PRESIDENT OBAMA: Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to nine dollars an hour.
BILL MOYERS: But as the economist Dean Baker points out this week, “If the minimum wage had risen in step with productivity growth it would be over $16.50 an hour today.” We talk a lot about what’s happening to the middle class, but the American Dream’s really become a nightmare for the poor. Just about everyone has an opinion about the trouble we’re in – the blame game is at fever pitch in Washington, where obstinate Republicans and hapless Democrats once again play kick-the-can with the problems we face. You wish they would just stop and listen to Richard Wolff.
An attentive and systematic observer of capitalism and democracy, he taught economics for 25 years at the University of Massachusetts and has published books such as “Democracy at Work,” “Occupy the Economy,” and “Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.” He’s now visiting professor at The New School University here in New York City where he’s teaching a special course on the financial crash. Welcome, Richard Wolff.
RICHARD WOLFF: Thank you, Bill.
BILL MOYERS: Last night, I watched for the second time the popular lecture that is on this DVD, “Capitalism Hits the Fan.” Tell us why you say capitalism has hit the fan?
RICHARD WOLFF: Well, the classic defense of capitalism as a system from much of its history has been, okay, it has this or that flaw. But it quote, unquote, “delivers the goods.'”
BILL MOYERS: Yeah, for most everybody.
RICHARD WOLFF: Right.
BILL MOYERS: That was the argument.
RICHARD WOLFF: And so you may not get the most, but it’ll trickle down to you, all the different ways—
BILL MOYERS: The yachts will rise.
RICHARD WOLFF: That’s right. The ocean will lift all the boats. The reality is that for at least 30 years now, that isn’t true. For the majority of people, capitalism is not delivering the goods. It is delivering, arguably, the bads. And so we have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, but a growing majority in this society which isn’t getting the benefit, is in fact, facing harder and harder times. And that’s what provokes some of us to begin to say, “It’s a systemic problem.”
BILL MOYERS: So we put together some recent headlines. The merger of American and US Airlines, giving us only four major airlines and less competition. Comcast buying NBC Universal, also reducing competition. The very wealthy getting a trivial increase in taxes while the payroll tax of working people will go from 4.2 percent to 6.2 percent. Colossal salaries escalating again, many subsidized by tax breaks and loopholes. The postal service ending service on Saturday. What’s the picture you get from that montage of headlines?
RICHARD WOLFF: Well, for me it is captured by the European word “austerity.” We’re basically saying that even though the widening gap between rich and poor built us up, many of the factors that plunged us into a crisis, instead of dealing with them and fixing that problem, we’re actually allowing the crisis to make the inequality worse.
The latest research from the leading two economists, Saez from the University of California in Berkeley, and Piketty in France confirms that even over the last five years of the crisis, through 2012, the inequality of wealth and income has gotten worse, as though we are determined not to deal with it. All of those headlines you talked about are more of that.
I mean, the astonishing capacity to make it harder for people to have a delivery of their mail on Saturday, to save what is in a larger picture, a trivial amount of money, but that will really impact– thousands of people will lose their jobs, everyone will lose a service that is important, particularly in smaller places around the United States that are not served by anything comparable to the Post Office.
And then as you pointed out, and I have to say a word about it, this amazing display in which we raise the top income tax on the richest people from 35 percent to 39.6 percent only for those over $450,000 a year, while for the 150 million Americans who get a weekly or a monthly check, their payroll tax went up a whopping 48 percent from 4.2 to– this is so grotesque an inequality that you’re watching a process that is sort of spinning out of control in which those at the top have no limits, don’t recognize any constraint on how far they can take it.
BILL MOYERS: If workers at the bottom get the increase in the minimum wage that President Obama proposed in his State of the Union message, they will still be faring less well than their counterparts did 50 years ago.
RICHARD WOLFF: That’s right.
BILL MOYERS: What does that say to you?
RICHARD WOLFF: The peak for the minimum wage in terms of its real purchasing power was 1968. It’s been basically declining with a couple of ups and downs ever since. So that if you adjust for the current price, the minimum wage was about $10.50 roughly, back in 1968 in terms of what it could buy.
And it’s $7.25 today in terms of what it can buy. So you’ve taken the folks at the bottom, the people who work hard, full-time jobs, and you’ve made their economic condition worse over a 50-year period, while wealth has accumulated at the top. What kind of a society does this? And then the arguments have come out, which are in my profession, a major staple for many careers, are arguments that, “Gee, if you raise the minimum wage, a few people who might’ve otherwise gotten a job won’t get it because the employer doesn’t want to pay the higher wage.”
Well, if that logic is really going to play in your mind, then you should keep lowering the wage. Because if you only made it four dollars an hour, just think how many more people could get a job. But a job under conditions that make life impossible.
BILL MOYERS: Who decided that workers at the bottom should fall behind?
RICHARD WOLFF: Well, in the end, it’s the society of the whole that tolerates it. But it was Congress’s decision and Congress’s power to raise the minimum wage, as has happened from time to time.
Even this time, not to be too critical of our president, but when he was running for office, he proposed a $9.50 minimum wage. Here we are in the beginning of his second term, and something has happened to make him only propose a nine dollar minimum wage. So even he is scaling down, perhaps for political reasons, what he thinks he can accomplish. When, if we just wanted to get it back to what it was in 1968, it would have to be $10 or $11 an hour.
BILL MOYERS: Many economists say, “We just can’t do that because it would be devastating.”
RICHARD WOLFF: Well, the truth of the matter is that there’s an immense economics literature, I’m a professional economics person, so I’ve read it. And the literature goes like this. On the one hand, there may be some jobs that are lost because an employer having to pay a higher minimum wage, will not hire people or will hire fewer. That will happen in some cases. But against that, you have to weigh something else. If the 15 million, that’s the estimate of the White House, the 15 million American workers whose wages will go up if we raise the minimum wage, we have to count also, the question, those people will now have a higher income.
They will spend more money. And when they spend more money on goods and services, that will create jobs for people to produce those goods and services. In order to understand the effect of raising the minimum wage, you can’t only look at what will be done by some employers in the face of a higher wage in lowering the employment. You have to look at all the other effects.
And when economists have done that, economist from a wide range of political perspectives, you know what they end up with? There’s not much effect. In other words, the two things net each other out and so there isn’t much of a change in the employment situation overall. To which my response is, “Okay, let’s assume that’s correct. At the very least though, we have transformed the lives of 15 million American working people and their families from one of impossible to get most of what America offers, to a situation where at least you’re closer to a decent minimum life.”
BILL MOYERS: Are you suggesting then that there is no economic reason why those at the bottom should not share in the gains of economic growth?
RICHARD WOLFF: Absolutely. There is no economic reason. And in fact, I would go further. We know, for example, that the lower the income of a family, the more likely it is to cut corners on the education of their children because they don’t have the resources. So here’s an unmeasurable question about the minimum wage.
How many young people who are born into a minimum wage family, that is it’s so low as we have it today, will never get the kind of educational opportunities, the kinds of educational supports, to be able to realize their own capabilities and to contribute to our society? That alone is a reason, whether you think of it in terms of the long-term benefit of the country, or you just approach it as a moral question or an ethical question. By what right do you condemn a whole generation of young people to be born into families whose financial circumstances make so much of what they need to become real citizens impossible?
BILL MOYERS: You remind me of something that President Obama said in his second inaugural address.
PRESIDENT OBAMA: We are true to our creed when a little girl born in the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American. She is free and she is equal. Not just in the eyes of God, but also in our own.
BILL MOYERS: That’s eloquent, but hardly true.
RICHARD WOLFF: That’s right. And it’s painful for some of us to hear that, because it is so obviously untrue. It is so obviously contradicted by the realities, not just of those who work at the minimum wage, but all of those who work at or even at 50% above what we call the poverty level. Because when you look at what families like that can actually afford, they have to deny huge parts of the American dream to their children and to themselves as a necessary consequence of where they are put.
And I don’t need to be an economist to put it as starkly as I know how. We can read every day that in the major cities of the United States, apartments are changing hands for $10 million, $20 million, $30 million, $40 million. People have enormous yachts that they cruise — we all see it. We all know it. We even celebrate it as a nation. How does that square with millions of people in a position where they can’t provide even the most basic services and opportunities?
We don’t have equality of opportunity. Because there is no shortcut. If you want equality of opportunity, you’re going to have to create equality of income and wealth much closer to a genuine equality than anything– we’re going in the other direction. And so I agree with you. It’s stark if our president talks about something so divergent from the reality.
BILL MOYERS: When study after study has exposed the myth that this is a land of opportunity, how does the myth keep getting perpetuated?
RICHARD WOLFF: Well, my wife is a psychotherapist. And so I ask her that question often. And here’s what she says to me. Often, people cling all the harder to an idea precisely because the reality is so different and becoming more different. In other words, I would answer the myth of equal opportunity is more attractive, more beautiful, more something people want to hold on, the more they know it’s slipping away. And they would like to believe that this president or any president who says it, might somehow bring it back.
BILL MOYERS: When you say that there’s no economic argument that people should be kept at the– should not share in the gains of economic growth, the response is, “Well, that’s what the market bears.”
RICHARD WOLFF: Well, you know, in the history of economics, which is my profession, it’s a standard play on words. Instead of talking about how the economy is shaped by the actions of consumers in one way, workers in another way, corporate executives in another way, we abstract from all of that and we create a myth or a mystique. It’s called the market.
That way you’re absolving everybody from responsibility. It isn’t that you’re doing this, making that decision in this way, it’s rather this thing called the market that makes things happen. Well, every corporate executive I know, knows that half of his or her job is to tweak, manipulate, shift, and change the market.
No corporate executive takes the market as given. That may happen in the classroom, but not in the world of real business. That’s what advertising is. You try to create the demand, if there isn’t enough of it to make money without doing that. You change everything you can. So the reference to a market, I think, is an evasion.
It’s an attempt to make abstract the real workings of the economy so nobody can question what this one or that one is doing. But let me take it another way. To say that it’s the market is another way of saying, “It’s our economic system that works that way.” That is a very dangerous defense move to take.
BILL MOYERS: Why?
RICHARD WOLFF: Because it plays into the hands of those like me who are critical of the system. If indeed it isn’t this one or that one, it isn’t this company’s strategy or that product’s maneuver, but it is the market, the totality of the system, that is producing unconscionable results, multi-million-dollar apartments next door to abject poverty, then you’re saying that the system is at fault for these results.
I agree with that. But I’m not sure that those who push this notion of “the market makes it happen,” have thought through where the logic of that defense makes them very vulnerable to a much more profound critique than they will be comfortable with.
BILL MOYERS: You graduated from Harvard.
RICHARD WOLFF: Right.
BILL MOYERS: Then Stanford.
RICHARD WOLFF: Right.
BILL MOYERS: Then Yale.
RICHARD WOLFF: That’s it.
BILL MOYERS: Was this the economy you were taught at those three elite institutions to celebrate?
RICHARD WOLFF: No. No, this is the economy that I came to understand is the reality. For me, and I learn things at all those institutions, it’s not that. I came to understand that in America, economics is a split, almost a schizophrenic kind of pursuit. And let me explain. On the one hand, there are the departments of economics in colleges and universities across America.
But side by side with them is an entire other establishment that also teaches economics. You don’t have that in other disciplines. There aren’t two history departments or two anthropology departments, or two philo– so what is this? I looked into this. It’s because there are two separate functions performed by the economics departments and then by the other ones.
And the other ones are called business schools and business departments. In fact, in most universities, in all those I’ve been at, the economics department is in one set of buildings, and across the campus in another is the business school. And there’s actually tension in the university about who teaches the basic courses to students that they’re required to take and so on.
Here’s what I discovered. The job of economics, to be blunt but honest, is to rationalize, justify, and celebrate the system. To develop abstract theories of how economics works to make it all like it’s a stable, equilibrium that meets people’s needs in an optimal way. These kinds of words are used. But that’s useless to people who want to learn how to run a business, because it’s a fantasy.
So they are shunted someplace else. If you want to learn about marketing, or promotion, or advertising, or administration, or personnel, go over there. Those people teach you how the economy actually works and how you’ll have to make decisions if you’re going to run a business. Over there, you learn about how beautiful it all is when you think abstractly about its basic principles.
BILL MOYERS: The invisible hand.
RICHARD WOLFF: Yeah.
BILL MOYERS: The market.
RICHARD WOLFF: All of that. So for me, I began to realize, “Okay, I’m an economist. I’m in that one. But I want to understand how the real economy works.” And then I discovered that I needed to reeducate myself. I had to go learn things that I was never assigned to read.
BILL MOYERS: After Harvard? After Stanford? And after Yale?
RICHARD WOLFF: It actually happened while I was there. I was already, there were a few people–
BILL MOYERS: –as heretics.
RICHARD WOLFF: Yes, they do.
BILL MOYERS: A few.
RICHARD WOLFF: You know, but you know, capitalism– I like to say to people, capitalism, like all systems, when it comes into being, is born a few hundred years ago in Europe and spreads around the world, like other systems before it. It has always produced those who admire and celebrate it and those who are critical of it.
I used to say to my students, “If you want to understand the family who lives down the street, suppose there’s mama, papa, two children. And one of the children thinks it’s the greatest family there ever was, and the other one is quite critical. If you want to understand the family, do you choose only one child to interview, or do you think it might be wise to interview both of them?”
For me, I began to interview the critics of capitalism, because I thought, “Let’s see what they have to say.” And that for me opened an immense door of critical insights that I found invaluable. And I’ve never forgiven my teachers for not having exposed me to that.
BILL MOYERS: But so few have done that. As you know, as you’ve written, as you have said, we’ve not had much of a debate in this country for, I don’t know, since the Great Depression over the nature of the system, the endemic crisis of capitalism that is built into the system. We have simply not had that kind of debate. Why do you think that is?
RICHARD WOLFF: Well, I think we have had it from time to time. We have had some of the greatest economists in the tradition, for example, Thorstein Veblen, at the beginning of the 20th century, a great American economist, very critical of the system. Someone who taught me, Paul Sweezy, another Harvard graduate. These are people who have been around and at various times in our history, the beginning of the 20th century, during the 1930’s, again in the 1960’s, there was intense debate.
There has been that kind of thing in our history. I mean, we as Americans, after all, we take a certain pride, which I think is justified, we criticize our school system. We just spent two years criticizing our health delivery system in this country. We criticize our energy system, our transportation system.
And we want to believe, and I think it’s true, that to criticize this system, to have an honest debate, exposes flaws, makes it possible to repair or improve them, and then our society benefits. But then how do you explain, and that’s your question, that we don’t do that for our economic system?
For 50 years, when capitalism is raised, you have two allowable responses: celebration, cheerleading. Okay, that’s very nice. But that means you have freed that system from all criticism, from all real debate. It can indulge its worst tendencies without fear of exposure and attack. Because when you begin to criticize capitalism, you’re either told that you’re ignorant and don’t understand things, or with more dark implications, you’re somehow disloyal. You’re somehow a person who doesn’t like America or something.
BILL MOYERS: That emerged, as you know, in the Cold War. That emerged when to criticize the American system was to play into the hands of the enemies of America, the Communists. And so it became disreputable and treasonous to do what you’re doing today.
RICHARD WOLFF: And for my colleagues, it became dangerous to your career. If you went in that direction, you would cut off your chances of getting a university position or being promoted and getting your works published in journals and books, the things that academics need to do for their jobs. So yes, it was shut down and shut off. And I think we’re living the results. You know, if I were–
BILL MOYERS: Of the silence? Of–
RICHARD WOLFF: Yes. Of the lack of debate. We’re living in an economic system that isn’t working. So I guess I’m a little bit like one of those folks in the 12-step programs. Before you can solve a problem, you have to admit you got one. And before we’re going to fix an economic system that’s working this way, and producing such tensions and inequalities and strains on our community, we have to face the real scope of the problem we have. And that’s with the system as a whole and at the very least, we have to open up a national debate about it. And at the most, I think we have to think long and hard about alternative systems that might work better for us.
BILL MOYERS: I was intrigued to hear you say elsewhere that this is not just about evil and greed. And yet you went on to say capitalists and the rich are determined not to bear the costs of the recent bailouts or the crisis itself. You even go so far as to suggest, as to question their patriotism, and that they may not have the country’s interest at heart. If that’s not greed, what is it?
RICHARD WOLFF: Oh, I think it isn’t greed. It’s– and let me explain why. Yes, I’m critical of corporations and the rich because they do call the shots in our society, and so that brings on them a certain amount of criticism, even though they don’t like it. So I will do that. But beyond that, let me absolve them in the following way. Bankers do what this system goads them to do.
If you talk to a banker, he or she will explain to you, “These are the things that will advance the interests of my bank. These are the problems I have to overcome. And that’s what I try to do.” And my understanding, and I’ve looked at this in great de– is that– that’s correct. They’re not telling a story. They’re doing. They’re following the rules. They do the things that advance their interests and they avoid the things that would damage their interests.
That’s what they’re hired to do as executives or as leaders of their institutions. And that’s what they do to the best of their ability. So for example, I’m not enthused about arresting these people or punishing them in this or that way. And the reason is simple, if we get, I won’t mention any names, but we get some banker and we haul him up in front of a court, and we find out he’s done some things that are not good.
And we substitute the next one. He gets arrested though, he gets fined, he gets removed. The next one is subject to the same rewards and punishments. The same inducements. The same conditions. If we don’t change the system, we’re not going to change the behavior of the people in it. So in a sense, I do absolve them even when they are greedy, because they’re doing what this system tells them to do. And if we don’t change the system, substituting a new crop will not solve our problem.
BILL MOYERS: You’re also not enthused about regulation, which is what so many liberals and others are calling for now. Is there some parallel reason for that?
RICHARD WOLFF: Yes. I find it astonishing to hear folks talk about regulation. We regulated after every one of our great panics in the 19th century. By the way, in those years, we were more honest. We didn’t refer to a “Great Recession.” We used much more colorful language, “The panic of 1857.” I mean, that describes what people felt. Anyway, after every one of our panics, crises, recessions, depressions, we have regulated. And the regulations were always defended, first by lower-level officials and eventually by the president and the highest authorities, usually on two grounds. “With this regulation, not only will we get out of the crisis we’re in, but,” and there was a pregnant pause, “we will prevent a recurrence of this terrible economic dilemma.” It never worked. The regulations never delivered on that promise. We’re in a terrible crisis now. So all the previous promises about all the previous regulations didn’t work. And they didn’t work for two reasons.
BILL MOYERS: Yeah, why?
RICHARD WOLFF: Either the regulations that were passed were then undone, or they were evaded. And that’s the history of every regulation. During the Great Depression, it was decided, as it has happened again now, that banks behaved in an unfortunate way that contributed to the crisis.
So in the Great Depression, a bill was passed, a regulation called the Glass-Steagall Act, 1933 Banking Act, which basically said, “There has to be two kinds of banks, the banks that takes deposits cannot make risky investments. For that we need something separate called an investment bank. The first thing will be a commercial bank, takes deposits, and we’ll make a wall between them.”
Okay. The bill was passed. For the banks, this was trouble. This was a problem. They didn’t like this. So they spent the first 30 years, 20 to 30 years evading it in a hundred different stratagems. Meanwhile, they began to realize that with some work with politicians, they could weaken it.
And after a while, they decided that even better than evading and weakening, why don’t we just get rid of it? And so in the 1990s, they mobilized, led by some of our biggest banks, whose names everybody knows, and they finally succeeded. The Congress repealed the Glass-Steagall Act, and President Bill Clinton signed the repeal.
BILL MOYERS: It was a bipartisan repeal.
RICHARD WOLFF: Right. It’s a joke. That allowed the banks to make risky bets with their depositor’s money. Eight years later, our financial system collapsed. It’s like a joke. This is a system that creates in the private enterprise a core mechanism and a logic that makes them do the very things that need regulation and then makes them evade or undo those regulations.
BILL MOYERS: You probably saw the recent story that Facebook, which made more than one billion dollars in profits last year, didn’t pay taxes on that profit. And actually got a $429 million rebate from you and me and all those other taxpayers out there. GE, Verizon, Boeing, 27 other corporations made a combined $205 billion in profits between 2008 and 2011 and 26 paid no federal corporate income tax. What will ultimately happen, Richard if the big winners from capitalism opt out of participating in the strengthening, nurturing, and financial support of a fair and functioning society?
RICHARD WOLFF: Well, the worst example I just learned about a few days ago. And I got it actually from Senator Bernie Sanders from Vermont. That during the very years 2009, ’10, ’11, that the federal government was basically bailing out the biggest banks in the United States, they were busily establishing or operating subsidiaries in the Cayman Islands, in the Caribbean, in order to evade taxes.
And it’s a wonderful vignette in which the very government pouring money to salvage these private capitalist institutions is discovering its own revenue from them being undone by their evasion of the regulations about income tax by moving to Cayman Islands where the corporate tax is zero instead of paying their corporate tax in New York or wherever they’re based.
BILL MOYERS: Your assumption that runs through your books, through your teaching, through this very interesting DVD, is that democracy, theoretically if not practically, but you hope practically, acts as a brake, B-R-A-K-E, a brake on private power and greed. And it’s clear that that brake doesn’t work anymore. That it’s not slowing down the growth of power to the capitalist class.
RICHARD WOLFF: Right. And I think it’s very poetic here in the United States. In the 1930s, when we after all had a crisis even worse than the one we had now by most measures, higher unemployment, and greater incidents of poverty and so on, we did still have a political system that allowed pressure from below to be articulated politically.
We had the greatest unionizing drive in the history of the United States, the CIO. We had strong socialist and communist parties that work with the CIO, that mobilized tens of millions of people into unions who had never been in unions before. And they went to the power structure at the time, President Roosevelt as its emblem.
And they said, “You have to do something for us. You just have to. Because if you don’t, then the system itself will become our problem. And you don’t want that. And many of us in the union movement don’t want it either.” Although some of the Socialists and Communists might have been quite happy to go that direction. And I think Roosevelt was a genius politician at that time.
He understood the issue. He went to the rich and the corporations of America, the top, who had become very wealthy at that time, and he basically said to them, “You must give me, the president, the money to meet at least the basic demands of the massive people to be massively helped in an economic crisis. Because if you don’t, then the goose that lays your golden egg will disappear.”
And he split the corporations and the rich. Half of them were not persuaded. And I believe they represent the right wing of the Republican Party to this day. But the other half were. And they made the deal. And so we had this amazing thing. Politics, the threat of the mass of people from below to politically act to change the system led us to see something we’ve almost unimaginable today.
A president, who in the depths of the Depression, creates the Social Security System, giving every American who’s worked a lifetime of 65 years a check for the rest of their life every month. He created unemployment compensation to give those millions of unemployed a check every week. And then to top it off, he created and filled 12.5 million federal jobs because he said, “The private sector either can’t or won’t do it.”
So in the midst of a terrible depression, when every level of government says, “There’s no money,” Mr. Roosevelt proved there is the money. It’s just a question of whether you have the political will and support to go get it. And when people listen to me explain this history, and it’s always amazing to me how many Americans kind of never got that part–
BILL MOYERS: Don’t know it.
RICHARD WOLFF: But when I do that, and they say, “Well, that’s a very risky thing for a politician to do, support the mass of people by taxing the rich, unthinkable.” And then I remind them, Roosevelt is the most popular and successful president in American history. Nobody had ever been elected four times in a row before that.
And it was so upsetting to the Republicans that after Mr. Roosevelt died, they pushed that law through that gives us a term limit of two presidential terms. So it wasn’t the end of his political career, it made him the most powerful popular president we’ve ever had. There must be a lesson here somewhere.
BILL MOYERS: Well, it was one of the few times in history in which the political elite and a few financial elite formed an alliance for the people.
RICHARD WOLFF: Right.
BILL MOYERS: And yet, Richard, it still took the war the create the spending that pulled us out of the depression, right?
RICHARD WOLFF: Right. Because they were always large groups of corporations and the rich who were angry at all of this, like they are today, who didn’t want to pay higher taxes, much higher than corporations pay today, who didn’t want to pay high personal income tax rates, much higher than they are today. But they had to. Right, people don’t remember in 1943, President Roosevelt proposed a top income tax bracket of 100 percent.
BILL MOYERS: Yeah.
RICHARD WOLFF: His bill that he sent to the Congress, a proposal, was that anyone who earns over $25,000, which would be roughly $350,000 a year now, in current dollars, would have to give every nickel of it, beyond the $25,000, to the government, 100 percent. That’s maximum income. The President of the United States, with massive popular support. And when the Republicans said, “No, we can’t do that.” They fought. And the compromise was a 94 percent top rate.
RICHARD WOLFF: Compared to the 39 percent, and .6 percent that we have today. I mean, you can see there that that– that was a lesson. That I believe the corporations and the rich in America have learned. They saw that they were forced between two choices. A real revolutionary possibility, or a compromise. They voted for the compromise. They gave the mass of people real support, far better than anything they’re getting now.
And they did that because politics was a real possibility to undo their economic system. After the war, I think our history is the history of a destruction of the Communist and Socialist parties first and foremost, and of the labor movement shortly thereafter. So that we now have a crisis without the mechanism of pressure from below. And that may look to those on top as an advantage because they don’t have that problem.
They don’t have a C.I.O. They don’t have Socialists and Communists, the way they do in Europe. But I think it’s a Pyrrhic victory, because what you’re teaching the mass of the American people is that politics, debate, and struggle, is a dead end. And if you think people are just going to sink into resignation, that’s wishful thinking. They’re going to find other ways to protest against the system like this, because the pressures are building in that direction. I think this is a capitalism that I would say has lost its sense of its social conditions, its social limits. It’s killing the mass support without which it cannot survive.
So it is creating tensions and hostilities that will take left wing, right wing, a variety of forms. But it’s producing its own undoing and doesn’t imagine it because it focuses so much on making more money in a normal way of business that it somehow occludes from itself. It doesn’t see the larger social conditions and what its behavior is doing to them.
BILL MOYERS: For a moment, wasn’t there kind of quirky or eccentric symbiosis between the Tea Party and Occupy Wall Street? That, ’cause in their own different ways, they were reacting to the colossus that was coming apart all around them. And upending their lives.
RICHARD WOLFF: Absolutely. I think in country after country going through this crisis, you’re seeing more or less the same thing. A upsurge of right wing agony and hostility and opposition to what’s happening in this capitalist system and a left wing one. But only difference from country to country is the balance between the two.
And I think the Tea Party comes first because being a right wing party in this country’s much easier, much more socially acceptable to form, and there’s the old roots of it, anyway, in the John Birch societies and all the rest in American history. So we have a Tea Party resurgence.
Then echoed a couple years later by the Occupy Wall Street, which is a left wing response to all of this. And I don’t think we’ve seen the end of either of these. I think these were the first explosions of this process, the first reflections and signs of a society coming apart because capitalism can’t deliver the kind of society and results that people want. And I think we’re going to see more of it and there may be difficult forms of it. But it is part of a system that has come, I think, closer and closer to its historical if not end, then a severe crisis.
BILL MOYERS: But there is no agitation here. People seem not to know what to do here.
RICHARD WOLFF: I think Americans are a little bit like deer caught in the proverbial headlights. They thought that they were in a society that kind of guaranteed that each generation lives better than the one before.
That the American dream gets better and better and is available. They promised when they got married to one another to provide the American dream to each other. And then they promised their children to provide it to them, that the children would have a good education, that children would have the opportunity. They can’t quite believe that it’s not there anymore.
You know, for 30 years, as the wages in America stopped rising since the 1970s, Americans reacted by doing two things. Because they couldn’t give up the idea that they were going to get the American dream. How do you buy the American dream, which becomes ever more expensive, if your wages don’t go up, per worker, per hour? Which they haven’t since the ’70s.
The first thing you do is send more and more people out to work. The women went out in vast numbers. Older people came out of retirement. Teenagers did more and more work. Here’s a statistic. The OECD, leading agency gathering data on the world’s developed economy shows that the average number of hours worked per year by an American worker is larger than that of any other developed country on this planet.
We work ourselves like crazy. That’s what you do if the wages per worker don’t go up. You send out more people from the family in order to be able to get that American dream. But of course if you do that, everybody’s physically exhausted.
The stresses in your family become more powerful. What’s happened to American families is a well-known result over the last 30 years. But the other interesting thing, to hold onto the American dream that Americans did when their wages didn’t go up anymore, was to borrow money like it’s going out of style.
You cannot keep borrowing more and more if your underlying wage is not going up. Because in the end, it’s the wage that enables you to pay off what you’ve borrowed. And it was only a matter of time, and 2007 happened to be that time, when you couldn’t do it anymore. You couldn’t borrow anymore because you couldn’t pay it back.
And so you stopped your mortgage or you stopped your credit card payment or you couldn’t make your car payments. And this is a situation that explodes the expectations of a good life. And I think Americans are stunned. And they haven’t yet kind of gotten their heads and their arms around the reality they face. And so what– we see people in shock, if you like. I mean, I’m stretching the metaphor, but–
BILL MOYERS: That’s all right.
RICHARD WOLFF: The American dream that they thought they could access, that they were told they could access, if they just worked hard or went to school or both of the– it’s not there. A whole generation of young people is learning that in order to get the education, without which the American dream is not possible, you have to borrow so much money that your whole situation is put in a terrible vice.
Then you discover, at the end of your four years and you have your bachelor’s degree, that the job you had thought you were then entitled to and the income you thought would go with it, they’re not there. And yet you have the debt, the effects of this on our society, not just for the young people confronting it daily, but for the parents who helped them, who led them to expect something, that is producing a kind of stasis, immobility, shock.
But beware, if my psychiatrist wife is right, as she usually is, what happens after that period of stasis, of shock, is a boiling over of anger, as you kind of confront what has happened. And that you were deceived and betrayed in your expectations, your hopes. And then the question is, where does that go?
BILL MOYERS: I’m struck by the fact that you give a fairly dire– not fairly, a dire analysis of what’s happened to us in the last several years. But at the end of both your book and of your lecture, you don’t wind up cynical or pessimistic. You–
RICHARD WOLFF: Not at all.
BILL MOYERS: You sound like you’re saying, “Let’s take to the barricades.”
RICHARD WOLFF: Yeah. I think there’s a wonderful tradition here in the United States of people feeling that they have a right, even if they don’t exercise it a lot, to intervene, to control. There is that democratic impulse. And I put a lot of stock in the hope that if this is explained, if the conditions are presented, that the American people can and will find ways to push for the kinds of changes that can get us out of this dilemma. Even if the political leaders who’ve inherited this situation seem stymied and unable to do so.
BILL MOYERS: Richard, I want you to come back in a few weeks. Before you come back, I want to alert our of readers of our website, have them submit some questions. You’ve opened so much of it, I know they’ll have some questions.
RICHARD WOLFF: Well, I’ll–
BILL MOYERS: But I’ll bring them here and we’ll deal with this. ‘Cause I know you have some alternatives, that you’ve given a lot of thought to the critique, but you’ve also given a lot of thought to the correcting of our system. And will you do that?
RICHARD WOLFF: I would love to, because one of the things that has happened to me in the last two years is as we’ve developed the criticism and people see the process of how we got here, the most insistent questions is, “What do we do? Where do we go? If regulation isn’t the solution and if punishing this one– if it is a systemic process, how can we conceive and talk about an alternative system?”
RICHARD WOLFF on Moyers & Company: For the majority of people, capitalism is not delivering the goods. It is delivering, arguably, the bads. And so we have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, but a growing majority in this society which isn’t getting the benefit, is in fact, facing harder and harder times. And that’s what provokes some of us to begin to say it’s a systemic problem.
BILL MOYERS: My conversation with Richard Wolff opened such a world of ideas that on the spot I asked him to return – and I asked you to send us the questions you’d like to put to him. Your response was as overwhelming as it was smart and informed. Just take a look at some of the letters we printed out from our website, billmoyers.com. Thanks to everyone who wrote. We’ll get to some of these in just a minute – and to even more of them with Richard Wolff in a live chat next Tuesday at our website, billmoyers.com.
Richard Wolff taught economics for 35 years at the University of Massachusetts and is now a visiting professor at the New School University here in New York City teaching a special course on the economic meltdown. His books include Democracy at Work: A Cure for Capitalism and Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It. Welcome back, Richard.
RICHARD WOLFF: Thank you Bill.
BILL MOYERS: Let’s move on to questions from the viewers who tuned into our conversation three weeks ago, hundreds of them responded.
Here’s Michael from Tulsa, Oklahoma.
MICHAEL: Professor Wolff, what can we as individuals in communities do to regain control of our economic destiny?
RICHARD WOLFF: We have an old tradition in the United States of doing things in a cooperative way. We celebrate it with phrases like team spirit or team effort. It’s the idea that a project will be better done if everybody has an equal stake and an equal say in the decisions that will determine the outcome. I like that idea, I believe it has a lot to do with our commitment to democracy.
So my answer to the question is we ought to have much more democratic enterprise. We ought to have stores, factories and offices in which all the people who have to live with the results of what happens to that enterprise participate in deciding how it works.
BILL MOYERS: That’s the subject of your book, “Democracy At Work: A Cure for Capitalism.” And we will come back to it in a few minutes. Here is Jose from Naples, Florida and Kristin from Joplin, Missouri.
JOSE: Professor Wolff. On the last show you mentioned how you were against regulation. I agree with you on the most part that regulation has been a failure. What would be your alternative to regulation?
KRISTIN: Without regulation how do we respond to widening economic disparity in our society?
BILL MOYERS: You said last time you were skeptical about regulation because the regulated found ways to evade, overcome or negate it.
RICHARD WOLFF: Yes, skepticism is the politest way I know how to say this. I think that we have now learned in our society that regulating big corporations and regulating wealthy folks is an exercise in futility. It’ll work for a while, but those folks have the incentive and the resources to work around it, to evade them.
BILL MOYERS: The hearings last week. JPMorgan–
RICHARD WOLFF: Morgan, yeah.
BILL MOYERS: –Chase continuing to–
RICHARD WOLFF: Stunning.
BILL MOYERS: –take these risks.
RICHARD WOLFF: Stunning. It’s as if the whole meltdown of 2008 and ’09 hadn’t happened, as if all the risk-taking can continue and all the massaging of the internal rules of the banks can be manipulated, all of that. It seems to me we’ve learned the lesson that regulation is usually coming too late after, in a sense, the disaster has happened. And then it is evaded and avoided and watered down. It doesn’t work. And we have to learn the lesson.
So I would respond by saying, we have to make a more basic change. Instead of constantly coming too late to the regulation activity let’s change the way decisions are made so we don’t have to be constantly after people regulating them in this kind of sad effort that never quite succeeds. Let’s change the basic decisions.
BILL MOYERS: I thought Glass-Steagall worked fairly well from the time it was enacted in the depression with Roosevelt to 1999 when Bill Clinton and Congress repealed it.
RICHARD WOLFF: Well, I don’t want to get into a dispute with you, Bill. I think–
BILL MOYERS: Go right ahead, everybody else does.
RICHARD WOLFF: I think there was a long history of evasion. In other words ways were found in the ’60s and ’70s long before the repeal, ways were found by banks setting up investment banks, setting up new financial institutions to get around if not the letter then certainly the intent of that kind of regulation.
When it was found possible politically first to weaken Glass-Steagall and then eventually to repeal it, well, that was even better. But basically the minute the regulation was set the regulated industries took it as a problem to be solved. Then they hired the economists like me, the accountants, the lawyers and all the other specialists to figure out how to get around it.
BILL MOYERS: And armies of lobbyists, let’s face it.
RICHARD WOLFF: Armies of lobbyists to make sure that the laws get massaged and the rules get adjusted so that they can get around it. That’s why we keep having financial scandal after financial scandal, hearings after hearings. After a while when you keep doing this you realize that even if you get some benefit (and I see your point), from a regulation for a while, it’s only a matter of time. And now that the corporations have gotten really good at getting around it the time for them has been reduced and so we’re back to the question isn’t there a better way than letting them do their thing and coming late to the table with another regulation?
BILL MOYERS: Okay, here’s Martha from Natick, Massachusetts.
MARTHA: I see a perfect storm coming. Capitalism is predicated on unlimited growth, but we live in a finite environment and we seem to have a dysfunctional democracy unable to resolve that contradiction. How do you see climate change and our diminishing natural resources such as fossil fuels and water impacting this crisis in capitalism?
RICHARD WOLFF: Capitalism is a system geared up to doing three things on the part of business: get more profits, grow your company and get a larger market share. Those are the driving bottom line issues. Corporations are successful or not if they succeed in getting these objectives met. That’s what their boards of directors are chosen to do, that’s what their shareholders expect. That’s the way the system works.
If along the way they have to sacrifice either the well-being of their workers or the well-being of the planet or the environmental conditions, they may feel very bad about it, and I know plenty of them who do. But they have no choice. And they will explain if they’re honest that that’s the way this system works. So we have despoiled our environment in a classic way. That’s why we have huge cleanup funds, that why we have so many problems. That’s why we have to impose all kinds of costs on companies now to deal with this problem.
So I’m not very hopeful. I don’t think this is a system that has a place in it for us to seriously deal with the limits to growth, with the need to preserve our environment, to take care of our health as a people because we have a system that pushes forward with a kind of intensity that pushes those issues to the side.
BILL MOYERS: Janet from Woolwich, Maine.
JANET: If you could be president with a cooperative Congress, what are the three most critical things you would do to ensure that we have a healthy economy that is sustainable, particularly in light of a growing aging population? Thank you.
RICHARD WOLFF: I would pick the following three. Number one, solve the unemployment problem. In a sense it’s the most urgent one we have. If the private sector– and here I’m paraphrasing Franklin Roosevelt in the ’30s.
If the private sector either cannot or will not provide the work for millions of Americans who want the work, then it’s the job of the government to do it because no one else is. And if I were president, I would follow Roosevelt and immediately create and fill millions, millions– I’m talking 15 to 20 million jobs in the United States right away.
Number two, I would make it would some have called a “green New Deal,” that is the major thing these people would be doing would be to deal with the environmental crisis that we have, to change the way we use energy. For example (just to give one), to give us the proper mass transportation system that advanced countries in other parts of the world already have that we ought to have.
Millions of people could go to work producing that system and give us a way to move our goods and move our people around the society using less oil and gas with less damage of injury and death the way our car-driven system has, with less pollution of our environment. Here’s a way to benefit people on many scales while we put to work those who want to work with the raw materials and tools that are available.
And the third thing I would do is take a page from Italy, yes, Italy who passed a law in 1985 called the Marcora Law which said the following wonderful thing. If you want employment you have a choice in Italy. You don’t just have to collect your weekly unemployment check the way we do here in the United States, you have an option.
If you get together with ten other unemployed workers and you agree to do the following thing, the government will give you three years of your unemployment payments upfront, right now, in a lump sum. What you have to agree to is that together with at least ten other people you’re going to start your own cooperative business which you all together work.
The feeling in Italy was if you give people a chance to own and operate their own business collectively they’ll be more committed to it, more invested in it, more likely to make a go of it than simply collecting a check. And meanwhile they’ll be producing things and they’ll feel better about themselves. And they’ll have a more productive role in the community. If you give everybody a vested interest in their enterprise, they work harder, they work better, because it’s theirs. They’re not just working for the man, they’re working for themselves, which is a dream Americans have had, way back from the beginning.
Sixty years ago the United States was less unequal than the capitalisms in Europe. Now we are more unequal. So yes, it is possible to have capitalism with a much more human face than the ones we have here in the United States and in Britain particularly where we have allowed things to go in a very different direction.
BILL MOYERS: But isn’t Italy in a mess today? We all know about the euro crisis. Those governments are in trouble, austerity’s being imposed throughout the Mediterranean area. We had this explosion with Cyprus– explosion of fear with Cyprus being bailed out and the depositors in the banks having to contribute to the cost of bailing out. A tiny island threatens to bring the euro system down again.
RICHARD WOLFF: Absolutely, and that Cyprus story is extremely important. Even though it’s a very small country and people might not pay attention because it is small. Here is the austerity program of raising taxes and cutting government spending, taking a qualitative new step to help bail out a capitalism that hasn’t worked in Europe and that has crippled this little country of Cyprus.
The step taken to try to fix the problem is to literally reach into the private, insured bank accounts of people in the local banks in Cyprus and take money out of it to pay for fixing this broken system. For all working people, and not just in Europe, here in the United States, too, this should be a wakeup call if you still need one that we’re in a situation where the most dire, unexpected, unimaginable steps are being taken to fix a system that keeps resisting being fixed so that we are required now to dip into people’s checking accounts and literally take the money away.
BILL MOYERS: Richard, one of our viewers, Antonia Murrero asks, “Student loan debts are overwhelming me and many others. What does Professor Wolff think would happen to the economy if those debts could be forgiven in personal bankruptcy? Is that even possible?” he asks.
RICHARD WOLFF: Well, the law in the United States specifically prevents you from using bankruptcy to erase your student loans. Bankruptcy does allow you to erase other kinds of debts if you can’t pay them. But the student loan system was set up to prevent that. So students are in a very specially bad place by virtue of this.
We’ve never before done this. In our history as a nation we’ve never before required college students to take anything remotely like this level of debt. We’re still– we’re requiring students to accumulate huge amounts of debt to get bachelor’s degree, let alone more advanced degrees, at the same time that we offer the graduates the poorest job market and prospects in a generation. That’s a one-two punch.
You have to borrow more than you can afford to face a job which will not allow you to ever pay it off, hence this person’s very intelligent question. How is this going to work? We’ve solved a problem in our society, how to educate the next generation. And let me tell you, this is an important matter. We economists believe that the single most important factor shaping the future of any economy in the world including the United States is the quality and the quantity of the educated trained labor force it produces.
College and universities are where we do that. If we’re crippling an entire generation with debts they cannot support and jobs that will not encourage them to continue in their studies we are as a nation shooting ourselves in the foot going forward. It’s a demonstration of the dysfunctionality of our system.
And then the question comes could we forgive the students’ debts? Well, it’s an interesting idea. But how then do you go to the people who can’t afford their credit card debts or their home debts or their mortgage debts– they’re all hurting. And the students have a special claim, I give them that. And we need those students, I understand it.
But we have to go at the root of a society which allows unspeakable wealth to accumulate in the hands of a tiny minority while condemning an entire generation of students to a set of burdens. We don’t want them to have those burdens. We need what they can produce for us as a society.
BILL MOYERS: But what does this young woman do who says she’s overwhelmed by her debt?
RICHARD WOLFF: Many students are not aware that they actually have some ways to help them. But the more broad answer I would give you is you need a social movement. If there were masses of students saying, “This is intolerable,” and saying it loudly and saying it publicly, peacefully for sure, but making it clear, then the powers that be would begin to realize that there are millions of students, upward of 15, 16 million people go to colleges and universities in the United States. You’re talking about a very well educated constituency. If they were organized and mobilized you would begin to get the response of dealing with their crises much more effectively than what we have now.
BILL MOYERS: Here’s a synopsis, Richard, of a lot of similar questions that bring us to your book, Democracy at Work: A Cure for Capitalism. A viewer who identifies himself as a longtime fan of Dr. Wolff writes, “You’re passionate about workers’ self-directed enterprises. Can you explain briefly why you think these are the way to save capitalism? Critics say your alternative may work in theory but not in practice.”
RICHARD WOLFF: My point is that workers ought to be– all of us who work in an office, a factory or a store—ought to be in the position of participating in the decisions governing that enterprise. And I do that not only because I believe in democracy. And let me say that if you do believe in democracy, it’s always been a mystery to me why that democracy that you believe in doesn’t apply to the place where you work. After all, five out of seven days of every week, most of your adult life, you’re at work.
So if democracy’s an important value it ought to be at your job because that’s where you are most of the time. And democracy at the job means the following. If you have to live with the decisions that are made in a job, what you’re producing, what technology’s being used, what the health conditions of your workplace are, what’s done with the fruits of your labor, literally whether your factor or your office continues, since you have to live with those decisions you ought to participate, the basic idea of democracy.
So I like the idea of cooperative enterprises because it fulfills my value commitment to democracy. Whereas a capitalist enterprise doesn’t because it keeps all the decision making in a tiny minority. We all who go to work have to live with their decisions, but we don’t participate in them, not even to speak of the community that has to live with the decisions.
But the second reason is I see concrete results coming from an enterprise that was run by the workers collectively, and let me give you a few examples. First, most of us believe that if the workers themselves made a decision that they would close the enterprise and move it to China, I don’t think so.
I think that the whole running away of enterprises out of the United States was made possible because the decisions to close enterprises here and to open them in another part of the world where you could get away with paying workers much less was a decision that was very good for the folks who make the decisions, but not for the average workers there.
So if we had decision making made by the workers in place they wouldn’t undo their own jobs and they wouldn’t move. And that would make a very different economic system from the one we have today. Second example, suppose a technology was being considered by the corporate heads who make the decision, the board of directors, and it was one that wasn’t safe, it created too much noise, too much air pollution, despoiled the water, whatever. If it’s a bottom line decision of the typical sort the board of directors and the shareholders seeing profit using that technology might go ahead and use it because it’s profitable and that’s what they’re called upon to do, make profits.
If the workers collectively made the decision knowing that they had to breathe that air, they had to hear that noise, they had to live with that water and so did their spouses and their children and their neighbors, I bet you you’d get a different decision because they would weigh the costs and benefits of that decision differently. And my third example, although I could give you many, Bill, if you want them.
The third example, when it comes to deciding what to do with the profits, suppose instead the workers themselves made that decision democratically, how do we divide the profits?
You think they would give a handful of top officials wild sums of money to buy $40 million apartments on Fifth Avenue while everybody else was having to borrow money to get their kids through school? I don’t think so. I think that people collectively would distribute the wealth more to some than others for all kinds of reasons, but they would do it in a much less unequal way than we have in a capitalist system.
So I challenge all of those who are concerned with a more equal system, with less inequality, to come up with a better way of achieving it than having workers be in a position to make the decisions as to how we divide the profits because that is the single most important determinant of the inequality of income in our society.
BILL MOYERS: But how do you answer this viewer? “In 1994 when United Airlines was on the brink of financial collapse a deal was made creating the biggest employee-owned company in the US. In 2002 the airline filed for bankruptcy.”
RICHARD WOLFF: My answer is the following and it’s very important. For workers to own something is one thing. For workers to become the directors of their own enterprise is something else. Worker ownership means for example, and we have lots of examples both in the United States and around the world, that the workers become in a sense shareholders. They are the technical owners.
But if the workers who become owners, and I’m not against that, but if the workers who become owners don’t change the way the enterprise is operated it remains a capitalist enterprise. It still has a board of directors, a handful of people who make all the decisions. It’s true that the workers may vote for who those people are, but they’ve left the structure of the enterprise in the old form, hierarchical, top-down. That’s what was done in United Airlines. I was involved in that. I actually know.
BILL MOYERS: How so?
RICHARD WOLFF: They called me in at a couple points to participate in some of the discussions, the International Association of Machinists, which was the union that was part of that. So they left the old capitalist structure, they weren’t willing to go beyond saying, “We, the workers, become owners, but we leave the running of the enterprise, the directing of it, the day to day decisions in the old form made by the old experts.” Part of a movement away from capitalism to a cooperative enterprise requires that the people of the United States stop believing that the folks at the top have some magical entitlement to give them that position.
BILL MOYERS: I think most of them have, if journalism and the social science surveys are reporting what’s actually going on out there.
RICHARD WOLFF: Yeah, and I think that there has to be a change. I think most Americans have to recognize that the folks who run our enterprises, they had to learn how to do that. And we can all learn how to do that. It’s the old argument in a sense that comes out of our history.
BILL MOYERS: Here’s a viewer named Jeff chiming in. “Dr. Wolff, can you please give a concrete, not academic or theoretical explanation, of how you would apply your employee-run business model to a McDonald’s, Wal-Mart, a hospital or JPMorgan Chase?”
RICHARD WOLFF: Well, the answer is best given not as a hypothetical but to describe an enterprise which is large like all of those are, which has done this.
BILL MOYERS: There’s a film called Shift Change, about the cooperative efforts. And we’ll provide a link to that.
RICHARD WOLFF: Well, the example I’m going to give is a company in Spain. It’s called Mondragon, the Mondragon Cooperative Corporation. And a little history may interest folks. It was started in the middle of the 1950s by a Catholic priest in the north of Spain in the Basque area just south of the Pyrenees Mountains.
It was a time of terrible privation in Spain after the World War II and the Spanish Civil War. There was terrible unemployment in this area and the Catholic priest decided that one way to deal with unemployment was not to wait for a capitalist employer to come in and hire people but to set up cooperatives. And he began with six parishioners in his Roman Catholic church to start a co-op.
Okay, this is 1956. Let’s fast forward to 2013. That corporation now has over 100,000 employees. It has been a success story of gargantuan proportions. It is a family of co-ops, within this large corporation. In most of these co-ops the workers make the decisions of how this cooperative works.
So let me give you an idea of how successful they’ve been. They partner with Microsoft and General Motors in their research labs because Microsoft and General Motors want to tap into their creative way of running a business. They have a rule that nobody can get more than six times what the lowest paid worker in an enterprise gets.
The typical situation in a major American corporation is that the top executives gets 300 or 400 times what their lowest paid worker does. So they have solved the equality problem in a dramatic way for 120, roughly, thousand people. There’s a concrete example of how you can make a cooperative democratically run enterprise successful, growing and becoming a powerful community force.
There is Arizmendi, the name of that priest in Spain, there’s the Arizmendi Bakeries, six of them in the Bay Area that are all run as cooperatives. And they run it as a worker-directed enterprise. They’ve been very successful. Their commitment, number one, is not profit. Their commitment, number one, is not growth. Their commitment, number one, is to their people.
BILL MOYERS: Which brings me to a question from another viewer. “How do you move to this alternative you’re talking about and writing about without strong unions? Union membership is down to its lowest level since 1936 when Franklin Roosevelt was president. And can you do this without increased strength among unions?”
RICHARD WOLFF: A union in its negotiations with an employer currently is limited in most cases to asking for better wages, better working conditions. Imagine with me for a moment what it would mean if the unions developed a new strategy. Let’s call it a two-track strategy.
On the one hand you continue bargaining with your workers for better conditions from your employer. But on the other hand you do something else. You begin to train workers to become able to run their own enterprises and to have a whole new bargaining chip when you confront an employer. Many unions over the last 30 years have been confronted by a company that basically comes and says the following. “We’re thinking of leaving Cincinnati, Sheboygan, Detroit, whatever. We need to get some concessions from you.
“We won’t leave if you give us wage give backs, lower benefits, all the usual things, or else we’ll leave.” The union doesn’t know what to do, is terrified, doesn’t want to call the bluff because not sure it is a bluff, et cetera, et cetera, so eventually the union caves. That has been the history over and over again.
Imagine a union that had been able to say to these folks, “Okay, if you leave rather than coming to a reasonable accommodation with us, we are going to set up an enterprise right here. The factory you leave we will occupy. The jobs you don’t pay us to do we will do for ourselves. And you will be located in China bringing goods back here, but we’ll continue to produce goods here and let’s see which goods the American working people will buy.”
BILL MOYERS: But they will need capital to do that.
RICHARD WOLFF: Yes. And the question is where would the capital come from?
BILL MOYERS: The question is where will the capital come from?
RICHARD WOLFF: Good. The answer is, where the capital come from, there are several possibilities. The first possibility is the United States government. The United States government has the money, needs to do something for our unemployment problem and here’s a way to do it because as the Marcora Law in Italy that I mentioned earlier illustrates there’s a governmental and a social interest in doing this. This is a better way to solve the unemployment problem than giving people a dole for months or years at a time during which time they lose their job connections, they often lose their skills.
This is a much better solution, giving them the startup money to begin small, medium size enterprises that they will have a great interest in making successful because it’s their future, it’s their wellbeing that’s at stake and it’s their collectively owned and operated enterprise.
Well, why in the world don’t we have a cooperative business administration providing startup money and technical help so that these kinds of enterprise, particularly helping unemployed people, could begin not only to help them and to help our economy but again to provide that freedom of choice for Americans so we can all see how these enterprises work and make a collective decision whether we’d rather have an economy more of them than of the old capitalist type. And again I think that the capitalists would be surprised by how many of us would choose that other route. And that would be a way to get it going.
BILL MOYERS: This is all very provocative and very controversial. And very imaginative. We’ll have you back at this table before the season is over. But in the meantime I look forward to our live chat on BillMoyers.com this coming Tuesday at 1:00pm Eastern Time.
RICHARD WOLFF: Good. I look forward to it as well.
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