Ask Prof. Wolff

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A short but important and controversial question .

Alright My name is Wael Taleb from lebanon , and eventhough i'm not american , i watch your economic almost all your economic updates , and have read the contending economic theories book . My question is , you always mention how the European Union's countries deals with the economy better than the United States, why then is the Combination of the economic indicators (GDP , Economic growth , export of products etc ) are way better in the united states eventhough they have a lower population and less land . Is it just about winning the world war and later the cold war . What about investing in the best people from outside the country , isn't this a successful policy .

posted an official response

Comparing the US and EU is a complex project and depends heavily on what indicators or measures you choose to use. If you use GDP, exports, growth rates, then what matters is the period of time over which you compare their respective records. Sometimes Europe grew fast, sometime the US grew faster, etc. If instead you use standards like average standard of living, or standard of living during times of economic crisis, etc. then you get different comparative results. For the last several decades, BOTH the US and western Europe grew much less quickly than China especially but also India and some other countries. What lessons do you wish to draw from that? The drawing of trained workers away from the country that paid to train them so they can instead contribute to other countries who thus save o training costs is a very bad way to do economic development because it exaggerates the income/wealth gap between rich and poor countries. And that threatens global economic growth profoundly.

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Maggie Wilderotter, "US has the highest corporate tax rate!"

What' Wilderotter talking about. Is there ANY truth in her assertion? I know she's ignoring the effective tax rate and is only talking about the nominative rate. Still, is our nominative rate the worst in the world? The Commonwealth Club of California posted "Sustaining Capitalism: Bipartisan Solutions to Restore Trust and Prosperity," May 15, 2015 on their youtube channel, an interview of top executives from the Commission for Economic Development, Lenny Mendonca and Joseph Minarik with Maggi Wilderotter of the Commonwealth Club moderating. Wilderotter’s statement is at minute 23:51. Corporate tax discussion roughly begins at minute 21:56 https://www.youtube.com/watch?v=YcubnqhA-aU Thanks!

posted an official response

Any economist interested genuinely in understanding and comparing national corporate tax rates knows that what matters is the effective rate not the nominal rate. Repeated references to the latter are thus usually ideologically motivated rhetoric rather than analysis. Even comparing nominal rates has its pitfalls that make glib usages of the numbers highly likely to be misleading. In short, the US does NOT have unusually high effective corporate tax rates. The US does have a highly evolved PR industry serving corporate clients by "creative" abuse of statistics in the interest of reducing taxes in every way it can.

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What will happen to the one-percenters infrastructure in the post capitalist world?

In a post-capitalist world with distribution of wealth and income much less unequal than it is now, what will happen to the vast wealth infrastructure that the wealthiest people now enjoy?The wealth infrastructure I'm referring to includes everything you can imagine that can only be sustained by excessive accumulations of wealth. The multiple lavish homes, the vast private property holdings, the yachts, the private jets, the country clubs, etc. etc. The wealth infrastructure also includes the many people whom the wealthy hire to satisfy their every desire. What happens to all of it when inequality is greatly reduced?

posted an official response

That is among the transitions/transformations that should be determined democratically. Because any social movement strong enough to move beyond capitalism and its grotesquely unequal distributions of wealth and income will also be strong enough to guarantee personally meaningful, socially useful work to all able-bodied adults, I suspect there will be a massive reorganization of our societies. Many kinds of personal services now provided to the rich will be reoriented to become social services provided to all or else ended with the providers retrained for other jobs. Facilities that once served the rich will be restructured to be public assets. Just as factories, churches, malls, etc that could no longer survive as their populations abandoned them were eventually refashioned to become schools, art centers, community centers, clinics, and so on, a parallel refashioning would likely attend the end of contemporary capitalism's extremes of inequality.

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Bernie Sanders and worker coops

Professor Wolff, during your program last week with Professor Jessica Gordon Nembhard in which you discussed worker coops you said that you wished that worker coops were more front and center in Bernie Sanders' platform. In case you were not aware of it, I am passing on a link to an article in In These Times that begins to address your concerns. I hope you find it of interest. http://inthesetimes.com/working/entry/20132/bernie_sanders_urges_workers_to_seize_means_of_production

posted an official response

While I welcomed the bills Bernie has introduced and the In These Times article about them, I must say that I continue to wish for something more or different from Sanders et al. Even what Corbyn has proposed in the UK is much further along. First, there is a world of difference between worker ownership and worker directorship. At best, the former is a step toward the latter. However, we have many, many years and examples of worker ownership (in ESOP and other forms) that never went further toward a democratic restructuring of the enterprise. A worker coop - in the specific sense of workers becoming their own board of directors - is a real democracy in which all the basic enterprise decisions (what, how, and where to produce and what to do with the net revenues) are made by majority rule with one employee getting one vote etc. Thats why we use the term WSDE - workers self-directed enterprises - to give concrete specificity to what we seek. Because that is several steps further than worker ownership, steps that have often been ignored or forgotten or denied, the Sanders proposals leave us wanting much more. Corbyn has committed the UK Labor Party to (1) passing laws mandating conversions under specific conditions from capitalist to worker coop (in our WSDE sense) enterprises, and (2) providing government financing to enable workers to buy enterprises from capitalist owners and convert them into WSDEs.

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50 State Solution for New Coops

Dr. Wolff: I propose you work with BCorp (https://www.bcorporation.net/) who have a legal lab developing state by state code fragments for charters and such. Bcorp can bring to the DNA of any new coop a triple-bottom-line style of doing business. In the charter and membership agreements are language that indemnify the Board and CEO for decisions that benefit society or the environment but have an impact on the financial bottom line. Armed with such protections a CEO of a triple-bottom-line (financial, societal, & environmental) coop is free to make decisions that benefit society as well as the company. I want to further suggest that you and BCorp develop a cookie-cutter charter for all 50 states in order to streamline the coop creation process even further. If you can produce a set of PDF files people can download and take to a lawyer - this process of spreading the triple-bottom-line coop can proceed much faster. BCorp provides a five point audit of coops so they can tell how they are doing on the triple-bottom-line. Also, there needs to be a funding body for new coops. Despite the solid numbers coops produce - it is difficult to get seed funding from banks. There needs to be a national funding group new coops can rely on for cheap capital to get started with. Thank you for your time, G. Gibson mistergibson@gmail.com

posted an official response
The movement for B Corps in the US represented an important step in the critique of and the going beyond capitalism as it has been organized and operated for the last 2-3 centuries. Its premise was that the capitalist enterprise's "bottom line" should not be profit rate but rather a collection of social and natural objectives (what you refer to as the triple-bottom-line). There was always an immense and irrational arrogance in the insistence of capitalism's devotees (and in its codification qua "science" in mainstream neoclassical economics) that what capitalism imposed on the capitalist (profit as the unique, singular bottom line) would somehow, magically be the optimum bottom line for society as a whole (a variation on the usual interpretation of Adam Smith's "invisible hand"). B Corps exploded that irrational arrogance and that is a major contribution. 
However, a key problem remains for the B Corporation: namely, WHO determines/interprets and pursues the "triple-bottom-line"? The same minority of capitalists (major share holders and the boards of directors they select) who own and operate the capitalist enterprises who pursued profit rate maximization as the single bottom line? Can they be entrusted to interpret and pursue the B Corp idea of triple bottom line? I dont think so. If a broad social/natural set of objectives are to guide enterprise decisions, then a broad social, inclusive, participatory body of persons should debate and democratically determine how best to interpret and pursue the triple-bottom-line. In other words, to complete the movement beyond capitalism in which the B Corporation marks a step requires the transformation of the enterprise from hierarchical, top-down capitalist enterprise to democratically run workers cooperative.
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The Economist shreds Marx

You may have already seen this Marx article in The Economist, https://m.facebook.com/story.php?story_fbid=10155393789204060&id=6013004059 Many online comments are critical of the article; "Yes his solutions were wrong but his analysis of capitalism is dead on." Have a wonderful weekend.

posted an official response

The Economist evaluates Marx and Marxism periodically to reassure its audiences that they need not worry about reading or thinking about Marx. This is, as they tangentially admit, especially needed now that challenges, criticisms, and rejections of capitalism proliferate. But their treatment is childish. First, there is no one Marx or one Marxism. It is a tradition of thought that has spread across the globe across the last 150 years and interacted with a huge number of different societies at varying levels of development. The result is a collection of different interpretations. There is no single definition of "his analysis" or of "his solutions." Even passing familiarity with the Marxian tradition would preclude writing as The Economist does, but luckily for them they lack any such familiarity, and so can pontificate ignorantly.

To illustrate the point, socialists have disagreed about and debated what "solutions" Marx advocated since before he died in 1883. They have also disagreed about and debated what his analysis actually was. Did it, for example, rest on his labor theory of value or was it independent of that? Did profit rates tendentially decline and thus provoke crises or did they not? Is that a question to be answered theoretically or empirically? None of these centrally important debates - key to grasping the multiplicity of analyses and solutions which have contested within Marxism - are relevant to The Economist. Their article is perhaps designed to undermine interest in Mr Corbyn's manifesto and proposals, but as serious analysis it is useless.

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How can I enlighten two friends and potential business partners about democratic ownership?

I'm a web developer and my friend, who is conservative, asked me to design software for his M&A business. I've accepted, along with the help of another engineer, because I enjoy working with these two people and I believe in our abilities. The idea has grown to be quite ambitious and it's clear that my friend with the idea (the CEO) wants this technology platform to be his main focus. Here's the problem: I understand mergers & acquisitions resembles a casino of private equity gamblers buying and selling companies like chips on a table. I don't want to walk away from the opportunity because I believe we can create a successful platform, and honestly, I don't have many other opportunities to speak of--I'd rather use my skills as a designer than have to wait tables. I'm also aware that our 'success' could directly contribute to capitalism's destructive behavior. I want an equal share of this business, along with all the other employees, and I have an opportunity to educate my partners about the pitfalls of traditional corporate structure, and capitalism as a whole. But as you can imagine, my friend who is the CEO, laughs at the idea of a cooperative, and wants double the shares of his two co-owners. The plan I'm left with is negotiating, but probably capitulating to my friend's plans of unequal ownership, while learning about, criticizing, and maybe even changing minds on the inside of the digital finance world rather than hating it from the outside. A different example of this same kind of struggle comes to mind: artists getting paid by corporate advertising for their creative work... I can't condemn them for accepting the money. Can you?

posted an official response

I dont either, preferring to focus on what we can collectively develop as a critique of capitalism and a commitment to collective struggles to move society beyond capitalism. How that commitment is expressed in each individual's life is subject to a complex overdetermination (see the importance of that concept in S. Resnick and R. Wolff, Knowledge and Class: A Marxian Critique of Political Economy). What you decide your life needs vis-a-vis your co owners, etc., is far less important than your commitment to be part of the solution to capitalism's retardation of social progress, whether or not you may also choose to participate in tghat capitalism in other ways. After all, we all do participate in the system while also seeking ways to criticize and move beyond it.

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Legislative Package Introduced to Encourage Employee-Owned Companies

https://www.commondreams.org/views/2017/05/11/hacking-american-dream-progressive-senators-go-big-worker-ownership Obviously this bill has no chance of passing the current congress, but a sign of future potential opportunities? Additionally, this legislation is modeled after the Vermont Employee Ownership Center, maybe something worth discussing in detail in the future if you haven't already? (If you have already, I'd love to read or listen!) Thanks! Big fan

posted an official response

I have spoken in general terms a few times about the positive step represented by worker ownership via ESOPs etc. So I will support this bill and do so publicly. However, my focus is somewhat different - or perhaps, better said, goes further. By that I mean that for me worker ownership is half the battle. The other half is to transform the workplace into a democratic community that makes all the key enterprise decisions: what, where, and how to produce and what to do with the net revenues. Too often, when workers acquire ownership, they continue to leave the running of the enterprise in the hands of boards of directors and resign themselves to being nothing more than shareholders (adding ownership to their subordinated place inside the enterprise and its decisions and operations). The social change modern society needs to seriously address its mounting problems requires the full democratization of the workplace: ownership by workers, yes, but crucially also the real control and direction of production.

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BC Green Co-Ops?

From the BC Green Party Policy Book: "16. Review existing programs to ensure they are effectively supporting innovation, and new business models in the emerging economy. 17. Establish an Innovation Commission to support innovation and business development in the technology sector, and appoint an Innovation Commissioner with a mandate to be an advocate and ambassador on behalf of the BC technology sector in Ottawa and abroad." Can Prof advise on natural resource based co-ops?

posted an official response

The debate over using and building worker coops as a basis for economic development, innovation, and "green" growth remains academic so long as governments in capitalist countries provide endless tax breaks, subsidies and myriad other tangible supports to enterprises organized along capitalist lines while withholding same from new and existing worker coops. Only after the latter are an established, significant segment of any nation's economy will the people be able comparatively to evaluate the two alternative kinds of enterprise organization to determine what mix of them is best suited to meet the objectives of economic development today.

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Solidarity Economy

Rick, if you haven't already, check out Boston's Solidarity Economy movement. See In These Times (June, 2017. "New Economy: Turning Capitalism Against Capitalusm", pg 10) right up dem@work's alley.

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Working class - the wrong revolutionary subject?

If we define working people as 'employees' (as opposed to 'employers', who we call capitalists), then those who work in a cooperative actually are something else. They don't fit into this scheme, one could call them just 'free people'. If we look at the history of labor movements, they seem to aim for either 1) social democratic reform 2) sovjet style 'socialism' (replace the capitalist bosses with 'socialist' bosses) or 3) if workers actually try to achieve libertarian socialism, they fail badly because they lack the support of the masses and the experience how to govern the economy (like in catalonia). Therefore, shouldn't we rather put our hopes for socialism on the people working in cooperatives than on those who would like to, but never do something for it (except waiting for a revolution that will never happen or fail badly as long as the masses of people stay employees)?

posted an official response

I am not clear on your critique of libertarian socialism, but I do basically agree that we must learn from the history of the first efforts to systemically go beyond capitalism (the experiments in socialism in the USSR, PRC etc.). That means learning from what those experiments achieved and from their failures. Thats what an earlier generation did in assessing the achievements and failures of the Paris Commune of 1870 and various other revolutionary, anti-capitalist upsurges. Just like capitalism's early experiments in the transition out of feudalism, so socialism's early efforts to go beyond capitalism must be critically interrogated. That many failed did not prevent the eventual demise of feudalism in favor of capitalism; and that many early efforts at socialism failed likewise tells us little about socialism's ultimate prospects.

I also agree that the current movement to revive cooperatives and especially worker cooperatives is an extremely important and promising form of anti-capitalism. It offers a mass-based, bottom up kind of socialism that might avoid the mistakes ands failures of the state-heavy earlier experiments.

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What models have separate paths for labor and resources?

In the typical economic model, labor and resource inputs, such as robots, are substitutable. What models maintain the distinction between humans and other inputs? Have any of these been tested?

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Does LTV always work?

If I work hard to produce useless things from wood, then would the value of those useless wooden things be still equal to the EL+LL? It seems that the things I have produced have no value at all...

posted an official response

No, Marx is quite clear that for products of labor to have exchange value (i.e. the socially necessary abstract labor embodied conveyed by the EL+LL formulations) they must be use-values to someone other than their producer. Thus producing something useless means it has no socially necessary abstract labor embodied in it.

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What does a leftist vision of the international financial markets look like?

What do you think the future of hedge funds looks like? How would the international financial system have to change after capitalism?

posted an official response

Most basically, the use of a reductionist concept of profit - i.e. as the "bottom line" that gets maximized by capitalist decision-makers - would stop being the operative performance guide. Neither funds deposited with hedge funds nor bank funds etc would be allocated by profit maximizing. A much more nuanced, multiply-diversified set of social objectives would guide investment decisions, thereby radically altering how economic development happens.

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Blockchain technology: How profound is this new technology and what could it mean for our economy?

There is a really exciting new "boom" happening in the tech-world based on Blockchain technology. This technology is enabling us to forgo the need of (many) trusted third parties like banks, notaries and services like PayPal. This is only a small part of what the Blockchain could do, the potential and possibilities are endless. It seems to me that this new technology can go hand-in-hand with running/organizing a Co-op.

https://www.weforum.org/agenda/2016/06/blockchain-explained-simply/

I'm a very big fan and I thank you very much for everything you do!

Kind regards from the Netherlands.

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