Interview with Noted Economist, Richard Wolff: Part Three

A close examination of various economic issues, including the current economic crisis, issues with capitalism, and their proposed solutions

Interview by: Konstantine Roccas

Konstantine Roccas has an in depth discussion with noted economist Richard Wolff that spans of variety of topics, including the “crisis of capitalism” and how we can recover from the current economic crisis.

KS: Having discussed the ‘crisis of capitalism,’ what can we do going forward? What are our solutions?

RW: Well, when people you know who are suffering from alcoholism finally decide that something needs to be done, they go to A.A. It is explained to them that the first step must be to admit to yourself in a room with other people, that you are an alcoholic; to admit that you have an illness. The argument given is that the first step in breaking out of something that is not good for you is to admit that you have that problem and that you are determined to get out of it. The same thing applies to capitalism.

In order for us to have a conversation, there must be courage and the honesty to admit that capitalism as a system deserves to be debated, questioned, and criticized. The United States is a country that for over 50 years has not dared to do that. You cannot find a debate. What you have are different degrees of celebrants. Capitalism is a system in our country that we cannot debate. It is thought to be stupid, ignorant or, worse, disloyal to question it.

We question in our society the education system, the transportation system, and the medical system. We think it’s healthy to debate a system that’s part of our society in order to make sure that we fix it where it’s broken, improve it where it needs it and that we change it when it’s necessary. It is generally understood that if you exempt one system from criticism, you are going to allow it to rot and indulge its worst tendencies. I think that is what has happened to our system. We have a broken dysfunctional system, because we’ve given it a free pass for 50 years.

Our first step is to play catch up and open ourselves up to those who have kept alive the flame of serious, but harsh, criticism. Capitalism is not working now for the majority of people. That has to be faced and that has to be admitted. Only then can we have the type of debate and discussion about our system that will allow the creative genius of the people to find, debate and settle on what the solutions are.

For myself, simply as one participant in that debate, I would argue that our problem is systemic. You are not going to solve it by another set of regulations, [or] laws; we’ve been there, we’ve done that and it does not work.  What we need is to change the basic system. By that I don’t mean who owns the property. I am not that thrilled with taking private property and making it state property, or vice-versa. Likewise, while I have many criticisms of how markets work, I know that there are problems when government planners make [the] decisions. So while that may be partially a way to go, it’s not the kind of systemic change I’m talking about.

We have to change how we organize the business of America; what goes on in the factories, offices and stores. We have to democratize them. Let’s remember that the board of directors, chosen by the shareholders, make all the basic decisions in all of our corporations. They decide what to produce, how to produce and what to do with the profits. All of the other employees live with the results of those decisions, but have no voice in them. That’s the opposite of democracy.

It is a strange country that proclaims its commitment to democracy when it does not allow the enterprises where most adults spend most of their lives, to be organized democratically. If democracy is a value we hold dear, then that’s where it ought to have begun, let alone the place where it is absent. We all go to work in a place where we don’t make the basic decisions; the board of directors does, and that’s not democracy.

Let me explain why that would be a solution and let me give you a short list. Suppose the workers were their own board of directors. Once a week, instead of performing a particular task, they all got together in meetings debating all day the answers to the following questions: ‘What do we produce? How do we produce? Where do we produce?  And what do we do with the profits?’ Here are some outcomes that would be very different from what we have in capitalism.

Do you think these workers would vote to close their enterprise and move to China? They wouldn’t. Suppose there was a new technology that would make more profits for the company, but had the following side-effects: deafening noise, air pollution and water pollution. The board of directors and the major shareholders – say in a big city like Chicago or New York – might be clearly tempted to make the technology available, because they don’t have to live with those conditions. They collect the profits from that technology, the workers don’t. So they will install that technology and the workers will have to live with the consequences as best they can. If the workers themselves made the decision on which technology to use, they would have to weigh the gain and profit on one hand, and what it would do to their health, the health of [those] who live nearby on the other. They would come up with a systematically different pattern of decisions, because their criteria for reaching the decisions are different from the criteria that apply in a capitalist system.

Here comes the final example, think of the corporation’s decisions about how much money to pay out in dividends to shareholders [and] top executives. If that were determined by the workers who vote democratically, do you think they would pay out fortunes to the shareholders? Do you think they would pay out tens of millions of dollars in pay packages to the top executives, while the average worker can’t afford to send his kid to college? I think the distribution of profits would be much more equally spread among the population. Sure, some would get more or less by some criteria that were democratically decided on, but you wouldn’t have the extraordinary and extreme inequality whose major cause is how the profits of enterprise are distributed in our society.

The democratization of our enterprises would be the best step we could take to significantly reducing the level of inequality in our society. If we change the system from a capitalist, top-down, hierarchical organization of business to a cooperative democratization of the organization of business, we would see less flight of our businesses abroad, see an advance in environmentally friendly work situations, and finally we would see less inequality of income. Those alone are powerful reasons to allow a serious exploration in this country of an alternative to capitalism.

Let us support that, let us support the enterprises that already exist in America as co-ops. There are thousands of them. Let us expand those not only for the sake of those businesses and the folks they serve, but in order to create a country with a real freedom of choice, so Americans can see in their neighbourhoods, cities and towns the difference between the old traditional capitalist enterprise and the new cooperative democratic enterprise. Let young people choose to work in one or the other. Let people talk about their different experiences and let there finally be a choice for which way we want America to go. If the capitalists and those who support capitalism are half as confident as they pretend to be, they should have nothing to fear from a real honest competition with an alternative system that has something to offer.

Before we finish, briefly talk about your Democracy at Work initiative, Professor Wolff. What is it about? And how can the youth get involved to help spread the word about this movement?

Well, I think that the best thing to do,  is to go to the website we have been running for about a year. It is called demoracyatwork.info. There you will see what we are trying to build, which is a social movement in America for the conversion of businesses from a capitalist to a democratic form of organization where workers are interested in doing that; for the creation of new businesses from the get-go that will be organized in that way and for the expansion of the many businesses in America that are already organized in this way and have been for years. You can also sign up for a free newsletter to bring all this information to you every month.

We want to use this website to inform people about all of this, and give them detailed video, audio and written articles about all the questions they should have about this alternative to capitalism.

If you are interested in the theoretical economics that lies behind all of this, in the sense of the arguments for it [and] the economic history, readers can go to my website where all of my work is gathered at rdwolff.com.

Both of these websites are available to you 24 hours a day at absolutely no charge. I also have a weekly radio program that runs on Saturdays for an hour on WBAI.org in New York that is now carried on stations nationwide. [Konstantine’s note: It can also be easily accessed via rdwolff.com].  This coming weekend, [22^nd of March], I will be doing my second interview with Bill Moyers on national television; [this interview] is devoted to the kind of democratic cooperative enterprise that we have just been discussing.  There you will find me responding to both Bill Moyers’ questions and to the questions posed by the millions of Americans who tune in to his program.

[This] is a growing movement in the United States and there are ways to find out about it. Two-thousand-and-twelve was declared by the United Nations to be “the year of the co-op,” so this is something  that is happening on a global scale and represents a recognition that whatever you think about capitalism – its strengths, its weaknesses and its current crisis – there is no need to believe that it is the only way to go and there is good reason to believe that there are better options and they certainly should be explored at a time when capitalism can no longer claim to be ‘delivering the goods,’ because for most people right now, it is delivering the ‘bads.’

To listen to this interview in its entirety, please click here: https://mega.co.nz/#!G8RhGTLS!KBwpKD4mnCn3uxCXMiXUk2aUWVd0_9YN3YCll2ocOZo

Richard D. Wolff is Professor of Economics, Emeritus, at the University of Massachusetts, Amherst and Visiting Professor at the New School University in New York. With frequent co-author, Stephen Resnick, he has published many books and articles on economic theory, economic history, and alternative economic theories. Their latest is Contending Economic Theories: Neoclassical, Keynesian and Marxian (Cambridge: MIT Press, 2012). Wolff’s recent work (books, articles, speeches, and interviews) critically analyzes capitalism’s severe global crisis since 2007. That work and proposals for solutions are gathered at rdwolff.com and democracyatwork.info.

Konstantine Roccas is an observer of local and international affairs and governance, but also writes about anything else that piques his ire. He enjoys a half kilo of Greek yogurt daily. He writes for the Arbitrage Magazine. More of his work can be found at myriadtruths.blogspot.caand he can be followed on Twitter @KosteeRoccas.