Much like Bernie Sanders, Richard Wolff (1942) has spent his entire adult life saying (and writing) many of the same things. Until not so long ago, his fierce critique of capitalism, voiced in his radio show Economic Update and articulated in countless papers and books, found little resonance beyond the fringes. And yet, like the Vermont Senator, he has seen a spectacular renewed interest in those ideas lately. When Wolff, a Marxist economist who was trained at Harvard, Yale and Stanford, sat down with CTXT at a coffee shop near his office in Manhattan’s New School for Social Research a couple weeks ago, he was preparing for a trip to Kentucky, where he would give a series of lectures in public and state universities. “I’ve never even been to Kentucky. And they’re paying to have me tell them about the disaster that capitalism is and what we can do to change it!” he joked, pointing to Occupy Wall Street as the force that brought theories like his –and Bernie Sanders’- onto the discussion table. In his idiosyncratic tone –combining the didactic with the forceful – Wolff spoke about the current situation of the American economy, the forces driving global competition, and the intricacies of the solution he proposes in his bookDemocracy at Work: A Cure for Capitalism (Haymarket Books, 2012), which turns to the Basque Mondragón Corporation for inspiration.
We get the sense that things are going better economically this side of the Atlantic than in Europe, and even most of the world. And yet, you’ve described the economic situation in the U.S. as bleak, and even a disaster. Isn’t there a recovery in the US, at least compared to Europe, with much lower unemployment and steady growth?
You have to understand, it's a little different in Europe because you have different countries. We have different cities and states, but they're the size of your countries. You have Greece; we have Puerto Rico. I wish I could take you to Detroit. I would show you something ... You don't even have that in Europe. Even if you go to depressed British cities or Lille in the north of France. You do not see what you see here.
What do you see in Detroit?
You see a third of the city abandoned. Every other house is burnt. You see only the black leftover timbers. You have a drug business going in some of the houses. Wild dogs are serious social problem in Detroit. Let me say that again— wild dogs. 20, 30 years ago, Detroit was the best example of American capitalism. When the King of Spain or the Prime Minister of Britain visited the United States, the President took him to Detroit to see the car factories, to see the workers earning high income, which they did, to be members of a strong union, the UAW ... All of that is gone. The UAW barely exists as a union. The population of Detroit in 1970 was 2 million. The population of Detroit today? 700,000. 1.3 out of 2 million people are gone.
Ford, General Motors and Chrysler moved. They made more money making cars in Mexico, in Canada and now in China. That's it. 'Fuck you,' they said to the working class. The city of Detroit is bankrupt. It's the largest city every to go through bankruptcy in the United Sates. I can sit here for the next 3 hours and give you one after another example of the vanishing of the American middle class.
Is it true that of the, roughly, 15 million people unemployed, we're now down to 7 or 8? Yes. But more than half of them left the labor force. That is, they're not looking for work anymore.
So the point is—a lower unemployment rate obscures a harsh economic reality for most Americans…
What you’ve done is – You have rearranged the American economy. Almost all the good jobs - well-paid, with a pension and medical coverage and so forth - all of those have been tremendously reduced. Maybe half gone. Those people have been rehired now as service workers. They're working in a fitness gym, they're working in Amazon, helping to move packages, they are making you a coffee at Starbucks. They have a job, lower pay, no benefits at all, no future, nothing. But they're working.
This is not an economic solution. That's why even though we have lower unemployment, our economy doesn't go anywhere. We have no growth, no well-being. We have the growing gap because all of these people were part of families that once had a pretty good income, a kind of American dream - a house, a car, could send their children to college. They can't do it anymore. Young people are not getting married. If they get married, they're not having children. How are they ever going to pay back their student loans, they have no idea.
Some would argue much of that is due to increased global competition
You have radically altered, over the last 40 years, the relationship between capital and labor. The basic way you did that was by bringing a vast number of workers into the orbit of Western Capitalism, with
the destruction of the Soviet Union and with the change in the political atmosphere in China. China is able to promise, ‘Will deliver to you –German, Spanish, American, Canadian company – a highly trained, highly disciplined labor force. You pay next to nothing.’ India, Brazil, Eastern Europe ... will say the same.
Try to think of it as a capitalist for a minute – Suddenly, you have a vast new supply of labor. You turn to the workers who you pay American wage levels or Western European levels, ‘What do I need these people for? I'm closing the factory in Barcelona, Paris or Cincinnati or Chicago and I'm opening in Shanghai and in Hyderabad and in Sao Paulo. What do I need this for? I can open a brand new factory that's all the latest technology - computers, robots - and I pay nothing in wages, and the government is desperate for me to come.’
When people argue that all that is is a shift in conditions of living, that the global south and the peripheries are rising, catching up with the West by benefiting from development, creating a reshuffling of wealth from center to periphery... What do you say to that?
I think it's a side effect. It’s wishful thinking to imagine that this is going to be good for the global South. The decision makers are the same ones. They will play off Brazil against India just as they play off the United Sates against China. They will move and they will go wherever suits them ... They will make things good for whoever welcomes them and they will make things difficult for whoever doesn't.
So it’s a race to the bottom?
Yes, because they can. It's not some conspiracy. It's the logic of how this plays out. You can see it already in the clothing business. You had an initial rush to China. Now, you can see a significant number of firms leaving China because the wages have been rising 5 or 6% per year for the last few years. So they go into Vietnam or Malaysia. That's their job. Everybody competes.
You have that here in this country too. Only here, it's one city against another city, one state against another state. That's one of the reasons we have such an abysmal tax structure that puts all the burden on middle income and low income people.
You’ve argued there are consequences for governments as well as workers when production relocation takes places
When jobs leave, the tax revenue shrinks. At the same time that your job deteriorates, public services are cut. The result is austerity.
The companies say, 'Don't you tax us because if you tax us, we'll leave even sooner.' You can't tax them. The mass of people say, 'You can't tax us, we'll vote you out. We're under such pressure that you cannot raise our taxes.' That's why Republicans, who never used to get working class vote, now get it, because they keep beating one drum. ‘We will cut your taxes.’
Where does the money come from then? Debt?
Exactly. That's why we have the explosion of debt. Nobody wants to pay any taxes; nobody can. If the politician taxes, he's voted out of office. If he doesn't deliver services, he's voted out of office. What's he going to do? Borrow. He goes to the rich people and he says, 'I'm not going to tax you. Instead, lend me the money. Then I give it all back to you, with interest.' Now he turns to the people and says, I can give you ... 'I give you a swimming pool. I give you a new airport. And I don’t raise taxes.’ Childish. You just borrowed another $50 million. You can't keep doing that, you idiot, because you don't have the economic base to pay that loan back. That's Puerto Rico, that's Detroit, that's the State of Illinois. They're slashing pensions. Even liberal democrats ... They all act as if trained by seals, they all say, 'We don't want to lay off a lot of public workers so we ...' As if the choice was between cutting the pensions or laying off workers. As if the choice of taxing corporations and the rich, after 30 years in which the rich have become much richer, is impossible to even think about. That's a successful ideological befuddlement of your population.
In your book, you describe the reaction to the crisis in the 30s, under Roosevelt, and compare that with the way Obama reacted to the 2008 crash. What was the main difference?
In the 1930s, the sense of an economic system not working – that it had betrayed the confidence that workers had been asked to put into capitalism - was organized. We don't have that here. That's the fundamental difference.
How was it organized?
In labor unions and leftist political parties. A coalition was made. The communists, two socialist parties, and the Congress of Industrial Organizations ( CIO) really worked together despite their disagreements. Between 1933 and 1936, you had about 10 million workers join unions. Never been anything like it before. We've never had anything like it since.
What did they do with that alliance?
Literally, they came to Roosevelt, who had run in 1932 on ‘balancing the budget,’ told him, 'Do you see the demonstrations everyday in the street?' 'Yes.'
So the unions said, 'You must now intervene - you, the President - to help the mass of people in this time of depression.' To use modern language: ‘No austerity. You must be a super Keynesian, but not a Keynesian helping big business. Keynesian, not in the sense of trickle down. Bubble up!’
You must help the people. You must recognize unions, which were not yet legal. The socialist and communists sit at this meeting and listen. At the end of the meeting, they say, 'We agree with everything the union leaders said, but we want to add that if you don't do it, you won't have any money left at all because of the revolution here, and you will be defeated.'
How did Roosevelt react?
Roosevelt knew that was his base. He cannot win without these people. So he goes back to the corporations and the rich and he basically acts as the agent of the mass. He says to them, 'I'm your friend, I'm one of you.... But I got to tell you, we've got to do something for the mass of people, because if we don't there'll be a revolution. You've got to give me half of what you have so that I can take care of this situation and at least that way, you keep the other half. You don't give it to me, you're taking a very big chance that you won't have anything.'
Half of them didn't believe him. That's much of the Republican Party today. But the other half was scared. That's all he needed. He went back to the leftists and the unions, and he said to them, 'I will take care of the mass of people. I will do more than you thought I would ever do. But, here's the price: no more talk about revolution. If you do that, no deal. Then I turn it over to the right wing and they will shoot you.'
So you’re saying there was a different balance of power then?
Yes. We had no movement in 2008. In the period after World War II, we got social security, unemployment compensation, minimum wage, legalization of unions and government jobs ... All as a result of that deal.
All of that came between 1934 and 1936. He gave the old people money, he gave public medicine, unemployed people jobs, a minimum wage, and the right for unions to function. Unheard of to be done, and unheard of to be done in 2 years, and during a major crisis! He paid for this by taxing the rich, taxing corporations much more than they had been, and demanding loans. You were taking money from the rich and distributing it to everybody else. The right wing was beside itself. They had been completely defeated by mobilization from below strong enough to take even their friend and make him their agent against them.
Hence the famous quote, ‘I wear their loathing with pride.’ But how do we get from that welfare state being developed, an age of prosperity in the making, to the present, a time of rampant inequality and political discontent, where you are proposing a cure for capitalism? What happened?
The right wing was smart enough to understand that this wasn't the activity of Roosevelt. It was that coalition. Communists, two socialist parties and the Congress of Industrial Organizations (CIO). They understood correctly, that had to be destroyed. That’s where the witch hunt started. You convert the communists from being the most militant leaders of the working class into traitors. They become instead agents of a foreign power, the Soviet Union. Then you destroy them, you arrest them, you deport large numbers, you make it impossible for them to have jobs. Then you do the same thing to the socialists. And then you went after the labor unions. The labor union membership in this country has been going down uninterruptedly for 50 years. We had almost 40% workers, members of unions. Today, in the private sector, 6.5%.
That's because of the attack you’re describing or also of some mistakes on the part of the union movement?
Both, of course. First, it's an attack. In 1947, the most important single law was called the Taft-Hartley Act. It made the following: Anything that a union wins in bargaining with an employer - a better wage, a half hour for lunch, whatever it wins - must be given to all the workers there, whether or not they are members of the union. This is an invitation to workers to say, 'Why should I go to a meeting? Why should I go on strike? Anything the union wins, I get. I don't have to do anything.' It was an attempt to destroy the unions.
The law also did this— You cannot be an officer of the union if you're a member of the communist party. Every union leader needed to prove that he was clean, that he wasn't a communist. Or at least, if he was, he wasn't anymore.
You had a terrified union movement. They had to prove their loyalty all the time. That's why, even today, leadership comes from outside the union: Occupy Wall Street appealed to the unions, but the unions had nothing to do with starting that. The unions are not at all leading Bernie Sanders. He's doing it as a militant socialist all by himself with an army of young people. Some unions have come along but they're few, and most of the bigger unions go with Clinton because that's what they've always done. That's the biggest obstacle that has blocked the coalition from the below.
You’re saying the New Deal reforms weren’t the result of a social-democratic program, but a bargain between the revolutionaries and Roosevelt?
The irony is, the coalition from below did exactly what Roosevelt wanted it to do. It saved capitalism. If there hadn't been such a thing, they wouldn't have created social security, unemployment, and then they would have gone the way of Italy or Spain or Germany. There would have been fascism because there was no other solution. They would have to control an explosion that had no way to work itself out. The coalition from below saved capitalism but the capitalists were too stupid to understand it. They destroyed the coalition, and now that can't save them and now they may get Trump.
Let’s talk about the way forward you propose on the book - Why do you think cooperatives –or, like you prefer to call them, worker self-directed enterprises, are the solution to our problems?
For me, everything is about the organization of work. In that model, the workers are not just employees. They're also the board of directors for themselves.
Which means they own the fruits of their labor, but also they choose how to operate?
They direct the enterprise. They do in their enterprise what a board of directors does in a corporation. They decide what to produce, they decide how – with what technology, under which conditions – to produce, they decide where to produce and they decide what to do with the profits— with the net revenue. If you like the Marxian language, in worker self-directed enterprises, the workers who produce the surplus are the ones who get it and decide what to do with it. There is no capitalist.
They still have to sell it in the market, right?
Only if market is your institution for distribution.
But you don't think markets are the source of the problem?
That's right. I have a more basic problem. The structure of an enterprise is one thing; the mechanism of distributing the products of an enterprise is something else. In America, capitalism is defined as free enterprise plus market. Socialism is public enterprise planning. But Marx never does this. There's nothing Marx about planning. For Marx, the key question is who produces the surplus and who gets it. In slavery, the slave produces the surplus, the master gets it. In feudalism, the serf produces the surplus and the lord gets it. In capitalism, the employee produces the surplus and the employer gets it. In communism, the workers produce it and they themselves get it. There it is. There's the theory. For us, therefore, the institutional embodiment of the theory is an enterprise in which the workers not only produce the surplus, but appropriate it. That distinguishes it immediately from slavery, feudalism and capitalism.
Many progressives these days emphasize the preponderance of the market -how we all ought become small businesspeople for ourselves, investing in our education, having lots of different jobs, making rational decisions about our expenditures, and so on and so forth. They say that's just not good for humans. Isn't there too much market these days? Isn't the market too omnipresent?
Marx was an admirer of the French writer Balzac. In his view, the novels of Balzac were an endless attack - using ridicule and irony - on the end of feudalism and the arrival of the market where everything is a transaction.
If you want a critic of markets, get Balzac. I don’t like markets, but that's not my issue. Before we get to the mechanism of distribution, we have the mechanism of production.
For me, to have leftists angry at markets means something terrible has been lost. They're going backwards. Fine fine, attack markets; I want to see you be aware of the other part of the story. In bourgeois culture, for you not to talk about the horror of exploitation on the job by always talking about markets, I'm very suspicious. You are doing the work of my enemy.
Let's talk about that process. You argue no democracy is complete without democratic economic institutions.
Complete? There is no democracy ... For me, the claim that the Unites States is democratic is absurd.
Because the place where most adults spend most of their life is at work, and there is no democracy at work. Therefore, what are you talking about? The best you could say is there's a democracy in the way you reside - your home, your neighborhood - because you vote for the people who are mayor or senator or governor. But you don't vote for your employer. Even if you use democracy equals voting -which I don't- then you don't have it where you are most of the time, which is at work.
What do you have instead of a democracy at work?
A dictatorship. It's obvious. When I explain it to American audiences, I hear not one word of refutation from Harvard to Kentucky, from intellectuals to workers. When I go through how and why the workplace is a fundamentally - not just undemocratic- anti-democratic institution, no peep. They look at me and they know everything I've just said is their own experience. They know when you go to work, you cross the door, you are told what to do, you are told how to do it, you are told where to do it. When you're done, you go home and they own what you produced. You have absolutely no say over what happens to it.
How your model, based on worker self-directed enterprises, be more democratic?
Everything would be decided by a majority vote. One person, one vote. What do we produce, how do we produce, where do we produce and what do we do with the profits. It's a collective decision. You bring it up, it's discussed and you decide. For example, Are we going to move production from Ohio to China? That's a short conversation because I know the answer, so do you. No. What group of workers is going to destroy their own job, community, and future? It's crazy.
I’ll give you another example –When it comes time to distributing the profits, you think a few people would be given tens of millions of dollars while everybody else can't send their kid to college? Not going to happen. The democratic decision is going to ... Not everybody would get the same, but the would be little, not enormous as it is now.
You use Mondragón as an example of this?
Yes. They have a rule. The highest paid, cannot get more eight and a half times what the lowest paid get in any of the Mondragón cooperatives. In this country, the ratio of a CEO to the lowest paid in a corporation is in the neighborhood of 300 to 1 on average. Some as much as 5 or 600 to 1.
The problem is not how to redistribute the wealth. That's a terrible way of going about it. We're creating conflict and enmity. That’s why those who can evade their taxes. A much smarter approach would be: Don't distribute unequally in the first place.
I guess people who argue for top to bottom involvement and redistribution are worried about scale. How do we make this work for most people quickly, particularly so that they're not out-competed by firms that offshore jobs for example. How do you create meaningful change for most people, not just the employees of that company?
For me, capitalism is a social organization and it presents a social problem. A social problem can only be solved by a social movement. I suppose you could imagine that one by one, little enterprise and medium enterprise and a big enterprise, go through a transition. Maybe it will happen that way, but my guess is long before that process can reach conclusion, you're going to have a conflict.
Capitalists are going to see this as a threat to them. They're going to see, how are they going to pay workers very little and executives a great deal if across the street is a coop that doesn't permit that? How is that going to work?
In order for this to happen in any scale in the society, you will need a political party that is the advocate of worker coops and that the structure becomes the worker coop is the base, the political party of the worker coops is how it gets the government to be supportive, to be encouraging, to be helpful to the growth of the coop.
By the way, that just replicates how capitalism arose. The early capitalists needed a political movement to rest control from the feudal government of the king. They had to develop struggles for political parties, struggles for parliament. They had to create institutions. For me, the republicans and democrats are agents of the capitalist system. We will have an agent of our alternative system and will finally have a politics about alternative systems, because we don't have that now.
So those who look at the state as a means to scale things up are wrong in your view.
Having more intervention by the state is not for me having anything to do with changing the system of production ... The Soviet Union represents the state becoming the capitalist. That wasn’t the initial idea, but what they did is they got rid of the private mode of capitalism and substituted it by the state. But they ran it the same way. The worker came to work Monday to Friday, arrive at 8:00, did his work, went home. Somebody else made all the decisions. If the capitalist is a state official, it means you have state capitalism.
What does the Mondragón model mean to you?
I use Mondragón as an example of, one: that you could do this. Number two: that you can solve the problem of going from a small group - Father Arizmendi with 6 people in 1956, to a very large corporation with 80 to 100 thousand workers today running its own supermarket chain and all the rest. Just like capitalists had to solve the problem of how to go from a little capitalist to a big corporation, Mondragón shows that the coops can also figure out how to do that. Number three: Many of the Mondragón cooperatives had, in fact, to compete with capitalist companies in the same line of work. For example, Fagor, which makes refrigerators and washing machines, they had to compete with all kinds of other companies making those kinds of goods. They did very well. Don't tell me that a cooperative cannot compete with a capitalist enterprise.
You also talk about their financing networks, correct?
Yes. I also use it as an example that the ability of enterprises to help one another the way Mondragón arranges for a certain percentage of the profits of each coop to go into a fund at the Caja Laboral, so that there's start up money for the next coop - that this is a way for the coop movement to be self-financing. That's extremely important. It's a way of collaboration that solves a financial problem for the development and growth of coops.
Most of my audiences, they've never heard anything about Mondragón. When I tell them it's the 7th largest corporation in Spain, they don't know what to do with that.
There's an argument on the left that talks about a rejection of work, saying we should put the emphasis on the fact that we work too much, and that we should have more pleasure, more leisure, less work, also for ecological reasons. You mentioned how social movements today often work autonomously from labor unions. They don’t seem to emphasize production like you do. So how can we create social change by emphasizing production again, when so many of your hypothetical allies see work as something they would like to do less of, rather than a source of identity?
For me, this is an ideological issue. Anybody who's participated in a social movement against the status quo understands that we are all shaped by the society from which we wish to escape. This doesn't go away overnight. It's uninteresting to debate which is more important or which comes first, changing your head or changing your daily life. They all have to change.
For example, a worker self-directed enterprise can decide take surplus and use it as leisure. They’re the decision-makers. They have discretion over and we use it for free time so that we can be with our family, so we can do artistic work, so we can sing songs, so we can go for a hike, whatever the hell we want. Or, another one, we don't want to destroy the environment here. We don't want to pollute the river, so we produce less, work less, using our surplus for that.
But that would take some kind of coordination, right? Some sort of political overarching governance.
Of course, there has to be. If you're an enterprise - a factory, an office, a store in the community - the decisions you make as an enterprise impact the community
The political system is going to have to evolve to make the enterprise and the residential community co-determiners. Each has a veto power over the other, otherwise you don't have a true democracy ... Of course the democracy is not limited by the workplace. That could only be possible if the workplace was separated from the community, which it never is.
You have that now. The mayor sits down with the corporate leader and they try to work something out. But workers are excluded from that process.
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