Capitalism Is Collapsing the Economic System - Dr. Richard Wolff



or this late stage of capitalism which the Trump administration is accelerating it's part of a pattern tell us where we are well we're at a point that your numbers verify in which the capitalist system which has been the growing dominant system for the last 300 years wanted to present itself in contradiction to feudalism and slavery as the system that creates a massive middle class that lifts everybody up and what we have now that it has become the global system is the exact opposite it has reproduced the kinds of grotesque inequalities that we associate with everything from the Versailles Palace of the late Louie's back to the Pharaohs of ancient Egypt it is a stunning expose of an economic system that couldn't deliver what it promised and now wants to distract everybody from this harsh reality that you pointed to this is the major measure of a capitalist system by its own claims and it can't deliver that's why we're besieged with economic and political theater anti-immigration and tariffs all that kind of stuff blaming foreigners for anything to get us away from confronting an economic system that doesn't work for the majority of the people well not only does it not work but the assault is being exacerbated as we saw with a new tax code well the new tax code really is a kind of explosive excess it's when when you've crossed the line and finally it is so grotesque that even those who didn't want to see are forced to see we see in that tax cut if I can take a moment we've had 30 40 years in which corporations have paid less taxes than they ever did have made more money than they ever did before have a been able to keep wages stagnant while the productivity of labour rose this is the last moment historically that they need another big gift let alone at the expense of the very people whose wages have been stagnant to give them a tax bust of this sort basically reducing from 35 percent to 20 percent is a 40 percent cut this kind of crazy excess does remind you of the late Louisan in France before the French Revolution when the level of excess reached the explosive social dimensions and I think that's where we are uh what about that moment in American history which you know that let's call it the Golden Age of Labor right after World War two cat when capitalism took credit for and we did have for a period of a couple decades a well compensated working class middle class workers could be part of the middle class well you know the irony which people don't want to remember is yes that's true but the irony is why did it happen and it happened because the last time capitalism crashed in 1929 and that was the only one worse than what we are living through now since 2008 at that moment in history we had a different American response the mass of working people join unions these are people whose parents hadn't been in a union they had never been in the Union they saw the Union as a way to get through this depression with less damage than you otherwise would have had to undergo and they join socialist and communist parties and those parties work together with the labor union the CIO and you had a mass and I don't use this word lightly a mass uprising of victims of capitalism shaking their finger at the system and basically giving mr. Roosevelt and the political elite an ultimatum well he heard it in his private correspondence he talks about revolution absolutely because they told him either you help us through this depression or there will be a revolution the CIO tended to want the help the Socialists and communists tilted the other way and it was a good good cop bad cop kind of routine that was done and he got the message and that's why he created Social Security unemployment compensation the first minimum wage and public employment 12 million people that was to work on the government and when you do all that you create for the first time a real pushback against capitalism's basic tendency towards inequality and so we had a few decades of the results of that well the irony is that Roosevelt said that one of his greatest achievements is that he saved capitalists absolutely understood that he ameliorated or adjusted a collapsing system and he did save it and yet ever since let's say 1948 with taft-hartley this draconian bill that makes it hard to organize forward the capitalist class essentially sowed the seeds of their own destruction didn't they that's the irony he saved them from themselves but they were so enraged by the fact that the way he paid for Social Security unemployment was by taxing corporations in the rich which were up to 90 percent right amazing 90 percent for the top bracket for the income tax much higher rates on corporations this notion that a politician would tax corporations in the rich to provide for the mass of people which by the way nowadays is said to be a political impossibility I like to remind people the one politician who was forced to do it was reelected three times it's not root to popular political figures in the country clearly in the history of the United States no president has ever achieved that before you would have thought mr. Obama might have thought about that model in terms of his future but that's another story in any case after the war the reaction of the business community enraged that they had had to pay these taxes were to destroy that coalition communists socialists and unions first go after the Communists convert them from militants into agents of a foreign power then go around the country telling everybody that socialism is just like communism is just spelled differently and when you got rid of them you go after the labor movement which has been as we know on a 50-year decline so the yes the capitalists got rid but the irony as you put it they got rid the coalition that forced it but that got rid of the very mechanism that Roosevelt told them saved you and so we now have a crisis since 2008 without the movement possibilities because it is so systematically crushed and so you have a capitalism spinning outta control and mr. Trump is it like the the cartoon alternative to mr. Roosevelt he doesn't get anything he's on a rush to make it even more grandiose and excessive and I really do wonder how long this can last well that's the question because lifting the very tp'ed reforms ofter off the speculators on Wall Street the global banks what's going to happen I mean I think first one of the things I'd like you to address just before that is how the figures that they use to justify what they call a recovery are in fact fictional yeah there's a number of ways in which this is done you know let me take a step back in economics if you're not an ideologue you understand that at any moment there are an immense array of economic statistics some of them make it look like the future might be a little bit better others make it look like the future look and grim a reasonable approach tries to weigh these but if you don't do analysis you do advertising or ideological more then you only look at the one and you pretend the other ones don't exist so bear with me if I point out some of the data that don't show it that is don't show a recovery number one the unemployment number that they love to talk about the way unemployment numbers are gathered in America so few people understand is you ask a lot of people two questions are you working if they say yes they're employed if they say no you ask them a second question are you looking for work or are you not if you say I am looking for work you're counted as unemployed if you say I am NOT looking you are counted as out of the labor force you are not counted as unemployed so you don't need to be a statistical genius to understand that if over the last 10 years a significant number of people gave up looking because it's too disgusting because the jobs they were offered was so inferior to what they had before that the jobs they offered were so insecure as to make their family life impossible so they either went back to school or went into the illegal economy or began to live off their friends relatives and neighbors then you think unemployment rate went down as if this were an improvement but the actuality is it's a deterioration and we know that because what it does is it leaves a smaller number of people in the labor force to support the entire population and that's fundamentally a bad but it also does things if you are twenty eight hours a week at Walmart which is the average hourly workweek at Walmart you're still below the poverty line and the Walton family which is making 11,000 dollars an hour will quite generously give you forms for food stamps because you qualify so we get to subsidize there but I mean there are all sorts of or if you're read somewhere that even if you're working one hour a week you're counted as employed yes you are you put in the temporary category or part-time category there's endless games that are being played the bottom line is as even the most right-wing of my colleagues admits that the quality of the job its security its benefits its impact on your physical and mental health all of that has been cascading down even as the wages have remained stagnant so that by any of those measures we're not in a recovery we're in an ongoing decline which by the way is why mr. Trump got elected it's happening to capitalism in Western Europe Japan and the United States it's why an angry working class is looking for ways to express and change its circumstance it's kind of sad for me that the forum in this country for many took the took the step of electing Trump it's sad for me that in Britain the same working-class decided to get it's a late relationship to Europe imagining that yes this was giving your finger to the elite but it wasn't solving your problem that's the issue to get the people who are upset to begin to understand that the target is what the folks who were upset in the 1930s understood was the target the people at the top the unfair tax structure the whole way the economy was organized that's our problem well the problem is that in essence we've lost control over our economy and you saw it with Stuart Hall writes about this with with Thatcher and Reagan began this shift with a deconstruction of kind of the welfare state under labor or the New Deal the the political rhetoric said well this is an assault on your national identity which which really began a few decades ago and epitomizes essentially Trump's response to the economic and political crisis well you know when you have a welfare system put aside the details you are in a way suggesting that the community as a whole that the society as a whole has a responsibility to itself and that if the private sector can't or won't manage that well in the public sector spec steps in it's really what Roosevelt said well he went on the radio and he said if there's millions of Americans who ask for nothing other than a job and the private sector can't provide it then it's up to me who else is going to do it we have this in implicit in our welfare system if you cut back welfare you're basically throwing people back into an ultimate and total dependence on the private sector which is showing you by the $15 an hour or less proof the Walmarts that the retail joins what these are being what's happening to people that are thrown on a private capitalist sector that cannot or will not function in anything like a socially acceptable way we raised the issue of unfettered capitalism which power Marx said is a revolutionary force but but the very minimal controls imposed by dodd-frank which wasn't much everything's being eradicated what will that do to the economy well it produces the very thing that folks used to want to celebrate capitalism for instead of creating a middle class it polarizes everything it allows the top executives to go completely crazy with their pack pay packages not only beyond what's reasonable in any sense but even beyond what their fellow capitalists in other parts of the world interject I mean with this tax cut what they did with that money was buy back their stock that's right which is suicidal for the economy may explain why they did that and why if you agree it's suicide absolutely this is a game in which there is a collapse of the math ability of people to buy things so a company that saves all this money through a tax cut for mr. Trump is not of course going to spend its money hiring people buying machines and producing more they're having trouble selling what they already produce and they're impoverishing the very people they would have to sell to so what do they do with the money instead well they take it and play for themselves they run the society they serve themselves they do it by giving themselves higher pay packages but they do it by buying back their own stock which they're legally allowed is the price of the stock is the price and assign their compensation goes and their compensation which is connected to how well the price of the stock does is thereby helped by their own using and and the lot jobs are created no growth their office trashing their own company in the process yes that's Lehman Brothers yes and because they're out of control building a price of this stock that is going up even though the viability of the enterprise because of the collapsing market is shrinking and if you wanted a case for there to be any negative outcome even for their own thinking it means that the only growth in terms of real production is happening elsewhere in the world because we're killing the very mechanism that might have produced it here so it's a capitalism that is hollowing itself out but refuses to do to face it because it is making money for a while but that's the same logic as King Louie before the French Revolution in the sense making fantastic Versailles without understanding he was digging his own grave in those lovely gardens there and let's talk about where we're headed if this trajectory continues we have two options we either let this stuff go let mr. Trump do his thing look the other way allow him the the notion that he's the president and therefore deserves some sort of deference which I see unfortunately in the Democratic Party and much of mainstream media and so on or we learn the lesson of the Great Depression there has to be a movement from below otherwise there's no counter force that can take us in another direction so if you ask me absent that counter force and I hope it won't be absent but if it is absent then I think you're right we're going to see this system spinning out of control and destroying itself in the very way its critics have for so long foreseen it well might which will mean what the dollars no longer the reserve currency huge contraction that's how the economy deals made by our trading partners that they can't work with us either they can't work with anyone or they can work among themselves the Russians and the Chinese will have a much to talk about the Europeans with both of them will have much to talk about Asia Africa Latin America we'll have to wonder what kind of future they have with a an operator like this in essence ability to grace a multipolar world which means instead of this kind of gradual decline would really mean a pretty catastrophic economic meltdown for the United States right what we saw some time ago when Trump announced his big tariffs on China we saw the stock market dropped 700 points in a day that's a sign of the anxiety the danger even in the minds of capitalist about where this is going just as we saw Warren Buffett and others say years earlier you can't keep taxing this way when I pay less than my secretary because it is an unsustainable thing you know if we hadn't been a country with two or three decades of a middle class working class paid really well maybe you could have gotten away with it right but in a society that has celebrated its capacity to do what it now fails to do you have an explosive City we don't talk about it it's either too dangerous stars or demonizing Russia or you know but but the the the nature of the crisis is never named and never addressed no it's everything is done from my perspective to avoid asking the question to what degree is the system we have in place capitalism as its name is that the problem no it's the Russians it's the immigrants it's the tariffs it's anything else even the porn star to distract us from the debate we need to have had that we haven't had for half a century which puts us in a very bad place we've given a free pass to a capitalist system because we've been afraid to debate it and when you give a free pass to any institution you create the conditions for it to rot right behind the facade and that's what I think is happening and how do you look at the Trump presidency in the last minute that we have it's the last gasp for me it's the last gasp it's letting it all hang out a system that's gonna do whatever it can take advantage of this moment grab it all before it disappears and I'm reminded again of the Louie's I don't know why they're in my head today in France it's in France it was said I played Wilder des lunes after me the catastrophe that the storm will break that's when I look at Trump that's what I see well he's kind of a louis xvi yes 11 with his golden apartment he literally really copies you




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