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Worker co-op competing with a capitalist organisation.

Hi Rick, This article from the NYT touches on many items you discuss frequently. Would a worker co-op be able to compete with a capitalist organisation address the problem addressed in this article? What advantages would a capitalist have over a worker co-op when addressing the increasing automation of production? THANKS. https://www.nytimes.com/2017/07/25/upshot/maybe-weve-been-thinking-about-the-productivity-slump-all-wrong.html?nytmobile=0

posted an official response

A worker-coop based economy would deal with productivity in altogether different ways (with correspondingly different results). First of all, a worker-coop would likely have workers who all feel much more responsible for as well as likely to benefit from increasing productivity than workers in a capitalist enterprise....for all the usual reasons of how people react to having real skin in the proverbial game.

Second, every increase in worker productivity entails a subsequent choice: will the same workers continue to work and produce more output because productivity rose or will the enterprise keep output constant and thus enable workers to have less work time/ more leisure as a result of their increased productivity. What combination of more output (likely at lower price) and less labor hour should be decided democratically with inputs from both the workers in the enterprise experiencing rising productivity and workers and citizens outside that enterprise. This cannot and does not happen in capitalist enterprises where undemocratic decisions on these issues are made by capitalists; workers are excluded from participating in them. In a worker-coop based economy there is at least a far greater likelihood of a democratic decision-making process on how to use/benefit from productivity increases.

The only reason the above is not clear in people's minds (including the NYTimes journalist) is that they assume capitalism and thus assume the usual capitalist decision to forego their workers increased leisure in favor of firing "redundant" workers, upping profits, etc. Then they worry about how to deal with that.

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Nancy MacLean is under swarm-attack by the very right wingers she calls out in her book

Nancy MacLean's new book, "Democracy in Chains: The Deep History of the Radical Right's Stealth Plan for America" must have struck a chord. She is now being targeted by people and organizations believed to have ties with dark money, a label coined by New Yorker writer and author Jane Mayer in her book by the same name. Think Koch brothers. MacLean's book and the attack it provoked have attracted a string of criticisms and alleged inaccuracies and accusations of outright libel in her book. Much of this criticism has been expressed in a blog on the Washington Post website. I understand she has even appealed for support through her Facebook page. I cannot verify this last because I do not have a Facebook account. A good discussion of the conflict can be found here: https://www.insidehighered.com/news/2017/07/12/historian-alleges-coordinated-criticism-her-latest-book-which-critical-radical-right. You can also hear Prof. MacLean interviewed about her book in this podcast: http://hwcdn.libsyn.com/p/a/e/2/ae2ef571cd9af7ba/Nancy_MacLean_on_the_Radical_Right_and_James_Buchanan.m4a?c_id=15889177&destination_id=195421&expiration=1501090510&hwt=b6ed7b1551f8f0316ffa50aa1e4f0595. For an earful of the kind of attacks being directed at Prof. MacLean, check out this podcast on Reason.com: http://reason.com/blog/2017/07/24/maclean-freedom-fest-panopticon. By the way, everyone should be aware that the very same radical right is now just six states short of calling for a constitutional convention to propose a revised constitution written by the American Legislative Exchange Council (ALEC) as described here: http://inthesetimes.com/article/18940/alec-balanced-budget-corporate-constitutional-convention

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How to get involved?

Professor Wolff, Your D@W site is helping me to learn a lot more about worker co-ops, something that I have been interested in ever since seeing you on a Q & A panel supporting the release of the book that you were involved with “Imagine: Living in a Socialist USA”. I’m hoping that you would be able to lend me your thoughts on something that isn’t really covered on the site. I’m a Data Science major (undergrad at this point) in the University of Michigan, minoring in the study of “complex systems”, and hoping to apply these skills to modeling (I mean computer modeling, of course – my job prospects in other kinds of modeling would be serious cause for concern). I’m interested in how models can be used to promote outcomes related to social justice. As for what specific outcomes, and what scale I want to focus on, well, I’m still trying to figure that out. I believe, though, that cooperative enterprise is something that would promote social justice in many ways; greater economic stability in communities, less poverty, less racism/classism/etc, even improved health outcomes. I’m sure there are more. Anyways, this leads to my question… In what ways would someone like me be able to get involved? In supporting co-ops, encouraging the adoption of co-op structure, advocating for more favorable legal environments for co-ops – whatever. I would like to use the skills that I am developing in school (agent-based modeling, analysis of large data sets, mapping system dynamics, etc) but other than that I am pretty open. If you have any ideas, or directions in which I could do further research, I would truly appreciate hearing about them. Thank you so much for your time, Professor!

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An interesting story about an entrepreneur in the eyeglass industry 'taking on the big guys'.

http://www.cbc.ca/listen/shows/sunday-edition/segment/11878318

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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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Interview with John Summa

I live in California. Engineer. Your guest, John Summa, elicited no sympathy from me. Third-rate non-academic who tried to carve out a place for himself at a university with his 'hands-on' working experience: steel worker, oil worker? I think he claimed in the KPFK broadcasted interview near the end that he was a 'hedge fund manager'?... Give me a break.

posted an official response

It would help me understand your displeasure with the interview if I had a better sense of what exactly bothered you. All sorts of individuals who become academics start elsewhere (and for all sorts of reasons). Mostly, they end up better teachers because (1) their varied real world working experiences provide a valuable supplement to book learning in classrooms, and (2) their curiosity about the economics moving the employment situations they occupied drove them to learn along the way, to ask questions, and generally to accumulate effective ways to convey to students what can otherwise be a dry, abstract subject. Yes, you heard right; he added "hedge fund manager" toward the end to his earlier listed other jobs, often in manual labor occupations around the country.

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Value

For us value is created only as a result of human labour. Price is a different thing which by and large fluctuates around value. The fruit of financial magic is money. It is something that has price but no value. Commodities (shares, bonds, prepackaged debt, etc.) are being bought and sold. The money is disconnected from labour. How do we account for this? (In terms of labour theory of value)

posted an official response

There is a long tradition of Marxian analysis of values, prices and the larger capitalist economy. It can and does treat products of labor that have no value or price; that have price but no value; and so on. Marx himself- as well as his followers - attended to the matter of paper money (rather than gold money which can be treated as a produced commodity with value [as Marx does in Capital, vol 1] through concepts like "fictitious capital" and so on. Perhaps the best way to think about this is to see that the world of labor, commodities, and values can spawn a set of derivatives - symbols that stand in for a particular relation to commodities, labor and values - that can exchange in markets at prices, etc. The question then becomes how such exchanges and their prices relate to values. This is analogous to the overblown debates over how Marx related the prices of commodities produce in capitalisj to their values. On that you might take a look at S. Resnick and R. Wolff, New Departures in Marxian Theory, New York: Rooutledge, 2006.

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Please address increasing high incomes and profits, and debt money creation as counterfeiting

Hi Richard, after analyzing economics for decades I feel there is a key narrative that is not being taken up that would help everyone (likely even many elites) to far better understand our modern economic crisis through the following very simple analysis: Especially now that money has become little more that imaginary electronic blips on computer hard drives, constantly increasing very high incomes and corporate profits (beyond inflation) and the endless expanding money creation through debt creation which fuels these endlessly increasing elite incomes and profits, can be very simply seen as nothing more complicated than a legalized form of counterfeiting. Seen in this light, it becomes a lot more clear why endless debt money creation and arbitrarily increasing elite incomes and profits, are so bad for the economy. This is because it is pretty easy for anyone to understand why physically printing endless private money supplies on paper is an economically destructive act. So why aren't we simply discussing debt money creation and arbitrarily and vastly increasing incomes and profits, as counterfeiting, and that the obvious needed correction to that counterfeiting is to remove all of that excess money through 90% to 100% taxes on high incomes and profits so that wealth disparity and inflation caused by this legal counterfeiting are strongly corrected; and disparities (as well as lack of investment in infrastructure, education, welfare, etc) are also corrected through redistribution? Let's open up this more simple way of looking at this problem. thanks Eric Brooks San Francisco, CA

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Politics of worker co-ops.

Dr. Wolff, I thoroughly agree that worker co-ops have the potential for spreading the wealth, and opportunity for people in the work place, but can you comment on the history of work co-ops, and the resulting "people politics" that eventually comes to the surface, as a result of everyone having a say in how the system is run? I find it interesting, that while you and others keep recommending co-ops as an alternative to Capitalism, NO ONE talks about the inevitable...politics, that will come up. Why is that? I lived on a farm co-op once, and most of the 30 or so families that lived there had full time jobs away from the community, but we all ran the property like a co-op. Meaning, everyone had a vote on important things that needed to get done/added/removed/modified within the community, and, if one family out of the 30 *disagreed*, we all had to find a way to solve that family's concerns, before we could put a resolution to bed, and begin the task. And I will tell you, we didn't always agree. Sometimes it took weeks or months to decide. And that was on a farming co-op. I have also talked with managers who work in work-place co-ops, and I've been told there are a, "lot of family (their choice of words!) politics that come up," as a result of everyone having a vote, and that it is often much harder, just to decide what they're going to do with, how the system is run, where it's run, and what to do with the profits. It's easy to see why people would automatically default to wanting a small group of people, and a single CEO, 2000 miles away to just make the decisions, because quite often, people in groups...can't! Now magnify that to the scale of Mondragon. How the heck does a company that large, survive for this long, and not have political explosions in its decision making process, with that many people, having to *all* decide...together? You've been there, so can you please comment on this? Is it cultural? Is it group pressure? Are they all smoking a wacky weed we need to be aware of? How do they do it???

posted an official response

Good question and so it draws a complex answer as good questions usually do. First, the human race has mostly lived in cooperating units (villages, tribes, clans, extended families, and so on). True, some of them were run hierarchically (top down), but many, many of them (lasting centuries) were run cooperatively with dispersed, consensus-based decision-making. So it is simply not true that human beings cannot function democratically/collectively/cooperatively or that they will tend toward hierarchy. Second, both hierarchy and cooperation have strengths and weaknesses so that human beings usually organize themselves using various mixtures of both. Thus in the US we have a president but also Congress and 50 states and so on: ranges of hierarchy and collectivity interacting in shifting ways and balances. Most US families teach their children early on to learn to share with others as a kind of basic civic virtue; there are good reasons for that. Third, many societies have discovered and come to subscribe to a basic idea: human beings are most creative and productive and happy when they have real power over their lives, when they contribute to the decisions that shape their lives. Indeed, many societies subscribe to that idea even if they do not really structure themselves that way. Fourth, certain kinds of economic systems are more conducive to cooperation than others. Slavery, feudalism and capitalism all divide those engaged in producing needed goods and services into two very different positions: master/slave. lord/serf, employer/employee. Such economic divisions work against social cooperation (no matter how hard advocates of those systems insist they have social cooperation). On the contrary, economic systems that do not so divide people in production (self-employment economies, egalitarian tribal economics, communal economies) show much deeper and longer-lasting social cooperations. Fifth, there world shows many examples of hierarchical institutions being challenged, often successfully, by alternative, much more cooperative ways of organizing such institutions. Examples include the Protestant Reformation and its split from the Roman Catholic Church; the American revolution that opposed the extremely hierarchical feudal kingdom led by Britain's George III; Mondragon's successful development of cooperative industries instead of hierarchical capitalist enterprises; the ways in which citizens rise up against autocratic hierarchies in the political processes (our 1960s, the Arab Spring, Occupy Wall Street, and so on.

Mondragon had and continues to have many challenges including one big one with which I will conclude this response to your good question. Coops existing within a larger non-coop based society are constantly finding that their members are affected by the hierarchical alternatives all around them. Mondragon members and their families watch Spanish TV which glorifies hierarchy and ignores or denigrates cooperation in many ways. Mondragon's members know what struggles are needed to build and sustain a cooperative structure, but they encounter difficulties getting their children to commit to such struggles because for them the coop seems to exist on its own without such struggles. To sustain democracy requires vigilance and struggle: the exact same applies to peace, freedom and cooperation. At least for the forseeable future, those key values are not secure enough to allow us to assume they will continue on their own. But struggle does not mean that those values are not achievable. Forsaking the struggle undercuts them and that leaves us all much worse off (no matter what the advocates of war, autocracy, hierarchy, etc would like us to think otherwise).

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Co-op and technological advancement

I was wondering if there are studies on co-op who decided to buy machine or automated tasks and so did they decide to keep everyone at the same salary but work less hours a week or did they decide to fire workers and make more profit? Do co-op take decisions that tends to look more after the well being of every workers or do they still tends to look at profit first. After all we could imagine result of voting decision 51% against 49% and getting rid of the 49%. Is there any studies of the decision and their rational in co-op, so far?

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Have you, or can you, give a talk about the economy in Venezuela?

Right now in the U.S. everyone, including myself until recently, thinks Venezuela is facing a collapse of socialism. But after watching a video by Abby Martin (https://www.youtube.com/watch?v=YUYWrPiUeWY&t=2s) it appears as though an "economic war" being waged on socialist policies.

posted an official response

I wish I had the time to devote to a proper investigation of the Venezuela situation. But of this much I am certain: the US has waged a covert war against first Chavez (recall his physical removal and return early in his government) and now Maduro. That continues a long-standing pattern in Latin America for many, many decades. How to balance that powerful fact with the impacts on Venezuela of the chaotic global oil market's volatility, the rebellion of Venezuela's upper classes against the changes pursued since Chavez first arrived, and the efforts of some other Latin American governments to take advantage of Venezuela's difficulties...that is what I wish but cannot now investigate to offer the kind of analysis that would be worthwhile.

A last suggestion: covert US govt operations against its perceived enemies have always included attention to media reports. It is wise and prudent to take especially mainstream media reports with a large grain of salt.

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Can California show our country the way to a functional healthcare system?

Here's a link to a study by a team of economists at the University of Massachusetts in Amherst that shows how the state-wide single-payer healthcare system now under consideration in California could be implemented and financed. Where the federal government has been failing us for decades, California just might have the size and clout to show us how it can be done. https://www.peri.umass.edu/publication/item/996-economic-analysis-of-the-healthy-california-single-payer-health-care-proposal-sb-562

posted an official response

Thanks. as myself a long-time member of the economics department at Umass-Amherst, I will be especially attentive to their report.

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Co-operatives moving production overseas.

As a man who has worked as a factory supervisor, I have seen men at work first hand and managed them and their environment to keep the factory running smoothly. I tend to agree with you that a co-operative way of organising and running a factory could produce some benefits both to the company and the workers, but I disagree that the workers would not agree to moving production off shore if they had the chance. It is my experience that men come to work to have the easiest and most pleasant eight hours possible, and will shove the work onto someone else if the opportunity arises and they think they can get away with it. Consequently, if a factory staffed and run as a co-operative decides that the product they make can be made cheaper overseas, what would then stop the co-operative from doing this? Nothing seems to stop the capitalists from doing it, and I can’t see anything that would stop the co-operatives from doing it either. Itis mu opinion that they would have few qualms about doing it, if none of them lost their jobs as a consequence and their profit levels remained at least the same. They would then come to the workplace merely to distribute the imported goods, and to collect the money. If it is profitable for a commercial enterprise to do this, then it would be profitable for the co-operative to do this as well. Am I missing something here or is there something in the model you are using to set up the co-operative in such a way as to prevent this from happening?

posted an official response

Capitalists can and do move production overseas if and when profit opportunities can thereby be exploited (due to lower wages overseas usually). But notice that the capitalists stay at home and usually bring the profits back home too. In the case of a worker coop, that would not likely happen. When production moves overseas, so do the jobs involved and thus too the individuals in those jobs. Their lives would be disrupted and changed in ways utterly different from a group of capitalists making the comparable decision. Moving production is moving jobs. A worker coop move abroad would displace the worker and his/her family, etc., disrupting the lives of children, relatives, etc. And all that would be taken into account when the workers in a worker coop are making the decision as to whether to move production overseas or not. Capitalists making that decision are under no such constraints.

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I thought you might find this interesting!

https://www.theguardian.com/commentisfree/2017/jul/18/cope-capitalism-failed-factory-workers-greek-workplace-control?CMP=share_btn_fb

posted an official response

I did and this week's radio/TV show "Economic Update" includes a segment I prepared on the Viome factory in Thessaloniki.

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