Economic Update with Richard D. Wolff

Episode: S10 E02 – "Answering our Critics"
Date: January 9, 2020
Host: Richard D. Wolff (Democracy at Work)

Episode Overview

In this episode, Richard D. Wolff addresses the three most commonly heard criticisms of the ideas and positions that he and Democracy at Work promote. The episode takes a reflective, critical, and methodical approach to answering challenges often thrown at critiques of capitalism and advocates of socialism and worker cooperatives. Wolff systematically breaks down each criticism, offering historical context, alternative analysis, and passionate argumentation drawn from both experience and economic history.

Key Discussion Points & Insights

1. "Capitalism Is Great Because It Has Reduced Global Poverty"

(Starts ~[01:10])

• Common Criticism: Defenders of capitalism claim that, because global poverty is lower now than in the past, capitalism should be celebrated, or at least not fundamentally critiqued.
• Wolff’s Response:
  • Credit Misplaced:
    • "Capitalists have resisted virtually every effort to do away with poverty that I am aware of. And so it is peculiar to call for credit when you have opposed the very thing that you're taking credit for." ([02:10])
  • Historical Examples:
    • Minimum wage laws, Social Security, and unemployment insurance were won through mass labor movements and opposition to capitalist interests.
    • "When Franklin Roosevelt ... set up the Social Security system in the 1930s, you know who opposed it? ... All of the capitalist class, with a few exceptions, were dead opposed." ([06:30])
  • International Example:
    • Recent French protests against pension cuts are cited as contemporary examples of capitalist opposition to anti-poverty measures.
  • Analogy:
    • Wolff draws a parallel to apologizing for slavery by pointing to minor improvements in slave conditions, calling it "an extraordinary and outrageous kind of criticism." ([10:15])
  • Memorable Quote:
    • "The problem here is a system that systematically works to keep down wages, to keep down the quality of working conditions, to boost the income of the capitalists, which we call profit. You know it, I know it." ([10:20])

2. "Socialism Has Never Worked"

(Starts ~[11:25])

• Common Criticism: People argue that socialism, in all forms, has failed everywhere it's been tried.
• Wolff’s Response:
  • Success Depends on Measurement:
    • Cautions that success/failure depend on one’s standards: "Whether anything, capitalism, socialism, or anything else, succeeds or not depends on how you measure it." ([12:10])
  • Growth in Socialist States:
    • Soviet Union and China lifted themselves rapidly out of poverty and backwardness.
    • "If your goal in establishing socialism was to get out of poverty and to become a modern industrialized economy, then socialism as practiced in the Soviet Union and China is a great success, not a failure at all." ([14:40])
  • Civil Liberties & Freedoms:
    • Admits that these states were not as successful in providing civil liberties or political freedoms.
    • "You wouldn't give them a high grade on that score. Okay, fair enough." ([16:20])
  • Social Democracies as Examples:
    • Points to Scandinavian countries (Norway, Sweden, Finland, Denmark) and parts of Western Europe where strong welfare states are "often referred to as the socialist countries of Europe."
    • These countries provide high living standards, robust civil liberties, and broad political freedoms.
    • "They have as high a standard of living as the United States or higher. ... In other words, if you want to use civil liberties, you want to use political freedoms, and you want to use standard of living, then there are parts of the socialist experience that have done real well according to those standards." ([18:15])
  • Limits of Existing Socialisms:
    • Notes that true socialism was meant to go "beyond capitalism"—to democratize the workplace—not just moderate capitalism.
    • "The absence of democracy in the workplace is a critique of capitalism that socialism has not yet overcome." ([20:35])
  • Memorable Quote:
    • "But the general idea that socialism hasn't worked is a criticism without merit." ([21:00])

3. "Worker Co-ops Disincentivize Innovation and Reward"

(Starts ~[21:10])

• Common Criticism: The notion that an individual inventor or entrepreneur shouldn't have to share the fruits of their innovation with a cooperative workforce.
• Wolff’s Response:
  • Inventing ≠ Exploiting:
    • "One thing to invent, another thing is to exploit workers. You don't need to exploit workers in order to invent." ([21:45])
  • Rewards for Innovation:
    • Advocates for awards, recognition, and incentives for innovators, but argues this does not require worker exploitation.
    • "Let's give them some financial inducement. ... But that doesn't require, nor does it justify exploiting them later." ([22:00])
  • Analogy to Slavery:
    • "Suppose I told you of a society in which to give an incentive to investors...we’re so grateful, we're going to give you three slaves for the rest of your life. We'd all gasp in horror." ([22:25])
  • Risk Argument Debunked:
    • Challenges the claim that business owners uniquely take risk; workers also risk by investing their lives and labor in a company, but without any corresponding control or reward.
    • "The worker may have moved his or her family ... They are putting their lives into this company ... We don't pay them for that risk, do we?" ([23:50])
  • Systemic Disincentives:
    • Argues capitalism also disincentivizes certain inventions and public goods:
      • Light bulbs designed not to last.
      • Suppression of public transportation for auto company profits.
      • Airline seating gets worse so people pay extra for comfort.
    • "There are incentives that work very perversely in capitalism and we ought to deal with them as well." ([25:40])
  • Worker Disincentive to Innovate:
    • Automation threatens workers with unemployment, which actually destroys their incentive to innovate.
    • "If you really cared about incentives to invent, you'd create the rewards for everybody. ... Capitalism doesn't do that." ([27:00])
  • Historical Context:
    • Other systems (slavery, feudalism) also produced innovation; there’s no evidence capitalism or private exploitation is the unique driver.
    • "The notion that somehow nobody would ever invent anything unless they were allowed to exploit afterwards, ... never held water." ([27:45])
  • Memorable Quote:
    • "A future of a democratic workplace will be at least as inventive as anything capitalism has so far achieved." ([28:10])

Notable Quotes & Moments

• On credit for alleviating poverty:

  • "The idea that we should give capitalism the credit for the hard won escape from poverty that the working class has achieved is an extraordinary and outrageous kind of criticism to offer." ([10:30])

• On the reality of risk in employment:

  • "The employer is the one making the decisions. The risk taken by the worker is much poorer ... because democracy doesn't exist in the workplace." ([24:45])

• On Scandinavian 'socialism':

  • "No politician in Germany dares to work against [free university education]." ([19:45])

Timestamps for Key Segments

• Introduction & Overview of Criticisms: [00:10–01:10]
• Criticism 1: Capitalism and Poverty: [01:10–11:25]
• Criticism 2: Socialism Hasn't Worked: [11:25–21:10]
• Criticism 3: Worker Co-ops Disincentivize Innovation: [21:10–28:10]
• Closing Thoughts: [28:10–End]

Tone & Style Notes

Richard Wolff’s tone is passionate, critical, and sometimes wryly humorous, appealing to listeners’ sense of history and justice. He draws sharp analogies and uses historical examples to challenge prevailing economic narratives.

For Listeners

This episode is a rich resource for anyone wanting concise, well-reasoned counterarguments to standard defenses of capitalism and critiques of socialism and worker co-ops. Wolff provides an accessible, historically grounded response to common criticisms, empowering listeners to analyze these arguments in broader economic context.