Economic Update with Richard D. Wolff

Episode: The Key Concept of 'Surplus' in Economics

Date: November 25, 2025

Episode Overview

In this episode, economist Richard D. Wolff unpacks the foundational concept of the "surplus" in economics, tracing its origins through different economic systems including slavery, feudalism, and capitalism. Wolff uses the lens of surplus to clarify persistent confusions—especially in political discourse—between capitalism, socialism, and communism. He specifically addresses Donald Trump’s public mischaracterizations of these terms and closes by exploring the significance of worker cooperatives as a move toward a more democratic workplace.

Key Discussion Points & Insights

1. Theoretical Foundations and Public Confusion

• Richard Wolff frames the discussion in response to both audience requests and public misstatements by Donald Trump regarding socialism and communism.
• He critiques U.S. education for presenting Marxist and socialist concepts as simply "bad" and stresses the importance of nuance.

"[In American schooling,] they're all collected into a bag called bad. And that's apparently all most folks are asked to learn. Oh, it's bad. Well, given how much of the world takes these concepts very seriously, it is childish to treat it in this way."
— Richard D. Wolff [02:25]

2. Defining the Surplus

• Wolff introduces surplus as the difference between what a society produces and what its producers consume.
  • Surplus sustains children, elderly, and the sick—anyone who can't directly participate in production.
  • Civilization: Seen as the evolution of society’s ability to create and manage surplus.

"It's the difference between what any community produces and what is consumed by the people engaged in production."
— Wolff [04:30]

3. Surplus Across Economic Systems

a) Slavery

• Surplus is created by slaves and appropriated by masters.
  • Slaves produce more than they consume; masters claim the excess.
• Justifications: Divine right, coercion, or social norms.

b) Feudalism

• Surplus generated by serfs is turned over to lords as "rent."
  • Serfs are not owned but are obligated to their land and lord.

c) Capitalism

• Workers ("employees") sell their labor to employers.
• Employers purchase materials and labor, then sell goods for more than the combined cost.
• The surplus is the portion of value workers create beyond what they receive as wages, claimed by the employer as profit.

"The remaining 50 value you added, but that I don't give back to you, that's mine. That's the surplus. And I'm the employer. I get it. In capitalism, there's a surplus, just like slavery and feudalism. It's just organized differently."
— Wolff [16:12]

4. The Role of Surplus in Capitalist Society

• Surplus funds not only profits, but also:
  • Dividends to shareholders (often with no involvement in production),
  • Taxes,
  • Supervisors and managers (who do not directly contribute to production),
  • Business expansion or company growth,
  • Maintenance of the broader system (security, management, advertising).
• The structure reinforces social inequality:
  • Employers (3% of the population) accrue most surplus, while the remaining 97% (employees) live paycheck to paycheck.

"Most of the surplus, or a huge part of it in any case, ends up being distributed to people called shareholders. ... Do they help produce anything in that company? Not at all. ... They have nothing to do with that."
— Wolff [25:00]

5. Surplus, Decision Making, and Economic Power

• Employers dominate economic decisions by allocating surplus for themselves—a process untouched in both private and state-run enterprises.
• Employment is "held hostage" to profitability: capitalists hire only if it increases surplus.

"Having a job in capitalism is held hostage to the profit calculations of those who get the surplus."
— Wolff [30:30]

• This logic drives outsourcing (e.g., American jobs moving to China for cheaper labor, increasing surplus for US-based capitalists).

6. Socialist States, State Ownership, and the Myth of "Communist Nations"

• Wolff challenges the notion that state ownership equates to socialism or communism:
  • Governments have historically acted as slave masters or feudal lords without changing the fundamental system.
  • State ownership of companies does not negate employer/employee dynamics—or the extraction of surplus.
  • Labeling state enterprise as "socialist" is misleading, especially when worker relations remain unchanged.

"When the government hires people, the government is the employer, you know, like the post office or whatever else ... Is it the usual relation between them? Yup. ... Then why [call it socialism] because it's the state? ... It's confusing. It certainly confused Mr. Trump."
— Wolff [37:23]

• No country has ever declared itself "communist;" even the USSR and China identify as "socialist" states.

7. Marx’s Definition of Communism

• True communism is achieved only when those who produce the surplus (the workers) are the same as those who control and decide its use—the end of class division over surplus appropriation.
• State ownership does not suffice (unless workers control the state and enterprise directly).

"Communism will exist, [Marx] says, if and when the people who produce the surplus ... are the same people as those who get it. ... When the workers themselves take, decide what to do with the surplus they've produced. Then Marx said, you have a communist, you've gone beyond capitalism."
— Wolff [42:55]

8. Worker Cooperatives: A Democratic Alternative

• Worker co-ops exemplify a step toward democratizing surplus and bridging the gap between workers and receivers of surplus.
• Co-ops empower workers to decide collectively how surplus is distributed, bringing workplaces closer to Marx's vision of communism.

Notable Quotes & Memorable Moments

• On American understandings of socialism and communism:
  "[American schooling] does not teach people about, about the differences between socialism and communism and Marxism and so on. They're all collected into a bag called bad. ... It is childish to treat it in this way, and I'm not going to do that."
  — Wolff [02:20]

• On surplus and inequality:
  "If employers get the surplus and give it to themselves and they are the few and we who produce the surplus are the many. Now you can understand how the many who do the work live on the edge, week to week, paycheck to paycheck, why, they like to make a joke about there being too much month at the end of the money."
  — Wolff [29:35]

• On the myth of "communist nations":
  "None of those countries ever claimed it was a communist country. That was a decision made by the Americans in the process, like Mr. Trump, of demonizing. It's all bad. It's all bad."
  — Wolff [41:30]

• On worker co-ops and democratic workplaces:
  "...a worker co op is the attempt inside capitalism to get closer to the idea of a genuinely democratic workplace where the workers who do the work and produce the surplus are the ones who decide who gets that surplus and why. Then you have a radically different system..."
  — Wolff [45:00]

Timestamps for Important Segments

• [02:20] – Critique of public confusion around socialism, communism, and Marxism
• [04:30] – Introduction and definition of surplus
• [08:00] – Surplus under slavery, feudalism, and capitalism explained
• [16:12] – Detailed breakdown: how surplus is created and distributed in capitalism
• [25:00] – Role of surplus in distributing wealth, shareholder discussion
• [29:35] – Surplus as the root of inequality
• [30:30] – Employment and surplus: why jobs depend on capitalist decisions
• [37:23] – State ownership: the myth of "socialist economies"
• [41:30] – No real-world communist nations; difference between socialism and communism
• [42:55] – Marx’s vision of communism and surplus control
• [45:00] – Worker cooperatives as democratic alternatives

Summary Conclusion

Richard D. Wolff’s episode centers the concept of surplus as the key to understanding economic systems, social inequality, and the confusion between socialism, communism, and capitalism. By grounding his analysis in Marxist theory—yet with everyday, accessible language—Wolff exposes how both private and state forms of employer-employee relations perpetuate class divisions unless workers become self-governing. The episode closes with hope for worker cooperatives as first steps toward a genuinely democratic, surplus-sharing society.