Notes from a lecture by political economist Richard Wolff, author of Capitalism Hits the Fan: Capitalism is sick and American capitalism is the disease. To understand this we need to understand the history. In the 1970s real wages stopped rising. In the U.S. the people believe that upward moving wages is a good for economics and stagnation leads to decline. Since we are in stagnation why aren’t people concerned? Why aren’t we discussing how we need to adjust? Are we in denial as individuals? Well, no. Workers reacted by trying to fix it.
First, workers worked harder. Second, women joined the work force but this took income for clothes, a second car, and child care. Third, we worked longer hours, more than most other industrialized countries. This only made us more exhausted as we still sought the American Dream. Fourth, we borrowed money. We took collateral on our homes, cars, credit cards. We borrowed money for education thinking if I only had more education I could reach the American Dream. That didn’t work either. It only put us more in debt and gave the money to banks. And fifth, we became anxious and sick over worry about our debt. The attempts at fixing capitalism by workers have not worked.
What did employers think about this stagnation? Employers thought that if they could get production up and lower wages, this should fix the economy. But it didn’t. What happened instead? It helped the employers by giving them rising profits but it made the gap between income of employers and workers increase, raising inequality. The U.S. began losing the middle class. Employers/CEOs joined the 1% and more workers were becoming part of the poor class. Employers and CEOs began ‘buying’ congress and the judiciary to keep the profits flowing to their pockets. When they saw there were cheaper workers in other countries, they shut down American businesses and moved them to Mumbai, using jets for their travel along with the internet to run their businesses. But with the American worker now losing jobs and not able to afford to buy the products employers are now making over seas, employers begin to realize they don’t need to sell to just Americans, so they find markets in other countries.
In 2008 something happened to disrupt this whole American capitalism. Capitialism crashed. CEOs and the financial system became terrified. They didn’t trust one another and they wouldn’t help one another. Where did they reach out for help? The U.S. government. The financial industry demanded credit and to be bailed out by the government. The banks got help but the workers didn’t. Unemployment skyrocketed. Inequality got worse. Governments cut, cut, cut. One of the big cuts was in education. This was the one place workers thought they might get ahead but instead their future was to be hurt.
The workers begin to see what is really happening. They see the rich getting richer and the poor getting poorer. But what can they do? Do they get to help make any decisions within the corporations or do the corporations just tell they what to do? Who is making the decisions about their work and jobs? Boards of directors and the share holders make the decisions which affect the workers. Why are all the profits going to the 1% and none shared with the workers?
Richard Wolff believes we need to change the whole American capitalist system. We need to put democracy back into the decisions which affect workers. We need democracy in the work place. This could cure the sick capitalism. Workers need to help make decisions including decisions about technology and pollution. Workers should help decide where profits go. They should design the jobs and help run the enterprise.
Workers need to criticize capitalism. They need to find an alternative to the present system. Richard Wolff suggests democratic worker capitalism. Labor needs to organize. Workers need to rebuild unions. They need to look at examples working in other countries. An example he suggested workers should look at is Mondragon Enterprise in Spain that has been functioning since 1956. It is a 100,000 cooperative where the CEO makes only 8 times what the highest worker makes. Workers can only work at a repetitive job for 2 hours. Workers serve on the Board of Directors and make decisions on market sales and distribution based on need and make decisions about salaries. They run their own bank and a university. They use profits for lots of research.
Wolff believes that only if we can democratize the corporation, capitalism might survive. The workers need to be part of the process, not just employers.