Economic Update with Richard D. Wolff

EU Extra: Why Capitalism Demonizes Government

Date: November 28, 2018

Episode Overview

In this Patreon-exclusive episode, Richard D. Wolff expands on the central theme: why markets are often inefficient and how capitalist ideology demonizes government intervention, especially when it comes to the allocation of scarce resources. Wolff uses both a hypothetical and a historical example to challenge the notion that markets are always the optimal way to distribute goods, emphasizing the ethical and societal implications of market allocation versus government intervention.

Key Discussion Points & Insights

1. Challenging Market Efficiency with Concrete Examples

• Thanksgiving Turkey Hypothetical (01:20–06:00)
  Wolff illustrates the absurdity of market allocation in personal and familial contexts by imagining selling Thanksgiving turkey pieces to the highest bidder among family members.
  • Quote:

    “You could distribute the turkey to the highest bidder... Those whose wallets are big enough to offer enough for a piece of turkey, they get a piece. And those who don't...do without.” (04:43, Wolff)

  • Key Insight:
    Most people would reject such a system because it contradicts ethical values and the spirit of community and sharing inherent in traditions like Thanksgiving.
  • Memorable Analogy:
    Drawing a direct line between these personal values and broader policy, Wolff asks listeners to imagine applying this “market logic” in all areas of life, pointing out how it would foster bitterness, envy, and undermine community.

2. Historical Precedent: Rationing in World War II

(06:01–13:00)
Wolff explores how, during WWII, the U.S. government rejected the market system for consumer goods—specifically because market allocation would have undermined national solidarity and favored the rich.

• Quote:

  “Any successful war requires that the population be behind the military...if you distribute scarce goods so that they end up in the hands of the rich...you're going to give middle income and low income people a big fat reason to be against the war.” (08:03, Wolff)

• Army and government leaders recognized distributing through markets would threaten social cohesion and the war effort.
• The solution was rationing: government-issued cards entitling holders to specific quantities of essential goods, allocated based on need, not wealth.
• Quote:

  “We distributed ration cards according to need...We distributed scarce goods not according to the market...but according to need.” (10:30, Wolff)

• Key Insight:
  The move away from market allocation in a time of crisis was broadly accepted as necessary and fair, aligning resource distribution with ethical and community priorities.

3. Broader Implications: Applying Wartime Solidarity to Peacetime

(13:01–16:00)
Wolff highlights the contradiction in returning to market distribution in peacetime and calls into question its logic in critical sectors like housing.

• Quote:

  “Maybe we need that solidarity in peacetime too. Maybe we wouldn't get into wars if we distributed goods more evenly, more according to need than according to how much money you've got.” (13:23, Wolff)

• Uses the example of housing: the market incentivizes building expensive homes, not homes for those in need.
• Quote:

  “In a market, you don't build for the homeless the home they need. You build homes for the profit you can get.” (15:22, Wolff)

4. Caution Against the Phrase “Let the Market Decide”

• Wolff wraps up by urging skepticism every time someone advocates for the market as the arbiter of resource distribution.
  • Quote:

    “Let the market decide. Because that's just an indirect way of saying give it to the richest people amongst us and everybody else—you lose.” (15:55, Wolff)

Notable Quotes

• On values and the market:

  “You would have made a moral and ethical decision to distribute scarcity in a non market manner because the market violates your values.” (05:25, Wolff)

• On government solutions in wartime:

  “The government of the United States, with the wholehearted support of most Americans, did away with the market as a dangerous, negative, unacceptable institution to deal with scarcity.” (11:57, Wolff)

• On the logic of market failures:

  “The logic that made us reject markets as a nation in World War II is the same logic that ought to make you very, very skeptical every time you hear someone say let the market decide.” (15:40, Wolff)

Timestamps of Key Segments

• 00:01–01:20: Welcome and framing of the episode topic
• 01:20–06:00: Thanksgiving turkey hypothetical; values versus market logic
• 06:01–13:00: Rationing in WWII, government intervention for solidarity
• 13:01–16:00: Application to peacetime and modern housing, call to reconsider reliance on markets

Summary Tone & Style

Richard D. Wolff’s tone throughout the episode is clear, didactic, and appeals to both logic and shared ethical values. He uses vivid, accessible analogies (like Thanksgiving dinner) and historical examples to make complex economic arguments relatable. His critiques are pointed, but the language remains conversational, aiming to empower listeners to question mainstream economic narratives about the inherent efficiency and fairness of markets.

Final Reflection

Wolff challenges the sanctity of market allocation by drawing on both hypothetical and historical sources, ultimately urging listeners to see government intervention not as a demonized imposition, but as an ethical and fundamentally necessary tool for true economic justice and social solidarity.