Economic Update with Richard D. Wolff
Episode: Worker Coops vs. Capitalism
Date: September 16, 2016
Overview
This episode of Economic Update, hosted by Richard D. Wolff, explores the economic impacts of recent historical events and offers a critical examination of the U.S. economic system—highlighting systemic inequalities, wage stagnation, and government policy failures. The main focus is an in-depth conversation between Wolff and political scientist Peter Ranis about worker cooperatives (co-ops) as an alternative to contemporary capitalism, drawing from experiences in Argentina, Cuba, and the United States. The discussion stresses the viability, advantages, and obstacles of worker co-ops and contemplates their potential for social and economic transformation.
Key Discussion Points & Insights
1. Economic Consequences of Historical Events
[00:00–08:00]
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9/11’s Economic Aftermath:
- Surge in government and private security spending, benefitting arms and security industries, leading to a boom in security-related jobs and services.
- Increased public spending shifted to citizens via taxes and budgetary adjustments.
- Economic instability impacts on city-level employment and the national psyche.
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The 1973 Chilean Coup:
- U.S.-backed destabilization in Latin America after Salvador Allende’s assassination led to a turn towards neoliberal economic policies (influenced by Milton Friedman and the Chicago Boys).
- The shift suppressed progressive movements, altered the trajectory of Latin American economies, and had long-lasting negative consequences for wealth distribution and development.
2. Decades of Wage Stagnation and Rising Inequality
[08:00–15:00]
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Misrepresentation of Income Improvement:
- Media outlets celebrated median household income gains from 2014 to 2015, ignoring the 20-year trend of declines (from $57,900 in 1997 to $56,600 in 2015).
- Quote:
- “All that output, all that growth in productivity and wealth went to the top 5% of the American households. That’s why everybody else is doing poorly. And the top 5% are laughing all the way to the bank.” — Richard D. Wolff [13:04]
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Inequality and Poverty:
- Wall Street Journal charts and government statistics affirm worsening poverty and wealth concentration.
- The economic frustration energizes political outsiders (e.g., Bernie Sanders, Donald Trump).
3. U.S. Policy Failures: Family, Health, and Social Security
[15:01–28:44]
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Abysmal Family Leave Policies:
- U.S. ranks last out of 35 wealthy countries for mandated parental leave; American proposals (6–12 weeks) pale compared to an OECD average of 54 weeks.
- Government spending on childcare and preschool is less than one-third that of similar nations.
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Healthcare Burdens:
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Employer healthcare cost-sharing shifts have dramatically increased deductibles ($500 in 2006 to $1,500 in 2016).
-
People forgo care due to financial constraints, not increased system efficiency.
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Quote:
- “The amount that the worker has to pay has tripled, even though the rate of growth of what the employer...has to pay...hasn’t gone up very much at all.” — Richard D. Wolff [21:36]
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Perpetual Revolving Door (Government & Finance):
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Example: José Manuel Barroso, former Portuguese PM and European Commission president who administered austerity, joined Goldman Sachs.
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Wolff critiques the mutual self-interest between big business and government elites.
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Quote:
- “These are the same people. In fact, it’s a little hard to keep track of which particular hat they’re wearing, nor does it matter.” — Richard D. Wolff [27:10]
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Social Security’s Crucial Role:
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65% of Americans over 65 rely on Social Security for more than half their income; 25% rely on it for 100%.
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For Hispanic Americans, over 40% rely exclusively on Social Security.
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Attacks on the program are painted as cruel and socially disastrous.
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Quote:
- “Attacking Social Security is a level of cruelty and insensitivity beyond words.” — Richard D. Wolff [28:32]
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Main Segment: Interview with Peter Ranis on Worker Co-ops
[30:37–57:32]
Introduction & Credentials
- Peter Ranis is Professor Emeritus at CUNY, author of Cooperatives Confront Capitalism: Challenging the Neoliberal Economy.
- His expertise spans worker co-op movements in Argentina, Cuba, the U.S., and Europe.
Key Topics:
1. Why Worker Co-ops?
[32:49–34:49]
- Co-ops challenge capitalist norms more directly than traditional unions by internalizing class consciousness and encouraging collective, democratic management.
- Quote:
- “As the workers achieve cooperative status, they begin to develop class consciousness from inside rather than from externally received ideology.” — Peter Ranis [33:47]
2. Real-World Feasibility: Lessons from Argentina
[36:14–38:31]
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High survival rate: 93% of Argentine co-ops formed in the early 2000s are still operational.
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Wide sectoral diversity: includes steel, autos, hotels, restaurants, and more.
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Democratic decision-making: layoffs, investments, and pay decided collectively.
- Quote:
- “The Argentine cooperative movement embodies... almost anything without owners and managers. They reskill themselves...they make the decisions on pay collectively.” — Peter Ranis [36:50]
- Quote:
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Superior job security compared to capitalist firms.
3. Obstacles: Capital and State Support
[38:31–43:18]
- Difficulty accessing loans from private banks; need for state intervention.
- Argentina’s “expropriation laws” (17th article of its constitution) provide some legal foundation, but political gridlock often limits financial support.
- Co-ops generally enjoy high public esteem vs. other forms of public assistance.
4. The Case for Government Aid
[41:57–43:18]
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Governments routinely subsidize capitalism (tax breaks, grants, bailouts).
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Co-ops deserve equivalent support to compete fairly.
- Quote:
- “Otherwise, it’s not a fair fight at all. It’s a fight between one sector cashing in on 200 years of government help and another sector being told there isn’t any government help for you.” — Richard D. Wolff [42:57]
- Quote:
5. Eminent Domain as a Tool
[43:18–47:52]
- Ranis advocates using eminent domain (states’ right to expropriate property for public good) to aid abandoned or at-risk workplaces, enabling workers to organize as co-ops.
- Cites U.S. and international precedents, suggesting it’s not revolutionary, but pragmatic policy.
- Stark contrast: NYC gave $3 million to 30 co-ops; Alcoa got $70 million in subsidies.
6. Worker Co-ops in Cuba
[47:52–51:58]
- Recent Party guidelines encourage co-op formation, marking a shift from centralized state enterprise toward worker-managed operations.
- Early evidence suggests higher productivity and autonomy among worker-run co-ops, especially in agriculture.
- Co-ops framed as a defense against capitalist resurgence, but reforms are gradual and bureaucratic.
7. Prospects for Co-ops in the U.S.
[51:58–55:05]
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Growth expected primarily at the local/state level (e.g., Madison, Seattle, New York), not federally.
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Effective change likely to emerge “from below” through co-ops before influencing political parties.
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Notes the UK’s Cooperative Party as a model for how a political wing can support the co-op movement.
- Quote:
- “If there’s a groundswell from below that builds up on cooperatives, then a political party can latch onto that.” — Peter Ranis [53:09]
- Quote:
8. Broader Implications and Closing Thoughts
[55:05–57:31]
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Only a new alliance of civic society and state, built around worker and community interest, can counter multinational corporate power.
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Worker co-ops’ deep community ties make them resistant to offshoring and speculative flight.
- Quote:
- “They have a sense of collectivity and they have a sense of their responsibility to the community... They’re committed to the community. That’s where they were born and that’s where they will remain.” — Peter Ranis [56:57]
- Quote:
Notable Quotes & Timestamps
- “All that output, all that growth in productivity and wealth went to the top 5% of the American households.” — Richard D. Wolff [13:04]
- “Attacking Social Security is a level of cruelty and insensitivity beyond words.” — Richard D. Wolff [28:32]
- “As the workers achieve cooperative status, they begin to develop class consciousness from inside rather than from externally received ideology.” — Peter Ranis [33:47]
- “The Argentine cooperative movement embodies... almost anything without owners and managers. They reskill themselves...they make the decisions on pay collectively.” — Peter Ranis [36:50]
- “If there’s a groundswell from below that builds up on cooperatives, then a political party can latch onto that.” — Peter Ranis [53:09]
- “They have a sense of collectivity and... responsibility to the community... They’re committed to the community.” — Peter Ranis [56:57]
Summary Flow
- Wolff begins by linking economic trends and societal unrest to policy choices and historical context.
- Transitions into the main interview, providing background for Peter Ranis and the significance of worker co-ops, especially in Argentina’s crisis response and Cuba’s cautious transformation.
- The discussed viability, successes, and obstacles—especially the need for political and financial support and the legitimacy of co-ops as alternatives to capitalist firms—are contextualized through international and U.S. case studies.
- The episode closes with a hopeful vision that co-ops can catalyze systemic change if supported from the grassroots up, with accompanying political realignment.
For Further Exploration
- Book: Cooperatives Confront Capitalism: Challenging the Neoliberal Economy by Peter Ranis
- Websites: democracyatwork.info and rdwolff.com
- Explore OECD and Kaiser Family Foundation statistics for original economic context.
This summary captures the full spectrum of critique, advocacy, and optimism from this episode, giving listeners a firm understanding of both the problems with the current economic model and the potential of worker cooperatives as a real-world alternative.
