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]

• 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.

• 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]

• 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]

• 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]

• 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.

• Healthcare Burdens:

  • 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.

  • 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]

• Perpetual Revolving Door (Government & Finance):

  • Example: José Manuel Barroso, former Portuguese PM and European Commission president who administered austerity, joined Goldman Sachs.

  • Wolff critiques the mutual self-interest between big business and government elites.

  • 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]

• Social Security’s Crucial Role:

  • 65% of Americans over 65 rely on Social Security for more than half their income; 25% rely on it for 100%.

  • For Hispanic Americans, over 40% rely exclusively on Social Security.

  • Attacks on the program are painted as cruel and socially disastrous.

  • Quote:

    • “Attacking Social Security is a level of cruelty and insensitivity beyond words.” — Richard D. Wolff [28:32]

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]

• High survival rate: 93% of Argentine co-ops formed in the early 2000s are still operational.

• Wide sectoral diversity: includes steel, autos, hotels, restaurants, and more.

• 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]

• 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]

• Governments routinely subsidize capitalism (tax breaks, grants, bailouts).

• 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]

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]

• Growth expected primarily at the local/state level (e.g., Madison, Seattle, New York), not federally.

• Effective change likely to emerge “from below” through co-ops before influencing political parties.

• 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]

8. Broader Implications and Closing Thoughts

[55:05–57:31]

• Only a new alliance of civic society and state, built around worker and community interest, can counter multinational corporate power.

• 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]

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.