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.

Los Angeles Affordable Housing Economics and Initiatives

I've seen many articles that seem to argue against affordable housing initiatives similar to the one recently passed by the city of Los Angeles, with the core of the argument revolving around how counter-productive it is to interfere with the free market and how affordable housing laws make the issue actually worse. I know you've touched on gentrification in the past, but what, if any, is a proper response to articles such as this? http://johnhcochrane.blogspot.co.nz/2016/11/how-to-raise-house-prices-and-inequality.html Thank you so much for the work you've done.

1 comment Share

This is how we got to the climate precipice...

...and why the market went up on the news of the new president elect... https://amstephanovich.wordpress.com/2016/11/08/the-system-will-self-destruct-if-left-to-itself-intelligence-may-indeed-be-a-deadly-mutation/

1 comment Share

Germany's party SPD (Social Democratic Party)

Dear Richard, our SPD did it again! The Employer's Association in Germany made the suggestion that the work time rules are too strict and that these should be eased. And our Secretary of Labour (Andrea Nahles) now pointed out that she is willing to change the laws just as the employers want it. Working of more than 10 hours a day, cutting of resting time between two working days a.s.o. In the Gerhard Schroeder chancellorship the SPD made the HARTZ IV rules, which forced unemployed people to take every work that was offered no matter how low the payment is. This was the reason that the SPD went down from 35 % of the votes to 22 %. The leaders of this party are not willing to back of of this policy. Sigmar Gabriel will never become chancellor this way. Unfortunately the LINKE is not able to make profit of the SPD downturn, because the Germans still think of them as a GDR-related party.

posted an official response

Your point makes good sense. The SPD was captured long ago by neoliberal ideology, the notion that capitalism was permanent and could, at best, only be reformed, not superseded. Making the LInke taboo as connected to the GDR will only do its political job until the decline in the conditions of the mass of workers makes them unwilling any longer to be controlled by that taboo. Here in US workers long tending toward Democratic Party were so angry at their long-term economic decline that they held their noses and voted instead for Trump as a hope for change that the democratic Party had betrayed. The lesson for Germany is clear.

2 comments Share

Fallout of Trump Election Regarding Personal Finances

Professor Wolff, America is reeling with the results of the presidential election. I have heard you talk about how this can be viewed as a natural outcome of our capitalist system. What I am interested in is your views on how the Trump presidency might effect our personal economic wellbeing. By that I mean the effects on our retirement accounts, investments, home and other real estate values, employment and career opportunities, and so one. I am 62, a carpenter, with an IRA, some thoughts of investing in rental property, and two young adult children whose future I am concerned about. With Trump ascendant, I feel completely unprepared for what may lie ahead. I realize Trump is a huge cypher, but assuming he governs like the authoritarian or neofascist he campaigned as, what does history tell us to expect?

1 comment Share

Dear prof.Wolff wrote you a Bulgarian member of MENSA!

Dear prof.Wolff wrote you a Bulgarian member of MENSA! We would like to launch a parallel, digital monetary system based on the money principle of Silvio Gesell, but where the negative interest is injected back into the economy in the form of a basic income! Would you like to take part in this project? The links are: 1. video in which I speak of nezhdunarodna conference. https://youtu.be/LxX0FPdiQ78 2. Complete explanation of the new financial structure that we want to start. http://www.moneyofthefuture.com/en.html I look forward to hearing from you. L.Stankov allximika@gmail.com

2 comments Share

Cooperatives in Yugoslavia

In Yugoslavia (The Socialist Federal Republic of Yugoslavia; SFRY) during the cold war, all industry was seased by the goverment but it was worker operated unlike as you point out in the USSR where the board of directors were replaced with goverment officials. I had an argument with both my sociology and history profesors where they give arguments that in theory this kind of a pilitical economic system could work but not in practice. We had a system where there was no competition, if one branch of the industry was doing poorly the other branches would bail it out since everything was state owned. Everybody had free health care as well as free education. Certain corporations gave out individual scolarships to students and when they finiahed college they were obligatet to work in that enterprise for a couple of years. Infact in our former education system Marxisam was a coriculum that was tought in highschools. Workers had a month paid vocation and on top of that they had something called K-15 where at the end of the year every worker gets a 13th monthly payment free of work. The Yugoslav republic colapsed for a whole host of reasons but my history profesors argument was that the workers did not understand the power they possesed over the state corporations at that time and did not know how to efficiently run the industry, since a significant number of people lived in rural areas and had little formal education, further my sociology profesor argues that in Yugoslavia in the cooperatives a phenomena developt called "the red bourgeoisie" where the workers over employ their staff, where everyone got paid but a smaler portion of the workers actualy worked hense one of the reasons that led to the Yugoslav economy downfall. Note that this is only a modest critisism of the cooperatives. As I am no Economy expert. It would be nice to hear a more indeapth analysis of the Yugoslav economic system if posible, with its advantages and posible flaws

1 comment Share

Cooperatives in Yugoslavia

In Yugoslavia (The Socialist Federal Republic of Yugoslavia; SFRY) during the cold war, all industry was seased by the goverment but it was worker operated unlike as you point out in the USSR where the board of directors were replaced with goverment officials. I had an argument with both my sociology and history profesors where they give arguments that in theory this kind of a pilitical economic system could work but not in practice. We had a system where there was no competition, if one branch of the industry was doing poorly the other branches would bail it out since everything was state owned. Everybody had free health care as well as free education. Certain corporations gave out individual scolarships to students and when they finiahed college they were obligatet to work in that enterprise for a couple of years. Infact in our former education system Marxisam was a coriculum that was tought in highschools. Workers had a month paid vocation and on top of that they had something called K-15 where at the end of the year every worker gets a 13th monthly payment free of work. The Yugoslav republic colapsed for a whole host of reasons but my history profesors argument was that the workers did not understand the power they possesed over the state corporations at that time and did not know how to efficiently run the industry, since a significant number of people lived in rural areas and had little formal education, further my sociology profesor argues that in Yugoslavia in the cooperatives a phenomena developt called "the red bourgeoisie" where the workers over employ their staff, where everyone got paid but a smaler portion of the workers actualy worked hense one of the reasons that led to the Yugoslav economy downfall. Note that this is only a modest critisism of the cooperatives. As I am no Economy expert. It would be nice to hear a more indeapth analysis of the Yugoslav economic system if posible, with its advantages and posible flaws

1 comment Share

Criticism of worker coops

"Dear Richard,

Hi, this is Zoe Sherman's dad. I introduced myself to you after one of your recent Judson Memorial Church talks.

My brother Len is a retired corporate consultant who now works part time as an adjunct professor teaching a course for MBA students at Columbia. He recently published a book on business strategies. (See lsherman.com) He sent me an email in response to your Nov. 11 WBAI program. If you respond to what he wrote on a future Economic Update, please send me advance notice so that I can be sure to listen to it.

Here's Len's email:

I actually listened to Prof. Wolff's program (for the first time). As you might expect, I have a profoundly different world view. During the program, he asked his guest, "why do you think there are so few examples of successful worker cooperatives in the world?"

The guest's answer was pretty lame, but let me posit a stronger response (that Wolff would probably agree with): because the capitalists would never allow socialist structures to thrive, and thus they'd use their financial and political power to crush resistance.

My response would be quite different: it's because socialist worker cooperatives are inherently inefficient, and therefore can't effectively compete with capitalist enterprises. For example, let's look at the trucking industry. There are 3.5 million professional truck drivers in the country -- one of the largest single categories of employment. Suppose a segment of the industry was operated as a worker's cooperative, committed to the welfare and safety of its drivers. As such, wages and benefits would be maintained at industry-leading levels, and perhaps more importantly, there would be tight caps on allowable driving hours per day to promote safety. Now suppose an entrepreneur invests her time and energy in perfecting the technology enabling fully automated truck driving operations. Because of her invention, trucks could operate nearly 24 hours per day; the industry would need fewer trucks, and of course they would no longer need most of the current 3.5 million truck drivers. As a result, the net cost of operating a trucking companies would go way down (while the patent-holder would earn a fortune). What do you think would happen to the trucking company cooperative whose objective is not to maximize efficiency, but to maintain the welfare of its worker/owners? Would Professor Wolff say, we can't allow such technology advances to happen? Or would he say, we have to expropriate 90+% of the wealth created by the new technology owners to share with the dislodged workers?

We face a serious problem in a world grappling with how to adapt to the relentless advance of automation and artificial intelligence. Trump tried to pin the blame for sluggish growth and income inequality on the Mexicans and Chinese, but of course they're not the problem. If there's any good to come out of this election (and the rightward shift in Europe), it's that there's a global political uprising against the relentless growth in income inequality. But I don't accept Wolff's prescription any more than I do Trump's. We will probably have to endure even more pain (as a result of the disastrous failure Trump is about to engender) before we can move towards a more enlightened debate on how technology, productivity and society can peacefully co-exist. The artisanal monks were really opposed to Gutenberg's printing press, and farmers rioted in the wake of the invention of the thresher and combine. So this isn't a new problem. The world 50 years from now will look very different from today, but it won't be Wolff's world. Getting to there will be the challenge of lifetime.

Len"

posted an official response

Dear Joe,

In response to Len - and I shall try to be polite - I would NOT agree that worker coops dont exist more widely because capitalists would crush them. First of all, the old canard that worker coops cannot compete with capitalist enterprises surprises by its longevity. Really? Mondragon Cooperative Corporations 200 member coops have been successfully outcompeting capitalist competitors since 1956. That's how the MCC became the 7th largest corporation in Spain. That's why the Arizmendi enterprises in the Bay Area of California have grown and multiplied, likewise the Alvarado street bakery etc. Nor is the theory at all a problem. Worker coops have fewer expenses than capitalist enterprises (usually no dividends, no bloated management salary packages, fewer supervisory expenses since workers, being owners and directors themselves, need less paid supervision/supervisors than in the internally antagonistic capitalist organization of enterprises, and finally get greater productivity because workers have their own "skin in the game", and so on). Len really should know all this. A Univ of Leeds professor has catalogued the many studies affirming the greater profitability, longevity and much else of worker coops when compared with capitalist enterprises. Do some worker coops fail? Of course, but that does not distinguish them from capitalist enterprises.

Bottom line: mostly the ideological domination of capitalism has led to laws, regulations, business school curricula, media treatments etc that treat capitalism as tho it were the best possible enterprise organization and as tho alternatives were either unthinkable, impracticable or proven unviable. None of that was or is true, any more than the medieval teachers's notion (mostly religious folks) that lords and serfs on feudal manors were the only conceivable mode of organizing enterprises. The failures and collapses of capitalism will fuel the search for and experiments with alternative enterprise organization; out of them will come the movement for transition beyond capitalism. Argentina's experiments (see the film "The Take") show one such route; others are emerging.

Please give my best to Zoe.

4 comments Share

Investment Opportunities to support Worker Owned Enterprises

I'm interested in a couple potential possibilities to support the expanding sector of the economy one might call, "people-powered". Are there investment opportunities that would provide a reasonable return on investment that would support Worker Owned Enterprises/Co-Ops? Thanks, Bill

posted an official response

The simplest answer is yes. Over and over again, worker coops have delivered profits as good or better than conventional capitalist enterprises. Of course, any enterprise entails risks - worker coops as well as capitalist enterprises - but there is no warrant for thinking that the latter are worthwhile investments while the former are not. Here in the US, what an investor needs is some reliable guidance in locating and collaborating with worker coops seeking outside investments. 

4 comments Share

The Tyranny of the Majority

Dear Professor Wolff, My name is Chris and I am writing to you from Australia. I am a huge fan of yours and I listen to your radio program religiously every week. Firstly I would like to thank you for all your efforts and your bravery in being able to talk about something which has been considered taboo for such a long time. It must have been very difficult to be against capitalism throughout the Cold War period so I have to thank you for not giving up in the face of all the demonisation and dismissal of socialist views. I wholeheartedly agree with your criticism of capitalism and the need to go beyond it. I have been thinking about this a lot over the past year and have been looking for alternative systems. As difficult as it is to predict the future, I think it is important that we discuss how alternative systems might work and what their advantages and potential flaws are. My question is, whilst capitalism gives a minority of the population (capitalists) power over the majority through their ownership and control over almost all of the means of production in society, do you think it is possible for the opposite to develop in a system comprised of worker cooperatives? By this I mean a situation in which the majority dominates and exploits a minority i.e. what is often termed the 'Tyranny of the Majority'. To my understanding (and correct me if I'm wrong), the root cause of the problem in capitalism is that most people (workers) cannot access the means of production which is absolutely essential for them in order to work and make a decent living, without getting permission from a member of a tiny group of people who privately own and therefore control those resources (capitalists). This leads to a situation in which the best choice available to the majority of the population is to agree to an employment contract in which they have to agree to be bossed around all day during work hours and give up a huge chunk of what they produce every day to the proprietor. Thus, the root cause of exploitation is the denial of peoples' freedom to access the resources they need to make a decent living without having to get permission from someone else. In a system of worker co-ops, presumably each co-op would control its respective means of production, with the control divided up equally amongst each co-ops' members (one person - one vote). If this is the case, then presumably each co-op would have the power to exclude people from joining the co-op and accessing its means of production, as well as being able to revoke a person's membership, otherwise it would just be purely common property that anyone could access. If all of the means of production in society is owned by different co-ops, then what happens to the people who do not belong to a co-op? Wouldn't they face a similar sort of dilemma as the worker in capitalism? If they do not have any capital themselves, then the only way they could access the means of production they need in order to make a decent living would be to get permission from a co-op. This would give the current members of co-ops a degree of power over the rest of the population, as they (democratically) control the means of production and could therefore impose conditions on anyone joining, similar to the way capitalists make workers sign employment contracts. The people who do not currently belogn to a co-op would have no better choice than to agree to a contract of this nature with a co-op, otherwise they would not be allowed to access a means of production. What is to stop co-ops from deciding, democratically, to pay new members less than existing members for the same work, thereby exploiting them. Particularly if they are under competitive pressure in a market, it is not difficult to imagine them doing this to remain competitive. Of course it may be objected that when a worker joins a co-op they get one vote, so everyone has a say over how the means of production is used. However, if a co-op already has thousands or more members in it, then the one vote of the new member is insignificant compared to the democratic will of the existing members. What happens to people who get out-voted and cannot find a co-op in which they can see eye to eye with the members? What about people who do not wish to join an existing co-op and would rather start their own or work for themselves? Where would they get access to the capital required to do this? What if the majority uses their democratic power over the means of production to discriminate against and exploit a minority of the population? I suppose this is a flaw of democracy itself, and it's probably better than the 'Tyranny of the Minority' that we have in capitalism, but at the same time as a libertarian socialist who sees the root of exploitation as the denial of individual liberty, I don't think we can dismiss this problem. Just ask the Jews who survived the death camps of Nazi Germany what majority rule can do. The other problem I can see is that what happens as co-ops accumulate capital? The value of the capital controlled by some co-ops may become greater than others, thereby giving their members control over a larger amount of capital than everyone else in society, potentially leading to capitalist type relations between people. Do you think that these are legitimate concerns or is there some sort of economic dynamic that I'm missing that would prevent these sorts of problems from manifesting? If these are indeed potential problems, are there any safeguards we could put in place to prevent these sorts of problems from happening? The only way I can think of is to come up with a system in which somehow every working age person is guaranteed control over an equal portion of society's means of production and land. What are your thoughts? Sorry for the long winded post, I always get a bit carried away. Hopefully I explained myself OK. Thank you very much for taking the time to read it I really do appreciate it. Keep up the good work, Chris

1 comment Share

Could you please comment on this article?

http://www.businessinsider.com/volkswagen-cuts-jobs-globally-germany-restructuring-programme-closely-after-emissions-scandal-settlement-2016-11

posted an official response

Basically, VW is in deep difficulty because it gambled on a deceptive program, made a fortune, relaxed into the normalization of the deception and then got caught, dealing a major blow to its global reputation and to Germany's global reputation. It is now taking all sorts of steps to try and cope with all that. Needless to say, as a capitalist corporation, it seeks to push off its costs of adjustment to its deception onto governments, workers, and public. These cutbacks are part of thatr.

5 comments Share

The critique of Capitalism applied to all sorts of ownership

Hello Professor Wolff, I’m a French teacher living in Beijing and I would like to thank you and your team at Democracy at work for your fantastic job at educating and empowering the working people, and as far as I'm concern, I owe you guys a great debt of gratitude for your role in giving me this indispensable knowledge of understanding how the world works and how it could, should and must work...hopefully in our lifetime. Whenever I have conversations with my friends and family about what's happening in the world and what are the solutions to the catastrophe that's bound to happen if drastic changes are to late to come to fruition, capitalism, the inequalities and how to resolve the ills of the world inevitably arouse heated arguments. I'm more than ever persuaded that this shit -meaning capitalism- has go to go. But I'm also aware of my lack of theoretical and ideological knowledge and too often I find myself out of arguments when I try to argue that we don't need bosses or bosses are grossly overpaid for what they produce. When I listen to you or other heterodox economists, I often hear that only labor/workers produce value, therefore owners/bosses/capitalists shouldn't be the only ones deciding what to do with it, to which my friends tell me that bosses also produce value, that without them there wouldn't be any companies to works for or that they don't steal anything from the workers since they give them wages, etc. Now I agree completely to what Professor Wolff says at the large companies level: it's crystal clear to me that the CEO of Mc Donald for exemple gets paid outrageous amount of money and at the same time doesn't prepare any burgers sold at his fast-food restaurants; that he doesn't give his employees their livelihood but his employees give him his livelihood. But what about small business owners ? Or the owner of a gaz station or a barbershop ? Does the critique of capitalism still work ? Do the arguments still apply ? Should we distinguish from CEOs and very small businesses owners ? I know that the laters doesn't count politically and don't carry any weight when it comes to economic policies. Also most of the time I guess that they give themselves the same wages as their employees whom they are very close to professionally if related to them. They may also very well work more hours than their employees. But the way labor is organized is the same as in the big companies. Should we and how could we distinguish from CEOs, small business owners and independent workers (freelancers) ? Long story short: - are bosses useful? - are they parasites that steal what workers do regardless of the size of the company ? A warm thank to you, Laurent Vimeney

posted an official response

Marx was well aware - and so have been critics of capitalism ever since - that it is quite possible for a capitalist who hires workers to also choose to work alongside them. In small businesses, that is quite common and always has been. Analytically, economics handles that situation by saying such an individual occupies two class positions: one as worker and another as employer. It is no different from saying that an individual is both husband and father, or laborer and Catholic, etc. And of course, if and when a person occupies both capitalist class positions - employer and employee - the analysis must take that into account, as critics of capitalism always have (even if defenders of capitalism like to pretend they dont). Indeed, the chief point of critics of capitalism from the Marxian perspective has been that a better, more just system would make production a genuine democratic community in which all participants have an equal voice - one person, one vote - in deciding what, how, and where to produce and how to use the profits to which all have contributed.

2 comments Share

Profit as a 'tax'

Have you ever tried to explain to skeptics of socialism that profit itself is a type of tax? It seems like some people in the US might be more receptive if they realized they are being 'taxed' well above the cost of production of the things they buy. It might be easier for them to visualize it in terms of a tax, which they hate.

posted an official response

This is an excellent idea. Profit is indeed like a tax only levied by a private entity, not the government. Like a tax it represents a portion of the value produced by a person's labor that is not received by the producer (neither individually nor as a member of the collective of producers) but instead delivered to someone else, a non-producer. Then too, where tax is extracted under threat of legal force, profit is extracted under threat of unemployment where employer has not responsibility for social consequences of firing workers who do not deliver what employer deems to be adequate profit. I will work on this. Thanks for the idea!

4 comments Share

modern day socialism

hello from ex-socialism country of bosnia. i am interested in finding literature about modern day socialism theories and writings/lectures on contemporary marxist commentators. possibly in videos, documentaries or pdf writings because those book is hard to find in my country. all the best!

posted an official response

In addition to suggesting that you look at the many materials on our websites - rdwolff.com and democracyatwork.info - I suggest you also look at mrzine.com and wsws.org

2 comments Share

Mutualism?

Have you ever explored the material related to mutualism as a system of anarchism that proposes a cooperative economy?

1 comment Share

connect

get updates