Bill Moyers has a wide ranging and lively chat with Richard Wolff, Professor of Economics Emeritus at the University of Massachusetts and author of many books including Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It. Wolff is a fierce advocate of the need for policies for fairer wages for workers and argues why better pay is salutary not just for the employees but the broader economy. He also gives considerable historical detail as to how politics and policies evolved to short change ordinary workers.
For the time pressed, you can read the transcript here.
Meh. This is all terribly nice and true enough as far as it goes.
But when Wolff says some of this stuff to Moyers — forex, “We’re living in an economic system that isn’t working …I’m a little bit like one of those folks in the 12-step programs. Before you can solve a problem, you have to admit you got one” — I do shake my head a little with impatience at these two fine old gentlemen.
I’m with Hugh, who points out that we have a fully descriptive term for what the current sociopolitical situation and that we should use it.
Kleptocracy. It’s the elite looting, stupid.
Why yes, the U.S. political economy has devolved into a oligarchical kleptocracy. Where Wolff is going is well beyond the identification of the problem, but a roadmap of how we got here – and more importantly, how to move away from that system and toward social and economic democracy.
Dr. Wolff is a socialist and a strong believer in democracy. I see his views as radical, where this blog tends to be more liberal. By that I mean that Wolff would transform the system to be more egalitarian on its face (e.g. publicly owned banking, greater wealth and power equality through tax policy, etc.) while NC has expended considerable effort toward crafting the regulations necessary to harness the creative power of capitalism. However, it is my view that this blog is moving closer to Dr. Wolff’s views all the time, suggesting that some well-trained capitalists around here have started sniffing the socialists tent. Keep sniffing.
No, we don’t live in kleptocracy, strictly speaking–it is an oligarchy/neo-feudal system. Everything now is about networking and playing the system. It problem is the system–it is weighted to benefit the oligarchs who aren’t, in my view, trying to steal things, just leveraging their connections and playing the game as a game. It is not really a kleptocracy because the players don’t have the intention of stealing just “winning.”
One of the TV series I like to watch, at least as a great metaphor of New York and the power centers, is Suits which has the value of “winning is everything” or “winners are everything” that worships with touching and charming deference the cult of success as an almost spiritual value.
My experience of New York/Washington is that the real power players use money to keep score and make periodic displays–they are not as shallow as just wanting to swim in money like Scrooge McDuck. They are, in their own eyes, living out the American Dream and thus infuse their actions with a kind of spirituality. The characters in Suits are if anything ascetic and focused on ideals not comfort.
The left does not respect, on balance, the fact there is more to the American version of materialism than “greed.” The Players in our power structure are sort of pursuing the Grail–they respect strength and their own peculiar notion of virtue which, on principle, does not include anything resembling compassion.
please learn what crime is…
“…the real power players use money to keep score and make…displays”
I don’t know if anyone else saw the story about the African Amercian Goodwill employeee in Stockton, California, who found $10,500 in cash in a donation of old clothes and turned it in to her manager:
Think of it: this young woman, perhaps not even earning minimum wage, knew what the right to do was, and immediately did it.
My first thought was: I doubt there is one person working on Wall Street–or on Capital Hill, for that matter– who would do the same.
No, I should not rush to judgement. It’s very possible that a waitress or janitor or parking lot attendant or even a receptionist working in those places would do the same thing.
When will we, the 99%, turn our backs on the parasites and begin to construct our economic, social and political life anew?
Calling the system a “kleptocracy” implies that everything will be just peachy if we can prevent the elites from stealing. FDR tried to do that, but unless you address the root cause of zombieism, they will always return, and so they have. Trying to prevent zombies from eating your brains can only work for so long — they’re insatiable (it’s their nature), and they will get your brains.
Wolff says he would absolve the bankers for what they do because their actions are induced by the system; they are merely doing what their jobs require of them. What he forgets to mention is that their actions are induced by a system they, with their economic theories, lobbying and revolving door policies, created. Would he be so forgiving of a drug lord who rises to the top by acting according to the inducements of the system he works in?
For those who would argue that the two, banker and drug lord, aren’t comparable, I would agree, in part. Drug lords have no say in the laws that apply to their products; legalize a drug, and the drug lord problem goes away (at least for that drug). Bankers, on the other hand, have an overwhelming say in the laws that apply to their products; they pay handsomely for that privilege through political donations, lobbying, and the practice of hiring ex-government employees. Although it may be I’m naive, it may be that some drug lords are also paying handsomely to keep certain drugs illegal. Bankers, however, get more bang for their buck; like their interest rates on money borrowed from the government, their risk of jail time is 0%.
The question is how do you want to stop this problem? Yeah, we’re all angry, and want some banker blood–but then new bankers are just going to come in and do the same shit. We must work to get rid of capitalism, which will get rid of the problem at its root. Holla!
Sure, blame capitalism.
It sure was capitalism that created the fed to nail out banks. It was capitalism that forced bable to lax lending standards and lend to people who could not afford it. It was capitalism that created regulations to funnel government funds to the medical and education industries.
It was also capitalism that forced the fed to lower rates so that it could keep borrowing and spending like drunken sailors. It was capitalism that issues excessive cheap credit onto the market, making it convenient for corporations to borrow and automate or shop jobs overseas.
Oh wait, it was our presidents, our Congress, voted in by the ‘something for nothing’ thinking Americans. Every single one of us is at fault and instead of doing something about it, you blame it on a theory that hasn’t been relevant for almost 100 years.
I think Wolff absolves the players because he knows they do not and did not set the rules. They play the refs like players do in basketball but don’t set the rules they really don’t. The rules have been in effect and modified for well over a century.
What we have to face is that the underlying philosophy of the cult of success is what infects the whole society not just the winners. The fact we have created a system which is mainly interested in success for the few and obscurity and disgrace for an increasing number of people has to be accepted–we all participate in this in some way.
the dude means well and I appreciate all his good efforts to articulate the unfairness of “the system”
but he says “regulation” isn’t the answer because — through a process of circular reasoning — it has always been eroded or evaded.
That’s like saying a parachute can’t protect a paratrooper jumping out of an airplane because people always find a way to avoid wearing parachutes.
Well. Uhhhhhh. Ummmmm. Ahem. Maybe they should be forced by law to wear parachutes and not be able to weasel out of it. Of course if somebody else takes your fall for you it makes it easy to forget. So they have to take the fall too.
why is this stuff so hard for society to manage? Ah ha! therein lies (no pun intended) the real reality and fertile field of inquiry for probing analysis.
The claim that the wealthy (the capitalist class) will always find a way to avoid regulation is not circular. Wolff is not arguing in a circular manner. That the rich have always, in the past, found ways to avoid regulation is a clearly demostrable factual claim.
Now, you might say you don’t believe the future will be like the past, but that’s a pretty extreme idea. And, you would need a reason to think that suddenly tomorrow the rich won’t have reason (incentive) to get around regulations–and the means to do so.
The key idea here is that wealth inequality provides power inequality. Once I’ve got so much money that I can disproportionately influence politics on my behalf, I’ve got all the motivation in the world to do so. No reason to think that will change.
However, the process won’t get started if there is not a small group of people who control a society’s wealth. So long as there is a small group of people who control the wealth of a society, they will have both an incentive to stay in that position, and, through their wealth, the means to do so.
so what you’re saying is we need regulations to reign in corrosive political influence arising from wealth concentration. :)
I personally think that’s a pretty good idea. Admittedly it will be difficult to make them stick, because history shows the usually don’t. No doubt about it.
God made it all like locks on doors. -Charles Bukowski
I can’t believe the site editor didn’t include my link in links. faaaaak. what an epistimologicaal oversight!
You guys, the rich write the regulations, and then they buy the regulators and the legislators and the judges.
That’s the systemic nature of the crime.
That isn’t circular reasoning, but I can see how you confused yourself. Using regulation as a way to stop crime, and then having our rulers (through political power) undue those very regulations, prompting a new set of regulations is a vicious circle–but to point that fact out is not an example of circular reasong.
What Wolff means by saying he is not in favor of regulation is that he does not believe the system is fixable at this time. Reforms are not going to work only radical change will work. The system, unlike the situation in the 1930s is just too far gone. In fact, I suggest to you that significant reform, as things stand politically at this time, is impossible the structure has become so rigid we can only hope of more of the same. Eventually, the cracks will start to show–as we are seeing–then slowly something will break as it did in 08 and then we will have major problems beyond 08.
I bet they are both in the 1%.
No American should ever get conned by the scamming so called socialists. There notice is $ and their agenda is a lie. Raise the minimum wage to 30 an hour, you will pay for those wages anyway.
I guess it makes the Dorothy rich pigs feel good to talk about how much they would help the poor, with other people’s money, while ripping the benefits of such stupid ideas. Sad that anyone would believe this.
That’s a pretty nonsensical critique of socialism. The idea behind it is that we live in a society where we are all connected. When a large segment of the population is suffering the whole suffers as well. For example, children who aren’t getting enough nutrition or dental care will not do their best at school and over the years will fall behind and many will end up in expensive jail which, in turn, cut into our tax burden. In the same way, making medical care a right not a privilege would make people a bit less stressed therfore making people happier and more efficient–but such arguments, despite social science research are always ignored by those who are attached to the few winners and many losers philosophy of life. Some of you take pleasure at the misery of others.
You are conveniently ignoring the cost of providing those services while mentioning poor people so that it sounds like the ‘right’ thing to do.
Someone will pay for the services and it won’t b the rich. There is also evidence that we already have programs, like EMLATA, which instead of lowering prices, they have increases. You want a government monopoly so that more juicy contracts are available to the wealthy entitled class. The UK has a queen, we have entitled rich who use the government to hike prices and stuff their coffers with cash. It ain’t about the poor, just like unions aren’t seeking for the interest of our children.
Are you saying that people who are eager to increase the minimum wage are ignoring the Law of Unintended Consequences?
After all, politics is anything but empirical and we are not very good at separating fact from fiction.
So you are not objecting to providing poor people with some means of sustenance, rather, you object to the government doing it is that what you are saying? I personally don’t feel the best solution is government doing anything. I believe we can create a society where we can care for each other in our communities and, in fact, that we have communities which, in many ways, we don’t at this time. I’m fine with deconstructing government as long as the national security state is dismantled alongside the welfare state (what’s left of it) and, more importantly, allow the hyper rich to own half the country. If we were, for example, to have a jubilee on debt and deconstruction of the regulatory state that tends to allow the state to give privileges to its rich clients then I sympathize with your position.
Let’s make a deal. Just raise the minimum wage to $15 an hour, but cap the maximum wage (including interest, dividends and rent) to the annual equivalent of $200 an hour.
Make 4-year college education free (yes, tax-supported — we did it with high school once upon a time).
We’re going to need more teachers, primary care physicians, geriatricians and nurses — make training for those professions tuition-free.
We certainly don’t need any more lawyers or MBA’s — charge $50,000 a year tuition for those credentials.
Okay, if lawyers will work exclusively in the public interest for 10 years, they can get a big discount on paying back their law school loans.
We keep plodding along with this criminal kleptocracy because we swallow the big lie of TINA.
There are alternatives. Let’s go there.
I think we are confusing things. First, purchasing power is not free. Money is a medium via which society exchanges purchasing power. Supply and demand suggests that adding currency lowers the value of the currency relative to goods and services. If the government prints unbacked currency, it is removing purchasing power from existing currency holders.
So paying teachers with newly printed currency is not free, we are paying them.
If you want free education ask every educator to work for free. That would do it. Who doesn’t want free things?
I don’t think you want ‘free’ education, what you want is the government to stop meddling in the market, allowing those competent to continue their education and not hand out money to people who will do nothing with a degree. If you want everyone to get a college education and the government to finance it than don’t complain about tuition priced. The beneficiaries of the intervention are not me or you nor students, it’s the wealthy government entitled educators. IM sure they are on your side. More demand for their services equals more theft.
If the government prints unbacked currency, it is removing purchasing power from existing currency holders. bapoy
Government money is already fully backed – by its taxation authority and power. Backing it by gold would add nothing but expense and profit private interests unjustly.
But even government money issued in excess of taxation needs is backed – by the unjust debt the banks have driven the population into as well as the normal need for a medium of exchange. Both cause people to value it.
And even if new fiat did cause price inflation so what? Ban further credit creation, send the new fiat only to the non-rich and tax them with inflation for a change. Turnabout is fair play, no?
The banks should never have been transformed into a counterfeiting cartel for the so-called creditworthy. But now restitution is due.
That is, tax the rich with inflation for a change.
And if, as some say, the new fiat will end up with the rich anyway then:
1) Yes but only after relieving the non-rich of debt.
2) That’s when a highly progressive income and capital gains tax would come in handy. When we have a just system is the time for a flat tax, not before.
And btw, since Federal taxation is about destroying fiat, not funding the Federal Government, tax enforcement should be highly progressive too.
Let’s stop focusing on whether is destroyed or created and look at it from a purchasing power perspective. I earn 1000 a month and with that I can buy 1000 chickens.
I send the government 150 dollars, which they destroy. The next day the create 150 new dollars and spend it on 150 chickens.
It’s a tax, it’s all it is. Nothing less. However, calling it a tax infuriates tax payers. Calling it inflation, now that, that is genius. You see, inflation is ‘out of the government’s hand’.
Beard, we would not be where we are if the government raised taxes instead of raising inflation. You and the rest of Americans would not tolerate it.
You do realize that the banks create new purchasing power that vastly exceeds what the monetary sovereign creates? But since people must pay it back, that’s ok? Even though they must pay it back with interest that does not even exist unless the US Treasury creates it?
A balanced budget by the monetary sovereign is stupid. Where else is new money to come from if not deficits? And a surplus is the height of insanity.
A monetary sovereign is not a freaking household! How many times must that be repeated? Pretending it is is criminal insanity and has killed MILLIONS!!!
If they do, than why is real GDP in decline since 1971.
No, they create credit, not purchasing power.
We need currency, but what makes you think we need more and more of it. The government funds and should find itself with tax revenues. Explain to us how anything else is not theft.
What you need is not ‘free’ stuff, you need to be able to SAVE and build wealth/purchasing power.
We need currency, but what makes you think we need more and more of it. bapoy
Would you rather a debt-jubilee? But how fair is that to non-debtors? It isn’t since the counterfeiting cartel, the banks, have cheated them too. So the solution is a universal bailout with new fiat. And that bailout will allow the banks to be painlessly euthanized.
Explain to us how anything else is not theft. bapoy
Well, for one thing, the government has a right to tax, even by inflation. And since the government-backed banks and the so-called creditworthy tax the rest of us with inflation then turnabout is fair play, assuming the new fiat goes to the victims, not the villains (as it has).
Yes, they can tax by inflation. All they have to to is print new un-backed currency.
I hope you are well aware that when a government resorts to printing to pay it’s bill, it’s nearing the end of the road. It is very painful for the population, who loses +10% of purchasing power quickly and continuously, and it really doesn’t help the government meet obligations. Prices will simply rise by the same amount of new money issued. It is a death spiral.
Since it’s very painful for the population, government offices will be quickly surrounded by people with pitch forks.
Perhaps that’s exactly where we need to go to get out of this twilight zone. The government likes it the way it is and the stupefied population also likes to get ripped off. This will not end well.
“I don’t think you want ‘free’ education, what you want is the government to stop meddling in the market, allowing those competent to continue their education and not hand out money to people who will do nothing with a degree. If you want everyone to get a college education and the government to finance it than don’t complain about tuition priced. The beneficiaries of the intervention are not me or you nor students, it’s the wealthy government entitled educators. IM sure they are on your side. More demand for their services equals more theft.”
It is really unwise, bapoy, to tell me what I think or what I want.
From your comments, I might guess that you consider money to be some sort of commodity that is in short supply. I don’t know for sure that’s what you think, and I’m not going to tell you what you think, so please extend the same courtesy to me.
Here is just a small part of what I think: I think that money is not property. Rather, I think it represents the productive capacity of the people of this country. At this particular time, in this conversation, I will not take on the crimes of the international banking cartel.
However, since according to the U.S. Constitution as I understand it, we are a monetarily sovereign country, it is up to us to create the money our people and our society need to maintain a constructive and sustainable existence on this planet.
In my personal view, it is not up to us to maintain a tiny, incredibly wealthy elite that rule over the rest of us for no discernable reason that I can see, other than that we allow it. It is certainly not to the benefit of the country as a whole, nor to that of the rest of the world.
(A tiny subset of this entitled elite is the current higher education system — aren’t you surprised? I agree with you on that! But when we re-structure academia to actually meet the needs of our society, we can take care of it.)
In my considered opinion and my experience, bapoy, “the market” is a religion. I, personally, do not think highly of any religion, but I certainly am not telling you what you think.
One possible way to address the toxic economic inequality in our country is to start at the top, by setting a maximum income, and taxing everything above that level (whatever it may be) at 100 percent.
Ah… you might say (but I don’t know that you will) — the rich will run for the exits, and what will we do then? After all, they are the creators of crappy jobs at Wal-Mart and McDonald’s — how can we survive without them?
Good riddance, is what I say. Let them flee to Argentina or Switzerland or (irony of ironies) oligarchic Russia. With 90 or 95 or 99 or 99.9 percent of the population left, we’ll get along without the Koch Brothers OR George Soros.
“I don’t think you want ‘free’ education, what you want is the government to stop meddling in the market, allowing those competent to continue their education and not hand out money to people who will do nothing with a degree. ” You sure like to project your own personal biases onto other people’s unspecific thoughts, don’t you? Not all degrees are the same. Not all degrees have economic value or social value. In fact, only a narrow range of degrees and skillsets have economic AND social value. Perhaps the government should completely subsidize people pursuing degrees in certain sciences, ,engineering and medicine while prohibiting all other degrees to be financed with government subsidies or private credit. The traditional private college was based around the interests of the elite, like Liberal Arts, and astronomy, etc. needs to go back to being the province of the rich because that is who the traditional private college was intended for. What we need and have always have needed are a good system of vocational schools programs and apprenticeship programs. Traditional private colleges were designed for the idle wealthy–in the same way that Fine Art is made for rich people with idle money.
The problem with Wolff is that he thinks Marx’s discredited combination of early 1800’s Ricardian economics and bizarre historical metaphysics is a legitimate view of reality. It is sad that so many on the left cling to one of two pseudo-intellectual ideologies: neoclassical economics or Marxism.
IF we need banks, we need completely PRIVATE banks because:
1) Bank failures are normal and good and not such a disaster to investors anyway since the assets can be sold. And, of course, all deposits would be COMPLETELY voluntary since we would have a Postal Savings Service for risk-free fiat storage and transactions.
2) Government-backed banks violate equal protection under the law since “creditworthiness” is a subjective determination and is irrelevant anyway since no one is worthy of his neighbor’s purchasing power via government privilege.
The voice of reason.
Yet our banks have NOT been completely private so restitution is called for too. An equal, universal, including non-debtors, bailout with new fiat, at least until all deposits are 100% backed by reserves, is also called for to provide the reserves necessary for a massive exit from the banks to the Postal Savings Service. That would leave only voluntary deposits at risk in the banks as is proper.
Banks have less reserves today than they had in 1950. Perhaps restitution is the way to go, just note that the money isn’t there. In other words, you would have to destroy the banks and the fiat system with it, to have restitution.
I’m all for a non fiat system, but I know you are not.
A temporary ban on new credit creation would allow new fiat to be distributed without significant price inflation risk IF the distribution were metered to just replace existing credit debt as it is repaid. Honest, 100% reserve lending, would still be allowed, of course. Later, when the banks are completely private, the ban can be lifted.
As for inexpensive fiat, it is the ONLY ethical money form for government debts else private interests are allowed to free-ride on the taxation authority and power of government. However, fiat should only be legal tender for government, not private debts, but NOT until after the universal bailout so the banks will be forced to accept it as they currently are.
It’s a wicked mess unethical money creation has created yet it would be literally a crying shame if we can’t or won’t unravel it peacefully.
I go with the kleptocracy angle and take Banger’s point that we actually know little of the motivation of the oligarchy. Most lower end crooks I nicked more or less went with ‘it’s a fair cop guv’ with the fraudsters almost they exact opposite, forever wailing they were just doing what everyone does and I was picking on them.
We are all guilty of the current mess to some extent – we don’t learn about the economy but vote as in Clinton’s ‘its the economy stupid’ and live in the trance of main media fantasy, buying cheap crap with no responsibility for the deaths and misery of the sweat shop. One might even argue the rich do us a favour by restricting our ability to pollute the world even further.
The motivation of criminality is so difficult to get at we generally resort to legal fictions like mens rea – though this translates as guilty knowledge it is no such simple thing. In most jurisdictions one can know have mens rea even if drunk or drugged and incapable at the time of the offence of being mens anything. That you knowingly got high is enough. Yet counter to this,the victim in rape cannot consent and the defence cannot track back as say he/she brought it on by getting drunk/high. There is, of course, reckless intent, where you don’t need to mean the outcome.
Intent in law is generally shown through actions, though in most of our summary courts the defendant is on a hiding to nothing. Otherwise we have strict prohibitions like running a red light. Catch someone teeming and lading or burgling and let’s say they say ‘I was doing it for a bet and was going to give the money back’ – this appears to let them off the ‘intent to permanently deprive’ rule – but it won’t, even if that was really in their mind. The law does not generally issue these get out of jail cards.
Banger’s question or assertion of what is in oligarch minds doesn’t matter much – partly because we can barely tell what intent is in the private mind. In minor frauds (still sometimes in millions), we find ‘brokers’ who take money off people to invest in safe mutuals. Instead they bank the money and take the interest as earnings. Crime, lock them up? Technically yes, but you’ll likely find they seem to have bought the mutuals and need to dig deeper into a repo scam that makes it look like they bought the mutuals, but in fact delayed this via the repo trick and still took the interest. It all usually gets much tougher. The proof you get rarely has much to do with the brain condition of the thieves.
This is only the beginning of argument in support of a kleptocracy model as Hugh suggests. We have sunk so far that I am no longer allowed, as an academic, to suggest that a potential student not take on university debt and go for an apprenticeship or join a firm at 18 for management training, even if this is the best advice. I’m expected to sign them up against their interests. My behaviour in this is obtaining a pecuniary advantage by deception in terms of my inner intent – I should resist the higher powers, threat of dismissal and so on and higher desires to exploit the 18 year old innocence and ignorance. What of the bank clerk and PPI – either selling us hopeless products or just adding them to meet bonus targets without our permission?
The kleptocracy is more about Gresham’s Law than private criminal intent.
1. That was a very long-winded post with no point whatsoever, imo.
3.Don’t pretend that a potential student has a lot of choices these days since paid apprenticeships are difficult to get into. ” Join a firm for management training “sounds like go into retail and apply for management. Academics have lobbied hard to have their ” knowledge economy”, where most people are either “going to college” or they are hoping on working in retail management. I don’t think you would vote to see the government take a lot of money from academia and give it to apprenticeship programs. Too many academics are on the side “kleptocracy” in the sense that they have a real disdain for blue collar labor and fantasize openly about a society where everything is automated except for “intellectual” occupations.
3. should be a