When Economic Systems Fail

Summary

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Economic Update with Richard D. Wolff

Episode Title: When Economic Systems Fail
Date: April 1, 2021
Guest: Rob Urie (Author, Journalist, Marxist Commentator)

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Episode Overview

In this episode, host Richard D. Wolff critically examines the American Rescue Act in response to the COVID-19 crisis, drawing comparisons to the New Deal and highlighting its limitations as a structural reform. He discusses signs of deepening inequality in the U.S. and globally, then welcomes guest Rob Urie for an in-depth conversation linking repeated crises—economic, militarist, and environmental—to the nature and structure of capitalism itself. The episode explores the systemic failures of current economic systems, the persistence of wealth redistribution from the bottom to the top, and rising anti-capitalist sentiment.

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Key Discussion Points and Insights

1. The American Rescue Act: Temporary Relief, Not Structural Change

• Wolff provides a critical analysis of the Act, acknowledging it as an improvement over past legislation but emphasizes its inadequacy for addressing deep economic inequalities and systemic issues.
  • The Act offers overdue relief to those harmed by decades of wealth redistribution upwards but does little to reverse those trends.

    "Comparing that to what has gone before it over the last 10, 20 years is to accept a very low bar." (00:37)

  • Contrasts with transformative New Deal policies like Social Security, unemployment compensation, and a massive government jobs program, none of which are matched by the Rescue Act.

    "No minimum wage increase, no federal jobs program, nothing comparable to Social Security. So no, there's no comparison. This is a temporary relief." (05:19)

• Memorable Comparison:
  > "Some comparisons have been offered by over the top hype people that this is another rerun of Franklin Roosevelt. No, it isn't. And that's an insult to the Roosevelt period." (02:49)

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2. International Labor Solidarity: Nigeria's Minimum Wage Fight

• Highlighting the Nigerian union movement, Wolff commends the unity among private and public sector unions in defending the minimum wage for government employees.
  • Nigeria’s minimum wage is $65/month—a strikingly low figure—but unions focus on solidarity and resisting divisions.
  • Notable observation: No split between private and public unions; solidarity is prioritized.

    "They will not allow employers, whether they're private or public, to split the working class. No wonder my hat's off to the Nigerian union worker nationwide movement." (08:25)

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3. Private Power Grids and the Erosion of Social Solidarity

• Growing business of private power grids in the U.S. for the wealthy exposes how inequality drives the privatization of essentials (like electricity) while the majority rely on a faltering public system.
  • This is identified as a “breakdown of the solidarity of any society.”

  "If you’re rich enough, you’ll solve the problem privately. That’s a breakdown of the solidarity of any society and we should recognize it for what it is." (10:01)

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4. Small Businesses and Big-Box Retailers: The Case of Toilet Paper Shortages

• Toilet paper shortages in the pandemic reveal how major suppliers prioritize large corporate clients (Walmart, Amazon, Target), to the detriment of small independent stores.
  • This dynamic accelerates the destruction of small business by undermining their ability to compete.

    "The so called competitive market destroys small business and is a very useful thing for big businesses who can use their size to crush the little ones." (11:50)

• Reference to the largely unenforced Robinson-Patman Act (1936), intended to prevent such favoritism but habitually ignored in practice.

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5. Pandemic, Economic System Failure, and the Lockdown Debate

• Wolff critiques the business-driven narrative resisting COVID lockdowns for fear of harming the economy, arguing that decisive early lockdowns (as in China, Taiwan, New Zealand, Vietnam) actually preserved both health and economic stability better than in countries like Brazil and the U.S.
  • The U.S. and Brazil are cited as negative examples of failed pandemic and economic management due to delayed or avoided lockdowns.

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6. Rob Urie Interview: Systemic Crisis and Capitalism

A. Capitalism as Root of Multiple Crises

• Urie ties three major crises—economic disenfranchisement (deaths of despair), militarism, and the environmental threat—to the function and structure of capitalism.

  “My contention is that all three of these are tied to capitalism.” (16:49)

B. Capitalism and Militarism

• Arms Industry: The profit motive is central; “when bombs are created and dropped, profits are earned.” (17:15)
• Resource Wars: U.S. foreign interventions (e.g., Bolivia for lithium, Iraq for oil) motivated by capitalist resource needs.
• Legal Infrastructure and Globalization: Capitalism expands via global trade regimes that require military backing to enforce profit repatriation.

  “Militarism is intimately tied to the capitalist profit motive and to capitalism.” (19:03)

C. Comparative Capitalisms: U.S. vs. China

• Urie contrasts China’s focus on raising living standards with the U.S.’s “hollowed out” industrial core and intensified worker impoverishment:

  “The Chinese government... spent the last four decades developing economically with a focus on raising the living standards... Contrast this with the last four decades in the United States where the industrial core has been hollowed out...destroying lives through deaths of despair and entire communities.” (21:14)

D. Mass Acceptance of Capitalism in the U.S.

• Urie suggests most Americans accept capitalism, but based on an “idealized idea…divergent from the way that capitalism actually functions.”

  “There’s a difference between the way that the people who I speak with…have an idealized idea of what capitalism is that’s fairly divergent from the way that capitalism actually functions.” (22:42)

• The 2009 bailouts highlighted the system’s real dynamics vs. its myth, fueling both right- and left-wing populist backlashes.

E. The Role of Mass Media

• Media consolidation has shifted its mission from informing the public to profit-making, with customers now being advertisers, not audiences.

  “What we have now is media where the customers are the advertisers rather than the news consumers. This has changed the focus of media from providing information to trying to convince people to buy goods and services.” (25:33)

F. Growing Anti-Capitalist Sentiment

• Urie notes recent growth in anti-capitalist protests and candidacies (e.g., Bernie Sanders), while questioning whether incremental reforms will “head off what has been a major movement away from capitalism.”

  “A fundamental questioning that came out of the 2009 financial crisis… Where this goes from here goes to something I said earlier. If the powers that be are able to close the distance between the way people’s lives are being impacted and the myth of capitalism, then there will be limited motion going forward.” (26:56)

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Notable Quotes and Memorable Moments

• Wolff, on the American Rescue Act:

  “Comparing that to what has gone before…is to accept a very low bar.” (00:37)

• Wolff, on FDR and New Deal:

  “No minimum wage increase, no federal jobs program, nothing comparable to Social Security. So no, there's no comparison.” (05:19)

• Urie, on militarism and capitalism:

  “Militarism is intimately tied to the capitalist profit motive and to capitalism.” (19:03)

• Urie, on American capitalism vs. China:

  “Contrast [China] with the last four decades in the United States…destroying lives through deaths of despair and entire communities.” (21:14)

• Urie, on media:

  “What we have now is media where the customers are the advertisers rather than the news consumers.” (25:33)

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Important Timestamps

• [00:37] – Critique of American Rescue Act
• [05:19] – Contrast with New Deal and FDR’s structural reforms
• [08:25] – Nigerian unions and solidarity for minimum wage
• [10:01] – Private power grids and inequality
• [11:50] – Small business disadvantage & Robinson-Patman Act
• [14:55] – Lockdown debate and economic fallout
• [15:24] – Introduction of Rob Urie
• [16:49] – Urie on crises rooted in capitalism
• [17:15] – Militarism and capitalist profit motive
• [19:03] – Global capitalism and legal enforcement via violence
• [22:42] – American workers’ perception of capitalism
• [25:33] – Mass media as a profit-driven institution
• [26:41] – Anti-capitalist movement and its future

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Episode Tone

Direct, critical, analytical, and occasionally sardonic—especially in comparisons to historical precedent. Both Wolff and Urie speak in accessible but precise language, intent on connecting large-scale economic concepts to daily life and contemporary politics.

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Summary Takeaway

This episode of Economic Update offers a thorough, critical view of U.S. policy responses to crisis, the deepening of systemic inequality, and the inextricable links between capitalism, militarism, and environmental peril. Through accessible analysis and interview, Wolff and Urie invite listeners to move beyond piecemeal reforms toward understanding and challenging the foundational dynamics shaping repeated systemic failures.

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Transcript

[A]

Welcome, friends, to another edition of Economic Update, weekly program devoted to the economic dimensions of our lives. Jobs, debts, incomes, our own and those of our children. I'm your host, Richard Wolff. I want to begin by something you've many, many of you, I think, have already understood, but I want to say it one more time. The American Rescue act, passed by Congress, signed by President Biden, is definitely to give it its due. Better than what we've seen for a bunch of years, certainly under Trump. It does provide some relief to people who've really had a very, very hard time. It's overdue. It's what should have been done before. All of that, I don't mind saying. But comparing that to what has gone before it over the last 10, 20 years is to accept a very low bar. We've had a 30 to 40 year redistribution of wealth from the bottom and the middle to the top. This act provides relief to the victims of that redistribution, but it does not reverse that redistribution. It doesn't even come close. So when Joseph Stiglitz, a Nobel Prize economist, refers to it as transformative legislation, I literally have no idea what he is talking about. If you want to deal with the problems of the American economy, you have to begin by admitting what they are. And they are structural and they are deep, and they have come to a head for no surprising reason. We are now in the middle of the worst economic downturn since the Great depression of the 1930s, and simultaneously the worst public health disaster since the Spanish flu of 1918. We've never had the coincidence in time and place of two catastrophes. There is no precedent for that. And given the redistribution of wealth that led up to all of this, in good part, you need an unprecedented response. And that's not what this is. I can drive it home yet another way. Some comparisons have been offered by over the top hype people that this is another rerun of Franklin Roosevelt. No, it isn't. And that's an insult to the Roosevelt period. Let me explain. What Roosevelt had to do because of pressure from below were structural changes, things that had never been done before and that were not scheduled to expire six months or 12 months from now, as most of the American rescue plan is. For example, he set up the Social Security system in the 1930s at a time when the government had no money. We had a program that said if you've spent a lifetime working, when you reach 65 years of age, the government will provide you with a pension for the rest of your life, something you can count on and that your Children can count on so. So they won't have the extra difficulty of taking care of you the way they would have before. That's a fundamental open ended commitment. That's a structural change. So was unemployment compensation. So was the first minimum wage set at a high level, not the pathetic $7.25 that the federal minimum wage is today. And finally, Mr. Roosevelt set up a government hiring program. Between 34 and 1941, he had employed 15 million American unemployed people. Nothing remotely like that is part of the American rescue plan we just passed. No minimum wage increase, no federal jobs program, nothing comparable to Social Security. So no, there's no comparison. This is a temporary relief. We are all appreciative of it. But the transformation of this economy, the overcoming of its grotesque inequality, no, this law does not do that. My next update is a kind of a hats off to the workers and unions in Nigeria. In Africa they have a mass nationwide union protest movement going on against an effort made to lower the minimum wage of public employees. What is the minimum wage in Nigeria? I thought you'd be interested to know. It was last set in 2018 at $65 per month. That's the minimum wage in Nigeria. Notice how low it is. Notice that the unions fight for what the lowest get paid. Not just for what each union gets paid, but a solidarity of all unions to help those at the bottom first and foremost. And notice also no split between private and public. It's the private unions that are out there on the streets supporting the maintenance of that minimum wage for public employees. They will not allow employers, whether they're private or public, to split the working class. No wonder my hat's off to the Nigerian union worker nationwide movement. My third update has to do with another sign of the inequality settling deep into the American system. There's a growing business in what are called private power grids. If you're rich enough, you can now get machinery installed in your home, on your piece of land that will provide you with a way of generating a variety of sources of electricity and storing them in high water quality batteries on your property. Why? Because then when fires in California cut off your electricity, or cold in Texas cuts it off, or cold in Mississippi denies it to you. If you're rich, you'll have your own supply to fall back on to get you through the failure of the public. Notice the mass of us will depend on an increasingly insecure source of the electricity without which modern society doesn't work. But if you're rich enough, you'll solve the problem privately. That's a breakdown of the solidarity of any society and we should recognize it for what it is. Next. An inquiry was started in the United States over recent months about what might appear to you to be a minute little problem, but opens up into a social problem. Here's the toilet paper. You remember at the beginning of the pandemic, suddenly there was a shortage of toilet paper and people began to hoard toilet paper since being without it is indeed inconvenient. Well, it has surfaced again, this shortage of toilet paper. Only now it's not quite a shortage. It turns out that if you want toilet paper, go to Walmart or Amazon or Target, they got plenty. It's all the little independent small stores that are kind of short on the toilet paper. You get to that part of the shelf in the little store and and there's only one roll left and it isn't quite wrapped properly. What's going on? Turns out, and this is very important, that in the difficulties of the pandemic and in the difficulties of the economic crash and in the difficulties of global supply chains that bring these products to us, one of the ways that the companies making and distributing them handle shortages is, is by favoring some customers over others. And it will come as no surprise to you that they favor the companies that are the biggest, that are the largest source of profits for them. And that means you're destroying small business. You're teaching customer by customer that when you leave your home to go get something you need, you probably shouldn't go to the store nearby. Not to the store where you know the family, not to the store that you've been going to for all these years, not to, but to one of those big box stores because they're more likely to have it. For those of you that are not familiar, this is a problem small businesses have had. The so called competitive market destroys small business and is a very useful thing for big businesses who can use their size to crush the little ones. That's why on the 4th of July, the speeches about the joys of competition tend to come from bigger businesses, not from little. And the little ones got together and they got something done in the 1930s partly by being allied with the working class. Here's what they got. It's called the Robinson Patman Act, a law passed in 1936 here in the United States that expressly forbids companies that sell to favor large over small businesses. And the antitrust division of the Justice Department is supposed to monitor and control and enforce that law, which it has not done and is not now doing that has led, for example, the National Grocers association to call on Congress and federal antitrust agencies to scrutinize large retailers for violating the Robinson Patman act of 1936. We need that. But it's not going to happen. Because the big companies have always reacted first by opposing laws like that, which they did. And if those laws pass anyway, then they evade the laws, they get around the laws, they amend the laws, they buy the politicians to repeal the laws. You know, like Glass Steagall with the banks. This is the same game. And if they can't get rid of the law, well, then they work around it. The thing that passed the law is the only thing that will get the law enforced. That would be a political alliance of workers and small businesses to help each other and to see who their common enemy is. And that's the biggest businesses in this society. It's been that way. And the sooner the these two movements, working class small businesses, understand the alliance they need, the sooner they'll be able to solve these kinds of problems rather than complain when it's a little bit late in the game. Finally, there is something going on that is so frightening that I need to talk to you about it. A game has been played, a kind of hustle in which we are told, gee, the pandemic, COVID 19 is terrible, but we shouldn't lock down the economy. Because that would add an economic problem, you see, to our health problem. That's a mistake, but it's a very purposeful mistake. Businesses don't want to close. They want you to keep coming there. Cause that's the only way they're gonna make profit. And they're willing to push for that. By this little game of suggesting, gee, let's not add a lockdown of business because that'll hurt the economy to the pain of the pandemic. The actual experience of most countries is the opposite. The countries that locked down hardest first have done the best. Whether it's Taiwan or the People's Republic of China, Vietnam or New Zealand. You can pick the country where the lockdowns were undertaken. You were able to keep a the disease from spreading and therefore the economy from being hurt anywhere near as bad as in the country's not. And the worst example today, Brazil, where Bolsonaro has refused the lockdowns. And Brazil has now surpassed the United States. We've come to the end of the first part of today's show. Before we get to the second half, I want to remind you our new book, the Sickness is the When Capitalism Fails to Save Us from Pandemics or Itself is available [e-mail] books. I also want to thank again our Patreon community for their ongoing and invaluable support. If you haven't already, Please go to patreon.com economicupdate to learn more about how you can get involved. Please stay with us. We will be right back with today's guest, Rob Urie. Welcome back, friends, to the second second half of today's Economic Update. It is my pleasure to bring to our microphones and our cameras author, journalist Rob Urey. Rob has a graduate degree in economics, just like me, from the University of North Carolina, and he spent two decades doing statistical research in economics professionally. He Left this in 2011 to write Zen Economics, and he now writes regularly on politics and economics from a Marxist perspective. He lives in New York State with his wife and as he wrote to us, too many cats to state publicly. Welcome, Rob, and thank you for joining us.

[B]

Thank you.

[A]

Okay, I want to start with part of the reason why we were excited about getting you on the program. Your work is part of a growing recognition that a basic problem facing the United States beyond this or that particular issue is a systemic problem, and that the system in question is the economic system, capitalism, whose function, whose structure, whose dynamic lies behind so many of the domestic and foreign crises. Would you agree that. That this is your perspective, and could you expand a bit on it for us?

[B]

I certainly do agree that it's my perspective. It's been a focus of my writing to connect the crises that we've been living through in recent years to capitalism and explain the relationship. The crises that I focused on have been economic disenfranchisement, which has resulted in deaths of despair. I've spent a fair bit of energy on militarism, and I'll get into a little bit of detail with that and then environmental crisis. We're currently facing a fundamental threat to the continued existence of humanity that we need to pay close attention to. And my contention is that all three of these are tied to capitalism.

[A]

All right, let's start and follow up exactly on that middle one. You've recently written about the connection between capitalism in the United States as a system and the practices of violence both domestically and abroad, which we have seen more and more of. Tell us a little bit about how you see that connection.

[B]

Okay. I'd like to break that into two parts, if it's okay.

[A]

Fine.

[B]

A lot of people understand militarism to be about contests between nations and Militarism is generally framed in geopolitical terms, and the business aspects of militarism are left out of the conversation. However, my contention would be that they are a fundamental motivator of the business of war. And I would put these into the categories of military production. When bombs are created and dropped, profits are earned. I would put it into the context of wars for resources. The United States was recently involved in trying to overthrow the government of Bolivia in order to. Well, Bolivia is a major source of lithium for electric vehicle car batteries. That's one resource motivation. Then I would throw the US war against Iraq from 2003 in there as well, and suggests that militarism is motivated by the desire to control natural resources. Then third, and something that people don't think that much about, is that for capitalism to function, it requires a legal infrastructure. And as globalism has taken off in recent years, legal infrastructure has been built out domestically and overseas through trade agreements. But they require credible threat of violence in order to assure the profits can be repatriated. So in the realms of the business of building war material and resource control, and in globalization, my argument is that militarism is intimately tied to, to the capitalist profit motive and to capitalism.

[A]

Yeah, you know, there was a recent story, maybe you saw it from the BBC, noting that the United States has increased its role in global arms sales to being 37%, by far the largest country in the world, distributing lethal weapons around the world, and that fully, fully one quarter of the entire army arms sales and the many, many billions of dollars go to one country, Saudi Arabia. It occurred to a lot of people, including the BBC, that letting the leaders of Saudi Arabia off the hook around the Khashoggi murder is not unconnected to, as you put it, the business dimension of these arms sales. Okay, let me turn next to a question. Do you find that the capitalism of the United States is significantly different from the capitalism in other countries? Or would you not think that? What's your view?

[B]

Well, it's a very interesting question because associated with neoliberalism over the last 40 or so years of capitalist development has been global globalization. And so what was there have been, depending on how you want to count them, two or three bouts of globalization in capitalist history. And the most recent would be the neoliberal epic here. And so, depending on how you consider capitalism, there are individual countries, and I'll speak to that in just a minute, who have capitalist economies. The globalization is the effort to build out the capitalist infrastructure internationally. This shifts the focus from countries specifically to a kind of global capitalism. I would like to speak to what's framed as competition between the United States and China. I do not care for the terminology, and I think that it's misleading and militaristic, but it serves to frame the difference that you're speaking about the country. Specific difference. The Chinese government has responsibility for the largest population in the world. They've spent the last four decades developing economically with a focus on raising the living standards of the Chinese people. I would like to contrast this with the last four decades in the United States where the industrial core has been hollowed out and the focus has been on concentrating income as highly as it can be concentrated by immiserating workers, by cutting industrial jobs and in the process destroying lives through deaths of despair and entire communities.

[A]

Yeah, it's a remarkable difference. It's a remarkable difference. Here's a question that I get a lot and I would like your thoughts. Do you believe that the mass of the working people in the United States basically accept capitalism? And if you do, why? And if you don't, why don't you?

[B]

I do, but with some qualifications.

[A]

Good.

[B]

There's a difference between the way that the people who I speak with and I speak with a wide variety of people I make it a point to. They have an idealized idea of what capitalism is that's fairly divergent from the way that capitalism actually functions. I believe that this came to the Fore in 2009 when people saw the bankers being bailed out while the rest of the country was left essentially to its own devices. What this resulted in was what's currently called populism. But the 2016 election was extremely contentious, and what's followed has been extremely contentious as well. But I see it as a fundamental questioning of the distance between the ideal of capitalism and the fact that bankers were bailed out and everybody else was left to their own devices. This has been described in the media as populism. Left wing populism, right wing populism. I would argue that right wing populism is focused on making purer forms of capitalism. This is a perpetual quest. Capitalism can never be pure enough for its advocates versus the left wing populism, which is more welfare state populism. A return to the compromises of the New Deal. There is an acceptance. And where this goes from here will depend on the ability of the current liberal government to bridge the gap between the way that capitalism is perceived and the way that people actually experience it.

[A]

Okay, so very interesting. It's less an acceptance and more of now a Kind of struggle, if I understand you, between this idealized version which is in trouble and the reality which is what's making the idealized version having difficulty holding on to people's support or loyalty. Rob, in the short time that we have left, could I get a quick response to you? How do you see the role of major mass media in the United States themselves, capitalist corporations and their relationship to the problems of US capitalism today?

[B]

Well, it's a very interesting question. The traditional role of the media as providing information to citizens to provide an informed citizenry was reoriented with the essentially privatization of media and the consolidation of media that's taking place in recent years. This has changed the role of the media from informing a public which was always questionable, but that is the perception to for profit motive of the media. What we have now is media where the customers are the advertisers rather than the news consumers. This has changed the focus of media from providing information to trying to convince people to buy goods and services. Ideas are considered a service or a good, if you will, in the modern age. And this is what the capitalist media is doing today.

[A]

All right, my last question. I would like your opinion because you work on this, you write about it. Do you feel that there is an anti capitalist movement in the United States and if you do, is it growing, is it shrinking? Tell me how you see such a proposition as such a movement existing here?

[B]

I think most certainly in recent years we've seen a growth of anti capitalist protests and activity. The presidential candidacy of Bernie Sanders allowed self described socialists to to put on a credible run for the presidency. Where we go from here is whether a few minor social welfare programs will be enough to head off what has been a major movement away from capitalism. A fundamental questioning that came out of the 2009 financial crisis and what followed the New Deal was a compromise that was forged to save capitalism, not to end it. There's the question of whether welfare state programs are intended to save capitalism. Where this goes from here goes to something I said earlier. If the powers that be are able to close the distance between the way the people's lives are being impacted and the myth of capitalism, then there will be limited motion going forward.

[A]

All right, Rob Ury, thank you very much for sharing your work, your thoughts, your sense of what's going on with us. I'm really glad that you participated. I want to close today by saying that it is this kind of discussion that we want to have more of on Economic Update. And thank you all for joining us today. And I look forward, as always, to speaking with you again next week, Sam.