← Economic Update with Richard D. Wolff
Economic Update with Richard D. Wolff
Unlearning Market Idolatry
00:30:35
This week on Economic Update, Professor Wolff explores the last 150 years of largely uncritical celebrations of "the market" as if it were a perfect institution that must be protected from the intrusion of other institutions such as the government,...
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Richard Wolff
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children. I'm your host, Richard Wolff, again, as usual. Remember, Charlie Fabian is available to take your ideas, suggestions and criticisms. You can reach him at charlie.info438mail.com and likewise, our book Understanding Capitalism, that I wrote over the last two or three years precisely to be a kind of companion to this program, to develop the ideas here in greater length and detail and to explain many of the concepts that we use so that you can get even more out of these programs than you otherwise might. And you can find out more about it at our website, democracyatwork.in Fox Books. Today, I'm going to talk about a single topic, one that comes up from time to time. I've spoken about it before. I want to entitle the show Unlearning Market Idolatry. By idolatry, I mean what that word means in religion when you are quote, unquote, praying to false gods. The uncritical, strange celebration of the market as if it were some spectacular institution beyond all others, the ultimate fruit of American or global or human ingenuity, depending on how narrow or broad your vision is. This really is a problem. It is getting in the way of a rational discussion and a debate about how we face the real problems we have and come up with solutions worth trying to solve these problems rather than excuse them away. I want to make the case that celebrating the market is a terrible mistake and it's costly. Here we go. For most of the last 150 years, orthodoxy in economic systems, in economic thinking about economic systems, has held that markets are the best institutions imaginable and that they guarantee prosperity and economic growth. In other words, not only will we be prosperous now, but our economy will grow and bring prosperity to the increasing populations over time. It's a wonderful idea. It makes you feel as though you live at a time when the human beings have just they've outdone themselves. They've come up, unlike in the past where every institution had flaws, at least eventually people understood that, and that's why we felt we could do better. And that's why we did do better than. Hold on. So we had institutions like, oh, I don't know, slavery. But we decided we could do better. We've had institutions called village economy, and an awful lot of parts of the world have decided they could do better. Or we had institutions in which young people who got married had the arrangement for who they would marry done by their Parents or other elders in the community. And well, we thought we could do better than that. Instit I could go on. And you all know what the examples are. There was a period, the period starting around 1929, the Great Depression, and into the 1970s, the 30s to the 70s, almost half a century, during which this idea that the market should be left alone, that the market was a perfect institution, that you didn't want anyone to interfere in how the market worked, that idea kind of got put aside in economics. It's called the Keynesian period. After the economist in England, John Maynard Keynes, who had the courage to write it all down and to say it's not true, the market, left to itself, produces the depression we're in. He said in his most famous writing, therefore, if we don't want depression, and hardly anybody did, well, then we better come up here we go now with a better institution. And by that he meant have the government intervene. And he showed how the government could and should intervene to at least deal with some of the problems of capitalism. And the big problem. He was interested in the cycles, the repeated breakdown every four to seven years. Suddenly large numbers of people thrown out of work, large numbers of businesses go belly up. The government gets no revenue from the unemployed people and the broken businesses, so it can't provide the public services. And we have, yes, yes, a recession, a depression, a breakdown, a crisis, a boom, a bust. Yeah, it's the unstable capitalism problem. And so for those 40, 50 years, 30s to 70s of the last century, the government intervened big time. And so people stopped talking about the perfect market. But it's an old idea, and for some reason, and that's what I'm going to get to in a moment, it came back with Reagan and Thatcher in England. It came back in the 1970s and really walloped us all over the last half century. We went back to celebrating the market as we had done before the crash of 29. We did it afterwards again. And so here I am again having to say, hey, it wasn't a good idea before 29, and it's not a good idea now either. But let's explore for a minute, why has it been so profitable and so important to keep it? Well, we begin with private enterprise, the idea that a business that produces shoes, software programs, ice cream cones. It doesn't matter that businesses that make the goods and services we all want, we all rely on, should be organized as private enterprises. Groups of people get together and make the ice cream or the shoes or the software programs. And we all know what the system is like they do it to make money. They spend money and time and energy and they hope to make more money coming back than they put in to make the business go. In fact, that's what drives this system. Private profit seeking enterprise. And the enterprises interact in a market with one another and with all of us. They interact with us because we buy what they produce. They interact with us because they hire us to produce what they sell us later. We are the buyers, we are the producers, they are the middlemen and women, the entrepreneurs. Yes. And they love markets. Why? Well, because the market is an institution for them. Here comes your first clue. It's for them. They like it, they want it. They don't want to be constrained. Listen to them. If you have an entrepreneur or a businessman or woman or someone who believes all of this stuff, listen to them. Next time, over coffee or a beer or at lunch, listen to them. Here's how they look at the world. We do this important service, we make shoes or ice cream or software or whatever it is. And the government comes and takes our money. We don't want that. Or the government comes and tells us what we can and cannot do. We know best how to make the shoes, we know best how to make the ice cream. We don't want regulations, we don't want taxes, we don't want anyone to intrude. We want to decide who we hire and keep them if they do the work we want and fire them if they don't. We don't want to have to pay them a minimum wage. We pay them what it's worth having them there. That's the way we want the system to work, to give us the best chance we can have to get a profit. That's why we're in business. They'll explain it to you. They understand that what you have to ask, what we have to ask as citizens is the. Is an institution that's good for the entrepreneur, that's good for the business people, also good for the rest of us. Let's remember a couple of statistics. Simple 1. Once according to the US Census, the number of employers, people who actually own, run, operate a business is 3% of our people. 3. The other 97% are not, they're employees or something like that. So the fact that the employers like it ought to make the rest of us a little nervous because there's lots of things employers like that we know are not good for us. They would like us to work longer, they would like us to work harder, they would like to pay us less they would like to get our lunch breaks shorter. They'd like us. You're aware of all of that because you've lived it, you know. So why assume that the market they like is the best thing for you? Stop. Ask a simple question. What's in it for them? What's in it for us? I think I know what's in it for them. A market is really an institution where the people who are the richest are the best off. Think about a market very simply, as a child might. If a rich person and a poor person are standing in front of the ice cream vendor and they both want an ice cream, and the vendor explains, I only got one, what happens? The one with more money offers more. And eventually the vendor sells the ice cream to the one because the one with more bids more and more until the one without money has no money to pay that high price. Rich people love markets because it favors them. When there's a scarcity of anything, the rich people get it. When poor people haven't got enough money to buy milk for their kids, rich people have the money to buy the milk for their cats. That's what markets do. They distribute. They allocate. But they allocate in a very particular way to the richest. Go whatever is scarce. And you know what the people at the top who own and operate businesses are? They're the rich people. That's how you get rich in our culture. You either have a business or you inherit a business. That's how it works. Wealth is made in this system by and for enterprises, but not for everybody. Who gets the wealth from the Chase Manhattan Bank? Jamie Dimon. He gets millions a year. Not the bank clerk. Not the people who sweep up in the bank. Not the person who explains your mortgage to you? No, no. The ones at the top, they get the big bucks. You know that. Markets are for them. They are not for you. When we come back after the break, we're going to show you how and why interferences in markets are the norm throughout history. 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. And we're here to expose and criticize the idolatry of the market. Let's take this interesting idea, the free market. You often hear that because it's a way of saying markets work and do their wonderful things and give us prosperity and growth and all of that other stuff. But you can't interfere in them. They do it beautifully, they do it perfectly. They do it, as the economists tell us, optimally. But you cannot interfere. You must not interfere. If you turn and pay attention to conservative writers, they will tell you how some law is inappropriate because it interferes in the market, or some rule or regulation is inappropriate because it is contrary to how the market would do something. Conservatives, for example, always hated, blocked, avoided, delayed, undercut the minimum wage because they want the market to decide how low you can get away with paying a worker, not some government make a rule a minimum. But here's the interesting thing I want you to think about. There never has been a free market anywhere, ever. You know what free markets are? They are utopias. They are vague ideas in the minds of a few economic writers over the years and others who didn't understand it all that well, who actually thought you could have that. Well, you never have. Governments have always shaped markets, always, one way or another, openly, secretly, both, usually. And likewise, institutions have arisen that don't allow the market to work. Think of a Thanksgiving dinner. It's an institution in our society. A whole lot of people get together, maybe at your house and have some turkey and mashed potatoes. Now, if you wanted to organize that with a free market, then mom might make the turkey and sell a drumstick to you because that would be a market distribution of the cooked turkey. But she doesn't. And when Papa at the end of the meal asks you, please could you take out the garbage that we've, you know, gathered here from the turkey bones and all the rest. And you said, sure, Papa, that's a service. It'll cost you four bucks. Your papa would lean across the table and either say something or maybe punctuate it with a slap. And, you know, they give you an interesting speech that's horrible that you ask money because we're a family, you would be told, we love each other, we care for each other, we don't charge each other money. That's for outside the house, not inside. Inside it's love that counts. Wow. You know what that means? That means your parents think that love and markets are opposites. And here's a thought for if the market undermines love inside the house, maybe it does that outside too. Governments have always come in. You know why? Because markets do things that people can't stand. I already gave you one example in the first half of today's show. Let's suppose there's a real shortage of anything important. Food, clothing, shelter. Well, we have that in America today we have a real shortage of shelter. That's why rents and houses are so expensive. You know what happens if there's a shortage of housing? It goes to the richest people. You know why? Because that's how markets work. If two people want one apartment, they bid for it. And the richer one keeps raising what he or she can offer until the poorer one drops out because they can't afford it. And who gets the apartment the richer one? Do you really believe, anyone watching or listening that the best way a society can distribute whatever is scarce is by means of a market? You don't believe that. You never did. So why are you celebrating markets? And when someone comes back and says to you, hey, when the price goes up with the rich people paying for it, that will bring lots of other businesses in to produce more of that high priced thing because it's profitable. See? Isn't the market getting the results you want? My answer to that is, what are you stupid? You think the capitalists, the businessmen and women haven't figured that out? They know that if they can block others from coming in, they can enjoy the high price they get from making what they sell scarce. They've learned that lesson long time ago. They keep restricting the availability to jack the price up. Eggs aren't the price they are these days because of the bird flu. That's this part of the story. The rest of the story is scarcity of eggs allows you to charge 15 bucks a dozen instead of five. And they know it. And they're profiting. If you wonder why, take a look. Bacon has gone up an awful lot too. And bird flu doesn't affect bacon, does it? The capitalists have long ago understood that they need to manipulate the market in order to get the prices they want. The free market is a phantom. The whole industry of advertising is there to manipulate the market. You pay an advertiser to give people the idea to buy what you sell, to push it, to tell you you're not just buying a bar of soap, you're buying something that will transform your sex life. You giggle, you know it's not true. But it works, doesn't it? That's why it's a multi billion dollar industry. Take the market as an institution. Nobody does that except in the classroom or the politician on the 4th of July who gives a speech. You know why we have a minimum wage? Because people were dying after working 40 hours a week, they were paid so little. You know why we have a food and drug admin? Because we were buying bad meat and taking dangerous drugs. They were profitable and that's why they were being produced. But they weren't good for us. Profits are not a one way street to good things. You can make a profit by cheating people. You can make a profit by using inferior materials. You can make a profit. But you know the answer to this and you know how you prevent that, or at least try to. You bring the government in to regulate. Mr. Trump is busy deregulating and you know what that means. Pretty soon we're going to have all those things happening which got us regulated in the first place and we will go and do it all again. But you know, meanwhile lots of people will be hurt, lots of mistakes will be made. There's nothing magical about a market. The reason the businesses have mostly celebrated the market is they're scared of the government. And they're only scared of it because the government isn't 100% under their control. In the end, we vote and the majority of us are the majority of the voters and we could decide all kinds of things they don't want. So they've got to keep the, they got to bad mouth the government. They've got to get people to not trust the government they've got. They've all got to celebrate the free market as if it could do all the things it can't do. They want you to be what they need you to think so you don't interfere in the profits they're trying so hard to make. That's what this idolatry of the market is for. And they don't have to worry anymore so much because they bought the government because that's their second line of defense. If you can't get people to distrust the government, then make sure the political parties and the politicians are in your pocket, that they depend on you for the money they need to win the election so that way you can control it. This way at the same time that you work on people's consciousness by telling them they ought to love an absent government, a free market which never existed, which can't exist now. And here's the ironic proof. The very Republicans in power now, the very Elon Musk who I recently pointed out and, you know, I think wants to privatize free enterprise, eyes Amtrak and the Post office. They want the market. And yet what is a tariff? Mr. Trump is the champion of tariffs. Tariffs is a government intervention in the market. It says, we're not going to let the buyers and sellers negotiate the prices of goods coming in and out of the United States. We're going to hit them with a tax. Wow. I'm going to subsidize this industry. I'm going to punish these people. I'm going to invade over there. I'm going to snatch back the Panama Canal. Wow. These are all government interventions. They're not free market. Mr. Trump didn't go to the Panamanians and say, I'd like to buy back the canal. Let's negotiate what price it. No, no, no, no, no. I'm going to send the army. If you don't do it, I tell you, that's the government. The very people who want you to believe other than they act, do what I say. Don't do like I do. Don't be fooled. The market is an imperfect institution. It has its uses. We could try to experiment with it, but it would always have to be hedged around with rules, regulations, limits and all the rest, because otherwise it produces grotesque inequality, unjust outcomes, one of which is to impose market ideology as an attempt to bamboozle people into allowing the owners and operators of enterprises, the 3%, to rule the roost, as they have in the past and as they want to continue to do now. Our problems are right here at home in our economic system. We don't need it, we shouldn't want it, and we can do better. As you know from this program. Just think with me what it might be like if we democratized our enterprises. Yeah. Took the daring step to say we're going to have democracy at the workplace. Everybody who works at the factory or the office or the store, together, one person, one vote, decides what we produce, how we do it, what technology we use, where we do it, and what we do with the proceeds of what we make. What an interesting idea. Democracy. Not just where we live, but also where we work. Thank you for your attention, and as always, I look forward to speaking with you again next week.