[MUSIC PLAYING]
SPEAKER: Please welcome
Richard Wolff to Google.
[APPLAUSE]
RICHARD WOLFF: OK, thank
you all for spending time,
a little bit, with me.
Let me tell you
exactly what I'm going
to do, and then try to do it.
I want to tell you about the
economic system in which you
live.
And like any object of people
trying to figure things out,
there have been
differences about how
to understand economic
systems from the beginning.
I don't want to bore
you by taking you back
to any economics class you may
remember having had in college.
If your experience
was like mine,
this is a memory you'd
rather not bring back.
For good reason, usually.
But if some of it is
still in your mind,
you may recall that people like
Adam Smith, and David Ricardo,
and Karl Marx, and John
Stuart Mill, and John Keynes,
and a whole lot of other people
whose names you've probably
heard all tried to
analyze the economy.
But they ended up,
many of them, doing it
in radically different ways.
And I mean really different.
They didn't see
the same thing when
they looked at the economy.
They didn't understand the
mechanisms that make it work.
They didn't understand in the
same way where it was going.
That is, it's been a
field characterized
by fundamental differences.
As big a difference
as whether you believe
the sun goes around the
Earth or the other way
around and many other
examples that I could give.
And that's never changed.
Economics has been
what philosophers
call an agonistic field, a
place in which different ways
of understanding the economy
contest with one another,
fight it out.
Some win, some lose.
And those losers sometimes
come back and win later.
Let me give you an example
that you may know about.
Because of the Great
Depression of the 1930s,
the confidence in
the capitalist system
being able to solve its problems
as they arose collapsed.
From 1929 to 1941,
the United States
had unemployment rates
hovering around 20% to 25%.
That's five or six times the
unemployment we have now.
And what we have
now is a problem.
Try to imagine that.
Those were years,
the 1930s, when
the total output of
goods and services
shrank each year from what
it was the year before.
It's not surprising
that people who
were living in a
capitalist system
worked like that, raised
lots of questions.
And then there were those who
believed, "on no, it's OK.
It's just a temporary thing,
nothing to worry about.
The system is wonderfully
configured in such a way
that it can solve its
problems and it will.
Just wait six months, a year,
another year, and so on."
But there were too many people
suffering too much to wait.
And one, a brilliant
one, a fellow in England
named John Maynard Keynes,
basically had the courage
to stand up and say, "the
system isn't working,
and if we continue to
keep our faith in it,
despite the fact that it
isn't working in obvious ways
that we can see every day,"--
he mentioned, by the way, people
sleeping in doorways in London.
He was British.
People out of work in huge
numbers, people whose wages
were going down, not up
et cetera, et cetera--
He said, if we don't
face it, there's
going to be a revolution
and we're not going
to have any capitalism at all.
He liked capitalism,
but he felt that letting
things be handled by
the private sector
was self-destructive lunacy.
And he developed an
analysis which we now
call Keynesian economics.
But it saw the economy
radically different from what
preceded it.
And that Keynesian became
the dominant economics
in the world, for most of
the period roughly the 1940s
to the 1970s.
And then it was all
pushed out, and we
had a return of what
existed before the 1930s.
It was almost as if the
memory of the Great Depression
and all the troubles it had--
and by the way, if
you're interested,
John Steinbeck is a good
one to read, give you
a feeling of the
Great Depression,
if you've never read that,
or seen the movies of "Grapes
of Wrath," "Of Mice and Men."
In the 1970s, it all
went the other way.
The Keynesians were
dethroned, and we
started looking at the economy
again in a different way.
That's the time of
Reagan and Thatcher.
The private economy,
which had been excoriated
for failing in the
Great Depression,
was suddenly
rehabilitated and made
the be all and end all that
would solve everything.
'70s, '80s, '90s.
It would have continued, except
in 2008, this capitalist system
we live in crashed again.
The second time in 75 years.
We're talking a major collapse.
For those of you
who don't follow
these things, in
the autumn of 2008,
September to December,
here in New York,
we came that close
to an economy that
would have stopped functioning.
By stopped functioning, I
mean the kinds of things
you don't think can happen.
But we came that close.
No milk, no bread,
no buses, no nothing.
Terrible.
We're still in the
after effects of that.
Here we are, almost
a decade later.
Like the Great Depression, it
has raised again the question,
"gee, what about this
economic system?"
Only, now we have to ask
it in a different way.
And that's really what I
want to talk to you about.
Because we can't go back
and repeat our own history.
We can't now say, oh, let's
bring the government back in,
the way Keynes believed
you needed to do.
Fix this capitalist system,
manage this capitalist system.
Because if you
leave it to itself,
if you leave it to the
business community,
look what happened
in 1929, and look
what happened in 2008 again.
And these are cataclysms.
You read every few weeks now
about an election, like the one
a couple of weeks ago in France,
in which the entire society is
being roiled around
by the consequences
of an economic system that
isn't working real well,
and is producing new kinds
of political characters.
Even here in the
United States, we
have what at least
most of us think
of as a pretty weird political
scene these days, don't we?
And that's not just because
a particular fellow got in.
It's because of
all the conditions
that made it possible
for him to get in
and to do what he's doing.
OK.
So let's talk about
this capitalist system,
remembering that people
have always disagreed.
The debates were not
only between those
who loved capitalism
and felt it should
be handled by the private
business community
being able to do its thing.
"Deregulate, let the economy
work" versus the Keynesians,
who loved the system
but said in order
to make it work, the government
has to come in and make things
happen, because left to
itself, the system collapses
like in 2009 and 2008.
Turns out, those were not
the only two perspectives.
There's also a perspective that
says the problems of capitalism
go far deeper than
whether or not
there's more or less
government intervention.
For such people, this
whole issue is secondary.
What's their point of view?
And it's the one I want to
present to you a little bit.
Their point of
view is that if you
look at the capitalist system,
with or without government
intervention, all the
key levers of power
are in the hands of the people
who run that institution which
is now the place where
most production of goods
and services happens.
And that institution is
called the corporation,
the capitalist corporation.
We are discussing this in
one of them, aren't we?
It is a powerful
institution, as you all know.
And so this approach says, let's
take a look at how it works
and see what consequences
come from that.
Before I do it, I need to
tell you honestly and clearly
where this approach comes
from this, this looking
at the organization
of production
as it is done in a
corporation which
is the dominant form
of modern capitalism.
The origin of this
way of thinking
is in the hands of
critics of capitalism.
This point of view comes from
people down through a couple
hundred years of capitalism
has been the dominant system
in the world.
It's not very old.
Like every other system,
slavery, feudalism,
any of the others,
capitalism has always
had people who love it
and people who hate it.
Just about like everything else.
Critics, admirers,
celebrants, skeptics.
And what I'm about
to tell you is
there's a tradition, which
some of you I'm sure know,
of criticism of capitalism.
It has many contributors,
but the name
that has come to dominate
is the name of Karl Marx.
And this is often called
Marxian economics,
in the sense that it's
influenced more or less
that varies from individual to
individual by the critical way
that Karl Marx developed
his analysis of capitalism.
I'm not sure whether I
should take a moment now
to remind you all of
who Karl Marx was,
but then again, maybe
it's worthwhile.
Karl Marx was born in 1818.
That's very important, because
that's the first generation
after the French Revolution.
And Marx was a
tremendous admirer
of the French
Revolution, the slogans
on the banners of the
French, "liberty, equality,
fraternity," those were the
three words of that revolution
in 1789, were absolutely the
love of the whole generation
of which Marx was a part.
And they all understood
the French Revolution
pretty much in the same way,
that what the French did
was to get rid of
feudalism, the old system,
and bring in capitalism,
the new system.
And that by doing so, they would
bring in liberty, equality,
and fraternity.
Or to use the modern
language, a democratic system.
Marx came a little later.
So Marx was able, by the
time he becomes a young man,
to see about 50 years worth
of development of capitalism
in Europe.
It began in England, moved to
France and the Low Countries,
and then spread eventually
to the whole world.
Marx was 50 years in.
Now, he looked around
Western Germany,
that's where he was born,
France, where he lived a bit,
and then in England, where he
lived most of his adult life.
He looked around
and he-- by the way,
that's the England of Dickens.
So if you want to understand
what he was saying,
remember "Oliver Twist."
The England of his time
was certainly capitalist.
Feudalism was gone.
So was Paris.
So it was Frankfurt.
Marx acknowledged
that capitalism was
a dynamic, developing system.
But where was the liberty,
equality, and fraternity?
Nowhere.
There wasn't any.
Again, if you want to see
what I mean, read Dickens.
He'll describe to you the
absence of liberty, equality,
and fraternity in 25 ways.
Or, if you want
the French version,
Balzac, or Zola, or
any of the others who
were writing about
these periods.
So Marx, young radical that he
was, from an upper middle class
family, educated at
the university, which
means he's one of the
3% or 4% of the people
who had such an
education at that time,
he drew a conclusion.
The French Revolution was
wonderful for bringing
in capitalism, but
capitalism, it turned out,
was not the vehicle or the
means to bring people liberty,
equality, or fraternity.
And so his life work was to
answer the question, "why not?"
What is it about capitalism
in the 19th century,
which is when he lived,
that prevented it
from bringing the liberty,
equality, fraternity,
democracy, all those
wonderful things?
And I'm going to tell
you his conclusion,
and then we're going to go
back and see how he got to it
and why he got to it.
His conclusion was
that capitalism was not
only unable to bring
it, but that capitalism
was a fundamental obstacle
to ever achieving it.
And that therefore the human
race, if it wanted liberty,
equality, fraternity,
and democracy,
would have to devise a system
other and different from
capitalism, or else spend its
entire lives bumping up against
the limits of a system that
cannot allow for, has never
allowed for liberty, equality,
fraternity, or democracy.
Not really.
OK, so how does
Marx get to this?
And why am I going to present
an analysis of it to you?
Well, let's go back to the
corporation, that instrument,
that institution through
which goods and services are
produced.
Everything.
Everything Google makes is
the product of the Google
Corporation, which the Google
Corporation makes sure we know.
As all other
corporations do likewise.
It's the institutional form
in which the work gets done.
The more materials, the
tools, the equipment
to produce the output, which is
then marketed around the world.
That's how it's done.
And in Marx's image, in Marx's
head, therein lies the problem.
How is that organized?
Let's look, he said,
closely into this.
And then, he did.
And again, I'm going to
save us a lot of time
by summarizing what he found
and why it's so relevant.
His analysis goes
something like this.
The workplace, the
corporation, but by the way,
it applies if you're
not incorporated,
if you are an unincorporated
business, or a partnership,
or a family outfit, the
analysis applies there too.
But since most production
in the United States
is organized in corporations,
and more and more
around the world too, that's the
appropriate institution for me
to focus on.
In the corporation,
something very interesting
happens every day.
The key decision-makers
are two groups of people.
One group are the
shareholders, the people
who literally, in the
way capitalism works,
own the corporation by
owning shares of it.
They're literally
shares of ownership.
Shares, however, are only owned
in the main by rich people,
or by a few institutions.
To give you just one statistic
here from the United States,
1% of shareholders own
about 2/3 of the shares.
If you ever wonder who the
1% are that folks talk about,
that's as good a group as any.
They are the major shareholder,
as we call them in economics.
They're literally a handful of
people in most corporations.
That is, your grandmother
may have left you
when she died 11
shares of something,
but you're not a
major shareholder.
This may come as a shock.
I don't want to upset you, but
you're not a major shareholder.
A major shareholder
owns millions of shares.
It can be a bank.
It can be a wealthy person.
It can be a foundation
and a variety of holders
of these major shares.
But it's a tiny group.
20, 50 people,
groups, institutions
own all the shares.
Except for the handful
that grandmothers
leave as parting gifts.
And the way a corporation
works again, for those of you
not familiar, once a
year, there's an election.
And the shares
vote for something
called the board of directors.
That's usually a group
of 12 to 20 people.
They're on the
board of directors.
If you ever
wondered, some of you
may have had as a
career objective
to become a member of
the board of directors,
you probably noticed that
that's a good place to be.
And so I'm about to
tell you how to do that.
You have to get elected
by the shareholders.
That's how everybody got there.
Once a year, the
shareholders have a vote.
And here's how the vote works.
You get one vote for
every share you own.
So if your grandmother left you
11 shares, you get 11 votes.
If you are Chase
Manhattan Bank, and you
own for your various
accounts 27 million shares,
then the vice president you
send to the annual meeting
of the shareholders votes
the 20 million shares.
You could think that
you're just like him,
but you understand you're not.
If 1% of the people own
the bulk of the shares,
that's the 1% who decide
all these elections.
And that's indeed how
it normally works.
So the 12 or 15 people that
are on the board of directors,
they make the decisions.
Sometimes with more influence
from the major shareholders,
if they muddle in there,
sometimes with less.
But it really doesn't
matter, because even if you
add together the 15
to 20 individuals who
are on the board of
directors to the 10 or 20
or 30 individuals who
are major shareholders,
those people, that 50
people, more or less,
make all of the key decisions
for every corporation that
works like this,
which is 99% of them.
Let me be clear with you, so
we all are on the same page.
This board of directors
decides what the company
produces, what objects are made,
what services and goods are
produced.
Number two, how they
will be produced,
what technology will be used.
Number three, where the
production will take place.
And finally, what to do with the
profits that all of this work
generates.
This board of directors
and the major shareholders
make all those decisions.
Those are the key decisions
any enterprise ever makes.
Meanwhile, there
is a large number
of people, 500, 1,000, 10,000,
100,000, hundreds of thousands,
millions, who are employees
of the corporation.
They all, of course, have
to live with the decisions
that the board of directors and
the major shareholders make.
Well, let's give you an example.
"We're going to close this
factory or office here
in New York, and we're
going to move it to China.
Have a nice day."
Or "we're going to
substitute these machines
for these working
people and lay them off.
Have a nice day."
"We're going to take the profits
to which the labor of all
the employees
contributed, and we're
going to decide to use
it for an advertising
budget or beautiful
new shrubbery
outside the main office
or whatever it is we want,
because that's who we are.
We make the decisions."
Who's the "we?"
The board of directors,
15 to 20 people,
and the major shareholders,
another 20, 30 people.
Marx finds this
intriguing, and so do
I. This is an
interesting way to make
the fundamental economic
decisions of a society.
Because what you are
essentially doing and saying,
whether you face up to
it or not as a culture,
is that there's going to
be a tiny group of people
who make all the key decisions
that everybody else has
to live from on and with.
But now to drive the point
home, the mass of people,
the employees to begin with, but
the larger community in which
every corporation
lives and functions,
they all have to live
with the consequences.
But they are excluded
from participating
in making the decision.
Let me say that again to
make real sure it's with us.
The mass of people in
our economic system
are required to live with the
consequences of the decisions
made by the corporate
leadership's decisions
from which they are excluded
legally and in practice,
de jure and de facto.
Whatever else you call this
system, it is not democratic.
In the communities
where we live,
we insist upon having votes.
We say that the mayor,
or the governor,
or the senator, or the
president makes decisions
that we all have to live with.
And therefore we, who have
to live with the decisions,
must be able to
participate in making them.
But when we go to work
in a capitalist system,
we cross the threshold
into the office, the store,
or the factory, and we
put all of that aside.
We don't demand it,
We don't require it,
and we don't have it.
Now back to Marx.
Herein, in that situation I just
described summarily for you,
Marx said lies the reason why
capitalism, despite its hopes
and dreams of the people who
brought us capitalism, that it
would usher in liberty,
equality, fraternity,
has proven itself
unable to do that.
Because it turns
out Marx, argues,
that if you put the power
of directing what goes on
in the economy in the hands
of a tiny number of people,
you can't really be
surprised if they
make the decisions that keeps
them in that charmed place,
can you?
So why are we surprised to
learn, as I'm sure many of you
know, that over the last
40 years, for example, here
in the United States,
just to take an example,
corporations,
boards of directors
and major shareholders,
have decided
to take the profits that
everyone helped to produce--
by the way, do we how
we know that everyone
helps to produce the profits?
You know how that happens.
That happens every
year, the proof of it,
at the Christmas party.
That's when the chief executive,
a little wobbly from too much
punch, gets up on
a chair and thanks
everybody for the contribution
every person in this firm made
to our successful year.
And then having thanked you, the
chairman and the other members
of the board go
off and decide what
to do with what you
kindly helped to produce.
So it shouldn't
come as a surprise
if the last 40 years turns
out that what has happened
is that those corporations,
those boards of directors
and major shareholders,
decided to take
a huge part of the
profits that were earned
and give it to themselves,
in the form of dividends
to shareholders, which
is what they are,
and spectacular pay packages
to the chief executives who
are on boards of directors.
This should surprise nobody.
But let's take some other
examples that are remarkable.
Corporations have
decided, and Google
is an important player in this,
to do what we call an economics
automation.
Over the last 30, 40
years, we have really
replaced huge numbers
of jobs that people
hold by computers and robots.
It's very interesting.
That is driven by profit.
The boards of
directors calculate.
They bring in
economists like me,
and they calculate what we
would pay for workers and all
that versus what it would
cost to buy and maintain
these computers, these robots,
whatever the automation
form is.
And they make the
decision based on what's
better for their profits.
Because that's how
corporations work.
That's what they do.
And then they make an
interesting decision.
If the machinery is more
profitable, they buy it.
They install it.
And they turn to the workers
and they say, "you're fired.
Have a nice day."
And those workers go off
and have maybe a nice day.
Probably not.
They are fired.
They are unemployed.
We have no idea--
I take that back.
We do know what happens to them.
In stunning numbers,
they get depressed.
They get sick.
They start desperately
looking for jobs.
If they don't find
them pretty soon,
they start being
willing to accept
jobs that they are
overtrained for,
jobs they are underpaid
for, etc, etc.
Then they may get angry.
They may do violent things.
The social costs of all
of this are staggering,
and always have been.
But that's none of the
problem of the corporation.
It bears in a capitalist
system no responsibility
for that at all.
If there are costs of
laying all those people off,
those are the problems
of those people,
of their friends and
relatives, neighbors
and the communities in
which they live to struggle
with as best they can.
Marx says this is
really interesting.
Because in many situations,
it is easy to show,
don't need to be a
Marxist for that,
that the social costs
of the unemployed
are much larger than
the profits gained
by the private corporations
who made the decision
to fire these people.
But because the private
corporations got the profit
without having to pay the cost,
it was profitable for them,
even though it was socially
an unprofitable move to make.
That's the way the system works.
OK, now let's put
it all together.
Marx argues that leaving
things in the hands
of the capitalist corporation,
and you can see now
why a bit more government
intervention or a bit less
is really beside the point.
Because with more or less
government intervention,
you're not changing the basic
way the capitalist enterprise
is organized, with a
tiny group of people
making all the key
decisions, and doing so
in a way that replicates
their situation,
understandably and unfortunately
replicates that of everybody
else too along the way.
In fact, let's even push it
further, as Marxists should.
If the government
doesn't just regulate,
but let's suppose the government
goes a step further, fires
all the private
boards of directors,
takes the property away from
the shareholders, and says
this is now a
government enterprise,
and then puts into
the board of directors
not individuals elected
by shareholders.
They're all gone.
But officials designated
by the state apparatus.
You 20 people will
now run this factory.
That's a little bit like what
happened in the Soviet Union
in 1917.
That didn't work
out too well either.
And why?
Because it didn't change
the internal structure
of that enterprise.
Yes, instead of
privately elected people,
as in private capitalism,
they had state officials.
Interesting change,
but that doesn't
change the fundamental problem.
And Marx pointed to
that as the issue--
the way this is organized
is fundamentally
antagonistic to ever
getting liberty, equality
or fraternity or
democracy, if that's
what you're interested in.
Now, this is a very powerful
way of analyzing things.
But Marx was a very
sophisticated thinker,
and wanted to drive it home
in the most intimate way
that one can--
by looking very closely at the
employer-employee relationship.
And again, this is an
elaborate piece of work he did.
It takes some time
to work through it.
I'm going to give you
a heroic short summary,
but I think you'll
understand it real well.
Let's start with the employee
who's looking for a job.
Could be me.
Could be you.
And you go and you meet an
employer who's got a job.
And you sit down,
and you discuss it.
And the employer explains you
to come Monday through Friday
at 8:30, and you stay till 4:30.
Whatever it is.
You'll sit over there.
You'll do work with this
machine on that piece of paper.
Whatever it is.
And then you get to
that touchy point.
How much are you
going to get paid?
And to make my
example very simple,
let's just use the
number $20 an hour.
You're going to be
paid $20 an hour
for whatever it is
you just came to work.
At that point, Marx
says let's stop.
Stop the film.
Stop the whole
thing, and let's be
clear about what happens here,
because everybody kind of knows
it, and yet hasn't faced it.
And I suspect that's still true.
Having been a professor
of economics for 50 years
helps you to get the sense
of whether it's true or not.
You know-- Marx
makes it very clear,
but you know what
I'm about to say.
That the only
reason any employer
will ever give you $20 for
an hour of your work is this.
That hour, adding you to
whatever the payroll already
is, hiring you, in
that hour you're
going to make more goods or
services for that company
to sell than they would have
if they didn't hire you.
They know that.
That's why they hiring you.
You're either going to make
a better quantity or a better
quality of whatever
it is they produce.
And the company's calculation
is, it is worth it for me
to hire you for $20 if and only
if the extra hour of your labor
will yield to me, the
employer, more than $20
worth of extra output
for me to sell.
If it doesn't, I won't hire
you, because it would be absurd.
I would give you $20,
you'd work for an hour,
I'd sell the result of
your extra work for $19,
and I'd be down $1.
I got an MBA.
I know that's not good.
I'm not going to do that.
But this has enormous
implications.
First of all, and this
is tough on Americans.
It means that if you spent
a lifetime telling yourself
you're never going
to work for anybody
who doesn't pay you
what you're worth,
I've got real bad news for you.
That never happened,
and it never will.
That kind of
statement to yourself
is your way of avoiding to deal
with the system in which you
live.
And I feel for you.
You need help, but not
the kind I provide.
You live in a system in which
the basis of the corporation
is that difference.
Or to use Marx's
language, the worker
produces a surplus
over what he gets.
And that's the name of
the system is to get it
and to accumulate it.
Wow.
So what have we
got in capitalism?
We've got a system
that has delivered
us two extraordinary qualities.
It has delivered us
stunning instability.
I always use the same joke at
this point in what I present.
If you lived with a
person as unstable
as this economic system, you
would have moved out long ago.
In 1929, it crashes.
The crash lasts 11 years.
In 2008, it crashes.
We're still in it.
For those of you who
don't know, there's
an agency in the United
States called the National
Bureau of Economic
Research, which keeps
track of the business cycles.
It's a polite term we
call for instability.
Between the end of the
Great Depression in 1941
and the beginning of
what we're in now, 2008,
there were 11 more
economic downturns.
Every president of
the United States
has been a president
over a downturn.
That's how unstable
the system is.
And every president has
promised during the downturn
that if we just do
whatever the things are
he thinks we ought to do, we
will overcome that crisis,
overcome that downturn,
and never have another one.
Every president promised it.
No president has ever
delivered on his promise.
That's why we're in one now.
They all promised.
They can't do it.
The system's instability
has been with it
from the beginning.
We average an economic downturn
every four to seven years
in capitalism.
For 300 years, no matter
where capitalism has come to,
that is what it brings with it.
Keynesian economics was an
attempt to cope with it.
Didn't work out.
We're still trying.
We're still debating it.
We live with a system
that periodically throws
millions of people out of
work, undoes their family life,
undermines their
educations, transfer--
it's unbelievable what we
expect and what we accept.
And the other thing capitalism
has done, stunningly,
is produce an inequality
that is mind-bending.
Of course, it's easy to see
why, if the boards of directors
and the major
shareholders decide
what to do with the profits and
give a lot of it to themselves.
Bingo, we've
explained inequality.
No mystery here.
We don't need to do
a lot of studies.
That's been answered,
that question.
But the problem is,
it's the system that
produces the inequality,
not this or that law,
or this or that rule, or this
or that political candidate.
This is a systemic problem,
like our instability.
The agency that keeps
track of inequality
in the world, the best
one is Oxfam in England.
Some of you may know about it.
They issue a report every
year about world inequality.
The famous number
this last year was
that something on the
order of 86 of the richest
people in the world
together have more wealth
than the bottom half of the
population of the planet.
That's about 3 and
1/2 billion people.
Folks, this is a level of
inequality that takes us back
to the pyramids.
Capitalism's
achievement is a level
of inequality and instability
that should have long ago made
people question what are
we doing staying in, living
with, accepting, especially
uncritically, a system that
works like this.
But now a personal note.
If any of this strikes you as
remarkable, or new, or maybe
hopefully even
interesting, I'm a product
of the American economic system.
And I'm a product of the
American education system.
I was born in the United
States, lived here all my life.
This economic analysis I've
just summarily presented
to you in 40 minutes, I
had to acquire on my own.
Why?
Because the institutions of--
they like to call it
"higher learning,"
I always used to wonder what
then would be lower learning
and then put it aside.
Institutions of
higher learning, they
didn't teach me any of this.
Let me stress that--
none of it.
So let me tell you
about my education,
because it'll help
drive the point home.
As an undergraduate,
I went to Harvard.
I graduated magna cum
laude from Harvard.
That's supposed
to mean something.
Then I went to Stanford
out in Palo Alto
and got a master's
degree in economics.
And then I switched
because my professor
that I loved there died,
and I finished at Yale,
where I got another
master's in economics,
a master's in history,
and a PhD in economics.
I'm loaded with the right
degrees from the right places,
aren't I?
Now listen to this.
Never in my education in
those three institutions
in an economics
course was I ever
assigned one word of Karl Marx.
There is no excuse, no
justification, nothing.
You know what that's about?
Fear.
My professors were afraid
to assign it, to read it,
to think about it, to
discuss it, or to debate it.
It was the Cold War
when I went to school.
And we, the Americans, were
arrayed against the Russians.
Like some are today and
others clearly not so much.
[CHUCKLING]
Well, it's very hard
to keep this straight.
You have to know what color,
who's got what jersey.
Otherwise, you get
confused as to who
the friends and allies are.
It is very confusing.
My professors were not confused.
It was real clear.
So we weren't told
anything about any of this.
We were taught
neoclassical economics.
That's, capitalism
is wonderful, fixes
itself, nothing to worry
about, go back to watching TV.
And the Keynesians, who
said, no, no, there's
something to worry about.
Let the government come in.
But the notion that there
was a critical alternative
to this way of
thinking, that came up
with a different analysis and
a different way of thinking,
and a different set of ideas
of what we need to do next?
Oh no.
None of my teachers ever
said one word about it.
Try to understand.
This is like a taboo.
They couldn't discuss it.
Some of you have
been wondering, why
when we have economic troubles
here in the United States
we seem so clumsy
about solving them?
We have had to
pretend in economics
that we don't have any
problems, that we don't have
a fundamentally troubled system,
that we don't have anything
to worry about.
Which means you're not
real good at fixing it
when it breaks down.
For that, you'd have to face
that it has lots of flaws.
You'd have to look at
how it broke down before
and see what it is
that might be amiss.
We don't.
So you live in an
economic system
that is now run by people who
have no idea about everything I
just told you.
It's painful.
I've had to teach all my life
the conventional neoclassical
Keynesian.
But I'm also taught this other.
I know what my
colleagues do, but they
don't understand what I do.
And I'm not the only one.
I'm not suggesting that.
But I'm a critic of this system,
because it makes sense to me
that a system that works
in the way I've described
deserves some criticism.
And I even dare to suggest
that intelligent folks like
you could thrive on
hearing the criticism
and thinking about it.
Accept all of it?
Of course not.
But think about it, engage it?
Come on.
If you wanted to understand
the family up the road that
had two parents and
two kids, would you
decide to interview one
of the two children,
not two, especially
if you knew that one
that the children
thought it was the best
family in the world,
the other child
thought this was a basket case
of psychological dysfunction?
Probably, most of
you will understand
you've got to talk to
both of the children,
then you make up your own mind,
hear what they have to say.
Hear the people who
think capitalism
is the best thing
since sliced bread,
but maybe also take a dare.
Listen to the people
who think it's critical,
who think it's a
system that never
could do what it had promised.
And finally, and I'm going
to conclude with this,
a system that is in
no way necessary.
What are we accepting?
It's not inevitable.
It never was.
Oh, true, the people who like
capitalism love to say it's
the end of history,
it's the final stage.
But the people who
articulated slavery said that.
And the people who articulated
feudalism said that.
So of course, the people
who run capitalism say that.
But the burden is on them.
Every system we know
of in human history
has been born, evolved
over time, and died.
We know capitalism was born,
and we know it's evolved.
You know what the next stage is?
Well, I won't go into it.
You can figure that out.
What would be an alternative?
Well, in a way, everything
I've said gives you the answer.
If we have a system
that's unstable,
if we have a system
that produces
unspeakable inequality,
a system that
makes it profitable to fire
large numbers of people,
even if the social costs
of their unemployment
exceed the profits that
the automation achieved,
all of the things I've told you
and many more, those are all--
every one of them--
the results of how
decisions are made
inside the productive units
of our economy, the factories,
the stores, and the offices,
by a tiny group of people
who are not accountable
to the people they employ.
The people they employ
are the majority.
The people who are not
accountable are the minority.
That's why it's not democracy.
It's the antithesis.
Well, then the solution
jumps right out at you.
Democratize the enterprise.
Make the decisions,
something that
is done one person, one vote.
Everybody who works
in an enterprise
has an equal say
in deciding what
to produce, how to
produce, where to produce,
and what to do with the
profits that they all
helped to produce.
What a wonderful,
interesting idea.
Democracy in the workplace.
Just think of a society
in which you have not
just democracy where you live,
but democracy where you work.
If it was good for the one,
it's good for the other.
Maybe getting rid of
the kings who told us
what to do where we
live is like getting
rid of the board of
directors who tells
us what to do where we work.
Because you know
it kind of matters.
Being at work is what you
do most of the adult life
you have, is going to work.
If democracy is a value
that means something to you,
it should have been
instituted long ago where
you work, because that's where
you spend most of your time.
Instead, you accept what?
To live in a society you
like to call democratic,
even though the place where
you spend most of your time
is the antithesis of that--
your workplace.
The alternative is very old.
Democratizing the workplace
is not a new idea.
No, no, it's ancient.
Nowadays, it's
called worker co-ops.
It's as good a name as any.
What does it mean?
A group of people getting
together and making a decision.
We're going to
produce something,
a software program,
hamburgers, haircuts.
It doesn't matter.
And here's how we're
going to do it.
We're going to be a collective.
We're going together
to decide how
to produce, where to produce,
when to produce, all of that.
And we're going to
debate it, and then we're
going to make a decision
by majority vote.
That's what we're going to do.
We're going to run it that way.
Human beings have been trying
to do that for a long time.
What you may not know
is that human beings
have done it often.
You may not know that human
beings are doing it right now
all over the place, including
in the United States.
And one of the reasons
it's a perennial effort
is because the systems that have
existed, slavery, feudalism,
capitalism, provoke
people to be critical
and to find their way sooner
or later to this alternative.
I'll give you just two examples
as I bring this to a close.
The most famous example
is a corporation in Spain.
Some of you may
have heard about it.
It's called the Mondragon
Co-operative Corporation.
Here's the story
of this company.
In 1956, Spain, which is
where this company exists
and is based, Spain was
a very poor country.
It had gone through
a horrific civil war,
and then there was World War II.
Spain was a poor
country to begin with,
and it was devastated
by the Civil War,
and then by World War II.
So in 1956, it was
a very poor country.
And in the Basque Region, that's
the northern part of Spain
on the southern side of
the Pyrenees Mountains
that separate Spain from
France, the Basque people, who
are their own kind of
ethnicity, if you like,
they have their own language
and culture, very, very poor.
They're Roman Catholic, as
are most people in Spain.
And they had a local priest.
And he made a famous
joke one day at church.
He said, if we
wait to have jobs,
for some capitalist or
some employer to come here,
we'll all die of old age.
So what I suggest,
he said, is that we
become our own employer.
In other words, set up a
worker co-op, which he did.
Six workers and a priest.
Fast forward to today,
Mondragon Corporation,
Mondragon Co-operative
Corporation,
is the seventh largest
corporation in Spain.
It has 100,000 workers.
It is the biggest success
story of the Spanish economy
in the last half century.
It is a collection
of 150 to 200,
depending on how you
count, worker co-ops.
In every one of its businesses,
it's a conglomerate.
Services, manufacturing,
and so on.
In every one of its businesses,
the workers collectively
decide all of these issues.
What to produce, how to
produce, where to produce.
Stunningly successful.
Outcompeted dozens of
capitalist enterprises
who could not make it work
in competition with them.
They are so successful now that
they have their own university,
the Mondragon University,
which will teach courses
to anybody who is interested
in how to organize a co-op, how
to finance a co-op,
how to manage a co-op,
how to deal with the personal
problems of co-ops, etc.
It's a well-developed
program, very successful.
Two interesting rules
that might excite you.
Rule number one, the workers
together hire, and fire,
and evaluate the managers.
I know I have to
let that sink in.
Other words, it's the
opposite of what you have.
The workers decide whether
the managers were successful.
And if they weren't,
they're gone.
They also have another rule.
The highest paid person cannot
get more than eight times
the income of the
lowest paid person.
That's how they solved
the problem of inequality.
Just gone.
Not an issue.
There is some inequality.
8-1 is still a
hefty ratio, but I
assume you know that the
ratio of corporate CEOs to low
paid workers in American
corporations is around 350-1.
Which is why we have the
inequality that we have.
And there are many
more examples.
A worker co-op would solve its
problems in a different way,
be a different economic system.
Here's an interesting thing.
Imagine a corporation
confronted with the notion,
gee, why are you
hiring Americans
who you have to pay a
large amount of money to?
Why don't you move to India?
You can pay much less.
The capitalist
corporation, as you know,
has been doing lots of that.
In a worker co-op?
Unlikely.
The workers would
be voting to destroy
their jobs, their
company, the benefits
to the community of
having the jobs there.
They're not going to do that.
You wouldn't have seen
the exodus of jobs
from this country for
the last 30 to 40 years.
It's really different.
Much less inequality, much less
loss, and the whole, everything
would be changed if we were able
to have a rational discussion,
debate here in
the United States,
about a capitalist economic
system versus a worker
co-operative system.
Maybe we would even be able
to imagine an economic system
starting out as
capitalist, but which
makes room for a
large worker co-op
sector across many industries.
And you know what the
rationale for it would be?
Freedom of choice.
Let Americans have the choice.
Do you want to work in
a top-down hierarchical
corporation?
Or would you rather work
in a democratic workplace?
Would you like to
buy from the one?
Would you like to-- for
Americans to have that choice,
there has to be a sector.
We have to spend some money and
make room for worker co-ops.
And there is a country
who's doing it right now,
committed to doing it anyway.
And that will be my final
point, just to make clear
that the reality of
this is not some fancy
in the future utopian dream.
The second biggest political
party in Great Britain is
called the Labour Party, the
leader of the Labour Party
a man named Jeremy Corbyn.
His party has committed--
they're running in a national
election right now--
his party has committed
that it-- and they've
run governments before.
They're like the
Democratic Party here.
The Republican here is the
Conservatives in England.
So he's committed that
if the Labour Party wins,
they'll pass this law part one.
Any existing business in
England can continue as it is,
but if it decides to
close, and/or if it decides
to sell itself to
another business,
and/or if it decides to go
public, to issue shares,
it must, before doing
any of those things,
give its own workers the
right of first refusal.
That's a legal
term meaning it has
to offer to sell itself to
its own workers as a co-op
before it can do anything else.
Part two of the bill
answers the question,
where would the workers get the
money to buy their own firm?
Answer-- the government
will lend it to them.
The British are committed to
building a worker co-op sector
precisely because of the
problems, limits, failures
of a capitalist system.
But the most important thing
is not the particular arguments
for this.
The most important thing is
for you to face up to the fact
you live in an economic system
that isn't the beginning
and end of anything, that
is part of an evolving
history, that has very
serious flaws and faults,
and that there's an
enormous literature,
including concrete
real experiences people
have had all over the place in
doing better than capitalism.
To insist that you don't
have to think about it,
you don't have to
debate it, you don't
have to listen to people
who tell you about it,
you don't have to read
the books that are there
for it is a kind of self imposed
censorship that doesn't do
anybody any good, unless you
really want the current system
to continue no matter what
the cost and no matter where
it takes us.
And I don't believe most of
you in this room feel that way.
Thank you very much
for your attention.
[APPLAUSE]
If there's time.
SPEAKER: Yeah, we have just a
couple minutes for questions,
I think.
Go up to the mics, please.
Go ahead.
AUDIENCE: Hi.
Thank you for your talk.
I really enjoyed it.
I was just wondering if you
could speak maybe briefly to,
you offer up democracy as kind
of the solution to the system.
I'm wondering if you could
speak to the efficacy of it
specifically with
relation to dealing
with the problem of capitalism.
Why hasn't democracy as
a governing system dealt
with this problem,
and why won't it
have similar inefficiencies
in the workplace?
RICHARD WOLFF: Sure.
I'll try to be as
brief as I can.
Marx tried to grapple with
exactly that question.
And basically, he
and the many who
have come since and
tried to work with it
make the argument that
in the practical life
of a capitalist corporation is
a systemic disregard, negation,
rejection of democracy.
And that in fact, the way
the corporation works,
how it rewards
disproportionately
the people at the
top, etc, etc, it
creates conditions
that undermine what
political democracy there is.
And the best way to see that
in this country, and again,
I'm not sure most of you know
it, is that we in America,
and in many other
countries, we see
our elections bought and sold.
You can buy the advertising
that you need or you can't.
If you can't, your
effort to run politically
is basically stymied
from the beginning.
It's not a coincidence
that most of the candidates
either are millionaires
or depend on millionaires
to donate to them.
And the likelihood
of millionaires
that are going to donate
to a critic of capitalism
is slim in a country like this.
Unless and until a movement
develops, that of course
can change all of that.
And in a way, the
Bernie Sanders ability
to raise large amounts of
money from small donations
is the beginning of
signs in this country
too that in a sense
the jig is up.
But the system is
itself undemocratic,
and it undercuts
because it has to.
Let me put it in the
most dramatic way I can.
If a society produces greater
and greater inequality,
you all understand what that
means-- tiny group of people,
a lot of stuff, and
a lot of other people
who are just barely
making ends meet.
The people who have a
lot, they aren't stupid.
They understand the
danger of democracy
and of universal suffrage.
Because sooner or later,
if a tiny group of people
have all the wealth and
everybody doesn't, everybody
is going to think the one
thing we have is the vote.
The one thing we have
is political democracy.
And we can use our numerical
majority in politics
to undo what capitalism
has achieved in economics.
We can do that by taxing.
We can do that by expropriating.
There's a lot of
ways of doing that.
The rich understand that.
They've got to make--
they've got to neuter
the political system.
They can't let it function
in the appropriate way,
because it's too
dangerous for them.
And so they buy it.
That's been the solution.
And I think that problem
has never been solved,
not by this law or that law.
Because you could find a way
for these inequalities of wealth
to represent themselves
in the political system.
The notion of worker
co-op is not a notion
that there will be pure
efficiency, whatever
exactly that is.
Economists do not agree on
what efficiency is, or means,
or how to measure it.
But put that aside.
There will be inefficiencies
in a worker co-op.
They will be different
from the inefficiencies
that capitalist
enterprises have,
just as the inefficiencies
of capitalism
were different from those that
feudalism had, and from those
that slavery had.
Inefficiency is part of
every economic system,
always has been and is now.
It is not efficient to
have millions of people who
want a job and don't have one.
If you want an introduction
to capitalism's inefficiency,
I can introduce you to the fact
that every capitalist system
suffers from millions and
millions of people that are
unemployed or proportionately.
That's not an efficiency.
That's a waste of people,
a waste of potential,
and a waste of resources.
Other systems have
different inefficiencies,
but weighing them is
not a basis upon which
you're going to decide between
systems and it never was.
AUDIENCE: Thank
you very much for
the interesting and
thought-provoking talk.
So in your overview of Marxist
analysis of capitalism,
you alluded to what I believe
is called the labor theory
of value that he developed.
RICHARD WOLFF: Yes.
AUDIENCE: So that's an idea
I've got the impression that has
come in for a lot of criticism.
Maybe I'm oversimplifying
here, but the idea
is that goods have a certain
value, the company underpays is
workers in order
to extract profits
from the difference
between the value
and what it pays the workers.
That idea doesn't take account,
for instance, of the prices
that the consumers are
willing to pay for the goods.
So I was wondering how that--
RICHARD WOLFF: Yes.
Well, don't take
this personally.
Your question bespeaks
the very absence
of teaching this material that
I was referring to before.
If you actually read
Marx, and by the way,
it's not that difficult,
I guarantee you.
If you read Marx, you'll know
that he makes a distinction
between values and prices.
He talks about prices
and what causes them.
He talks about values, which
for him, are something else.
Nor is he the only major
economist who did that.
Smith and Ricardo also did that.
So he tried to use
his analysis of value
to say whatever
else a commodity is,
a thing produced
in capitalism, it
has in it a congealed
amount of labor.
Every society has
to make a decision,
whether it's conscious of it
or not, how much labor will
we allocate to making food, how
much will be made to clothing,
how much--
because you only have a
certain amount of labor,
and you have a set of desires.
And so every society allocates
labor one way or another.
For Marx, the value
of a commodity
simply meant the amount
of the total labor
a society had that was allocated
to the production of that good.
That's a definitional
logic, which he then
used to explain why
prices are what they are.
But there was no equation
of price to value.
Let me go back to the first
part of your question.
Has there been lots of criticism
of the labor theory of value?
Absolutely.
There's been lots of criticism
about virtually everything
Marx ever wrote, because of what
happened in the years since.
But that's true of
every theory of value.
For example, the
mainstream one that
is taught in the United
States has a different name.
I don't know if
you've heard of it.
It's called the utility
theory of value.
Things are valuable because
of the amount of utility
they provide to the consumer.
Try, please, to measure that.
Please, come on.
You're all smart folks.
You think that's an easier
concept to nail down,
the utility theory of value?
Exactly how much joy does that
ice cream provide for you?
How much money are you
willing to part with?
Will that vary with the
temperature outside?
Will it vary with the amount
of calories you're counting?
What?
Every economic theory begins
with a set of basic hypotheses
upon which it builds its system.
Marx started with
labor, because for him,
that was the key
variable to focus on.
Neoclassical economics,
which developed in the 1870s,
for those of you who know, was
itself a reaction against Marx.
They hated the labor
theory of value
because it was
associated with Marx.
They forgot, so let
me make sure you all
know, that Marx did not invent
the labor theory of value.
Marx took the labor
theory of value.
This may come as a shock to some
of you, but just do the work.
You'll learn.
Adam Smith and David
Ricardo, champions
of capitalism, that's where
the labor theory of value
comes from.
Marx thanked them
profusely for it,
and then uses it to do things
they never wanted to see done.
This happens often in science.
The people who
develop a concept then
get very upset with where
their students take it.
Marx was a student
of Smith and Ricardo,
took the labor theory
of value in a way
that was critical of capitalism.
They had used it to
celebrate capitalism.
But if you see a lot of
criticisms of the labor
theory of value, be careful.
What these are criticisms of,
because Marx's labor theory
of value is not the same as
Ricardo's and not the same
as Smith's, and has more to
do with this notion of how
labor is allocated in a
society than anything.
Marx was not-- let me
put it another way.
When I teach in the
American University system,
we begin by assuming
all students want
to understand the great
mystery of economics,
which is why is the price
of something what it is?
Why is the price of a hamburger
$5 and the price of a Mercedes
much more than that?
And we begin.
That's very nice.
Perfectly good to
make an economics
built on that question.
I'm going to now exaggerate,
but to make my point.
Marx wasn't interested in
that, and I'm not either.
I got many more
interesting things
I want to understand about
this economy than why
the prices of things
are what they are.
I understand if
you're a capitalist,
you are very concerned
about prices.
But if you're somebody else,
you might be interested,
but you might have much
higher priority subjects.
Marx is coming at it
with a different agenda,
and so he starts in
a different place,
then takes it in
a different way.
By the way, just a footnote for
some of you scholarly types.
In 2012, a colleague of
mine, Stephen Resnick and I,
we did a lot of work together,
published a book called
"Contending Economic Theories."
It was an attempt to create
for the English reading public
a book that
systematically compares
neoclassical Keynesian
and Marxian economics so
that a generation of students
would have something to find.
If you are at all
interested, that's
the title, "Contending Economic
Theories, Neoclassical,
Keynesian, and Marxian."
And the publisher is MIT Press
in Cambridge, Massachusetts.
Why MIT?
Because it is the home of the
most prestigious tradition
in economics, Paul
Samuelson, Robert Solo,
all kinds of people were there.
And we wanted very much to
introduce the profession
through a publisher
that they all
respect to deal with an
argument that most of them
do not understand.
AUDIENCE: Thank you.
So you make a point that
capitalism is going to die,
and we're probably going to
be better off if we kill it
sooner than let it die.
Now--
RICHARD WOLFF: You said that.
AUDIENCE: Sure.
That's my interpretation
of your work.
RICHARD WOLFF: Gotcha.
AUDIENCE: I'm a good student.
All right.
Now, you also said you
don't teach the generation
the issues.
And I'm curious about yourself.
Do you think there is potential
to get quicker to a better
solution if we were to
teach the younger generation
things properly
and make it clear.
And when I say
education, I'm not
talking about the education
of yesterday, [INAUDIBLE]..
I'm talking about the education
of today and tomorrow,
the YouTube and the like.
RICHARD WOLFF: Absolutely.
I couldn't say it as
strongly as I want to say it.
Yes, that's why I'm here.
That's what I now do.
I try to teach critical thinking
in the realm of economics.
Look, let me be as
blunt as I know how.
This country has been
like a bear hibernating
for half a century.
It's very serious.
For half a century,
since the 1950s,
end of World War II
basically, this country
has been so freaked out
about its Cold War struggles
with socialism, communism,
and all the rest
that it took the pathetic
position of a three-year-old.
You know, a three-year-old
sees a scary thing,
puts his or her hands in
front of his or her eyes,
and believes that the
scary thing is now gone.
And it takes a little
further maturity
to recognize that you
can put your hand there,
the thing's still there.
And when you move
your hand, boom.
We are in a society that
has not dealt seriously
with the criticism of
capitalism in 50 years.
I once had a graduate student.
I said, go read the
congressional record,
the literal record
of every debate
in the House of Representatives
in the Senate, and find me
a debate over the pros
and cons of capitalism.
Couldn't find it.
We have not allowed
a political leader,
we have not allowed
economics as a profession,
which is my profession,
to have people like me.
I'm gonna be real
personal and honest.
I'm a professor.
I have been a professor all
my life in the United States,
despite my criticisms.
And that's because I'm
like a game player.
When I'm in trouble and I need
help, I wave my pedigrees.
You all know what I mean.
I went to the right
schools, so I'm in the club.
Even though I say strange
things, I'm critical.
That's sad.
And our country
and our society are
weaker because we do not have a
tradition of critical thinking,
which we badly need
in a system that's
working as poorly as
the current one is,
and is likely to continue.
Those of you who
remember what I said,
that the average in the
history of capitalism
is four to seven years
since the last downturn,
our major downturn
was in 2008 and 2009.
Now you do the addition.
Four to seven years?
Uh-oh!
We're due for one.
And Wall Street waits one.
You think we have trouble in the
United States with Trump now?
Make Trump plus a recession
over the next 12 months,
and try to ask the
question again.
This is a system whose
instability rocks it.
And yes, I think education
that would open people
to the enormous, and productive,
and sophisticated literature
that explores these
critical perspectives would
be an enormous contribution
to solving the problem.
Yeah.
AUDIENCE: Thank
you for your talk.
I find it very refreshing,
because I'm from China.
And six years ago, when I
came to the United States,
I really hated my
country's system.
Now that I look back, I
see the great achievement
that my country has made, I
find that oh, probably there's
some problem in
the United States
or in the Western
world in general, which
is those capitalistic countries
have great economic systems,
but the political system
is really backward,
or it hasn't been
updated regularly.
So you can see this
from the amount of debts
that the United States has.
I think it's like 9
trillion US dollars.
In China, we have $4 trillion
US dollars in people's savings
as of now.
So the economy is
really booming.
But what I find in your
talk is, your perspective
is a little bit too extreme.
I think what my
country did well was
we find a really good balance
point between efficiency
and equality.
Actually, those two are
two different forces.
So if you have
better efficiency,
it's really hard to get quality.
So my question is, how
would you suggest--
in the current States,
you have this government.
You have this political
system in your hand.
How would you
suggest those people
who make those
decisions move forward
into more of an
appropriate point
where equality meets efficiency?
And if any one of you, if you
haven't been to China, please
go there.
It's an amazing world.
I wonder if you have
ever been to China?
RICHARD WOLFF: Not yet.
AUDIENCE: OK, I think
it's the right time
to visit China right now.
RICHARD WOLFF: Let me respond.
Some facts and then an
interpretation of what's
happening in your country.
Facts do underscore
what you have said.
For example, the real
wage in the United States
has been stagnant
now for 35 years.
Let me drive home what that
is, so you all understand.
Real wage in economics
is a very simple measure.
You take the amount of money
a person gets on average,
and you adjust it for the prices
that the person has to pay,
because obviously if you get 10%
more wages but all the prices
go up 10% you're not better off.
You can't buy any more with
your extra 10% of money
than you could before, because
the prices have gone up.
The term "real wage"
takes that into account.
So it measures what you
really can buy with whatever
the wages are that you get.
When you do that, the American
real wage over the last 35
years is the same.
I'm going to be
starker with you.
Real wages in the United
States are the same today
they were late in the 1970s.
The only reason
Americans have been
able to consume a rising
amount in the last 70 years
is because of two
things they did.
And for those of
you who don't know,
this is your life
I'm talking about.
Number one, a vast
social change happened.
And it is about
women, particularly
white in our country,
white women who
have left in the millions
lives as homemakers,
wives, mothers, and so on,
and become members of the paid
labor force, so much so that
your generation, I would guess,
simply assumes it.
But that's new.
That's how the family
had enough money
to sustain the illusion
that they were participating
in the American dream.
Because every household,
every married couple
now had a second
major money earner.
But it turned out
it wasn't enough.
It wasn't enough, because
when mother or wife went out
to work in massive numbers, she
needed her own outfit for that.
She needed a second
car, because we
don't do public transportation
in this country.
It's against our
religion, and so on.
That was an attempt at humor
there, what I just did.
OK.
So the second thing
American working class
did to sustain the illusion
was, you all know, debt.
We borrow for our house.
And we borrow for our car.
We borrow for the credit card.
And in a stunning innovation
of American capitalism
over the last 25
years, we borrow
to send our children
to college, producing
a level of indebtedness that is
explosive, and which explains
part of why we crashed
in 2008, and why it
is taking so long to recover.
We can't handle our
economic system.
By contrast, real wages in
China have increased many times
over the last 20 years.
There's no comparison.
The working class standard
of living in China
is zooming by
comparison to here.
China's GDP grows in the
neighborhood of six to nine,
depending on how you
count, percent a year.
We're lucky if we get to
2 to 3% year after year.
That's why the two economies
are getting closer and closer.
Because we're slow,
and they're fast.
Now, you can pretend
all you want.
And boy, Americans
are good at that.
But that's the reality.
And somewhere, you
have to deal with that.
Number two point in response.
China is taking advantage,
understandably, of something
much bigger than China.
There is a decision made in
the centers of capitalism
that the places in the world
where capitalism was born
and grew to its modern power--
and those places are Western
Europe, North America,
and Japan--
those places, as capitalism
grew in these areas
where it first got
going and became big,
and that's where it put
its industry, that's
where it put its warehouses,
that's where it's
put its offices and its stores.
It's what you all know.
You're living in New York.
But along the way, it had to
come to terms with the working
class.
And what it did was
offer them higher wages.
And so the wages here rose.
Not as fast as the
profits, but they
rose to keep the system going.
Because the inequality, if
you let it get too much,
blows the system up.
So a point was reached
around the 1970s
when something happened
to change everything.
American capitalists looked
at their working class,
paying them the
kinds of salaries
that enabled the American
working class to have
the standard of
living it enjoys.
But they also
discovered in the 1970s
the jet engine and modern
telecommunications.
And suddenly something
was possible that
had never been possible before
for corporations, capitalists.
To say to themselves the
following-- why the hell are we
in the United States, or
Britain, or France, or Japan?
We can now supervise production
in a factory in China,
or India, or Brazil with
modern telecommunications
as easily as we could
before supervise
the factory across the street.
And we can fly anywhere in the
world in a matter of hours.
So our managers can--
we don't need the American
working class, whom we overpay.
And we're out of here.
We're leaving.
Capitalism, over
the last 40 years,
has abandoned the countries in
which it was born and reached
its maturity.
And where did it go?
To the countries in the world
that gave the greatest reason
to bring them.
China, number one.
A disciplined working class,
a pretty well educated working
class, a politically
controlled working class,
and cheap working class,
by comparison to the West.
And of course, the
capitalists maximizing profit,
because that's what this
system works with, they went.
They're still going
in massive numbers.
China is where
capitalism is succeeding.
And we here in America are
facing a very, very traumatic
problem.
Our capitalism is declining.
There are pockets that are not.
Google's probably one of them.
But the larger society in
which Google too has to survive
is a society that
is experiencing
cutbacks of job opportunity,
cutbacks of income,
cutbacks of government services.
Everywhere, Western
Europe, and North America,
and Japan, the political
implications we're
just at the beginning
of understanding,
but it's going to traumatize
and trouble all of our lives
for the rest of our lives.
China is where
capitalism is new, where
it's going, where it's growing.
We live in a part of the world
of capitalism where it isn't.
And that we are
not prepared for,
because that no one has
prepared the American people
or the people of
Western Europe or Japan.
Which is why the
trauma of politics
is becoming so turbulent,
as this is slowly
dawning on people.
And they look to blame somebody.
A favorite one is, of
course, immigrants!
Let's pretend it's all them
who somehow are to blame.
We'll just kick them out!
It won't solve anything.
We'll kick out the
old politicians
and bring in Mr. Trump.
Doesn't solve anything either.
Dump Mr. Trump?
It won't solve anything either.
Because you're not dealing
with what the underlying
realities are that have
provoked all of this situation.
But I do believe
that China is mostly
the beneficiary of the
transformation of capitalism,
and will suffer.
It's already suffering,
but will suffer
as capitalism moves its center
to those parts of the world it
brings with it all of the
history of turbulent class
struggles that we know
from what happened
in Western Europe, North
America, and Japan.
So I would be a
little more cautious
about the future of
Japan, but without denying
that they are where
capitalism is it ebullient,
where capitalism is growing.
We aren't.
We only sustained the
illusion the last 40 years
by having women go
to work and borrowing
like there's no tomorrow.
But you don't need an
advanced degree in economics
to understand if
the wages are flat,
the real wage that
American working class has,
while it borrows more
and more, a day will
come when you don't have enough
wealth to service the debt
to pay it off.
And when that
happens, it crashes,
and that's what 2008 was.
If capitalism was what's coming
to China, as I believe it is,
both Chinese and foreign,
then the instabilities
and inequalities of
capitalism everywhere else
will descend upon China too.
Just a footnote.
Last year, there were more
new millionaires in China
than there were
the United States.
This is in a country that's much
poorer than the United States.
You've got to wonder
where does that go?
But that's the typical
story of capitalism.
SPEAKER: Wait, I'm sorry.
We don't have time
for more questions.
RICHARD WOLFF: OK.
SPEAKER: Thank you for coming.
RICHARD WOLFF: Thank
you all very much.
[APPLAUSE]
SPEAKER: I wanted to
mention, we do have books--
"Democracy at Work."
