Transcript

A (0:00)

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 (1:09)

Our incomes, our debts, those of our.

A (1:12)

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 (1:45)

So I'm going to proceed today.

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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.

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Verging on the dishonest.

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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.

Summary

Economic Update with Richard D. Wolff

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

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.

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)

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.

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)

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

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.

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

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.

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ECONOMIC UPDATE: Economics of Worker Cooperatives