Ask Prof. Wolff

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Have a question for Professor Wolff? Want to suggest a topic or article? UPVOTE your favorite questions or submit your own. Top suggestions will be given a video answer on YouTube.
 
Professor Wolff receives hundreds of questions per week covering a wide array of topics, from economics and politics, to historical movements and current events. While Professor Wolff does his best to reply to some questions on Economic Update with Richard D. Wolff, he's received more questions than can be answered individually. Prof. Wolff will now provide video answers to his favorite questions on this page.
 
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Is crashing the stock market the way to obtain equality?

Dear Dr. Wolff If the stock market crashes SEVERELY is that good or bad? Would that not realistically be a way to de-pump the inflated values out of the insane wealth accumulated by the fraction of the 1%ers? Or would they just pass the bill on to others once again? What would actually and likely happen? Is it a naive question? Best Hank

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Foreign Policy for Sale: Greece’s Dangerous Alliance with Israel

https://www.counterpunch.org/2018/02/09/foreign-policy-for-sale-greeces-dangerous-alliance-with-israel/

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What does the marxian analysis of capitalism really tell us about why capitalism is problematic?

Hi, Dr. Wolff I have a question about your video series “Introduction to Marxian Theory.” I am a concerned leftist with some philosophical training, and I’m finally deciding to try to understand this Marx fellow everybody keeps talking about. Your series is great because it reduces the complexity of Marx’s arguments in Capital. I have some questions though. Let me recap some of the main points of the series. First, you note that Marx was critical of capitalism because its failure to achieve the spirit of the French Revolution mantra: “liberte, egalite, fraternite.” You don’t specify precisely what is meant by the spirit of this mantra, but we can assume it is the kind of society that leftists generally want: where everybody is taken care of because we all work together in solidarity against the urges of individualist greed, fascist violence, racism, sexism, and the rest of it. The Marxian analysis you present does not, in fact, tell us anything about (a) what a desirable or just society would look like or (b) how to achieve that desirable or just society. The Marxian analysis is solely supposed to be just that: an analysis of societies generally and capitalism more specifically to understand, from a certain perspective, how they function. Okay, so now we move on to the analysis. It goes like this. First, we note the empirically universal truth that in every society there are people who work, and there are people who do not. We could instantly raise the question of what counts as “work.” You suggest that some people do not work but instead might “sing for amusement” or they might “stand around with a big stick” to protect the group from violent outsiders. In other words, you seem to say that some kinds of activity should count as “work” and others shouldn’t. I’m not super worried about how to properly draw this distinction, but I do note that at the moment, it is vague without any further elaboration. (You at one point says that work produces the “basic goods and services” of society, but again, it would be controversial at best to say that singing and protecting a border don’t in some obvious sense count as “basic services”). Okay, so then you note the following almost tautological truth: if those who do not work consume, then they must consume surplus value produced by those who work. As an example, if a child does not work but does in fact consume, then the child must be consuming the products of other people’s labor. There does not appear to be any question that this is trivially true. Then, you claim that Marx argues that in every society we can see five different class structures, three of which Marx claims are “exploitative.” Now, this word exploitative does not, in Marx’s usage, imply anything normative. As we will see in a moment, it is merely a word used to designate a particular kind of arrangement. Five types of societies: (1) Communism. In a communist system (communist only in Marx’s usage), a bunch of people (not necessarily all people) work and they themselves distribute the fruits of their labor themselves. They are both the producers and the ones who choose how to distribute their produced things. They make these choices collectively. Now, just to remind my readers, just because Marx calls this arrangement “communism” does not necessarily mean it is good. There could be a communist arrangement in which those who produce and distribute simply ignore their obligations toward those who cannot, or fail, to produce; maybe, for example, they just neglect to take care of their kids! There would be, on Marx’s definition, no reason why this would not still count as a “communist” system. Thus, we must remember that “Communism” in this usage merely designates a system in which a group of people collectively produce and collectively distribute the fruits of their labor. (2) “Ancient” societies. This poorly chosen word designates those societies where each individual is self-sustaining. Each person produces their own goods and their own surplus which they distribute by themselves to whoever they wish. Note also that nothing about this kind of society implies that it is actually desirable or good. (3) Slavery. In slavery, there are slaves and masters. The slaves are themselves the property of the master. Everything the slave produces is “instantly and automatically” the property of the master, and the master may decide how much to give back of the produce, usually enough to keep their property alive. (4) Feudalism. In Feudalism, there are lords and serfs. The serfs are legally (by threat of violence) obliged to work half of their free days on the lord’s lands. Everything that they produce is “instantly and automatically” the property of the lord. The lord decides to whom to distribute the fruits of the serf’s labor. Most everybody except the fascists would probably think slavery and feudalism are unethical systems. We should keep that in mind because if we can identify why those systems are unethical, we can see if that reason would equally apply to the final exploitative system: capitalism (I am actually skeptical such a clean argument will present itself) (5) Capitalism. In capitalism, there is neither lord nor serf, master nor slave. There is instead “employer” and “employee.” The employee is a “free person” who hunts around for a job. Upon finding one, he signs a labor contract under which the employee will work a certain number of hours for a certain wage provided that the employee signs over all rights to decide what happens with the products of his labor. In other words, like Feudalism and Slavery, the what the employee produces is “instantly and automatically” the property of the employer in exchange for a wage. You point out that there is no way that the employer would be willing to pay you wage W unless the work that you do at wage W produces more value for the employer than it does for the employee. We can see that this is true, and thus that in every single labor contract, the value produces is higher than the wage paid. Thus, workers are “exploited.” The difference between the “value” of the labor’s work and their wage is called “surplus value.” Now, I agree thus far. However, you make the argument that the capitalist arrangement flies in the face of liberty and equality because the workers are getting “screwed over.” I do not think this is true simply by virtue of the fact that surplus labor exists. Let me explain. First, let us note that middle managers, upper-level managers, lawyers, accountants, and so on are not themselves directly involved in the production of things. What does the corporate lawyer “produce”? Well clearly, he produces something of value to the whole corporate racket. He produces memos and gives out advice using his expertise in the law. He is himself offered some wage W to do this intellectual work, even though his work does not, in the end, really produce the basic commodities sold by the corporation. Now you say that this lawyer must be paid by the surplus labor of the exploited workers. Well, of course he must be paid with that surplus labor. From where else should we expect the money to come? The corporation doesn’t do anything but sell some widget! Well if the lawyer must be paid by the surplus labor of the worker at the bottom, then he cannot tell merely by the fact that his wage is less than the value he produces that he is “exploited” in any meaningfully moral sense. He should thus not feel that he is not being treated in a way which is inconsistent with “liberte, egalite, fraternite.” Now, I do not see myself as offering a deeply nuanced or interesting objection. I just want to clarify that it is not the mere fact that surplus labor exists that proves that workers are “exploited” in any meaningful moral sense. This then raises the question I am eager to get answered: What does this Marxian analysis do for us, then, if not prove that workers are “exploited” in a meaningful sense? What does it tell us, if anything at all, about why capitalism cannot fulfill the promise of the French Revolution? Note that I agree with you that this whole system is in fact deeply fucked. I am as appalled as anybody that Jeff Bezos’ billions exist, and I have my own criticisms of capitalism from the perspective of property rights. I am right now trying to understand this marxian analysis better to see if it gives us genuine insight to what’s wrong with capitalism. - Jordan

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In 2017, I earned $144,000 and I'm living in my car in one of the richest cities in the world...

Dear Dr. Wolff, I feel so compelled to send you an email because so much of what you study, and talk about has moved, and is moving through my current life. Let me begin by saying that 7 years ago I was sharing a zip code with Opra (93108) and by the time I moved out was paying $5,500 a month rent on a 2,800 sq. ft. house in Montecito, California. At that time I was earning about $350,000 a year as a commissioned salesperson working from home. Soon after my life was turned upside down with marriage problems, I suffered abuse from my wife, this made working from home very difficult. At the same time my sales job was becoming increasingly harder to make the same income I had been making, due to Amazon, ebay, etc. There was a long, slow, steady decline in what I could make (selling inkjet cartridges) at the same time that my marriage problems eventually forced me out the door. Since the availability of affordable housing in area of Santa Barbara, California is more scarce that our water, I was not able, being the sole income provider, to even afford to rent a room (which start at $1000 a month in this area), I have children that still live at home, so rather than my family experience a disruption in their lifestyle (even though they became extremely frugal) I moved into my 2014 Nissan Leaf EV (electric vehicle). I have been living in my car now almost 17 months. Yes, I'm a rough sleeper. I'm still separated, my wife rents a house that is $2800 now which is more on the outskirts of Santa Barbara, in 2017 I earned $144,000, I supplement this now with some cash from playing music, but with all the bills from maxed out credit cards, 401k loans, State & Federal taxes, I still cannot afford a place to live. The owner of the sales company I work for just sent this email out to all the top salespeople and it was just so "Trumpy" I had to share it with you, it reads as follows; Subject Line: "Check out who pays the taxes that run this fine country." "If you have an AGI of 138,000 you are in the top 10 percent of income earners in America. The top 10 percent pay 71% OF ALL FEDERAL INCOME TAX. I just returned from Fiji where the minimum wage is 2.00 per hour but food and hotels cost the same as they do here in the states. We live in the country that people all over the world dream of coming too. It is an awesome gift to be a U.S citizen. " I guess what's inside that gift might not be the same, ("your results may vary.") I have decided to tap my 401k (before Trump's cronies get it all) and take advantage of a penalty free withdrawal (I'm only 51) for a primary residence, since you need at least $200,000 for a down payment, I have decided to buy a 35 foot RV that will qualify. Since I'm a musician I welcome being able to get the RV, so that's a good thing to me. It's all just too strange to me, to be living this way in Santa Barbara and I am by no way alone, I am now meeting and seeing others in this same kind of housing crisis as me. And let me tell you, the shame that people have (myself included) is what is keeping it under the radar. I'm telling you all this in the hopes that maybe it can shed more light in areas you are looking for more understanding in. I admire your work so much, it has enriched my understanding and knowledge of economics. Thank you for being such a warrior for truth. I thought you might like to know that even Opra's neighborhood is not immune to our housing crunch. Please let me know if you can, what you think of my boss's email. Sincerely, Greg Korzen

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Are all wages rightly considered variable capital?

This may be a naive question, and I apologize if the issue has been dealt with elsewhere, but I am reading Marx's Capital, and I am struck by his claim that the tendency of the profit rate is to fall. Reading some other sources, I see that this is still hotly disputed and that the empirical data don't necessarily back Marx's view. My question is: Did Marx consider ALL wages to count as variable capital, or only the wages of productive laborers who actually add value to a product? Because if he considered non-productive wages to be rather part of the circulating component of constant capital, then the displacement of living labor through mechanization would be offset by the reduction in wages laid out for non-productive labor, and the changes to the composition of capital brought about by mechanization would be far smaller than they would appear if we count all wages as variable capital. Not to mention the fact that the word "profit" is applied to appropriation of value from quite different sources, such as capital gains, ground rent, merchant gains from the differential between discounted and retail commodity prices, and of course the employment of value-adding labor power. I would think lumping all those different types of "profit" together isn't what Marx was doing. Is that right?

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I try again:

Profit is a tax on workers. And, just as in the public sector, that "tax" is beneficial to everyone in the form of increased investment ability, and other, longer-term benefits to workers. This is the essence of the unwritten social contract between employers and employees. But when the tax becomes oppressive, same as in the public sector, it breaks that social contract. Marx pointed out that, after centuries of serfdom and wage slavery, this social contract has yet to be defined. That is the true purpose of a government of, by, and for the people.

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How do worker co-ops respond to michael kalecki's critiques of full employment capitalism.

https://delong.typepad.com/kalecki43.pdf

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How do worker co-ops respond to michael kalecki's critiques of full employment capitalism.

https://delong.typepad.com/kalecki43.pdf

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How do worker co-ops respond to michael kalecki's critiques of full employment capitalism.

https://delong.typepad.com/kalecki43.pdf

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How do worker co-ops respond to michael kalecki's critiques of full employment capitalism.

https://delong.typepad.com/kalecki43.pdf

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How would worker co-ops respond to the pressures from markets and global capitalism?

Having to participate and compete in global markets would put co-ops under many of the same pressures as top-down corporations, who have responded by outsourcing and wage cuts, etc. How can worker co-ops avoid the pitfalls that would seem to come from the globalisation of capitalism? Would it help, for example, to establish trade with co-ops in other countries favourable to both? Similar to the idea of "socialism in one country", could networks of co-ops in a single nation work together to buy raw materials in quantity, and so on, for mutual benefit? If they saw themselves as belonging to a common group, maybe they could also work together politically to lobby or vote for better conditions for themselves. Can you comment on how this could work?

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How do you respond to critics of raising wages?

Your first economic update was about how wages increased 2.9% but that inflation also increased by 2.8% basically leaving wages flat. How do you respond to critics who say that raising wages through the fight for 15 campaign or through legislation will only increase inflation there by canceling out any gain in wage and who will use this first economic update as an example that happening?

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Quantitative Methods and Financialization

Do you believe there is an overemphasis on quantitative methods in today's universities and if so, is this part of an effort to legitimise increased financialization and similar neoliberal economic policies?

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Commodification of Debt -What replaced the Gold Standard?

I have had trouble finding a modern socialist explanation for the value of money in this post gold-standard time. The only explanations stem from free market neo-liberal think tanks. From what I can gather, we have commodified debt instead of precious metals. This is troublesome to translate into marxist terms as thusfar in my reading industrial capital is only supported by money capital(augmenting or subsidizing the hoard), but the commodification of debt blurs the lines between credit and currency. From debt collection agencies, to trade deficits, to international purchase of treasury bonds there is a hidden world of debt that completely determines the value of what it is produced, where it can be sold and what can be bought. By deliberately targeting inflation benchmarks(since the 70's), we have prevented the devaluation of usury rates over time while simultaneously stagnating wages and engaging in the purest form of currency manipulation. The enforced austerity programs seemed designed to pay dues to the holders of these debts regardless of social and economic consequences. So my question is why? Why should we the people eliminate the "risk" of investment by directly subsidizing the the cost regardless of the effectiveness(let alone the corrupt self-enrichment) of that stimulus? Do we strip the earth of all it's assets to reward the predatory speculation of a minority foisted upon the majority by corrupt and inept bureaucracy? I find it ironic that conservatives babble about liberal entitlement but simultaneously want the public to subsidize the risk of wall street loans. If you agree with my implied opinion here than there is a more important question. How do we combat this "accumulation by dispossession"? At the end of the day every generation tries to pass the bag onto the next and the bag keeps getting heavier and heavier. The inevitability of split seams only seems to be outpaced by our inherent drive to self-destruct.

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