Economic Update with Richard D. Wolff

Episode: "Labor and Capitalism's Rise and Fall"

Date: May 20, 2021

Overview

This episode, hosted by Richard D. Wolff, critically examines the intersections of labor, capitalism, and economic policy both historically and in the present. Wolff’s solo commentary opens with the political struggle over D.C. statehood and the mechanics of U.S. tax policy, critiquing recent Biden administration proposals as insufficiently ambitious. In the second half, Wolff interviews Professor Michael Hillard about the cycles of growth and decline in American industries, focusing on the Maine paper industry as a microcosm for broader capitalist dynamics and pointing to alternative possibilities for worker empowerment and industrial policy.

Key Discussion Points & Insights

1. The Politics of Representation and Voting Rights (00:10–08:00)

• D.C. Statehood Debate (HR51):

  • Wolff explains the historic nature of HR51, which would grant statehood to Washington, D.C., a territory with more residents than Vermont or Wyoming.
  • He critiques Republican opposition, arguing it stems from fear of increasing Democratic and Black representation in the Senate.
  • Quote:
    “Given the demographics of D.C. it's crystal clear that those two senators will be, A, Democrats and B, black people. And you can see now why the Republican Party, especially...is freaked out.” – Richard D. Wolff (03:40)

• Broader Context of Voting Restrictions:

  • Wolff contextualizes today’s fights over voting rights as part of a long, exclusionary American tradition—from barring women and the property-less, to ongoing attempts to limit black participation after the Civil War.
  • He links HR1 (Democratic voting rights bill) as an attempt to counter Republican efforts at voter suppression.
  • Quote:
    “The notion of democracy was always qualified in the United States in ways that some today find downright embarrassing.” – Richard D. Wolff (05:31)

2. Biden’s Economic Proposals and Systemic Critique (08:00–15:25)

• Corporate Taxation:

  • Wolff lays out the drastic reduction in corporate tax rates—from 35% before Trump to 21% after (2017), and Biden’s current proposal to raise it only partway to 28%. He suggests the final compromise will fall short.
  • Wolff points out the long-term collapse of the corporate tax’s share of GDP (from 4% to 1% over two decades).
  • Quote:
    “At no time did the rich and the corporations need a tax cut less than when Mr. Trump gave it to them.” – Richard D. Wolff (10:15)

• Individual Taxation & Capital Gains:

  • The top income tax rate for individuals may rise, but only modestly (from 37% to 39.5%), a shadow of historic highs (e.g., 94% under FDR).
  • Capital gains (income from investments) are taxed far less than earnings from labor; Biden proposes changes only for the ultra-wealthy.
  • Wolff critiques the “step-up in basis” loophole allowing inherited wealth to dodge capital gains taxes entirely.
  • Quote:
    "It makes a joke out of the notion that we should all have a level playing field.” – Richard D. Wolff (13:39)

• Summary Judgement on Biden Plan:

  • Wolff concludes Biden’s changes are “very modest” and shaped more by what is politically possible than what history or justice demand.
  • He warns these incremental efforts are “way too little, and ... coming too late for little to be enough.” (14:45)

3. Interview with Professor Michael Hillard: The Decline of the Maine Paper Industry (15:25–28:35)

Introduction to Hillard’s Work (15:25–17:59)

• Wolff introduces Professor Hillard and his book "Shredding Labor and the Rise and Fall of Maine’s Mighty Paper Industry."
• The discussion frames the Maine paper industry as emblematic of a recurring “American tragedy” where industries, having built communities and livelihoods, are “wiped out” by decisions made by a “tiny minority” of owners.

Capitalist “Creative Destruction” and Worker Harm (17:59–22:04)

• Hillard references Schumpeter’s concept of “creative destruction,” noting its Marxian roots.

• He emphasizes the transition in the 1980s toward “shareholder primacy” and financialization, with corporate decisions increasingly driven by Wall Street logic.

• He highlights the Scott Paper case in Maine, where corporate raider Al Dunlap closed profitable mills, enriching a small elite while devastating communities.

• Quote:
  “You maximize profits for the shareholder – that’s the only purpose of a corporation.” – Michael Hillard (20:12)

• Hillard argues:

  • The main questions are (1) could decline have been less destructive, and (2) was it inevitable?
  • He spotlights worker ownership as a promising but mostly unrealized alternative, describing workers’ high skill and capacity for self-management in paper mills.
  • Industrial policy, as seen in other countries, is raised as another alternative path.

Worker Radicalization and Near-Miss on Worker Ownership (22:04–24:27)

• Hillard recounts how strikes provoked by “Wall Street ideology” in the 1980s spurred radicalization against corporate capitalism among Maine’s paper workers.
• A significant 1987 rally included a speech by Jesse Jackson (notable moment at 23:10).
• Workers' push for democratic ownership at SD Warren Mill was ultimately thwarted but could have set a powerful model for the state.
• Quote:
  “If they had succeeded, this would have set a model for the rest of the state.” – Michael Hillard (24:15)

The Absence—and Potential—of Forward-Looking Planning (24:27–27:13)

• Wolff asks if any state leaders ever planned for inevitable industrial decline.
• Hillard says the political response was limited to scrambling for new investors, never real economic planning.
• He highlights the contrasting case of the federally-owned Kittery Naval Shipyard, where political action successfully preserved jobs.
• Now, Hillard senses Mainers increasingly reject pure free-market orthodoxy and support state intervention and planning.

Can the American Decline Be Reversed? (27:13–28:35)

• Wolff asks if Maine’s fate foreshadows that of the broader U.S.
• Hillard responds:
  • The cycles of rise and decline are intrinsic to capitalism.
  • The key question: can history guide us to implement alternatives like worker ownership and national industrial policy?
  • He expresses cautious optimism based on increasing openness to new strategies and positive labor movement engagement with his research.
• Quote:
  “What the contingency is at this point is...can we learn from models...both at the local level—I think worker ownership is a profound option—and then nationally, having some kind of planning, an industrial policy.” – Michael Hillard (27:53)

Notable Quotes and Memorable Moments

• “The idea was limit the vote to a very small part of the population. So the notion of democracy was always qualified in the United States.” – Richard D. Wolff (05:26)
• “Mr. Biden’s is a very modest effort to change direction. My opinion as an economist, it’s way too little, and it’s coming too late for little to be enough.” – Richard D. Wolff (14:48)
• “Corporations that lay off workers, shut down operations, do all kinds of financial engineering can make massive amounts of windfall for shareholders.” – Michael Hillard (19:17)
• “A radical movement against capitalism that had never existed within the industry” – Michael Hillard, on the Maine mill workers’ reaction in the 1980s (22:56)
• “I’m a little bit more optimistic about [the future].” – Michael Hillard (28:27)

Timestamps for Important Segments

• HR51 and D.C. statehood: 00:10–05:00
• Voting rights history and struggles: 05:00–08:00
• Biden’s tax and economic policies critique: 08:00–15:25
• Interview with Michael Hillard starts: 15:25
• Creative destruction and Maine paper industry: 17:59–22:04
• Worker ownership efforts and missed opportunities: 22:04–24:27
• State response and economic planning discussion: 24:27–27:13
• Comparing Maine to broader U.S. trends: 27:13–28:35

Tone

Richard Wolff maintains a critical, insightful, and accessible tone throughout, blending hard economic analysis with historical context and a drive for empowering listeners. Michael Hillard’s contributions are thoughtful, precise, and infused with a sense of cautious hope, reflecting both marked historical pessimism and an openness to future reforms.

Summary

This episode’s first half scrutinizes contemporary U.S. policy battles over voting rights and taxation, offering a historical critique of their limitations and the entrenched power dynamics they reflect. In the second half, Professor Michael Hillard provides a poignant case study of the decline of the Maine paper industry to illustrate systemic flaws in American capitalism—particularly the dominance of financial interests and the lack of economic democracy. Both Wolff and Hillard agree on the necessity and possibility of alternative models of ownership and national planning, highlighting the critical importance of collective action and historical awareness in shaping a more equitable economic future.