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Welcome friends, to another edition of Economic Update weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, those of our children, looming in the future, the whole economic situation. 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. Before jumping into today's updates and getting the ball rolling, I wanted to remind you of some events you might want to take into consideration. Every second Wednesday of the month throughout the year, I do a public presentation at the historic Judson Memorial Church on equally historic Washington Square in Lower Manhattan, New York City. Please consider yourself invited. It's an opportunity for me to go into much more detail about selected issues that are important than I can do on a radio broadcast. It's an opportunity for me to meet you, for you to meet me and for you to see the remarkable audiences growing steadily that come to these events in order to inform themselves and be even more effective in the work that they do. January 13th is the beginning one for 2016 and every second Wednesday, by the way, with one exception, February, it will be the first Wednesday because I will be traveling and speaking in California at that time. So please consider this a standing invitation for what we do in the Judson Memorial Church basically every second Wednesday of the year of every month. I want to remind you also that we are partnered with a firm that helps convert businesses that want to become worker co ops to change from the top down hierarchical capitalist structure with a tiny number of bosses and a large number of people who do what they're told into a worker cooperative. If that's something that interests you, if you're a worker, if you're an employer, if you're both together, we can connect you, which we're happy to do to people who know the financial details, the legal details and have a long history, many years of doing such conversions which are going on all the time in the United States and which you can take advantage of as well. And finally, I do speaking around the country. I'll be in California in February and I want you to all know about that because I'd be happy to come and visit your area. Just get in touch with our websites. Democracyatwork.info is the best one to use. You can also use rdwolf.com get in touch with us and we will work out with you the arrangements for me to visit your part of the country. Likewise, we're always looking for other radio stations to add to our list. We're now about 50, and we want to become 100. And you can help in that process. Okay, jump then into the updates. The first one has to do with Obamacare or the Affordable Care act or health insurance in America. A lot of ways to title this. And I want to tell you about something which for me, given what I've said over the years on this topic, is an ongoing scandal. Let's begin by giving credit where it's due. Basically, since it went into effect, Obamacare, that is 2013, about 15, 15 million Americans who had been uninsured for medical care are now covered. So coverage has been extended. And that was one of the goals of the legislation. And that has been achieved. That is, there are still tens of millions of people who have no insurance, but coverage has been extended to a good number of them. And there is reason to believe maybe that the rest of them will eventually be covered. You might call that the good news. The bad news is that extending coverage was only one of two fundamental goals that most Americans attached to the Affordable Care act, to Obamacare. The other goal, besides extending coverage, was to reduce the outlandish expenses and costs of medical care in the United States. It is a well known fact, which I will repeat, that we pay more for medical care than people in any other advanced country do. Not only do we pay much more, it's not even close we pay much more. But the medical outcomes we have as a nation are mediocre. They're nowhere near as good as many of those countries who spend much less of their annual total income on healthcare than we do. So we pay more than anybody else and we get mediocre outcomes, whether they're measured in length of your life, measured in number of times you visit the hospital, length of average stay in the hospital, on and on and on. It is a scandal. And on that front, on achieving that second goal of cutting expenses, Obamacare has been one large failure. The New York Times recently did a survey, a remarkable survey. They actually did it together with the Kaiser Family Foundation. And the survey has the extension of coverage to 15 million people come at the expense of the mass of Americans insured, uninsured, newly insured. Have they been forced to pay more than they did before? So that not only did the problem of excess expenditure not get better, it got worse. And to make a long story short, that was the finding of this survey done by the New York Times and the Kaiser Family Foundation. You can find the report at either of those two websites or in the New York Times a summary on January 6th. But it's easy to verify all of this. Here's basically what the insurance companies did. They increased the deductible, the amount of money, typically at the beginning of the year, that you have to pay to cover your share. You'll love the term, your share of the insurance policy that you're supposed to be getting. They also raised the copays, the 5, 10, 15, 20, and it's going up bucks. You have to shell out when you visit a physician or a health care facility. In other words, having to insure people they used to avoid insuring. The insurance companies saw an opportunity to make more money and they're doing it. And the result is that there are very high numbers of Americans who either don't go to medical care who, because they can't pay the deductibles, they can't pay the co pays. Those do add up, as everyone knows. Or they go incur expenses and then have serious difficulty empty out their savings, get help from other members of the family at times that are difficult for the other members, turn to charity to get through it. This is a disaster. And it shows a fundamental flaw not only in our medical care system, but in our economic system. Let me explain. We have something which deserves the name medical industrial complex. I borrow the term from the military industrial complex that President Eisenhower warned us about at the end of his presidency many years ago. This is a cozy relationship between the government and the defense industries to give them a lot of money and a lot of profits by scratching each other's backs. We have now the same thing in the medical field. First, the four industries that are involved. Doctors, that's 1. Hospitals, that's 2. The manufacturers of drugs and medical devices, that's 3. And the insurance companies that insure medical care, that's 4. Doctors, hospitals, device and drug makers. And the insurers, they've got a wonderful cozy deal going. Each of them takes care of the other. The insurance companies pay the high premiums to the doctors and the hospitals. They charge as much as they can get away with. All of that is passed on to us as people with insurance policies or to our employers. You can see the game. And the government is cozy by permitting all of this to happen. You know, medical care is something you can't do without, even though many Americans tragically try. It's a kind of monopoly in its very existence. We don't want to get sick, we don't want to die. We want medical care. And we turn to the system we have, and that system has organized itself to rip us off. And Obamacare did not deal with that problem. It extended insurance to people who hadn't been covered and Lord knows we need it. But it did so while allowing, and in some cases actually creating incentives for the companies involved, the doctors, the hospitals, the drug and device makers. There have been scandals already this year about that and the insurance companies to keep on using their monopoly power in an unconscionable and exploitation of medical need. That's how capitalism works, when you get right down to it. All the abstractions taken away. That's what it's about, getting a cozy monopoly, getting the government to either look the other way or help you and then take as much as you can for as long as you get away with it. The next update deals with a problem that's going to be with us throughout 2016 and possibly beyond. It was brought to my attention by a friend of mine, Ellen Brown, who does wonderful work as a critic of our banking system, a proponent of public banking as opposed to private banking, and who does very good research and publishes it regularly. Ellen Brown. Here's what she points out, which is truly frightening. And while I don't know exactly how this is going to play out, I would be remiss on a program like this if I didn't tell you something about it. So you too, like me, could watch to see how this unfolds. The story begins perhaps two or three years ago when there was a terrible crisis in the little island country of Cyprus in the Mediterranean. Turns out that the banks in Cyprus, two or three major banks in particular, had been engaged in a very shady operation. In order to get lots of money into their hands, they offered higher than the market interest rates, tempting all kinds of people, particularly Russians, who wanted to get money out of Russia and into a place where they could do things they can't do with it in Russia and outside of the prying eyes of the Russian government inspectors. So Russians deposited a lot of money Cyprus banks. The Cyprus banks then lent it out for all kinds of purposes. They weren't, as banks so often are, terribly careful about how they invested the Russians money. And then when the crisis of 2008 hit, suddenly it turned out that the Cyprus banks had lent money to all kinds of institutions, including the Greek government that couldn't pay the money back. The banks were in trouble. The banks couldn't cover their obligations to folks they had borrowed from. What were they going to do? They wanted a bailout from the Europeans. The Europeans refused. The European institutions didn't want to bail out Cyprus. They were afraid in those days that with the Greek government's difficulties, with the Spanish government's difficulties, the Portuguese and Irish government's difficulties with their banking sectors, that if they bailed out Cyprus, the banks in Cyprus, they would be sliding down an already slippery slope and they could not go that way. What did they tell the Cyprus banks to do? Well, if you can't get a bailout, a new phrase was developed. It was called a bail in. What does it mean? It means that the banks were told, and they did this, that if you don't have enough money because you've made bad investments to be able to pay off the debts you've incurred, what you can do is take the money of your depositors and use it to cover your own mistakes. Yes, you heard me correctly. A bail in is when a bank treats the money folks have deposited into it, businesses, individuals who've made a deposit in the bank, thinking that that was their money and nobody could touch or use it without their permission. Turns out they were wrong. Turns out that the fine print somewhere buried in an obscure document, enabled the Cyprus banks to go after the depositor's money. The Russians who were involved screamed bloody murder and then tremendous negotiations took place and the Russians took some losses. Why am I bringing this to your attention? Well, as Ellen Brown has taught me, it turns out that the Dodd Frank Act, a bill that we refer to as a Bank control or a Financial Control act act, has in it some juicy bits that are not good for the average person, you and me, but are very good for the banks. Here's the upshot. Big banks in the United States, the major ones, the banks of America, Wells Fargo, Citibank, those huge monster banks that are very important in our banking system, they invest a lot of money in derivatives, those arcane, complicated financial instruments that are so dangerous that were so much a part of the collapse and meltdown of 2008. So the question has always worried what happens if the bets these banks make on derivatives explode in their faces the way they did in 2008? Well, it turns out that bailing in is now available to American banks too. Yes, if they have trouble, the derivatives they owe money on because they borrow by means of derivatives, they insure their investments by means of derivatives. If they lose money on their derivative investments, they can use their depositors money. They may be able to use it outright. They may have to convert a deposit, which is cash that you normally can take out when you wish, into shares in the bank. You don't have money on deposit. You have shares in the bank whose price can go up or down. You get the picture. Depositors are being looked at under this legislation as if they were just more creditors of a bank, as if they had lent their money to the bank rather than deposited it in there. And as creditors, they have to wait in line after the people that the bank owes money to for derivative investments. In other words, other big banks would get in line ahead of the very depositors who've put their money in there. Are there people who are aware of this who are deciding not to keep money in banking accounts? Yes, there already are. They see this as a terrible foretaste of what may happen the next time capitalism crashes. And for those of you who don't know, let me remind you, put on my hat as an economic historian. Capitalism has a notoriety as a fundamentally unstable system. It has an economic downturn every three to seven years. Periodically, these downturns are doozies like, like the Great depression of the 1930s and the long great recession that started in 2008 and for most Americans, continues as it does for most people in Europe ever since. So to think that we are not going to have downturns that threaten our banks is to imagine that the future will have no relationship to the past. Every past crash, the people who have made reforms, passed laws like Dodd Frank, have assured that now that they've taken these great steps, we will never have another crash. Every such promise made by most presidents, by the way, has not been kept, and there's no reason to believe it will be kept in the future. What is new is the movement of the financial sector, whose arrogance really has no limits to now make it possible to take the money deposited mostly by innocent businesses and innocent persons thinking that their money was safe, that their money was theirs for the taking, actually being able to take that money to convert it to shares of stock or take it in yet other forms, forcing the depositors to be bailed in so that the government and other corporations don't have to bail out the failing banks. Let me turn for the next update to yet another scandal. And folks, I'm not here to provide one disaster after another, and I'm sorry how often it has to happen, but we live in a capitalist system that works this way. It pretends in each case that the scandal is an exception, that the scandal is outrageous and unique and once in a blue moon and will be quickly fixed. But it's not true. We have an endless list. And only because I don't want to depress folks do I not report on at least as many as I Do report on one. Well, here's another. Pensioners in the state of Rhode island have been whacked over the last two or three years by a great crisis in the finances of that little state, Rhode Island. And the governor, a Democrat, by the way, having tried to solve the problem not by taxing the rich, not by taxing corporations, but instead by taking away pension supports for longtime public employees who often put a lifetime of contributions into a pension, only to be told now, well, we can't afford it and you're not going to get what was promised to you. Wow. Well, these people have gotten angry. And in their anger they began to ask questions. Why was the pension money not there for them? Was it really true that they hadn't put in enough? It turns out it wasn't. Turns out that the problem is that there's ahere we go now. Much too cozy relationship between the politicians who decide how to invest the money for the pensions of public workers. Money put in by those workers, by the way. Much too cozy a relationship between the politicians who decide how to invest it and the banks and hedge funds and hustlers in the financial world who are there looking to make a killing by handling, by investing, for, by advising pension funds. And yep, you guessed it, they discovered that the fees being taken by the managers of the pensions, the private companies who get those contracts from the cozy politicians have been enormous, much higher than they need to have been, could have been and should have been so angry have the people in Rhode island come that they have called in the FBI to investigate. And believe me, what goes on in Rhode island is not unique to Rhode Island. It is something that goes on more or less in the other 49 states. There has been, in short, for decades, a kind of sophisticated behind the scenes looting of pension funds so that when you're told that your pension is going to be cut or your pension is going to be suspended because we just can't afford pensions in our difficult economy, that's not what's going on at all. They're using the genuine difficulties of the economy as an excuse to hide, to squirrel away the horrible looting of the pension funds done by the managers who got the ducky contracts from the politicians who no doubt got healthy contributions to their reelection campaigns from this whole ugly business. But to sacrifice the elderly, the people who've given a lifetime of service as police officers and firefighters and clerks and teachers and supervisors and inspectors, people who've done a good job for a lifetime in the public service, to deprive them of a decent old age with an adequate pension in order to keep a crooked system going that demands being spoken about. And while you may be depressed to learn it's going on, there may be something in it in the way of a good feeling that at least it's coming out. Maybe something can be done. Let me turn then, in the time that we have left, to an issue that many of you asked me about after I spent some time talking about how large, wealthy universities basically get away with economic outrage by not paying taxes. You asked me, and that's perfectly good that you did, to talk about religious institutions, since they also get enormous support. So let me begin, and that's all we'll have time for a beginning on this topic. So first, do we in the United States subsidize? The answer to that is an unqualified yes. How much? It's very difficult to estimate. But I am in possession of a wonderful piece of research by Professor Ryan Cragan at the University of Tampa in Florida and his colleagues who have been doing really good research and publishing it on the subsidization of of religion in the United States, by which he means, and I mean subsidizing institutions of religion, basically churches, synagogues, temples, mosques, and the priests, rabbis, ministers and so on who serve in these institutions. So let me briefly outline how they are subsidized. First, any income that these institutions receive. For example, many of them own stocks and bonds, so they get dividends and interest on that wealth that they have accumulated. They pay no tax on that wealth. They receive dividends but pay no taxes on them. They receive interest payments, pay no taxes. They pay no taxes to the federal government, and they pay no taxes to the state governments in those states that tax income. So this is an enormous benefit to them. They don't have to do what your corner store has to do, what you as an individual have to do. The church doesn't have to do it. So when the federal government does things, for example, maintain highways that church officials use, the church officials get to use those highways. But unlike you and me, they don't have to contribute to paying for those highways or to paying for the support of schools and hospitals that the federal government provides. They get the benefit, but they do not have to contribute. Let's continue. Churches, mosques, synagogues, and so on are also exempt from property taxes. That is the land on which the church or synagogue or mosque sits. They don't have to pay real estate taxes the way other people do who have a home or a business on land in a community. They don't pay property taxes, not on the building, not on the equipment they have, unlike the store across the street, which must pay. They don't. Okay, the estimates here, well, it varies, but we could talk 40, $50 billion according to Professor Cragan at Tampa University. So we're talking big money in next week's program. We're going to investigate this and other ways that we subsidize religion, leading always to the question, would we have anywhere near the number of churches, temples and synagogues if we demanded of them, or what particularly conservative folks like to demand that everybody pay their own way and not get subsidized by the government? We'll pick up on that. Well, folks, we've come to the end of the first half of this program. Please stay with us. We will be back in a very short time with the second half and some major pieces of economic analysis that I hope will interest you. On our way Our bodies make it perfect and your eyes can make me swim Then again everything seems new I can barely hold my tongue to say the least I mean to you. The same all the weekend. Welcome back, friends, to the second half of today's Economic update. Once again, I'm your host, Richard Wolf, and this is a weekly program that we bring to you as a team, hoping that you find this approach to the economic dimensions of our lives interesting and worthwhile. And while I'm on that point, let me invite you, ask you, partner with us. And by partner, I mean if you find parts of this program interesting, if you find a particular piece of analysis important in the work you do, in the research you do, in the thinking you do, share it with other people, let them know about this program, go to our websites and excerpt parts of it, send it to other people. Use the wonders of, of Facebook, Twitter and all the other social media to share, to extend, to expand the audience reached by this kind of work, it's in your hands. If all of you did a little of this, it would magnify the impact of what we're doing many, many times. And that's why we're here. So please make use of this program and make use of the websites that archive all of our programs and that have a whole bevy of other things that expand on what we do. Rdwolf with two Fs.com and democracyatwork.info the first major topic is picked up from an earlier program I had spent some time talking about. What is socialism? After all, Bernie Sanders is a socialist and is now an important figure in American politics. Socialism has come back out of the shadow and taboo under which it lingered for decades. And so it seemed appropriate and many of you asked me to go over the economics of socialism. Well, I now want to do the same thing for capitalism. And it turns out there's not a lot of clarity about what capitalism is, and that's nobody's fault. Like socialism, capitalism is a term that means different things to different people. Not only that, it changes its meaning over time. And I'm going to go over that briefly because it's a very important concept. Fundamentally, capitalism is the term that is used to describe the economic system that we live in in most of the world today. You can put an adjective in front of it. Some people like to do that. Crony capitalism, financial capitalism. But the bottom line is capitalism is understood as a word used to describe the economic system. The problem is the meaning of the term changes, and we don't agree on it ever. Not now, not in the past. So let's begin with the old definitions that were primarily the ones used. Even today, if you pick up a major newspaper in the United States, for sure you will see the word capitalism when it's used, which isn't all that often, but it's used more now than it has been for a long time. You'll see it put together with terms like free enterprise system or private enterprise system, or market economic system or free market, things like that. Let's take a look at that carefully in this idea. What's distinctive about capitalism when those people use the term who associate it with free or private enterprise? What they're saying is it's an economic system where individuals, by themselves or in little groups, private individuals own and operate the enterprises, the factories, the offices, the stores that do the economic work of society, that produce and or distribute goods and services. And they distinguish that from when the government does it. That wouldn't be a private enterprise or it wouldn't be a free enterprise, it would be a state enterprise. And a lot of people think capitalism is when things are done not by a government or a governmental agency, but instead by private individuals and maybe also individuals who are free. What's this word freedom about? Well, it distinguishes capitalism from systems where there were private enterprises, but the people working in them weren't free. For an example, a slave plantation, say, in the American cotton growing south, that was an enterprise owned and operated by private individuals. It wasn't a state operation, but the people in it weren't free. You couldn't use the word free enterprise really, since the majority of people were the slaves the property of somebody else. And the same is true of the feudal system when you had lords of manors and serfs. The serfs weren't anybody's property, they weren't slaves, but they kind of went with the land. They had to stay there where they were born. And they had a kind of obligation to the lord that went with their identification as a serf born to another serf on that piece of land. They weren't free, for example, to get up and go. They weren't free to take a job or not take a job. So that capitalism, in these people's mind is private enterprises where everybody is free, at least in the sense of not being a slave and not being a serf. Okay, that's a way of defining it. Perfectly. Okay, that's one way. Here's another way that's also been around a long time. Capitalism, it said, is a market system. What do they mean by that? Well, the idea is everybody owns something, even if it's only their ability to work, whereas other people own not only their ability to work, but maybe a piece of land or a factory or a piece of machinery. And the way the economy works is everybody who's an owner of something exchanges it for other things. If you're a worker, all you have is to sell your ability to work. So you do that and you get in exchange a wage or a salary which you then use to buy, that is, make another exchange the goods and services you wish to consume so that the system is understood to be an endless process of buying and selling. Capitalism is a market system. That's what those folks mean. Well, why do I call these old definitions? The reason is they've been around a long time, but also they're fading away. They are proving to be inadequate to distinguish what's unique about capitalism. Let me explain. It turns out that at least the term private enterprise, as I've already hinted, applies to lots of economies that are not capitalist. There's something fundamentally different about a slave system and a serf system and a capitalist system. And there's something fundamentally different here that isn't captured by the word private enterprise. Because the plantations of the slaves and the manners of the feudal lords were private in that sense, they weren't part of the government. And free is also a funny term to use if you think about it. Why? Well, sure, a worker in a modern capitalist business isn't a slave, and he or she isn't a serf. But are they really free? If you have nothing but your ability to work with which to get the goods and services that you need to live, how free exactly are you in order to be free of the need to do what other people tell you to do eight hours a day, five days a week, you'd have to have property. That's what gives other people the freedom of not to work. You don't have that freedom. They do. You don't. Since the majority of people have nothing they can live off of for more than a few days or weeks, simply have their ability to work, then. The claim that these are free people might make sense if you compare them to slaves and serfs. But it makes a mockery of the term free if you think about it. So folks have become less and less happy with terms like private enterprise or free enterprise to describe what capitalism is. You can even take it a step further. The slave wasn't free because the master could tell the slave what to do. And the serf wasn't free because the lord in a futile manner told the serfs what to do. And when you think about it, when you go to work nine to five, five days a week, the minute you enter the workplace, your boss, the capitalist, tells you what to do. Yeah, you can say no, but then you're fired. And if you're fired, you have no way basically to survive. Or let's put it this way, your options are severely reduced. Therefore, how free exactly are you in comparison with the others? Let's turn to the question of markets. Is capitalism appropriately called a market system? I don't think so. Why? Well, let's again compare. In the slave economic system, were there markets? The answer, yeah. Well, why not call that a market system? Cotton that was produced by slaves in the American south was sold in a market, obviously a market system. The slaves themselves were bought and sold in markets. So slavery could certainly be called a market system. Why would you want to call capitalism a market system when markets existed in other systems? The same is true of feudalism. Feudal manners with serfs working, produced all kinds of things that were traded in markets. Markets and feudalism have coexisted for eons, as have markets and slavery. So what's this calling capitalism a market system when it applies to non capitalism? Well, then what are we going to do? What is this capitalism that everybody talks about? Well, let me provide you with an answer that I find persuasive, but an increasing number of people do, and I'm going to give you a metaphor to drive the point home for us. Capitalism isn't about whether the government or a private individual does something. It isn't about degrees of unfreedom, because that's really what an employee and a serf and a slave have in common. The degree difference, but their lack of freedom is very similar. So this, it isn't about freedom and it isn't about private versus government and it isn't about markets. Well, then what is it about? The answer is it's about a relationship. It's the relationship among the people as they go about producing or distributing goods and services. You see, in a slave system, we can clearly identify the relationship. One part of the relationship is the master and the other part is the slave. And that's a relationship of ownership where human beings are like animals or furniture, they're the property of other human beings and so on. That's a unique economic system based on a unique relationship. In production, everything the slave produces on the land or in a workshop belongs to the master. None of it belongs to the slave. The master, at his discretion, gives back to the slave, however much he or she feels like it, mainly with the idea of keeping the slave alive enough to do the same work again tomorrow. What about the lord and the serf? That's a different kind of relationship. The serf is nobody's property. And the relationship with the serf and the lord are such that the serf works on his own piece of land that the lord assigns to him for three days a week and keeps the produce for himself. And the other three days of the week works on the land of the lord and the lord gets that output. It's a kind of division of labor in which the master tells the serf what to do. But the serf has a certain claim that the church, for example, the Roman Catholic Church in medieval Europe, guaranteed, preserved. But that's a relationship in which the serf and the lord are tied to the land. A relationship sanctified by a church. Again, in Europe, the Roman Catholic Church, the serf was understood to have relations with the lord of obligation and the Lord also with the serf. Mutual obligation sanctified by the Church. Not an ownership relationship, a relationship of mutual obligation. That's one of the reasons why a serf typically had to swear loyalty to a lord. That's where these kinds of swearing ceremonies come in. Well, what about capitalism? That's a unique and different relationship. It's not built on a master slave. It's not built on a lord serf. It's built on something unique called employer, employee. The employee comes to work and produces when he or she works more than they are contractually given As a wage or a salary, A deal has to be struck between the worker, the employer, the labor contract, something that didn't exist in slavery, something that didn't exist in feudalism. In capitalism, the two sides, employer and employee, sign a contract. And in that contract, the employer provides tools, equipment, and raw materials and a place to work. And the employee provides labor brains and muscles to do what the employer tells him. The reason the employer pays the worker and buys the tools and equipment and raw material is because the worker, when he works, will produce enough to replenish all of that equipment, replenish all of the costs of the raw materials, and replenish for the employer the wages paid to the worker, and still leave something extra for the employer, or which we call profit. That's a unique relationship, the employer employee relationship. That's what capitalism is about. It's about that arrangement where the mass of people come and produce more than they get paid. And that difference is the profit. That difference is what capitalists go into business to get. You know that from your own life. Even if you never thought it through this way. You know that when you sit down with an employer and you talk about the job you're hoping to get, and you sign a contract, you agree to work there, and the employer says, I'll pay you $20 an hour. Just to take an example, you do know. Or if you don't, you should. You know that the only reason that employer will shell out $20 an hour for you to come there 9 to 5, Monday to Friday, is because in an hour of your work, you add more to what that employer has to sell than $20. That's why it's interesting for him to bring you there. And if you didn't do that, he wouldn't hire you, because he would be losing money. If an hour of Your work added $19 to what he has to sell at the end of the day or week, then for every $20 he paid you, he got $19 worth of extra revenue. He'd be losing money on you and you would not long be in that job. The condition of your employment is that you produce more for the employer than he gives you, which is why the rich get richer and everybody else doesn't. That's how the system is set up. Capitalism is about a relationship. Now, let me use a metaphor to drive the point home. Marriage is an important institution in our society. But as you know, like capitalism, marriage means different things to different people. And the very meaning of marriage has changed over time. Heaven knows, in the last two or three years, we have change the meaning of marriage to encompass relationship between people of the same gender, the same sex. We didn't do that before. This is a change. There are social reasons why that change has happened, but it's a change. And likewise, many couples, when they get married, discover sooner or later that they didn't understand what marriage meant. The same way part of being married is working out the differences you have, you and your partner, over what the word means. What are the obligations, the responsibilities, the entitlements. Now, some people need to come up with a quick definition. Marriage is, let's see, forming with another person a household. Well, that's quickly disappearing as an explanation because it's clear that people who aren't married can get together and have a household. Marriage is one thing, household is another. It's like capitalism is one thing, markets are something else. To say that capitalism is a market system makes a mistake, just like saying marriage is a household can't do that. And when you pare away the things that don't work, you're left with a relationship. Marriage is a certain relationship that people enter into. It isn't fixed, it isn't something they both agree on. Certainly not at the beginning and maybe never. But it is a relationship. And we can understand it to be different from parenting, from friendship, and from other relationships that are different. Just like the capitalist relationship is different from the slave master relationship or the lord serf relationship. Where is this going? Well, now I want to connect capitalism, having talked about it as a relationship to an alternative, an alternative relationship. We don't have to be employers on the one side and employees on the other. The people in slavery, masters and slaves, believed for centuries that this was the necessary, the appropriate, the only way to be related in production. There had to be masters, there had to be slaves. Well, we now know that wasn't true. And then for hundreds of years, people thought you had to be a lord or you had to be a serf. That was the only relationship in the economy. We know that isn't true. Well, today there are people who think that employer, employee is the necessary way to organize stores, factories and offices. Guess what? It isn't. It is a way. It has strengths and weaknesses like the others. But it is not the only way. It is not the eternal way. It is not the best way. It is a way. And now here comes an alternative. Instead of having some people be the order givers and others the order takers, some people produce the profit and other people get it. Some people run the show and Others don't. We don't have to do it that way. There doesn't have to be a master and a slave, a lord and a serf, or an employer and an employee. Suppose instead we pick up on a dream, on a hope, on a utopian fantasy that is realized all the time for thousands of years to organize the production or the distribution of goods and services in a non hierarchical way. No master slave, no lord, no serf, no employer, no employee. But instead as a cooperative democratic operation where all the people working in the production of something or all the people working in the distribution of something, say in a store, together divide the work amongst themselves through discussion and democratic voting, divide up the tasks to be done, divide up the responsibilities and divide up the rewards in whatever way they think is fair to all of them. Suppose we have democratic, cooperative. That's a different relationship. It isn't capitalism, it isn't feudalism, and it isn't slavery. There are those who think that that last thing, the cooperative arrangement, is what socialism or communism could have, should have, might have, will one day mean. And those people like to point out, and they have a point, that in the whole 20th century, the debate was between do we have private enterprises or public state enterprises? Do we have a market system or do we have government planning? Well, from the perspective of what I've been saying to you, that was a debate over the wrong topic. Because what distinguishes a society where the government runs it and where the private sector runs things isn't a distinction about capitalism versus socialism. It's a distinction between an employer who's private and an employer who's the government. But the relationship between these employers and the workers is the same in a private enterprise as it is in a government enterprise, because it's the employer employee relationship. That's why we call that state capitalism, not socialism, not a different name. Because that implies a difference that isn't there. Capitalism is about a relationship. The problems of capitalism come from that relationship. That's the important thing to understand. You're not going to solve the problems of capitalism as a relationship by changing whether the employer is private or state, by changing whether the goods and services are distributed by market exchange or by planning. Those are interesting differences. They will make a difference in the way people live, but it's not a change in the relationship of production. And that's crucial. You don't change that relationship, and whatever else you do will not solve the problems you're trying to solve. When the Soviet Union went from private enterprise to state enterprise and from markets to Planning? Did they solve their problems? The answer is no. That's why they're not here. In the American capitalist system, where we have private enterprise and markets, have we figured out how to stop having cataclysmic economic meltdowns? No. And in both cases, the reason is we haven't dealt with the relationships in production, the relationships among people, in the problems of offices, factories and stores. To end, again with my metaphor, when marriages have serious problems, sure, if you change the way the household works, it might make a difference. If you change the location of the household, it might make a difference. If you change the division of labor inside the household, it might make a difference. But I think most psychologists will back me up when I say you probably have to deal with the relationship between the two persons that are married, that subtle, complicated interconnection between two human beings. Therein lies, in all likelihood, a key answer to how to make a better relationship, how to make a lasting relationship, and one that meets both people's needs. It's the same with the economic system. We have to address that relationship or else we're not going to solve neither the problems of state capitalism on one side of nor of the private kind on the other. We've spent a century thinking that was the solution. We have to get on with it. We can do better than capitalism, both the private and the state varieties. Thank you very much for being with me today. I hope that this long discourse about capitalism, it is, after all, the system we live in, proved interesting to you. I want to thank truthout.org, that remarkable independent source of news and analysis that's been a partner with us, to ask you again to be a partner with us. Take from our websites, rdwolf.com and democracyatwork.info all the materials, the audio files, the video, the lectures, the interviews. Take what you will. 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