Ask Prof. Wolff

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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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How do we keep one Worker Co-op from exploiting another Worker Co-op?

I keep thinking of a "Gig Economy" as a way to undermine Worker Co-operatives. You are now an independent worker-owner contractor not an employee.

posted an official response

I suspect this is a matter of how one understands terms like "Independent worker-owner" or "Worker Coop." If the latter is just a gathering of the former (more than 1 of them) then there is little difference. The individual self-employed person who produces a good or service under contract to its purchaser is, in effect, both the producer of a surplus (more total value produced than is kept by the producer for his own consumption) and the appropriator of that surplus and thus the person who decides how that surplus will be distributed and used to reproduce this economic system/structure. A worker coop is simply a collection of individuals who organize work collectively among themselves (rather than individually) the produce an output that they divide into (1) the part they sell and use the revenue for their own consumption, and (2) the surplus part that, as a worker coop, they collectively appropriate from themselves and then decide how to use, distribute etc. Whats gone in both the individual and collective versions here is the basic opposition of employer and employee as different persons with correspondingly opposed interests. These two version need not exist or function as competitors, enemies, mutual "underminers." They could simply co-exist as options for each individual to consider and decide for himself/herself as to their own workplace choice.

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Jill Stein and Student Debt

I'm wondering if you could speak to the viability of Jill Stein's plan for the cancellation of student debt and comment on the accuracy of her statements regarding this plan (https://www.youtube.com/watch?v=lelEx10_PMQ). In particular: To what extent is her claim that Wall Street debt was canceled through the use of quantitative easing a valid statement? How likely is it that, if she were elected president, she'd be able to make Federal Reserve appointments in such a way as to ensure her plan gets put into practice, and what kind of time frame would this involve? Would each individual's forgiven debt inevitably be taxed as income? Any insight you could offer into these questions would be welcome. Thanks.

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The Economics of the Green Party's Platform

Jill Stein, the presidential nominee of the Green Party, proposes using quantitative easing to erase student debt in a similar fashion to what was done during the bail out for banks in 2008/2009. She also proposes a Green New Deal that will create millions of jobs while addressing the issue of climate change. http://www.jill2016.com/platform I'm very curious to hear Richard Wolff's insights into the feasibility of these ideas and their potential outcomes.

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Daer prof. Wolff

I would really like to hear your opinion on my ideas on how to build better and more stable socio-economic system:

https://www.linkedin.com/pulse/economic-crises-unavoidable-sašo-tomažič

https://www.linkedin.com/pulse/7-steps-towards-better-more-just-stable-society-sa%C5%A1o-toma%C5%BEi%C4%8D

I am also writing a book on this subject, so your opinion would be very helpful.

Best regards

Sašo Tomažič

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What steps can a person do to join a national or international coop?

Hi Professor Wolff, Thank-you very much for your excellent and insightful GCM's and weekly economic updates and for taking the time to read my question. I am a 35 year old, caucasian male with a communication degree and an information systems degree - a sucker for learning. I agree with a lot of your world views. I have an interest in creating and/or participating in worker cooperatives but I have limited capital, resources and influence. I also agree with Noam Chomsky's perspectives, and, perhaps more surprising or interestingly, Nassim Taleb's views on risk. Ideally, I'd love to work/cooperate with people with a reasonable understanding of these views to create a genuine, cooperative consultancy. What general steps could I take to create or join this type of national or international coop? I should mention I am not a U.S. citizen. Cheers.

posted an official response

There are some cooperative consultancies, but I am not familiar with their rules for adding member etc. What is more needed is for interested, committed people like yourself to start them. For a few years, I and my associates have been pondering how to organize a website that would serve as a kind of clearing house where individuals with your interests could register for others to find you as you would find them to build the cooperative sectors of economies all over the world. The point would be to institutionalize a fuller response to the questions you pose than I can do ad hoc here and now. Thanks for your kind words about out work.

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Co-op Banks?

Dr. Wolff, I recently spent an afternoon helping my college-student son fill out applications for student loans with Sallie Mae. Coincidentally, that evening I received an email from Sallie Mae asking if I wanted to 'receive a better interest rate for my savings.' I'm already contributing $80k from my own pocket to my son's college education, and the fact that he must borrow a further $40k is galling. But the email highlighted a troubling situation: people with money can expect a guaranteed return while my son, whether he's able to or not, must repay the money he's borrowed plus interest. I suppose theoretically the lender's interest rate has a direct relationship to the aggregate ability of borrowers to pay, but this is a future ability to pay and impossible to predict. Is there some way (co-op banks?) that a lender's eventual return could be directly linked to the borrower's eventual ability to repay?

posted an official response

There already exist plenty of precedents and models that link a lender's rate of return to a borrower's rate of return using the borrowed money. This is an old idea of shared risk that often accompanies shared gain as when a nominal interest rate attached to a loan can be raised or lowered depending on the results of the borrower's investments made with the borrowed money. Of course, a certain sharing of risk has always been part of most loans since a borrower's possible default on a loan would impose shared risk on the lender.

A coop bank could work out various shared-risk-shared reward arrangement - and likely would do that much more readily than atypical capitalist bank. That's because the cooperation between borrower and lender follows from the cooperation in a worker coop among the different types of workers contributing to the final output.

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Effect of Dow Jones increases

Hello Professor Woff, Just recently discovered Economic Update and have found it immensely informative. Thank you for your work. As Obama is exiting office I am seeing metrics along the lines of the Dow Jones industrial average has increased by approximately 10k points and is getting close to this perceived “magical” milestone of 20k. I am curious as I have been for some time how this metric affects or doesn’t really affect the average American. It seems to be some sort of barometer as to the economic health of the nation but it seems that whether it rises or falls by 1,000s of points it doesn’t seem to impact for instance my standard of living or really anyone else I know who seems to exist in the middle to lower classes. Is this something you could speak about or if you already have could you point me in the direction of a previous episode or possible a good book on the subject of the correlation between the Dow Jones and for lack of a better term the “average” American worker?

posted an official response

Your instinct is quite right; there is no direct connection, no necessary linkage between movement in the Dow Jones industrial average (DJ) and the economic conditions of average Americans. The DJ is just the average price of a group of major industrial companies' stocks. These can and often move in one direction while most stocks move in the other. Endless possible combinations of movements have and continue to characterize the price movements of companies, industries, etc. These movements can happen with improving or deteriorating conditions for average Americans. One has no necessary linkage to the other. In particular, dont be fooled by the ideology that seeks to get you to believe that a rising DJ (a sign the stock-owners are making money as the values of their stock holdings rise) is somehow a good sign for average Americans. It is not. The goal of saying something patently untrue is to line up average Americans behind the old idea that what;s good for Wall Street is good for the rest of us. Not so;never was.

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Commentary on MMT (modern monetary theory)?

Could you please offer your opinions and/or commentary on MMT (modern monetary theory), Hyman Minsky, Warren Mosler, Stephanie Kelton, Randall Wray, Bill Mitchell, etc. and how this explanation of monetary systems might relate to economic democracy and socialism.

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Could you please respond to this Michael Parenti lecture?

It's "Reflection On the Overthrow of Communism." It goes from 12.23-20.19 in the audio, although I agree with your logic, Dr. Wolff, what you argue validates what I also have advocated for years. creating and new economic system from the ground up by democratizing the enterprise , "co-ops etc. but Dr. Parenti argues, as do many on the left that a "pure socialism" cannot exist without a strong state etc. Top Down hierarchical centralize state power . maybe you could respond before I die which may be very soon since I have bile duct cancer "incurable" thank you

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Universal Basic Income and the falling rate of profit.

From what I know, some capitalists support UBI because it would serve as something of a palliative for declining demand caused by automation and the resulting decline in profits. It would seem, however, that as automation proceeds, there would need to be an increasing tax burden upon capitalists in order to raise money for the UBI, which would approach 100% as we proceed towards full or near full automation, which would of course mean the end of capitalism. Thus, ceteris paribus, UBI doesn't actually solve the contradictions of capitalism.

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Venezuela

Hi Prof Woolf: The Tampa Bay Times has printed several letters stating that Venezuela's current economic problems are due to socialist policies. Is this true? And if not, can you expound on what exactly happened. Many thanks, Pete E.

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Ratio to Measure Worker Exploitation

A stock statistic I recently discovered was "revenue per employee", basically Total Revenue/Total Employees. I then did my own research to figure out what the average salary was, Total Payroll/Total Employees. Then, I did divided the average revenue/average salary, which shows how much they revenue the worker is expected to generate per 1 dollar paid. I already did a few companies.

 

For example, Apple, for every dollar it pays in payroll, on average will generate $16.31 in revenue. You can also think of the reciporcal of this on a per dollar basis - Apple makes a dollar revenue, it only pays 6 cents to the workers. Obviously this reciprocal is constrained between 0 and 1, 0 being absolute slavery and 1 being the workers enjoying the revenue.

 

I also did the same calculation with revenue after deductions (less payroll since workers must generate their own salary). I did this because I figured it'd be the first objection. Using that, Apple pays 1 dollar and gets 5.97 in pure revenue (all expenses have been paid), or for every 1 dollar of revenue after expenses, Apple pays it's workers 17 cents of that. I wonder if there's a name for this ratio or if it's been discussed before. The reciprocal I think is most interesting because it is limited from 0-1, and you can literally see how wages is just a sliding scale of slavery. You'd also be able to rank and point out companies that were the most egregious offenders (so far Apple and Chipotle are winning in my research).

One last way I toyed with this was post-tax dollars as well. For every 1 dollar after taxes and expenses Apple generates, it gives 21 cents to its workers.

 

Big fan by the way, Please let me know what you think.

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Conspiracy Theory

I am not a friend of conspiracy theories. But when I am thinking of the fact even the super rich people in the world are beginning to realize that capitalism might be near its end, I cannot help that the idea comes to my mind that the political crisis that we are facing are willingly provoced. Here in Germany the housing prices are rising at a pathological speed. In my hometown 2,000 students cannot find a room at a reasonable rent. People of the lower middle class cannot rent apartments, because the richer ones are paying more than the others can afford. There is too much cheap money in the hands of the rich and they dictate the prices for real estate. Real estate is the only possibility to secure your wealth when the next crisis hits us, because people have to live somewhere and so they have to pay rent. In Germany the number of rented apartments and houses are 3 times higher that the owned ones. But back to my conspiracy. Is it possible that the super rich and the politicians in charge force the chance of going to war? We here in western Europe would be in the middle if Nato and Russia would go against each other. Sometimes I think they don't care because they believe that such a conflict could not harm them.

posted an official response

Capitalism played major roles in both World Wars, the bloodiest wars in human history. In WW1, it was a growing capitalism and its competition that drove both colonialism and imperialism and then the conflicts among competing capitalists and nations that culminated in the war. In the case of WW2, capitalism's global breakdown in 1929 so traumatized masses of people that some found fascist solutions to the mass unemployment and suffering caused by capitalism's crisis, and that then led to war. It would therefore be extremely naive not to imagine that if the current capitalist crisis since 2008 worsens, a solution around warfare may well be found. Indeed, the endless US wars in Iraq, Afghanisatn, Yemen, Libya, and soon Syria may be beginnings of all that. Yes, the leaders fear war, but they fear capitalism's implosion as well.

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Clarification about Modern Monetary Therory

Dear Professor Wolff, On social media, there's a group that calls itself "Real Progressives". It is led by Steven Grumbine. Mr. Grumbine frequently posts videos claiming that, since the US has monetary sovereignty, it can just print unlimited amounts of money to pay for any government program it likes (healthcare, education,...). He pretty much implies that the national dept is irrelevant and that we are being lied to when it comes to economics and that we don't know anything about economics. Another favorite line of his is "Taxes don't pay for spending". I'd very much like to get your viewpoint on this, because 1. this seems to be too fantastical to be true and 2. Mr. Grumbine has quite an influence in the progressive movement in the US. I greatly appreciate your way of explaining economics. Thank you. An example video can be found here: "MMT, Monetary Sovereignty and Why it Should Matter to ALL Progressives..." https://www.facebook.com/RealProgressive/videos/1597074277288663/ Another bold video, where he gets kinda agressive about it: "Warning: this video contains an economic throat punch of a rant... fit for cable not public TV... Hillary Clinton, goldbug fanatics and the hyper inflation hyperventilators who are guilty of economic treason against the nation." https://www.facebook.com/RealProgressive/videos/1616237938705630/

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Review Joel Koel; The Enemy of Nature: The End of Capitalism or the End of the World

Suggest this author or book for review.

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