Ask Prof. Wolff

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.
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$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?

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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 OFFICIAL BANK OF ENGLAND REPORT ON MONEY CREATION NEWS REPORT ON BANKING SYSTEM EXPOSE

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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 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

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Addiction and capitalism

Here is a great article from Bruce Alexander, the psychologist who did the Rat Park experiments:,-environmental-crisis,-and-global-capitalism Could provide several shows' worth of insight! :)

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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!

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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 ( 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 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 and



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American Chartered Bank

American Chartered Bank was recently purchased and merged into MB Financial bank. I have read that MB screwed the CEO, and the CEO screwed his bankers, who were equity shareholders at American Chartered Bank. I would love to hear more on this topic.

posted an official response

Based on public records, ACB was hurt in the 2008 global crisis and turned to several private equity groups for the capital to survive and recoup. To satisfy those investors, the sale to MB Financial made sense. Private profit of small groups once again determined an economic event with social consequences. Chicago had one of the nations most competitive urban banking industries: lost of competition among banks. MB's several acquisitions (and others' as well) are fast turning Chicago into a highly concentrated banking industry with all the consequences of consolidated economic but also political power in ever fewer hands.

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An observation for review

I have made an observation that i would like to be reviewed by Richard. In one comedy show, from Croatia, called "Our little clinic", there was a scene: Guy says: "I have a problem. I need three maids but only for one I have enough money." Other guy responds: "Make a competition for three maids. Reward the best one by paying it salary. Other get nothing. You get work of free maids by the price of one." Competition is main component of capitalism. The competition is dependent on reward witch means that there higher performing workers should be paid more then lower performing workers. There are two ways archive that: First: by increasing the paycheck of higher performing workers. Second: by lowering the paycheck of lower performing workers. If they look for decreasing cost of production they would be tempted to choose the second one. In that case the main character of competition is just an excuse by employer to lower the paychecks of his employees, and also an mask for doing so. Do you want competition in economics? Do you want higher quality work to be rewarded? In that kind of system the difference between higher and lower performers might be difference whether you can earn enough to survive. In other words workers are not working as much for earning money then for hope that they might earn money. There is an psychological experiment: use food to train an dove to pick an button. That is classical conditioning. Then lower the rate by witch reward, food, is given to the dove for picking the button. The dove starts picking button even more than it use to. Why would lowering the reward for doing something increase the need to that same thing? Could it be anxiety? I don`t know but that psychological effect reminds me on capitalism. Why is that?

posted an official response

Defenders of capitalism have always praised competition as if the way capitalism organizes competition is either (a) the only way to do so or (b) the socially "best" way to do so. But both (a) and (b) are false. Competition among work performers, for example, can be recognized and rewarded in many different ways. Raising or lowering their wages or hiring or firing them is only the capitalist way of organizing competition. An alternative economic system might, for example, disconnect wages and living standards from work performance. The worker with lower productivity would then be required to take a remedial course, get counselling, move to a different job where productivity would be higher, get more skills training etc. The more productive worker might be recognized for his/her contribution to output, social welfare, etc...or be entitled to more vacation days...or be promoted to a preferred job, etc. There is much empirical research suggesting that other ways of rewarding/punishing greater/lesser work performance have better social results than the capitalist way.

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Any comments on "demonetization" in India and Venezuala? Bitcoin?

And the prospect of the US Government taking the $1,000 note out of circulation? Copycat Currency: Venezuela Follows India into National Demonetization 2016 has become an all-out war against cash. Last month, India almost instantly demonetized their most used paper currency notes, the 500 and 1000 Rs. This has caused massive problems throughout the country, resulting in the deaths of people as they wait in line to exchange money, and a soaring market for Bitcoin. Now, embattled Venezuelan President Nicolas Maduro announced on Sunday that the 100-bolivar bill will be decommissioned. Haven’t we heard this before? In India, Prime Minister Narendra Damodardas Modi announced on Nov. 8 that the government would remove India’s most used currency notes to fight “black money,” or money that is undeclared and untaxed in the underground economy. On Sunday, President Maduro seems to have taken a page out of Modi’s book, referring to “mafias” smuggling the currency ..... Bitcoin trading volume all-time high Demand for Bitcoin has risen dramatically in Venezuela, as it has in India, with the amount of Bitcoin purchased on growing 1000 percent within the last six months, according to Coin Dance. With the bolivar losing so much value, it may be hard for Bitcoin to be purchased effectively in the region, as its price continues to move in the opposite direction. Venezuela is on a growing list of nations with national currency devaluations. The list includes China, which has seen six national devaluations in the last twelve months, Zimbabwe, Brazil, Argentina, Spain, Italy, Great Britain and Ukraine. Every weakening of a nation currency, or a cash ban by a national banking system, seems to strengthen the global demand and value for Bitcoin.

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Applying the Cooperative Model to Higher Education

Dear Professor Wolff, I have enjoyed your radio broadcasts immensely, especially the ones concerning worker co-ops and, as an adjunct professor myself, the perils facing our system of higher education. Combining these two issues, I wonder if any significant work has been done on the possibility of applying the democratic, cooperative model of industry to the enterprise of college and university education. Would a college that is run entirely by educators who are not managed and ultimately exploited by overpaid administrators, shareholders, trustees, etc. be viable? Thanks, Justin Harmon

posted an official response

Not only viable but already existing in various degrees with more efforts forming all the time. Universities began centuries ago as collectives of teachers. They work best when handled that way now, when small enough to enable the kind of relationships to develop among students and teachers that make education all it can be. Even today, ruins of once collective university departments punctuate the shift to a more capitalist employer-employee model with adjuncts positioned as employees more than regular professors. A self-conscious movement for higher education reform would/should/could include demands for cooperative structures of teaching, governance of the university, and student cooperatives for learning would be integral as well.

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A privately controlled system of power generation leaves us more vulnerable to cyberattack.

Charlie Rose recently interviewed Ted Koppel about his book "Lights Out" which is a expose on the dangers posed by cyberterrorists to the power grid and on a government that has done nothing to safeguard that system. I did some follow up reading which revealed the fact that it is the industry itself that is refusing to confront the danger because of the costs of doing so; moreover, I learned that although power distribution is overwhelmingly controlled by public companies, only 10% of power generation is under public control. Capitalists simply will not spend any money that does not contribute to their bottom line, even if the failure to safeguard power production exposes society to unimaginable calamity: without power, there is no water, no system of human waste disposal and consequently an increased likelihood of a public health crisis. I imagine that this failure is grounds enough to nationalize the entire energy system.

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A Progressive, Veto-Proof Congress in 2018?

Dr. Wolff, I think we are in terrible trouble unless Trump sees a large, cohesive opposition group rise up soon and help to elect a Veto-Proof Congress. The Democratic Party seems like a clueless, corrupt bunch. A relative of mine lives in affluent Newport Beach, California and last week a large, spontaneous meeting took place in my relative's home, with people expressing outrage and a desire to do something concrete about the threat we face. What about a national umbrella group composed of and representing people who meet like this and who are focused on a small number of gun versus butter issues that affect huge numbers of people, like Social Security, defense spending, and progressive taxation? Such a group could coordinate nationally over the Internet and by phone, and its membership figures could show politicians that large numbers of people are of like mind. Call it "The House Party."

posted an official response

Many such initiatives are being taken by all sorts of people these days. Time will tell which get support. For me what is key, however, is whether a program for basic change will emerge to galvanize people and focus their energies. Without that, people will wonder whether another massive effort is worthwhile when even if it succeeds against Trump will then face how many more Trumps emerging from the same system in which inequality breeds the billionaires who must buy/corrupt the govt to protect their billions and then the whole sad story of the last few years would repeat itself. Only if that problem is addressed will the sustained effort of oppositional people be tapped and the long sought progress be achieved.

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A recommendation

I have a great song you can play during breaks or a break, that can be downloaded from ITunes. Title is: "Capitalism Gone Mad", sung by The Mighty Sparrow. It's a very catchy tune in a Calypso style, from the album "Quintessential". The Mighty Sparrow is perhaps the most famous and prolific singer from Trinidad and is very well known in the U.S. as well.

posted an official response

Well, thank you. I will gladly use this for the music interlude on my radio show. I had not known of this work and so am doubly glad you sent this in. I gather it was recorded first in 2002 but it sure sounds like it could have been written yesterday. For others who may see this exchange, I extend this recommendation to me also to you.

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