Frequently Asked Questions

Please select a topic below to see an short list of the most frequently asked questions I receive regarding general issues and my work. Don't see what you were looking for? Suggest a question and I may post it here or answer it on Economic Update.

Economics

 
1. What is the relation between money and capital? Do we need currency at all?
2. How do you feel wealth should be measured in our society? Should stock ownership of corporations be based on consumption levels, or something else entirely?
3. What is in your opinion on the actual cause of the global economic crisis?
A:
1. It's useful to follow Marx' distinction between money and capital. His point is doing this (early in Das Kapital) is to show that while money may function as capital, it need not do so and often functions in other ways. For Marx, capital is self-expanding value: we use money as capital if and when we deploy money for the specific purpose of making more money. For example, when we (1) lend money to get it back with interest, (2) when we buy a commodity to resell it at a higher price, or (3) when we use money to buy labor power from workers and tools/equipment/raw materials in order to produce a commodity which we can sell for more that the total cost of the labor and materialize realizing a "surplus". However, money can be used merely as a means of exchange. That is, we give products of our labor (for example, a bread I have baked) - for money which we then use to buy a shirt to wear (the bread is worth $10 in labor and material which is then exchanged for $10 worth of, lets say, clothing). In this exchange there is no need or desire to gain more than the exchange value to secure a surplus. Following Marx, we can speak of money being used as mere money and NOT as capital.
 
2. I worry that too exclusive a focus on differing consumption levels might tend to lose sight of the fact that differing capacities to consume derive finally from different relationships to the production process. Workers live off wages from selling their labor power. Owners of corporate stock may earn wages for labor but in any case earn income from their property (dividends and/or capital gains). That different relationship could be eliminated if one were to take seriously your idea of conceiving corporations as social or public goods and therefore not allowing any portion of their revenues not returned to workers and replenishing used up inputs to be given to any subset of the population. That is an old and quite reasonable socialist proposition that deserves precisely the public debate this society still fears to engage.
 
3. The crisis emerged from the way in which corporations (both banks and non-banks) interacted with workers and consumers and the way in which corporations, workers, and consumers interacted with governments. No one of them is "to blame" since all of them behaved according to the economic system's rewards and punishments. Thus the proper cause of the crisis is the economic system: capitalism. The problem is that for many years it has been unfashionable or even dangerous to question, let alone criticize the system itself. Capitalism, we were endlessly told, was "efficient" and "optimal" - the best possible system - and so on. Only criticism of this or that economic actor was possible. Hence we called one actor "greedy" or another one "imprudent" and so on. However, like all previous economic systems (e.g., slavery or feudalism), capitalism has its time of growth and prosperity and then it has its time of decline. The real and basic question for the world today is this: has capitalism peaked? Are we now on the downward phase of a capitalism that is increasingly unable to serve peoples' needs. Today, hundreds of millions of people are unemployed and want work. Economists estimate that 20-30% of our capacity to produce (machines, tools, factory, store and office space) are sitting idle, gathering rust and dust. Yet global poverty could be eradicated with the output we could have if those who wanted to work could be placed together with available industrial capacity. Yet it is the capitalist system driven by profit that is failing to produce the wealth we need and are capable of producing. It is capitalism that cannot find a proper balance between people and nature that does not destroy both. The economic crisis is a problem of the system. It is above all a capitalist crisis.

Marxism and socialism

 
1. Are you proposing adopting the USSR system, Putin's managed capitalism, or China's system?
2. What is market socialism? Can markets and socialism coexist?
3. What is the Marxian definition of corporation? How is it different from the mainstream definition?
4. Why, in the American discourse, have Karl Marx and his ideas became a kind of taboo?
A:

1. No, the USSR, Russia nor China have never established what I am suggesting: a kind of enterprise structure at the base in which the collective of workers share a common task in addition to their different positions within the enterprise's technical division of labor. The common task would be to receive and distribute the net revenues of the enterprises, to perform, in short, what boards of directors do now. For the full analysis of how and why the USSR (and likewise China, et al) never did this in a society-wide basis, see S. Resnick & R. Wolff, Class Theory and History: Capitalism and Communism in the USSR (London ad New York: Routledge Publishers, 2002).

2. Socialism in the Marxian framework of analysis, refers to how production is organized. It means that the workers whose labor generates a surplus (an excess above what the workers themselves get back out of their output for their own consumption) are also identically the collective of persons who receive and distribute that surplus. Socialism is the negation of exploitation where exploitation is defined as an organization of production in which the people who receive and distribute the surplus are different from those who produce it. Examples of exploitative organizations of production include slavery (masters exploit slaves), feudalism (lords exploit serfs) and capitalism (employers exploit employees). If production were transformed from a capitalist to a socialist form - and exploitation were thereby eliminated from society the way slavery and serfdom were earlier - that would leave open the question of how society would distribute resources among productive enterprises and likewise how society would distribute the outputs of those enterprises. This could be done by markets, state planning, planning by other social institutions, and so on in an endless array of combinations. Markets have co-existed with every other kind of organization of production (e.g. slavery, feudalism, etc.) and the same is true of planning, and have always partly reinforced and partly undermined the organizations of production with which they coexisted. I would expect the same if markets coexisted with socialist organizations of production.

3. There is a world of difference. A capitalist industrial corporation (Marx differentiates that from a merchant or financial corporation) is one which gets from its productive employees a value of output that is larger than the total value paid by the corporation for physical inputs (tools, equipment, raw materials) plus the value paid to the workers as wages (payment for what Marx calls their labor power). The difference is the surplus value appropriated by the corporation's board of directors. In the mainstream definition taught in schools (and by me as a professor) there is no such thing as a surplus and hence what I just described is NOT an aspect of the corporation, let alone its central aspect as for Marx. For more information take a look at an extended discussion in S. Resnick and R. Wolff, Knowledge and Class: A Marxian Critique of Political Economy (Univ of Cgicago Press, 1987, chapter 3).

4. For the last half century it was taboo to question or criticize capitalism in the US; the very few who dared to do so were immediately branded as either crazy, ignorant, or agents of communism. For 50 years the vast majority of Americans heard nothing but endless praise for capitalism and no serious discussion of any alternatives. The result was a capitalism without criticism or many limits, a capitalism that could and did indulge its darkest anti-social tendencies. That is one reason why US capitalism collapsed in 2007 and provoked a crisis that has now spread globally with no end in sight. US capitalists were so shocked by the regulations and taxes on them passed by Roosevelt in the 1930s Great Depression that they have worked since the end of World War II to undo the welfare state type of capitalism ("capitalism with a human face") Roosevelt created. They have done that by destroying the labor movement (it has had a steady decline sine the 1950s so that now under 7% of private sector workers in the US are unionized). They likewise destroyed all the socialist and communist parties who had worked with the unions to win the welfare state type of capitalism in the 1930s. The twin results have been (1) a neo-liberal capitalism replaced the welfare state especially after the 1970s and (2) that neoliberal capitalism has now crashed the global economy again but this time with no effective labor movement or left wing counterforce as there was in the US in the  1930s. And that situation poses the gravest possible dangers for the world.

Politics & Society

 
1. How can we communicate this message to the broad majority of Americans who are by any standard of Economics, poor?
2. Can socialism in whatever form gain political traction in the United States/Europe without revolution?
3. Can socialism and religion get along?
A:

1. I use the sad trajectory of Youngstown, Ohio - my birthplace - as an illustration of all the complex, enduring social costs of our economic system that never get figured into the calculations that justify what corporations do. The only real option I see is a large, organized, unified movement of Americans finally fed up with what has been happening, not distracted by the hunt for scapegoats (e.g. tea parties), able to mobilize to change a system that is not working except for a tiny few at the top. In such a movement we can collectively overmatch the funds used by the corporations to control politics and the mass media and we would already have the momentum. I hope you will consider supporting such a movement, and encourage you to visit my non-profit which advocates for such change: democracyatwork.info

2. I have little doubt that a new socialist left is already slowly emerging. The reason is simple: socialism was born with capitalism, is its shadow/other, and is provoked and revived by capitalism's own mechanisms (e.g. crises like this one). Those who suffer, like those able to see and sympathize with the suffering, caused by the deep irrationality of capitalism (e.g. imposing austerity on a recessionary economy, enlarging the homeless population alongside the empty homes, deepening the wealth and income inequalities that helped to cause the crisis during the crisis, etc.) will sooner or later rise from a focus on fixing the system to fundamentally changing it. At that point - unique in each culture and indeed in each individual - the rediscovery of the rich accumulated theoretical and practical tradition of socialism resumes. Marx and Marxism are rediscovered. I don't know if what results will use the name socialism or some other(s), but it will in any case be a new and unique outgrowth of an extension from socialism. And part of its differences from traditional socialism will emerge from flaws and critiques of the earlier experiments (Soviet, Chinese, etc) that will clear the way. Anyway, that is how the situation seems to me as I do both public speaking and media work and encounter the profound shifting already underway in the consciousness of so many in the US.

3. Socialism, Marxism and religion have often gotten along very well indeed. Though under external, often political circumstances, they have been bitter enemies. That alone suggests that the larger social context shapes how they interact. See for example, the article on the Irish bishops' recent critique of capitalism. Liberation theology was the effort to combine Roman Catholicism and Marxism that attracted and persuaded millions before the Vatican opposed it. It is still widely influential especially in Latin America. One of my best students over the years, who combined his Jesuit priesthood with Marxism, believed that the two could be and often were compatible partners. I suspect that just as Marxists who take religion seriously will find themselves a particular kind of Marxist, so too will believers who take Marxism seriously thereby become particular sorts of believers. Indeed, religion and mass commitments to Marxism have coexisted especially well in Italy for a long time. And the same applies to non-Marxist variants of socialism.

Worker Cooperatives and WSDEs

 
1. How do coops of all types actually work in the real world? Don't they frequently fail because the workers are too inclined to put up with poor business practices?
2. How could a large company possibly work if all workers ran it together?
3. Has any research been done on the various ways in which the worker co-ops/ WSDEs can distribute surplus in different ways than the capitalist firms and change the wealth distribution of the society as a whole?
A:

1. The term “coops” covers many different things: collective buying institutions (e.g. food coops), collective selling institutions (individual small capitalist enterprises who get together to sell their products), collective owners (farmers who own collectively the land they farm in individual farms). We are mostly interested in yet another type or meaning of coop: when workers in an enterprise collectively function as their own board of directors, thereby not needing any separate group of people functioning as a board of directors. We call this sort of coop a Workers Self-Directed Enterprise or WSDE. There really is little broad evidence that compares businesses that are otherwise alike (what, how and where they produce) except that some are run as top-down hierarchical capitalist enterprises whereas others are WSDEs (coops in the sense of worker self-directed enterprises). WSDEs still remain relatively few compared with capitalistically organized enterprises. In any case we don’t have grounds to say that WSDEs, for example, fail at any greater rate than capitalist enterprises. Where we do have some evidence – for example, with the huge Mondragon Cooperative Corporation in northern Spain – it is quite clear that its member coops (WSDEs) have failed at lower rates than their capitalist counterparts over the last 50 years. Historical evidence suggests that enterprises are very complicated and complex things utterly dependent for their survival on the interplay of external conditions (over many of which they exert little or no control) and internal conditions (all the technical and interpersonal aspects of producing and distributing goods and services). Special sets of conditions bring enterprises into existence. Changing conditions change those enterprises. And new conditions often end the useful lives of many enterprises. No one aspect of a business (whether it is hierarchical/capitalist versus WSDE) ever determines success or failure; those results always depend on the interplay of many factors. Also, we need to be careful about the word “fail.” It means different things for capitalist enterprises than for WSDEs. Capitalistically-organized enterprises focus on “bottom lines” such as profit rates or growth rates or market shares. If they don’t get those big enough, they “fail.” Quite differently, WSDE’s do not focus on one, two or three measures. They are concerned about profits and growth but also about the welfare of workers and their families, of surrounding communities where they live, of the quality of life and personal development on the job, and so on. In a word, a WSDE that did well on many of those issues even if its profit rate was low would not be viewed or treated as a failure. From the WSDE perspective, a capitalist enterprise that scored high on profits and growth but treated its workers and the surrounding community badly might well be judged a “failure.” Capitalist enterprises and WSDEs are basically different ways of organizing production. They likely produce correspondingly different ways of working, thinking, relating to other people, and so on. They have different ways of serving people’s needs. Likewise, if and when an enterprise “fails” and disappears, the two systems differ in how they handle that failure. Capitalist enterprises typically dissolve in bankruptcy where capitalists and workers are on their own to search for alternative livelihoods. Coops – for example in the Mondragon Cooperative Corporation in northern Spain – are more likely to work out elaborate systems for finding other work in partner cooperatives for workers from a failed enterprise. If there is not enough work for all, for example, then unemployment is shared (everyone does 2 hours less work per week rather than some being completely unemployed). Secure employment is a major priority for WSDEs in ways that it is typically not for capitalist enterprises.

2. It would certainly be a major social change/transition to move from the traditional, top-down, hierarchical capitalist organization of corporate enterprise to the very different model of workers functioning democratically as their own enterprises' boards of directors. As with all social changes of such magnitude, there would need to be all sorts of adjustments along the way. The same was true of the social transition from monarchy to parliamentary democracy in Europe, from slavery to free labor in the US south, and so on. In this case, there would need to be education and training for workers so they could properly carry out their new duties as directors alongside their traditional duties as hired workers. Nowadays, a tiny minority of citizens are trained in colleges and business schools to become directors of capitalist enterprises. In the new system, a majority would have to be similarly trained. Just as once only a tiny minority of people attended any school - when kings ruled everything - so now we require public education of everyone in what we like to call a democratic political system. Well, the proposed transition to a democratic economic system inside each enterprise can and will require comparable education and preparation for all. Mass public education and preparation were worth it to support political democracy. I have no doubt that the parallel education and preparation will be worth it to support economic democracy.

3. Yes, some UMass students investigated alternative distributions of the surplus from those normally chosen by capitalists, alternatives that would be available to WSDEs. No direct examination of impacts on income and/or wealth distribution were undertaken. That would be an important theoretical inquiry and in places like Mondragon would also be possible empirical inquiries as well. In all likely scenarios, a collective/democratic distribution of the surpluse as in a WSDE would never consider or enact the sorts of unequal distributions of the surplus to some workers vis-a-vis others that have become the capitalist norm...hence WSDEs mean at least significantly less inequality in income and wealth distributions than in capitalism. Indeed, given the stunning long-term failure of capitalist societies to reduce inequality (except when surges of populist political rage from below forces it temporarily), WSDEs emerge as the only serious mechanism to structurally do something lasting about capitalist inequalities.

Miscellaneous

 
1. What are some resources I could use to verify statistics that you are using in your presentations?
2. What can I do, other than vote, to contribute in a positive way and promote change? Especially with limited free time to spare?
A:
1. All the following departments and organizations have immense web sites I make regular use of when doing empirical work: the Department of Commerce, the Department of Labor, the Census Bureau, the White House Office of Management and Budget, and the Federal Reserve System. Outside the US government: Economic Policy Institute, Center on Budget and Policy Priorities and such international sites as the OECD, Eurostats, FAO and the UN generally. Wikipedia has proven a great starting point which may lead to additional data you would find useful.
 
2. Voting is a good start, but in the U.S. our two major political parties are quite similar – especially in their basic responses to social problems - and run campaigns based more on costly TV ads than on mass participation. The truth is that the society we live in is now dysfunctional. The economy tanked and left most of to cope with tough consequences. The gap between rich and poor widens and thereby deepens social tensions. These are social problems that cannot be solved individually. They need social solutions that are worked out and pursued by social movements. Individuals are responding in the US chiefly by trying to escape from social problems (into careers, personal lives, schools, travel to distant places, alcohol, Facebook, and so on). Individual responses rarely work. Our society’s problems find their ways into our lives no matter which escape routes we try. The sooner we realize that social problems and crises demand social responses, the better. What I have to suggest may frustrate you since it does take time and effort: Economic decline and political disengagement in the US will not likely change until enough people decide to gather with others to generate social efforts/movements for change. Form a group if one to your liking is not already there. Find groups to ally with around shared projects and goals. Start by getting together to talk about your lives, your jobs, your fears for the future, or the quality and quantity of pubic services provided in your community. The topic matters less than assembling others so act as part of a social effort and movement. You may also contact my non-profit at info@democracyatwork.info to get in touch with other d@w supporters in your area.

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