Capitalism improvements

A Dr. Richard Wolff transcript

Hasn't Capitalism been responsible for countless improvements in the

last 100 years?
We are told that if you look over the last hundred years, you may marvel how much our
quality of life has improved, how much our life expectancy has improved, how much
child mortality has diminished, and so on, due to the capitalist system we live in.

I want to respond to that reasoning stating that, that is the kind of over-simplistic approach
many folks do in order to try to shut critics of capitalism off, with no fundamental
intention other than that.

I should remember that, over the long span of history, we can see periods of improvement
along the way. There were improvements in all kinds of aspects of our lives under
primitive tribal economic systems, under slave economic systems, across feudal
economic systems and, yes, also across the capitalist economic system.

Those improvements were often the result of dramatic struggles that peasants and
working-class people made to achieve them. Those improvements are not, however, a
basis for shutting down criticism of our current system.

The criticism of capitalism that matures in minds of many people today is that we could
do better, and it can be, fundamentally, described as follows:

The society we live in is not as good as it could be to the majority of people and its
environment.

In other words, the criticism is about the gap between what we have and what we could
provide to ourselves as communities. This criticism goes precisely to point out the
changes we could and should make to get closer to the quality of life that we're capable
of producing to everyone, not just to a relatively few like we see today.

Some contextualization is needed here:

In this society most people only have a job if an employer sees a profit in hiring them.
People are held hostage to profiteering. The ability of workers to work is, thus, dependent
on profit seeking individuals. Well, that's a very nice system for these same individuals
that are also the profit collectors. They can decide around what's best for them regardless
of any negative consequences, euphemistically called “externalities”.

Often, what's good for profits is not good for most of society in general because the ever-
present race to the bottom in wage policies is the main reality in this “everything-is-for-
sale” profit mechanism. Informed people are reaching this conclusion as capitalism is
confronted with this basic contradiction.

I think most folks would agree that a full employment economy, an economy that gives
everybody who wants and needs a job, not only a job but a decent income, is good for all.
The knowledge and the good feeling that comes from doing something useful for
the community while earning a decent income is paramount of a sane society.

We have plenty of things to do in this society. We need revolutionary changes in our

ecological situation. This is work that needs to be done to be less of a bad partner to
mother nature. We need lots of work to rebuild our cities. We need lots of work
to take care of the elderly people who lived a hard and working life and need to have a
decent retirement. We need lots of work to take care of young children, so they get a
nurturing environment and their parents are free to lead good adult lives while their
children are safely and effectively cared for.

We can do what needs to be done and we have more than enough wealth to give
everybody a decent job with a decent income doing what will benefit us all. But,
presently, we don't have that because profit dictates who gets to be hired and for what.

This is a basic problem and one of the obvious critiques of capitalism. The gap between
what most people could have and what most people do have is one of the pressing aspects
of present-day capitalism.

Pointing out that it could be worse and that 40 or 50 hundred years ago was much worse
is not an acceptable argument to defend this status quo. Looking backwards to rationalize
and justify the unjustifiable is not an intelligent strategy. We could and should be looking
forward to applying our resources for the benefit of all, right now.

Contradictions
The basic idea is that every economic system has, within it, conflicting forces. In Marxist
terms this is called Internal Contradictions. The systems have intrinsic problems. They’re
constantly struggling because conflicts are built into themselves and seemingly, for long
periods of time, systems, kind of, find “solutions”. But in the end, historical materialism
says the internal contradictions become unmanageable and then there's an explosion. The
systems die and new ones are born.

So, for example, we had slavery in various times and parts of the world. It was born, it
evolved, it had its contradictions and now, at least in most countries basic law, abject
slavery is forbidden. For slavery, one of the contradictions is that the only way a slave
system can continue is, it must replace the slaves that reach old age and die. That became
a big problem because that was not profitable. So, eventually, first in Europe, slavery
couldn't solve its problems and died, replaced by feudalism.

Feudalism went through in a parallel process with fading slavery and then it blew up. It
couldn't solve its problems. Enter capitalism. Now historical materialism begins to look
at capitalism through the same lens. “What are the internal contradictions, how do they
bedevil the system, what solutions, for a while, can be found?” But when and where we
get to a level of internal contradiction that makes the system tremble and be vulnerable,
if revolutionaries can see that and understand what's going on, revolutionaries can
accelerate the move to the next system, to go beyond the status quo.
Just like rebels overthrew slavery and overthrew feudalism the expectation of Marx was
that capitalism would generate the contradictions, tensions and then the failed solutions
that would bring into being the rebels, Marx himself being one of them, with the ideas
and criticism who would eventually move society to the next system.
To illustrate it as concretely as I can let me give you an example of the kind of
contradiction Marx found in capitalism that has been crucial for everybody else. I pick it
because it's as relevant right now in the United States as in around the world.

Every capitalist, (I think most of the folks know this just from their personal life
experience), every capitalist is always trying to either make more money or survive
competitively by saving on his labor costs. One capitalist does it by substituting machines
for working people, automating, getting a computer to do what he used to have 50 people
do etc., etc. Another capitalist does it by trying to get cheaper workers in place of more
expensive ones. Hiring women if they're less expensive to do the job that they used to pay
men more for. Hiring immigrants rather than native folks. Moving to another part of the
world where wages are much lower. We all know that. So, capitalists are always trying
to save on labor costs because they can make a better profit if they do that.

But here comes the contradiction:

- if all capitalists are reducing the number of workers they pay or reducing the pay
they give to their workers, what will result is that the working people have less and less
money. And if they have less and less money, they can't buy what the capitalists are
producing. The capitalism is therefore destroying themselves. But they have no choice.
They have to save on the labor outlay and then that comes back and bites them in the rear
end because there's no demand.

If you've been so successful becoming rich as a capitalist you've killed yourself. This kind
of contradictions, for Marx, are the beginning of the end of a system. It papers it over.
For example, when people couldn't buy in the 1970s the capitalist system kept going
anyway. How did it do that? How did it keep going when the people didn't have enough
money from their wages to buy? The solution was credit.

We loaded the world up: House credit - that's your mortgage, car payment credit - nobody
buys a car except by paying out for everything with credit cards, which didn't exist before
the 1970s but for traveling businessmen - a small number of them. Then, when that was
not enough, we loaded up, for the first time in American history, an entire generation of
students who can't get a degree without loading up with tens of thousands of what keeps
the system going - debt. People could buy stuff, even though their wages didn't pay for it,
by borrowing.

And in 2008 the predictable happened. It turned out your “fix” only lasts for a while. You
really must ask in a way that many of us, as Marxists, haven’t done for most of our lives.
The problems of capitalism now are so severe, so systemic, so global that we're beginning
to wonder whether this system is going to find a way out.

The Marxists are not the only ones wondering whether this system is coming to an end.
The people on the other side of the political fence are very worried - yeah you have
billionaires writing op-eds “The pitchforks are coming for the plutocrats”. They know
what's coming.
Let's talk about the bubbles. The housing bubble, I think it is an interesting indication.
The housing crisis, the crisis of overproduction. The fact that we have more houses than
we do homeless people. Because you had this crisis of overproduction, too much of
something was produced and people couldn't utilize it.
Talking about that concept and why this is an inescapable phenomenon under capitalism
we can start with 1970s American businesses. In the 1970s American businesses began
to have what I like to call an Eureka moment - they realized that in the West North
America, Western Europe and Japan 100 to 200 years of capitalism impressive factories,
offices, stores had been built but they were built up in the places where capitalism was
born - Western Europe North America and Japan. That's where they had concentrated
everything and that's where they had drawn workers in, off the countryside to become
urban industrialized working classes.

Along the way the workers, noticing how productive capitalism was and since they did
the work, demanded, for themselves, a standard of rising pay. So roughly from 1820 to
1970 wages rose in those places. That's why over that time capitalists were doing so well
that could raise the wages of their workers and still make out like bandits. It was a system
in which people began to get the idea “capitalism works”. It delivers the goods because it
raises wages. You had to not look at what was happening, to where most people in the
world lived. Asia, Africa, Latin America - for them the situation was horrible. If you
concentrated on where capitalism was born, you could fool yourself into thinking “wow
this is a system that works”.

Capitalists, of course, and the people who liked it celebrated. Then in the 1970s capitalists
had this Eureka moment. They said to themselves “wait a minute we're in North America,
Western Europe and Japan, where the wages are now very high. Workers are very happy
but why are we here? In the rest of the world, (which has been savaged by the growth of
capitalism of those privileged areas), wages are very low”. So, in this Eureka moment
capitalists said “what are we doing here in the Western Europe, North America, Japan?
It's much more profitable if we produce in China in India in Brazil, anywhere else”.

So begins what we're still in the middle of; the Exodus, the abandonment of the places
of origin of capitalism by the capitalists. There's a massive move to China, India, Brazil
and all those places offering what every capitalist wants, which is low wages and no
worker rights to speed up big profits.

They build big factories imagining that they can sell all this stuff like they used to. But
they forgot something - if you go from high wages in the United States to low wages in
China the bottom line is that the people earning wages are earning a lot less than they
used to. It's not just that they're not Americans, they're Chinese but they can't buy
what you're building, they can't manage to consume what you have the capacity to
produce.

Right now China is “slowing down” scaring the whole world but it's not China that's
slowing down… it's the inability of China to sell to the world because the wages of the
world's workers have been depressed now, for years, as we move out of Western Europe,
North America and Japan into these lower standards. The system totters as it encounters
a very old contradiction in its current form for which they have no solution.
Right now, it's happening on a global scale. Europe is having it, North America is having
it, Japan is having it. These are the centers of capitalism. They're in the most trouble right
now and they don't see a way out and I don't either which makes it possible for the first
time in my life to begin to see a capitalism that is in fundamental shaking difficulty.