How Capitalism’s Dogged Defenders and Propagandists Shield It From Criticism

Yves here. Even though I am running Richard Wolff’s piece, I do not accept his premise that capitalism is ever and always bad. Capitalism in Japan, where entrepreneurs are revered for creating employment, not for getting rich, performed well until the US forced rapid deregulation on its banks to make the world safer for American investment bankers. Even in Japan’s bust, large companies further narrowed the already-not-large by Western standard gap between entry-level and executive pay to preserve employment levels, the opposite of what you see here. Similarly, the Nordic model also delivered high levels of social services and low levels of inequality until neoliberals had increasing success in eroding it.

What Wolff misses is that democracy and democratically-organized organizations don’t scale well, as anyone who participated in Occupy Wall Street and encountered “stack” can tell you. Mondragon is the world’s largest worker cooperative. But it’s actually 257 companies, so the average company size is under 300 employees. Many lines of enterprise have economies of scale or scope. That means smaller entities, unless they have managed to create a defensible niche, will be at a big disadvantage. Scale in turn virtually necessitates hierarchy. Even Mondragon has had to relent on its “maximum wage” rules and has widened the gap between minimum and maximum pay.

As we explained long-form in ECONNED, the reversion to a more tooth-and-claw form of capitalism is the direct result of a concerted and well-funded effort, codified in the Powell Memo of 1971, to move the values of the US to the right. One of the proof of the success of this campaign has been the successful attack on unions and the erosion of worker rights. Another is deregulation and the denigration of government employees and government service. I’m old enough to remember, for instance, when the SEC and the FDA were respected and feared.

So shorter: Wolff is awfully late to the propaganda party and in my opinion, is far too black and white in choosing his targets.

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 three recent books books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism. Produced by Economy for All, a project of the Independent Media Institute

The more victims and critics of capitalism coalesce and thereby strengthen one another, the more that economic system is questioned and challenged. That in turn provokes capitalism’s defenders. They increasingly resort to attaching qualifying adjectives to capitalism and deflecting criticisms onto them. They say that the capitalism they support is a particular kind of capitalism. Their support depends on whether or not certain adjectives are attached to capitalism. For example, is it “free market” capitalism (minimum or no government intervention)? Similarly, is it perfectly competitive, conscious, compassionate, socially responsible, progressive, or still other qualifying adjectives? Defenders of capitalism criticize kinds of capitalism that lack the particular adjectives that matter most to them. Many defenders go a step further: kinds of capitalism lacking those adjectives are not “really” capitalism at all.

The placing of qualifying adjectives to differentiate among kinds of capitalism allows defenders to accept some of the rising chorus of criticisms of capitalism. Those criticisms, defenders say, apply only to certain kinds of capitalism that defenders also reject in favor of some other, preferred kind of capitalism. The flaws cited by capitalism’s critics become flaws not of capitalism per se but rather of its (unfortunately) currently existing kind. Such defenders can then focus our attention on changing from one kind of capitalism to another. By changing to a different kind of capitalism—one designated by a different adjective—the criticized flaws will vanish.

With such reasoning, for example, “free market” capitalism’s devotees can accept all sorts of criticisms of actually existing capitalism. They too can denounce its inequalities, instabilities, and injustices. But, they explain, that actually existing kind lacks a fully “free” market. They urge policies that change the economy from a government-regulated kind of capitalism to their preferred “free market” kind. Similarly, champions of a “competitive” kind of capitalism can join critics of the monopoly kind. They attribute monopoly capitalism’s social ills to the adjective—monopoly—not to the noun, capitalism, itself. The solution follows: take anti-trust steps to establish a competitive capitalism, their preferred kind. Progressive or “social responsibility” advocates are also included among capitalism’s defenders using adjectives. They find narrowly profit-driven capitalism to be a kind that causes all sorts of social ills. A different kind of capitalism could rectify those ills by adding social responsibility to the goals and standards of success for capitalists. Such a “compassionate” kind of capitalism represents the better world they seek.

For defenders, placing adjectives before the word “capitalism” removes its core “relations of production” from criticism. The focus of analytical attention becomes the adjective, not the noun. That noun, capitalism, is the employer-employee relationship that structures the enterprises producing the goods and services sustaining the economy and thus the society. Capitalism, per se, is defined by how it organizes production. The employer-employee relationship is what differentiates it from the master-slave relationship in slave systems of production, the lord-serf relationship in feudal economies, the economic structure of individual self-employment, and so on.

Qualifying adjectives for capitalism can be combined, a la Donald Trump, with a reversion to economic nationalism around the slogan “Make America Great Again.” Trump could and did criticize kinds of capitalism (e.g., as “globalized” or “unpatriotic”) that outsourced production beyond U.S. borders or that promoted immigration. He advocated, instead, a kind of capitalism that positioned “America First” as its qualifying adjective. Criticizing capitalism per se never entered his mind.

Qualifying adjectives can alternatively be combined with libertarianism. Then, criticism of a currently existing kind of capitalism (e.g., as “welfare or nanny statist”) blames its faults or flaws on the government’s intrusions (taxes, regulations, mandates, etc.). Libertarians’ policy proposals focus on reducing or, better, eliminating government intrusion into a capitalist economy. Their goal is the aforementioned “free market” kind of capitalism.

Opposite the libertarians, Keynesians and certain kinds of “socialists” also focus on capitalism’s alternative adjectives. Their critiques of currently existing kinds of capitalism often attribute their income and wealth inequalities, cyclical instabilities, and so on to inadequate governmental management of the economic system: too few and too constrained governmental intrusions. Keynesians therefore promote a more intrusive system of governmental monetary and fiscal policies, a state-macro-managed kind of capitalism. That, they believe, will overcome its central, cyclical problems (Keynes’ key work was published in the depths of the 1930s depression).

Further-left Keynesians want government intrusions to also reduce income and wealth inequalities. They often call themselves socialists. But in fact they put the adjectives “welfare state” or “social democratic” or “Scandinavian style” in front of the word capitalist. Many do not question or oppose the employer-employee organization of the workplace that defines capitalism. Neither do many “communists” who want the state to own and operate enterprises internally organized around the employer-employee division. If an economy’s enterprises, public and private, retain the basic capitalist organization of production—the employer-employee split described above—then that economy is a kind of capitalism even if and when its advocates call it “socialism” or “communism.”

It is important to note that the socialists and communists mentioned above, like the libertarians, Keynesians, and so on, all generally accept—often implicitly without comment or criticism—that workplaces must be organized around the distinctively capitalist division between employers and employees. When they advocate for more state-regulated or state-owned-and-operated enterprises as better economic systems than capitalism, they rarely question the internal organization of those enterprises. It is as if nature or technology or history mandates no other possible modern workplace organization than the employer-employee division and relationship. Their socialisms and communisms are then less nouns differentiated from capitalism and more adjectives distinguishing different kinds of capitalism. Such is the ideological power of the long tradition of defending capitalism with adjectives. Ironically, that tradition also captured many of capitalism’s critics.

As traditions, socialism and communism also include advocates who define those terms as entailing radically different organizations of enterprises. Instead of the capitalist division into employers and employees, such socialists and communists seek the democratization of enterprises’ internal organization. That means all participants in the enterprise’s work have equal votes in deciding what, how, and where production occurs and what is done with the output. Interestingly, the practical “going beyond” capitalism already exists in enterprises and has for a long time and around the globe. Sometimes socialists and communists helped establish such worker cooperatives, but often individuals outside those traditions did so as well.

Our current debates about our society’s problems and prospects need to refocus beyond the different adjectives for a common noun they qualify. It is time to expose and challenge capitalism’s core: that employer-employee organization of enterprises, private and state. We need to drop the taboo on debating how we ought to organize the workplaces where most adults spend most of their lives. Workplace organization shapes society in many ways. Different workplace organizations have always existed. Changing from the prevalence of one to the prevalence of another can help solve social problems. To that end, we need to challenge capitalism’s workplace organization, not presume its inevitability as the unacknowledged prison of our politics.

Parallel debates over “free markets” versus “state-regulated markets” in slavery were finally resolved by abolishing slavery. So too were debates over harsh versus compassionate slavery. Masters tried to save slavery by focusing people on choosing among its different kinds. However, people eventually grasped that the problem was not what kind of slavery existed; the problem was slavery itself. It had to end. Likewise, debates over monarchy contrasted those with parliamentary advisers and those without them, harsh versus popular kings and queens. Monarchs tried to hold on by offering alternative kinds of monarchy. But eventually, people decided that what was needed was not this or that kind of monarchy but rather monarchy’s abolition. Capitalism now faces that same historic resolution.

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  1. Basil Pesto

    Monarchs tried to hold on by offering alternative kinds of monarchy. But eventually, people decided that what was needed was not this or that kind of monarchy but rather monarchy’s abolition.

    I mentioned Sentimental Education in comments last week and picked it up to reread the 1848 scene. It’s terrific. Anyway the above quote reminds me of this little flourish of Flaubertian irony, when Frédéric espies his revolutionary confrère Dussardier, who remarks on events:

    […] The Republic’s been proclaimed and now everyone’s going to be happy! Some journalists talking near me a moment ago were saying we’re going to liberate Poland and Italy! Do you realize there’ll be no more kings? The whole world will be free, absolutely free!

    Oh well

    1. Carolinian

      The US didn’t turn out the way the founders expected either although with their classical educations they were acutely aware of the failings of ancient world democracies. It could be, as social animals, we are wired for hierarchy and taming the beast is always going to be a struggle.

      One could say capitalism is a “realist” acceptance of this human nature. It does get results while creating tons of misery–and now threats of planet destruction–in the process. We are going to need more than ironic detachment to get out of this.

      1. drumlin woodchuckles

        At the very least we will re-need the Square Deal-New Deal- Fair Deal concept of ” Ordered Capitalism under Law.”

        And also, some things are too sacred to marketise. No slave markets. No human organ markets.
        Keep the public lands public. Etc.

    1. vlade

      Sweden (which for some reason a lot of people have as a synonym with Scandinavia) is becoming way more neolib these years.

      1. John A

        You are absolutely correct, and in response, people are increasingly voting for the nationalist SwedenDemocrats, who sooner or later will form the government. As it is, the other parties are forming ever more desperate coalitions to keep them out of power.
        Things have even gone as far as wanting to end 200 years of neutrality with political propaganda to join Nato (Sweden is already a quasi member), aping the Russia, Russia Russia aggression nonsense of US/UK media. There Orange Man bad/Biden god has been the media line for a very long time.
        Someone asked on another story here the other day, if US politicians could get over all wearing a stars and stripes lapel pin. Too late, all too many Swedish politicians now sport a blue and yellow flag in their lapel. It is clearly contagious.

        1. drumlin woodchuckles

          I would love it if some stylishly uncompromising new office-seeker were to appear at events, media, etc. without a flag pin. I can just imagine the flag pin wearers trying to make that an issue.

          I could see the dialog going like this . . .

          Flag Pinner: “Where’s your/ why aren’t you wearing a — flag pin?”

          New Officeseeker: ” Any scoundrel can wear a flag pin. (Dramatic p a u s e . . . ) I see you’ve got yours on.”

      2. dcblogger

        The author, George Lakey, lives in Norway and the book talks about all the Nordic countries. He even goes into the origins of Nordic social welfare which have as much to do with writing of Bishop Grundtvig of Denmark as Marx.

      3. Jeff W

        “Sweden…is becoming way more neolib these years.”

        Well, that’s consistent with the argument Richard Wolff makes elsewhere (not in this post)—that capitalism reverts back to more and more exploitative forms and the only way to not have that happen is to get rid of it entirely. (Japan might be a counter-example.)

        But it seems to me that the examples of where capitalism “performed well”—creating employment, keeping the pay gap narrow between the highest and lowest in a company, delivering “high levels of social services and low levels of inequality”—don’t address Wolff’s argument, even if they portray capitalism in a more favorable light than Wolff might. I read Wolff as saying the way enterprises are organized, “the distinctively capitalist division between employers and employees”—where the surplus is appropriated and distributed by a class (the employer) other than the direct producers (the employees)—is the core problem of capitalism. It’s in that sense, at least the way I interpret Wolff’s argument, that “capitalism is ever and always bad.”

        It might be, in fact, that “democratically-organized organizations don’t scale well” and, therefore, Wolff’s preferred solution of worker-owned enterprises has its limitations—it would be interesting to have Wolff address that—but that still leaves, as Wolff defines it, the exploitation at the core of the capitalist employer-employee relationship.

        1. Yves Smith Post author

          You don’t have this right. In most enterprises, until the fetish for equity-linked pay in the 1990s, the managers are employees, not owners, and the most senior have employment agreements (the lawyers study Edgar so the key terms are similar). This is true under PE too, the owners are the fund, the execs and managers are employees. The family/founder owned business (like Fidelity or Amazon) is an anomaly. Even WalMart, with the family holding big blocks of stock, the CEO is a hired gun.

        2. dk

          The opportunity to hijack surplus distribution can also be taken by distributors and shippers, and actually just about any party in multi-stage supply or distribution chains.

          Visiting East Germany, Yugoslavia, and Bulgaria before the wall fell, I remember that local regional directors in the Communist state would skim and purloin goods for out-of-circuit exchanges for favors, smuggled export, or simply to hoard them.

          The fact is that any system can be games, skimmed, and otherwise corrupted, but as systems scale larger, the opportunities and rewards of corruption increase, while oversight, effective enforcement, and proportionate accountability decrease.

          It’s simple system analysis. The tasks of government administration are structurally and procedurally very similar to many applications for silicon computers. It’s a weird vanity that humans refuse to recognize that things they identify with in personal and passionate ways are actually simple processes without special virtues, except for the good or bad faith with which they’re executed.

    2. Sound of the Suburbs

      I’ve read it and it is very good.
      It shows you how capitalism can exist in much more benign forms.

      1. Starry Gordon

        For the last two or three centuries, capitalism has existed in an environment characterized by imperialism and war, and often genocide as well. It is true there have been some capitalist polities not actively engaged in imperialism and war, but the big dogs have been at it pretty continuously, and the little dogs of picked up the leftovers. The Danes could have butter as long as the Germans (or the British, or the Americans) had guns. Since war is expensive and risky, it seems reasonable to guess that it is deemed a necessity for some reason by capitalist ruling classes. Clearly, then, to defang capitalism would require us to understand the reason or reasons and arrange to remove them, which might then raise the question of whether we could continue with a system necessarily based on class war, domination, and exploitation.

  2. Thuto

    The real questions for me are:

    1. Can capitalism be reformed?
    2. Can capitalism be abolished?

    A reformist agenda requires political will and courage, alas, with politicians in the pockets of the rich, both are sorely lacking in today’s landscape. The entrenched power and control arch-capitalists have over practically every facet of modern life make the odds of abolishment vanishingly small, so the answer currently appears to be no for both. It appears we are caught in a holding pattern where we can neither reform nor abolish capitalism but rather watch entropy do its number on it, on society and on the planet.

    1. PlutoniumKun

      Yes, its a fundamental problem on the lines of ‘if you want to go there, you wouldn’t start from here’. There is no simple way to a capitalist alternative, not least because not many people agree on what that alternative looks like. You can’t just be pro-capitalist, you must have a workable alternative, otherwise you are just shouting slogans.

      Ultimately, every community, every society is different, the road away from capitalism will never be the same for every region or nation.

      1. Thuto

        One thing all countries must absolutely do to have any hope of transitioning to a post-capitalist society is to clip the wings of their billionaire class. Jack Ma appeared for the first time yesterday after an absence from the public that set a lot of tongues wagging, and boy was he striking a conciliatory tone, towing the party line on the need to reduce inequality, empower rural communities in China etc, none of the bravado from late last year just prior to the postponed (collapsed) ANT IPO was evident in his speech. China sure knows how to tame its billionaires, a lesson any country will have to learn if it hopes to extricate itself from the clutches of late stage capitalism.

      2. Ignacio

        One tool is law, and before law, Constitutionalism that sets the preferred values above all. Since law must be in accordance with those values and the Constitution, then, when and if Capitalism breaks the values, it will be breaking the law. So if ‘liberty’ is your preferred value then ‘free market’ will probably prevail as a superior value. If ‘equality’ and human rights are superior to ‘liberty’ you will have a different outcome. All this supposedly if law enforcement works properly.

    2. dcblogger

      at minimum we have to abolish billionaires. no one should have enough money to buy the political structure of an entire country or countries.

        1. dcblogger

          it is not just a question of campaign contributions. The Koch brothers have financed think tanks, endowed university chairs, books, and created an entire ecosystem of lies. Money is like water, it will find a way around any regulation and law. We need to tax it away from them.

          1. drumlin woodchuckles

            That’s what the New Deal Era progressive tax brackets and rates were about.

            What would happen if tens of millions of people learned about the details of New Deal era thinking and then law and rules and regs and also their antecedents and lead-ins?

            And then learned about how the New Deal was torn apart in many steps and stages, including by laws cancelling or repealing the New Deal laws?

            Might they then think in terms of getting the anti-New Deal laws repealed law by law in steady steps and stages? How about seeking repeal of the Biden Bankruptcy Deform Law, to begin with?

    3. Jessica

      As far as I know, for decades now, none of the (once-)industrialized capitalist economies has successfully reformed a capitalist economy, except to make it more rapacious/neoliberal. In terms of electoral politics, I don’t know of anyone proposing serious reform in a (once-)industrialized capitalist economy that is anywhere near to gaining power. Even the Sanders and Corbyn programs would have just humanized adjectives, to use the authors terminology
      This is not just the US and the UK, but across the first world. This suggests that capitalism has reached a phase in which reform is no longer possible.
      Alternatively: The current phase is caused by the severe tilt toward capital in the capital-labor relationship caused by the collapse of the Soviet bloc and the reversion of China to capitalism, which added so many low-wage workers into the global labor pool, and the replacement of independent industrialization with production controlled by first-world companies in nations such as Mexico and Vietnam, to name just a few.
      _If_ that huge bubble of extra workers is ever fully absorbed, then reform will become possible again. Though I don’t see that condition ever being met. Not in a good way.

      1. Synoia

        Brought about by free trade, and in turn Neo-Liberalism.

        Local manufacture, local jobs, protected by tariffs.Vigorous enforcement of Anti-Trust, and placing large contributions as arms length donations, with no strings attached.

        This will only happen when there are publicly funded elections, and campaign contributions are prosecuted as bribes. Otherwise the rich will continue to suppress and corrupt democracy (As CA prop 22 just displayed.)

        The large foundation revert to the stare upon the founders of the foundation’s passing.

        And this is not a complete list, and has absolutely no possibility of happening, because the US’ established religion appears to be Worship of Money and the Wealthy.

  3. cnchal

    What we have here is the Humpty Dumpty definition of capitalism. It means whatever Humpty says it means, no moar, no less.

    1 – Is it capitalism when Bezos gets subsidized by the taxpayer’s billions to erect torture chambers in every city in the land?

    2 – Is it capitalism when Goldman 666 get’s bailed out by uncle sugar during the GFC and is allowed and encouraged to continue it’s crime spree?

    3 – Is it capitalism when Uber can accumulate tens of billions of losses (that are carried forward to eternity and can be used to offset future profits, if any, or be sold to a company that has a large tax liability) while at the same time going from law breaker to law imposer (CA prop 22) the price of which was $200 million, which was also added to the collective carry forward losses of Uber, Lyft and the other crap app companies?

    Humpty says no to #1 – it is slavery, pure and simple. Even those unlucky enough to find that Bezos is their slave master need government subsidies to put food on the table. Being tortured is not enough. The taxpayer must be tortured along with the employee to make Bezos’ nut.

    Humpty says no to #2 – it is pure corruption and cannot be called capitalism.

    Humpty says no to #3 – no profits, ever. Are you kidding me? How is it that the foreign entities that back Uber’s staggering losses can now define the working conditions of Californians, soon to spread like a noxious weed to the rest of the land?

    Three exampes of what could be called capitalism. Humpty says no to all.

    1. tegnost

      Indeed,in the states at least we have socialism for the rich. I’m not sure what the adjective is that describes what kind of regime the rest of us toil under… for me it’s neofeudalism, we’ve replaced the genetic monarchy with a bunch of barons. The outcome is the same, the benefits of production go to the top, then favored groups have favors bestowed upon them. That’s why wages have to be anchored to zero, while riches go to infinity.

      1. Stan Sexton

        Neofeudalism progressing to the China model, which is Communism for the serfs and Socialism for the Rich. China is not really Communist,. It is Capitalism gone Wild.

        1. Weimer

          Really? I doubt ‘capitalism gone wild’ would have cared about lifting 800 million out of poverty. Yet, that is what the Chinese govt did.

          1. al

            If one wishes to maintain a political economy where it is mandated that you, “Let a part of the population get rich first.” and where wealth accumulation is directly associated with graft, corruption, and collusion, then it also becomes both necessary and sufficient to pacify that vast ‘unwashed’ part of the population, with the economic ‘crumbs’. Such pacification can both, avoid and forestall, a violent overthrow of the status quo, which suggests, that some individuals do indeed learn from past mistakes.



          2. Jessica

            Whatever we call the Chinese economy, the deal between the CCP and the Chinese people definitely includes make China great again and Never Again to the century of humiliation.
            It would have been hard for them to accomplish that without pulling much of the population out of poverty.
            This does not change the fact that whatever bad things the CCP has done, pulling hundreds of millions of human beings out of abject poverty is quite an accomplishment.

    2. deplorado

      >> “Uber can accumulate tens of billions of losses (that are carried forward to eternity and can be used to offset future profits, if any, or be sold to a company that has a large tax liability)”

      Is that really done – selling losses to another company? What instruments are used for this, how is it securitized?

      Absolutely agree with you on everything – just wanted to know if this is hyperbole or an actual, sulfurous, practice?

      1. cnchal

        The losses land on the balance sheet as Net Operating Loss (NOL) Carryforward.

        From this link.

        An NOL Tax Loss Carryforward (also called a Net Operating Loss NOL Carryforward) is a mechanism that firms can use to carry forward losses from prior years to offset future profits, and therefore, lower future income taxes. The way a Tax Loss Carryforward works is that a schedule is generated to track all cumulative losses, which are used in future years to reduce profits until the balance in the TLCF is zero.

        When a company is sold and it has NOL Carryforward on it’s books, those losses can be used by the aquiring company to offset their profits and reduce or eliminate their tax liability.

        1. Yves Smith Post author

          In the current low corporate tax environment, NOL are worth very little. And the IRS long long ago cracked down on tricks for trying to transfer NOLs. You really do now have to buy the entire garbage barge of the company, with all of its other liabilities.

    3. drumlin woodchuckles

      Yes, that is all capitalism. Every example you offer is power-political capitalism in a force-field of Anarchic Capitalism under Lawlessness.

      To try and invent theoretical analyses where those practices are not capitalism because they depart from a mythical purity of capitalist spirit and belief gets close to saying ” capitalism can never fail. It can only be failed.”

      1. Basil Pesto

        Would this not also be true of those who say “Soviet communism was not ‘real communism’”?

  4. ArkansasAngie

    I would like to suggest a new word “dissynergy”.

    We all like synergy. But … when “things” get too big and complex the system’s status quo forces start extracting a cost in the form of waste, redundancy, corruption, catastrophic failures, anti-competitive behavior (etc.) — aka too big to exist?

    1. Susan the other

      And the dissynergy is because the economics is out of balance with the universe. Just the limited universe we live in – the planet. In an attempt to stave off entropy we engage in dissynergy. Denial. Rationalization. Nostalgia. Taxidermy. Bubbling hot tubs. Self-driving cars. Drones. Mining for Bitcoin. Yet all our enterprises go under the indiscriminate “free-market” flag of “capitalism”. We’ve gotta be more self-critical. Much of our entrepreneurial activity is very destructive. This, when our survival depends on the environment we create and maintain? We need to be far more materially discriminate (because it really is a material world) than the political garbage dump we have become. At this point in our politics it hardly matters whether we call it capitalism or socialism.

      1. Weimer

        It seems to me correct terms are necessary. We cannot substitute capitalism for socialism in discussions. Two very different things. And, socialism – not built on the premise of runaway consumption – was more in balance with the universe (which – the balance – is important, I agree).

  5. Chris Herbert

    Should we consciously chain capitalism to nature? Nature is our ‘natural’ environment. The one that nurtured us into existence. And the one which can turn us into dust too. We really do need to restrain ourselves. It would be better if we did so consciously and democratically. Somewhere in the future (if we have one at all that isn’t a hellhole) we will live with nature, not try to somehow ‘change it’ to better suit our personal preferences. Hubris, greed, Mammon and Moloch? We need to put our values in a better place.

    1. Rod

      great thought. I have no idea how, but this recognition of our human fate tied to the carrying capacities of the earth must come about.
      Daniel Raphael, in a comment below says:
      When we collaboratively run our own affairs, deciding what to produce, the conditions of labor, and how to design our living circumstances, we will have a democratic society. Not until then. And that’s not capitalism.
      I bolded what i thought was key in this, then immediately thought that is just what Goldman does in its Board Room–so you have to have the ‘right’ Common Values in there.
      I am thinking that Common Values derive from our ‘Life’ security needs and have ( for the minority of the worlds population) wandered far away from Food/Water/Shelter and the Base System(our Earth) from which those directly come.

      1. Jessica

        I found this book enchanting. It also made me see things from the point of view of people whom I had not understood until I read this book.

  6. Paul Whalen

    The eminent Marxist critic Frederic Jameson once remarked “Most people can imagine the end of the world much easier then the end of capitalism.” For implacable foes of what Hunter Thompson called “the highest form of human savagery” (the free market system) the odds are truly formidable.
    The current historical circumstances, i.e. the ruling class’ possession of nuclear weapons, does, however makethe overthrow of sociopathic religion, capitalism, highly problematic. Make no mistake, capitalism is a religion, and infused with the eschatology of its Christian forebear, could make its extinction that of life on earth. This threat will be used to extort acquiescence, thus the slow death of environmental degradation as capitalism exhausts nature.

    1. chuck roast

      That pretty much encapsulates it. The locals here can easily envision the waves lapping at the doors of the front street businesses, but the idea of corporate capitalism releasing it’s death grip is beyond the pale. The Christians will be taking up human sacrifice before that happens.

  7. Daniel Raphael

    Capitalism is ever and always bad simply because it is based on theft of the labor of others–that’s where profit comes from. What’s democratic about that? There is nothing intrinsic in “human nature” that requires a king, nobility, a fuhrer, or a boss to rule us and tell us what to do. When we collaboratively run our own affairs, deciding what to produce, the conditions of labor, and how to design our living circumstances, we will have a democratic society. Not until then. And that’s not capitalism.

  8. rob

    This is what happens when people play with words for too long. We live in a prison of definitions… in our minds.
    After all, the great conflation in the US was baked in during history.
    This country “of the people ,by the people, for the people” has a written constitution. No where in it does it mention “capitalism”.
    Yet throw in the last couple hundred plus years of the elite,who were driving the industrial revolution on the back of imperialism,exploitation,and greed….while THEY were defining our language,and our cultural norms…. have slipped the willy in without anyone noticing…. And now people argue over semantics,because cause,effect and intention are all jumbled… personal motivation is covered up in terms academics use for “clarity”…. which is why when people” teach themselves” subjects.. like economics and the study of capitalism and finance and money. and history… they “see it all wrong”…

  9. Gregory Etchason

    When your dealing with “scarcity” Capitalism of all stripes is the only game.
    China comes to mind. Scarcity as in “value added manufacturing to be specific.
    The Post- scarcity financialized zero sum game of “predation” isn’t Capitalism by anyone’s description. Labels are only relative to a timeline.

  10. Bob Hertz

    Capitalism is not the first social system that exploits desperate individuals, nor is it the worst historically, (see Nazism or Soviet or Chinese Communism or Chattel Slavery), nor will it be the last.

    The solution today is the same as in the 1950’s, when John Kenneth Galbraith described the need for countervailing powers.

    There is nothing wrong with Amazon or Uber that national labor unions would not fix.

    Shortly after World War II ended, John Kenneth Galbraith coined the phrase “countervailing powers.” Here is Ezra Klein:

    You rarely hear the term today, but it’s time to bring it back. It’s key to understanding the debate playing out in the Democratic primary.

    ….Galbraith believed that in an advanced capitalist economy, the inevitability of bigness needed to be recognized, even embraced. “People want large tasks performed,” he wrote, and “large tasks require large organizations. That’s the way it is.”

    Once you accept that premise, the implications are clear. Bigness can only be checked by bigness. A healthy economy was one in which these countervailing powers balance each other. An unhealthy economy is one in which one or more of these powers was left to run roughshod.

    1. Weimer

      I think this misses the point – completely. ‘Bigness’ (is it really so inevitable?) is quite separate from exploitation – or, the siphoning of any and all profit (produced by many) by only a few.
      And the problem with invoking countervailing powers is – who exactly is that? who enforces them? who maintains them?
      Among the c’s problems is that if a society allows only a few to get very rich – they will in time (and always) seek to transform laws to their favor. And then – so long, countervailing powers.
      (Unless, of course, you’re China, which can afford to push J Ma down a bit. But then, they call themselves communist. Which is just one reason why listing nazis, slavery – and Russia and China in one sentence is historically inaccurate and, thus, misleading.)

    1. rob

      good points,
      I think the author’s term of the first article, “oligarchic democracy”; is just another way of saying “republic”. And I agree totally. This is the way it has been since the founding of this republic.
      I also think that in the larger sense, it is just this kind of “blob”; that is our government, IS doing just what the author says. taking property. redistributing property, Protecting property.
      The founders didn’t want “democracy”, they chose a republic. Which has been led by the elite, and in the history of our country has done it’s best to first acquire more property for the elite… manifest destiny.. then “the free market”… and capitalism…
      all the while, “the gov’t” is controlled by levers of power. the elite, control those levers… the population perpetually are “looking the other way” at whatever distractions the decade offers… but time goes by.. and it is just the same as it ever was..
      The notion of a divided gov’t, where the powers are in check.. and do nothing… is regarded as a good thing.. and time goes by…and the rich get richer…

      If the people were to steal their gov’t from the “government”… that would be monumental..

  11. bulfinch

    If we could evolve just a smidge and decouple the act of rabid capital accumulation from whatever little gland likes to squirt the good stuff, then I suspect we’d be sober enough to finally see our way forward past the casino lights and on out into a broader landscape.

    I imagine something like a post-capitalism future, where capitalism — or the zero sum iteration of it we now enjoy — is an elective: you can go full-tilt and hang out all day/night in the casino if you desire, but if you don’t, you needn’t. I realize I won’t live to see it, but it seems inevitable to me.

  12. Rod

    Yes Carla! A Radical View for radical times
    clearly and honestly stated:

    #2 We the people of the City of Toledo find that this emergency requires shifting public
    governance from policies that urge voluntary action, or that merely regulate the amount of
    harm allowed by law over a given period of time, to adopting laws which prohibit activities
    that violate fundamental rights which, to date, have gone unprotected by government and
    suffered the indifference of state-chartered for-profit corporations.

    The Commons are just embodied as fact here.

  13. Grebo

    what is done with the output

    Wolff correctly identifies the nub of the matter. Capitalism is the system in which the Capitalists decide what is done with the output. The rest is superstructure.

    Entrepreneur and Capitalist are separate roles. Democratic systems will still have a need for the former but they will not be ennobled.

    Can democracy scale? If you break it into small chunks, why not? A heirarchy of democracies instead of individuals. That is how most countries are supposed to be organised already. Socialism is merely the extension of democracy downward into the workplace.

  14. Jim OReilly

    Richard Wolff defines capitalism’s ‘core’ as the employer-employee relationship and, of course, he’s free to do so. But if we accept that definition, then we must logically conclude that the term ‘capitalism’ itself doesn’t describe the essential core of what our socioeconomic system is. Workers within firms may get the power to select their CEO’s and we may thereby eliminate ‘capitalism’, but the greater social reality of immense inequality, cut-throat competition, and the profit motive would remain essentially unaltered. Let Wolff focus as a micro-economist on issues of workplace management, but let’s recognize that if our goal is a just egalitarian world, we need a much larger macro solution.

    1. Yves Smith Post author

      Thanks. That much better encapsulates the point I was working toward in my intro, that in many sectors, the factors that favor scale are economically overwhelming, and the problems of managing hierarchies don’t go away with employee ownership.

    2. doily

      To his credit, Professor Wolff at least commits to the position that capitalism is “per se”, that it is a single global phenomenon. I agree, Jim OReilly, that defining it “by how it organises production” is incomplete. Of course, how production is organised is as important as how politics is organised, and the more democratic the better. But that democracy has not scaled well historically not mean that it can’t, especially in light of the continuing revolution in information technology (currently perverted into the so-called “subprime attention bubble”). Recall the adventure that was begun in Allende’s Chile, albeit with medieval computing technology Surely we can do better in the coming decades.

      Yes I agree Wolff is not as clear as he might be on capitalism. If production remains hierarchical in so-called socialism or communism, he claims, it’s just capitalism with another prefix. And what happens when production is democratized in free-market capitalism? It fails to compete and disappears (unless, as Yves notes, it “finds a niche”, but capitalist competition abhors a niche).

      Capitalism is defined by how it organises production, but also why it does so: for profit. Profit is not a motive, it is not a capitalist vice, it is a systemic requirement which applies indiscriminately to all capitalisms, bad and worse. And because profit is “value in motion,” it has a history and a trajectory. The why behind the how is the link between the micro and the macro: the organisation of production to extract surplus value from living human labour, and the macro trajectory of profit. Marx theorised that this trajectory was downward, with painful corrections in the core and aggressive expansions at the periphery of the system itself temporarily reviving it, only to return to its downward path. There has been a renaissance in empirical work corroborating and analysing this in recent decades (Brenner, Kliman, Roberts and Cardechi, et al).

      We are condemned to a treadmill by this system, recycling all the temporary and unsustainable responses: direct attacks on real wages, lengthening and intensification of the working week, flight to low-wage zones at the periphery of the system (followed eventually by reshoring), adoption of labour saving technologies, flight into deregulated FIRE ponzi schemes – all against a backdrop of unrelenting wealth creation, resource consumption and environmental degradation.

      The problem is that while the end is in sight (full automation with no profit, or environmental collapse, or both), what’s next is not. What is required is a new organising conception of value, perhaps one based on knowledge and information, not on price. Allende tried to grasp this problem, but we have dropped the ball. Hopefully it is not too late to pick it up and run with it.

    3. Jeff W

      I think this comment (and the replies preceding mine) are excellent.

      I think that Richard Wolff’s proposals have implications a bit beyond workplace management—would worker-run and -owned enterprises de-industrialize themselves out of existence, for example? (Wolff suggests not)—but maybe not much more. I’m not sure a worker-run and -owned petroleum company is better, for some uses of that word, than a capitalist one.

      doily: “…that democracy has not scaled well historically [does] not mean that it can’t”

      Or that we can’t at least specify those conditions under which it might or might not.

      I think Richard Wolff’s proposals (however feasible they are) would ameliorate a subset of problems within capitalism and present other problems (e.g., “are there internal factors that also make worker ownership more difficult?” as asked in this piece, linked to in the Water Cooler, 30 October 2019). I appreciate that Wolff is communicating to a broad audience and, therefore, might simplify aspects of his analysis but I think it would be better if he qualified that analysis more clearly with the limitations and challenges of what he is proposing as well.

  15. YPG

    It’s always seemed to me that Wolff is trying to engage a very broad audience. He wants to be unapologetic in his criticism of capitalism and he doesn’t want to hide the fact that he comes from the Marxist tradition. Maybe his actual thoughts are as simple as he presents them here but I don’t think so. I think what we see here is his attempt to show, to what he assumes to be a broad audience of people, how to start thinking about capitalism differently. A black and white style of rhetoric may not fly at NC but I don’t think that’s who Wolff is trying to reach out to. I think an NC-level of nuance and sophistication about propaganda would likely mystify and overwhelm the person it seems Wolff is trying to reach. He’s trying to act merely as the point of the spear.

    Don’t believe me? Listen to his podcast or watch his youtube videos, they are all primarily presented to a general audience that he’s hoping to convince. I haven’t read any of the recent books that he promotes on his media but they’re all basic, introductory texts for a new reader. The titles bear this out: “Understanding Socialism,” “Understanding Marx.” Again, these titles lend support to the idea that a very general audience is who he’s hoping to appeal to.

    I think his Worker Co-ops argumentation is likely the same. I don’t think Wolff believes that worker co-ops are the answer to all our problems but what they ARE is a different way to organize the means of production within a Firm (i.e. a capitalistic entity that a general audience does understand to some degree, if only because they have been part of it). I think his enthusiasm for these enterprises come not from a utopian mindset but rather from a pedagogical one. He’s hoping to get ordinary people to think about capitalism differently without slamming a copy of ‘Capital’ on the desk and saying, ‘Stare at this until it makes sense to you,” which is what too many Marxists do. Worker Co-ops are after all a way in which a person can 1) provision a life *within* capitalism and 2) do something that in many ways is against the grain of currently existing capitalism.

    Still, I appreciate very much some Marxist thought in the marquee section here at NC.

    1. YPG

      I’d also like to add that Wolff, like Marx, recognizes how transformative capitalism has been to human society and it’s perhaps uncharitable to characterize Wolff as only able to see it in Manichaean terms. Rather, he seems to believe that capitalism’s usefulness has long since run its course and that it (capitalism) now seeks chiefly to find new and creative ways to perpetuate itself- for example, crappification (shabbification is my preferred term of art).

      1. drumlin woodchuckles

        Or schlockification for those who prefer that. As in . . . downholding the very lowest standards of personal schlockmansship.

    2. deplorado

      Yes, that’s how I see Prof. Wolff’s approach too. He is speaking to those who first hear that alternatives exist and are worth thinking about. I listened to him avidly 5 years ago over a period of a few months, after which he started to seem too “beginner level” to me and I moved on to other sources. But Prof. Wolff is very effective in his niche.

      On the point that Yves made about capitalism in Japan being a lot more moderate and benign, I wish that’s the direction the US could go too and reduce the dangerous tensions that are starting to build in the the US society. It is very regrettable that the trajectory of most of the world led by the US is going the opposite way.

      1. YPG

        You and I have a similar trajectory with Wolff. I don’t listen to his podcast much anymore but I still give to his patreon because I think he’s a figure that can pull in disenchanted liberals, which is what needs to happen.

    3. Aumua

      To YPG: Right and that is the dialectical materialism of Marx and Engels, as far as I understand. Capitalism was once the resolution to the contradiction (of feudalism), and now it has become the contradiction itself.

      Of course he can be criticized for them, but I for one have appreciated and benefited from Prof. Wolff’s reductionist explanations. Breaking down the essence of Capitalism to the fundamental dynamic of employer-employee relationship really helps to keep focus in a discussion space that is so polluted by ignorance and vicious misdirection that there almost is no public discussion possible on the subject of Marxism or economic modes in general.

      Wolff is right. The employer-employee dynamic is necessarily exploitative, no matter how “good” of an employer they may be, and it is the same essential dynamic as that of the lord-serf, or the master-slave. Wage slavery is servitude. It’s just a matter of degrees. What is the solution? Because we are embedded within a political system that is completely captured by Capitalism and capital, it’s difficult to imagine anything else. Certainly revolution has been tried. Maybe we just need more of that, or maybe some form of revolution that hasn’t been tried yet. I don’t know.

      1. YPG

        What’s the solution? There’s the rub. Wolff is doing what he can as an academic and public figure but it’s not going to be enough. That’s the real bummer thing about Marx. Once one sees what he is saying- especially with regard to his Theory of Value- it can’t be unseen. The world is different but makes more sense. But having what feels like some greater certainty about capitalism’s exploitation of ALL working people, doesn’t really tell one what to do. It seems like it should but it doesn’t.

  16. Craig Dempsey

    The problem with free markets is that they are impossible fantasies, like perpetual motion machines. As Thucydides said, ” . . . you know as well as we do that right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.” I think Keynes came as close as any to finding a way to achieve this “equals in power.” Inequality has been causing social crises for thousands of years. Just as the US Constitution is a convoluted balancing of power, so must any workable economic system be. What we need to recognize is the power and the glory that tax and spend Democrats once held. Just like with the story of Joseph and the famine in Genesis 37.1ff, extreme inequality leads to slavery.

    For me, capitalism is like fire. Tame it and it can run your engines and heat your house. Lose control and it will burn you out, even kill you. Can we simply replace it? Cooperative groups lost dominance when agriculture made its appearance thousands of years ago. Agricultural surpluses rewarded hierarchies, which in turn used their power and larger groups to push aside the remaining hunter-gatherer societies around them. Yuval Noah Harari in Sapiens: A Brief History of Humankind wrote that humanity did not so much domesticate wheat and other plants, as the plants domesticated humans. He also wrote that capitalism is a religion. We must look deeply and carefully to find a solution. If we can find a better solution that Keynes did, fine. If we cannot find something better than the balance of big business, big labor, and big government that dominated the mid-twentieth century, then we should update and revive it.

  17. Sound of the Suburbs

    We got a bit confused.
    There was wide spread prosperity in the Keynesian era with a strong, healthy middle class in developed Western nations.
    There was a bell curve distribution of wealth, with most sitting comfortably in the middle.
    There were poor people and there were rich people, but they sat on either side of the bell curve and there weren’t that many of them.

    Somehow, we got the idea that this was the wealth distribution that capitalism naturally produces, which it doesn’t.

    Mariner Eccles, FED chair 1934 – 48, observed what the capital accumulation of neoclassical economics did to the US economy in the 1920s.
    “a giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. This served then as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products which would justify reinvestment of the capital accumulation in new plants. In consequence as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped”

    A few people had all the money and everyone else got by on debt.
    When the credit ran out, the game stopped.

    Keynes had a look at this and added some redistribution to stop all the wealth concentrating at the top.

    We really need to see the timeline to see how we have got so confused.
    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.

    Keynesian economics was developed from the problems of neoclassical economics.

    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.
    The idea is to move forwards, not backwards.

    1. Sound of the Suburbs

      So, the arc of progress wasn’t supposed to look like a U-turn?

      Who’s going to tell Obama?

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