There’s a Crisis in U.S. Capitalism

By Richard D. Wolff, Professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism, both available at This article was produced by Economy for All, a project of the Independent Media Institute.

Capitalism has always had business cycles. The capitalist enterprises that produce goods and services are distinctively organized around the conflicted relationship of employer and employees and the competitive relationship of markets. These central relationships of capitalism together generate cyclical instability. Wherever capitalism became a society’s economic system over the last three centuries, business cycles recurred every four to seven years. Capitalism has mechanisms to survive its cycles, but they are painful, especially when employers fire employees. Widespread pain (unemployment, bankruptcies, disrupted public finances, etc.) brought the label “crisis” to capitalism’s cyclical downturns. Only on special occasions, and rarely, did the cyclical crises in capitalism become crises of capitalism as a system. That has usually required other non-economic problems (political, cultural, and/or natural) to reach crescendo peaks around the same time as a cyclical economic downturn. Today is a time of crisis both in and of U.S. capitalism.

U.S. economic policy now focuses on what is already the worst business cycle downturn since the 1929 crash. As data accumulate, it may well prove to be the worst in global capitalism’s entire history. Forty million jobless U.S. workers find incomes lost, savings disappearing and over-indebted family finances worsening.

Today’s mass unemployment also threatens those still employed, the remaining 120 million members of the U.S. labor force. Mass unemployment always invites employers to cut wages, benefits and working conditions. If any of their employees quit, many among the millions of unemployed will accept those abandoned jobs. Knowing that, most employees accept their employers’ cuts. Employers will justify them as required by “the pandemic” or by what they say are its effects on their profits.

Led by Trump and the Republicans and tolerated by the Democrats’ leaders, U.S. employers are intensifying class war against workers. That is what mass joblessness accomplishes. On one hand, Washington bails out employers with trillions of dollars. On the other, Washington enables (by funding) a mass joblessness that directly undermines the entire working class. Germany and France, for example, could not allow such joblessness because of their labor movements’ and socialist parties’ social influences. In sharp contrast, the predictable results of mass joblessness in the U.S. are deepening social divisions, renewed racism, social protests, and government repression (often violent).

A desperate president fears electoral losses because his government failed to prepare for or prevent (1) a bad virus or (2) a capitalist business cycle downturn or (3) their catastrophic combination. White supremacy, police brutality, mass media control, and so on serve Trump’s efforts to mobilize his political base. So do his attacks on foreign scapegoats aimed to distract blame from his government and from system failures. These include immigrants, China, the WHO, Iran, former European allies, etc.

All these tactical maneuvers by the Trump/GOP regime provoke oppositions. However, they remain dispersed and unorganized politically. Instead of mobilizing and coordinating them, the Democratic Party leadership does the reverse. It undermined the Bernie Sanders movement, especially by splitting it from a large part of the middle-income African American community. By thereby blocking, if only temporarily, a powerful emerging opposition, Democratic Party leaders deterred mass opposition to bailouts, unemployment, minimal COVID-19 testing, and all the government’s other failures. They just want to win the November 2020 election. Biden’s vague “return to normal” promises are offered as soothing antidotes to the Trump/GOP’s crisis-wracked, fear-mongering divisiveness. Trump plunges ahead with a radically pro-capitalist agenda coupled with reactionary cultural and political warfare against civil rights and liberties. It is the old GOP strategy but a much more extreme version. The Democrats counter with reactionary responses: a revived Cold War (against Russia and/or China) and a domestic safety less shredded than what the GOP plans. Culture wars are perhaps the only realm where Democrats sense some votes in not caving further to right-wing pressures.

Alternating Democratic and Republican governments produced today’s impasse. Global isolation accompanies the U.S.’s declining economic and political footprints. Its technological supremacy is increasingly challenged globally and especially in and by China. Efforts to break that challenge have not succeeded and will not likely do better in the future. Further China-bashing—pursued by both major parties—will only slow global economic growth just when many circumstances converge to make that the least desirable future. Record-breaking levels of government, corporate and household debt make the U.S. economy exceptionally vulnerable to future shocks and cyclical downturns.

The U.S. population below 40 years of age struggles increasingly with unsustainable debts. The jobs and incomes it faces have already undermined access to the “American Dream” they were promised as children. Nor have they much hope for the future as today’s pandemic-cum-crash imposes more hardships on them. That protests surge, provoked further by government repression, should surprise no one.

Repeated polls where half the young “prefer socialism over capitalism” reflect growing antipathy to their deteriorating capitalist reality. In the Cold War-shaped U.S. school system since the late 1940s, socialism’s substantive theories and practices were not seriously taught. Debates among socialists over how socialism was changing or should change remain largely unknown. Today’s growing interests in critiques of capitalism and in socialism’s varieties reflect young peoples’ rejection of Cold War taboos as well as a capitalism that has failed them.

No “return to normal” after the combined systemic shocks of the COVID-19 pandemic and capitalist depression is likely. Many want no such return because they believe that that normal led to both the pandemic and the economic crash. They also believe that the managers of that old normal—corporate CEOs in both their private and governmental positions—should face tough public scrutiny and opposition because of where that normal led and where it will likely lead again.

Those managers are not solving the problems they helped to create: utterly inadequate testing for the virus, bigger-than-ever bailouts for the biggest banks and corporations, mass unemployment, and deepening wealth and income inequalities.

Why then keep those managers in power? We should not expect different results from them now than when conditions were “normal.”

Of course protests flared up in and around African American communities. Beyond their long history of suffering social and employment discrimination and police oppression, it is important to remember that those communities suffered worst in the Great Recession of 2008-2009. Their unemployment then shot up, they lost homes disproportionately to foreclosures, etc. They have died from the coronavirus significantly more than white communities. Because of disproportionate reliance on low-paid service sector jobs, they have once again suffered disproportionately in 2020’s crash of U.S. capitalism. When a president then blatantly panders to white supremacy and white supremacists, while making and repeating racist comments, the ingredients are in place to provoke protests. However useful for Trump/GOP electoral campaigns, social protests and oppressive police responses add sharp social conflicts to the already disastrous combination of viral pandemic and economic crash.

Trump is a product and sign of U.S. capitalism’s exhaustion. The long, cozy governmental alternation between GOP and Democrats after the trauma of the 1930s Great Depression had achieved its purpose. It had undone FDR’s redistribution of wealth from the top to the middle and the bottom. It had “fixed” that problem by reversing the redistribution of wealth and income. The ideological cover for that “fix” was bipartisan demonization of domestic socialism combined with bipartisan pursuit of Cold War with the USSR. The major GOP vs. Democratic Party dispute concerned the modes and extents of governmental support for private capitalism (as in Keynes vs. Friedman, etc.). That minor squabble got raised to the status of “the major issue” for politicians, journalists, and academics to debate because they caved to the taboo on debates over capitalism vs. socialism.

Capitalism has so extremely redistributed wealth and income to the top 1 percent, so mired the vast majority in overwork and excess debt, and so extinguished “good jobs” (via relocating them abroad and automation) that the system itself draws ever-deeper disaffection, criticism, and opposition. At first, deepening social divisions expressed the system’s disintegration. Now open street protests take the U.S. a step closer to a full-on crisis of the system.

Trump subordinated the old managers of capitalism by politically threatening them with aroused, angry small businesses and middle-income workers. Trump promises the latter a return to what they had before the upwards redistribution of wealth hurt them. He tells the old managers that he and his base alone can secure their social positions atop an upwardly redistributed contemporary capitalism. They will save the old managers from Bernie, “progressivism” and “socialism.” The Democratic Party’s old, “centrist” leadership offers weak, partial opposition, hoping Trump goes too far and implodes the GOP.

In the wake of the pandemic and the massive unemployment used to “manage” it, wages and benefits will take major hits in the months and years ahead. Wealth will be further redistributed upward. Social divisions will deepen and so will social protests. This crisis in capitalism is also a crisis of capitalism.

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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. Louis Fyne

    (IMO) things could’ve been righted in 2009-2010, when US capitalism had two wheels over the precipice and the political will was there for systemic change.

    instead the system floored the accelerator and the bus is off the cliff

    If only Democrats, Pelosi and Bide were around to do something then! (sarc)

    1. flora

      +1. T is a symptom of 40 years’ political abandonment of capitalism — by both parties — in favor of … what… plutocracy?

      1. Rolf

        +2 The good ship America, capsized, can right itself and escape what seems to be inevitable submergence by reversing regressive policies embraced by both political parties since the Reagan “revolution”. But both parties also seemed doomed to irrelevance, because both have, as Wolff describes, just played musical chairs over four decades. Little surprise that the only growing political affiliation is “Independent”: democracy needs an alternative! Even BEFORE COVID-19, those under 40 could not find sustainable employment, and those over 40 were jettisoned as too expensive to maintain. Meanwhile the mainstream media supply a steady diet of trivia and misinformation, gushing over stock market rebounds or growth in Jeff Bezos’ literal mountain of wealth, while a realistic 25% of the work force (including those in the darling “gig” economy) don’t have a job or a paycheck, and can’t make the rent. Unbelievable. And a disgrace in any country with the means to correct it.

        The political response to this virus and the ensuing economic collapse is but one preview to our future: we should study it, and hard. A vaccine may take a few years to put in place, but there is no “vaccine” against profound environmental shifts on the horizon, broadly labeled climate change. A response that avoids enormous human suffering requires planning and transformations on space and time scales unlike anything we have faced heretofore. The bad news: these shifts are already manifest and likely irreversible. The good news: a response will require everyone’s labor, creativity, and collaboration. This means planning, cooperation, and work, much of which can’t be automated easily. These are political and economic transformations in which we will have no choice, if we are to survive.

        1. John Steinbach

          Emphasizing that there will be radical reduction in energy/resource use in the near future, either planned or unplanned. The Club of Rome models appear to be still spot on.

  2. ChrisFromGeorgia

    Good article that makes many valid points. One I disagree with though is:

    will only slow global economic growth … just when many circumstances converge to make that the least desirable future

    Why is growth always the goal? Given the looming climate change catastrophe, economic growth is the enemy. We must figure out how to live in a zero-growth (i.e. balanced) economy or we will kill off the human race. A lot of the tensions we see are because it is no longer possible to “grow” the economy in a way that benefits all segments of society. Energy and GDP are related. As we run out of the former the latter must adjust.

    1. Olga

      In a rather simplistic understanding of these issues, I too have often wondered about this endless “growth” goal. How can we have long-term a system, whose inner logic requires constant growth to remain ‘viable’ – on a planet with finite resources? A collision of the two seems inevitable at some point. Am I missing something?

      1. John Wright

        You are not missing something.

        Economic growth and human population growth have been disasters for much of the animal/plant world (insects, large mammals, forests, oceans).

        Human focused economists seem to ignore this vitally important earth inhabiting non-human constituency in the quest for the, always assumed necessary, headline economic growth.

        As we follow in the path of our already distressed animal/plant kingdom, achieving a “balanced” economy without a great deal of human distress seems unlikely to this reader .

        1. Carla

          I agree with this thread. Having just finished Kunstler’s “Living in the Long Emergency,” I think J.H. Kunstler would, too.

          1. Dan

            Ian Welsh’s latest post has commenters, myself included, indulging in this dilemma. I just posted this:

            An excellent introduction to indigenous ways as seen through the lens of a modern economist can be found in “Limited Wants, Unlimited Means – A Reader on Hunter-Gatherer Economics and the Environoment” edited by John Gowdy, professor and chair of economics at Rensselaer Polytech University. Highly recommended to understand where some of us are coming from, for those who are so inclined.

            I also recommend “What is Sustainable” by Richard Adrian Reese and “In the Absence of the Sacred: The Failure of Technology and the Survival of the Indian Nations” by Jerry Mander. Reese was a computer programmer and Mander was an advertising executive.

            One of my favorites is a slim volume called “Original Wisdom – Stories of an Ancient Way of Knowing” by Robert Wolff. From the description:

            Deep in the mountainous jungle of Malaysia the aboriginal Sng’oi exist on the edge of extinction, though their way of living may ultimately be the kind of existence that will allow us all to survive. The Sng’oi–pre-industrial, pre-agricultural, semi-nomadic–live without cars or cell phones, without clocks or schedules in a lush green place where worry and hurry, competition and suspicion are not known. Yet these indigenous people–as do many other aboriginal groups–possess an acute and uncanny sense of the energies, emotions, and intentions of their place and the living beings who populate it, and trustingly follow this intuition, using it to make decisions about their actions each day.

            Psychologist Robert Wolff lived with the Sng’oi, learned their language, shared their food, slept in their huts, and came to love and admire these people who respect silence, trust time to reveal and heal, and live entirely in the present with a sense of joy. Even more, he came to recognize the depth of our alienation from these basic qualities of life. Much more than a document of a disappearing people, Original Wisdom: Stories of an Ancient Way of Knowing holds a mirror to our own existence, allowing us to see how far we have wandered from the ways of the intuitive and trusting Sng’oi, and challenges us, in our fragmented world, to rediscover this humanity within ourselves.


            1. Olga

              Yes, thanks for this. Whether its religion (as someone yday suggested), capitalism, or technological innovation… but humanity is steadily becoming unmoored from what is its essence – i.e., connection to the earth and natural cycles. This won’t end well, I fear.

      2. HippoDave

        Earth isn’t a closed system, energy is available directly from the Sun. And potentially in the future energy and resources will be brought to it from other planets and moons, other solar systems, galaxies, etc.

        I agree that growth is unsustainable in the world/system we have now, but Earth doesn’t have finite resources. It’s part of the Universe.

    2. California Bob

      ‘Growth’ sounds good, positive even. ‘Rampant pillaging of the planet and its resources’ not so much. It’s called ‘branding.’

    3. lyman alpha blob

      That growth mantra has been internalized by most people without even thinking about what it means.

      I had a city councilor claim a few years ago that she didn’t think anyone would disagree that economic growth was a good thing and we needed more of it in our town. I argued that it wasn’t, with pretty much the same reasoning you mention above.

      If we’re ever to change this abysmal economic system most of us are trapped in, a lot of minds are going to need to be changed first.

      1. Dan

        Living in NJ, I don’t have much hope. And as the rest of the country becomes more and more New Jerseyized, the less hope I have.

        And yet, I’ve always come back to NJ, and I’m not really comfortable anywhere else. There is something about place. And comfort. Yes, that’s it, I’m comfortable in my little dystopia. Leave me alone, I can’t handle your utopian ideals.

        Ah, to live in a state of near constant cognitive dissonance…

        1. polecat

          If one where to take into consideration all the toggles, switches, servos, and quantum-state gates ’employed in the, er ..’well-oiled machine’s we commonly refer to as civilization .. then it’s not too hard to see how a biological lightning bolt could, um, unspool the gears toward general ‘un’ertia … much to the humans’ lament. We’re seeing it manifest in surrreal time!

          If you do nothing else p, do try to grow/raise some sustenance, whatever is within your abilities .. cuz you’re gonna need it.

      2. Kurtismayfield

        Yeah tell most of the suburban towns that growth is a good thing. Most of them are stuck in keeping the status quo.. watching house prices go up while not allowing new construction and keeping their neighborhoods static.. not building 3br 1.5 baths on 1/6 of an acre because that would be too much growth.. in their costs for schools, road repair, etc. Growth is not their goal.

    4. Ernie

      To paraphrase and agree with others replying to this post, human population and economic growth are the problem. It is no accident that human growth has not been controlled yet since the issue first became mainstreamed in the late 1960’s (my apologies if my history is not accurate), almost tripling during that relatively short time period, since unbounded human population growth is the ground in which unbounded economic growth is planted. Unbounded growth, however benefits no one except the most belligerently acquisitive, that tiny population of oligarchs, plutocrats, and tyrants. Ever notice how many of the “1%” pose as fundamentalist christians professing the sacredness of embryonic life and opposing population control, while embracing the notion that this is the end times? More humans equals more consumers from whom to extract wealth and more human capital stock from whom to extract time, life, and labor, before it all ends.

  3. Left in Wisconsin

    I generally like Wolff but this just seems like a grab bag of whatever. And what’s with the title and focus on U.S. in isolation? Is U.S. capitalism any more “exhausted” than other capitalisms? I guess probably more than Chinese capitalism but I don’t see how U.S. capitalism is even a thing – as Wolff well knows, it’s a global system. It’s certainly not evident that any of the European politicos, parties, or technical experts have any more of a clue.

    1. Olga

      Kinda my sense, too… plus if you’re a young Italian or Spaniard, with no prospects for meaningful employment, you’re probably also wondering – ever so slightly – about the possibility of a crisis. (And if you’re in Central Europe, the only reason a young one may have a job is because the west can exploit the wage difference.)
      Is all this what was meant by ‘secular stagnation’? (Or was it a more narrow scenario?)

          1. LawnDart

            Being told (repeatedly) without the wisdom and worldly experience to properly evaluate the statement/mantra that higher education/college is the only way out of a life with dead-end prospects?

            That may not be brute force, but there are other means of coercing one into taking actions that are not beneficial to themselves.

    2. Susan the other

      I think RW is OK here, LinW – Because: We have a system that is confrontational: the Rs are totally unenlightened while the Ds are totally treacherous. It all boils down to fear. The difference is marginal, or was, and it is simply that money is security. We need to be looking at that. Security is Money. When RW says, “The crisis of Capitalism is also a crisis IN capitalism” it’s downright quantum. Since I lived through it, I’d just like to say that Capitalism in the 20th Century was more-or-less crowd control. Created by a tempered-fascist mindset. But, in retrospect, since we have no gain whatsoever from all the former “capital”, I think capitalism could just as easily (or better) have been applied to a socialist mindset. What do capitalists want – fascism or socialism? And that is the vague direction we are starting to discern. It’s really the politics of the emergent – give up the rotting, fearful ideologies of security by money and force, or embrace the open, willing ideologies of security by mutual cooperation? Money, “Capital”. is just the metaphor.

    3. Lost in OR

      Agreed. The underpinning of capitalism is the industrial revolution. The underpinning of the industrial revolution is the enlightenment. The underpinning of the enlightenment is the separation of the divine from ourselves and our environ.

      God is dead. And this is the consequence.

      There was a short thread in yesterdays Links about how the (western) world transitioned from polytheism to monotheism. Without knowing much of how this happened or why it happened, I believe this was THE major turning leading to our current condition. For those with greater insight, I would love to know your sources.

      1. John Wright

        I believe the underpinning of the industrial revolution was the tapping of hydrocarbon energy via coal (England) and oil (USA).

        Exploiting the earth’s resources by humans has occurred for all history but available human/animal energy limited the number of people and the amount of resource exploitation.

        Relatively inexpensive hydrocarbon energy allows a mountaintop to be removed to get at resources underneath.

        If human and animal energy were the only energy sources available, the world would be far different, independent of the form of current religions, polytheistic/monotheistic.

        That is my view as a lapsed Catholic (Holy Trinity = both polytheistic and monotheistic?).

  4. DJG

    Thanks for this, and I don’t write that simply because I agree with the article.

    The current round of proposals by the Democrats is gattopardesco politics: All must change so that all can remain the same. (Stress on remain the same.) Hence, the Democrats trot out kente cloth and a bill that bans chokeholds–with nothing more ambitious and with no admission that torture has been encouraged in the U S of A for years. Wolff writes of a full-on crisis–the prevalence of torture shows me that the crisis has been full-on for some four hundred years. No wonder the Democrats’ only idea is a return to the status quo ante. Real reforms would change economic relations.

    It is an important point to understand black Americans as members of an economic caste, as Wolff mentions. Any important change in race relations means redistribution of wealth–which is why the elites are offering breadcrumbs, abuse, scare tactics, and the status quo ante.

    What Wolff refers to as identity politics among the Democrats has little to do with identity. It is melodrama–bad actors mouthing clichés. The kente cloth is as good as it gets in melodramaland.

    1. Ignacio

      Remain the same indicates a very conservative state of mind and an inability to understand that societies evolve and that evolution is always a forward movement. You cannot remain the same as you cannot get back to the 50s, the 60s or whatever is your decade of choice but you have to confront the current situation with some idea of where to go. Stay the same is not a motivation for anything and must end with system rotting because there is always this damning evolution around. Biden looks like the best representative of this “let it rot strategy” and I cannot see how could he command any massive mobilisation. No matter how badly is Trump doing, he still has the initiative, compared with the vaccum that Biden represents, and if the GOP manages to do a good PR effort he will undoubtely be re-elected.

      1. Ignacio

        I see Biden very much like a Mariano “Do Nothing” Rajoy. A slow but relentless degradation of everything.

        1. Knot Galt

          Thus our choice this November will boil down to;
          random voices of individual opinions (or cry’s in the dark),
          a relentless degradation of everything,
          a rapid decline into an unimaginable abyss.

          Given 2020 so far, I think “relentless degradation” would be a relief.

      2. L

        The Democrats as a party have always been small ‘c’ conservatives. They have never sought to fix things, especially not since Bill Clinton’s “triangulation” started. I maintain that the only goal of the party hierarchy was to stay in charge of the party. And to that extent they won the election the day Bernie dropped out. Winning the presidency, and god forbid changing anything, has always been secondary to keeping their donor dollars. That is why they keep complaining that Sanders hasn’t shared his lists with them, because they don’t care to change policy, only charge money.

      3. Amfortas the hippie

        aye! see Buckley’s “definition” of Conservatism:
        “Standing athwart history, yelling ‘Stop!’.”
        using Toynbee’s taxonomy, the Dominant Elite…who used to be the Creative Elite, but have become exhausted and bereft of Ideas…want to Freeze Time at the point where they had it the best. GOP likes Reagantime…Dems really like to pretend it’s 1995(this is also a part of the Backstory in the Matrix films, btw…which is pretty chilling,imo)
        Given that these groups of incestuous Elites represent Global Capitalism(not you and I)…there’s really no more “External Proletariat” (again, Toynbee’s taxonomy)…all of us, from New York Cabbies to Texas Hill People(Amfortas waves) to Calcutta slum dwellers…we’re all the Internal Proletariat, champing at the bit and chewing through the restraints as best we can.
        The Elite…both of them…fear this…because they understand, at some level, that they cannot remain “In Charge” without Our forebearance…whether cajoled or coerced.|
        They have nothing left to convince us that they are worthy…so Force/Coercion is what they reach for.
        But “We are many, and they are Few”, and all…and they’re not all powerful and all knowing, in spite of how mightily they attempt to convince us that they are.
        The problem is that the Elites have needed to divide us in order to hang on for this long…so We haven’t been able to talk among ourselves with anything resembling reason or substance…too busy with the colors and the who’s screwing who and my team is better, and all the rest of it.
        so We have nothing to take the place of the current “Order”.
        This is a shame, because there’s been some really good ideas, here and there, for how to order things so that suffering is lessened, both for humans and for other earthlings…but the damage is done.
        we must lie in that bed they’ve taught us to make.
        I expect warlordism and a new feudalism based on corporations, instead of geography…much famine and sickness and death…and a continuing degradation of the biosphere.
        I’m glad the Club of Rome is finally on everyone’s lips…but it’s about 4 decades too late, thanks to a handful of small minded greedheads who didn’t want to share the world with their fellow creatures.
        well done, all.

  5. Dichotomus

    Global capitalism, using the new tools of unrestrained global monopoly, big data and social media, has so radically incentivized intellectual dishonesty in academia, and corporate crime, widespread political corruption and world wide environmental catastrophe, I often feel that mother nature has just about had enough of us humanoids.

  6. K teh

    Replenishing and replacing is a feature, and it’s feudalism, whether it’s called socialism or capitalism or anything else by the tribe sitting in the birds nest.

    You can see people catching on in real time this cycle. The virus was used as a convenient excuse to reset the credit system and race identity is the symptom being used to distract from the status quo. Next cycle I expect many will be way ahead of the curve.

    IT was supposed to eliminate busy work, not increase Central control and extract a tax on every breath everyone on the planet takes.

    The “community” Banks served their preferred customers first, then their unpreffered and then their “new” customers, to the end of maintaining control. The first will get grants regardless, the second will be stuck with a loan, and the last is the next round.

    Don’t play.

  7. John Merryman.

    The bankers had their, “Let them eat cake.” moment.
    Government serves as the executive and regulatory function of society, essentially its central nervous system. While money and finance, as the value circulation and distribution system, are analogous to blood and the body’s circulation system. Government was private originally, but when it reached the limits of its effectiveness, it became a public utility. Now private banking has cooked its own golden goose.
    Capitalism is not synonymous with a market economy, as markets need money to circulate, while people see it as the signal to extract and store, from the noise of society and the economy.
    As it generally functions as a contract, with the asset backed by a debt, Capitalism requires enough debt be generated to back it’s stores of notational value.
    One way is squeezing money flowing through the necessary economy, requiring it to run on debt and draw the saved money back into circulation. Austerity.
    Another is having government as debtor of last resort. It should be evident the capital markets couldn’t function, without the government siphoning up trillions in surplus money. Hence endless, strategically inept wars and no one is court marshalled, as their primary function is to spend the money in order to borrow more.
    The secret sauce of capitalism is public debt backing private wealth.
    Eventually we will have to redevelop the public commons, as a store of value and social safety net.
    People might be linear and goal oriented, but nature remains cyclical and feedback driven.

  8. Hepativore

    I have very little hope that things will realistically change in terms of our economic and political systems within the next few decades as the systemic dismantling of any degree of security for the precariat will continue, and more and more of the PMC will soon find themselves to be downwardly mobile as the wealth flows upward despite all of the cheerleading they have done for millionaire and billionaire class ala the Iron Heel by Jack London.

    If things continue as they are now, I do not think it will be that far-fetched to see a reimagined take on the manor system. The federal government and state governments become small and relatively weak while wealthy private individuals have large estates consisting defended by platoons of private security forces to keep the teeming throngs of the underclass at bay. The lower class will consist of millions of people that grew out of the massive pool of unemployed and homeless people that have accumulated over the years which the new wealthy aristocracy have left to fend for themselves. This will be the aftermath after our overlords have taken everything away or have left it to rot.

    It would not affect them as they have sealed themselves in their own comfortable little bubbles in their estates and what remains of the public government exists to ensure that the will of the aristocrats remains unchallenged and is carried out.

    The best comparison I could make is all of the little corporate fiefdoms that the US had been carved up into in the book Oryx and Crake by Margaret Atwood.

  9. Red

    Judging by americans’ voting patterns in the primaries it doesn’t look like they think there’s a crisis. Yaaawn… Yet another boring article with no half decent solution posed. NC has become utterly boring.

    1. Lost on OR

      Not sure I agree with your characterization of this election. But I’m game.

      Where do you go for your excitement?

    2. LawnDart

      Oh, there is a solution. And it isn’t decent, not even by half.

      Utter lack of decency aside, I cannot help be feel myself aroused.

      Boredom is a symptom of a lack of imagination, or one of self-obsession.

    3. Massinissa

      The primaries were pretty much over before most of the recent economic crisis even started…

  10. Sound of the Suburbs

    We don’t need to reform capitalism just remember what it really is.
    William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.
    He thinks we have been on the wrong path for one hundred years.
    Small state, unregulated capitalism was where it all started and it’s rather different to today’s expectations.
    Rent seeking was a problem that the Classical Economists were only too familiar with, but this knowledge disappeared as economics moved on into Neoclassical Economics.

    It took one of today’s Nobel Prize winners to see what has been hidden for so long.
    “Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel prize winner
    It got really bad because no one was aware of the problem anymore, until he spotted it.

    What did we get from Ricardo and what is now missing?
    We got Ricardo’s Law of Comparative advantage.

    Ricardo was an expert on the small state, unregulated capitalism he observed in the world around him. He was part of the new capitalist class and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.

    “The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist.
    What does our man on free trade mean?

    Disposable income = wages – (taxes + the cost of living)

    Employees get their money from wages and the employer pays through wages.
    Employees get less disposable income after the landlords rent has gone.
    Employers have to cover the landlord’s rents in wages reducing profit.

    Ricardo is just talking about housing costs, employees all rented in those days.
    Employers and employees both win with low housing costs and a low cost of living.

    There were three groups in the capitalist system in Ricardo’s world (and there still are).
    Workers / Employees
    Capitalists / Employers
    Rentiers / Landowners / Landlords / other skimmers, who are just skimming out of the system, not contributing to its success

    From Ricardo:
    The labourers had before 25
    The landlords 25
    And the capitalists 50
    ……….. 100

    He looked at how the pie got divided between the three groups.

    Ricardo supported free trade and knew it required a low cost of living so employers could pay internationally competitive wages and this is why he supported the Repeal of the Corn Laws to get the price of bread down. They housed workers in slums to get housing costs down.
    Employers could then pay internationally competitive wages and were ready to compete in a free trade world.

    The West’s high cost of living meant it was at a huge disadvantage in a world of free trade and Western companies off-shored to where they could pay internationally competitive wages.
    Western companies can pay wages elsewhere people can’t afford to live on in the West.

    1. Sound of the Suburbs

      Things aren’t working because policymakers don’t understand the system.
      Does anyone understand the mechanics of the monetary system?
      Afraid not.
      Well, not global policymakers anyway.
      They think banks are financial intermediaries.

      The economics of globalisation has always had an Achilles’ heel.
      In the US, the 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at debt, neoclassical economics.
      Not considering debt is the Achilles’ heel of neoclassical economics.

      When you use this economics, policymakers run the economy on debt until they get a financial crisis.
      Policymakers don’t realise it’s the money creation of bank loans that is making the economy boom as they head towards a financial crisis.

      At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
      Policymakers run the economy on debt until they get a financial crisis.
      1929 – US
      1991 – Japan
      2008 – US, UK and Euro-zone
      The PBoC saw the Chinese Minsky Moment coming and you can too by looking at the chart above.

    2. Sound of the Suburbs

      Now you can see this.
      What was Keynes really doing?

      Creating a low cost, internationally competitive economy.

      Keynes’s ideas were a solution to the problems of the Great Depression, but we forgot why he did, what he did.
      They tried running an economy on debt in the 1920s.
      The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.

      Keynes looked at the problems of the debt based economy and came up with redistribution through taxation to keep the system running in a sustainable way and he dealt with the inherent inequality capitalism produced.

      The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living

      Disposable income = wages – (taxes + the cost of living)

      Strong progressive taxation funded a low cost economy with subsidised housing, healthcare, education and other services to give more disposable income on lower wages.
      Employers and employees both win with a low cost of living.

      Keynesian ideas went wrong in the 1970s and everyone had forgotten the problems of neoclassical economics that he originally solved.

      1. Sound of the Suburbs

        The timeline helps a lot.

        Classical economics – observations and deductions from the world of small state, unregulated capitalism around them
        Neoclassical economics – Where did that come from?
        Keynesian economics – observations, deductions and fixes for the problems of neoclassical economics
        Neoclassical economics – Why is that back again?

        We thought small state, unregulated capitalism was something that it wasn’t as our ideas came from neoclassical economics, which has little connection with classical economics.
        On bringing it back again, we had lost everything that had been learned in the 1930s and 1940s, by which time it had already demonstrated its flaws.

        What did they learn in the 1930s?
        In the 1930s, the University of Chicago realised it was the bank’s ability to create money that had upset their free market theories.
        The Chicago Plan was named after its strongest proponent, Henry Simons, from the University of Chicago.
        He wanted free markets in every other area, but Government created money.
        To get meaningful price signals from the markets they had to take away the bank’s ability to create money.

        What did they learn in WW2?
        In the paper from 1943 you can see …..
        They knew Government debt and deficits weren’t a problem as they had seen the massive Government debt and deficits of WW2.
        They knew full employment was feasible as they had seen it in WW2.
        After WW2 Governments aimed to create full employment as policymakers knew it could be done and actually maximised wealth creation in the economy.

        Neoclassical economics – Why is that back again?
        Well there was a reason.
        After a few decades of Keynesian, demand side economics the economy had become supply side constrained.
        Too much demand and not enough supply causes inflation.

        Neoclassical, supply side economics should be just the ticket to get things moving again.
        It does, but it’s got the same old problems it’s always had.

    3. Dick Swenson

      I have banged the drum too often to do so here again, but why not?

      There is no such thing as a Nobel Prize in economics. To verify this, just refer to the 2019 Annual Review by the Nobel Foundation

      There is a Swedish Riksbank Prize paid for by Swedish taxpayers while the real Nobel Prizes are paid for from the Will of Alfred Nobel.

  11. OpenThePodBayDoorsHAL

    I just object that Wolff perpetuates a few blinding myths.

    The first is that there is somehow a “business cycle”. No. There is a credit cycle. The extension of credit and the fact we have privately-issued debt-based money are the root of the “cycle”, not some vague -before or after-that-fact decisions by “business managers”. Define the issue correctly and you’re closer to understanding what could be done.

    Secondly he asserts that “Capitalism has so extremely redistributed wealth and income to the top 1 percent, so mired the vast majority in overwork and excess debt, and so extinguished “good jobs” “. No. An “ism” did not “do” this. An “ism” can’t possibly have agency. This was done, each and every day, by people, elected officials who wrote and passed laws that let Comcast have a monopoly, let Amazon pay no tax, and gave more free money to fossil fuel companies than is spent each year on education.

    You’ll never get more economic justice by lining up to oppose an “ism”. Bernie escalated that ridiculous debate, and it plays directly into the hands of capital.

    1. witters

      “Secondly he asserts that “Capitalism has so extremely redistributed wealth and income to the top 1 percent, so mired the vast majority in overwork and excess debt, and so extinguished “good jobs” “. No. An “ism” did not “do” this. An “ism” can’t possibly have agency. This was done, each and every day, by people, elected officials who wrote and passed laws that let Comcast have a monopoly, let Amazon pay no tax, and gave more free money to fossil fuel companies than is spent each year on education”

      Try and place politics inside capitalism, where it lives. Then consider the agency of these “elected officials.”

      1. OpenThePodBayDoorsHAL

        Reminds me of Attorney General Eric “Place” Holder’s 0bama Doctrine For Banks: that the bank buildings themselves committed the crimes, not the people inside them.

        So, sure, “Capitalism” did it.

  12. TomDority

    Placing blame on both political parties is correct – of course, underlying and triggering this fubar is the FIRE sector who have co-opted economic teaching and thought and the very levers of power. Ultimately, it is not for the people to overthrow or throw out the Constitution and this form of government but, to throw out those who have corrupted it. – That would be the FIRE sector – the definition of Capitalism has been utterly perverted – we need to recognize the FIRE sector as an overhead and has its foundations undermined by fraud and corruption.
    When Obama bailed out the financial sector he locked-in the higher costs of doing business and living – a lot of your fellow citizens bought into the loose money being lent to boost real estate and land prices way beyond where they should be – Its the biggest vig to pay for rent or owning or business or farming – this debt overhang and the type of economy we have is a direct result of tax laws and repeal of Glass–Steagall – 1933 Banking Act – designed to prevent reckless banking – I think this was repealed during Clinton ( I can remember how excited the division head of GE financial was about this repeal – they new what it meant)
    One should not blame China, or Mexico or other locations for our loss of industrial base – That industrial base and technology was given over to those locations by the ‘leaders of our businesses’ – mainly because the Tax system favors financialization (sorry about the spellin) and the abhorrent version of capitalism practiced today that skews so heavy to evasion, fraud and money over honest labor, scientific advancement art and making a habitable planet for everything that lives upon it –
    Change the Tax system and the way GDP is calculated –
    The FIRE sector does not produce wealth it produces asset inflation and overhead charges – it would love to charge you for the air you breath and is already charging for the water you drink and the place where you stand or work
    Also – following are some comments made in the 1920s that are relevant

    Laborers knowing that science and invention have increased enormously the power of labor, cannot understand why they do not receive more of the increased product, and accuse capital of withholding it. The employer, finding it increasingly difficult to make both ends meet, accuses labor of shirking. Thus suspicion is aroused, distrust follows, and soon both are angry and struggling for mastery.
    It is not the man who gives employment to labor that does harm. The mischief comes from the man who does not give employment. Every factory, every store, every building, every bit of wealth in any shape requires labor in its creation. The more wealth created the more labor employed, the higher wages and lower prices.
    But while some men employ labor and produce wealth, others speculate in lands and resources required for production, and without employing labor or producing wealth they secure a large part of the wealth others produce. What they get without producing, labor and capital produce without getting. That is why labor and capital quarrel. But the quarrel should not be between labor and capital, but between the non-producing speculator on the one hand and labor and capital on the other.
    Co-operation between employer and employee will lead to more friendly relations and a better understanding, and will hasten the day when they will see that their interests are mutual. As long as they stand apart and permit the non-producing, non-employing exploiter to make each think the other is his enemy, the speculator will prey upon both.
    Co-operating friends, when they fully realize the source of their troubles will find at hand a simple and effective cure: The removal of taxes from industry, and the taxing of privilege and monopoly. Remove the heavy burdens of government from those who employ labor and produce wealth, and lay them upon those who enrich themselves without employing labor or producing wealth.


    In spite of the ingenious methods devised by statesmen and financiers to get more revenue from large fortunes, and regardless of whether the maximum sur tax remains at 25% or is raised or lowered, it is still true that it would be better to stop the speculative incomes at the source, rather than attempt to recover them after they have passed into the hands of profiteers.
    If a man earns his income by producing wealth nothing should be done to hamper him. For has he not given employment to labor, and has he not produced goods for our consumption? To cripple or burden such a man means that he is necessarily forced to employ fewer men, and to make less goods, which tends to decrease wages, unemployment, and increased cost of living.
    If, however, a man’s income is not made in producing wealth and employing labor, but is due to speculation, the case is altogether different. The speculator as a speculator, whether his holdings be mineral lands, forests, power sites, agricultural lands, or city lots, employs no labor and produces no wealth. He adds nothing to the riches of the country, but merely takes toll from those who do employ labor and produce wealth.
    If part of the speculator’s income – no matter how large a part – be taken in taxation, it will not decrease employment or lessen the production of wealth. Whereas, if the producer’s income be taxed it will tend to limit employment and stop the production of wealth.
    Our lawmakers will do well, therefore, to pay less attention to the rate on incomes, and more to the source from whence they are drawn.

    Written around 1925

  13. chuck roast

    I like Wolff a lot, but maybe he should do a bit of self-refection. Being a “Marxist” can get you stuck in the ancient tropes. Capitalists? Really! It appears to me that we are deep in the throes of a kind of perverted State Socialism whereby the established political order and its legal, propaganda and apparatchik apparatus functions in complete economic support of a small oligarchy.

    We have even advanced beyond the “monopoly capital” analysis of Baran and Sweezy. These two old Marxists wouldn’t even recognize the monopoly part, let alone the capital part. We now have a vast array of crypto-monopolies or wanna-be monopolies that have achieved zero market dominance and endlessly lose Solomonic riches. The monopolies the don’t lose money, loot the general populace for 10 years or so and then use their central bank for all their needs just prior to bankruptcy. This is the oligarchs regular recipe. Looks like socialist soup to me. Let’s start defining it as socialism.

    1. Massinissa

      “Looks like socialist soup to me. Let’s start defining it as socialism.”

      You had me until this part. Maybe its not ‘Capitalism’, but its definitely not ‘Socialism’ either. If it’s not Capitalism/Neoliberalism, then it’s something new. Calling it ‘socialism’ would be even more obfuscatory than calling it Capitalism. At least whatever-the-hell-it-is-now-ism is supported by wealthy interests who still call themselves Capitalists and claim to love Capitalism, even if what we have isn’t that anymore.

  14. VietnamVet

    This article pretends that the train is still on the rails. The coronavirus pandemic knocked it off, triggering the crash. Government did what it could at the time, locking down the population, to keep the system going with essential workers delivering supplies to the 10% sheltering in place. It basically did not work. North Carolina has had a rock steady increase in coronavirus cases. Other states; Texas, Arizona and Utah, are spiking now. The US Government failed.

    Americans only realistic future is waiting for an effective, safe and most importantly a profitable vaccine. Bipartisan scapegoating of China, the global supplier for significant portion of the world’s manufactured goods, is like chopping off your foot before the battle even starts. Western Oligarchs and Multi-nationals built a global free trade superstructure but whittled away at the governmental, societal and legal underpinnings to earn more profits until the system fell apart and can’t work anymore.

    Multinational executives will still try to screw the workers and the environment to earn larger bonuses but if supply is cut off and there is no demand, all they are doing is howling at the moon. Human survival is now dependent on science, libraries and cooperative communities. Plus lots of luck that the psychopaths don’t decide to destroy each other.

    1. Massinissa

      “Americans only realistic future is waiting for an effective, safe and most importantly a profitable vaccine.”

      What if there is no vaccine, or at least, no viable vaccine in the immediate future? I don’t feel comfortable that American society is relying on luck to last the rest of the year without imploding…

  15. Sound of the Suburbs

    They were in a hole and they kept digging.

    Twelve people were officially recognised by Bezemer in 2009 as having seen 2008 coming, announcing it publicly beforehand and having good reasoning behind their predictions.
    What do they say?
    You can’t solve a debt problem with more debt.
    What have we been trying to do?
    Solve a debt problem with more debt.
    This is how monetary stimulus works, as it can only get into the real economy through borrowing from banks.

    “We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein.
    Who do you think you are?
    This is what we are going to do, whether you like it or not.
    He must be one of those populists.

    Einstein is quite right of course.

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