Richard D. Wolff

Hi Professor Wolff, I apologize in advance if you've previously covered this topic, but I have found it immensely interesting for quite some time, and yet I feel like nobody talks about the banking system in its true form. I'd love to get your take on it as your explanatory skills are second to none. The 2014 report released by the Bank of England (link below) outlines how banks no longer use deposits made by customers as a basis to then loan out to others. Instead, when a bank makes a loan, it simply creates the credit out of thin air, and with the newly created credit it also makes a matching debt. The conclusion is therefore that banks are responsible for the total money supply of a given economy - the more people borrow from banks, the greater the money supply. As people pay off their debts, then the money supply shrinks. To my mind, this unrestrained method of money creation is directly responsible for the incredible volatility of the market and the severity of the last financial crisis (economic bubbles and bursts are much easier to fuel and come down with more force when money creation has no limit). There is also the interrelationship between commercial banks and the central bank - the issuing of central bank reserves etc, which I find a little more confusing. Could you please elaborate on this topic in your monthly updates/weekly podcasts, and on any other negative consequences of such a system of money creation? Is the alternative to this unaccountable banking system an interest free, nationalized banking system (like the one in Syria) that works as a general service rather than a profit seeking institution? Without taking much more of your time, I would also like to link this topic of money creation with the financing of government debts (link that may be helpful included below). You've previously mentioned that the wealthy, and the investment institutions of the world are now seeking safer investments in government bonds, instead of investments in productive capital that would (in a perfect world) create jobs and growth for the middle and lower classes. The governments on the other hand, are desperately seeking these loans since they are struggling for revenue that would normally come via taxes and fees. But since capitalism undermines itself by cutting wages, by creating unemployment, and because our politicians are bought and will not tax the wealthy, our governments are forced to borrow to fund services. But by borrowing from the most powerful cliques in our society, the governments now face a strict obligation to compensate their debts - which means austerity around the globe. My question is, why can't governments fund their expenses the same way that private institutions or private persons would - by "creating" credit and an equal debt via the central bank? Would this not give governments breathing space to at least lessen some of the devastating effects of austerity - and not rely directly on wealthy investors/institutions? Thanks! FINANCING GOV DEBTS http://positivemoney.org/how-money-works/advanced/what-about-the-national-debt/ OFFICIAL BANK OF ENGLAND REPORT ON MONEY CREATION http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf NEWS REPORT ON BANKING SYSTEM EXPOSE https://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

You often discuss the wages that working people earn, how that money is spent and the ways that both of these things can play in the economy at large. Something I haven't heard you talk too much about is rent. I'm wondering if you could lay out a very broad, Marxian analysis of what it means for the working class that so many of us are tenants? Under Capitalism, in what ways is the relationship between a tenant and a landlord similar to that of an employee to an employer? In a more socialistic economy would we ideally see more home ownership or would it be preferable to collectivize real estate on a mass scale so the question becomes irrelevant? I know this is a very large area of discussion but anything you have to say would be of interest. Thanks!

Dear Prof. Wolff, I'd love to hear you discuss tenants rights on Economic Update. I don't know much about the history of tenants rights struggles in this country, but have recently moved out of San Francisco (where tenants rights are pretty strong- although not strong enough) to a county further north where tenants rights are basically non-existent. My landlord is forcing me to sign a 6 month lease extension or move out of my home in 9 days, and I realized this morning that this lease/contract is essentially void because I'm being forced to sign it under duress due to the threat of homelessness. How does our legal system deal with the fact that so many leases are signed under duress because the landlord-tenant relationship is so one-sided that tenants often have no real power to negotiate? Has this been argued in higher courts at any point in our history? I feel like this is such a basic legal standard, and I'm suddenly shocked to realize I've never heard it use to justify why renters rights need to exist in so many places where they don't. Thanks for your thoughts! ~Brandi in CA

Dear Prof. Wolff, Some economists, writing in the press, have claimed that criticisms of capitalism are overblown and that, contrary to what is believed, inequality and indeed poverty are declining, thanks -they say- to capitalism. See for example the following article by the German economist Clemens Fuest who cites World Bank figures that suggest global income inequality is declining and that the rate of people living below a dollar a day has also declined quite significantly: http://www.zew.de/en/das-zew/aktuelles/clemens-fuest-zehn-thesen-zur-ungleichheitsdebatte/ I note that Prof. Fuest directly challenges the Oxfam figures you have so frequently referred to in recent episodes of Economic Update. Who is right? I am grateful for your excellent work and hopeful that you can respond to this question. Sincerely

Prof. Wolff, I think it would be great to hear you interview Michael Hudson on a segment of "Economic Update". You and he would complement each other in a discussion of the financialization of the global economy, austerity, and the crises of capitalism. I don't know his political and economic philosophy, but I'd wager he's a Marxist. He's certainly an outspoken critic of neoliberalism. His book Killing the Host impressed me greatly.

Suggest this author or book for review.

When the gentlemen who owns the liquor store down the road here in NJ asked how I "know so much about economics", I recommended he check out Richard D. Wolff. I warned in advance that it's a Marxist perspective on things, and he replied "You know what? Good! Maybe capitalism sucks and there's a better way to do this." He then slammed a pen and paper on the counter and asked me to write it down. Wow.

Reading about Wells Fargo/Enron and their questionable practices. It seems like the capitalist system has devolved into a system of rewards, punishment, and deterrent (in the wrong direction). The people at the top have a strong incentives for profits with very little punishment against breaking the law (the only punishment is when they refuse to pursue profitable actions/policies that are too damaging). The people at the bottom has both carrots and sticks working for them/against them but it has now devolved into a new incentive, a system driven by fear against failure, failure to meet sales or failure to make enough money to eat is pushing people into questionable activity that is ignore by management who are driven by the same fear against making enough profit for the company. It seems the system is not just driven by profit making, but also an abhorrent fear against personal failure that could be translated into economic failure. Can a Coop/WSDE avoid the pitfalls of reward/punishment/fear that could create dangerous/unstable incentives?

It's occurring right now, since september 9th, buthe its almost no coverage. There are various issues, such as solitary and others, but what Unites the prisoners together across the US is about prison labor. Many protested by refusing to show up for work. The young turks: https://m.youtube.com/watch?v=c3_dvJ8Rc1g https://theintercept.com/2016/09/16/the-largest-prison-strike-in-u-s-history-enters-its-second-week/

The media has ignored the insidious nature of the TPP which took six years to be written in secret, some of the Presidential candidates including my favorite Bernie Sanders spoke against it. Most of the media’s spotty pro coverage of it goes something like: Globalization requires free trade. Trade is important. TPP promises to create jobs. The critics are allowed to basically say it may be as bad for jobs as prior so called trade agreements. The TPP is a very detailed large document that is very specific in extending corporate power. It was written by corporations for corporations. The corporate media and the Washington Beltway approach this in a limited discussion which is vacuous. The media does not discuss or ask the questions which would foster real discussion which I believe would lead to a far deeper concern than now exists . Over and over they talk about increasing American jobs and the need to be part of the global economy. I would expect that any cogent discussion of so called free trade start with a synopsis of the promises verses the reality of prior trade agreements. The history of “free trade” includes the empty promises that Bill Clinton had said that NAFTA would create jobs. The country lost manufacturing jobs, it is really hard to understand how the same lame promise can be recycled for TPP which is a far broader document encompassing 12 countries and 600 participating corporations favoring greater corporate control. Corporate profits are prioritized over the citizen’s welfare and well being in TPP and TTIP. Here are some terms I want to see people who pass themselves off as knowing something about the trade agreements ought to be able to discuss the pros and cons of in the context of TPP. Indirect expropriation Regulatory homogenizing Corporate Tribunals Investor State Dispute Settlement Opportunity Costs Indirect expropriation refers to when a local state or federal government that makes a regulation to protect the interests of citizens of a said country such as protecting their drinking water gets accused of taking the right of corporations protected under the trade agreement to extract profit away. A corporation which has a foreign base or subsidiary outside that country (foreign interest ) is eligible under TPP to sue for lost opportunity cost or future projected earnings in a corporate tribunal which does not adhere to the laws of that country nor is bound to follow precedence. Regulatory homogenizing is requiring the signatory countries to align all that countries rules laws and regulations to comply with the TPP agreement Investor State Dispute clauses; ie eradicating safe water standards so foreign corporations can make more money without worrying about the public’s safety laws, the public’s health or the environmental impact. The public would have NO RECOURSE. Investor State Dispute Settlement clauses have been arranged for a corporation to protect the corporate interest of that business to operate over and usurp our judicial system. Three corporate lawyers sit as judges on a tribunal against local state and Federal governments laws that the corporations take issue with. These tribunals are not bound by precedence which has been the back bone of democratic judicial systems. Corporations can sue a government for lost opportunity costs by that government having laws to protect the publics health, safety and well being such as but not limited to safe drinking standards for instance. Corporate interest for ever greater profits would be the tribunals primary if not sole interest. Only corporations can sue in the tribunal, which becomes the highest court in the land for 18,700 corporate entities and their subsidiaries of multi national companies to sue us. There is no appeal process for the public against the tribunal’s decision. Investor State Dispute Settlement ISDS are clauses written by corporate interests . These corporations can then sue your government against perceived trade barriers. The judges in the tribunals would come from a rotating pool of corporate lawyers who one day would sit as judge and the next litigate for the corporate world, a serious conflict of interest. TPP would at least double the number of foreign subsidiaries that are eligible to go to such tribunals. It would grow from 9500 companies under all prior agreements including NAFTA, to include an additional eligible 9200. Trans Canada lost in the Keystone Pipeline case that Mr. Obama vetoed. Thereby not allowing dirty tar sand “oil: to flow through the US. Trans Canada is suing for $15 billion dollars, $3 billion of which they spent , the rest being opportunity cost or their perceived lost future profits. Trans Canada would much rather bring their case to a corporate tribunal made up of other corporate lawyers. On the one hand Obama supports TPP but wants to create a pseudo progressive legacy which he hopes vetoing Keystone will support. Succumbing to TPP will be tragic for any semblance of justice or democratic process in the future. Our health, safety and welfare will also be jeopardized. MH

Another thought: How would you actually deal with banks? Private banks are of course a bad thing, but would cooperative banks be optimal? Those would still need positive interest rates, but if you think about it, interest rates are actually harmful. Interest rates increase when risk is higher, but thereby the risk goes up even more. Actually, one doesn't need interest rates to keep people from taking big loans they can not pay back - a hard bankruptcy will do the job. So, interest rates serve no purpose at all on credit taking side. So, it would be much better to have banking in the hand of the state. Then, you do not even need the savings of the people to give credits - collecting them at banks then only serves the purpose of having some overview, and people will still have most of their money on bank accounts because it is easier to store the money there and banks make paying easier.

Wouldn't it be an interesting approach to tax people (and redistribute money) in such a way that everyone has roughly the same saving rate (i.e. savings compared to individual income)? I think, this would be a very fair approach, because it combines your individual performance with the collective performance. The only question is: how to do that?

I work in a public school as a teacher. The public schools are modeled after capitalist enterprises in that I have to follow decisions made by people in power above me. Am I producing a surplus and if not, am I involved in a power struggle or a class struggle if I want public schools to be run more democratically.

Conservatives/Libertarians like Gary Johnson have advocated for a flat Consumption Tax. Sounds simple, but it would obviously be unfair to the middle class and the poor, since they spend more of their income. However, I came across the idea of a Progressive Consumption Tax, where the rate would increase steeply as one consumes more. It has been proposed that this would replace all federal taxes with the exception of the Estate Tax. I'm attracted to this because of the streamlined nature of the idea. Your thoughts?