Ask Prof. Wolff

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Should there be billionaires?

Professor Wolff, I am a tremendous fan and major supporter of your message. I never miss an episode of “Economic Update.” Thank you so much for lending an articulate and well-reasoned voice of sanity to these issues of economic injustice kept so long in the dark. Keep up the excellent and vital work! Now… My liberal/progressive framework tells me that there are evil, scheming billionaires like Sheldon Adelson and the Koch Brothers, and there are nice, philanthropic billionaires like Bill Gates, Mark Cuban, Mark Zuckerberg, etc. Personally, I can’t understand why we don’t view ALL billionaires with the same level of concern for mental health that we might reserve for someone who hoards a large quantity of anything else, say old newspapers or cats. However, from a purely economic standpoint, what are the ramifications of having a society and economic system that allows individuals to become billionaires? Is it “ok” to have billionaires? Is compensation at this level ever justified? Can the existence of billionaires ever be healthy and indicative of a robust economy? Or, as I suspect, are people of such disproportionate wealth suggestive of a certain sickness/malignancy of the system? In addressing this question, perhaps you can give us a sort of “economics of billionaires 101”—commenting on how and why the number of billionaires worldwide has gone from a few dozen in the early eighties to more than 2,000 today—and sharing your own thoughts on these men and women of lofty esteem and influence in our society. Thanks!

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can you explain how Mondragon works in Spain ?

suggest new ways of company organization

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What if the American Revolution never happened

Would the U.S.A. have evolved today to be more like say Canada? Would the elite been less able to buy the politicians and even Supreme Court judges, like the newly installed Gorsuch?

posted an official response

Tough counterfactual question. So many variables would have shaped the eventual outcomes if no revolution occurred. US might have ended up like Australia within a Commonwealth. Or a revolution from Britain delayed into the 19th century might have become far more radical and turned against capitalism as well as Britain. Had Jefferson's image of a nation of small farmers and craftspersons won out as the future US, a very different social experiment might have emerged. The value of such huge, open-ended questions has always been to help people - as they think about the many answers - to realize that social development can always go in multiple possible directions. Things could indeed be very different today had earlier events worked out otherwise.

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Universal Basic Income?

Professor Wolff, In addition to the concept of Wage Subsidies, which are notable in that even Republicans like Marco Rubio have shown favor to them as policy solutions to modern capitalism's economic woes and inequalities, I was hoping you could discuss your views on a Universal Basic Income- once again in one of your videos such as Economic Update if possible- although an answer here would also still be appreciated. The idea of a Universal Basic Income seems most appealing in combination with a cut to the Minimum Wage- in that if appropriately balanced it would increase workers' standard of living (by raising incomes and depressing prices) while SIMULTANEOUSLY reducing the incentive for employers to automate or outsource jobs- thus generating increased employment and partially alleviating modern capitalism's income inequality crisis while also increasing economic efficiency by making the "true" cost of labor for an employer more similar to the market-based of labor, ultimately leading to better solutions for problems like manufacturing needed goods (for instance not making good in overseas factories when there are unemployed workers with the necessary skills right here in the United States- who would work for less than the Minimum Wage if their income were supplemented with a Universal Basic Income...) Please discuss this if possible- inclyding, ideally, the best way to pay for it. I would think that ideally a UBI would be best paid for with an increase to the Capital Gains Tax (stock prices and dividends would increase due to increased corporate profits if the Minimum Wage were eliminated, providing the larger tax-base to accommodate this), although I could always be mistaken...

posted an official response

Wage subsidies appeal to capitalists in so far as they enable them to pay lower wages. In capitalist societies, there would be endless political struggles (largely won by capitalists whose wealth buys parties, candidates etc.) over who pays the taxes to support wage subsidies. In the end, employed and thus non-subsidized wage workers would shoulder the taxes used to provide subsidized wage workers with those subsidies. This would set up the same social tensions that unemployment insurance and all other forms of welfare for the poor and/or tensions eventuating usually in a minimization of such subsidies etc.

Much the same set of problems beset UBI and for the same reasons.

UBI is now getting attention chiefly because a few savvy economists have pointed out that capitalism's endless production of the unemployed (its failure to provide jobs for the people in its societies) has rendered the irrational system vulnerable to the accumulating rage, anger, and anti-social potential of those it fails to employ etc. Thus for the last 150 years capitalism has provided palliative welfare payments to mitigate the antagonism of those disserved by capitalism. The savvy economists point out that the mass of confused welfare schemes and the mass of public employees administering them cost tax-payers more than what a UBI would entail. That is, UBI could be a cheaper way to solve capitalism's problem of an endless failure to employ.

This strikes me as an irrational "solution" to the system's irrational performance. A transition to a full-employment economy based on enterprises structured as democratic worker cooperatives could simultaneously solve these problems by providing meaningful work to all together with much less unequal incomes (determined and distributed democratically) and thus much less in the way of divisive social struggles over who pays what in taxes and all the other divisive social struggles over "redistributive welfare policies."

Its better to not distribute income and wealth unequally in the first place than to do so and then tear society apart fighting over redistribution.


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Why didn't Stalin (around 1930) just achieved socialism?

I have watched your lecturer on youtube about Socialism. I don't understand why Stalin didn't just made the transition to reorganize enterprises. Instead he substituted the wish for the society and told the them that they have "achieved" socialism. But why didn't he use his power to reorganize the factories, the offices, the stores, ... so they would work in the interest of the community and the whole community would be making the decision. Because then he actually would have achieved socialism, or?

posted an official response

People are mostly prisoners of the ruling ideas of their time. Stalin was too. Socialism then was conceived as government taking over production (state enterprises) and govt planning the distribution of goods and services. Stalin focused on that as did most socialists and communists until the last years of the 20th century. However, the weaknesses, shortcomings and eventual failure of the USSR has provoked socialists everywhere to rethink their most basic ideas including how to define socialism. They increasingly move to a definition that includes or even foregrounds transforming enterprises' structures from hierarchical capitalist to worker cooperative non-capitalist.


This argument is developed in great detail and systematically in S. Resnick and R. Wolff, Class Theory and History: Capitalism and Communism in the USSR, New York and London: Routledge Publishers, 2002.

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Where to put my money?

I've been putting money into a ROTH account for the last 6 years (I'm 25). After listening to you and your talks about capitalism instabilities, do you think it is likely by the year 2050 the market will crash making my retirement funding disappear as well? If so, should I just invest my money in a house instead or something along those lines?

posted an official response

Providing anything like or close to "investment advice" is something I do not do because it requires knowing a great deal about the person being advised. Moreover, it is also an activity that is governed by laws and regulations intended to provide some protection for those seeking advice. So nothing I say here should be construed as a suggestion to buy or sell or hold any form of property etc.

That said, all investments carry risks and especially in a capitalist economy those risks include business cycles of the sort that have plagued capitalist economies since they became the chief economic system in the modern world. Thus many people believe that the safest thing to do is to make sure you do not keep all your eggs in one basket....i.e. diversify as the safest strategy.

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Publicly ran consumer group to expedite worker co-ops.

Consumer groups in our history have made demands of businesses by the use of boycotts. I feel if there was a forum where everyone could collaborate and discuss businesses ethics and make demands the market would more quickly transition to worker co-ops. These sites would have recalls, law suits, and hopefully financial paperwork showing profit margins and employees pay for every business. A market cannot function properly without informed consumers making rational decisions.

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Is there is a connection between Arab States' Cooperative Movements + Wars in Middle East?

it just so happens that countries like Iraq, Lebanon, Jordan, Syria, Yemen and Palestine are part of the Arab Cooperative Federation with Iraq its elected president...all under military attack by Imperialist powers. It's obvious that worker cooperatives are a threat to capitalism. Is it more than just oil interests? I wonder if capitalist powers are attempting to destroy Cooperatives starting with the Middle East. The International Labour Organization Regional Office for Arab States, background paper on cooperative development in Arab states:

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A hospital in Pinole CA that serves mostly low income patients, has closed its doors.

Here is more info: I think it would be interesting to compare this hospital with places like UCSF that receive a lot of grants from big pharma, etc. I also wonder if the tax base in West Contra Costa County (poorer area) is insufficient to keep a hospital going. Apparently not. Thanks.

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Mark Blyth

Hi Professor Wolff. I'm wondering if you're familiar with Mark Blyth (my guess is that you are). I think he would be a great guest for your podcast.

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Professor Wolff, I have been following your lectures for a few months now and have learned quite a bit. However, I have never seen you touch upon the topic of non-profits in a capitalistic economy. I am curious what your general thoughts are on how non-profits fit within this system and how they are affected by capitalism. Thank you.

posted an official response

The first problem is the very term non-profit. Mostly it is a bit of a misnomer for what is better described as "tax-exempt." The US laws designate that religious institutions, charities, and educational institutions - broadly defined - are exempt from taxes. Because of the often questionable nature of the legal exemptions they enjoy, they have preferred the less troubling term "non-profit." So it is often an open question as to whether various "non-profits" do not, in fact, make profits (which are not subject to taxation). Whether an entity makes a profit or not depends on how it accounts for its incomes and expenses. Elite universities in the US often count the portion of their incomes that they add to their endowments as an "expense" in a way that most individuals would not and in a way that the IRS would not allow individuals to do. There are, of course, enterprises that fail to earn a profit and so are "non-profit" just as there are firms who do not seek profits and aim instead to break even and thereby function as "non-profits." The latter's capitalist nature - in the definition I use that focuses on the employer-employee relationship and the surplus-appropriator vs surplus-producer identities it entails - is not much affected by whether it does or does not achieve a profit. Non-profits usually replicate the capitalist nature of profit-making enterprises....and that for a whole host of reasons.

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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.

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Whose side is he on?

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!"

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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.

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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...

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