Economic Update with Richard D. Wolff

Episode: Worker Coops: Why and How

Date: April 4, 2016
Host: Richard D. Wolff
Producer: Democracy at Work

Main Theme

Richard D. Wolff’s episode centers on the ongoing crises of capitalism in the United States, highlighting practical alternatives—particularly worker cooperatives—as solutions to recurring economic challenges such as unemployment, wage stagnation, corporate abandonment of communities, and rising inequality. Dr. Wolff dissects these issues via recent case studies and explains why shifting toward worker-owned enterprises is not only feasible but urgent.

Key Points and Insights

1. Global Wage Disparities: U.S. vs. China

[08:20]

• Chinese real wages increased dramatically, tripling between 1997 and 2007, and have continued to outpace U.S. wage growth.

• In 2015:

  • China’s real wages rose by 7%
  • U.S. real wages less than 1%

• Quote:

  “Working class in China has an improving standard of living that Americans cannot even fantasize enjoying.” – Wolff [09:00]

• The rapid improvement in Chinese workers’ lives helps explain differing social and economic attitudes in China vs. the U.S.

2. The Opioid Crisis and Economic Despair

[10:56]

• Lethal drug overdoses in the U.S. doubled between 2004 (10 per 100,000) and 2014 (20 per 100,000), affecting increasingly white, rural communities.
• The epidemic is connected to post-2008 job loss, rising insecurity, and declining life prospects.
• Quote:

  “Among the many uncounted costs of a capitalist system that has periodic crashes… lethal overdoses, hepatitis C, communities… devastated…” – Wolff [14:32]

3. Puerto Rico: Colonial Debt and Corporate Privilege

[16:51]

• Puerto Rico is in a debt crisis due to deals between politicians and U.S.-based lenders/banks.
• Drastic measures:
  • 11.5% sales tax (higher than anywhere else in U.S.)
  • Public service cuts
• Major employers like Walmart pay extremely low wages and resist taxation; a federal judge blocked a tax on Walmart due to bankruptcy risk.
• Quote:

  “An extraordinary tying of the hands of the Puerto Rican government… inching closer to a catastrophic imposition of suffering on the poorest part of America…” – Wolff [21:51]

• Comparison: Puerto Rico is “the Greece of the United States.” [23:00]

4. Yale University: Wealth, Tax Exemption, and Local Inequality

[23:04]

• Yale owns most of New Haven’s property, pays little or no taxes, and receives extensive city services paid by the struggling local population.

• Quote:

  “This is Robin Hood in reverse. Poor people… have to pay more taxes to pay for the public services delivered free to Yale.” – Wolff [25:30]

• Governor of Florida invites Yale to move south to avoid taxes, exposing inter-state competition to retain wealthy institutions at public expense.

5. The Minimum Wage Debate in California

[30:15]

• California committed to raising the minimum wage to $15/hr by 2022.

• Opposing narratives:

  • Businesses predict closures/job loss.
  • Supporters argue increased spending will create jobs.

• Wolff labels the debate as “absurd and ridiculous,” emphasizing the real issue is the distribution of bargaining power.

• Quote:

  “Employers don’t want to pay higher wages and workers want to get them. That’s the way this system works.” – Wolff [32:08]

• Suggestion: If job loss is a real concern, expand government jobs programs—like in the 1930s—to offset potential dislocations.

In-Depth Analysis: Worker Coops as Structural Solutions

The Problem with “Blame Education”

[37:02]

• Two-thirds of U.S. workers do not have a college degree; advising more education isn’t a realistic or fair solution.
• The real necessity: “higher wages and better working conditions separate from the question of education.” [39:34]
• Quote:

  “There’s a kind of cruelty in proposing something which isn’t relevant for a huge number of people.” – Wolff [39:10]

Corporate Flight: Massachusetts (PolarTec) & Indiana (Carrier)

[41:20]

• Companies shifting production to Mexico for lower wages devastate local economies.
• Unions and politicians typically offer insufficient responses: retraining, minor assistance, “pathetic begging.”
• Quote:

  “There is something humiliating, isn’t there? …way too little and way too late.” – Wolff [45:13]

Eminent Domain and the Worker Co-op Option

[46:10]

• Proposal: Use eminent domain to buy closing factories, convert them into worker cooperatives, and support with public investment.
• Worker ownership preserves jobs, local income, and community welfare, unlike corporate closures.
• Empower communities to choose:
  • Accept mild, token assistance after closures—or
  • Keep factories running under worker control
• Quote:

  “A worker co-op is a good, viable investment for this community… It’s a good direction. A worker co-op is better than a capitalist enterprise, and here’s why…” – Wolff [51:43]

Advantages of Worker Co-ops

[52:14]

• More equal wage distribution

  “…worker co-ops distribute wages and salaries to their members much less unequally than capitalist enterprises do.” – Wolff [52:30]

• Workers democratically hire and fire managers
• Promotes personal growth, creative engagement, and meaningful work
• Restructures the workplace:

  “Every worker is both an employee and his own or her own employer.” – Wolff [54:10]

• Worker co-ops foster democratic decision-making, both economically and politically.
• Future vision:

  “Worker co-ops… are the future. They’re where people are going to go, as they already are, as the capitalist system is more and more incapable of providing the kind of life most people want…” – Wolff [57:31]

Coordination & Planning: Beyond Capitalism

[58:00]

• Worker co-ops must be coordinated via markets and/or democratic planning, learning from past socialist experiments but striving for control “from below.”
• The interaction between democratic workplaces and communities is key to a more just and sustainable system.

Memorable Quotes & Moments

• On the cause of job-related drug abuse:

  “People’s prospects for the kinds of lives they had hoped for versus the kinds of lives… will not surprisingly, lead people to look for an escape…” [14:07]

• On corporate dependency on public support:

  “…a debt you have, and you don’t have to pay it… but you then owe us in the event you propose to leave.” [50:18]

• On changing work itself:

  “We want to convert all jobs into having major components that you look forward to… that you have freedom and power to shape…” [55:17]

Important Timestamps

• 08:20 – Wage growth: China vs. U.S.
• 10:56 – Drug overdose epidemic and economic causes
• 16:51 – Puerto Rico’s debt and corporate taxation
• 23:04 – Yale, New Haven, and urban inequality
• 30:15 – The minimum wage debate dissected
• 37:02 – Statistics: Education and the American workforce
• 41:20 – Factory closures: PolarTec and Carrier
• 46:10 – Eminent domain as a worker co-op solution
• 52:14 – Benefits of worker co-ops
• 58:00 – The future: democratic planning among co-ops

Conclusion

Dr. Wolff contends that only fundamental systemic changes—like empowering worker cooperatives and democratizing workplaces—can offer lasting solutions to economic instability, inequality, and job displacement endemic to capitalism. Recognizing and acting on alternatives like worker co-ops is not only practical but crucial for communities seeking economic security and dignity.