Richard Wolff on Leaving Our Unstable System

This article originally appeared on The Boston Occupier's website.

For 50 years, it has been impossible in the United States to seriously debate or criticize our economic system. The different points of view represent different ways of cheerleading for it. So in a sense, we shouldn’t be so surprised that our system isn’t working real well.

The key difference between now and the Great Depression is the mass of people had organizations that were leftist and were willing at least to raise the question of a system. First, CIO, the Congress of Industrial Organizations, brought into American trade unions millions of workers. Second, we had half a dozen socialist parties. They were strong, lots of members, and they were intimately interwoven with the CIO. And third, a powerful Communist Party. Unions, Socialists, Communists, lots of them, well organized and interacting with one another to give each other the spice of their particular perspectives. All of that’s missing now, but it was present then.

In the depth of a depression three times worse than today, you can imagine that the government—federal, state, local—was, like today, impoverished. Unemployed people can’t pay income tax. Unemployed people and their families can’t buy things, so don’t pay sales tax. Wherever you look, the revenue coming to the state, local, and federal governments was shrinking. Just like today.

But there were those three organizations—the unions, the Socialists, and the Communists—and they began to say to the mass of people, with a profound response, “This system sucks. It’s not working real well. That’s why you are so poor. That’s why your prospects are even worse. And your children? Forget about them.” And this frightened the people at the top, starting with Mr. Roosevelt, because they were organized and they were talking about the system.

So Roosevelt did a remarkable thing. He went to his friends and associates, and he said to them something stark: “I want you to give me a lot of your money, like a real lot of it. And I’m going to do things that are going to save you.” And they all looked at him as if he’d lost his mind. And then he explained, “You better give me the money, because if you don’t, those union people and the Socialists and Communists, they’re going to come down the road and they’re going to cut you a much worse deal.”

Half of them never agreed with him, and I’ll come back to them in a minute. But half of them agreed, and with half of them, Roosevelt had what it took to go to the unions, and the Socialists, and the Communists, and he said, “I’m going to do things for you you never dreamed of, on one condition—stop talking about the system. Let it be.”

A deal was done. He created the Social Security system, in the middle of the Great Depression, when there was absolutely no money to do anything. Between 1934 and 1941 Roosevelt created and filled 12 and a half million jobs. What do you mean there’s no money? He knew where the money was. That’s exactly where the money is now.

Do we have to have an austerity program here? Let’s review. Depression is three times worse in the ‘30s; we create Social Security. One-third the Depression now, and the Republicans and Democrats are trying to figure out how to cut Social Security. What starker opposition could you imagine?

In 1942, Roosevelt sent a message to Congress, proposing a new top income tax rate for the richest Americans. For everyone earning more than $25,000 a year, the proposed tax rate above $25,000 was 100 percent. The Republican Party, then as now, went ballistic. That’s a normal condition for them. And they got half the Democrats to go along with them. That’s another normal condition. And they forced a compromise on the president. Every dollar over $25,000 that you earned in 1942, you gave 94 cents to Washington. You got to keep six. I didn’t make this up. I wouldn’t have had the imagination.

In 1943, for every dollar that was taxed from individuals, a dollar-fifty was raised by taxing profits of enterprise. Today, for every dollar of tax the government gets from individuals, corporations are required to pay 25 cents. The top income tax bracket in the middle ‘40s was 94 percent. Today, 35 percent. The rich paid for the kind of solution Roosevelt was able to produce. And then they went to work to undo it, which is why the numbers look the way I just described them to you.

So they needed to control the political arrangement, but the need to do it and the desire to do it are not enough. You have to have the resources to do it. And here’s the punch line: Nothing that ever happened in the Great Depression took the resources away from the people who dispose of them—the major shareholders and the boards of directors. Roosevelt never changed that. So the private sector took the resources that they still gathered into their hands, because they’re the ones who get the profits that labor produces, and they used the profits to undo the New Deal.

The only difference if we react to this crisis with new regulations and new taxes, which is what the left in America, such as it is, proposes most of the time, will be that after half a century of practice, the corporations will be much quicker at getting rid of them than last time. What then is a solution?

We change the organization of production. The workers, the majority who do the work, enterprise by enterprise, have to become their own board of directors. No more private ownership. No more stock market. No more major shareholders. No more major shareholders electing a board of directors. Here’s a new arrangement: Monday to Thursday you come to work and you do your particular function in the enterprise. On Friday you come to work, and you sit around all day and you have meetings in which you decide what to produce, how to produce, where to produce, and what to do with the profits. You are your own board of directors.

If the mass of workers are making the decisions, they’re not going to be using their profits to undo the kind of social legislation that a president like Roosevelt proposed, because they’re the beneficiaries of it. They’re not going to move the plant to China, destroy their lives, lose their jobs, disrupt their families, and destroy their community, for very obvious reasons. Would you think the workers would decide to pay some of themselves huge salaries two, three, four hundred times the amount of the others? I don’t think so. We’re not going to have the distribution of income problems in a society like we have here, or at least it’s a lot less likely.

The idea of democracy is if you have to live with the decisions, then you must be able to participate in making them. We as a nation try to take seriously that idea. Well where do most people spend most of their waking hours? At work. Five out of seven days you get up in the morning, brush your teeth, get all dressed up to go to work, and you stay at work all those best hours. If democracy is a basic value of the system, how came it to be that we exempted the place and the situation where we spend most of our lives? So this is only the modest proposal that we finally bring democracy where it should have been all along—at the workplace.

Richard Wolff is professor of economics emeritus at the University of Massachusetts Amherst, and a visiting professor at The New School. His latest book is Democracy at Work: A Cure for Capitalism (Haymarket Books, Sept. 2012). Adapted from a speech given at Columbia College, March 27, 2012.

Wolff spoke at Occupy Boston in November, as a part of the Howard Zinn Memorial Lecture Series. Here is the video of that speech, in two parts:

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