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.

Why Has US Culture, for 200 Years, Supported Numerous Myths about Capitalism?

Capitalism in the U.S. seems to be saturated with deceptive myths that are based on misreadings of early economic observers or historical revisionism. E.g,: Histories of capitalism in early America seem to suggest that the "true" free-market of that era was, in fact, too unstable for large-scale business transactions; so various stabilizing elements were experimented with -- including monopolies, and the addition of government regulation to protect the deals of the elites. Adam Smith's alleged enthusiasm for the division of labor is contradicted by his observations that it was bad for the education of young minds; some historians also believe that Smith's "invisible hand" had no great theoretical meaning and was merely a common phrase of the times. Finally, meritocracy of the post-WWII period seems merely another myth -- this time the myth that capitalism is benign because it predictably rewards cognitive talent. How can we begin to dispel all of these myths about the cruel, unequal, exploitative nature of capitalism?

posted an official response

Basically, capitalism has always provoked all sorts of defensive rationalizations among those capitalists who could recognize, however dimly, the exploitation they operated on their employees. So some decided that their profits were rewards for the "management" or "risk" or "initiative" they took. This became harder to do when critics pointed out that workers too took risks when they accepted jobs and were never paid for that nor for the management tasks they routinely perform nor for the initiative. Or when critics pointed out that in modern corporations, the boards of directors who get all the profits pay others to manage, take risks, take initiatives and profits are what's left over after all those functions/people are paid. Marx really troubled the rationalizers when he shows how profit is the surplus - the excess of the value added by laborers over the wages aid to them - taken by the employer simply by the act of employing even when nothing else is done by the employer etc. Those myths are being dispelled these days as capitalism's instabilities, inequalities, and injustices proliferate and through the entirety of rationalizations of the system under a darkening cloud of doubt and skepticism.

2 comments Share

Whose side is he on?

https://www.bloomberg.com/news/articles/2017-04-04/dimon-still-optimistic-warns-something-is-wrong-with-u-s

posted an official response

Given his lifetime performance he is likely on the side of the capitalist status-quo as well as of his bank. In that capacity he is smart enough to not collapse into self-delusion all the time. So now he looks around and considers that what he sees supports the view that things are not in great shape in the US politically, economically or culturally and that the Trump regime - however much it helps big banks - is likely to roil US society further and perhaps in ways that could threaten Dimon's bank and the status-quo capitalism he so loves. So he says something - vague, general, but reflecting is uneasiness about the times we are living through. 

My simplest reaction is "Duh!"

2 comments Share

Scott Pruitt has decreed that the EPA will no longer pick winners and losers with regulation.

Presumably this will leave energy policy up to the "free market". Perhaps you'd like to comment on this on your show.

1 comment Share

Please Discuss Wage Subsidies

Professor Wolff, I was hoping you might be able to discuss the concept of Wage Subsidies more in one if your upcoming videos, possibly Economic Update. Several politicians, most notably Marco Rubio, have suggested the idea of Wage Subsidies as a partial solution to Puerto Rico's economic woes- but the idea sounds surpridingly (given the source) socialist, and like something that might actually be a good idea... Basically the idea would be that the government lowered the official Minimum Wage- but instead set a "Target Wage" somewhat above the current Minimum Wage. When an employer paid its employees it would receive a government subsidy (possibly paid through the government taking up a portion of the employer's required contributions for the payroll tax system) for any employees it paid MORE than the Minimum Wage, up to the Target Wage. So if, for instance, an employer paid its workers $10 an hour, which was also the Target Wage, and the new Minimum Wage were $5/hr, then the government would make up the difference between the two in terms of a $5/hr subsidy to the employer. Most such proposals would also gradually phase out the subsidy as the wage paid reached closer to the Target Wage, so say 100% subsidy up to $8/hr, 50% subsidy up to $10/hr, and only 25% subsidy up to $12/hr for a $12/hr Target Wage. Anyhow, it sounded like a good idea because it would redistribute income to the bottom of the wealth heirarchy without directly increasing employer wage costs and driving up the peice of everyday goods for the poor like raising the Minimum Wage might. Additionally, it might discourage the exploitative use of undocumented immigrants being paid less than Minimum Wage and create new jobs that are only viable at lower pay-rates than the current Minimum Wage without forcing workers to accept lower standards of living. And, of course, to pay for all this we could raise the Income Tax on the highest brackets or levy an extra tax on Investment Income- which would ultimately collect most of the increased profits the increased employment and lower labor costs generated for employers, ensuring that this really did help to benefit the poorest members of society... It sounds like a good idea to me because it partially separates the social and humanitatian good of ensuring workers have a decent Standard of Living from the market forces driving employers to always seek to pay their employers as little as possible. If the government were picking up part of the tab, employers would be willing to pay their workers more and might be less determined to quash unions, for instance. Also, since the system would still provide income in exchange for work, it would provide none of the depressing effect on job-seeking (however minor) that something like a Universal Basic Income or increased welfare benefits might (though these are hardly mutually exclusive- in fact wage subsidies and UBI/welfare *compliment* each other by allowimg the system to still strongly incentivize work while providing a more adequate safety-net for the unemployed and the most needy/vulnerable members of society...) So, Professor Wolff, I was wondering what you think of the idea of wage subsudies, and if you might be able to touch on them (and Rubio's proposal for PR) in a future segment, particularly keeping in mind how this could potentially be used to increase incomes for the poorest workers and generate additional employment by increasing taxes on the rich a little...

2 comments Share

I am interested in starting a co-operative in Sweden

I am interested in starting a co-operative here in Sweden. With Mondragon as a role model. In addition I was thinking of starting an optional sharing scheme. Members would be willing to allocate at least three hours of their time for free. This would give them all the benefit of services provided by other members for free. To start the idea wanted to buy a large building. The bottom level would have perhaps ten shops and the upper level would have ten flats. Some of those who are interested in the idea love gardening, so it needs to have a garden. So I am interested on some advice and info on running such a co-op.

1 comment Share

Since the US came off the gold standard, unlimited amounts of money can be printed!

I have been told that since the US came off the gold standard, unlimited amounts of money can be printed, that taxation is unnecessary but is levied to give credibility to the currency, that austerity is unnecessary, tuition could be free and the infrastructure could be repaired. I was told that income from taxation is effectively cancelled or taken out of circulation with regard to the Federal government since they exclusively print the dollar. Can you enlighten me on the true situation!

1 comment Share

Older Worker Exclusion

Dr. Wolff can you speak more on what is happening to older workers age 50-65 that have been excluded from the workforce, not hired because of their age despite their many accomplishments. It seems as though more and more are turning towards suicide and substance to alleviate the huge economic and personal pain. Please read Elizabeth White's book 55, Unemployed, and Faking Normal.

1 comment Share

Please Say More About the Blindness of Merely Altering Parts of Capitalism

In a question below that asked you about the book, Makers and Takers, you emphasized that the "system" of capitalism (as Marx analyzed it so well in his time) is the true problem -- not mere faulty parts. Why does it seem as if only you and your close economist colleagues; Profs. Chomsky and Giroux; and a handful of economic anthropologists (e.g., D. Graeber and D. Harvey); as well as some older U.S. anthropologists (e.g., Jules Henry); see/saw the systemic dysfunctions of capitalism. Is it because all of you were willing to take Marx's theories seriously, or do you think there are other social or psychological forces that have been obstructing a systems understanding among the public of the inevitable destructiveness of capitalism.

posted an official response

Indeed, it is much more social and psychological forces than theoretical engagements that explain our relative rarity (although that rarity is diminishing quickly these years). After World War 2, the right wing in the US (big business, conservative social forces, their politicians, etc.) moved aggressively to undo the New Deal and especially to undo the rise of the left-wing coalition (CIO, 2 socialist parties and the US Communist Party) that forced the New Deal onto FDR. They decided the CPUSA was the weakest link of that coalition and so demonized it first and hardest, and then followed by lesser versions of demonization imposed on socialists and unionists. The end result was a kind of psychological traumatization of the population. Everyone got a strong lesson in how careers, jobs, friends etc could be lost by the govt attacking you or your organization as disloyal, evil, etc. One result was what you point to: if one dared to criticize any aspect of the economy, one had to be doubly careful to make it only a specific part and never, ever the system as a whole. The Cold War deposited that taboo against systemic criticism deep into the national consciousness from which it is only now evaporating.

2 comments Share

Ever heard of Green Century Investments?

My 83-year old mother is looking for guidance on investing the proceeds from selling our family home. I just saw an ad for an investment company called Green Century that identifies as socially responsible. Do you know anything about this particular company? many thanks for your work, Nina Galin

3 comments Share

Cooperative as a news agency or cable TV channel? How a coop can get big in the big media arena?

Dear Prof. Wolff. First of all, we would like to thank you for your amazing lectures on coops. We appreciate all the hard work you put in to popularize the social way of doing business. I would like to ask a question on mass media, TV channels, and public relations. This question is important like never before, since today, most of the information and public opinion is shaped by a couple of powerful corporate media groups. How a democratic way of running the business, meaning COOP model, can and should change the status quo in this area? Could you direct us to some literature or examples of well-established cooperative TV channel or even a mass media agency that has at its roots the COOP principles? We know of public radios and stuff like that. However I believe that's not enough. Could you touch this subject on one of your upcoming talks for a greater exposure? I looked into Associated Press, as their wiki page states it is a news agency that operates as a cooperative. Yet, this so-called cooperative has only a board of directors that consists of different people representing other media outlets. The true meaning of the word "cooperative" in this case is skewed. Can you comment on this as well? Thank You, Denis Donici and SKRY Online Team

1 comment Share

Can you please explain the expected shortcomings of cooperatives, and the Resource Based Economy?

Dear Dr Wolff, can you please make an episode with your opinions on what kind of problems will continue to exist after the cooperatives are formed, and workplaces are socialized? Of course this will solve many serious problems such as inequality, and reduce the environmental pollution. However, there will be still a profit motive present (for example the workers will not decide to support the hungry in other countries or even in their country). Surely they may not care about their products in other countries (non-recyclable etc.). Also the automation will reduce the jobs, and workers may vote against the automation, which is not good because it prevents the improvement of humanity. I think these are serious issues to be discussed also. So I think although the ideas you present is definitely an improvement, it is not the best we can do. If you heard, there is something called a Resource Based Economy. Which, decisions are made based on scientific principles, and not on the worker's or other's subjective opinions. It proposes the automation of basic needs, and a value change in the society. It means people will share the resources equally, and what it is produced and how it is produced will be decided scientifically, based on experiments etc when a demand arises. It is based on function, not the product. The people will not demand cars, but they will demand going from point A to point B, and how it is done will be decided based on science (Do we have the resources (left after supplying the more basic needs), which method should we use, which materials are the most efficient in doing this job, which design is the most environmentally friendly, etc). And people who are interested in solving the problem will gather and work (maybe internet based via Skype etc.) as they work in a scientific project together. As engineers design an airplane don't ask the passengers how many wings the airplane should have, instead they design it based on experiments and science. And people who don't like the outcome from the project would suggest his/her own ideas based on again...science. Automation as much as possible, and free and high quality education, sharing of the information, well being of everyone and the environment are the priorities. It is basically engineering applied to society. No money, no politics, no banks, no military, no police. I would like to hear your opinions about the Resource Based Economy, and also what kind of shortcomings do you see in cooperatives and also in RBE. Thank you :)

2 comments Share

What does a Hedge Fund Manager do? And, why are people with that title often extremely wealthy?

When people are described as Hedge Fund Managers, what is it exactly that they do? How does being one lead to such huge wealth? A recent New Yorker article about Robert Mercer by Jane Meyer, titled THE RECLUSIVE HEDGE-FUND TYCOON BEHIND THE TRUMP PRESIDENCY, has me wondering. I listen to Economic Update on KPFA, thanks for the great show.

posted an official response

Basically, Hedge Fund managers receive the money of clients to invest it for them. They usually charge a percentage of the sums given them plus a share of whatever gains their investments obtain for such clients. The idea is that such hedge fund managers know markets and have opportunities to invest far more advantageously than the wealthy clients do (as they are usually engaged in other pursuits). Hedge funds have managed to maneuver tax laws that make their incomes subject to lower rates of taxation than other comparable income sources. So when they do well - with other people's money - they rake off huge gains for themselves with relatively little outlay or risk of their own assets.

2 comments Share

The auto bailout, the decline of Detroit and the role of the unions.

Dear Prof. Wolff, Happy birthday, tomorrow. My questions have to do with the decline of Detroit, the car industry bailout and the role of the unions. I notice that there is a recurring narrative in the US in which unions are being blamed for demanding too much and being a contributing factor in bringing large companies down. In detroitbankruptmovie.com , for instance, a large section is dedicated to complaining about how the UAW didn't take a hair-cut and wasn't forced to adjust to the new economic realities of America in the bailout process. It is indeed true that car manufacturing plants were moved to other states (often right to work states) or low-wage countries (f.i. Mexico), but I don't see how this is the fault of the unions. There are strong unions in the German auto industry and they are not blamed to the same extent when there is overcapacity or an economic downturn. What are the real reasons for the structural decline of the US car industry? Why is it that GM cannot turn a profit in Europe, and has just sold off Opel and Vauxhall? It would seem to me, as a layperson, that the European compacts and more energy-efficient cars are exactly what the US needs. Selling off the European parts of GM would also take away the R&D located in Europe? There are many questions wrapped up in this, but I am trying to get to the real reasons of the decline of the big three (and the City of Detroit with it) and to a balanced view of how unions may or may not have played a part in this process. Kind Regards, Thomas Wensing

2 comments Share

I am sending an CBC article

Canadian corporation bailout - http://www.cbc.ca/beta/news/canada/montreal/bombardier-executives-quebec-payout-1.4047290

1 comment Share

What is meant by productivity, the contradiction it creates, and the great money trick?

https://irs.princeton.edu/sites/irs/files/event/uploads/robots_and_jobs_march_3.17.2017_final.pdf This new study suggests for every automated task in a particular area of automation, 6 jobs were lost over the 20 year study period (1993-2007) and a correlated depressing of wages. (They limited the study period to before the crisis it seems to disentangle the effect that the crisis had on depressing wages) The great money trick is a reference to a depiction in the 1908 book by Robert Tressell - Ragged Trousered Philanthropist - http://www.freeclassicebooks.com/Robert Tressell/The Ragged Trousered Philanthropists.pdf

posted an official response

Productivity simply refers to the quantity of output a worker 's labor generates per unit of time (an hour, a week, a year, etc.). The "money trick" refers to how capitalism organizes and distributes the fruits of rising productivity (i.e. a rising quantity of output per unit of workers' labor efforts over time). Basically the capitalist organization works to raise the productivity of labor in order to generate an increase in the portion of workers' outputs that is taken or appropriated from them as capitalist's profits. As is usually the case in capitalism, the more the capitalist can take of the rising productivity, the less is given to the worker. In recent decades in the US, nearly all of the gains in productivity ended up in capitalists's pockets as rising profits, while workers wages stagnated. This was and remains a clear, present-day illustration of what Robert Tressell's book described in 1908 and what Marx analyzed so clearly in 1867.

4 comments Share

connect

get updates