Ask Prof. Wolff

rdw_speaking.png
 
Have a question for Professor Wolff? Want to suggest a topic or article? Post it here! Professor Wolff receives hundreds of questions per week covering a wide array of topics, from economics and socialism, to historical movements and current events. While Professor Wolff does his best to reply to some questions on Economic Updatewe receive more questions than we can handle! Ask Prof. Wolff allows his fans to ask questions publicly and also vote and respond to others questions.
 
Select "Most Recent" to view recently submitted questions. You must be logged in to submit your own.
Please check your e-mail for a link to activate your account.

10 films that shook the world.

10 early Soviet films are being aired monthly at the L.A. worker's center. Radio spot was short and the best online resource for further information is: www.hollywoodprogressive.com With the 100 anniversary of the russian revolution these classic films are a inspiration and opportunity to meet other likeminded people.

1 comment Share

$15 Minimum Wage

How would a minimum wage of $15 impact New York's economy? Would this deliver a fatal blow to mom & pop shops that are already struggling to keep pace with corporate America? Are there better ways of minimizing economic inequality?

1 comment Share

2014 Bank Of England Report on Money Creation

Hi Professor Wolff, I apologize in advance if you've previously covered this topic, but I have found it immensely interesting for quite some time, and yet I feel like nobody talks about the banking system in its true form. I'd love to get your take on it as your explanatory skills are second to none. The 2014 report released by the Bank of England (link below) outlines how banks no longer use deposits made by customers as a basis to then loan out to others. Instead, when a bank makes a loan, it simply creates the credit out of thin air, and with the newly created credit it also makes a matching debt. The conclusion is therefore that banks are responsible for the total money supply of a given economy - the more people borrow from banks, the greater the money supply. As people pay off their debts, then the money supply shrinks. To my mind, this unrestrained method of money creation is directly responsible for the incredible volatility of the market and the severity of the last financial crisis (economic bubbles and bursts are much easier to fuel and come down with more force when money creation has no limit). There is also the interrelationship between commercial banks and the central bank - the issuing of central bank reserves etc, which I find a little more confusing. Could you please elaborate on this topic in your monthly updates/weekly podcasts, and on any other negative consequences of such a system of money creation? Is the alternative to this unaccountable banking system an interest free, nationalized banking system (like the one in Syria) that works as a general service rather than a profit seeking institution? Without taking much more of your time, I would also like to link this topic of money creation with the financing of government debts (link that may be helpful included below). You've previously mentioned that the wealthy, and the investment institutions of the world are now seeking safer investments in government bonds, instead of investments in productive capital that would (in a perfect world) create jobs and growth for the middle and lower classes. The governments on the other hand, are desperately seeking these loans since they are struggling for revenue that would normally come via taxes and fees. But since capitalism undermines itself by cutting wages, by creating unemployment, and because our politicians are bought and will not tax the wealthy, our governments are forced to borrow to fund services. But by borrowing from the most powerful cliques in our society, the governments now face a strict obligation to compensate their debts - which means austerity around the globe. My question is, why can't governments fund their expenses the same way that private institutions or private persons would - by "creating" credit and an equal debt via the central bank? Would this not give governments breathing space to at least lessen some of the devastating effects of austerity - and not rely directly on wealthy investors/institutions? Thanks! FINANCING GOV DEBTS http://positivemoney.org/how-money-works/advanced/what-about-the-national-debt/ OFFICIAL BANK OF ENGLAND REPORT ON MONEY CREATION http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf NEWS REPORT ON BANKING SYSTEM EXPOSE https://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

4 comments Share


30 hour work week, full employment, universal basic income

i was wondering if you could go more in depth into universal income, shorter work week, and guaranteed jobs. for the guaranteed jobs you could look at china where they had state owned enterprises that aimed to employ every one and they were unproductive, where you had 3 people doing the job of one person. when china opened up and private companies joined, the state owned enterprises found themselves unable to compete.how can full employment be realized in a practical way. as for shorter work weeks, i believe it was you that went over how a few cities in denmark shortened the work week to 30 hours but kept the same pay and still managed to be competitive, if you could go into detail on that it would be extremely helpful. and also the number, science, whatever you wanna call it, how is it achieved. and what are the pros and cons of it

1 comment Share

60 Minutes segment on H-1B visas

Hello again Professor Wolff. I think you'll find this segment from tonight's 60 Minutes interesting: http://www.cbsnews.com/news/are-u-s-jobs-vulnerable-to-workers-with-h-1b-visas/?ftag=CNM-00-10aab7d&linkId=35629150

1 comment Share

Addiction and capitalism

Here is a great article from Bruce Alexander, the psychologist who did the Rat Park experiments: http://www.brucekalexander.com/articles-speeches/283-addiction,-environmental-crisis,-and-global-capitalism Could provide several shows' worth of insight! :)

1 comment Share

Add your suggestion

1 comment Share

Adjunct Professors

Professor Wolff, Thank you for keeping listeners apprised of the economic realities of adjunct professors. As an adjunct, I appreciate the facts as well as the public discourse on the issue. Recently, I presented the below paper at a conference to frame adjuncting in a larger historical and economic context. I would appreciate feedback on this perspective: https://www.academia.edu/31616200/Adjuncting_The_Epicenter_of_an_American_Culture_War I'm grateful for all that you do-- thank you!

1 comment Share

A Global Currency

I would be interested in Professor Wolff's opinion on the establishment of a single global currency. Get rid of the US dollar, British pound, Japanese Yen sort of like they did in the European Union with the Euro but on a global scale. So a dollar in New York is the same as a dollar in Beijing or London. Thanks

1 comment Share

A hospital in Pinole CA that serves mostly low income patients, has closed its doors.

Here is more info: http://www.eastbaytimes.com/2015/04/21/san-pablo-doctors-medical-center-closes-doors-to-patients/ I think it would be interesting to compare this hospital with places like UCSF that receive a lot of grants from big pharma, etc. I also wonder if the tax base in West Contra Costa County (poorer area) is insufficient to keep a hospital going. Apparently not. Thanks.

1 comment Share

Alternate Investing

My meager savings draw no interest at the bank. My 401K is long gone with the small stock portfolio I held. My collectable pssessions; 1st editions, firearms ( wish I had kept one at times listening to you and Ralph Nader) etc are too along with the curation headaches and equally volatile market. IF I were to invest any funds what ETHICAL options are there? Do Co Ops seek 'Start Up' strategems? Should I just invest in freeze dried Lima beans for the next collapse?

1 comment Share

Alternative Currencies? Crypto Currencies? Community Currencies, etc. A Solution For Today?

I am tickled pink that you opened this channel for communication. Before I would just reply to your infrequent status emails and would rarely get a reply. That said, and this may be too big a topic for this forum but perhaps deserve a few words on the radio show as well, could you speak a bit about alternative currencies? Discovering Bitcoin also led to the discovery of a whole history of community currencies in the US and elsewhere. I think perhaps your audience, and myself for certain, would enjoy hearing a bit more about these alternatives to our current monetary system. For example many people know the Fed is bad news but arent aware that other alternatives exist, have existed, and have been successful throughout our history. Also of potential interest is the particulars of how they are eventually forced out of circulation, often times becoming too successful to succeed. A word or two about their killers and the killers motivations wouldnt hurt either. Thank you for this opportunity to communicate with you directly. I am trying not to hog the service but have had a growing list of questions for you for years now. Keep up the great work!

1 comment Share

Alternatives to Finance Capital and suggestion for Guest on Econ Update

Dear Prof. Wolff and team: Thanks for your great work. You spend a great deal of time discussing WSDE as alternatives for industrial capital. But Marx also talks about finance capital, and if we are to "do better than capitalism" we must clearly also propose alternatives to the current financial system. I wonder if you might be able to suggest some reforms on that front either here on this webpage or on Economic update. I recently read this article by Prof. J. W. Mason on the topic which I found extremely interesting (https://www.jacobinmag.com/2016/11/finance-banks-capitalism-markets-socialism-planning/). I would certainly be very interested to hear your views on these proposed reforms and I would like to hear Prof. Mason as a guest on Economic Update if that be possible. Thanking you again for your excellent work which has taught me so much. Ali

posted an official response

Thank you for your kind words. Might we begin the conversation with a recent short piece I wrote on finance? Here it is: 

The Contradictions of Finance

Saturday, 17 September 2016

 

By Richard D. WolffROAR Magazine | News Analysis

After the financial crisis, the long-term fate of Wall Street now hinges on the context of global capitalism and the emerging popular struggles against it. (Photo: David Ohmer / Flickr)

This article originally appeared in ROAR's third print issue, "The Rules of Finance." ROAR is a volunteer-run publication sustained by its subscribers. To read more,pre-order the print issue or subscribe online.

Like much else in economies, finance both enhances the economy's growth and development and undermines it. The balance between these contradictory effects depends on all the other aspects of an economy and society and how they all influence financial contradictions. From its first entrance into the economy -- that part of society concerned with the production and distribution of goods and services -- money has been contradictory. On the one hand it enabled trade and exchange far beyond the limits of barter and other pre-money systems. On the other hand, money introduced all sorts of new instabilities.

The role of finance and its contradictions changed especially after the 1970s. The old centers of capitalism (western Europe, north America and Japan) lost major parts of their global primacy. A combination of computer-related automation, political shifts and relocation of production to low-wage areas -- particularly in Asia and Latin America -- brought economic decline to most of the old centers' people. In effect, employers in the old center obtained access to a vast new, lower-waged labor force and the profit gains associated with it. The employers could relocate to where the new cheaper labor became available or else bring that labor into the old centers as immigrants. Most old center countries did both. The result nearly everywhere in capitalism's old centers was stagnation or decline of real wages coupled with sharply worsened inequalities of income and wealth.

Ironically, the post-war period had enabled the resurgence of a capitalism that had been hobbled by the Great Depression and the war. Coupled with the social-democratic gains achieved during the 1930s and 1940s, the years from 1945 to 1975 witnessed a decades-long celebration of rising standards of mass consumption paid for by rising real wages.

Indeed, depicted as the emergence of a comfortable "middle class," rising consumption was celebrated by capitalism's ideological champions as the system's great achievement and justification. Product advertising exploded alongside rising consumption, intruding into every corner of modern life. One key result was to make rising levels of consumption more than ever the measure -- the very definition -- of each individual's success in life. In the US, parents promised one another and their children an American dream of ever-rising consumption financed by ever-rising real wages.

The arrival and continuance of stagnant or declining real wages after the 1970s made the realization of that dream impossible. Yet it was so deeply internalized and desired by Americans, so ingrained in their expectations, that they were determined to achieve it even without the rising wages to pay for it. They would sustain rising consumption otherwise, partly by borrowing. The latter provided a new profit opportunity for financial capitalists: lending to consumers to enable their rising consumption.

Families determined to consume more usually turned first to sending more household members out to do more hours of work as real hourly wages stagnated. When those extra hours proved insufficient, borrowing remained as the only way to pay for rising consumption. In profit-driven response, the financial sector invented new forms of consumer credit extension (especially credit cards and later student loans) and greatly expanded old forms (mortgages and car loans). Banks bundled all these forms of consumer debt into asset-backed securities, enabling them profitably to tap globally dispersed sources of loanable funds.

Credit crucially supported the booms of the 1980s and 1990s into the new century, yet it also spread globally the risks that the huge new supplies of consumer debt instruments might not pay off. The spurt of financialization after the 1970s also included major new loans to corporations and governments. When the credit default crisis broke in 2008, it included all three types of loans: consumer, corporate and public. Financialization had yielded large new profits and the expansion of the financial sector relative to all the other sectors of capitalist economies around the world. It had also yielded their global collapse.

The financial expansion phase is often followed by its contradictory other, the contraction phase. The crash of 2008 proved to be the turning point this time between the phases. Bailouts, bail-ins and a wide variety of other monetary (and some fiscal) policies have been tried to "manage" the crash and its consequences with, at best, mixed results to date. Where some "recovery" has occurred it largely bypassed huge portions of the population. Recovery's impacts on the top 1 percent and 10 percent of enterprises and individuals also proved uneven.

Financialization facilitated the historic relocation of capitalism from its old to its new centers. Because this relocation was driven by the profit gains of capitalists moving from high to low-wage production, the result was a supply-demand imbalance. Lowered global wages rendered effective demand deficient. In this situation, debt could temporarily remedy the imbalance. Global finance thus profited in multiple ways from the globalization it promoted. Yet it also over-reached, took excessive risks, and eventually imploded. Its survival became dependent on state intervention and support.

As a result, financial industries are now stronger but also weaker, thereby perpetuating finance's intrinsic contradictory nature. Their longer-term fate now hinges most on what happens to the larger capitalist context. As capitalism declines in its old centers and leaves massive social, economic, ecological and political divisions and destructions in its wake, how far will the resistance there go? Will movements demanding state-financial enterprises to compete with private counterparts gain strength? Will initiatives to go beyond capitalism arise, grow and challenge the established financial institutions? Has that already begun?

In capitalism's new centers, will history repeat there the bitter divisions and working-class struggles that characterized the early development of capitalism's old centers? Might struggles in old and new centers find some common ground and bond to build an effective alliance in opposition to capitalism? Answers to these questions will have more to do with shaping the future of financial industries than the details of their practices.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

RICHARD D. WOLFF

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a visiting professor of economics at the University of Paris (France), I (Sorbonne). His work is available at rdwolff.com and atdemocracyatwork.info.

 

 

2 comments Share

Amazing paper from Oxfam, can you use this in Economic Update?

Oxfam, mostly known from the inequality reports like "Eight men own the same wealth as the poorest half of the world", have published this paper with analysis of the causes of inequality. Very similar to your analysis. Also covering "The false assumptions driving the economy of the 1%" and "A human economy designed for the 99%". Unusual clear analysis pointing to the richest people/corporations and their anti-social ideology and use of power to maximizing their profits at the expense of the welfare for everybody else. Full text and summary available as pdf here: https://www.oxfam.org/en/research/economy-99 Perhaps you could also contact the author of the paper, Deputy Head of Research, Deborah Hardoon?

1 comment Share

connect

get updates