How Class Works – Richard Wolff Examines Class

By Richard D. Wolff, who is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. From The Real News Network.

Comedian Reginald D Hunter (recommended by our own Richard Smith) tells the following one-liner: “A class system is what you use to discriminate against people who look like you.” True! Though Wolff has a more precise definition.* You can hear Wolff on this YouTube:

Here’s a transcript of Wolff’s discussion of the foreclosure crisis:

Foreclosure in the United States today is in fact a classic example. Over the last thirty years, we have faced a phenomenon we never had before in the history of the United States. We have had rising real wages in America, roughly from the beginning of our history, up until the 1970s. If you worked hard, you got more money in your wage envelope at the end of the week. That was true for 150 years, that was really amazing, and no other country did that.

It stopped in the 1970s, because of computers replacing people, because of American companies moving abroad so they could pay lower wages, because of a mass movement of women into the labor force, immigration, and we went from a country with a chronic labor shortage to a country with a chronic labor oversupply. Employers no longer had to raise wages to keep workers working, to keep them happy, and keep them employed.

And as result, the American working people went into a kind of prolonged psyhic shock. Their wages weren’t rising any more. And so what they did was they turned to another source of money to realize the American Dream that they had been culturally developed to hope for, to expect, to promise to their kids.

They borrowed money like crazy. And the business community of the United States saw in the borrowing of the American working class a fantastic market to go after. You know in the 1970s, in the beginning, the only people who had a credit card were wealthy people or folks on business expense accounts. Starting in the 1970s, we gave credit to the mass of Americans. Everybody gets a credit card, and everybody can go to the bank to borrow to buy a home. Mortgage debt, credit card debt explodes.

It was a money-making extravaganza. We saw all the wealthy come together and get involved in this money. Bulding houses, lending workers at huge interest rates the money with which to buy the new and expensively built homes. Wealthy people poured their money in to companies that built these homes, furnished these homes, decorated these homes, and you had a literal explosion of profitability.

But of course. You can’t keep lending to working people if their underlying economic situation isn’t improving. So it was only a matter of time until the extra borrowing reached the limit of the underlying frozen, stagnant wages.

That was hit in 2007. Millions of Americans could no longer afford the houses that they had borrowed to buy. The foreclosure crisis represents the rage and anger of the wealthy class. If the underlying people they lent money to can’t pay for them, they’re going to take those houses back, throw those people out of their homes, and ry to find another way to make money. Here’s a perfect example of the profit motive creating a housing boom that becomes a bust, and that now to recoup the money of the minority wgo invested in it, requires millions of people, the majority, to literally lose their homes, producing in the United States in 2010 and 2011, a society that has millions of empty homes, side by side with millions of homeless people.

Enormous pressure was placed on the United States government by big businesses, businesses that produce homes, that clear land, that produce construction equipment, the businesses that produce the furniture that goes into the homes — All of those companies have put enormous pressure on the government in the last 100 years to subsidize and stimulate everything having to do with the home construction business. They asked the government to subsidize mortgages, which we’ve been doing in America since the 1930s. They wanted the government to help individuals buy homes because their well-being as corporations depended on selling those homes, selling the furniture, selling the equipment that dug the ground for the homes, etc.

So the whole corporate structure of the United States has been geared to making money by developing the private home business. They are the ones who have made the major difference in all of it. Every house, virtually, bought and sold in the United States over the last 25 years, with very few exceptions, was paid for with a mortage loan. That is the buyer of a home goes to typically a bank, and borrows the money with which to buy the house, and has to make a long-term repayment to the bank for having borrowed that money.

As a loan, it has two sides: The borrowwer and the lender. In our kind of capialist economy, it is the rule that a banker has the social responsibility of properly assessing risk. If billions upon billions of dollars were lent to people who couldn’t pay it back, then the culpability is at least as much from the side of the bankers who made those loans as it is on the borrowers who took them out.

Borrowing vast amounts of money to buy homes took off in the 1970s and 80s and 90s. It had not happened before. So if you’re going to blame the victim, you’ll have to explain why the victim undertook these blameworthy activities jus then and not, for example, in the previous 150 years. And now the most important poin which I made earlier: Starting in the 1970s the American working class stopped getting real wage increases.

Readers, what do you think of this narrative? (I notice the lack of accounting control fraud, and that Wolff seems to think that the construction industry carries as much weight with the government as the banks. However, tying the foreclosure crisis to the flattening of real wages in the mid-1970s — a class issue if ever there was one — makes a lot of sense to me.)

NOTE * “Class is this difference between those who do the work, the overwhelming majority, and those who gather the profit into their hands. The way our society splits up the output leaves those who get the profits in the position of deciding and figuring out what to do with them.”

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. EenAnderGeluid

    It sounds very, very familiar to me – living in the Netherlands. We have probably the biggest mortgage boom-and-bust in the world, built on tax deduction, lower and lower interest rates, easier and easier loans (up to 7x yearly income and 120% house price). 50% of the mortgages are of the long-term-no-paydown type (you pay down only after 10-30 year, or renegotiate a new loan).

    The whole fabric of society was geared to building and eternally rising real estate prices. As an individual you were almost send to an asylum for questioning this folly. Not buying a house was only for the real losers….
    And now we’re living a collective hangover and deepening crisis.

    And now the main point : the start of this policy coincided with the stagnation of wages, the austerity drive and wagesuppression-deals in the period 1979-1985.
    You’re house became a ATM. Consumption could rise on the back of mortgage debt. Municipalities became speculants. Huge profits were made on it by the FIRE-sector and building industry.

    The same Neoliberal b…t.

    1. Jim in SC

      Does anybody remember the stagflation of the ’70s? It was not pretty or pleasant. Blaming our current situation on women entering the workforce seems to be sexist. Blaming it on globalization seems to ignore the benefits of globalization. As Robert Reich said twenty years ago: ‘if you want to see the benefits of globalization, go to the mall.’ So the neo-liberal conservatives are the Neanderthals in this picture, and the big government types who were running things back in the seventies are the homo sapiens? I don’t think so.

      1. wunsacon

        >> go to the mall

        …if you have money to spend.

        You might also observe the working conditions abroad or measure an assortment of byproducts from ecolaw arbitrage. It’s not that we shouldn’t trade with other countries. We should tariff imports from countries proportionally based on their mitigation/reduction of externalities and their attempt to comply with our values re labor safety and human exploitation. Otherwise, we undermine ourselves.

      2. digi_owl

        I see no difference between the scenario described in the article and the British stagflation. In both scenarios you have run away credit and stagnant or dismantling industry.

        1. Expat

          I remember “stagflation” very well. It was mostly generated by media hysteria and bad public policy that artificially raised interest rates in a Friedman theory to break the unions. It is well established that unionized workers get pay increases to cope with inflation and the only losers are the banksters. Not to mention the rich bloodsuckers, who had to cope with nearly a decade of stock market fluctuations within a 200 point range. Hard to lead the leisure life on that return!

          The underlying kernal of “reality” was the Vietnam war debt, but Nixon fixed it by breaking with Bretton-Woods and going off the gold standard. Instead of embracing a new era of economic renewal, voters were threatened with visions of ever rising prices and shrinking incomes. The majority apparently never guessed that rather than correcting the “problem” they outlined, these knaves intended to permanently destroy the middle class and middle class values.

          Mission accomplished. The whole business was a mind game to break the Democratic stranglehold (30 years and counting) on the Congress and usher in a new era of rule by finance instead of manufacturing.

          1. Nathanael

            Stagflation was caused by (a) an oil-dependent economy (true in every country which had stagflation), and (b) OPEC tightening the oil supply (affecting every country which had stagflation).

            I have seen no explanation which better fits the evidence.

            Moral of stagflation: do NOT make your economy dependent on oil.

        2. William C

          Well if the subject is the British ‘stagflation’ of the 1970s, I remember it well, having lived through it. The way it is represented nowadays is usually false. It was more – if you look at the decade overall – a period of rapid inflation than anything else. The growth in GDP was pretty well comparable with the 1980s and the 1990s, and that despite the fact that the full benefits of North Sea Oil had yet to come through. Unemployment was relatively low by more recent standards. The period since 2007 has been a great deal worse.

          There was a period of negative growth and high inflation in the middle of the decade, following the 1973 oil shock, but it only lasted a couple of years. Then growth resumed at quite a healthy pace.

          1979 did not usher in a new UK Golden Age. That ended in 1973.

      3. diptherio

        He’s not blaming the current situation on women entering the workforce; nice straw-man though.

        Wolff simply points out that many factors in the 1970s served to send the US economy from a situation of relative labor scarcity to on of relative glut. Women entering the workforce was one factor. I don’t see how it’s sexist to point out that more women working in the private sector had the effect of increasing the size of the labor pool and thus exerting downward pressure on wages.

        If anything is sexist, it’s the fact that capitalist employers are still only paying women 75 cents on the dollar for their labor: yet another factor which tends to drive down overall wages.

        1. Sue

          Actually, women entered the workforce in large numbers because the family needed two incomes. Now, the family has to put teenagers to work to get by. The wage decreases and threats came first.

          It has been a fact in almost every country in the world that the more women you have in the workforce, the better off that economy is. This is, indeed, blaming women for something we did not cause, yet again.

          1. Heron

            I found the way he put that pretty odd, because other times I’ve seen Wolff make this argument, he’s said what you’re saying; that stagnating wages brought on by changes in industrail and commercial policy made it necessary for households to have both adults working to maintain standard of living.

        2. Lrellok

          If you look at the data, what you are describing is called a “Feed-back Loop” During the 1960’s, women began joining the labor force in increasing numbers. Companies quickly found they could pay women less money for the same quality of work as men. During the next economic downturn, men who lost their jobs had to accept proportionatly less pay to get a job (that is, if a women would take the job for $4/hr, a man had to accept $4/hr to get the job, even if he would otherwise have been able to ask for $5/hr). In addition, the increased amount of people seeking jobs also suppressed wages.
          This cuased household incomes to drop. As household incomes dropped, more women had to get jobs to keep the income at an acceptable level. This further suppresses wages, which cuases more women to have to seek jobs, which further suppresses wages, ect, ect.
          Women joining the labor force per say was not in and of itself a problem. The problem was women joining the labor force at unequal pay to men. “THe Women” is not the issue here, “The Pay” is the issue. Had women been paid equally to men, the spiral would probobly have been avoided, or at least be rapidly recovered from.

      4. EenAnderGeluid

        Ask the growing number of people on foodstamps about the mall. Or maybe the surviving garmentworkers in Bangla Desh, they know a lot about Primark.

        The neoliberal dream has gone up in smoke. So discussing the fundamental problems is not just revenge, it’s a necessity. Learning from mistakes.

        Recently a dutch parlementary enquiry into this was published. Guess what ? It’s a man made disaster based on false theories. But economists, politicians and business people including bankers converted themselves into true believers. A systemic blindness.

      5. Ed S.

        Hey Jim,

        Here are a few answers:

        Does anybody remember the stagflation of the ’70s?

        Sure do, and gas lines, Jimmy Carter, Led Zeppelin, and a bunch of other things. Also remember a property bubble. So what?

        Blaming our current situation on women entering the workforce seems to be sexist

        Really? The workforce increase by a factor of 50%+ with the entry of women. And unrelenting illegal immigration of (mostly) limited skilled workers. Neither sexist or racist — just a fact. Supply increased at a rate faster than demand resulting in lower wages. Speaking of the 1970’s — remember when construction, restaurant, and other service workers weren’t here illegally? I do.

        if you want to see the benefits of globalization, go to the mall.

        Nice pick of a Reich Quotation. We all know the benefits (cheap, poorly made consumer goods)– how about the costs? Jim, you know what they are. Just because they’re not in your backyard doesn’t mean the costs don’t exist. Here’s another benefit:

        A worker who handles food at the Nordstrom Cafe was diagnosed with typhoid, a bacterial infection rare in the United States but common in many developing countries. The worker, a line cook who was not identified, has recovered from his illness. (

        If you live next to a hog farm, you can put a clothespin on your nose. But the stench is still there.

        1. Lrellok

          Yes please, go to the mall Prof Reich. There are three in my region; one is used as a paintball arena, one is half empty, and one is for sale. There are your globalisation benefits, right there professor.

      6. Denise B

        Go to the mall?

        Workers have lost a lot of valuable things – including pensions and the protections afforded by unions – and gained loads and loads of cheap merchandise in return. Maybe you know people who think it was a good deal; I don’t think I do.

      7. gepay

        there was a decision made in the 70s by the elites. they raised the price of oil to use debt slavery on the third world and somewhat developing countries. It also caused wage price spiraling inflation – the stagflation of the 70s. But Nixon had gone to China. The factories marching south (first the non-union American south)to Mexico (when the tax givebacks used to induce the locating of the factory ran out) could now jump the pacific – jet planes, modern electionic commuinications, airconditioning( so the small number of Westerners needed to run this manufacturing in Mexico and Indonesia etc could be comfortable) and then computers made outsourcing possible on a very large scale.
        Bye Bye Union power. No need to worry about wage price inflation if the workers can’t get realistic CPI adjustments. Let them eat loans. Without a soviet Union we don’t even need to give them the doorprizes. And there was money to be made on the loans. But you know, many of the problems of today are from solutions of the problems of yesteryear. The computer productivity gains have been had. The sweet crude easy to pump is not to be found (yes, some in Iraq and here and there) but why did the BP Gulf of Mexico catastrophe happen? Why are tar sands economic?
        The elites just aren’t satified wiht their wealth growing only 2% a year. The American and European middle class can just get poorer. What will they do then? Well robots or androids will be perfected and goodbye useless eaters. Even useful eaters won’t be needed. Get your H17N9 flu shot. They will be mandatory.

  2. Calgacus

    We have had rising real wages in America, roughly from the beginning of our history, up until the 1970s….That was true for 150 years, that was really amazing, and no other country did that. Right. Forget where, but there was some paper that contended this was true since colonial times. Basically since the 17th century, a lot longer than a mere 150 years!

    It stopped in the 1970s, because of computers replacing people, because of American companies moving abroad so they could pay lower wages, because of a mass movement of women into the labor force, immigration, and we went from a country with a chronic labor shortage to a country with a chronic labor oversupply. Employers no longer had to raise wages to keep workers working, to keep them happy, and keep them employed.

    Baloney. It stopped because the people on top decided it would stop. No other reason. The Great Moderation / Stagnation since the 70s was a conscious decision, consciously announced (famous Business Week editorial, Volcker statements, etc.) If anything, the progress of science and technology slowed down – which is the real problem – decreasing investment and creating a vicious circle, not some imaginary great increase in technology causing unemployment. Most of those other reasons don’t correctly fit the time frame, indulge in the lump of labor fallacy, etc.

    The Herrenvolk on top thought that the Merkins had enough material prosperity, and in the 60s showed that they could get uppity. This would have to stop, or people might not understand that a large bank account transforms the holder into a superior species. They thought that the lesser people could be satisfied with a stagnant level of material prosperity, BS from Capitalist Big Brother about increasing their chocolate rations. Reintroducing the stick of unemployment, creating homelessness, and atomizing society even further, would make enough of them willing marks of their con-men masters. They were right, at least for a generation or so.

    The Kaleckian Josef Steindl, writing in 1972! said that the decision for stagnation had already been made, and he was right, and prescient. (And was probably the first to denounce the Euro abomination too.)

    1. Doug Terpstra

      Right. Hanlon’s Razor corrected — “Never ascribe to incompetence that which can only be adequately explained by deliberate malice” — call it the Obama phenomenon. Unreformed NAFTA topped by TPP treason, Obamacare and unilateral cuts to Social Security and Medicare are proof beyond reasonable doubt of malicious intent. People have to face the evidence with clear eyes.

    2. RanDomino

      I’m sure the peak of domestic US oil production and 1973 oil shocks had nothing to do with it.

      I love this website because you can see discussions of class that don’t mention relationship to the means of production, and analysis of macroeconomic trends that pretend that resources are irrelevant.

      1. Calgacus

        And US oil production peaking whenever had an effect other than on oil prices – how? And how did the fact of the oil crises, the high oil prices of the 70s cause decades of stagnation when they oil prices came down?

        Sure, they had real, deleterious, perhaps even crucial effect. Without them, the predatory class’s decision to stagnate might not have stuck. But the fact remains that the key structural change was the elite decision to end the postwar prosperity, basically everywhere on earth. At best, the oil crises made this decision effective. A key part was worldwide propaganda, including purging economic academia of all but the stupidest and most intentionally ignorant and uninterested in economics.

  3. Cletus

    The builders might build, but it’s the banks that must lend. And they lend with a government guarantee against loss. Wage stagnation only came into real prominence when the government did not honor the social contract (wage/hour guarantees, as well as employee/independent contractor classifications).

    In all cases, the government is complicit.

    What really seems to be missing is wisdom. We obviously had a little wisdom in the past, as we have (or had), laws that smoothed these things over and prevented the type of collapse we have witnessed. Those laws have been overturned and/or unenforced. Maybe “lack of wisdom” is too generous. Maybe we are fools.

    1. EenAnderGeluid

      May be it’s the logical outcome of a growthmodel that maximized profits, restricted wages and nevertheless wanted to garantee sufficient demand.
      In that case we are speaking about the biggest robbery in history – the banks and other big players cashing the profits and leaving us with the debt and crisis.

      It’s in my view no coincidence that this started after Reagan clipped the wings of labour, Thatcher crushed the miners, and the Soviet Union collapsed.
      The balance of power tilted completely to Big Capital.

    2. scraping_by

      Who’s ‘we’?

      I don’t remember voting for anyone running Countryside homes.

      The semigovernment corporations refused to insure substandard mortgages (which was all they did during this period) until 2008, when they were made part of the government (The Bush government) and forced to do so. It was only after being made part of TARP they fueled the bubble.

      The Fed is a private corporation, owned by other corporations; while this makes no sense for a central bank, it’s true.

      The only government complicity was not regulating private corporations as closely as they needed to be regulated. A government run by people chanting ‘The magic of the markets!’ And I was never rich enough or connected enough or ideological enough to be part of that ‘we’. Were you?

  4. Andrew Watts

    He’s wrong about the constant growth of real wages up until the 1970s. During the 1920s, the growth of real wages stagnated while worker productivity was going up. Keynes saw this as a major contribution to the depth of the depression in the United States. But thanks to the brilliant observations by Niall Ferguson, we know that Keynes was gay and all his ideas were wrong due to his homosexuality.

    Like his contemporaries Wolff would rather scapegoat others than examine the socio-political policies that contributed to the present crisis. This allows a tame intellectual like Wolff to avoid criticizing those policies that directly contributed to the crisis. It’s much easier to blame women for entering the work force, rather than question why Congress has not raised the minimum wage to keep pace with inflation. That view is not consistent with the growth of real wages during the period of full employment circa 1939-1945. When women entered the workforce en masse during the second World War. I don’t know how this view is any more respectable then Ferguson’s observation about Keynes’ alleged homosexuality. So women need to spend time more time in the kitchen making sandwiches instead of working ooooh’kay?

    Yes, technology has contributed much to the growth of worker’s productivity. Though that is not the reason for real wages not keeping pace. Workers have not shared in the benefits resulting from that economic growth. This can be directly attributed to the Fed’s policy of crushing wage growth through it’s interest rate policy. Which began as a inflation fighting measure under Paul Volcker. The inflation of the 60s and 70s was not the Fed’s fault though. It was merely a direct result of the Vietnam War. Previous administrations chose a policy of over-producing money to pay for the military expenditures required for the war effort. Rather then raising taxes and instituting a system of war time rationing. This is a common enough occurrence when one studies the rise and fall of empires. It was only a year (or so) before the great economic crisis when Paul Kennedy publicly stated that the United States was not like any of the countries mentioned in his book; The Rise and Fall of the Great Powers: Economic Change and Military Conflict From 1500 to 2000. What great timing, huh?

    I’d rather have a leftist explain the nuisance of our class system.

      1. Andrew Watts

        I don’t know about his personal sentiments. They all sound rather centralist to me. One of his proteges was George Papandreou. So based on what we’ve seen thus far….. well, it’s a matter of opinion is it not?

        It’s true that his work does cover a lot of left-wing economics though.

    1. Andrew Watts

      Any person who does not mention the resemblance between our current economic predicament and the Great Depression is a fool and/or a charlatan. Everything from inequality, stagnant wages, and the laissez-faire attitude of those in power echos in the past as well as our present. In the United States this continued right along with the Mellon/Bush tax cuts. As well as the lack of criminal prosecution for all the fraud committed by Wall Street.

      History repeats itself because nobody was paying attention the first time around.

    2. Mark Pawelek

      The class system is simple. It’s an informal means by which the wealthy discriminate against the poor.

      PS: Why did Keynes get Capitalism so wrong? What lunacy led to his prediction of the 15-hour working week? Answer – his rejection of Marxism. If he’d understood that the logic of accumulation is the driving force of capitalism he would never have made that blunder because the it is intrinsically bound to the exploitation of labour. In order for labour to be exploited it has to be put to work. No exploitation of labour, no accumulation.

    3. HotFlash

      Richard Wolf self-identifies as a Marxist. He is most definitely criticising capitalism as system. His accurate observation that women entered the workforce in large numbers starting in the 70’s does not make him sexist. When I graduated from high school in 1967 very few of my classmates mothers worked outside the home. For my mother’s generation and her mother’s, a job is what you did until you got married. Then in the ’60’s there was women’s lib and we got these notions. In 1966 the essay question on the Betty Crocker Homemaker of Tomorrow test was, “Can a woman combine being a homemaker with a career?”, ‘homemaker’ being the polite term for housewife. Very few of my female classmates wanted to be housewives.

      Since then it has become the norm for all able-bodied adults in a household to work for money, and indeed, with the stagnation in purchasing power, it has become a necessity in most households to make ends meet. The overall reduction in jobs due to technology and the increased competition due to as larger workforce, together will the fact that most households have two working adults (or at leat that is the perception) makes it possible for employers to hold wages and salaries down. Which employers will certainly do under a profit-driven system such as capitalism.

      1. Andrew Watts

        As I’ve already pointed out, we had full employment with massive female participation in the labor force during the second World War. This era saw an increase in wage growth. Congress actually raised the minimum wage too. You can ignore pre-1960s history all you want. It doesn’t change it.

        The introduction of labor saving technology does not have a negative impact on the wages of the Longshoremen in the present. Why do you think that is? A better question is what makes the Longshoremen different then other workers?

        1. Massinissa

          During the second world war, yes.

          But thats because shitloads of men entered the military and went to the pacific. Its apples and oranges here: we are only talking about 2-3 years, for starters. And anyway, didnt the women make less than a male would have?

          Wolff is not ‘blaming’ the crisis on women entering the workforce. He is saying it had an EFFECT. And it DID have an effect. It wasnt the MAIN problem, but Wolff never said that it did.

          You really should watch/read some of Wolffs other works before judging him so harshly IMO.

          1. Yves Smith

            Go read up on the stats. Women who joined the paid workforce during WWIII exceeded the # of men deployed overseas. When the men returned and women went back to domestic work, the labor force shrank by millions (IRC six million).

      2. Lidia

        Haven’t read her book yet, but this woman writes about “Radical Homemaking”:

        What’s overlooked in the shift from domestic production to industrial production is the degree to which it was impelled by an abstraction rather than anything real: impelled by the debt-money system by which debt, but also money (increasingly debt), must grow exponentially. To have the debt-money universe grow exponentially, you need more “GDP” and more waste but you also need the monetization (if that’s the right word) of things that used to be free: you need to having a paying job so that you can pay for child care and pay the supermarket or restaurant for processed food, and in turn they pay employees and so forth. This all feeds the money beast while impoverishing real people and the real world.

        The “idea”—which is never expressed as such because I don’t (want to) think it was the intentional point of the system—is to always create the maximum number of nominal monetary transactions. But the maximum is never enough. So the planet and its populace are put on a treadmill to the point of peak exhaustion, a treadmill that runs ever faster. The only hope for survival is to jump off, and it’s probably too late even for that.

    4. diptherio

      Ok, Wolff is NOT blaming women for entering the workforce or suggesting they spend more time in the kitchen. He’s pointing out influences in the labor market, that’s all. His suggestion for how to ameliorate this situation is through worker-owned and managed cooperative businesses. He doesn’t discuss that here, but if you duckduckgo “Capitalism Hits the Fan” he talks about them plenty.

      I’ve conversed with one of Mr. Wolff’s grad students…a young woman, FWIW…

      Oh, and Wolff is definitely a Marxist, although he appears to be avoiding overt references to Marx lately, which I imagine is a “marketing” decision, and a wise one, in my eyes. But again, watch Capitalism Hits the Fan for the full-on Marxian analysis.

      1. Ché Pasa

        Oh, and Wolff is definitely a Marxist, although he appears to be avoiding overt references to Marx lately, which I imagine is a “marketing” decision, and a wise one, in my eyes. But again, watch Capitalism Hits the Fan for the full-on Marxian analysis.

        Yes, it’s disconcerting to listen to him speak in a more mainstream/generalized context these days. Not only does he not mention Marx, there is little in his analysis that is identifiably Marxian.

        “Marketing” no doubt — after all, he is appearing in the mainstream, and it’s unlikely he would be doing so if he didn’t leave some of his more rigorous analysis and statements at the curb.

        On the other hand, there is occasional acknowledgement in said mainstream that, just possibly, Marx and Marxian analysis was right. “Crisis of Capitalism” and all that.

        Hm. Who’dathunkit?

        1. Me

          I have always argued that even friends of the capitalist system would benefit from reading Marx. 99.99% of Marx’s economics wasn’t calling for anything; he was trying to understand the workings of the system. He got some things right, others wrong. He wasn’t god so that is expected. Having said that, while others always say to read the first volume of Capital, the third volume is far more pertinent to the problems we are facing now and is amazingly far sighted. The third volume focuses on finance, debt, fractional reserve banking (or whatever Basil Moore and Steve Keen want to call it), the relationship between finance and the real economy, what happens when finance grows too large, etc. He also goes into what would cause the eventual collapse of the capitalist system, in the 13th chapter. The following chapter says that there were factors, six I believe, that would hold off that collapse. Those factors (like the cheapening of capital and the driving down of wages) are exactly what the capitalist system has done to extend its life. I don’t see, especially given the environmental and ecological issues we are facing, how capitalism can possibly sustain itself.

          Any rate, economists like Joan Robinson, Sraffa, Michael Hudson and Michal Kalecki didn’t shy away from Marx and neither should Wolff. No other economist that I am aware of caused economic itself to radically change as much as Marx did. He used the ideas of classical economics (like the labor theory of value and a class analysis of capitalism, both mainstream ideas within classical economics) as a weapon against the system and he did it better than any other socialist of his time or today. As great as all the left wing economists since have been, no one comes close to his influence or the power of his work. Ha Joon Chang, a pro-capitalist economist himself, has said exactly what I am saying. You don’t have to be a socialist to greatly benefit from the work of Marx. Besides, there are lots of things economists don’t like to discuss. They don’t like to discuss debt, especially private debt. They don’t like to discuss the assumptions that underlie Ricardo’s comparative advantage argument and what happens when you take those assumptions away. They don’t like talking about imperfect competition or class either. Screw them, drag them into reality.

    5. Calgacus

      He’s wrong about the constant growth of real wages up until the 1970s. I agree with you about causation of the stagnation, as above. But Wolff is right about the constant growth, if anything understating it and the change in the last generation. He means smoothing things over a generation, over 20-30 years. The Great Stagnation since the good old 70s has seen worse wage growth than any such long period in the USA ever. Even including any such long period with the Great Depression and Hoover in it. They’re all better than the last few decades. Until the last few decades, your real wages were always a bit better than your parents’. Not any more.

  5. jake chase

    The entire business system is founded on leverage, recapitalization of assets and extraction of rents. Wages are a drain on the system, and the kleptocracy organizes to minimize that drain. It doesn’t care whether or not borrowers are credit worthy, because the debt is government guaranteed. And then the greatest rent extraction of all is military imperialism.

    The manufacturing jobs are gone because technology enables their export and our National politicians are completely in the bag. Service jobs are leaving as we speak. You can do legal research and drafting in Bangkok too, and nobody reads the damn briefs anyway.

  6. Mark Pawelek

    { They borrowed money like crazy }

    15 years ago I asked a Marxian acquaintance of mine – ‘what the next trick was’. She proceeded to predict the future and it came to pass :- credit.

    Prior to the ‘reforms’ of the late 1980s it was quite difficult to privately borrow money in Britain. At the height of the 2008 bust private borrowing was 4 times GDP.

    Why did they stimulate debt so much? Could it be because the economy was flat-lining before the bust? – after the dotcom bust Greenspan kept interest rates low and laissez-faire made lending easy. This was a structural solution to a structural problem.

    What happened to capitalism – that transcendental economic force, beloved of Keynesians, Neo-classicists and Austrians alike? In theory, high profits lead to high investment; in practice that hasn’t been happened.

    1. Moneta

      Let the masses gorge on debt, then let them fail.

      Then the elite can buy up all the foreclosed properties and rent them out… just like in Europe.

    2. banger

      Like everything in history the system of capitalism encountered the law of diminishing returns. We always fight the last war and always base our understanding of things on past successes. Capitalism has been widely successful because it piggybacked onto the fast growth of technology. However now technology (which enabled globalization) is growing at an exponential rate and modern capitalism has been unable to cope with that fact. Previously, capitalism was able to digest technological advancement and make it work on a social level. Increased productivity translated into increasing real wages as Wolfe states. And society was able to keep up and adjust to urban life and so on. Countries understood that education and social welfare helped all classes.

      But all that has changed. We have reached the situation today that capitalists have lost interest in innovation because it is happening too fast to comprehend and have, instead, gone into speculation and criminal and corrupt activities. As a system our politics has not been able to catch up. Information has not created knowledge but decreased it in the public who are now utterly overwhelmed by change such that people are tuning out and falling into escapism.

      The worst of it is that our intellectual elite are no longer able to cope either–the intelligentsia is hopelessly confused, stuck on outdated theories and trivial pursuits.

      1. Moneta

        Technology really benefited maybe 1/7 of the world’s population.

        Maybe technology will keep on benefiting in that proportion but the wealth will get redistributed on a global level instead of mostly benefiting those in the developed world.

        1. banger

          So far that is the case, you are right. But technology will force a deep crisis in capitalism because technology will be very cheap and ubiquitous making capitalism itself obsolete. We are on the road of replacing 80% of our jobs very soon with robots and other intelligent systems–or at least having the capacity to do so. I don’t think even the predatory version of capitalism can stop that–though they will try.

    3. EenAnderGeluid

      Mark, I think it’s really simple.
      Capitalism is about profit. And then this must be invested somewhere again, looking for a good return.
      If you keep wages suppressed to make profit, you’ll get problems with demand, purchasing power, and thus with the realization of profits. This demand-problem was temporarily postponed by credit growth. But gradually profitability in the “real” econonmy sank.
      So investors jumped on the bandwagon of “finance”, or speculation. They invented a completely new sector of derivatives to achieve even more credit growth, taking huge profits out of somebodies elses debt. Not only on mortgages, but many companies were taken over bij speculants en loaded with debt before abandonement. Now around 95% of all banking is speculative…
      By the way, something like this happened before in de 20’s. on the eve of the Depression.

  7. Moneta

    One hundred years ago, you moved West, occupied and farmed a piece of land. Your wealth increased. But all land is owned now.

    Since money is injected into the system based on collateral, the only way the average Joe can get some freshly printed dough is by buying a house. But once your average debt-to-income ratio passes 4X, the gig is up.

    Unfortunately, the amount of energy needed to maintain the road network and the housing stock will be a huge load on Americans… especially if the population keeps on growing.

    And the US still has not even begun to acknowledge this energy issue. IMO, most see no link between their energy use and the state of the economy.

    Discrimination is often a sign that resources are getting more scarce.

    One hundred years ago, there was energy and land for everyone. Not anymore. It is now a rentier society.

    1. Andrew Watts

      “One hundred years ago, you moved West, occupied and farmed a piece of land. Your wealth increased. But all land is owned now.”

      This attitude was what led to the New Deal in the United States. The New Dealers accepted that economic opportunity had dried up for the majority of people. Our leaders think that they can stimulate more growth in the present to create opportunity. They’re ignoring the fact that all the anemic gains made so far have been monopolized by the rich.

    2. diptherio

      One hundred years ago you moved West, drove the native inhabitants off the land, and called it your own…

      There, fixed it for ya

      1. Andrew Watts

        Yes, and before that the native tribes fought amongst themselves for the very same land. Your point?

        1. Massinissa

          They certainly fought eachother, but they didnt do full blown genocide on eachother (usually).

          Its kinda apples to oranges aint it?

        2. diptherio

          Just pointing out that “occupation and farming” wasn’t quite as harmless as Moneta makes it sound.

          And, for the record, while there was fighting amongst Indian tribes (they are human, after all), the various tribes also had enlightened traditions such as setting aside areas of ‘every-man’s land’ between tribal territories to prevent border-disputes and to provide a place for the curmudgeons to live.

          1. Moneta

            My point was not to make it seem sound. It was to say that our way of life is unsustainable due to full occupation by proponents of the Anglo-Saxon economic model and our over-indulgent use of energy.

          2. Charles LeSeau

            Right. Not all tribes were warring on each other anyway. And in any case the idea that “they fought each other, so there’s no point in bringing up European/American genocide” is pure tu quoque, i.e. a logical fallacy.

    3. Me

      It was owned then too, it was many times already populated by people. We killed them and took their land, their livelihoods. That is what the capitalists are now doing to society at large.

  8. wunsacon

    >> We have had rising real wages in America, roughly … That was true for 150 years, that was really amazing, and no other country did that.

    What’s missing from this narrative is that the US expanded territorially for 150 years and acquired a lot of natural resources, including oil. (Lots of externalities there: we only count the surpluses and don’t count all the dead bodies.) We also become creditors and manufacturers to the world after everyone else’s factories were bombed and ours weren’t. Take away these things and how would our real wage growth compare to other non-expansionist countries?

    1. Moneta

      The amount of oil burned globally to hold up the US empire is formidable and probably unsustainable.

      Life in the US for the average Joe will not get better unless there is a change in paradigm.

      1. Andrew Watts

        Plenty of empires have sustained themselves through the power of manual labor throughout history. The period of history that Professor Kennedy covered in the book I referenced does cover an era of pre-industrialized wind power. There is no doubt that oil is an important resource of modern life. Though at some point you have to accept that oil is not the magical elixir that will determine everything that is or will be going wrong with the United States.

        The peak oil crowd has constantly claimed the world has reached it’s peak in oil production for every year since about 1982. They were particularly insufferable in 1987 when they thought that the stock market crash had vindicated their views. Furthermore energy use per capita is not intrinsically tied to the standard of living, much less the quality of life in our modern society. Not when Germans use half the energy Americans do per capita. That’s where all those neo-malthusians in the peak oil movement gets it wrong. The costs of oil production is not intimately tied to the market price of a barrel of oil. Which is where the social activists of the “limits to growth” crowd has it wrong.

        1. Moneta

          How can you disregard the deforestation, the pollution of our waterways, the erosion in arable land, the extinction of many species and tell us that Malthus was a farce?

          1. wunsacon

            Moneta, agree. On top of that, Malthus didn’t speak of a “we’re here today, gone tomorrow” outcome — which is how it seems people interpret him.

            Watts, oil production in the lower 48 peaked in the early 70’s and, counting Alaska, in 79 or so. In terms of oil per capita, even more so. … Is it the “magical elixir that will determine everything that is or will be going wrong with the United States”? No. You’re exaggerating. But, it’s a huge component affecting the quality of life — and the probability of death. Campaigns and entire wars since the start of the 20th century were about oil. Try telling Japanese admirals and German generals that oil wasn’t critical.

          2. Andrew Watts

            Moneta: Sorry, but I don’t share your sense of angst or despair. Even though I don’t put much faith in the progress or genius of mankind. Nor do I think that humanity has tamed nature in the slightest degree. Nature will always remain the great adversary of humanity. Though that view could be influenced by the fact I live in one of only two American cities that could be scheduled to become the American Pompeii in the next couple hundred years or so.

            Wunsacon: You’re not telling me anything new I don’t already know. I am not all that inclined to revisit areas that have been repeatedly beaten to death on the internet. Especially since I suspect you first heard about peak oil around 2004 when oil prices first began their record climb. Which is far more telling then anything else you might have to say on the subject.

            As far as India goes, activists have warned the public that increased hunger would be the product of increased subsidies for the ethanol industry. That’s the developed world’s devastating food to fuel program at work.

        2. Moneta

          One hundred years ago, the US mostly used its own eneryg and resources. Now it depends on the exploitation of the ROW.

          I guess it all depends on how much longer it can keep on using other countries resources.

          1. Andrew Watts

            Forests can be re-grown and pollution can be cleaned up. Though pollution caused by nuclear energy is a whole different matter. Through my own personal efforts I’ve seen how much food can be derived from labor through such novel gardening concepts such as forest gardening. All without the use of petrochemicals. It’s labor intensive to be sure, but it’s not wholly dependent on modern methods of agriculture.

            “I guess it all depends on how much longer it can keep on using other countries resources.“

            It also depends on how wisely we utilize our present abundance.

          2. Moneta

            We have created more pollution on a global scale than what has been cleaned up. Our planet is getting destroyed at a faster rate than what is getting saved… the only reason why any king of environemental protection was possible in the US was because the destruction was being done somewhere else.

            The US can’t even save itself… New Orleans scenarios will probably happen everywhere in the US as growing entropy makes it impossible to preseve the current way of living.

          3. Me

            “Forests can be re-grown and pollution can be cleaned up. Though pollution caused by nuclear energy is a whole different matter.”

            Yes, but ecosystems can’t just recover and forests that take the place of original forests aren’t usually as healthy or biologically diverse as those lost. We also can’t do much of anything about plastic, that will be in the environment for many, many generations. Nuclear waste isn’t going anywhere. Heavy metals in the soil aren’t going anywhere any time soon. One of the four laws of ecology is that once you throw something into an ecosystem it stays in an ecosystem until it is altered by natural forces. The extinction rate is as high as 10,000 times the natural extinction rate and most every ecosystem worldwide is either stressed, in collapse or has already collapsed. If we were to put a market value on the costs the capitalist economy has created (for current and future generations), these costs are currently ignored by the market economy, it would likely drown out any benefits. IF the worst case scenarios of the IPCC turn out to be true, what price would you put on the carbon that we have put into the atmosphere? If we put a price on the carbon already in the atmosphere, how much would each addition of carbon cost (assuming we could place a market value on such things)? If we were to put an accurate market value on these external costs, how in the world would the capitalist system continue? It does so only by ignoring these costs. If it is forced to acknowledge them it will say something about increases in efficiency (Jevon’s paradox be damned) and/or try to minimize those costs.

            Besides, the economy is based on growth (in throughput and market values). Both need to endlessly grow. Population is growing too. So population is growing while resources are dwindling. Per capita resource availability is going down and down. The system is, again, based on endless growth. An alternative system could be, must be, created but it would be radically different than the current system. Again, how can this system possibly work if we acknowledge ecological and environmental limits? I don’t see how.

          4. wunsacon

            >> Forests can be re-grown and pollution can be cleaned up.

            “Can” be but isn’t — unless you’re telling me that more forests are grown than are being cut down? Except anything to be done about CO2 or the Great Pacific Garbage Patch?

            Going to take a paradigm shift (like Moneta says), such as a combination of AI and solar energy, because humans generally can’t clean up after themselves. We’re like bacteria eating up all the resources in a petri dish and shitting in our own environment until it’s uninhabitable.

        3. HotFlash

          “Plenty of empires have sustained themselves through the power of manual labor throughout history.”

          Excellent! Could you please name a few?

          1. Andrew Watts

            By manual labor I meant slavery. So any empire from antiquity fits the bill.

          2. Stan Musical

            I doubt Watts is a troll, he’s just not a very deep thinker so can only mouth platitudes. Like comparing tree farms to native forests.

            I hesitate to go ad hominem but the rest of you are wasting your own and other readers’ time by trying to engage his simplistic, and unserious, arguments seriously. He’s yapping factoids (falsehoods masquerading as facts). I’ve been mostly ignoring this kind of pseudo-debate for years and suggest others follow suit. You can’t play chess with someone who only knows checkers.

  9. Cassiodorus

    Wolff’s idea of capitalist history reinforces the idea of the golden age of capitalism (1948-1971), though, as Andrew Watts argues above, the period before 1948 isn’t really mentioned in Wollf’s narrative.

    The implementation of Keynesian economic strategies during FDR’s tenure as President no doubt was part of an overall realization by America’s owning classes that, if they wished to re-enact the prosperity they had realized in the 1920s, America’s “middle class” would have to be on a more solid financial footing than what the 1920s had granted. Thus the political classes were granted lee-way to push through the New Deal, the Fair Deal, the New Frontier and the Great Society.

    During its period of most spectacular growth (i.e. before 1973), capital accumulation tended to produce “crises of overproduction.” Firms competing for market share in a capitalist economy tend to produce more consumer goods than the consumers are willing to buy. The problem, in that era, was that the working class was not paid enough of an aggregate wage to afford more than a portion of what it was itself producing in the factories.

    The consumer society that developed after World War II was a product of the notion that, if sales were to increase, there had to be a class of people whose idea of happiness involved buying stuff. And thus the consumer society of the 1950s and 1960s was created, along with what we today call “the suburbs.” It was hoped that therein the crisis of overproduction could be eliminated altogether, but another such crisis came into being in the 1970s. This is what Wolff describes in his video.

    From the 1970s onward, however, capitalism becomes ever-more increasingly a form of gaming, in which profit through production is replaced by what David Harvey called “accumulation through dispossession,” or, basically, taking stuff. The creation of a consumer class could only extend the profits system so far, and no further.

    1. RanDomino

      After the whole world was conquered by imperialism’s demand for new markets, the Spectacle was invented to conquer our minds.

    2. Phrase

      … Cassiodorus, you wrote ” From the 1970s onward, however, capitalism becomes ever-more increasingly a form of gaming, in which profit through production is replaced by what David Harvey called “accumulation through dispossession,” or, basically, taking stuff. … ” Right On ! … Wolff seems content to say it’s the system, Capitalism. … In one of David Harvey’s books i remember him writing that Neo-Liberalism’s catechism was implemented for the first time on bankrupt New York city circa 1974. … Point being that Neoliberalism is a very harsh variety which was methodically lobbied for and nurtured by the financial elite. … Moving a little bit further afield, … i’ve just read Robert McChesney’s “Digital Disconnect: How Capitalism is Turning the Internet Against Democracy”. … For the first time i was introduced to the Lauderdale Paradox, through which McChesney speaks of how the abundance of the commons public wealth (land,food, water,commodities etc.) , being privatized by being assigned an exchange value sets up an inverse relationship between Public and Private wealth, an increase in the latter diminishes the former. … Point being that the debate really needs to be expanded to include moral ethical principles beyond the dominant narrative of solely fiduciary commitment and maximizing returns or and whether one is a have-yatch or have-not. … The catch is that, in order to have such a deliberative debate the political economic social system would need to be much more socially democratic to even allow the debate to create a lexicon to discuss that which would inevitably challenge the oligopoly. … At this present time it feels like ‘fear’ and insecurity is being utilized by the state to clamp all other options down. … All the Best ! … phrase

  10. George Blesi

    I didn’t see him arguing that the construction industry had more power to influence the government than banks. Rather, he seems to be saying that those industries profitting from private housing all worked to influence the government together.

  11. Carla

    Wolff says “And as result, the American working people went into a kind of prolonged psyhic shock. Their wages weren’t rising any more. And so what they did was they turned to another source of money to realize the American Dream that they had been culturally developed to hope for, to expect, to promise to their kids.

    They borrowed money like crazy. And the business community of the United States saw in the borrowing of the American working class a fantastic market to go after.”

    NO. The banking cartel and FIRE sector SOLD people on the need to borrow. Credit cards were SOLD. Home equity loans were SOLD. And it was a hard sell. For years, I received three, four, five solititations for credit cards and home equity loans EVERY WEEK, not to mention phone calls and print and TV ads.

    As wages were systematically squeezed and regulations demolished in ever-increasing support of the grotesquely growing DEBT SECTOR, people began to buy what they were being SOLD. So began a vicious downward spiral for tens of millions of our fellow Americans.

    From this transcript, it appears that Wolff has no idea who is responsible. He blames Americans for borrowing too much (a right-wing trope) rather than looking to the underlying causes.

    I hope Naked Capitalism will not waste too much time with Richard Wolff.

    1. Charles LeSeau

      Yes, thank you. The devious and ubiquitous nature of advertising and marketing go too often completely ignored in the supply-demand argument. Demand is surely influenced by these things, or else there wouldn’t be so much advertising, everywhere, ad nauseum, in every receivable mode of communication there is.

      I rarely check my mailbox anymore unless I’m specifically expecting something in it, as it is always filled with just more advertising junk to throw out, every day – most often credit card offers by a long shot over any other kind of junk. My parents, who made the unfortunate decision to buy stuff everywhere over the years with little foresight into the aftereffects, have literally hundreds of various junk mail pieces delivered to their home weekly. It’s frightening to see how much of it comes through that slot and onto the foyer floor.

      1. Charles LeSeau

        Caveat: Wolff does refer to “the capitalist class [seeing] a fantastic market to go after” in the bit you quoted, so I think he’s addressing this, but not quite in the way I would have.

    2. diptherio

      This is a much shorter version of Wolff’s full critique. If you check out his other stuff, you will find that he does indeed address the issues you highlight, but that’s in an hour long presentation.

      He points out, for instance, that at the same time worker productivity at GM became de-coupled from wages, GM created GMAC, to help their workers afford the cars that they no longer earned enough to buy outright. Wolff DOES NOT lay the blame for the current situation at the feet of workers or consumers. American workers/consumers were sold a bill of goods; they have been propagandized to by the advertising industry since birth. We have been led to believe that every generation should be materially better off than the one before it. That we have indeed believed it is not a put-down, just a simple statement of fact, from my perspective anyway.

      1. McKillop

        The selling included the idea that most of us had moved on up, from the working class, who depend upon their job/career for a living, to the middle clas, rentiers.
        In ’67 a sociology professor asked a lecture room full of first year students to ‘self-assess’ their class status: about 12 of the large group claimed working class.
        Even miners and smelterworkers here where I live consider themselves to be middle class and from spending on exorbitant weddings to criticizing union leaders for not dressing in a ‘classy’ suit work against their interest. “Greedy” unions account for ALL of the financial problems.
        It’s not hard to defeat your foe when he is busting a gut to deny that there is a war, that he is under attack and that those other guys need a good licking.

  12. TomDor

    Tax Facts – 1923

    Legal Gambling
    The gloom is fading from the real estate situation. More nibbles during the last few weeks than the last three years. If January brings us good rains, this next year will open the door to the sunshine – a case of rain bringing the sun.
    It is to be hoped, however, that there will never be another boom. The crash of the boom of 1923 was due to the same causes that wrecked the wall street stock market. People sold what they did not own. They made a payment down in the hope of getting the property off their hands before it began to burn. Real estate fell into the hands of sharp-shooting gamblers who had no interest in land. To them it was just a pile of blue chips on a roulette wheel.

  13. Joe

    Amazing the amount of people here accusing one of America’s most radical Marxist scholars of being centrist or right wing! He literally wrote the textbook of contemporary Marxian economics.

    Weren’t any of you listening? No, he doesn’t blame the workers. He blames the capitalist’s appropriation of wage labor-time: they take all the surplus value for themselves, leaving less of it for the workers, even though those workers have become much more productive.

    Then, when capitalists encounter the prospect of a crisis (workers not having money to buy the products capital produces), they find a new avenue of exploitation by foisting debt on those workers.

    The last minute or so of the video basically predicts an overthrow of the capitalist system, for goodness sakes!

    I for one hope to hear a lot more from Richard Wolff here.

    1. Andrew Watts

      It only sounds radical to you due to the fact you have not read a truly radical analysis of this country. Instead all you have heard is a re-hash of the same conventional wisdom originally propagated by liberal intellectuals from the last century. Here’s Ferdinand Lundberg in the rich and the super rich on class;

      “Most adult Americans in the quasi-affluent society of today, successors to the resourceful (and wholly imaginative) Americano of Walt Whitman’s lush fantasy,are nothing more than employees. For the most part they are precariously situated; nearly all of them are menials. In this particular respect Americans, though illusion-ridden, are like the Russians under Communism, except that the Russians inhabit a less technologized society and have a single employer, There are, of course, other differences (such as the fact that Americans are allowed a longer civil leash), but not of social position. And this nation of free and equal employees is the reality that underlies and surrounds the wealthy few on the great North American continent.”

      vs Wolff @ 11:04 (or so)

      “Capitalism here worked better than it did in other countries for a long time, and it accumulated a lot of wealth. Over the last thirty years it hasn’t raised the wages the way it had for 150 years before.“

      There is a distinct lack of historical materialism or class conflict in one of those people’s analysis.

      1. Massinissa

        As for that quote about Capitalism, remember that this is a video aimed at the average joe. Claiming that capitalism has ALWAYS been a system of exploitation, while true, would turn most americans off. It conflicts with their idealized view of american history.

        This is a video aimed at the average man and woman. He can hardly go off ranting about class warfare in a truly marxist fashion without turning people off to the argument. Just mentioning class divisions at all upsets many people.

        You should be more understanding. And if you go to, you can find plenty of things with a greater emphasis on historical materialism on his website.

        This is a basic analysis: Do you REALLY think the average person is ready to learn about historical materialism?!!

      2. banger

        Capitalism has worked well in this country–not necessarily well for everyone but well as a system that brought an ever increasing standard of living of the working class until the late 70s as Wolff suggests. The facts are pretty clear. Part of that success, of course, was due to the union movement that achieved real gains in the 20th century–but they were part of the system.

        The problem with capitalism was not that it was not a dynamic and creative system that gave scope for some of our most creative efforts–the problem is that it has, as a system, reached the law of diminishing returns and is no longer anything but a drag on our lives–it’s over but we’re still collectively hoping it will “recover” — it won’t because it can’t.

        1. Lidia

          You’re incorrect. Capitalism only “worked” in America as long as the con game could be carried on in our favor: the sleight-of-hand which pretended that profits from land acquisition and fossil-fuel exploitation came from within the USD monetary system instead of from outside that system. It worked while America was on the profitable end of the wealth pump. Now the flow has stalled and is reversing from what we’ve become used to. Capitalism is now broken because there are no more resource frontiers to acquire while pretending capitalism created them from nothing (although oil/gas concerns are sociopathically smacking their lips about the melting of the Arctic).

          When the first “capitalists” put together expeditions to go to the Far East or the Spice Islands or South America to grab silk, spices, gold, etc., their accounting pretended that that wealth came from within their money system, when it didn’t. We’ve been doing the same thing ever since, deluding ourselves that wealth is “created” rather than transferred.

          1. Stan Musical

            @Lidia: thanks for pointing this out (others have too); this is one of my objections (see above) to any analysis that leaves out depletion or destruction of nature, and of other countries and their peoples.
            The main business of the English in early 20th-C SE Asia was teak. Tons and tons of teak. Where are those forests now? Gone. One country finally banned (officially) logging of them in 1989, way too late. Then Cambodia was deforested, now only 3% of its native forest remains.
            Or, closer to home, take WA state: from 2,000,000 acres of lowland native forest to, presently, about 35,000 acres.

            Just one part of one facet of the “growth” model of capitalism. The same dynamic has played out with human populations: exploitation and killing on a mass scale (including genocide). The horror in Bangladesh is just one of the instances that has gotten attention. I know a woman who worked in a shoe factory in SE Asia, it sounded like a similar horrorshow: she’s a wonderful young lady with likely permanent nerve damage due to the glues–and the factory owners wouldn’t even ventilate the building much less supply even half-effective ventilators.

            Thus a better word for “developed countries” is “destroyed countries” as that is what either economic model “choice” has accomplished over the last 150 years.

            But, as I like to say, it’s not how much you know, it’s how much you care. As the former increases amongst us, how about the latter? How’s that caring about the world and the other beings who inhabit it (with, ostensibly, equal rights to live and thrive) doing folks?

            1. Lambert Strether Post author

              I believe the tribes are suing to have rivers recognized as persons, just as corporations are. Makes sense in a way even if nature is fractal in a way that corporations are not????

      3. Expat

        When I read your Ferdinand Lundberg quotation, I thought I was reading Wolff. Wolff describes the Soviet model in virtually identical terms, and his analysis is available on his website in his lectures on Marx. Like most philosophers, he must be read as a whole to critique him accurately. Since the Occupy movement, he has been focusing on practical solutions to the current crisis, and properly, I think, identifies the need for workers to reclaim control of the surplus.

        1. Andrew Watts

          There is a fine line between the overly optimistic outlook of the conventional liberal and the stark despair of individuals like Lundberg. Since neither view is fully justified by history.

  14. Massinissa

    Most of the criticisms I see above in the comments I think mostly derive from the fact that this video is TWELVE MINUTES LONG.

    One person was criticizing the fact that Wolff didnt mention the 20s-30s for instance.

    This isnt a video for wonks like us who read economics articles every day, this is a video for the average joe (And im not talking about Joe above me, of course ^_^). And talking about the 20s-30s would only divert from the general purpose of the video, it would complicate things further and make it more difficult to understand.

    And I dont understand why Watts was being so critical. It would be difficult to explain the political economy and political history behind this in such a short video. Further, its undeniable that women entering the labor force did have an impact on labor. Wolff was not ‘blaming’ this on women, he was simply saying it had an impact. And it DID have an impact: I dont see how this is arguable. Its not the sole reason, but Wolff never said that it was.

    Wolff is one of the foremost Marxists of our time. I fail to see why so many of you are saying hes a centrist! Its absurd! Did you expect him to go over every single detail of the situation in a 12 minute video? You can hardly blame him for trying to keep the video succinct for the average person to understand.

    1. diptherio

      Agreed. And when it comes to the Average Joes and Janes, even the left-leaning ones, many will immediately tune-out as soon as Marx is mentioned. I think Wolff is aware of this and purposefully trying to avoid “trigger” words that scream “marginal-wacko” to many of our fellow citizens.

      I’ve spent so many hours trying to explain and defend Marxian analysis, and Marx in general, to my liberal friends, that I finally realized it wasn’t worth it. Better to just give them the analysis without the name attached.

  15. allcoppedout

    Richard’s pitch here is 101. This makes it all-too-easy to criticise.
    I’d start by look at class in animals – from the hive to the pack one finds queen and worker, alpha and omega – and usually some sort of desperate need to belong – other social animals seem to manage without hierarchy. Most animal groups produce new leaders when one dies – the leadership properties seems latent, held back by chemical signaling.
    We would move quickly to anthropology. Primitive societies are egalitarian, though violent. We find very different ways they live together and the leadership they allow. I used to do a lecture on this claiming the tribes I was using were science fiction inventions – before revealing they were all from Papua NG.
    Next we need a bit of history. I’ll keep this short. The Domesday Book describes modern economic-class attitudes.
    Then we’d need real data on what resources the earth has and how far we’ve moved to Robot Heaven and how appropriate our non-modern ideologies-in-use are to what modern living could be. In metaphor I’d say we are about as advanced as the social mice where the male leader keeps the rest in poverty even in times of plenty.
    In Robot Heaven the need for workers is severely curtailed. We can thus dispense with workers – unless we actually think such a cull is wrong. One suspects the class morality here is a combination of ‘let them eat cake’, ‘they don’t feel things like us’ and the ‘utterly profound’ economics of having to be cruel to be kind (workers as children to be disciplined) in which one suspects vaccine for the Black Death would be withheld for the greater good of the cull (they’ll be so much happier with the higher wages later).

    Nietzsche once said (something like) that the bourgeois morality rested on being able to send the boys round to collect debts. The essence of class to me is the morality that we can behave like animals constrained by biology when we could do something very different. Even in our non-modern society we constrain the will to power – better thought of as the biological setting for dominance-hierarchy – something termites and social spiders manage to evade (even some rats don’t dominate the submissive ones).

    Most work is probably neurotic – estimates are 80%. On this basis Keynes is already right on the 15 hour week. We fear that human motivation to do the necessary work and invention will wither away if we gave everyone a basic living by right. I think the model to understand class is that of parasite and host and animal group behaviour.
    One suspects class is a deep fiction control fraud – think of the similarity between a divine right of kings and a bankster defending his obscene pay and bonus. The sky would not fall after some lucky accident took out all our bankers and their political lackeys. The problem is that our biology tends to default to producing more of the same.

    The shame is that Richard’s video is 101 – we should be wondering how our education system produces people at 18 who don’t know the deeper story of what we are and how we might very substantially change this.

        1. allcoppedout

          I only know it won’t be that simple Cass. The first of Lambert’s links today is to a paper on minocycline – a tetracycline antibiotic which reduces male tendencies to get honey-trapped economically by females they fancy. Bond would have needed an overdose.
          I’m not proposing a biochemical solution. It strikes me the arguments against reasonable equality are so dire they are likely to be rationalisations of biological ‘drives’. We should end with Dip’s punchline – but sadly I am a humourless scientist and will seek genetic answer. The minocycline inhibits microglial play in human mental activities. One may suppose we could come up with another drug to stop us being fucked over by the rich. We could just poison them – but sadly in these complex genetic-epigenetic plays this would only mean some of us would switch on our filthy rich genes and behave as those we currently despise do. In the meantime we might take the law back from them.

  16. EMichael

    Quite a stretch to say the foreclosure crisis was caused by wage stagnation. It was caused by intentional mispricing of credit increasing demand for loans while defrauding investors buying misrated securities.

    Power(wage) to the people, but Wolff makes it sound like the two things naturally went together.

    1. HotFlash

      Well, yeah, they did go together. People were not getting pay increases to match the cost increases they were encountering. They had already sent the women out to work but even two-income families could not keep up with skyrocketing housing (and other) costs. But the kindly bankers invented easy-to-get credit cards (mentioned above), “home equity” lines of credit (connected to credit cards), low or no down payment mortgages c/w bait-and-switch tactics like “variable rate mortgages” — when my bank lady wanted to sell me one I *screamed*, “Variable rate, are you KIDDING ME???” and caused quite a stir in the bank. Oddly, she never mentioned it to me again. And this is without even considering the outright illegalities, robosigning, MERS and other frauds which Yves and others at NC have so capably documented.

      Easy credit and low down payment, skyrocketing prices, real estate agents pushing quick-turnover sales (remember the TV `reality` show “Flip This House”?) The foreclosure crisis was inevitable, given the wage and credit situation, and I expect someone had a chart showing the point in time where the two lines crossed.

      1. EMichael

        If everyone had earned higher incomes through the years, the foreclosure crisis still happens.

        Proof? Over half of the bubble(and growing as we figure out exactly the number of property purpose fraud) was for second and investment properties. None of that has anything to do with people not making enough income.

    2. jrs

      I really can’t get completely on board with this framing of blaming it all on employers not paying enough. Yes, more of the benefit of increased productivity should have gone to workers, but is that the only thing going on? Or is the problem just as much rentiers, sucking like ever growing leaches off any wages the workers might still keep.

      For instance, would so much credit have been taken out if the cost of housing was only growing equal to inflation and the rate of homeownership no higher than in the past? Credit would have been taken out, but it would have been less. By the way as to the rate of homeownership being higher than in the past – it peaked in the bubble and has since following – but it was less back in the days when people made 40% downpaymets and so on.

      The same with education. Wages did not keep up with the cost of education, but that’s also because education started increasing much more rapidly than inflation.

      So evil old bosses or rentiers sucking on any wages people do get?

  17. Jim Shannon

    “Class is this difference between those who do the work, the overwhelming majority, and those who gather the profit into their hands. The way our society splits up the output leaves those who get the profits in the position of deciding and figuring out what to do with them.”
    .. and that is why we need to cap personal wealth at $10,000,000!
    Greed Greed Greed – Corruption Corruption Corruption!
    Take all the BS out of America and there would be nothing left!
    CentaMillionaire$ are circling the wagons – we need to TAX THEM ALL OUT OF EXISTENCE!!!!!!!

    1. EenAnderGeluid

      Can’t wait !
      But seriously, this will be a radical and international job.
      Otherwise it will be simply an upper-middleclass-tax. Of those suckers who don’t know how to escape.

      All the money you need to save the world is to be found in tax-havens. Private wealth hides behind trusts ans Anstalts. About 60% of all international trade is intra-multinational trade, and the profits mostly fall in tax-havens bij means of transfer pricing.
      You won’t find out how this works without opening the books of banks, putting brakes on capital transfers etc.

  18. Elliot

    Ah, so nudge theory now requires homeownership to be demonized (it’s those greedy proles’ own fault for wanting something they should not, and wanting the wages to make it possible) the way education is dangled out of reach now, and health care.

    If you keep the workers in a state of desperation, they are much easier to force to do as you like, put up with horrid job conditions, be supine.
    A home that can’t be taken from you, work that pays enough for food and medicine and education, those things make a person able to look up and change things, and that won’t do.

    And hello, yes, women had jobs before 1970.

  19. Casteelk

    There used to be a time where profit was a good thing. A business (of any size) made enough money to pay employees, pay the bills and have enough left over for the owner(s) to enjoy a great life to reap the benefits of their work. Everybody won. Then, something changed. It became not about profit, but continual growth of that profit. It wasn’t enough to make money, you had to make more, each quarter, every quarter. In fact you had to give guidance to make more. There wasn’t a simple “owner” of the company. Instead now you suddenly had thousands of owners (investors) who could care not what the business did, only that it made more money.

    I remember when American Airlines filed bankruptcy a decade or so ago, and was looking at their numbers. It wasn’t that they weren’t making money. They weren’t even losing money. They were just not making enough money. I thought, wow, they filed bankruptcy, yet that made 8 Billion last quarter.

    Anyone could see this would not be substainable forever. I picked through the crazy notions in college. One day, after it all collapse, I think we (the world) will return to a different model. One where it isn’t about making “more” money, but instead focused on making enough money to be worth the time and labor.

    My kids now ask these same questions, the same ones I asked when I was young. Why are houses and cars so expensive, our incomes don’t warrant the average person to afford it? Why do companies have to increase the profits, what’s wrong with just making 100 Million profits a quarter, why does it have to be 110Million next quarter?

    These are childlike questions, but then again, they are realistic questions, that we should answer.

    1. Lidia

      Underlying all this is not just greed (while there is some of that) but the interest-based debt-money system’s built-in law that money/debt must expand exponentially.

      As a primer the Albert Bartlett series cannot be beat:

      Also, the “Money as Debt” animation (various sources).

      If we got rid of interest payments on loans, the effects you describe would not occur.

  20. McKillop

    One hundred years ago, in 1913, . . . .

    When I realized that all of my ‘best’ stories told about events that had happened to me twenty years earlier I realized I was middle aged; that was twenty years ago.
    From what I recall about natives, land use and ownership, the conquest -theft, whatever- began in 1492 and was successfully concluded in the 1870’s.
    The people who moved west may have been given land grants by the large corporate landowners but the work done was back-breaking and involved penury and, in the ’30’s, loss. The companies, in Canada, the C.P.R.,and the banks and the hardworking capitalist Barons, made out o.k. So did the ‘farmers’ who owned thirty sections and could afford to have people work for peasant wages.

    In 1914, the imperialist W.W. I began . . . .

    1. HotFlash

      My family on one side got their land in settlement of claims for war service. Going way back, land in Pennsylvania as payment for mercenary work for one G Washington. Later, land in Michigan as compensation for the deaths of two family members at Andersonville. My grandmother once showed me the two tiny wooden Bibles they had carved and sent home with letters before they died. The house I grew up in was on the southwest corner of a reservation given to the Chippewa until the rivers flowed upstream. There was a commemorative plaque on the Michigan National Bank building which stood at the northeast corner, at the junction of the Black and St. Clair Rivers, neither of which ever flowed upstream to the best of my knowledge.

      The Chippewa had long since been displaced to Harson’s Island (basically, a swamp in the middle of the St Clair river) by then, although they did get a school named after them.

      I have come to the conclusion that the past 100 years of American ‘growth’ has been the equivalent of algae bloom, produced by cheap oil in the last 100 years, and before that by cheap land and cheap labour.(ie, slave, either actual or wage).

      We will have to find a sustainable model, or we are just beginning to see the crash. Me, I am organizing with my neighbours and learning how to identify and prepare edible weeds :).

      1. Lidia

        hotflash, you’ve figured it out. I can identify knotweed, and know that it’s edible but I haven’t tried preparing it yet. Best of luck to you!

  21. TomDor

    The only way to ‘central plan’ is through the exchange mechanism.

    The exchange mechanism is how trade is done.

    Trade is done 100 percent by two-Part contract.

    The exchange mechanism on this planet is: The two-part contract.

    The two parts are as follows:
    Part 1 of the contract (by law) is subordinate to the Part 2 of the contract.
    Part 1 of the contract is all the written portions.
    Part 2 of the contract is superior at-law to Part 1.
    Part 2 of the contract is: policy, existing law, regulatory, political, social…. (((This is the stuff that is bounded by each and every type government or community on this planet))).
    Part 2 of the contract is, additionally, influenced by multiple factors, socially good and bad.

    A contract must always contain performance and consideration in addition it requires;
    competency of the parties, voluntary mutual agreement, offer and acceptance, legality of the subject matter

    An example of good:

    The ratification of the United States Constitution and its Amendments – I particularly like where it says something like; All-ya’all have given your consent to do something when you see other folks being deprived of…. this here…this here…. more perfect Union, Justice, domestic Tranquility, common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…heck… it says it in writing… it even tells you to follow it. It tells ya how to write law. It says to put on a new dress if you got any problems….. wait…wait sorry …right to redress.

    An example of bad:
    Just read people that have documented ‘bad’ – kudos to Bill Black, for his factual evidence collections and, documentation regarding crimonagenic environments and associated Gresham’s dynamics, control frauds, collusions and inside deals. Bill’s point, if I read it correctly is; these frauds and crimes are in a proportional relationship to the exchange mechanism described above.
    It is here that most economic damage is done – Criminal contract conduct is always underestimated because ‘most economic damage’ takes place where detection by others is hard. In-other words: the burglars don’t like to be seen plying their trade-craft in public.

    I digress.

    Therefore, the true definition of Money, currency , gold, fiat, corn chips, Tulips…. whatever you want to call it.
    Money = a two part contract (above)
    We all have a consented obligation… a legal requirement to use money lawfully.
    If we do not use money lawfully, then we are in breach of the contract Part 2 imputed with the use of money.
    Since a corporation is a legally constructed entity, they have strict liability to use money issued by their government lawfully.
    The fed has a super strict duty to use the money lawfully.
    We give consent to the government to enforce the laws we make as contained in part 2 of the contract. Said another way –
    The government has promised to enforce the contract Part 2 as described on the note – A Promissory Note –
    Taxation is the consideration of the contract with the government. The government’s obligation of performance is to: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

    We have an inequity in this country – measured by money – the inequity is found in our two-part contract, part 2. As proof, look around and see if Money is predominately being used to ensure the promises, warranties and representations of our Constitution.

    Why are public/government institutions breaching the contract with the people when, all they need to do; is perform under contract to enforce our constitution, laws and regulations?
    Why does the government breach its contract to promote the common good when we wrote the contract and, paid for performance?
    Why are so many breaches of contract occurring? – cause that’s how we exchange – the mechanism is money.
    Why the inequity in society? – breach of contract and improper enforcement of Part 2 contract provisions. Part 2 contract law has been eroded and is subject to the illegal using of Promissory notes – that illegal use is; fraud, influence pedaling, jury tampering, bribery, campaign financing, political judge appointments, corruption and kickbacks etc.. Basically, the two-part contract that is Money, is being breached and put to illegal use as described in our form of government and the Constitutional contract.

    Believe me when I say that Taxation and good law enforced is the only way to stem the economically damaging practices rampant in our country– Taxation is direct form of deterrence of bad practices or habit when using the two-part contract .
    Law is a direct form of deterrence if enforced within the confines of our Constitution contract.
    Taxes – well made tax laws, are the best way to deter money usage that is illegal if, looked at through the lens of promoting general welfare.

    If that were not enough;
    Economic rent taking is a tax – it is the biggest tax and, it does not go to aid the government in it’s contractual obligations to we-the-people – the contractual demand that government issued currency not be used in a way that forces breach by the government – of it’s imputed obligations in contract with ‘We The People’.
    Therefore, the enforcement of the implied contract should be taken with the utmost care….laws against the common good should be repealed, good law made and proper enforcement should be rigorous – If these things are not considered well…then the full faith and backing of our means of exchange –money – will come into doubt and repudiation.

    Money, therefore, is the implied contractual obligation portion of, contract between the governed and the governing law (Constitution, Federal, State, County, municipality, community, tribe, prisoner camp, jail etc.)

    Two types of business are conducted using our currency, both ultimately depend on the implied portion of the contract. The implied or imputed portion is the dominate contract when exchanging money – money is the imputed contract between people and our government for its enforcement against those who would use it illegally.

    One type of business – the economic rent extraction type – increases what the other type of business must pay and factor into their production and prices. (Private income) minus (economic rent) = potential consumption or demand.
    Economic rent increases the cost of living and doing business – it does not add, rather, it subtracts from wealth creating activities. Economic rent subtracts from what is available for labor and industrial/business capital. Money, from where economic rent is taken, is a contract….it is not wealth.
    An example of economic rent taking toll upon the wealth creating sector is – real estate.
    Rising prices in real estate raise the cost of everything associated with it. The economy does not grow with rising real estate prices – it only makes things cost more money for everyone – it does not create wealth. I know of no human wealth creation activities that can be done without a piece of real estate – more accurately – land (resources), labor and physical capital (machines, paint brushes). Economic rent does not employ labor, land or tools. Economic rent is non-wealth producing…it is wealth destroying. The financial sector has been using money to create economic rental stream – they did it both legally and illegally. Fraud eviscerates contracts. Fraud breaches the contract…makes them unenforceable.

    How many contracts (heads up – it’s the same contract) breached due to the fraud perpetrated by the financial sector – even though each contract has the same, implicit guarantees– billions of dollars (each a contract) were stolen through economic rental activities and fraud. Far greater damage is done by economic rental activities than from any other sort…legal or illegal.

    Therefore, taxation upon income derived from economic rent extraction activities should be very high – high enough to tax it out of the free economy….high enough to repair the damage it has done or will do to labor and industry – high enough to promote the common good and lower the cost of living and doing business.

    The proper definition of Free Market is, and always has been, a Market free from economic rent.

    Our economy is out of balance – economic rent weighs to heavily upon the scales of justice – – it is favored over humanity and extracts to much tax/toll upon the wealth creating activities that reflect the real world in which we live. Too much economic rent has been the cause of all depressions, wars and misery. Taxation is the most effective tool to achieve re-balance. The repeal and introduction of proper law to enforce the proper use of our exchange mechanism – money – the implied contract – is the only way to direct and correct our ills.

    – A few hangings would help, some law enforcement please. Dear government officials, you are getting close to breaching the contract implied in money.

    – Rebalance the economic rental activities so they do not continue to predate upon the bones of your wealth creating businesses and citizens.

    1. Expat

      “The proper definition of Free Market is, and always has been, a Market free from economic rent.” Very well put. Of course, achieving a free market requires heavy policing from the judiciary, which is, to say the least, not up to the job.

  22. Myron

    A dimension left out of this discussion over Keynes, government, labor, and free market ideology: Is the stagnation setting in around the world the natural state of an advanced capitalism? There is a whole school of writers associated with the journal Monthly Review (yes, a Marxist group) that argue the future for advanced capitalist economies can be seen by looking at Japan’s economic history of the last couple of decades

  23. petridish

    The American middle class is confused. It has reached it’s “Sell By” date and didn’t even know it had one.

    The real estate fiasco took care of a couple of generations and the college education fiasco will finish off the rest. The invocation of American exceptionalism will keep the sheep coming until all have been shorn.

    The club of global elites is full up and no longer taking applications.

  24. PeonInChief

    What’s interesting to me is that the capitalist class is still desperate to get us to spend again–payday loans, subprime auto loans car title loans and so on–that’s what’s making money in the present economy. And now the banks are trying to make money from housing again–this time, renting people the homes they used to own.

    But, of course, the problem is that no one has enough money to pay the 15% ROI that the elite wants.

  25. Hugh

    Participation rates had begun to inch up in 1969. They steadied and then began to go back up in late 1973, and then take off again between mid-1977 and 1980.

    In case you were wondering, there were recessions in

    Real weekly wages for production and nonsupervisory employees peak (not seasonally adjusted) in chained 1982-1984 dollars peak in September 1973 at $346, unsurprising due to the recession but both participation rates and wage rates recover somewhat coming out of it, peaking at $324 in December 1978. The difference between this second peak and the first is that there is no recover. In January 1980, real weekly wages drop below $300, and they have remained below that level ever since.

    1970-1980 was a complicated period marked by recessions and price shocks resulting from the 1974 oil embargo and the Iranian Revolution. However, contrary to Wolff, participation rates start to rise before wages begin to fall. And it is only toward the end of the decade that wages begin their definitive drop off and go flat for 3 decades.

    What Wolff does not mention is the high inflation of the late 70s followed by Volcker’s high interest rate policies which had the effect of suppressing wage growth and which the Fed institutionalized. Nor does Wolff address the deregulation and anti-unionism which began under Carter but has been expanded by both Democratic and Republican Presidents and Congresses ever since. On the other hand, Wolff does mention offshoring of jobs.

    Women entering the labor force didn’t have to depress wage rates and at least initially do not appear to have. Feminism certainly played a role in increased participation rates in the 1970s, but I am sure that even then it was a mixed bag between women pursuing independent careers and women working to supplement household income. The difference is that at some point that supplement became a necessity. Clinton, neoliberal that he was, and is, showed that jobs could be created and wages increase (even as wealth inequality increased). The real squeeze comes, I think, when the participation rates begin to fall which is what happened from 2000 to the present. It is at this point that the dynamic of too few jobs and too many workers comes into play. And it is really from this point that people begin to revisit the effects of women entering the labor force, as well as immigrants.

    1. HotFlash

      My dear Mr Hugh,

      I don’t know how to check to see if this actually happened, but my gut feeling is that higher household earnings made possible lower salaries/wages. Not simply b/c more workers competing for jobs, but many of the newbies being women would make lower $$/hr, so further increasing pressure to lower wages. Which in turn further lowered wages overall. What do you think?

      1. Hugh

        The top 20% of households are the ones that have shown large increases in income going back to the 1960s (which is as far as my information goes). Households in the 40-80% group showed moderate income growth gains, but post-the 2008 meltdown have fallen back to mid-1990s levels. The bottom 40% of households were pretty much flat throughout.

        So supplement or necessity also may be related to income level.

        It is true that women are still paid less for the same amount of work as men, and this would have a depressive effect on wages in the aggregate, but direct effects would likely only occur where men and women were competing for the same jobs, and even then sexism might still result in preferential hiring of men.

      2. p78

        Elizabeth Warren referred to the entry of women in the workforce in a conference when she was a prof.(it’s on youtube somewhere). She concluded that men wages’ stagnation was anterior to the massive entry of the women in the workforce in the ’70s, if I recall correctly.

    2. rps

      Wolfe perpetuates the big lie – women’s ‘all of a sudden’ 1970’s participation in the workforce had depressed wages all around. Women have always worked whether in the home as unpaid labor or/and in the marketplace. 1830’s The Massachusetts Lowell Mill were textile mills that hired 8,000 women, who came to make up nearly seventy-five percent of the mill workforce. The women striked against a 15% wage reduction and organized the Lowell Female Labor Reform Association (LFLRA). WWI and WWII demanded women into the workforce and professions usually accorded to men as well: active duty as nurses to “Rosie the Riveter”.

      Women’s wages/work has always been hijacked in patriarchal civilizations. In the 1940’s women rarely earned more than 50 percent of male wages. The 1830’s textile mill female workers earned 50% less than men.

      Percentage of female (population) over 16 years old in the marketplace:
      1940 – 25.4%
      1950 – 33.9
      1960 – 37.7
      1970 – 43.3
      1980 – 51.5
      1990 – 57.5
      2000 – 60.2
      2010 – 58.6

      The U.S. Labor Force In 2012: Women made up 46.9% of the labor force. 57.7% of all women 16 years and over were in the labor force, compared to 70.2% of all men (

      14.3% – Women Executive Officers in the Fortune 500 (2012)
      16.6% – Fortune 500 Board Seats Held by Women
      14.5% – Women’s Share of Financial Post 500 Board Seats
      18.3% – (Women) of the 535 seats in the 113th US Congress
      0% – Women elected as President of the USA

      Wolfe has a problem with the class system??? I have a bigger bone to pick. Let’s back up and focus on the embedded discriminatory gender system and marginalization of Women’s labor and wealth. The Census Bureau’s latest figures on poverty show that U.S. women are hit hardest in every category. 34.2% of families with a female householder where no husband is present were poor and 16.9% were living in deep poverty; 16.5% of families with a male householder where no wife was present were poor and 6.7% were living in deep poverty; and 7.4% of married couple families with children were living in poverty, 2.4% were in deep poverty.

  26. Jim

    Much of the commetariat on NC can’t seem to get beyond Marxism.

    But what if it is the case that Marxism had already collapsed in Europe with the so-called Bernstein or “revisionist” debate at the turn of the 20th century when it was realized that social democracy and Bismark’s policies had successfully integrated the labor movement within the logic of corporate capitalism?

    What if it was also the case that had it not been for the Russian Revolution—a voluntaristic coup d’etat contradicting the deterministic and unilinear character of orthodox Marxism—this philosophy would have gone the way of other 19 century philosophies, like those of Comte, Spenser and the various Social Darwinists?

    What if it is the case that the Bernstein debate along with the tragedy of the Russian revolution in terms of the political involution of the Soviet regime (the Moscow trials, the Molotov-Ribbentrop pact, the Gulags, bureaucratic centralism etc.) brought about an acceleration of the destructive pace of modernization now reaching its terminal end game in the 21st century in the West.

    What if it is the case that what we see today in the United States (the emergence of a managerial social formation of professionals/intellectuals—think, for example, of the role of most economists, accountants, lawyers, national security analysts etc) who are contributing to a newer form of domination—in political power– linked to what Michael Hudson has called the centralized planning bureaucracies of Wall Street, resulting in the complete collusion of the Market and the State?

    What if the liberal/left/progressive community has never taken the time or effort to develop a political theory of the state because it has internalized so completely the economic determinism of Marxism and has consequently ignored the current system of political/ cultural domination which exists in conjunction with the more traditional economic concentration of power in 2013?

    1. Expat

      Wolff has good answers for these questions. Marx’s lasting insight was analytical; in fact most of his writing was about capitalism, not communism. And I think you have to make a distinction between historical determinism, a very 19th century idea, and Marx’s insights regarding the role of history (i.e., we none of us start with a blank slate/empty world). It may be that those of us forced to live through the horrors of the last century and the current one are able to use Marx’s critique in ways he never imagined, but that hardly undermines his contribution. After all, many of us still sing along to the last movement of Beethoven’s Ninth!

  27. Myself

    The central issue here — which many people have touched on, but which deserves much more emphasis — is the destruction of American unions and the labor movement in this country, starting with Ronald Reagan’s policies in the 1980s, and continuing up to today. Yes, there were problems with unions that developed from the post-war period through the 1970s. But even the most problematic unions — among them, some of those that were openly corrupt, racist, and sexist — also provided much-needed public services. Unions in sectors like the building trades excluded anyone who wasn’t a white male, often anyone who wasn’t a relative of an existing union member; but they also funded apprenticeship programs that trained the next generations of skilled blue-collar workers. The solution, at least from the point of view of workers and the stability and prosperity of the broad economy, would have been to reform these unions by enforcing existing law, along with the anti-discrimination provisions won by each wave of the 1950s-1980s civil rights movements. To say this is what happened in Germany is far from completely fair, but it at least gets at the fact that other choices than that made in the US were possible.

    “Our” choice in the US, under both Republican and neo-liberal Democratic presidents — and these were policies with key federal components, in which the presidential power to regulate was key, as well as policies pushed by unrepresentative, corrupt statehouses — was, instead, to destroy most of the unions that existed, and to make it virtually impossible for new organizing to succeed. Since the 2010 midterm election, we’ve seen the final phase in this process: the destruction of public employee unions.

    Where labor cannot bargain collectively with capital, any country begins to look more and more like Bangladesh.

    At the same time, fear of immigrants — most fevered, today, in precisely the few rich countries where labor, in the 1970s and ’80s, was able to strike a somewhat less brutal bargain than what US workers were forced to accept — restricts labor mobility more and more, even while capital flows more and more freely across those same borders. Before the First World War, hardly anyone — even the much-traveled cultural elites of Western Europe — had a passport, because they generally were not required. Now, most rich countries require that their own citizens carry passport-like identification documents (in that obtaining them is the equivalent of obtaining a passport) at all times, even if they’re just going to the grocery store, not traveling across international borders.

    Once we really are all living in Bangladesh, labor mobility, I predict, will become the new rallying cry of the 0.01%. Oh wait a minute — you’re saying that’s already happened: I guess it *is* time to start worrying about whether the building I work in is going to collapse on me…

    How is all this related to the housing bubble, the banking crisis, the specific events of 2007-08 and their aftermath? Obviously, the specific causal links are complicated, and it’s fair to say that this video glosses over them. But putting that forward as even partial refutation of Wolff’s basic story about the post-WWII US economy (on anything pre-WWII, he’s pretty sloppy) is the moral and intellectual equivalent of the proposal — fashionable back in the early 2010s, and far from dead today — that the banks are their own best regulators, since only bankers really understand what they’re doing anyway. When the collective power of workers has been deliberately crushed by the government, in flagrant violation of the law, how can we possibly hope that anyone will restrain the owners of capital — and even more perniciously, the finance industry whose members pretend to act as their agents, while in fact its participants aim to join the 0.01% themselves even if that means robbing their clients blind — from acting in their own, thoroughly unenlightened self-interest?

    If mortgage securitization hadn’t brought down the house of cards, something else would have been invented. I wish I had hope that this situation could be reversed, but I’m afraid it’s too late.

    1. HotFlash

      Eaarlier still are the McCarthy purges, which stripped socialist and communists from every social organization including the unions. Rick Wolff did not mention them, but the purges made a huge diff in the US. Um, that does not even begin to tell the true story, which is that, hello, McCarthyism ate the Left alive.

      This just the wiki, more if you duckduckgo.

    2. p78

      Breaking the backbone of the powerful unions in the state-companies was the aim of the IMF and World Bank in the east Europe, by requiring their overnight privatizations, in a “shock-therapy”. This created the berezovskys & co., the sudden billionaires who had no real merit in the industries they had stolen from the 99.999% who dedicated their lives and sacrifices to built them.

  28. Bagehot by-the-Bay

    I’ll take the 1970s over what we have today, no question about it. In the 1970s, the electorate still had some power and a shot at getting things right. Today it has none. It will take a miracle or a catastrophe to break the grip of the privileged elites.

  29. rps

    I have a bone to pick with Wolff not defining “Profit” Profit gains are based on the hijacking of labor (3rd world) and/or underpaid labor, and/or overpriced product(s), and the ravaging of public and private lands that impact our health and lives: deforesting, fracking, slicing off mountaintops, coal mines sludge, corporate animal farming slaughterhouse production and operations, pollution of rivers, lakes, streams, rare earth metals land destruction, etc…

    In other words, stolen labor, land, resources and buyer beware products and services. And if you’re one of those lucky dogs with a local, state or federal government contract – taxpayer subsidized profiteering

  30. pws

    The Construction Industry has huge clout with local governments. If we live in an aristocracy (and we do) land developers are the Baronets and Gentry. No, they aren’t up their with the Dukes and Princes, but they aren’t complete nobodies either.

    However, their clout, at best, goes to the State government level, and the aren’t earthbound gods like the CEOs of Citibank or Chase.

    1. Lidia

      The governor of my state dances to the tune of developers. Because building crap that no one needs = JAAHBS (in the short term). Then the bill will come due for the white elephant. The majority of people in my supposedly “green” state seem captivated by the “build it, and they will come” meme touted by land “developers” (exploiters/ruiners).

  31. L.Nichols

    The Leisure Class as described by Veblen certainly played no small part in the 70’s economy and the factors that led to and created it and the economic environment since. Can anyone recall the 70’s without a reverent recollection of Soul Train?…America’s youth of that era embarked on a spirited odyssey into the future; what freedom have they finally gotten, where have they arrived in terms of their goals and financial security class-wise?

  32. Egmont Ouerveture

    Class is not about money. Social class in America is about taste and family and location and manners.

    See Paul Fussell’s eponymous work on the subject.

    LOTS of people have tons of money, but are as bourgeouis as buttered toast.

    1. Lambert Strether Post author

      Class is about one’s relationship to the means of production. If you’re part of the downwardly mobile “middle class” and especiallly if you’re permanently disemployed, this becomes very, very evident. Taste, family, location, and manners all tend to revert to that baseline (though of course cases will vary).

      That said, the relationship between status, rank, and class is richly textured.

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