Professor Wolff, I have been following your lectures for a few months now and have learned quite a bit. However, I have never seen you touch upon the topic of non-profits in a capitalistic economy. I am curious what your general thoughts are on how non-profits fit within this system and how they are affected by capitalism. Thank you.

Official response from submitted

The first problem is the very term non-profit. Mostly it is a bit of a misnomer for what is better described as "tax-exempt." The US laws designate that religious institutions, charities, and educational institutions - broadly defined - are exempt from taxes. Because of the often questionable nature of the legal exemptions they enjoy, they have preferred the less troubling term "non-profit." So it is often an open question as to whether various "non-profits" do not, in fact, make profits (which are not subject to taxation). Whether an entity makes a profit or not depends on how it accounts for its incomes and expenses. Elite universities in the US often count the portion of their incomes that they add to their endowments as an "expense" in a way that most individuals would not and in a way that the IRS would not allow individuals to do. There are, of course, enterprises that fail to earn a profit and so are "non-profit" just as there are firms who do not seek profits and aim instead to break even and thereby function as "non-profits." The latter's capitalist nature - in the definition I use that focuses on the employer-employee relationship and the surplus-appropriator vs surplus-producer identities it entails - is not much affected by whether it does or does not achieve a profit. Non-profits usually replicate the capitalist nature of profit-making enterprises....and that for a whole host of reasons.

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  • Richard Wolff
    responded with submitted 2017-04-05 20:53:47 -0400
  • Kristin Abdow
    published this page in Ask Prof. Wolff 2017-04-05 09:27:10 -0400