Citizen Action Monitor

Why capitalism is failing workers and triggering repeated economic crashes – US economist explains

Richard Wolff sees workers’ growing awareness of capitalism’s failures as a force for system change. —

No 2667 Posted by fw, October 5, 2020 —

“The problem of policies aimed to return the economy to what it was before the virus hit is this: Global capitalism, by 2019, was itself a major cause of the collapse in 2020. Capitalism’s scars from the crashes of 2000 and 2008-2009 had not healed. Years of low interest rates had enabled corporations and governments to “solve” all their problems by borrowing limitlessly at almost zero interest rate cost. All the new money pumped into economies by central banks had indeed caused the feared inflation, but chiefly in stock markets whose prices consequently spiraled dangerously far away from underlying economic values and realities. Inequalities of income and wealth reached historic highs. In short, capitalism had built up vulnerabilities to another crash that any number of possible triggers could unleash. The trigger this time was not the dot.com meltdown of 2000 or the sub-prime meltdown of 2008/9; it was a virus. And of course, mainstream ideology requires focusing on the trigger, not the vulnerability. Thus mainstream policies aim to re-establish pre-virus capitalism. Even if they succeed, that will return us to a capitalist system whose accumulated vulnerabilities will soon again collapse from yet another trigger.”Richard Wolff, CounterPunch

Richard Wolff (dob April 1, 1942) is an American Marxian economist, Professor Emeritus of Economics at the University of Massachusetts Amherst, and currently a Visiting Professor in the Graduate Program in International Affairs of the New School in New York. He is the author of Capitalism Hits the Fan and Capitalism’s Crisis Deepens. He is founder of Democracy at Work

How is it, asks Wolff, that although workers represent the majority of the population in capitalist societies, capitalism rewards the special interests of a minority of employers with the position, profits and power to determine how the society as a whole lives or dies?

The answer to that question is below in my repost of Richard Wolff’s Counterpunch concise article, which includes my added subheadings, text highlighting, and, at the bottom, a link to a related You Tube video interview with Wolff.

Alternatively, read the article and watch the video by clicking on their respective linked titles.

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COVID-19 and the Failures of Capitalism by Richard D. Wolff, CounterPunch, April 6, 2020

By 2019 global capitalism had become a major cause of historic inequalities of income and wealth

The desperate policies of panic-driven governments involve throwing huge amounts of money at the economies collapsed in response to the coronavirus threat. Monetary authorities create money and lend it at extremely low interest rates to the major corporations and especially big banks “to get them through the crisis.” Government treasuries borrow vast sums to get the collapsed economy back into what they imagine is “the normal, pre-virus economy.” Capitalism’s leaders are rushing into policy failures because of their ideological blinders.

​The problem of policies aimed to return the economy to what it was before the virus hit is this: Global capitalism, by 2019, was itself a major cause of the collapse in 2020. Capitalism’s scars from the crashes of 2000 and 2008-2009 had not healed. Years of low interest rates had enabled corporations and governments to “solve” all their problems by borrowing limitlessly at almost zero interest rate cost. All the new money pumped into economies by central banks had indeed caused the feared inflation, but chiefly in stock markets whose prices consequently spiraled dangerously far away from underlying economic values and realities. Inequalities of income and wealth reached historic highs.

Sooner, rather than later, something else will trigger a collapse of capitalism’s accumulated vulnerabilities

In short, capitalism had built up vulnerabilities to another crash that any number of possible triggers could unleash. The trigger this time was not the dot.com meltdown of 2000 or the sub-prime meltdown of 2008/9; it was a virus. And of course, mainstream ideology requires focusing on the trigger, not the vulnerability. Thus mainstream policies aim to re-establish pre-virus capitalism. Even if they succeed, that will return us to a capitalist system whose accumulated vulnerabilities will soon again collapse from yet another trigger.

​[Three reasons why capitalism is to blame for triggering repeated economic crashes]

1. Capitalism protects corporate profits not public health, which accounts for multi-million COVID-19 deaths

In the light of the coronavirus pandemic, I focus criticism on capitalism and the vulnerabilities it has accumulated for several reasons. Viruses are part of nature. They have attacked human beings — sometimes dangerously — in both distant and recent history. In 1918, the Spanish Flu killed nearly 700,000 in the United States and millions elsewhere. Recent viruses include SARS, MERS and Ebola. What matters to public health is each society’s preparedness: stockpiled tests, masks, ventilators, hospital beds, trained personnel, etc., to manage dangerous viruses. In the U.S., such objects are produced by private capitalist enterprises whose goal is profit. It was not profitable to produce and stockpile such products, that was not and still is not being done.

Nor did the U.S. government produce or stockpile those medical products. Top U.S. government personnel privilege private capitalism; it is their primary objective to protect and strengthen. The result is that neither private capitalism nor the U.S. government performed the most basic duty of any economic system: to protect and maintain public health and safety.

U.S. capitalism’s response to the coronavirus pandemic continues to be what it has been since December 2019: too little, too late. It failed. It is the problem.

2. Washington’s blinkered political leaders carefully avoid any criticism of capitalism

The second reason I focus on capitalism is that the responses to today’s economic collapse by Trump, the GOP and most Democrats carefully avoid any criticism of capitalism. They all debate the virus, China, foreigners, other politicians, but never the system they all serve. When Trump and others press people to return to churches and jobs — despite risking their and others’ lives — they place reviving a collapsed capitalism ahead of public health.

3. Profit-first capitalism is proving grossly inefficient in managing a response to the pandemic

The third reason capitalism gets blame here is that alternative systems — those not driven by a profit-first logic — could manage viruses better. While not profitable to produce and stockpile everything needed for a viral pandemic, it is efficient. The wealth already lost in this pandemic far exceeds the cost to have produced and stockpiled the tests and ventilators, the lack of which is contributing so much to today’s disaster. Capitalism often pursues profit at the expense of more urgent social needs and values. In this, capitalism is grossly inefficient. This pandemic is now bringing that truth home to people.

In comparison, a democratically-run, worker-coop-based economy puts social needs ahead of profits

A worker-coop based economy — where workers democratically run enterprises, deciding what, how and where to produce, and what to do with any profits — could, and likely would, put social needs and goals (like proper preparation for pandemics) ahead of profits.

But capitalism gives a minority of employers the position, profits and power to control how society lives or dies

Workers are the majority in all capitalist societies; their interests are those of the majority. Employers are always a small minority; theirs are the “special interests” of that minority. Capitalism gives that minority the position, profits and power to determine how the society as a whole lives or dies.

What of workers? They, the majority, are excluded from the capitalists’ decision-making process

That’s why all employees now wonder and worry about how long our jobs, incomes, homes and bank accounts will last — if we still have them. A minority (employers) decides all those questions and excludes the majority (employees) from making those decisions, even though that majority must live with their results.

Wolff sees workers’ growing awareness of capitalism’s failures as a force for system change

Of course, the top priority now is to put public health and safety first. To that end, employees across the country are now thinking about refusing to obey orders to work in unsafe job conditions. U.S. capitalism has thus placed a general strike on today’s social agenda. A close second priority is to learn from capitalism’s failure in the face of the pandemic. We must not suffer such a dangerous and unnecessary social breakdown again. Thus system change is now also moving onto today’s social agenda.

This article was produced by Economy for All, a project of the Independent Media Institute.

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RELATED VIDEO

Prof. Richard Wolff: COVID-19 and the End of Capitalism || Mexie, You Tube, September 15, 2020

During his appearance on a You Tube interview program, the hostess, Mexie, asks Richard Wolff: “Experts are fearing that we’re headed for a recession that will rival the Great Depression. Where do you think we are right now?” Wolff responds: ”Okay, let me answer this way. This is the worst crash of American capitalism since the Great Depression. That means everybody watching, listening to this program, this is the worst economic crash in our lifetimes.”

This opening segment of the 31-minute interview begins at the 1:35-minute mark and ends at about the 10:19-minute mark, featuring Wolff’s analysis of capitalism’s recent failures The rest of the interview is equally informative.

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