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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of of our children. I'm your host, Richard Wolff. Before jumping into today's program, I want to make it clear that one of the purposes guiding this program is to provide you with the information, the analysis, to go out and share that with your friends, your co workers, your neighbors, in other words, to quadruple or quintuple our reach by making each of you that much more able to carry the messages, to make the interpretations and to affect the way we live. That's also the logic behind the classes we offer, such as the Marxian class analysis, one just recently completed by myself in collaboration with Professor Shahram Azer of Bucknell University. Indeed, we're going to be having a public question and answer based on that course towards the end of May. And you can find out about all of our classes and these Q and A sessions and all the rest by going to our website, democracyatwork.gov info. And again, it's to make you a partner, if you like, in the project we're all engaged in. And please remember that by liking, subscribing and sharing this video with other people, you are helping us to educate, to inspire, and to help build the movement for change that I think you all understand this country and this world we live in badly needs, perhaps more now than ever. Okay, Today's program is going to be devoted to answering a question many of you have sent to me. And the question is, how does Marx, yes, Karl Marx, how does his work, his criticism of capitalism, which is what he devoted his life to develop, how does it speak to our times? Now, granted, Marx lived back in the 19th century. He was born relatively early in that century, died toward the end of the century. He's a 19th century man living most of that time in London in England. But that's a long time ago. 150 years have passed since Marx died to our times. So you're quite right to ask me, as many of you have, to talk about his relevance to our times, to our situation. So that's what I'm going to try to do in today's program. The first level of an answer is to say that Marx focused, which may surprise many of you, not on the macro, the big picture of how capitalism works. He was interested in that. He studied that. He did write about it, but it was not his primary interest. His primary interest is what we might call, and should call the micro level. He was interested, above all in what happened inside the Production of goods and services inside the workplace, whether it's a factory, an office, a storewhere people get together to make what we call the economy happen, to produce the goods and services we depend on for pretty much every aspect of our lives from birth to death. And to do that properly, he began by saying, I want to be clear about what distinguishes capitalism at the micro level from other systems. I want to be sure, you might say, paraphrasing Marx, that we're all on the same page when it comes to talking about the economy. And in that way, he speaks very much to our current situation, because we're not all on the same page. When Mr. Trump talks about the economy and says it's great, I don't know what he's talking about. When I present my sense of where we're at as an economy, he doesn't know what I'm talking about. We're not on the same page. We're not even in the same book. It's important to make clear what we mean to avoid the noisiness that will otherwise intrude on our effort to communicate. So here we go. Marx begins by saying all economic systems, from the ancient village to the slave plantation to the feudal manor to a modern capitalist enterprise, all of them have in common that they combine land, labor and produced means of production, otherwise known as tools, equipment, and so forth. All systems do that. So that's not unique to capitalism, that it combines labor, land, raw materials, tools and equipment. Tools produce, products, output. Likewise, all systems begin with what nature gives us, begins with a tree, and out of it fashions a table, begins with a sheep, and out of it fashions a woollen sweater. We begin with what nature provides and then transform it, using our brains and our muscles to get the products we're interested in consuming. And then Marx adds, and now he's beginning to play with us by adding something very original because everybody knew about the land, labor and capital. He says every system produces a surplus. What does he mean? Well, it's actually very simple, but what a breakthrough. Every system has a number of its people, not all of them a number of its people. Whether we're talking about an ancient village of 40 people or a modern town of 3,000, or a whole country doesn't matter. Every group of people, every community, every society has some, not all of its people using their brains and muscle to transform nature into finished products in every society and part of the output that they produce, these people, they consume the producers part of every community consume part of of what they produce. But there's another part of what they produce that they don't consume. And that part is called the surplus. Every society of which we have any record in human history has a portion of its people producing output greater than what that portion of consumes the surplus. Some of that surplus is used to sustain members of the community that don't work. This could be babies, you know, one year old, not going to do much labor. It could include elderly people who are given an opportunity to retire at the end of a lifetime of work. Work. And they're not told now that you can't work, go off and die. Could be told that. But we don't in general find that human beings sustain their elderly. With what? With the surplus. Then it's possible for communities to decide that there's all kinds of other people that they want to be free from work. Don't transform nature into a finished product. Don't do that. Do something else. Here's an if it's a religious community, they want someone to speak to the God or the gods. If that community believes that, and they'll say we're happy to take a portion of the surplus and give it to John over there or Mary over there to intercede with the gods for, for us, it's something we all benefit from, so we will use the surplus to do that. Then there are communities that are afraid of strangers. So they want a few people to stand around with big sticks. We call them the police or the army. They don't transform nature into finished goods. Not what they do. They're freed from that kind of labor. They do something else. And how do they feed themselves? And who pays for their clothing and their stick that has to be fashioned in a certain way and maintained? The surplus does all that. So Marx points out that every society produces a surplus and distributes it. But, and here comes Marx's let's get on the same page. He says every society does it in a unique way. Capitalism is one way of managing, organizing the production and distribution of the surplus. And to drive home how capitalism does it, Marx say, let's take a look at how slaves do it in a slave society. In a slave society, we know who does the work. The slaves. The slaves produce everything, food, clothing, shelter, you name it. The slaves. That's what their slavery entails. Labor all the time. And who gets the fruit of their labor? The master. He gets it all. But the master, not being stupid, gives a portion back to the slave so that the slave can feed, clothe and shelter himself or herself because otherwise Slavery doesn't survive. And the master, who's the beneficiary of slavery, is not going to let that happen. So he gives back to the slave a portion of what the slave produced. But what the slaves produced over and above the portion, the master gives back to them. That's the slave surplus. In feudalism, it's kind of simple. The serf works on the land of the Lord three days a week, Monday, Tuesday, Wednesday, and he keeps whatever he produces. Thursday, Friday, Saturday. The serf works on the land of the Lord and the Lord keeps what the serf produces on the Lord's land those other three days. And on the seventh day, it being a Christian serfdom, they rest and go to church where someone persuades them that this is God's will. You're a serf because you were born to a serf, and you're a lord because you were born to a lord. And since, of course, the cleric, the priest, the minister, the rabbi, whoever doesn't help transform nature into finished product, they live off the surplus too, that the lords give them because the lords want their serfs to believe. What Marx devoted himself to was to showing that in capitalism, there's also the surplus. And he shows us who produces it and who gets it and what they do with it, because it's not like the slave, it's not like the primitive village, it's not like the feudal system, none of it. It's its own system. And then Marx teases us not much more than that and says, you know, you could imagine a system in which the workers who produce the surplus are the same people who get it. They don't give it to anybody else. No slave who gives it in the end to their master, no serf, who gives it in the end to the Lord. But the workers themselves get and keep the surplus they produce. And he called that socialism and communism. We've come to the end of the first half of today's show. Please stay with me. We're going to go into the detail of what Marx says and what Marx is relevant to today, right after we make the brick. Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts this year and in particular in the last couple of months. And in part responding to that, we are extending the availability of our limited edition, linen covered hardcover version of Understanding Capitalism, the book I wrote and that we have been making available now for quite a while. If you are interested, I will be signing copies of that hardcover and they will be available to you as they have been over the last few weeks. Just simply send an email to us@infodemocracyatwork.info and put in the subject line limited edition. We will send you all the information you need to order and receive your copy signed copy of Understanding Capitalism in its hardback. And thank you again for your kind attention to the fundraising dimension of what we do. Welcome back, friends, to the second half of today's economic update. We're going to begin right now by dealing with Marx's notion of the surplus in capitalism. How capitalism uniquely organizes the production and distribution of this surplus. And I'm going to do this by means of a simple everyday example. And then I'm going to use it to show you what Marx's insights for today really are all about. Here's the you're looking for a job. Many of you have done that more than once or twice in your life. You sit down with your employer already. Ah, an employer. And what are you? An employee. And you sit down with the employer and you have a conversation and the employer tells you, this is the job I have in mind for you. You come at 8 o' clock and you stay until 5. And you're going to be working with this machine on this raw material in this way to produce this product. And then you get to the tense part. You ask, how much does the job pay? And the employer says to you, let's pick an example. $20 per hour. Okay, now you're agreed. Let's assume it's a simple story. You agree to work 40 hours a week, $20 per hour, and you will do what the employer tells you to do from eight to five, five days a week. That's how it's going to work. Here's what you know, even if you've never read a word of Karl Marx. Karl Marx is here telling you something you kind of half know. But he's the expert, so he can put it into words. You know, as Marx says, that that employer is willing to pay you $20 for every hour you work. Why? Because he knows in that hour your labor, that is your brains and your muscle working together, are going to either increase the quantity of output from what it would otherwise be if he didn't hire you, or are you going to improve the quality of that output beyond what it would be if he didn't hire you. In other words, you add value to his business by your labor and because the product you help to produce belongs to your employer at the end of the Day when you go home, you leave that product there. It doesn't belong to you. Your brains and muscles are embodied in it. But it is not yours. It's the employer's. And you know what he's going to do with it? He sells it like he sells all the other products in his business. And here's what you know that Marx makes clear. The only reason the employer will ever pay you $20 an hour is if an hour of your labor adds more than $20 to what he sells. Why? Because that's the profit of his business. The difference between the value he sells that you produced, the value you added to his business by being there and using your brains and muscles in, in the way he told you and you're not being there. The difference is the value added. It's got to be more than 20 bucks. Because if the value added is $20 and he gave you that $20, there'd be nothing in it for him. And he's not going to do that. He's in the business. He will tell you to make money, to have something out of it for himself. That's the surplus. When you work, you produce a surplus which shows up as his profit when he sells the output. That makes capitalism completely different. There weren't employers and employees in feudalism. That's not the lord and serf relationship. That's not the master slave relationship. Now let's use this for today. The United States and Britain are the prime examples of private capitalism. Private individuals who go about hiring workers who add value by their labor, which the private capitalists sell. And they keep the difference between the value added by the workers and what they pay them as wages. Okay, that's private capitalism. But there's another kind. State capitalism. Very simple. It's exactly the same. Except instead of a private individual doing it by himself or with a group who set up a company with shares, and that really doesn't matter. But the Soviet Union was a wonderful example of the state doing it. And we actually have samples here too. The post office does that. The USPS does it. All kinds of public companies, bus companies, all kinds of other do it too. But most of the production in the United States and England private. Most of the production in the Soviet Union was public. The government set up enterprises. It hired workers, Soviet workers. It paid them a wage. They produced output and the value they added by their labor was greater than what they got paid. And there was the surplus. But it accrued to the government of the Soviet Union. And now we have China. And China is not private like the United States and Britain. And it's not all public like the Soviet Union was. China, learning from both of them, decided to commit itself to being a hybrid, a mixture. Roughly half of the Chinese economy today is private capitalism. All the United States and Britain, in fact, private capitalists, American capitalists and private British capitalists own and operate factories and offices and stores inside the People's Republic of China. To this day, half of their economy is private capitalists, both Chinese and foreign. The other half of the Chinese economy are public enterprises owned and operated by the government of the People's Republic of China. So it's kind of half American, half Soviet. The Chinese call their country socialism with Chinese characteristics. But actually, if we're going to use Marx's insight. Here we go, here it comes. Marx's insight into today's world. What the Chinese actually have is a unique form of capitalism. Why? Because they're using the employer employee relationship. And that, as Marx taught us, is what distinguishes capitalism from all the other systems. This is not a critique of China. This is using Marx's theory to understand China. And the understanding works. This, what the Chinese have done to their credit is figure out the best kind of capitalism you can have if your goal is to become rich and to escape poverty. Now, since that's the concern of the majority of people in the world who live in conditions of, if not poverty, well, then near poverty, China has achieved quite something. To be clear, 40, 50 years ago, China was one of the poorest countries on this planet. It didn't get help from the United States and Europe and Japan, the developed world, because those parts of the world, and I was involved in this, were busy providing economic development assistance to Asia, Africa and Latin America. We didn't provide it to China because they were communistically led. We didn't provide it to Russia or to North Korea and so forth either. But the irony, it's the least of it. The irony is that the country that got helped least after World War II is the country that developed best after World War II. And I'll leave you to think about what that means. The Chinese are the greatest growth experience we have in the human race. Their hybrid approach gave them a rate of growth that makes them a superpower. Today, after having been the poorest country on the planet or one of the poorest a very few decades ago, you have to respect that achievement. Doesn't mean you endorse China, doesn't mean it doesn't have lots of problems. It does, but economic growth isn't one of them. And it is in most other countries. But now the Marxian insight is not socialism or communism. For that to happen, you have to overcome the break, the opposition, if you like, the difference between, between the employer and the employee, which is scarily similar to that between the master and the slave, the lord and the serf. The mass of people produce a surplus that a small minority enjoys as great wealth. Hundreds of thousands produce the surplus that makes Elon Musk very wealthy, or Bill Gates very wealthy, or Jeff Bezos, etc. You know, if you're going to have the socialist alternative Marx had in mind, it comes when you no longer have that split, when the surplus produced by the mass of workers is theirs and not anybody else's. They decide collectively, presumably democratically, what to do with the surplus, who to distribute it to, to whom to say, you don't have to work like the rest of us, we want you to do something else. And who's the we who wants the workers who made this surplus? Not the capitalists who take it. Not the lords who take it. Not the masters who take it. No, no, no. The people who produce it. The dream the slaves had but never realized. The dream the serfs had but never realized. The dream the employees have but have not yet realized. And not in China either. The relevance of Marx today is to pose the most important part question facing China and therefore the whole world. Are we ready yet, you in China, but all of us, to take the next step of saying we don't only not want kings to rule over us, we don't want CEOs to rule over us either. We want democracy not just where we live, but where we work. We the people want to own and operate the enterprises upon which our lives depend. Socialism and communism were this dream of going beyond capitalism. And it was a dream made clear and concrete by Marx's insight, which is why he's as relevant today as he ever was. I hope you found this presentation valuable. I hope it answers the questions you've sent me. And in any case, I look forward to speaking with you again next week.