Economic Update with Richard D. Wolff

[S9 E47] Libertarianism, Capitalism and Socialism

December 12, 2019

Episode Overview

In this episode, Richard D. Wolff, host of Economic Update, dedicates the program to dissecting libertarianism and exploring its relationship to both capitalism and socialism. Responding to audience requests, Wolff assesses the libertarian critique of state intervention in the economy, provides an informed critique of libertarianism’s assumptions, and proposes a possible common ground between libertarians and socialists through the democratization of workplaces.

1. Historical Review of Capitalism

Timestamps: 00:10–06:50

• Wolff provides a concise economic history of capitalism spanning roughly 300 years, beginning in England and eventually dominating globally.
  • “It started about 300 years ago in England. Modern capitalism did spread from there to Western Europe, from there to North America, Japan, and by now it is the world's dominant system.” (01:20)
• Strengths of Capitalism:
  • Rapid economic growth and increased production of goods/services
  • Technological dynamism and faster adoption of new technologies
  • Driving globalization and unifying markets
    • “It produces rapid economic growth, no question about it. It is an explosive system for producing goods and services. It is technologically dynamic... it has brought the world together.” (02:00–02:40)
• Weaknesses of Capitalism:
  • Tendency toward extreme inequality (“1%/99%”)
  • Instability with frequent economic crises (recession, depression, crisis)
  • Injustice in both distributions of wealth and the impact of downturns
  • Limited real democracy; economic power concentrates influence
  • Reliance on a strong state apparatus
    • “There's little real democracy...to suggest that we all have an equal influence on what happens to us in this society is an argument few would be able to sustain without a smile at best.” (04:40)

2. The Libertarian Critique and Defense of Capitalism

Timestamps: 06:50–17:30

• Libertarians focus their critique on state intervention, seeing government as an external actor distorting capitalism.
  • “There's a line of defense of capitalism that picks out that quality...the big strong state, and attacks it.” (07:50)
• Libertarians use terms like 'deregulation' and 'privatization,' believing that removing the government would restore efficient and fair capitalism.
  • “They like the word liberty, which they understand as being free from...a government telling us what to do, shaping our lives, limiting our options, and so on.” (09:40)
• They often label current issues as "crony capitalism" or "unfair capitalism," arguing these are due to government interference rather than inherent flaws.
• The libertarian vision is aligned largely with the Republican Party’s traditional anti-intervention stance, although Wolff notes contradictions under the Trump administration:
  • “It's a little hard to keep that in your mind when you have a president like Trump, since he roaringly intrudes the government into the economy.” (15:10)

3. Wolff’s Critique of Libertarianism

Timestamps: 18:10–29:35

• Core Critique: Wolff argues that a strong state is not an external accident but is inherent and essential to the functioning of capitalism.
  • “I would argue, based on a lifetime of work in the field we call economic history, that this is a complete illusion. Strong government has been part of capitalism throughout its history.” (19:30)
• He provides historical examples demonstrating state roles:
  • Government controls money, land distribution, regulation of commerce, measures, safety, and crises intervention.
    • “Nothing is more important to the modern functioning of a capitalist economy than money. But to whom do we entrust the production, distribution and control of the money we use every day? All the government.” (21:00)
  • Cites the 2008 financial crisis as an instance where the capitalists ran to the state for a bailout.
    • “Just remember the crisis of 2008, when global capitalism collapsed in every country...the leading private bankers, the leading private corporations sent their top executives to the capital city to beg the government to bail them out, which the government did.” (24:00)
• Key Takeaway: Capitalism without a strong state is a “utopian fantasy.”
  • “The notion of a capitalism without a government has only one adjective that really applies. It is a utopian fantasy, beautiful in a certain way. It would be wonderful if we didn't have a government. But capitalism has not ever proven the way to get beyond a government.” (22:50)

4. Connections and Contrasts: Socialism, Capitalism, and Libertarianism

Timestamps: 29:35–36:00

• State Socialism vs. Capitalism:
  • Socialist experiments that organized production with a state replacing private employers (e.g., Soviet Union, China) did not abolish the hierarchical employer-employee relationship.
    • “The socialism of the Soviet Union and the socialism of the People's Republic of China did not do away with capitalism. They organized their industries with employers and employees. Same system, they had different people in the role of employers—state officials rather than private citizens.” (28:40)
• Libertarian Definition of Socialism:
  • Wolff notes libertarians often equate socialism with state power but emphasizes the diversity in socialist thought, including strong anarchist and anti-state traditions.
    • “Your definition of socialism is strange and not quite on target. Are there some socialists who are in love with the state and the power of the state? You bet. But there have always been socialists who are dead against that.” (31:30)
  • References Bakunin and Lenin, highlighting “the withering away of the state” as an aim.
    • “One of the most famous remarks by Lenin shortly after the revolution in Russia was that his commitment...was to accomplish, I quote, ‘the withering away of the state.’ Interesting remark for a socialist.” (33:00)
• Modern Socialism’s Emphasis:
  • Focused on “democratizing the workplace”—abolishing the employer-employee power divide inside enterprises.
    • “You might think of modern socialism's focus on democratizing the workplace as getting rid of...the state inside the workplace. This tiny group of people at the top...who decides who works and who doesn't, who has an income and who doesn't...” (33:45)

5. Memorable Moments and Notable Quotes

• On the Myth of Capitalism Without State:
  • “Capitalists like to denounce the government, but they do denounce what they also embrace and what they have had to turn to over and over again.” (23:30)
• On Democratic Workplaces as Common Ground:
  • “For socialists who are interested in democratizing the workplace, the way forward is to get rid of capitalism, by which is meant the relationship of employer to employee. I've noticed in my debates with libertarians that when I talk about democratizing the enterprise, they are in agreement. They say, we want that too. Good. That is something we then have in common.” (36:10)
• On the Possibility of Collaboration:
  • “Might that be the basis for some coming together of libertarians and socialists with a shared agenda? Put the old jargon aside...blended together with making it no longer necessary to embrace the state in the larger society.” (37:00)
• Summary Insight:
  • “So maybe socialists, at least those who see what I've just said, that the future of socialism is the transformation of the workplace, have something to share with libertarians. They all want in some way to get rid of the baleful influence of the state.” (36:40)

6. Conclusion

Timestamps: 36:45–End

• Wolff closes with the idea of a potential alliance between socialists and libertarians based on the goal of genuinely democratizing the economy — both inside and outside of workplaces.
• “I hope you have found this discussion of libertarianism interesting. We've come to the end of the program and I look forward to talking with you again next week.” (38:10)

Key Segment Timestamps

• [00:10] Introduction and context
• [02:00] Strengths and weaknesses of capitalism
• [07:50] Libertarian defense of capitalism — against the state
• [15:10] Contradictions in the Republican position on government
• [19:30] Wolff’s critique: strong state is inherent to capitalism
• [21:00] Concrete examples: money, land, crisis intervention
• [24:00] 2008 crisis and reliance on the state
• [28:40] State socialism as a form of capitalism
• [31:30] Diversity within socialism—anti-state socialists
• [33:00] Lenin: “the withering away of the state”
• [33:45] Modern socialism: democratizing the workplace
• [36:10] Common ground: workplace democracy
• [37:00] Proposal for libertarian-socialist cooperation

Summary in Wolff’s Tone

Richard Wolff, with his signature clarity and critical analysis, systematically unpacks capitalism’s strengths and enduring flaws. He illustrates that the libertarian critique — the dream of capitalism free from a strong state — has no historical precedent and points to numerous examples where state intervention was necessary for capitalism’s survival. He then navigates the ideological divide between libertarians and socialists, exposing the caricature of socialism solely as state control, and draws attention to anti-authoritarian strains within the socialist tradition. Ultimately, Wolff proposes democratizing the workplace as vital common ground, inviting libertarians and socialists alike to imagine an economy freed both from oppressive state power and hierarchical enterprise control.