Ask Prof. Wolff

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if a crash comes, which is the safest haven for my retirement funds?

A lot of commentary seems to issue the warning that the wheels of the capitalist system are starting to wobble. As a retiree, I am acutely aware of not putting all my eggs into one basket: but the problem we all face is that everything seems interconnected. What is your advice for what would be a good set of diverse investments for the just-retired?

posted an official response

I make it a rule never to give advice when I have not first ascertained the financial details of the person to whom I am offering the advice. So I cannot offer it to you in these circumstances either. I can say to you that capitalism has a long history of cycles that basically run usually every 4-7 years. The last cyclical downturn in the US (and elsewhere too) was in 2009-2010. You can do the arithmetic. Be extraordinarily cautious because the fast-worsening political instabilities overlay the underlying economic instabilities.

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Big U.K. grocery store trialing robots to automate further

Big U.K. grocery store trialing robots to automate further. Ocado trials fruit-picking robot http://www.bbc.co.uk/news/technology-38808925

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We Own It - Europe and Worker Coop Movement

Prof. Wolff, I wanted to pass along this campaign aimed at young people and a note on the worker coop movement in Europe. You may have been aware of both! They would make useful comments for Economic Update or your monthly lecture in NYC. http://www.we-own-it.coop/home.html http://www.cecop.coop/European-Parliament-calls-for-the-promotion-of-cooperatives Keep fighting. We really appreciate it.

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Can Complementary Currencies be used to bootstrap worker-owend businesses?

Could a municipality/city council impose a tax that required payment in the form of a "digital muni" currency, and then use that generated demand for the "muni" to fund worker-owned businesses? Anchor institutions could provide recurring demand, and a marcora law type equivalent could provide the cash needed to purchase machinery/means of production made outside the muni-area. Have you heard of the "Miracle of Worgl?" What are your views on demurrage currencies? I've come to a realization, which is possibly wrong as they sometimes are, that money underpins all social relations... that the ruling classes have chosen a form of money that accumulates power is no surprise, and I believe that demurrage would be way to nullify that aim. Thank you, -Jon.

posted an official response

I would agree that the capitalist system both inherited money and monetary systems from the feudalism or other systems that preceded it but also transformed money and monetary systems so that they were more aligned with, more reproductive of the specifically capitalist organization of enterprises and the economy as a whole. I am less clear on why you would want to go to relatively unusual mechanisms (at least these days) such as digital muni currency or demurrage charges if your goal is to "fund worker-owned/run businesses." Most tax systems could raise the money needed to support what we call WSDEs (workers self-directed enterprises). The support can include one or more of the following: buying WSDE outputs, lending to WSDEs below market rates, investing in WSDEs, subsidizing them by lowering their input costs, providing free or low cost consulting services, training employees, and so on. In doing any or all of these things, government (at any level: municipal, state, federal) would be providing to WSDEs the same set of supports that governments have provided to capitalist enterprises over the last 300 years. One could, of course, explore how muni currencies of various sorts might facilitate the development of a ESDE sector.

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Pension Scheme for WSDE workers

Dr Wolff, I am from Melbourne Australia. I have read your book Democracy At Work from cover to cover. However I have found that no references have been made for retirement arrangements or a pension scheme for the members of WSDEs. Could you please explain how that works.

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There are, with an economy based on WSDEs, a variety of ways to organize pension systems (as indeed there has proved to be a variety within capitalist systems). For an existing system built and refined over half a century, you can look at the Mondragon Cooperative Corporation's very well documented system. Another way would be to allocate a portion of a worker coop's net revenues as a fund to be used to make pension payments to retired WSDE workers. This raises the question of how such a fund would be invested over the time that the worker is working. And here multiple possibilities likewise exist. It could be cautiously invested in govt bonds and/or it could be invested, part or whole, in loans at interest to new start-up WSDE's thereby constituting a fund that was both aimed at pension provision but also WSDE growth. Witholding of contributions into such a pension fund could come from individual WSDE members' wage income and/or from net income of the WSDE (total revenues minus wage and other input costs). An interesting concept that some WSDE's have developed entails rethinking what "retirement" means. Here the idea is that individual workers would be offered a situation somewhere between regular work and full retirement with a whole network of full-time and varying part-time tasks needed by the community of WSDEs that would be partly paid as all regular workers are paid and partly funded out of pension fund disbursements. In sum, no special problems attach to WSDE's in terms of establishing, funding and managing a pension fund system.

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How to interest young people in saving Social Security?

Dr. Wolff, I live in Southern California and witnessed unbelievable levels of homelessness and despair among young people during road trips I have taken throughout the West in the past two years. In the age of the "gig economy" where Uber runs radio spots urging people to get their "side hustles" going, young folk have no security in the present and face a bleak future if Trump and the austerity hucksters have tbeir way. How can the young be reached and, most importantly, be mobilized? The mendacious memes of Paul Ryan, who claims he wants to save Social Security, need to be effectively neutralized (Trumped. If you will).

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An old man, Bernie Sanders, galvanized millions of young people into a powerful political force. The young can be reached by anyone who has (1) a solid critique of the political economy of a declining US capitalism, and (2) a reasonable plan of what changes to make to give young people (and everyone else) real hope for the future. If we do that, the young will be moved, excited not only to save Social Security but to make the many other changes this country so badly needs. I do a good bit of public speaking and traveling around the US and my audiences include a growing number of young folks, more all the time. The politics represented by Clinton and Trump are making their ugly last gasps. The component of the young in the mass demonstrations across the country against Trump's actions on refugees is yet another sign of what is possible. Organization to mobilize: that is the key next step.

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Is this the crux of the religious rights political thinking?

Would like to know what you think of the Tellus Institutet and a teleconference which is particularly interesting to us "homemakers". Also, I happened upon a frightful muddle of "alternate facts" that begs to be straightened out (by you?).  I remember parents talking like this 40 years ago in Maine.
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Guaranteed minimum income

Are there any studies or statistics you know of that compare the costs of subsidizing (mostly corporations, of course) and workers competing for increasingly scarce and increasingly lower-paid jobs with providing a Guaranteed Minimum Income? 

I take your point about splitting society into workers and non-working consumers. That potential political-philosophical problem could be solved by a revolution in how we think about work and about unemployment. I direct any interested people to Ivan Illich's "The Right To Useful Unemployment." 

I see no absolute virtue in work for the sake of work. Our society mistakenly conflates purpose and work. There are a vast number of soul-sucking jobs that people, given an alternative, would leave to pursue their dreams if they could, which would benefit us all.

 

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Probably are such statistical efforts but they depend on myjriad assumptions and are always contested endlessly. On the point of work/non work dichotomy as socially divisive, that would apply to almost any definition of work unless it was tantamount to equal with non-work. Hegelian complexity but true nevertheless.

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How would you like me to send you my essay when I am finished?

My email: zachcampbell01101@gmail.com

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Is the Calexit a good idea?

It looks like California has different views on Tax, Education, Religion, etc. Could California benefits by separating itself from the Union? or a terrible idea? who would really benefit from it?

posted an official response

Having not ever really looked into this, I cannot offer you much in the way of an answer. Sorry about that. What I can say is that as global capitalism's relentless instability and inequality worsen, all kinds of rising anxieties push people to rethink their situations, loyalties, etc. They question assumptions they took for granted. One of those is nationality. That can take the form of the rise of extreme nationalist political movements and parties (eg., Trump, Farage, LePen among many others) and/or kinds of nationalism built around units smaller than currently constituted nations such as Scotland, Catalonia, Macedonia, Quebec, and now California as well as Texas. These are signs of socio-economic decline.

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nationalism v. neoliberalism, co-ops v. neoliberalism

Prof. Wolff, The president suggests that he will impose tariffs on companies that ship their jobs overseas as a method to preserve jobs in the US. I presume if this works, the jobs will be saved but the price of product will go up, thus necessitating higher wages (my guess highly unlikely). To my understanding the alternative is, within a capitalist system, to continue on the neoliberal path to globalization maintaining the status quo of outsourcing jobs overseas. Playing devils advocate, let's say these tariffs are indeed implemented, jobs saved and wages increased...could nationalist type economics be a better alternative to neoliberal economics?

I am in favor for a democratized workplace and fully support co-ops. I am conflicted however in understanding how a co-operative system would deal with capitalist foreign enterprises making cheaper products. Would the co-operative economy be forced to impose tariffs and other protections or are there alternative methods that can make co-operatives successful in dealing with cheaper goods and services abroad?

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The historical record is clear, if perhaps not what you might have expected. Sometimes neoliberal policies happen together wit rising wages and sometimes with falling wages; sometimes protectionist policies occur together with lower unemployment and sometimes with higher unemployment. In other words, it is simply wrong to debate neoliberalism vs economic nationalism as if one or the other is better for wages, jobs or anything else. No one to one correlation like that exists now (or ever has). Bill Clinton said NAFTA would be a boon for US workers; it wasn't. Trump says ending NAFTA and levying tariffs will be a boon to workers: no reason to believe that either. Free- trade vs protection is a struggle between groups of capitalists who think one or the other will be better for their profits. Workers/employees have no skin in that struggle; they will be fleeced by employers in either case because that is how capitalism works. If tariffs make US producers produce in the US, not Mexico, their labor costs will rise and so will the incentive to replace higher cost workers with machines and robots, thereby worsening workers' positions. The problem for working people is capitalism not this or that kind of capitalism (neoliberal or protectionist).

A worker-coop based economy would evaluate international trade differently because its "bottom line" (i.e. top priority) would not be profits. If imports are cheaper than producing it yourself, then workers would gain more free time and thus welcome cheaper imports etc. Its a different system and thus has altogether different attitudes toward and responses to international trade conditions.

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What are scholarly/statistical institutes or resources that focus on worker coops?

I am writing a persuasive essay on the superiority of worker cooperatives instead of the traditional employer-employee relationships. I would like arguments in addition to the democracy, equality, etc points.

posted an official response

Look into the work of Virginie Perotin (teaches at Univ of Leeds in UK) and Prof Peter Ranis of CUNY. They will provide all sorts of leads for you to follow. I would be interested to read your essay when completed.

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Market System "structural incentives" as the real problem?

Dear Dr. Wolff, I agree with your criticisms of Capitalism, and I find your suggestion to democratise the workplace very interesting. I own a very small distribution company in a very small part of the world, and may put those ideas into practice there. However, the solution does not do away with the incentive to out-compete competitors - which I see as an equally problematic issue. This same economic incentive to outcompete competitors can be spun to sound like a good thing, but it is the very same incentive that leads countries to war with each other over resources. I feel strongly that the problem is not Capitalism per se, but the Market System construct. The Market System has it’s own “structural incentives”, and often, a gaming strategy is required by the individual/state/company to “get ahead” in the game of Market. This usually means to acquire wealth for yourself, and taking it from the other guy. Are my criticisms naive? Am I missing something? I did not study economics, but I feel that we need to transition into an “Access system based on automated labour” from a “Market system based on human labour” to really detach ourselves from the same self-perpetuating problems of the Market. I have more to say on this topic, but will end it here for now. Best, Andrew

posted an official response

The social organization of production (that has historically taken such forms as master-slave, lord-serf, and now employer-employee) is one thing within an economy and the mode of distributing resources and products among enterprises and people is something else. Today we have an economic system comprising a capitalist organization of production and a market system of distribution. The combination of these two elements produces that competition to which your email refers. I focus my criticisms on the capitalist organization of production chiefly because its negativities are insufficiently understood, appreciated and targeted for change. However, I know that for a long time now, thoughtful analysts have offered very powerful criticisms also of the market as a mechanism of distribution. Indeed, when I teach my courses I ask students to read the powerful critiques of markets offered in ancient Athens by Plato and Aristotle. So let me suggest that we collaborate: you with your focus and emphasis on the problems of markets and me with min on the problem of how we organize production/the workplace. Both elements call for change and transition to far better social arrangements, especially now.

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Isn't the quest for profits a defiining characteristic of capitalism?

In your last show you said the defining characteristic of capitalism is the employer-employee relationship. Isn't capitalism also defined by the quest for profits? It seems to me that the employer-employee relationship and the quest for profits originated around the same time, in the late middle ages or perhaps during the Renaissance, around the time of the onset of colonialism. I don't think Roman slaveholders or medieval lords were interested in profits, though they certainly sought to increase their wealth, mostly by acquiring more land. I'd be interested in your thoughts.

posted an official response

The best way to respond to your question is to explain the point of a "defining characteristic." The attempt is made to dig down deep to find the key thing that sets the stage for, provides the basis for, generates the major aspects that comprise whatever you are trying to explain. If that is capitalism, then you try to reason your way back to that quality or characteristic that is such a "key thing." In my view that is the employer-employee relationship in production such that the employee produces what he/she consumes plus a surplus beyond that which is taken/appropriated by the employer. If such a capitalist production relation co-exists with a market as the mechanism of distribution (of resources and products) the result is a drive for profits as both the best offensive and defensive strategy vis-a-vis market competitors. In this way of defining capitalism, the key thing that sets the stage for, provides the basis for, generates the profit drive is the production relationship interacting with market exchange as the distribution mechanism.

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Trump "Border Tax" casualties (the first 600 jobs) in auto industry in Canada

Since the American automakers have been threatened by Trump to bring the Mexico jobs back to the US, or else, GM is taking Canadian Jobs to Mexico, see news from Friday, below http://www.cbc.ca/news/business/gm-unifor-ingersoll-1.3955128

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The immediate narrow issue is that GM, to escape Trump tweets, is moving canadian jobs to Mexico while GM waits for better circumstances to do the same to US jobs. More profoundly, this is all about the radical change in the global capital-labor balance since the 1980s. The collapse of the Soviet bloc and changes in China coupled with new technology (jet air travel and the internet) made it possible to bring billions of new workers into capital's orbit, available for hire and at far lower wages than had been built up in the west and Japan. So businesses have been moving to take advantage of lower wages and higher profits. In an historical irony, the development of capitalism drove up wages in the old centers of capitalism (western Europe, north America and Japan) while driving them down in the old colonial and post-colonial territories. Now the low wages in the latter plus technical changes etc enable capitalists to move from higher to lower wage locations for production. US and canada just told to suffer and absorb all the social costs as the rich get richer off of the lower-wage workers.

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