To cure the “bads” of capitalism, change how the system of production is organized
No 698 Posted by fw, March 19, 2013
Employment’s up, wealth’s up, but the benefits of both are increasingly concentrated in the hands of a few. Welcome to capitalism, says Richard Wolff. In a 15-minute interview, Wolff provides an easy to understand explanation of the “bads” of capitalism and suggests some alternatives, including “worker self-directed enterprises”, which have the potential to democratize the economy, and US society.
Watch Laura Flander’s interview with Richard Wolff below, followed by my own transcript with added inline links, highlighted text, and SEE ALSO links. Alternatively, watch Laura’s GRITtv version, without a transcript, by clicking on the following linked title.
Rick Wolff: A Cure for Capitalism? Laura Flanders in conversation with Richard Wolff, GRITtv, March 12, 2013
Laura Flanders (LF) – Guess what the most searched terms were in the Merriam-Webster online dictionary in 2012? – capitalism and socialism. Well, seeing that, I realized clearly there is a need for more definition and understanding. So who better to talk to about what some of these words mean and to give us a primer on where we are economically speaking as we enter 2013 than our next guest, GritTV regular. Rick Wolff is a professor of economics emeritus at the University of Massachusetts Amherst and he’s the author most recently of Democracy at Work: A Cure for Capitalism, just out from Haymarket Press.
Let’s start with the “s” one, socialism. What’s it mean?
Richard Wolff (RW) – Basically, it’s an alternative to capitalism. That’s how it arose. It was the idea that capitalism focuses on the individual entrepreneur and the individual worker and an awful lot of people said that gave short shrift to the larger community of which every individual is a part. So they used this word ‘socialism’ being interested in their community. So socialism developed as an alternative. Another way to put it is that capitalism as a system that took over from feudalism and became the dominant system in the world always produced people who were critical of it alongside people who thought it was great. And the people who were critical took this term ‘socialism’ as a kind of catchall term to talk about those ideas and those features of our society that folks who were critical thought were a problem. In simplest terms, maybe the way to put it, if you were a person who lives in capitalism but has concluded that the world can do better than capitalism, you’re probably a socialist.
Capitalism is a peculiar arrangement for the economy. A worker cuts a deal with an employer. I agree to come to work, 9 to 5, five days a week, you agree to pay me and out of this agreement we will get together. The problem is, when you do that of course, that you put conflict right at the core of the system because the employer wants to get as much out of you while paying you the least possible and the worker wants to get the biggest salary possible, so there’s conflict built in. And that means a lot of people who are supervisors and forepersons to watch because it’s a conflicted system, but it is a way of organizing production, for example, from the old way, landlord-serf as in feudalism, or master-slave as in slavery, and we have a system in which everything then is a deal. And the deal of the worker and the employer is matched by the other big deal – buying and selling.
LF – Well, so where does the extra come from? And I mean if I’m giving you some of my labor in return for a salary and you’re getting in return for my labor a thing getting made that you can sell, how do stockholders, shareholders get rich?
Capitalism is a system which pays you less than what your labor produces
RW – It’s called a surplus, a very old idea; it’s been as old as capitalism because capitalism is a wonderful example. You know, you know, I know, everybody knows that if you go and sit down with an employer and you discuss the job you’d like to get, and you and the employer finally work it out and now comes the big one – how much am I going to get paid? – and you work that out, and let’s say it’s, oh, $20 an hour. So you agree to come forty hours a week typically, you will get paid $20 an hour. What do you already know? You know that the employer would never pay you $20 an hour if in that hour that you worked you didn’t produce more than $20 worth of extra for your employer to sell, because the way capitalism works, is you use your brains and muscles to work. You produce goods and services. At the end of the day you go home, the goods and the services stay there. And if you take them with you people in blue uniforms come and bother you. So you know, you leave it there. And you know, too, that they would only pay you $20 an hour, or fifty or a thousand if in that hour you added more of what they sell than it cost them to hire you. You produce more than you get. And I know this upsets particularly Americans who watch these explanations because we would all like to believe that we would never work for anyone who doesn’t pay us what we’re worth. Capitalism, however, is a system that cannot and will never do that. It will only pay you less than what your labor produces for them. And that’s where profit comes from. And that’s where the stock market is manipulative to get its hands on that profit.
LF – How do we get to a situation where we find ourselves – such as the one we find ourselves in today – where we have 400 families earning essentially the equivalent of a 180 million other people, because clearly the little bit extra that you’ve talked about doesn’t necessarily lead to this setup that we have here? Or does it?
Corporations control the economy
RW – It does. That’s what people have to understand. First of all most of the business in the United States is done by a thousand or two thousand large corporations. I know we love to celebrate the mom and pop businesses, the little restaurant, the little workshop, and we have lots of those. And they’re important. But in terms of what controls the economy, it’s huge corporations who number employees in the hundreds of thousands. So now think about it. The major shareholders of most big corporations are a tiny number of people — ten, twenty, fifty, a hundred. That’s it. And a 100,000 people are working, each of whom is producing a surplus. You put all that together, you get that. And you know you shouldn’t be surprised. That’s not so different from ancient societies. Go back to ancient Greece, ancient Egypt. You had lots of people working but all the surplus that each of them produced ended up in the hands of somebody who could build over his entire lifetime the pyramids that we still see. It’s a little bit like that.
Capitalism is delivering the ‘bads’ year after year
The last quarter we produced less. Our economy went down. We are producing more but it’s going to a smaller number of people. And the stock market is doing well because our businesses are more and more dependent on other parts of the world where they’re doing business – China, India, Latin America. They’re making money there, and for them that’s the growth area, that’s the explosive future. The United States is becoming the backwater order for large corporations and it shows because they’re not interested in sustaining public services. They’re not interested and we’re watching a capitalism – which I like to put it this way because it shocks people – capitalism delivers the goods for a very small number of people. For the rest of us, capitalism is delivering the “bads” and it’s doing so year after year.
The first thing about a cure – like anyone will tell you – is you have to recognize that you have a problem. Right? You have to recognize that there’s something wrong, that there’s an illness, that there’s a difficulty, because if you don’t then a curse is going to work because you’re not set up for it. That’s why I think people are looking up capitalism [in the dictionary]. They know that the problem isn’t this or that official or this or that law or this or that decision by this or that company. There’s something bigger going on that involves a whole society. So the notion that system is broken is more and more in the air and they want to understand this system which they took for granted which they believed, with the propaganda, was the best thing that had ever been developed. And now they’re willing to ask. And that’s crucial. That opens the space for people like me to come in and say, you know there are alternatives. And I call it a cure because I want that metaphor of illness-cure to be in the air.
So what’s the cure? I think that rather than go to the old notion of cure – socialism, which for 50 years in this country has been bad-mouthed from here to tomorrow, has a bad name, a bad association, and, indeed, some of the countries like Russia and China that did things in the name of socialism, did things that nobody wants – and so with all of that going on it’s time to use a different language to describe what we want – to democratize the economy.
Old notion of socialism, change the ownership of enterprise, won’t work
The old notion of socialism had basically two dimensions: You should take – the socialists said, you should take the enterprises, the factories, the offices, the stores, away from the private owners and make them run by the state in the name of the people as a whole. So you should change the ownership of enterprises from private to public. And the second idea, you shouldn’t let the market decide. You shouldn’t let the goods go to the people with the most money, they should go to what people need. And do you should have government planning for the distribution of goods and services rather than a market. So socialism was different from capitalism because capitalism was private ownership, socialism was public, capitalism was markets, socialism was planning. And you’re right. That’s all about the context. That doesn’t say a word about how you organize production. It doesn’t say a word about the actual life lived by the average working person five days out of seven, 9 to 5 in the workplace. Those definitions of socialism were seriously deficient because of what they neglected, And my response is to say let’s focus on what they didn’t do because it’s a more realistic and more promising way to change a system that isn’t working for most of us.
So my argument would be to build on the old idea of the co-op, or the co-operative. Let’s reorganize enterprises in our society so that all the workers together make the decisions – what to produce, how to produce, where to produce and what to do with the profits. We will get much better economic outcomes for all of us if we organize it in this new way rather than going on with the old way that isn’t working and that has shown us that even with good laws and good regulations they get around them, they undo them and we’re back to square one.
LF – So you call them, in your book, Democracy at Work, you call them WSDE, Workers Self-Determined Industries
RW – Self-Directed
LW – Self-Directed Enterprises
RW — Right
LW – The acronym could do with a little work. How is it different from a regular co-op? Like a food co-op? Or a farming co-op?
RW – Well co-ops are a very old idea — thousands of years old. We’ve had them in the United States for a long, long time. My colleague, often, Gar Alperovitz, talks about co-ops as involving more than a hundred million Americans right as we speak. So there are lots of different co-ops. I think that the important thing that I’m talking about is that we’re interested not so much in co-ops, for example, food-co-ops are popular in America; a whole neighborhood or a whole part of a community gets together and realizes that if they buy groceries together in a big bulk they can get better quality at lower price than if they go to the local supermarket. So they band together, often doing, paying a little money to be a member, maybe doing a couple of hours work a month, or whatever they do and they buy cooperate…that’s a cooperative buying association.
You similarly have companies, small companies often, that get together in a co-op because they can get a better deal for what they produce if they sell cooperatively. So there’s a buying co-op, there’s a selling co-op, sometimes farmers buy land cooperatively, so there’s an ownership co-op. I’m talking about something else.
The cure for the “bads” of unbridled capitalism — Change the organization of production
I’m talking about the ‘cooperativization’ of the work itself – not the owning, not the buying, not the selling – but the organization of the production. Sometimes it’s called a producers’ co-op or a workers’ co-op, because for me the crucial thing is to change the organization of production.
LF – That word ‘socialism’ has ‘social’ at the heart of it. I mean it was about concerns for the life of the worker and the community.
RW – And it was all about this. If you open volume one of his [Karl Marx] greatest work – is called Capital: Critique of Political Economy – volume one – I teach it in university so I know it – volume one is all about the organization of production. And his argument is – Look the mass of people produce a surplus that is gathered into the hands of a very small number of people who then organize a system to keep that nice arrangement going for themselves. And the implication, as he spells it out, is change that. That is the root of many problems.
LF – Although you talk about it as something that needs a cure, there’s a whole lot of people that think capitalism is doing just well and their health is fine and they want to keep it that way, So how do you think this could ever change? Or are you talking about new little projects in different places that could maybe make life different for the people that are part of them [the communities] but don’t necessarily take on the whole system?
The big push for change will come when enough people recognize capitalism is not tolerable anymore
RW – My reading of history, as best I can, is that the great changes that happened very rarely happened because the people who made the change had a clear idea of where they were going. So, for example, if you look at the people who made the revolution in France in 1789, the great French Revolution, they knew they couldn’t stand feudalism, the old system. They didn’t want the landlords, they didn’t want King Louis, they didn’t want all of that. Where they were going, that they would establish a capitalism that would look like…they didn’t know that, they didn’t think like that – and frankly I don’t think most of them cared. Some did. And they sketched blueprints. And those were interesting. But the big push came when it was recognized that’s not tolerable anymore. And my guess is that what we’re seeing and what we’re living through, which is a very important historical moment I think, is the mass recognition by people around the world that this system – which achieved many things in the last 300 years: we’re not throwing out, you know, in some casual way, an economic system that proved technically dynamic and an ability to generate wealth – but like anything else that has worked in history, it’s born, it evolves, and then it passes away. And we might want to believe that this system will last forever the way no other system did, but the odds aren’t with us. And I think when you have just what we began this conversation with, a quote “recovery” just five years old that has benefited a tiny number of people, who are most responsible bringing the crisis, and bypass the mass of people, you’re talking about a situation in which many people are beginning to understand that this is a system problem. It can’t be fixed by this or that. It’s not the refrigerator where you call the repair persona and he or she does this. No. It’s when that repair person sits you down and says “I could charge you a lot. I could do another quick fix. But you need a new refrigerator.”
LF – Rick Wolff. His new book is Democracy at Work: A Cure for Capitalism. It’s just out from Haymarket Books.
Visit Richard Wolff’s website, democracyatwork, where you can watch other recent videos featuring Wolff. He even invites visitors to submit their most pressing questions,
- Cooperativization on the Mondragón Model As Alternative to Globalizing Capitalism by Betsy Bowman and Bob Stone, Center for Global Justice, November 15, 2011 – “Among available models of alternatives to capitalism, we have borrowed much from David Schweickart’s “economic democracy” and Michael Albert and Robin Hahnel’s “participatory planning.” We put a Schweickart-like democratization before processes like participatory planning. What may also set us apart is our claim that cooperativization can eliminate globalizing capitalism’s worst features.”