← Economic Update with Richard D. Wolff
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Foreign. Welcome friends, to another edition of Economic Update. I'm glad to be here. I'm your host, Richard Wolff. I want to respond today to a criticism sent in to us which I think is well taken. The critic said, look, you, you make a good case and thank you for that by the way. You make a good case for the transition from hierarchical, undemocratic capitalist enterprises where a tiny group of people make all the decisions and the rest of us have to live with the results without being able to control those decision makers. You make a good case that we need to transition to democratic worker co ops. But in your first focus on that, you tend to shortchange a discussion of what the larger social changes have to be that go with a transition to worker co ops. So that sometimes it sounds, from the way you talk, says this critic, as though the transition in the enterprise will solve all the problems, will take care of itself, will produce the context it needs to survive. I think there's a good point to that criticism. So I want to use today to talk about what some of the larger social changes have to be if a transition from capitalist enterprises to a worker co op based economy is going to have the results we want and to be able to survive over time to become the dominant economic system, the way capitalism became dominant through the passing away of slavery, feudalism and other pre capitalist systems. So let's discuss what the larger context beyond capitalism would need to be and might look like if we want to have it be democratic in the way we won't want to democratize enterprises. The first thing to begin with is to notice that there has to be an inclusion. If you mean to be democratic as we do, there has to be an inclusion in the decision making operation of people other than the workers in an enterprise, because they're not the only ones affected by what an enterprise does or doesn't do. Here are two other groups that are affected and that have to be brought in. One is the community. Where this workplace exists, the factory, the office, the store is located somewhere. It is surrounded by people who live and work elsewhere in the society or who maybe live but don't work. Not everybody is a working person. All kinds of people are doing other things. Their children, their elderly, they're incapacitated one way or another, or they're devoted to things we don't normally call work. Although if you look closely at them, they are perhaps not paid, but just as important in society. So there has to be a way for the community, for the environment, for the people affected by what an Enterprise does to have some input too. Otherwise it isn't democratic. And it's not just the people who live in the communities where workplaces are located. There's another the customers, the people for whom the the work is done. The goods, the services produced are consumed either by another enterprise or by the general public. And they too are affected by the price, by the quality, by everything about that. And they too have to be in on it. So one of the things that has to happen for worker co ops to be successful, to be workers welcomed as a new form of social life, the way capitalism was two or three centuries ago, as we emerged from feudalism, at least in Europe. So I would argue that the new society has to have a context in which there are instruments, ways, organizations that allow the citizens in the surrounding community and the customers also to participate with the workers in making the decisions. That would be a democratic reorganization of society to facilitate and to make it acceptable for the workers to democratically run their enterprise because they bring in as co determinators, the others affected by the decisions of an enterprise which, which is not only the workers, but also the residents of the community and the customers. Then we have another problem that the larger society has to solve. And we've talked about that in other contexts on this program in the past. Let's imagine worker co ops. Well, one worker co op does real well and grows and does able to pay its workers better and also all of the good things that can happen. But next door or down the street or across town, there's another worker co op which for all kinds of reasons isn't doing so well. Maybe people there got sick, maybe the environment was not successful. Maybe people stopped wanting to get the output that that other worker co op did. All kinds of reasons explain why one enterprise is successful and another one isn't. That's true in slavery, that's true in feudalism, it's true in capital, and it will be true in a worker co op economy. The question is not whether some do better and some do worse. The question is how do you handle that in capitalism, those who are successful outcompete those who aren't and eventually destroy them in competition and then eventually absorb them, hiring the workers who lost their job in the capitalist enterprise that went down, who move over to the one that went up, thereby continuing the uneven development that capitalism is always noted for. So what would a context be that would help this not happen in a worker call? How would it handle it? Well, the answer is you've got to deal with it directly. You've got to make a commitment socially not to allow one co op's success to be connected to and in effect worsen another co op's lack of success. You've got to deal with that. Not imagine that it doesn't matter. Not imagine that it doesn't have terrible social effects. It always has. Capitalism pretends you don't have to worry about that. We know better, we want to worry about it, because we know that the success of a society sooner or later will depend on its internal cohesion, its sense of community. And if you destroy that by having extreme different experiences in the workplace, you will come to regret it. So we need a context that handles that situation well. How would you do that? This is an old idea of people who have been critical of capitalism, because capitalism not only makes some people rich and large numbers of people poor, as we well know, but it allows the rich to use their wealth to get richer still and thereby forces the poor to suffer the consequences of the rising inequality, which we certainly know much about here in the United States since the last half century has been a historical horror show of, of rising inequality. So what are we gonna do? Well, I think we need first of all to understand that this is a real problem, that it has affected society for a long time. It isn't unique to a worker co op society. The difference is, in a worker co op society, the very logic of democratizing the enterprise, creating equality, where all the people who work in an enterprise together, one person, one votemake the decision that hopefully will inspire, will inform, will give an idea about how to do that in the larger society, because it's good for us that way. And doing it in the larger society reinforces the support for doing it inside the workplace that they can help each other. So what would it mean? It would mean to learn a lesson. And the lesson is that you're better off if you solve a problem collectively, if you share the suffering and the difficulties we all have in life, and if you share the victories and the successes we have, we will become a stronger family, a stronger neighborhood, a stronger town, a stronger country. If we learn how to do that, to help one another. You might even call it a kind of loving one another, if you use the term broadly enough. And so there ought to be a context for worker co ops, and I shouldn't say there ought to be. I don't think worker co ops can survive without what I'm about to say. There has to be a larger social context that reinforces the whole logic of democratic egalitarian workplaces and enterprises. And the first step in that is to understand a role for, let's call it the government or the state or whatever you want to call it, something we agree to, to establish in our community, to help our community deal with the reality that we have to figure out how to cope with unequal growth rates, unequal experiences in the workplace. One way to do that, very, very important, and perhaps in the larger scheme of things, the most important, at least at our phase of history, we have to finally understand that there has to be a separation between a job and an income on the one hand, and the decisions at a workplace on the other. We now have a situation in which human beings are in terror all the time, of losing their job, of losing their income. And they are asked to make decisions about what happens at the workplace, not in terms of what's good for the community as a whole, not in terms of the society as a whole, of which they are a part, of which they are a product, but instead, out of terror, to hold onto the job, to hold on to the income, or maybe to get a better job, or maybe to get a better income. Suppose we handle that as we want everyone to decide what's best in their workplace in terms of the society's well being. And the way we're going to do that is we're going to say a job is a human right by virtue of having been born. You're going to have a, a job and an income. And if the particular job you have right now is not useful, society wise, we don't want it anymore, for whatever reason, we don't need that product, or we want to preserve nature, or whatever is our reasoning, if we decide a particular kind of work isn't needed to be done, that has no impact on your job and your income. We will find you another job and we will maintain you with your income in the transition and we'll work out ways of doing that. But you don't have to worry when you make a decision about a workplace based on your membership in the larger community, that it's going to risk your job and your income. That is not necessary anymore. We have more than enough wealth and income to do that for everybody. And it would take our society an enormous step forward. And I'm talking not only about what's good for our society, but what's good for the mental health of every single person who spends so much of their mental energy, their anxiety, their worry on the job. Can I keep it? The income, Can I count on it? And all that flows from that. Well, we've come to the end of the first half of this discussion of the larger context we need for worker co ops to survive and grow. And so I want to make a couple of announcements before we make the break. We recently published our second book called Understanding Socialism and you can get a copy of it by going to our websites. You can get a copy by going to lulu.com and we urge you to do it. It's the second book we earlier published, Understanding Marxism. If you haven't checked out our gift shop, please go to our website, look at the items under store and see whether some of those might be of interest. We want to thank, as always, our Patreon community for the enormously important support they provide. Consider becoming a member and be sure to subscribe to our YouTube channel. It's a big help as well. Stay with us. We'll be right back. Welcome back, friends, to the second half of today's economic update. We were talking about a response I want to make to a criticism that by focusing on the transition from capitalist enterprises to worker co ops, too much attention, an excessive amount of attention, is focused on that micro level without talking about the larger social context that has to go with it if these transitions are to survive and if they are to have the social impact, which is why we support them in large part. I want to make the point now that we need a government. We need a government to help us locally, regionally, nationally create that context. I ended the first half by talking about one function for that government is to manage the guarantee of a job and income so that people are freer to make decisions about what's good for the environment, for our community, for their families and so on at the workplace. Without that anxiety and fear of losing my job and losing my income, which of course has to be primary if it's not guaranteed. It's like having to worry about where your next drink of water comes from because you could die from poison, rather than living in a community which makes sure that all the water coming out of all the faucets is safe to drink. We want that because we don't want to have to worry about our next drink of water, do we? Well, we don't want to worry about our income and our jobs either. And they're just as available as is clean water Problems, sure. Costs for sure, but we can manage it. It's only the capitalist system that blocks us from solving this kind of problem. Well, what would the government do, some of you think, and particularly if you're sensitive to the old socialist tradition that the government should come in and redistribute wealth from the poor to the rich. Or the other way around. Right. If you're a socialist, it would be more from the rich to the poor. But you think of the government as a redistribution agency. I want to argue very strongly that that's not what I'm talking about. Let me explain. It's not that I don't object to the imbalances, poverty and wealth existing side by side, of course I do. But I don't think redistribution is the solution. And the best way I can teach that or get it across is by using a simple example, which I have done before. But since a number of you wrote to me about it, I'm going to do it again. Imagine you and your child going to the park on a lovely Sunday afternoon and your child informs you none too subtly that they would like an ice cream cone. And now imagine that you have two children and and you take them to the park and both of them at the same moment happen to say, wow, I would like an ice cream cone. So you go to the little vendor down the road and he or she is selling ice cream cones and you order two and you give the two of them to one of your two children. And then you see the face on that one and you see the face on the other one and you realize this is going to cause major trouble, not only in the immediate moment, but who knows for how long. You already got problems we call sibling rivalry. They're going to get a lot worse if you behave like this and you figure that out. So you say, okay, I am now going to redistribute the wealth. I'm going to take one of the two ice cream cones away from the child I gave the two to and give it to the child who had none. I'm going to redistribute. And then you're going to see a level of rage on the part of the child who's deprived of one. And you're going to wonder, wow, did I make the situation better by my redistribution or did I make it worse? If you're honest, you will ask that question because it has to be asked. Redistribution produces bitter anger, division, conflict. The logical inference from the story I've told is, and you already know, would have been much smarter never to have given one child two cones than it is to give one and then redistribute. The same is true everywhere else. In economics, it's much better to distribute from the get go equally than to do so unequally and then impose a redistribution. Much of modern society is torn apart over these redistribution efforts. Those who got it in the first place feel embittered that they are being deprived. Suppose you had not done it that way. Suppose you had said, there's a reason why we distribute much more equally. It's precisely to avoid the difficulties and the tensions and the bitternesses that come from not doing it. Learn the lesson like the parent of those two kids sorted it out, we can learn that lesson socially. What would that mean? Here's what it would mean. Very practically, if there's a worker co op that is doing really well, generating profits, growing, and on the other part of town or the other part of the country, there are worker co ops that are having problems. Let's leave a small portion of the profits of the worker co op that is doing well in their hands to distribute to their communities, to their workers. But the lion's share of their profit, that goes into the general fund and that is made available in part to those that are not doing so well. But even more generally is used for everybody's benefit. For example, everybody gets a benefit because a part of the profits produced by the successful co ops is used to start new co ops to provide a higher social welfare in the form of better parks for people to enjoy more beaches, more free time. Let everybody learn that in whatever worker co op you work, you're being benefited by the good performance of other worker co ops, just as they will be benefited when it's your turn in your co op which gets help to become successful. You will always be helping yourself a little and helping the larger community. And you won't mind having the bulk of your profits taxed away because you're getting benefits all the time from the profits taxed away from the other co ops you're participating. And you know, people know that already because that's the principle of taxation. We all pay taxes and then things are done that we all benefit from. The public highway, the public park, the networks of support that we get, the social benefits that flow to us, the state parks we enjoy in the summer, you name it, we kind of understand the collective resources so that we understand, hopefully that the taxes we pay are not just a drag on us because they perform good services for other people, just like the taxes on other people produce, the social services we all use and rely on that can be done in and for enterprises. It makes us all cohere as members of a community and a government apparatus, the same kind of apparatus that would allow for the end of terrorization of people because you can take away their income and jobs. The end of that administered by a state should be accompanied by a state that uses its powers of taxation of the profits of worker co ops to balance them out to help those that are having a hard time to carry out the adjustment. If some co op is doing stuff that we just don't need anymore and the help has to be moving those people to things that we do need to have and so on, this kind of management of the relationship among worker co ops will allow them to be more of a community and less of a cutthroat set of competitors than we are used to in capitalism. And then again a rough equality among co ops so that the strong help those that are less strong, knowing that what's strong. This decade will not be so strong next decade. We once were an economy in which the car industry was number one. It isn't anymore. We were once an economy in which coal was the name of the game in mining. It isn't anymore. These things go up and down with technology, with tastes. The co op that's in a good place one day will not be in a good place the next. We will help each other and the state will do that. Performing that kind of collective, democratic, mutual support in the larger society will reinforce doing the same inside a workplace with the workers, the customers and the community members around the workplace. In other words, yes, we need larger social institutions alongside the workplace institution and the democratization of one facilitates the democratization of the other. It's the transition from a capitalist economy to a worker co op economy that will help bring the social changes with. They don't guarantee it. That's why we're talking about it. Those big social changes have to become themselves, targets, objects, goals for what we're trying to achieve. Let me explain to the critic who wrote and who suggested this program. Let me explain one more reason why I have focused so much of my life work and my work on these programs to the transition to worker co op enterprises. It's because we have a long tradition of thinking about what the state should or shouldn't do and having debates over it. We've had a tradition of socialism that focused on what the state could and should do to make capitalism less harsh and more humane. But what we haven't done, what we have neglected is, is to look inside the corporation, inside the workplace, for the changes that have to happen there. That's why I focus on it. Not because it's more important than anything, but because it has been neglected. That's the focus. But it was never intended to suggest that we don't have the big changes, the big social changes in front of us that have to be dealt with. And I hope that the conversation today is at least a beginning of showing the kinds and directions of larger social changes that need to go along with the transition to a democratic workplace, both as a condition for that transition to happen and as an objective for the people involved in that democratic workplace to participate in a productive way in the larger society and in ways that will reinforce the very worker co ops that they have established. And my final point, what I'm saying is what capitalism did too, the transition from the feudal manor lord and serf to the capitalist enterprise, employer, employee, also needed to adjust the larger society. And boy, they were bold. They got rid of kings and queens. That's what you had in feudalism. They set up parliaments and they had rules about what the parliaments could do and not do. Things that were done to facilitate what capitalists wanted. To this day, capitalists spend a lot of time and a lot of money shaping the politics to make the society work in such a way that they can become richer and more successful. All that I'm suggesting is some of the ways in which a worker co op based economy will change the larger society to reinforce its ability to serve the people that the democratization of workplaces is intended to rescue from the condition they suffer in capitalism. I hope you have found this extended discussion useful, particularly those of you who wanted to hear some more about the larger context. The focus on worker co ops is a response to the fact that the old criticisms of capitalism, the older socialisms, talked about all kinds of important, interesting things, but they tended to neglect the transformations inside the workplace that were needed to make a transition from capitalism to something better happen. That's why we focus on it. But it's an addition to the issues of the larger society, not a substitute. Thank you very much for your attention. We've come to the end. Appreciate your being interested and I look forward to speaking with you again next week.