Economic Update with Richard D. Wolff

Episode: How We Get Beyond Capitalism

Date: September 17, 2020
Host: Richard D. Wolff (Democracy at Work)

Episode Overview

This episode focuses on the decline of social and economic progress in the United States and globally, the structural realities of debt and welfare under capitalism, and—centrally—Richard D. Wolff's analysis of how societies move from one economic system to another. Wolff draws historical lessons from the transition out of feudalism and discusses experiments in organizing work and production beyond the traditional employer-employee capitalist relationship, arguing for democratizing the workplace as the key to moving beyond capitalism.

Key Discussion Points & Insights

1. The Social Progress Index and Decline in the U.S.

[00:10 – 06:30]

• Introduction to the Social Progress Index (SPI):

  • The SPI measures not just economic variables (GDP, income), but also social, educational, and health indicators to give a broader sense of societal wellbeing.
  • Of 133 countries measured, only Hungary, Brazil, and the United States declined in social progress from 2011–2020.

• U.S. Rankings and Deeper Problems:

  • U.S. universities are ranked #1 globally, but access to quality basic education is #91.
  • Leads in medical technology, but is #97 in access to quality health care.
  • Health statistics in the U.S. parallel Chile, Jordan, and Albania; education is on par with Uzbekistan and Mongolia.
  • Wolff underscores deep systemic inequalities: “The rich, the well off ... have access to high quality social progress, but the mass of people do not. Their social progress is gone into reverse.” [02:40]

• Significance:

  • The U.S. is experiencing not just a temporary pandemic or economic crash, but a “long term economic decline … that has to be something we think about, talk about, face up to and deal with.” [05:05]

2. Living Arrangements and Economic Hardship

[06:30 – 08:15]

• Historic Proportion of Young Adults Living at Home:

  • 52% of Americans aged 18–29 live with their parents—the highest since 1900.
  • Driven by inability to afford independent living, thus reducing standard of living and undercutting economic recovery.

• Associated Risks:

  • Increased health risks (COVID-19) by bringing different generations together who take different levels of precautions.

• Quote:

  • “Young people cannot afford to live apart. They have to economize by living with their parents … It is a decline in the standard of living, even though it doesn’t quite show up in most statistics.” [07:05]

3. Argentina’s Debt Crisis as a Parable of Global Finance

[08:15 – 15:00]

• Recent Debt Restructuring:

  • Argentina cut its foreign debt nearly in half through negotiation, not by paying in full.
  • Wolff argues this is proof that “if you mobilized, all of the people in debt like yourself, could also get cuts in your debts. It’s not impossible. It’s not something that never happens. Don’t let the lender try to persuade you otherwise.” [11:06]

• The Reality of High Finance:

  • Most of these loans benefit banks and local elites through steep fees; ordinary citizens bear the burdens.
  • Debt “cuts” are largely financial theater; much of the money never reaches the people, but the debt obligations persist.

• Quote:

  • “Fancy flim flam is the underlying reality of high finance. Which is why banks are now lining up … to give another huge loan to Argentina … Because it never stops, since it’s not what it appears.” [13:57]

4. Welfare, Corporate Support, and the New “Dole”

[15:00 – 19:18]

• Irony of Welfare Attacks Vanishing:

  • Wolff notes a conspicuous lack of conservative rhetoric against welfare, because businesses and the wealthy now depend on government support on a massive scale.
  • “The entire capitalist system is now on the dole.” [15:53]

• Mechanics of Corporate Welfare:

  • One-third of all U.S. mortgages now financed by the Federal Reserve.
  • The Fed is directly buying corporate bonds, funding corporations at low rates, and allowing banks to profit risk-free.

• Quote:

  • “Corporations are on government dole, housing is on government dole, and much more money is involved in just those two than was ever given to welfare moms or is given today to people who get a little extra on their unemployment check.” [18:15]

5. How Transitions Between Economic Systems Happen

[22:10 – 41:00]

a. Lessons from Feudalism to Capitalism

• Structure of Feudal Society:
  • Lord and serf defined by personal legal ties; serf worked both his own land and the lord’s (the origin of “landlord”).
• How Feudalism Broke Down:
  • No single event; local crises—famine, war, plague, resistance—periodically destabilized the lord-serf arrangement.
  • The Black Death (bubonic plague) [32:15] destroyed the population and thus the feudal order, leading many to become self-employed or to enter wage labor—proto-capitalism.
• Quote:
  • “In that moment, feudalism turns into capitalism. There’s a transition, it happens often, but the conditions aren’t ripe for it to last.” [30:35]

b. Non-Capitalist Experiments: Worker Co-ops

• Historical and Modern Examples:
  • Shaker Villages: Early American religious communes—“the way we nowadays call worker co-ops.” [34:05]
  • Mondragon, Spain: Began in 1956, now one of Spain’s largest enterprises, worker-owned and -managed.
    • “No employer, employee. We are our own bosses here.” [35:20]
  • Emilia Romagna, Italy: About 40% of region is composed of worker co-ops, demonstrating scalable non-capitalist organization.
• State Socialism, Lessons from the 20th Century:
  • Cases like the Soviet Union, China, Vietnam, and Cuba: “Some worked, some didn’t. … The focus on power in the state can be too much.” [37:19]

c. Towards the Next Transition—Democratizing the Workplace

• Beyond Employer-Employee:
  • Draws parallel to older oppressive relationships (master-slave, lord-serf), arguing capitalist employer-employee structure is the new hierarchy to be transcended.
• Democratizing Production:
  • Advocates for workplaces governed on the principle: “One person, one vote, and we all together decide what to produce, how to produce, where to produce, and what to do with the fruits of our labor.” [39:46]
  • “We don’t need to be divided between owner, board of directors, boss and peons at the bottom. We didn’t need a king anymore some centuries ago. … Why are we keeping kings inside the workplace?” [40:13]

Notable Quotes and Memorable Moments

• “The rich, the well off ... have access to high quality social progress, but the mass of people do not. Their social progress is gone into reverse.” [02:40]
• “Fancy flim flam is the underlying reality of high finance.” [13:57]
• “The entire capitalist system is now on the dole.” [15:53]
• “One person, one vote, and we all together decide what to produce, how to produce, where to produce, and what to do with the fruits of our labor.” [39:46]
• “We didn’t need a king anymore some centuries ago. … Why are we keeping kings inside the workplace?” [40:13]

Timestamps of Important Segments

• [00:10] – Introduction & Social Progress Index findings
• [06:30] – The surge in young adults living with parents; economic and health implications
• [08:15] – Analysis of Argentina’s debt restructuring and global high finance
• [15:00] – Irony of corporate “welfare” and the scale of government support for business
• [22:10] – Historical overview: From feudalism to capitalism
• [34:05] – Worker co-ops: Shakers, Mondragon, Emilia Romagna
• [37:19] – State socialism: lessons from failed and successful transitions
• [39:46] – The case for democratizing the enterprise and abolishing workplace hierarchies

Conclusion & Takeaway

Wolff urges listeners to learn from the patterns of history: transitions away from exploitative systems require reimagining core relationships—in this era, that means transforming workplaces into democratic cooperatives. Only by challenging the employer-employee hierarchy and democratizing economic life can society progress beyond the limitations and crises inherent in capitalism.