Economic Update with Richard D. Wolff

Episode: Living in a Socialist Economy

Date: May 16, 2019
Host: Richard D. Wolff
Guest: Victor Grossman

Main Theme & Purpose

This episode examines the realities of living under capitalist and socialist systems, focusing on economic inequality in the United States before transitioning to an interview with Victor Grossman, an American who defected to East Germany and lived there for decades. The purpose is to provide firsthand insights, challenge mainstream narratives about socialism and capitalism, and discuss what lessons can be learned from different economic models.

Key Discussion Points & Insights

1. Critique of Capitalism & Examples of Inequality

(00:26–14:31)
Richard D. Wolff opens the show critiquing capitalism’s persistent inequality and highlighting news stories that expose systemic issues.

• Warren Buffett's Defense of Capitalism

  • Buffett reaffirms himself as a “100% capitalist” and admits that “capitalism will always hurt some people.”
    • Notable quote (01:03):
      • “Capitalism will always hurt some people.”
      • — Warren Buffett, recounted by Richard Wolff
    • Wolff observes,
      • “Coming from a person who is never in the group ‘some people,’ this was an extraordinary remark.” (01:08)
  • Skepticism about claims that “socialism will never come” to the US, referencing historic leaders making similar claims before socialism arrived in their countries (01:51).

• College Admissions Scandal

  • Discussion of Rick Singer’s college admissions scheme, bribery, and the usage of wealth to buy privilege (02:06–05:15).
  • Tax fraud via college “donations” cited as further evidence of how the wealthy exploit the system.
    • Notable example:
      • “One Chinese couple in China paid Singer six and a half million dollars to get their daughter into Stanford.” (03:24)
  • Richard Wolff shares personal anecdotes from Harvard to underscore that “flashing a college degree” does not always equal merit (04:41).

• Lobbying and Legislative Manipulation

  • A case study from New Jersey in which a lawyer wrote pro-corporate tax legislation, robbing the public treasury (05:31–07:21).
    • Result:
      • $260 million tax break for corporations, merely $155,000 gained for the state.
    • Quote:
      • “That was what goes on every day in Washington and in all 50 state capitals. The money talks, and the more money, the louder it talks.” (07:01)

• Teacher Strikes in the Carolinas

  • Praises teachers for striking against poor state support, connecting budget shortfalls to tax policies favoring the wealthy (07:49–08:49).
    • “Politicians are cutting the budgets of school systems around the country because they don't have the courage to tax rich people and corporations, which is where the money is.” (08:30)

• Non-Disclosure Agreements (NDAs) as Tools of the Powerful

  • Explains how NDAs are used to buy silence on workplace abuse or misconduct, illustrated by US and international cases (09:10–13:40).
    • “NDAs are a way for wealthy people to buy their way out of being held accountable for what they do.” (10:39)
  • Legislation claimed as “reform” often only provides window dressing, not real change (12:02).

• Conclusion on Systemic Problems

  • Emphasizes that abuse of power is deeply rooted in economic inequality:
    • “The inequality of wealth and power built into our capitalist enterprise is an invitation that has been accepted by countless top executives… It's the system's inequality that lies at the root of this behavior.” (13:31–13:56)

2. Firsthand Account: Life in East Germany (with Victor Grossman)

(14:31–28:32)

Introduction to Victor Grossman

• American-born, Harvard student, Communist Party member, former US Army soldier who defected to East Germany; author of memoirs on the American left and life in the GDR.

Why Defect to East Germany?

(16:04–17:30)

• Not voluntary: Grossman fled to avoid prison after his leftist past was discovered by the US Army during the McCarthy era.
  • “I deserted by crossing from the American zone of Austria to the Soviet zone, which meant swimming across the Danube River. … I managed that really in panic, but safely, as you see.” (16:46)

Strengths & Weaknesses of the GDR System

(18:03–21:57)

Strengths:

• Removal of Nazi collaborators from power (important for Grossman’s identity as a Jewish anti-fascist).
• Solidarity with global liberation and anti-colonial movements.
• Eradication of poverty—Grossman never saw a beggar or homeless person in 38 years.
• Universal access to medical care and education, including financial support for students and generous parental benefits.
  • “You never paid a penny anymore. And education was the same… Childcare was free. These were good things that I liked.” (19:29)
• Cheap housing (rent was only about a tenth of salary).

Weaknesses:

• Economic shortages and inability to match Western consumer goods standards due to constant external pressure and sanctions.
  • “Awful lot of goods were missing. … Bananas were short, for example, many other commodities.” (20:07)
• Repression:
  • Lack of a free press; people cautious with public expression due to risk of losing professional advancement, even though there was no widespread fear of imprisonment (21:13).

Reunification and Its Impact

(22:00–24:10)

Benefits:

• Families reunited; freedom to travel; access to modern consumer goods.

Drawbacks:

• Destruction of East German industry and agriculture led to mass unemployment.
• Youth programs dismantled; formerly free or inexpensive childcare and medical care became costly.
• Rise in job insecurity and erosion of social safety nets.
  • “Not only that, but youth clubs were disbanded. Childcare became expensive. … You weren't sure of a job. You didn't know what was going to happen tomorrow.” (23:06)

What Can the US Learn from the GDR?

(24:11–25:47)

• Do not emulate the repressive aspects, but recognize that constant external hostility led to defensive, “besieged” mentality.
• Key lesson: Genuine equality and security only possible if “the main profiteers—the extremely wealthy and their companies—are removed from control of production.”
  • “I think this could be altered and done away with if you got rid of the main winners, the main profiteers, which are the extremely wealthy and their companies.” (25:28)

The Cold War as Lived Experience

(25:47–27:38)

• East Germany saw constant ideological battle—propaganda from both sides dominated daily life, primarily through TV.
  • “This conflict between east and west was fought out every evening on the TV screens because West German television was always telling the people in the GDR how bad things were.” (26:10)
  • Differing narratives between East and West produced a culture of whispered contradictions and cautious conversations.

Legacy of Socialism in Modern Germany

(27:39–28:32)

• The Social Democratic Party (SPD) rejects the GDR’s legacy.
• Die Linke (The Left), a successor party, is divided: some recall the merits of secure employment and affordable living, others distance themselves from the past.

Notable Quotes & Memorable Moments

• On systemic inequality:
  • “That was what goes on every day in Washington and in all 50 state capitals. The money talks and the more money, the louder it talks.” — Richard Wolff (07:01)
• On social achievements in East Germany:
  • “In all the years, 38 years I lived there, I didn't see one single person sleeping in the street, or one single beggar.” — Victor Grossman (19:06)
• On lost security post-reunification:
  • “You weren't sure of a job. … You were willing to work overtime … just so that you wouldn't be fired. This was one of the differences.” — Victor Grossman (23:48)
• On what the US can learn:
  • “I think they should learn that only by taking over production into the hands of the people who work on it … this is the only way to solve the dangers ecological, the danger of atomic war, this terrible gap between the very, very wealthy and the very, very poor.” — Victor Grossman (25:10)

Important Segment Timestamps

• 00:26–02:05: Warren Buffett/Capitalism vs. Socialism
• 02:06–05:15: College Admissions Scandal
• 05:31–07:21: Lobbying and Tax Giveaways
• 07:49–08:49: Teacher Strikes in North and South Carolina
• 09:10–13:40: NDAs and Abuse of Power
• 14:31–17:30: Introduction and reasons for Grossman’s defection
• 18:03–21:57: Life in the GDR—pros and cons
• 22:00–24:10: Effects of German reunification
• 24:11–25:47: Lessons for the US
• 25:47–27:38: The Cold War as daily reality
• 27:39–28:32: Socialism’s legacy in modern German politics

Conclusion

This episode blends a trenchant critique of contemporary capitalist excesses with a firsthand account of socialist governance in East Germany. Richard Wolff and Victor Grossman together paint a nuanced portrait—acknowledging both the material security and the political drawbacks of socialism, while exposing the inegalitarian, often corrupt dynamics of capitalism. Grossman’s lived experience punctuates abstract debates with concrete detail, challenging listeners to imagine systemic alternatives and question the persistent mythologies about both economic systems.