geomancer
09-09-2012, 04:08 PM
https://www.thesunmagazine.org/issues/434/capitalism_and_its_discontents
[this is the most cogent analysis of what is wrong with our economy that I've seen anywhere. Here is a link to a very lucid lecture on this subject by Wolff: https://blip.tv/zgraphix/capitalism-hits-the-fan-a-lecture-by-richard-wolff-on-the-economic-meltdown-5834895 ]
THE SUN INTERVIEW FEBRUARY 2012 | ISSUE 434https://www.waccobb.net/forums/waccobb/keep90days/2012-09-09_1725.png
Capitalism And Its Discontents
Richard Wolff On What Went Wrong
by DAVID BARSAMIAN
DAVID BARSAMIAN is founder and director of Alternative Radio, a weekly radio program based in Boulder, Colorado (www.alternativeradio.org (https://www.alternativeradio.org)). His books include Original Zinn (https://www.powells.com/partner/32206/biblio/9780060844257), coauthored with Howard Zinn, and How the World Works (https://www.powells.com/partner/32206/biblio/9781593764272), co*authored with Noam Chomsky. In his spare time he lectures worldwide, reads Urdu poetry, and listens to Indian ragas. www.alternativeradio.org (https://www.alternativeradio.org/)
Today’s economic crisis is the most severe since the Great Depression. Some put the blame on greedy bankers who pawned off credit-default swaps, subprime mortgages, and a smorgasbord of derivatives on hapless investors in a time of little or no regulation. Others blame consumers who irresponsibly took out loans they couldn’t pay back. Economist Richard Wolff says no single sector of the economy is at fault. The seismic failures are systemic and deep, and fundamental change is necessary to avoid future collapses.
Wolff has devoted a lifetime to the study of economics and capitalism. He is professor of economics emeritus at the University of Massachusetts Amherst and is currently a visiting professor at The New School in New York City. His 2009 book, Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It (https://www.powells.com/partner/32206/biblio/9781566567848), is an account of the current crisis and its origins, with suggestions for structural changes rather than tepid reforms. “The issues raised by the crisis,” he says, “go far beyond the stale old debates between those favoring more versus less government. The capitalist system itself has been placed in question.”
The son of European immigrants, Wolff was born in 1942 in Youngstown, Ohio, where his father worked for the Youngstown Sheet and Tube Company, a steel manufacturer. Wolff got his undergraduate degree at Harvard, his master’s at Stanford, and his doctorate at Yale. (“I’m a poster boy for elite education,” he jokes.) His professors taught him to revere capitalism but also to ask tough questions. He supplemented his required reading with works by capitalism’s critics, Karl Marx being the most prominent. Marxism, Wolff says, has its own shortcomings and failures, but its analysis counterbalanced the perspectives of his teachers. “If you want to understand capitalism,” Wolff says, “you need to talk to people who think it’s wonderful, but you also need to expose yourself to the arguments of those who don’t think it’s wonderful, who think we could do better.”
Wolff’s analysis is proof that economics doesn’t have to be boring. He is witty, affable, and sensitive to the effects of joblessness on individuals and families. He avoids jargon and peppers his arguments with concrete examples. Though for many years he was seldom invited to speak publicly, he now has so many requests that he has to turn down engagements. The Occupy Wall Street [ows] movement has placed income and wealth inequality — and the system that created them — at the forefront of the debate. Wolff’s time in the spotlight has come.
I interviewed him in Santa Fe, New Mexico, in early September 2011 and broadcast our talk on Alternative Radio, my weekly radio program. At that time he predicted a new movement would arise in the U.S., similar to the Tea Party but from the other end of the political spectrum. “We’re going to see an American working class that views what’s going on as not only unjust but intolerable,” he said. When we talked again in November, Occupy Wall Street was front-page news.
Barsamian: You write that Americans “had a remarkable 150 years during which workers enjoyed a steadily rising standard of living.” When and why did that stop?
Wolff: What distinguishes the United States from almost every other capitalist experiment is that from 1820 to 1970, as best we can tell from the statistics we have, the amount of money an average worker earned kept rising decade after decade. This is measured in “real wages,” which means the money you earn compared to the prices you have to pay. That’s remarkable. There’s probably no other capitalist system that has delivered to its working class that kind of 150-year history. It produced in the U.S. the expectation that every generation would live better than the one before it, that if you worked hard, you could deliver a higher standard of living to your kids.
Before we talk about why this changed, let’s think for a moment about the trauma the end of this trend represents to the working population. It is the end of the notion that a better future is the reward for hard work. And the trauma is made worse by the fact that there’s no discussion of it, no way to share the experience, because most of the population literally believes that it hasn’t happened.
Barsamian: So why did it end?
Wolff: There are many reasons, but I think four developments in the 1970s were key.
The first was the increasing use of computers, which made it possible for employers to reduce their number of workers, since one computer now did the work of many humans. For example, once upon a time supermarkets needed workers to keep track of how many boxes of cereal and rolls of toilet paper were leaving the shelves. Now a computer scanner at the checkout counter does that. One man or woman sitting at a monitor somewhere can tell exactly how many boxes of cereal have to be ordered at a hundred different super*markets. They don’t need an army of workers to take inventory.
The second thing that happened in the 1970s was that employers moved production to other parts of the world, where wages were lower. Between the computer replacing workers and jobs going overseas, the demand for labor in the U.S. shrank.
The third event was that women joined the paid workforce in large numbers and stayed, largely abandoning the role of full-time mother and housewife. And, finally, we had a new wave of Latin American immigrants who came here looking for jobs and a better life. So while the number of jobs was declining, there was an increase in the number of people looking for work. This combination meant that, for the first time in American history, there was no labor shortage.
With so many people competing for jobs, employers discovered that it was no longer necessary to give raises to attract and keep employees. Since the 1970s American employers have enjoyed record profits. During that same thirty years, according to the Bureau of Labor Statistics in Washington, DC, the wage earned by the majority of American workers hasn’t changed. In real terms, adjusted for inflation, what a worker makes in 2011 is about what the same worker made in 1978.
Barsamian: And employees are working longer hours today, right?
Wolff: That’s right. According to the Organisation for Economic Co-operation and Development (oecd), Americans do more hours of paid labor per year than workers in any other advanced country. That is because, if you don’t earn more per hour, the only way to deliver a better life to your family is by doing more hours of work. So Americans have been pushing themselves, taking second jobs or working full time if they had worked only part time before. We have elderly people coming out of retirement to help their grown children. Teenagers are working on weekends to help pay bills. Americans have committed to an incredible number of work hours per household to try to achieve a rising standard of living. Let’s remember that we are constantly bombarded by advertising telling us that, to be a success, we need a better house, a better car, a better vacation, and a college education for our children. To be financially successful today, most of us have to work crazy hours.
And of course the other thing the American working class has done since the 1970s to keep their consumption rising is take on debt. When your wages don’t go up, and adding a few hours a week isn’t enough, you buy on credit.
In the 1970s we had to develop new mechanisms for providing credit to the masses. Before then the only people who carried credit cards were traveling businessmen with expense accounts, and the only company offering such a card was American Express. But then MasterCard, Visa, and others came along to make credit available to the rest of us, because there was such a hunger on the part of our working class for a better standard of living. American workers started to borrow money on a scale that had never been seen before in any country.
Barsamian: So wages were flattening out, workers’ hours and productivity were soaring, and Americans were accumulating huge individual debts.
Wolff: The amazing thing about the last thirty years is the collective self-delusion in the U.S. You cannot keep borrowing money if your ability to pay it back — i.e., your real wage — isn’t going up. You don’t need a PhD in economics to understand this.
So the current crisis really began in the 1970s, when the wages stopped rising, but its effects were postponed for a generation by debt. By 2007, however, the American working class had accumulated a level of debt that was unsustainable. People could not make the payments. They were exhausted: exhausted financially, exhausted physically by all that work, and exhausted psychologically because the family had been torn apart by everyone working.
Stay-at-home parents hold families together. When you move everyone into the workplace, tensions in the family become unmanageable. You can see evidence of this in popular culture. The sitcoms of the 1960s showed happy middle-class families, but many sitcoms today show struggling families. Americans are 5 percent of the world’s population, but we consume 65 percent of the world’s psychotropic drugs, tranquilizers, and mood enhancers. We are a people under unbelievable stress.
Barsamian: There have been other busts and recessions and depressions throughout U.S. history. How is this one different?
Wolff: This isn’t a typical business cycle. This is the culmination of a thirty-year postponement of what happens when 150 years of steady real-wage increases comes to an end.
Capitalism is an inherently unstable system. I like to tell my students that if they lived with a roommate as unstable as this economic system, they would have moved out long ago. Capitalism is notorious for its ups and downs. We have a whole vocabulary to refer to them: booms andbusts; recessions and depressions; upturns and downturns. When people have a lot of words for something, it’s because it’s a frequent phenomenon in their lives.
You would expect that we would know this about capitalism’s history and therefore not believe that we could somehow manage to escape instability. But over the last thirty to forty years we, as a society, have been unwilling to think critically about capitalism. And it shows. We thought we weren’t going to have another crisis like the one we had in the 1930s, or like the one the Japanese have had since 1990. We imagined that these problems were no longer relevant to modern life. So we were unprepared for the mess we’re in. Nothing shows our unpreparedness better than the inability of either President Bush or President Obama to deal with this problem.
So another reason this crisis is so different is that it’s coming at the end of a long period of denial. Let me give you an example: When I began my work as a PhD student in economics, the typical curriculum had a course about the business cycle, to introduce students to the history of economic ups and downs in their own country and others. In 2007 the vast majority of graduate programs in economics had no course on the business cycle at all. We thought we had overcome it, outgrown it. We had come to believe that we were in a new economic system, a mature capitalism, and that we had all the mechanisms to control it.
Barsamian: To what extent have the mainstream media contributed to this lack of understanding?
Wolff: I wouldn’t single out the media for blame, but certainly they’ve contributed. The mainstream media haven’t been critics of the system. I would describe the media, as I would my fellow economists, as cheerleaders for capitalism: it’s efficient, they say; it’s a growth engine; it will make everybody happy. We’ve produced a generation, maybe even two generations, of economists who think that economics is about celebrating capitalism’s greatness instead of assessing its strengths and weaknesses.
Capitalism is an institution, like our public-school system or our healthcare system. As a nation we think it’s appropriate to debate whether our schools and our healthcare system are working properly and meeting our needs. Why is it taboo to ask whether the way we organize the production and distribution of goods and services is meeting our needs?
The Cold War, for one, made it practically impossible to question capitalism. A normal exercise of a democratic society — evaluating its institutions — came to be seen as an act of disloyalty. And I’m afraid the mass media went right along with that.
Barsamian: There’s a certain market fundamentalism in the U.S. that equates capitalism with freedom.
Wolff: Yes, employers are free, in this system, to stop raising workers’ wages. But their exercise of that freedom has deprived the mass of Americans of a rising standard of living to accompany their rising productivity. Employers have kept all the benefits of the productivity increase in the form of profits. So one sector of our free economy has deprived another sector of its due. It’s the paradox of a democratic society: the freedoms of one group limit the freedoms of another. To face this fact requires a more critical notion of freedom and democracy than the happy, cheerleader mentality we have today.
How do you talk about freedom to the 20 to 30 million Americans who currently have no job? Are they free? They’ve been denied a living through no fault of their own. When 20 million Americans suddenly can’t find jobs, that isn’t a problem of individuals being lazy. That’s the problem of an economic system that isn’t delivering the goods.
1 / 2 (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=2) / 3 (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=3) / next (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=2)
[this is the most cogent analysis of what is wrong with our economy that I've seen anywhere. Here is a link to a very lucid lecture on this subject by Wolff: https://blip.tv/zgraphix/capitalism-hits-the-fan-a-lecture-by-richard-wolff-on-the-economic-meltdown-5834895 ]
THE SUN INTERVIEW FEBRUARY 2012 | ISSUE 434https://www.waccobb.net/forums/waccobb/keep90days/2012-09-09_1725.png
Capitalism And Its Discontents
Richard Wolff On What Went Wrong
by DAVID BARSAMIAN
DAVID BARSAMIAN is founder and director of Alternative Radio, a weekly radio program based in Boulder, Colorado (www.alternativeradio.org (https://www.alternativeradio.org)). His books include Original Zinn (https://www.powells.com/partner/32206/biblio/9780060844257), coauthored with Howard Zinn, and How the World Works (https://www.powells.com/partner/32206/biblio/9781593764272), co*authored with Noam Chomsky. In his spare time he lectures worldwide, reads Urdu poetry, and listens to Indian ragas. www.alternativeradio.org (https://www.alternativeradio.org/)
Today’s economic crisis is the most severe since the Great Depression. Some put the blame on greedy bankers who pawned off credit-default swaps, subprime mortgages, and a smorgasbord of derivatives on hapless investors in a time of little or no regulation. Others blame consumers who irresponsibly took out loans they couldn’t pay back. Economist Richard Wolff says no single sector of the economy is at fault. The seismic failures are systemic and deep, and fundamental change is necessary to avoid future collapses.
Wolff has devoted a lifetime to the study of economics and capitalism. He is professor of economics emeritus at the University of Massachusetts Amherst and is currently a visiting professor at The New School in New York City. His 2009 book, Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It (https://www.powells.com/partner/32206/biblio/9781566567848), is an account of the current crisis and its origins, with suggestions for structural changes rather than tepid reforms. “The issues raised by the crisis,” he says, “go far beyond the stale old debates between those favoring more versus less government. The capitalist system itself has been placed in question.”
The son of European immigrants, Wolff was born in 1942 in Youngstown, Ohio, where his father worked for the Youngstown Sheet and Tube Company, a steel manufacturer. Wolff got his undergraduate degree at Harvard, his master’s at Stanford, and his doctorate at Yale. (“I’m a poster boy for elite education,” he jokes.) His professors taught him to revere capitalism but also to ask tough questions. He supplemented his required reading with works by capitalism’s critics, Karl Marx being the most prominent. Marxism, Wolff says, has its own shortcomings and failures, but its analysis counterbalanced the perspectives of his teachers. “If you want to understand capitalism,” Wolff says, “you need to talk to people who think it’s wonderful, but you also need to expose yourself to the arguments of those who don’t think it’s wonderful, who think we could do better.”
Wolff’s analysis is proof that economics doesn’t have to be boring. He is witty, affable, and sensitive to the effects of joblessness on individuals and families. He avoids jargon and peppers his arguments with concrete examples. Though for many years he was seldom invited to speak publicly, he now has so many requests that he has to turn down engagements. The Occupy Wall Street [ows] movement has placed income and wealth inequality — and the system that created them — at the forefront of the debate. Wolff’s time in the spotlight has come.
I interviewed him in Santa Fe, New Mexico, in early September 2011 and broadcast our talk on Alternative Radio, my weekly radio program. At that time he predicted a new movement would arise in the U.S., similar to the Tea Party but from the other end of the political spectrum. “We’re going to see an American working class that views what’s going on as not only unjust but intolerable,” he said. When we talked again in November, Occupy Wall Street was front-page news.
Barsamian: You write that Americans “had a remarkable 150 years during which workers enjoyed a steadily rising standard of living.” When and why did that stop?
Wolff: What distinguishes the United States from almost every other capitalist experiment is that from 1820 to 1970, as best we can tell from the statistics we have, the amount of money an average worker earned kept rising decade after decade. This is measured in “real wages,” which means the money you earn compared to the prices you have to pay. That’s remarkable. There’s probably no other capitalist system that has delivered to its working class that kind of 150-year history. It produced in the U.S. the expectation that every generation would live better than the one before it, that if you worked hard, you could deliver a higher standard of living to your kids.
Before we talk about why this changed, let’s think for a moment about the trauma the end of this trend represents to the working population. It is the end of the notion that a better future is the reward for hard work. And the trauma is made worse by the fact that there’s no discussion of it, no way to share the experience, because most of the population literally believes that it hasn’t happened.
Barsamian: So why did it end?
Wolff: There are many reasons, but I think four developments in the 1970s were key.
The first was the increasing use of computers, which made it possible for employers to reduce their number of workers, since one computer now did the work of many humans. For example, once upon a time supermarkets needed workers to keep track of how many boxes of cereal and rolls of toilet paper were leaving the shelves. Now a computer scanner at the checkout counter does that. One man or woman sitting at a monitor somewhere can tell exactly how many boxes of cereal have to be ordered at a hundred different super*markets. They don’t need an army of workers to take inventory.
The second thing that happened in the 1970s was that employers moved production to other parts of the world, where wages were lower. Between the computer replacing workers and jobs going overseas, the demand for labor in the U.S. shrank.
The third event was that women joined the paid workforce in large numbers and stayed, largely abandoning the role of full-time mother and housewife. And, finally, we had a new wave of Latin American immigrants who came here looking for jobs and a better life. So while the number of jobs was declining, there was an increase in the number of people looking for work. This combination meant that, for the first time in American history, there was no labor shortage.
With so many people competing for jobs, employers discovered that it was no longer necessary to give raises to attract and keep employees. Since the 1970s American employers have enjoyed record profits. During that same thirty years, according to the Bureau of Labor Statistics in Washington, DC, the wage earned by the majority of American workers hasn’t changed. In real terms, adjusted for inflation, what a worker makes in 2011 is about what the same worker made in 1978.
Barsamian: And employees are working longer hours today, right?
Wolff: That’s right. According to the Organisation for Economic Co-operation and Development (oecd), Americans do more hours of paid labor per year than workers in any other advanced country. That is because, if you don’t earn more per hour, the only way to deliver a better life to your family is by doing more hours of work. So Americans have been pushing themselves, taking second jobs or working full time if they had worked only part time before. We have elderly people coming out of retirement to help their grown children. Teenagers are working on weekends to help pay bills. Americans have committed to an incredible number of work hours per household to try to achieve a rising standard of living. Let’s remember that we are constantly bombarded by advertising telling us that, to be a success, we need a better house, a better car, a better vacation, and a college education for our children. To be financially successful today, most of us have to work crazy hours.
And of course the other thing the American working class has done since the 1970s to keep their consumption rising is take on debt. When your wages don’t go up, and adding a few hours a week isn’t enough, you buy on credit.
In the 1970s we had to develop new mechanisms for providing credit to the masses. Before then the only people who carried credit cards were traveling businessmen with expense accounts, and the only company offering such a card was American Express. But then MasterCard, Visa, and others came along to make credit available to the rest of us, because there was such a hunger on the part of our working class for a better standard of living. American workers started to borrow money on a scale that had never been seen before in any country.
Barsamian: So wages were flattening out, workers’ hours and productivity were soaring, and Americans were accumulating huge individual debts.
Wolff: The amazing thing about the last thirty years is the collective self-delusion in the U.S. You cannot keep borrowing money if your ability to pay it back — i.e., your real wage — isn’t going up. You don’t need a PhD in economics to understand this.
So the current crisis really began in the 1970s, when the wages stopped rising, but its effects were postponed for a generation by debt. By 2007, however, the American working class had accumulated a level of debt that was unsustainable. People could not make the payments. They were exhausted: exhausted financially, exhausted physically by all that work, and exhausted psychologically because the family had been torn apart by everyone working.
Stay-at-home parents hold families together. When you move everyone into the workplace, tensions in the family become unmanageable. You can see evidence of this in popular culture. The sitcoms of the 1960s showed happy middle-class families, but many sitcoms today show struggling families. Americans are 5 percent of the world’s population, but we consume 65 percent of the world’s psychotropic drugs, tranquilizers, and mood enhancers. We are a people under unbelievable stress.
Barsamian: There have been other busts and recessions and depressions throughout U.S. history. How is this one different?
Wolff: This isn’t a typical business cycle. This is the culmination of a thirty-year postponement of what happens when 150 years of steady real-wage increases comes to an end.
Capitalism is an inherently unstable system. I like to tell my students that if they lived with a roommate as unstable as this economic system, they would have moved out long ago. Capitalism is notorious for its ups and downs. We have a whole vocabulary to refer to them: booms andbusts; recessions and depressions; upturns and downturns. When people have a lot of words for something, it’s because it’s a frequent phenomenon in their lives.
You would expect that we would know this about capitalism’s history and therefore not believe that we could somehow manage to escape instability. But over the last thirty to forty years we, as a society, have been unwilling to think critically about capitalism. And it shows. We thought we weren’t going to have another crisis like the one we had in the 1930s, or like the one the Japanese have had since 1990. We imagined that these problems were no longer relevant to modern life. So we were unprepared for the mess we’re in. Nothing shows our unpreparedness better than the inability of either President Bush or President Obama to deal with this problem.
So another reason this crisis is so different is that it’s coming at the end of a long period of denial. Let me give you an example: When I began my work as a PhD student in economics, the typical curriculum had a course about the business cycle, to introduce students to the history of economic ups and downs in their own country and others. In 2007 the vast majority of graduate programs in economics had no course on the business cycle at all. We thought we had overcome it, outgrown it. We had come to believe that we were in a new economic system, a mature capitalism, and that we had all the mechanisms to control it.
Barsamian: To what extent have the mainstream media contributed to this lack of understanding?
Wolff: I wouldn’t single out the media for blame, but certainly they’ve contributed. The mainstream media haven’t been critics of the system. I would describe the media, as I would my fellow economists, as cheerleaders for capitalism: it’s efficient, they say; it’s a growth engine; it will make everybody happy. We’ve produced a generation, maybe even two generations, of economists who think that economics is about celebrating capitalism’s greatness instead of assessing its strengths and weaknesses.
Capitalism is an institution, like our public-school system or our healthcare system. As a nation we think it’s appropriate to debate whether our schools and our healthcare system are working properly and meeting our needs. Why is it taboo to ask whether the way we organize the production and distribution of goods and services is meeting our needs?
The Cold War, for one, made it practically impossible to question capitalism. A normal exercise of a democratic society — evaluating its institutions — came to be seen as an act of disloyalty. And I’m afraid the mass media went right along with that.
Barsamian: There’s a certain market fundamentalism in the U.S. that equates capitalism with freedom.
Wolff: Yes, employers are free, in this system, to stop raising workers’ wages. But their exercise of that freedom has deprived the mass of Americans of a rising standard of living to accompany their rising productivity. Employers have kept all the benefits of the productivity increase in the form of profits. So one sector of our free economy has deprived another sector of its due. It’s the paradox of a democratic society: the freedoms of one group limit the freedoms of another. To face this fact requires a more critical notion of freedom and democracy than the happy, cheerleader mentality we have today.
How do you talk about freedom to the 20 to 30 million Americans who currently have no job? Are they free? They’ve been denied a living through no fault of their own. When 20 million Americans suddenly can’t find jobs, that isn’t a problem of individuals being lazy. That’s the problem of an economic system that isn’t delivering the goods.
1 / 2 (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=2) / 3 (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=3) / next (https://www.thesunmagazine.org/issues/434/issues/434/capitalism_and_its_discontents?page=2)