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Conflicts between employed and unemployed in worker coop economy

A common criticism of unions is that they work to increase pay and benefits for their members who are established employees at the expense of those who are looking for work. It seems to me that there is the same conflict between the employed and unemployed in the co-op economy, where established worker co-op members have powerful incentives to prevent new entrants to their field from driving down their profits and bargaining power. As a career changer myself, I am interested in knowing how one would balance the needs of the unemployed or underemployed against the interests of co-op members with established careers and undoubtedly much power over hiring decisions.

posted an official response

Unemployment is a basic irrationality that is and always has been intrinsic to capitalism. Neither slavery nor feudalism nor other systems exhibited it. Unemployment exists because employment depends on capitalists' ability to profit from it; if profit opportunities dictate unemployment it happens. In a worker coop economy, the blatant irrationality of unemployment would likely be more widely grasped. Unemployed people continue to eat, dress, inhabit dwellings, etc.; in short they consume while not also producing. The society is unambiguously better off if such folk were kept employed to share their output with the output of others that they consume. The likely ways to achieve no unemployment would be (1) to reduce the work hours of the employed and thereby absorb the unemployed, (2) poll the population to see what needs to be done and employ the unemployed to do that, and so on. Since profits need not and would not be the bottom line, the basic driver of a worker coop-based economic system, profits would not dictate behavior and thus the result of unemployment. In direct response to your question, if unemployed who already consume are employed, there is a net addition to output so that the employed need not and would not suffer any loss of benefits or wages from ending unemployment as indicated.

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First german hospital organized as a worker coop

Dear Richard Wolff, I just stumbled upon an article by Deutschlandradio. This article is about the first german hospital that is organized as a worker coop. It was voted for being the "most popular hospital of eastern germany" and the head of the hospital speaks of the workers as "her bosses". Even though workers are paid a little less than average wages, they are more satisfied than others because they have a feeling of meaning and participation. Unfortunately the article is in german only, I did not find an english source. If you like, I can translate the article for you. Thank you for your work, I am a long-time follower of your economic updates. Greetings from Munich, Germany Benjamin Helgert http://www.deutschlandradiokultur.de/modell-fuer-die-zukunft-beschaeftigte-uebernehmen-ein.1001.de.html?dram:article_id=377833

posted an official response

To Benjamin Helgert: I would be very grateful if you could send us a translation as you suggest. Not only would that help to educate me, but I would then prepare a segment for my weekly radio and TV program, 'Economic Update," that now is broadcast on 75 radio stations and TV stations in New York and san Francisco areas reaching 1.5 million people weekly. Let me thank you in advance.

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Does this article's explanation make sense?

I'm interested in knowing if the economic explanation of this article makes sense http://www.counterpunch.org/2017/02/02/how-we-the-people-were-screwed-by-obamas-bogus-recovery/ Thanks you.

posted an official response

The article's argument that Obama's "recovery" was largely a matter of hyping a poor, slow, limping economy after 2008 is mostly correct. The logic of the article overemphasizes the problem of inflation. Simply put, an inflation can, under certain circumstances, work as well to deepen inequality as the absence of inflation. The willingness of the rest of the world's rich to lend to the US government played an important role here too, as did other factors. The fuller story of how and why the US and world economies have taken so long to recover so little is more complex than the article admits, but the critique of Obama and "recovery" is good.

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How could we transform professional sports leagues into worker co-ops?

With all the recent news about professional sports teams leaving their communities for more profitable venues, I've been thinking about how all these leagues (MLB, NFL, NHL, NBA) are structured (that is, in a capitalistic, top-down fashion). How could we go about reorganizing these leagues in a more democratic way that prioritizes players, fans, and their surrounding communities over profit?

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How would you recommend to read Capital, Volume I?

I'm thinking of reading it with a couple friends. Should we get David Harvey's companion? How about starting at Part 8, then reading from the beginning? etc. Thank you.

posted an official response

Capital - and indeed, all three volumes - is an important book to read because (1) it remains a foundational work in how and why to criticize the capitalist system, (2) it is thus a good balancing companion to the works of Adam Smith and David Ricardo whose foundational works in economics were both highly celebratory of the capitalist system, (3) it can enable you to pursue the vast accumulated literature of Marxian economics. There are several books that can help you work through Marx's Capital and David Harvey's is certainly one of those. Please excuse my immodesty but let me also recommend the chapter devoted to Marx's economics in the following book: R.D. Wolff and S. A. Resnick, Contending Economic Theories: Neoclassical, Keynesian and Marxian (Cambridge: MIT Press 2012). This book also clarifies systematically how Marxian economics differs from the mainstream neoclassical economics and also from Keynesian economics.

Preview the text online or order your examination copy at http://mitpress.mit.edu/CET

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It is looking likely that Donald Trump will roll back financial regulations on banks

you probably caught whiff of this by now, but i would love to hear your take on what will happen in your weekly and/or monthly economic update if trump takes things in this direction, or even took it to it's extremes. How do you think getting rid of the dodd-frank (and possibly many other regulations) could affect both the American and global economy? Do you think this could result in banks exploding in a similar mortgage crisis like what happened in 2008? Sources:

https://www.bloomberg.com/politics/articles/2017-02-03/trump-to-halt-obama-fiduciary-rule-order-review-of-dodd-frank

http://www.reuters.com/article/us-usa-trump-wealth-fiduciary-idUSKBN15I199

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Is a sizeable middle class (50-60-% of population), a natural product of a Capitalist society?

Is a middle class bigger than a relatively few percent of the population, an artificial creation? It seems that in every country ruled by Capitalist elites that never had a "New Deal"-type installation of social programs, poverty dominates and there is a small middle class. Is America's large middle class an artificlal creation via the Democratic-Socialist policies from the New Deal? Does unfettered Capitalism naturally create anything but a SMALL middle class?

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How do you combat information warfare?

Dr. Wolff, your message and ideas resonate with over a million viewers worldwide. That is amazing. At the same time it is only a fraction of the people that we need to achieve your(and I believe my) ultimate goals. I have listened your commentary on the sensationalist news regarding international interference in the election and agree with your points; that this is nothing new and has been common practice for some time if not forever. I think the same logic applies to the reports of fake news and how effective they were in influencing the election. However, just because this is nothing new does not mean that it is less effective in modern times than it was in the past. The rise of the internet and social media combined with the declining audiences for traditional news sources has enforced a bunker mentality that contributes heavily to the effectiveness of misinformation campaigns waged by both governments and private interests. While for-profit news sources will need to adjust their model to try to regain their footing, history show that it is unlikely that they will make any meaningful changes. Nor were they exactly the paragons of truth and unbiased journalism(which has quite a lot to do with declining viewership). In any case more and more people are relying on social media for their news. While a community platform for news can be desirable, how can Socialism reach people who have decided that they would rather listen and support news that validates their opinion with rather than challenging their ideas. Competing with prejudice is one thing, but competing with deliberate and almost universal misinformation is an entirely different complication. You are correct in saying that this is not a new issue, but the degree to which an individual can be advertised and pandered to is exponentially greater than it once was. Nor can this be addressed in the place people spend the vast majority of their time; their workplace. Private enterprises have the right to dictate what a employee can and can't discuss in the workplace. Despite the obvious issue of businesses being able to flout the first amendment, how can a population grow and communicate if they can't engage in public discourse?

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Why have two organizations with basically the same name?

Your organization, Democracy at Work, and the US Federation of Worker Cooperatives's sister Democracy at Work Institute.

posted an official response

Just coincidence; the two organizations have no relationship, never did, and just reflect that the worker coop idea is basically about bringing democracy into the workplace and is an idea whose time has come.

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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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What are the economic aspects of military spending?

For a country that is opposed to government employment, the USA spends an awful lot of money employing people in one of, if not the largest, military forces in the world. Ignoring defense contracts, which have their own economic implications, what are the economic aspects of military as a means of managing unemployment? There seems to be certain amount of incentive to offer more benefits than the government is willing to pay. A cynic might point out that they are counting on weening out that number by making sure less veterans live long enough to collect on those benefits. Is the military an unacknowledged conservative welfare program?

posted an official response

The military in the US is many things. These include being an engine of Keynesian economics in the sense of being the means of massive govt spending (the US is indeed the biggest military spender on the earth, spending more than the next 9 biggest millitary spending countries combined). This spending boosts the economy's demand for military products of all kinds and civilian products to serve as inputs into the military. The military is also a major anti-unemployment program since it removes 1-2 million citizens from the labor force who wold otherwise compete for jobs in the civilian economy. The military is also a major productivity improver in its financial support for all sorts of scientific endeavors that generate new products and new technologies for production. The too the military intimidates foreigners to give US corporations better deals than they would get without the menace of US military interventions. The US economy since World War 2 would have been and would today be a very, very different thing without the massive government intervention operated on all these levels by our huge military establishment. Nothing better shows the emptiness of the boring old debate in economics over more versus less government intervention than to notice how the conservative mouthpieces who endlessly argue against government intervention very rarely, if eve, say boo about the government's military spending.

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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.

posted an official response

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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