amounts of money.

[A]

The inheritor of the wealth of the Walton family, the family that became rich.

[B]

Through the Walmart department stores, Lucas Walton.

[A]

He's 29 years old and he has.

[B]

A bit more than the Duke of Windsor.

[A]

Still more Dustin Moskovitz. And let me remind myself and you.

[B]

What Dustin Moskovitz is.

[A]

Oh yes, he was a co founder of Facebook. He is only 32 years old and.

[B]

He has 12 to 15 billion also.

[A]

And then there's the most famous of.

[B]

The young men, Mark Zuckerberg, the other co founder of Facebook. He's 32 years old but he is.

[A]

In a league of his own. He has $55 billion. Isn't it interesting that a few pages away from reading about the old people.

[B]

May be hobbled with a miserable retirement because of the way age is going.

[A]

Forgets about the absurd excess of wealth.

[B]

That has concentrated at the top which.

[A]

Could be made available for all manner.

[B]

Of socially useful things. Much more useful, much more ethical, much more humane than allowing this wealth to accumulate in the hands of a tiny minority.

[A]

Not to talk about that if you're.

[B]

Talking about cutting pensions is nothing short of shameful. My last update for today.

[A]

Is yet.

[B]

Again a bit different.

[A]

This one has to do with a story that appeared in the last week.

[B]

Actually a two part series of stories.

[A]

That I have to commend.

[B]

This is good investigative reporting and it.

[A]

Appeared on the front page of the New York Times, which meant not only.

[B]

Was it good investigating, but it was.

[A]

Good journalism to give this important story the kind of exposure it will get.

[B]

Because of its placement on that important front page.

[A]

And I have a personal connection.

[B]

So let me begin with that.

[A]

When I was a graduate student at.

[B]

Yale University years ago getting my PhD.

[A]

Toward the end of that process, it.

[B]

Was quite Typical for recruiters from major corporations and major think tanks and major.

[A]

Government agencies to come by Yale offices in New Haven, Connecticut, and offer to meet with students who might be interested.

[B]

In a career with the particular institution they represented.

[A]

And if that went well, if you.

[B]

Signed up as a graduate student, which I did for some of these interviews, and if you liked them, and if.

[A]

They liked you, well, then you'd likely.

[B]

Be called to wherever their headquarters were for a follow up interview, which might indeed lead to a job. And one of the entities coming was the Brookings Institute. So we all learned as graduate students.

[A]

What the Brookings Institution was. And I would say, if my memory.

[B]

Is correct, we were told by our professors you could not get better postdoctoral position than at the Brookings Institution doing research. This was a famous Washington, D.C. institution, known for its strictly objective research on important economic issues of the times. And you would be caught up with the great researchers that were gathered there. It would look wonderful, wonderful on your resume. And it would catapult you into a very desirable job as a professor or indeed at another think tank or a government agency, who would be very pleased that you had spent time at this wonderful, pristine, highly respected research institution. That's what was called those days. Nowadays we call these things think tanks, but it's basically the same idea.

[A]

So imagine how interesting I found it when the New York Times article basically.

[B]

Says that the Brookings Institution, which is.

[A]

Discussed in detail and by name, has.

[B]

A very shady dimension to itself.

[A]

It turns out it takes huge amounts of money from people with very particular economic interests and that are followed up by the research at Brookings, fitting really nicely into what they need, these donors.

[B]

To the Brookings, in the way of.

[A]

Something that can be touted as objective scientific research, but is actually, as the time suggests, lobbying by another name. It's being the paid, hired research gun.

[B]

Of the big corporations.

[A]

And they give several.

[B]

The Lennar Corporation being the first one that's a major home builder in the United States with a big lucrative project in San Francisco.

[A]

And it turns out the Brookings Institution did a lot of research that had the interesting quality of suggesting how good.

[B]

This would be for San Francisco if they did something that stood to gain the Lennar Corporation millions of dollars, if not billions, and that only cost Lennar a $400,000 contribution to Brookings.

[A]

But as I looked into it, I.

[B]

Discovered two other things.

[A]

The chief fundraiser, it turns out, and.

[B]

This is from the observer newspaper, also last week, the chief fundraiser for the.

[A]

Brookings Institution, Haim Saban, is the same man who's the chief fundraiser for Hillary Clinton.

[B]

Uh oh.

[A]

Throughout the primary between Clinton and Sanders.

[B]

The Brookings Institution, this supposedly neutral, objective.

[A]

And scientific institution, issued a long series of reports mocking, ridiculing and dismissing the economic proposals of Bernie Sanders while suggesting.

[B]

Those of Hillary Clinton were the height.

[A]

Of responsible economic policy.

[B]

It turns out the money comes from the same man.

[A]

The major donor to Mrs. Clinton is.

[B]

Also the major donor to the Brookings Institution.

[A]

Is this corruption?

[B]

Well, who knows what the legal implications are? Hopefully those will now become an issue. But morally and ethically, to have written reports denouncing one candidate that favor another while your largest donor is the donor.

[A]

To the other, not mentioning that, not making that clear, that violates every ethic.

[B]

I know of in the realm of research. It's a little bit like those scandals of a few years ago when we discovered that the papers in scientific journals about the effects of drugs were often commissioned by the companies making and selling the same drugs. But my concern goes even further. Even without the corruption, we can see that the New York Times itself points out there's a deeper corruption that has nothing to do with particular donors. The Brookings Institution is an institution which, for all its history, has never had an interest in a research report about the pros and cons of a system of other than capitalism. It's as if the unspoken commitment to capitalism runs so deep that it doesn't even occur to the folks gathered there that arguments about the system itself, evaluations of whether and how we could do better than capitalism might also be, oh.

[A]

I don't know, the topic of an occasional conference where they might gather. The folks like me who think that and see what might have to say and have a debate and an argument and look about discussing the pros and.

[B]

Cons, they don't bother with that. That's why they didn't occur to them that there might be a problem in taking money from the same people that their research affects in the most urgent way. Let me give you an example of where this leads. Suppose you had a research institute whose job was to discover what are the problems of our school system.

[A]

And suppose all you ever got from.

[B]

This institution, whether it was called Brookings or something else, were research papers which said either it's the fault of the teachers or it's the fault of the teachers union, or it's the fault of the students, or it's the fault of the parents of the students.

[A]

Wouldn't you, after a while, say, wait.

[B]

A minute, don't you also want to.

[A]

See what's the role of the way.

[B]

We organize our schools.

[A]

You know, our schools are organized in a very top down fashion. We have a small number of people who are called administrators who have an enormous amount of power and they tell.

[B]

The teachers who what to do.

[A]

And the teachers in turn tell the students what to do, partly because that's what happens to them when they're told.

[B]

What to do by the administrators.

[A]

And the parents are kept usually at an arm's length so that they don't interfere in this. Maybe there's a problem with the system.

[B]

Maybe schools ought to be organized in.

[A]

A different way so that parents and students and teachers manage their own schools, become their own administrative personnel, become self managers, rather than having a bureaucratic layer above them telling them what to do. Isn't that also something? I think you would agree that a research institute trying to understand problems of our schools and trying to come up with innovative ways of proceeding wouldn't shut down the possibility that the problem is the system and how they're organized. And rather than doing that, not wanting.

[B]

Simply to find who the scapegoat is, who's to be blamed, well, that's Brookings. With capitalism, the problem is the unions.

[A]

The problem is the corporations, the problem is the bankers. Even when they do that, the one.

[B]

Taboo they will not break is that.

[A]

The system called capitalism.

[B]

Why, that's sacrosanct. That's where religious fundamentalism comes in among people who pride themselves on not being religious fundamentalists. But they are. But their religion is secular and their God is capitalism. And it is not to be questioned, it is not to be interrogated, it is not to be examined, it is to be prayed to. And end of story.

[A]

We've come to the end of the.

[B]

First half of Economic Update for today. I hope you have found these small items analyzed in each case of interest. They cover some of the major events of the last week and a half.

[A]

If you want more information about all.

[B]

Of this, remember please to look at our websites, rdwolff with two f's.com and democracyatwork.info info where you can get a great deal more of this information. Stay with me. We will be right back.

[C]

When I was a child I used to wonder how Santa put my toy under the tree I said, mama, can you tell me how this can be when there ain't no chimneys in the project Ain't nothing in the ghetto not in the project Ain't no chilies in the project Mama sat me down and said baby, 7 o' clock does magic things as soon as you sleep a chimney will appear and in the morning you will see all he bring. Don't be worried that there ain't no diminution to project Ain't much in the I Not in the. Now I'm all grown and I see.

[A]

Welcome back, friends, to the second half.

[B]

Of today's edition of Economic Update. Before turning to two major issues that many of you have written to us about asking me to make comments on it, which I'm going to do.

[A]

I want to remind you that we.

[B]

Take these communications we get from you very seriously.

[A]

They help us shape this program. They help us decide not just the.

[B]

Topics that we're going to investigate, but how to organize the analysis so it serves your interests.

[A]

It also helps us to discover who we might bring here to interview, who has the kind of experience and expertise.

[B]

That can best speak to the very issues and questions you have raised.

[A]

Last week I had Dr. Harriet Frad.

[B]

On the program, partly because she is really capable of generating a very, very important flow of your responses to us.

[A]

And we want to be in turn responsive to you. So please make use of our two.

[B]

Websites to partner with us to tell.

[A]

Us what you need and want to make use of the programs we put up there.

[B]

Every one of these programs is archived on the websites.

[A]

You can listen at any time to.

[B]

Any of them built up over the last five years, every week.

[A]

But there are many other things these.

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Websites provide to you besides a way to communicate directly to us.

[A]

By clicking on an icon on any.

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Of our two websites. You can follow us on Facebook, Twitter and Instagram.

[A]

You can use the links we provide.

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For your own education. You can share the materials we put up there.

[A]

Texts, audio files, video files, all of it we add every single day, sometimes.

[B]

A bevy of materials even in one day.

[A]

So here are the names of the two websites. They're available 247 with no charge ever for anything.

[B]

That's what we are doing. That's what we are committed to doing. Rdwolf with two Fs. That's rd w o l f f.com.

[A]

And democracyatwork.info that's democracyatwork, all one word dot info.

[B]

These are websites for your use and for your interest. Okay, Many of you have asked questions about worker co ops, something we talk about often. And that's basically because we believe the whole team here at Democracy at Work, we believe that's a direction that economic change has to take. In order to understand that, let's review the three major systems of, of the.

[A]

Last several thousand years.

[B]

In most parts of the world, one.

[A]

Of those systems is slavery. And what's distinctive about that system is that it divides the people doing the work into two major masters and slaves. And typically, the slaves do all the.

[B]

Work, produce a lot of output.

[A]

It is automatically and immediately owned by the masters. The because they own the land and.

[B]

They own the workers, the slaves. That's what slavery means.

[A]

And then the masters give back to the slaves whatever they think they need to to keep the slaves alive and healthy so they can keep doing the.

[B]

Work of the society.

[A]

That's slavery.

[B]

And it has been in existence in all different parts of the world, sometimes for hundreds and sometimes for thousands of years.

[A]

The next system is called feudalism. There the division is again between two basic groups.

[B]

But they don't have slavery.

[A]

That's why it's a different name and a different system. What they have are lords and serfs.

[B]

Serfs do the work, again, all of.

[A]

It, but they work a little bit on land for themselves and they keep.

[B]

The produce of that to. To nurture themselves and their family.

[A]

And another part of the time, they work for the lord who gets to keep whatever they produce that other part.

[B]

Of their working day or their working lifetime.

[A]

So once again, the mass of people.

[B]

Produce the output, and it goes partly.

[A]

To them to keep them going as serfs and partly to that other group.

[B]

And as you might have guessed, the masters are small in number and the slaves are large, and the lords are small in number in feudalism, and the serfs are a large number.

[A]

And now we come to capitalism. And capitalism is like those other systems in that it also divides the people.

[B]

Involved in producing goods and services into two great groups. But we call them neither slaves nor serfs.

[A]

We call them employees, that's the majority, and a small number called the employer. So the employer and the employee is a different arrangement.

[B]

The employer doesn't own the employee, as in slavery.

[A]

And the employer doesn't have the employee.

[B]

Work on his own project part of the time and work for the employer the rest of the time, as in feudalism.

[A]

Instead, peculiar.

[B]

Something that happened neither in slavery nor in feudalism.

[A]

The employer and the employee sign a.

[B]

Contract, literally on a piece of paper, or at least verbally between them, that.

[A]

The employee is going to come to work five days a week, usually nine.

[B]

To five or some hours like that.

[A]

Produce with his or her brains and.

[B]

Muscle, whatever it is, that's to be done with materials provided by the employer.

[A]

And at the end of each day.

[B]

After they've poured their creativity into whatever.

[A]

Is to be produced, they go home, and the employer keeps the fruit of their labor, which he then sells.

[B]

Typically in capitalism, the revenue he gets from selling what the workers have produced, he takes.

[A]

He gives part of it to the.

[B]

Workers as a wager salary.

[A]

He uses part of it to replace.

[B]

The tools and equipment that were used.

[A]

Up, and the remaining part he calls profit and keeps for himself. Is it similar, therefore, basically to feudalism and slavery? It is in the sense that one.

[B]

Group, the majority, is doing lots of work to sustain a much smaller group.

[A]

That tends to accumulate impressive wealth in.

[B]

This way, just as the masters did in slavery, the lords did in feudalism, and the capitalists have done in capitalism, capitalist being another word for employer.

[A]

Have people in these kinds of societies.

[B]

That have, as I say, lasted either hundreds or thousands of years, have they.

[A]

Been the only arrangements for production? And the answer here is very important. The answer is no. Human beings have looked at that system.

[B]

All of them, the slave system, the feudal system, and the capitalist system, and said, I don't want any part of this. I don't like it, I don't accept it, I don't tolerate it. I want to organize production differently, and.

[A]

If I can't do it for my.

[B]

Community as a whole, I'll do it for myself. And what words have been used by.

[A]

People through the ages who didn't want.

[B]

To be part of the slave economic system or the feudal economic system or the capitalist economic system?

[A]

Well, one phrase they used, and lots.

[B]

Of variations of this.

[A]

But one simple phrase that will ring.

[B]

True, I think to most of you listening or watching, is the phrase, I want to be my own boss. I don't want to be a slave, I don't want to be a serf, and I don't want to be an employee.

[A]

But tell you what, I don't want.

[B]

To be a master, a lord, or an employer either. I don't like that way of relating to other human beings five out of seven days a week during my work time.

[A]

So these are people who did something.

[B]

Else, who resisted, who revolted, who took another way economically. What many of them did was say, I'm going to be my own boss. I'm going to work alone. I'm going to work on my little farm or in my little workshop or in my little boutique or store.

[A]

And I'm not going to be anyone's employee.

[B]

And I'm not going to be anyone's employer either. I'm going to work for myself. Because that is a more satisfying, a more ethical, a less exploitative way to live. My working life, we've always had those. For example, in the United States, from the earliest days of a colony right up to the present, millions of people do not want to be in the employer employee relationship. Just like there were people who didn't want to be lords or serfs, masters or slaves.

[A]

But there's a second way that people.

[B]

Have broken away from the master, slave, lord, serf, employer, employee, set of options.

[A]

These are people who didn't decide to.

[B]

Break away by becoming their own boss in an individual worker enterprise.

[A]

Instead, they banded together with other workers.

[B]

And said, you know what we're going.

[A]

To have, we're going to have. And then there were many words.

[B]

A co op, a commune, a community.

[A]

We're going to organize work so that.

[B]

We are all both, excuse me, employees and employers.

[A]

We're not going to do it as individuals the way others do. We're going to do it as groups.

[B]

We're going to have a cooperative, collective, communal community. Lots of words for this way of producing goods and services. I'm going to use the word co op.

[A]

And these worker co ops. Co ops focused on a cooperative way.

[B]

Of producing to get away from slavery, feudalism and capitalism. To have a way of working that is different, that does not divide into a few who dominate and control, and the many who are dominated and are controlled. There's a deep democratic impulse behind the notion that you bring democracy into the workplace by making it cooperative, one person, one vote. That allows me then to turn to what is distinctive about worker co ops. And here we have to be very careful because there's a lot of misinformation.

[A]

A worker co op means that the work itself, the daily task of designing.

[B]

What is to be done, organizing the inputs so that they're available, collecting the machines if you need them, organizing, training.

[A]

People to do the work, making all.

[B]

Of those decisions and actions collectively through discussion and community, voting on what should be done, on what should be produced.

[A]

On how it should be produced, what.

[B]

Technology are we going to use, where are we going to produce it in.

[A]

This community, in this country, where? And finally, what are we going to do with the profits, with the excess beyond what we pay ourselves as workers?

[B]

We're going to have an excess, a.

[A]

Surplus, a profit, and how are we.

[B]

Going to use that? For what purposes? To grow our enterprise, to provide a daycare for our kids?

[A]

What? That's a collective decision.

[B]

In a co op, it is the decision of the master, the lord or the employer in slavery, feudalism and capitalism. And that's a fundamental difference in how Co ops work.

[A]

But if you understand that, then you.

[B]

Can see right away that we are not talking about worker ownership. Whether the workers own the enterprise or.

[A]

Not is a separate matter from how.

[B]

The work itself is organized.

[A]

It might well be that we would.

[B]

Want an economy in which the workers who organize collectively also own the enterprise collectively.

[A]

But that's not necessary.

[B]

The enterprise can be owned by the local community. The enterprise can be owned by by the local town. The enterprise can be owned by an institution, by the federal government. It could be lots of different arrangements of ownership.

[A]

But what matters in terms of the.

[B]

Economic system is mostly how is the work organized.

[A]

And here the crucial difference from slavery.

[B]

Feudalism, capitalism and self employed individual production is that the work, everything about it, is decided collectively and democratically. That's also why we talk about workers self directed enterprise. Because what we're talking about is workers who direct what's going on, whether or not they own it.

[A]

And likewise, it's important to keep clear that worker direction is not the same.

[B]

As workers self management. There are experiments, and they have been for a long time, in letting workers not only be the workers who do.

[A]

The work, but also to be the managers. But that leaves the question of who.

[B]

Directs it, who makes the decisions that directors make in the hands of others. That's not what we're talking about. That still has those who make the big decisions at the top versus those who do the work and manage themselves. And that's the very division that replicates yet again the slavery, feudalism, capitalism, division into two. So we don't want that. What we're talking about when we talk about co ops is precisely that workers are their own board of directors, instead of workers being many. And a board of directors, typically 15 or 20 people, none of that. The directors are now going to be the workers as a whole. That's crucial. They're going to decide democratically all the decisions that are now decided undemocratically by a tiny number of people at the peak of a corporation, the board of directors.

[A]

Well, having said all this, is there.

[B]

Experience over the generations and is there.

[A]

Experience right now that will allow us.

[B]

To compare the performance of a capitalist enterprise, since we don't have much in the way of slavery and feudalism anymore.

[A]

Is there a way to compare the.

[B]

Kinds of division that capitalism represents, employer, employee, and how those enterprises organized that way work with how cooperative enterprises do? Well, we don't get much of that research done around the world because capitalism is dominant, but we get some. And I want to conclude today's Discussion by giving you a report on one.

[A]

Of the most interesting systematic comparisons between.

[B]

How cooperative enterprises work and how capitalist enterprises do. For my American audience, I need to remind you that there are many countries in the world where cooperatives are a much bigger, bigger part of the economy than in the United States, making it easier in those countries to make these kinds of comparisons because you have a lot of enterprises organized cooperatively relative to the capitalist structure. That's a little bit behind here in the United States, but we have them.

[A]

So we can include them.

[B]

And they have been included in the research that I'm going to report on to you right now first, in case any of you wish to follow and pursue this, the reporter in question. The research I'm going to report on.

[A]

Was done by a professor of economics.

[B]

At Leeds University Business School in Great Britain. It's an old established business school at an old, established and highly reputed British university.

[A]

Her name is Virginie.

[B]

It's the French version of Virginia.

[A]

Virginie Peyrotin. I'm going to spell it P E R O T I N. Once again, Virginie Perrotin.

[B]

P E R O T I N.

[A]

And you can find her work on.

[B]

The web at www.ukcoop real simple www.uk.co op and the paper she wrote that I'm going to report to you on.

[A]

Is called what Do We Really Know.

[B]

About Worker co ops.

[A]

And she has made a systematic study.

[B]

Across many countries of the relative performance of capitalistically organized enterprises and cooperatively organized enterprises. That is the dominant form capitalism, top down, hierarchical, tiny group of people making the decisions, everybody else has to live with them versus a cooperative democratized workplace.

[A]

And I'm just going to read you.

[B]

The main findings of her research. If you go again to the website www.uk.co op or one word coop you can get all the details. Here are the main findings. Worker co ops are larger than conventional.

[A]

Businesses and not necessarily less capital intensive.

[B]

That is they have all the machines and bells and whistles. There's no need to think of co ops as somehow intrinsically small. That's just a mistake. Number two.

[A]

Worker co ops survive at least as.

[B]

Long as other businesses and have more stable employment than capitalist outfits. That's right. They're not short lived, they last longer. And here comes the big one. Worker cooperatives are more productive than conventional capitalist businesses. Their staffs work better and smarter and production is organized more efficiently. Next, worker co ops retain a larger share of their profits than other business models, that is capitalist enterprises, executive and.

[A]

Non executive pay differentials are much narrower.

[B]

In worker cooperatives than other firms. In other words, when the workers together decide who gets what amount of salary, they still give some people more than others, depending on what they need and what they think is reasonable. But the gaps between rich and poor are much, much less than what happens in capitalism. So to summarize, what do we. Co ops like self employment, have been a way for people to resist being taken over, forced to participate in a binary, in a two part organization of production, whether it's master, slave, lord, serf, employer, employee, they don't want that. They want to be their own boss, either individually or as part of a collective that is its own boss because it directs itself whether or not it.

[A]

Owns, whether not or whether or not.

[B]

All management is done by everybody. The direction, the basic decisions, what to produce, how to produce, where to produce and what to do with the profits, is made democratically by the workers who in their commitment to democracy will of course include the communities that interact with these corporations, with these enterprises. Because democracy demands that since the community is affected by what the corporation does and vice versa, there needs to be.

[A]

A co directing by the community and.

[B]

The workers to make a democratic workplace a reality. And as I say, there are many examples around the world, worker co ops have always been an option. And when systems break down, when slavery broke down, passed away, when feudalism broke down and passed away, one of his signs was the growing numbers and commitment of people to not be part of those unequal systems, to be their own boss individually, or to be their own boss collectively.

[A]

In the United States, as in so.

[B]

Many capitalist countries today, as capitalism has more and more and deeper and deeper problems that we see around us everywhere, more and more people are choosing or being forced to go into business for themselves, to become self employed, to see the capitalist system as something they want to step away from. And they are discovering self employment more and more, but they're also discovering cooperative employment, cooperative organization of enterprises more and more. That's not only a healthy new direction, it's a sign that the system we're living in, that we became used to capitalism, may well be coming to the end of its historical period. Just like the other systems that divided society into a small number who became wealthy and ran the show and a mass number of people who didn't, those societies passed away. Capitalism may be following in their path. We don't have much time left. I took more than I expected to to make these points about worker co ops, but you have been communicating to us a desire to have these Kinds of questions asked and answered in the time that remains. A few comments about unemployment here in the United States. And it is worse in many other parts of the developed world. For example, European. But here in the United States we have somewhere between 15 and 20 million people who have no job. Either they're looking for one or they've stopped looking. But in any case, that's the rough number. The cost of this for the society as a whole is stupefying. It is overwhelming. It's hard for me even to talk about it in a calm voice. Every statistic we know indicates that unemployed people have more physical and mental problems. Their difficulties, of course, become the difficulties of their spouses, their children, their neighbors, their relatives. The damage done to their self esteem, the damage done to all the people they interact with. It's overwhelming. The burdens those people then have to put on social services, from hospitals to childcare. It ramifies. It's crazy. There's really no other word for it. To allow the profit calculations of employers.

[A]

To lead them to decide, I need.

[B]

To fire 20% of my people like Macy's that I talked about in the first half of Today's program. Closing 100 stores, just telling those people to get lost. That a company can provoke the problem of unemployment simply because it's profitable and.

[A]

Have no responsibility for what in the world happens.

[B]

And as the consequences of their decisions.

[A]

Ramify, that's an insane way to organize an economy.

[B]

The losses to our society from unemployment.

[A]

Are way greater than the gains to.

[B]

The private profits of those who cause the unemployment. Why do we permit this? Why don't we have a program that.

[A]

Immediately puts these people to work doing something socially useful and taxing the rich.

[B]

In this society who are the benefits of 40 years of inequality getting worse.

[A]

To do something to deal with the social disaster that they, in their role as controllers of business are the main causes of this is a simple question of efficiency and of social justice. Unemployment is a scourge.

[B]

It is one of the worst costs of sustaining capitalism. We've come to the end of our program. Thank you very much for your attention as always. We are now at 70 stations and counting across the United States. We're very proud. We ask you to help us find more stations. We want to thank all of you for partnering with us, the action groups that are forming around the country to work with us, Truth out, that independent source of news and analysis, our longtime partner. It is a pleasure to make these programs and to see that they're getting out there, they're helping. They're informing. It makes my coming here every week one of the most important and meaningful things I do in my life. I look forward to talking with you again next week. Change, change, change, change.

[A]

Ra.