The Richard Wolff Lecture On The History Of World Economics

A transcript of the 2012 lecture, "Crisis and Openings: Introduction to Marxism."

The following is a transcript of Professor Richard Wolff’s lecture, “Crisis and Openings: Introduction to Marxism,” given on July 29, 2012 at The Brecht Forum. The original video of the lecture can be viewed, here.

A keyword section is added at the end of the transcript. Keywords are highlighted in bold.

This lecture influenced the article, “The Economic Philosophy of Borderlands.”

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Introduction - What is Economics?

…Let me begin by saying a few basic things about economics just so we're all on the same page. And because since I do a lot of speaking around the country, um, I have come to learn the bitter lesson that whatever passes for economics education in the United States is right up there with education in nuclear physics. In other words, there isn't much and most people don't get it and so they turn away from economics. It's a little bit like people turn away from mathematics and subjects like that, that are basically presented so badly that the student feels it's his or her fault and doesn't want to go there. So I'm not saying that happened to any of you, but it might've, and it might be helpful if we all, uh, started on the same page with some basic, uh, economics. Okay, so bear with me. This is simple, but it is more important to get it clear than you might imagine.

The Beginning - Commodification

Human beings are a little different from most other creatures on this planet because instead of simply looking and hoping to find, um, what sustains us, food, shelter, so on, uh, we make it [commodification]. We are human beings who use our brains and muscles to shape, to control our environment and to take care of ourselves. And to make a long story short, we work. We use our brains and muscles to transform the things we find in nature, to put them in a new and different form that pleases us, that satisfies us. We take a tree and we make a table. We take a cotton plant and we make a shirt and so on. And human beings, for as long as we have a human record, have been doing that. They have been working to produce goods and services out of nature to satisfy and take care of themselves.

Individuality to Division

What has happened over the history of the human race is how we've organized that. We've done that very differently. For example, for much of the history of the human race, human beings did this individually or in very small groups of family. That is, we went to work as individuals or very small groups, used our brains and muscles to produce the goods and services we consume. We grew the vegetables, we cared for the animals. We found a way to get clothing by taking the fur of an animal and so on. We built a little house, a shack, a a lean to whatever. And that was true for tens of thousands of years of human life, individual small groups and even if they clump together in something bigger, each of the little groups within the something bigger function this way. Then at a certain point in human history, something monumental happened. Many reasons. And we call that nowadays the division of labor. It stopped being the case that everybody produced all of what he or she needed.

Distribution

We began to specialize. It's what we all take for granted. Now, this one becomes the baker of the bread. This one becomes the spinner of the wool. This one becomes the builder of the house. This one becomes the school teacher. You know the rest of it. And that's fine. We specialize all kinds of reasons. But what I wanna focus you on is that when we specialize, we have a new problem which we didn't have when we didn't specialize as human beings.

Because if you don't specialize, if each of us produces pretty much what us, myself, my little family, my little group, if we produce what we consume, we don't have to worry about something economists call distribution. But if I produce only one thing and you produce something else and she produces still something else, then we have to come up with a way of distributing what each of us produces to one another, or else I'll be great at making ladders, but I'll die tomorrow 'cause I have no food. You'll have a lot of food, but you won't be able to get up the tree to harvest the apples above what you could reach 'cause you don't have a ladder. So there has to be a distribution system some way to parcel out amongst all of us what we each specialize in producing.

And the human race has been very creative in how to do that. What lasted most in human history was a kind of ritual of doing that. It became a kind of social ritual, maybe a religious ritual. Uh, for example, terms like harvest is when we gather the fruits of our different labors. You get the corn, you get the eggs, you get the meat or whatever it is. And then we have a festival. All cultures have harvest festivals where they distribute, where we work out. I'm gonna give you the eggs that I don't need myself and you're gonna give me the carrots that you don't need. And you the wheat and you the rice and all the rest of it.

Other systems were also developed a group of elders that's very popular in human history. Older people who've lived around a long time and kind of know what's going on. They get together and they parcel out amongst all of us what each of us specializes in producing. And so we get the distribution that way. Sometimes it isn't an elder, it's just a kind of rule, a custom that develops. For example, in your family, when you do a certain kind of labor, say around a Thanksgiving day table and you variously do things, maybe your mother prepares the Turkey and you do the mashed potatoes and your brother does the cranberry sauce or whatever. And then the question is, each of you has made something, but your thanksgiving is not gonna see you groveling in the cranberry sauce as your activity. You'd like some Turkey and you'd like some potatoes. And so and so a method works out. Maybe the method is grandma hands it out, maybe your father does it. Very interesting how it gets worked out. Family by family who's in the position of deciding. And you know, you remember when you were a kid? You had a problem. You wanted two chocolate puddings at the end of the meal and that became attention as to who would get the extra dessert. You, your cousin, your uncle, grandma, grandpa, whoever that has to be worked out. That is a distributional problem. Okay?

The Market

Then a few hundred years ago, we began to do this distribution in a very peculiar way. It had happened before, but it had been sporadic. But starting about three, 400 years ago, 500 years ago, depending on when you count in the western part of the world, Europe and so on, a development happened that organized a new way of distributing the goods that were specially made by different people. And that way was called the market. The market is a peculiar arrangement. Here's how it works. You make a bunch of stuff, bread or shirts or whatever, and you come to a particular place at a particular time, the edge of the village at five o'clock on Thursdays and you open a little blanket and you lay out the stuff you've done the eggs, you have the chicken, the shirts, the whatever. And along come people who likewise came to market with whatever they made baskets or uh, chairs or whatever. And a peculiar ritual develops in which you and the other person bargain a new word. I'll give you four of my shirts. If you give me six loaves of bread, I'll give you two of my oranges if you give me a pound of your coffee or whatever it is. And the distribution happens through lots and lots of individual bargainings. That's called a market system. It is a way of distributing goods and services when you have a division of labor.

It has not been the way we've divided goods and services for most of the history of the human race. We had other ways elders did it. Priests did it, you know, uh, religious rituals accomplished it. The market is relatively new and the market as a system has always been fought over. It was never instituted as some great acclimation of the best thing to do. Not at all. If you go back, some of you do some reading, you go back and you study Plato and Aristotle, way back in ancient Greece, there were market arrangements among, if you know the history a little bit, the different Greek city states, Athens, Sparta, and the other ones, they would trade with one another. Trade is another word for market, “cause trade is, I'll give you three of these. You gimme two of those.”

And so the question arose, gee, in a society like Athens where Plato and Aristotle did their work, what will be the impact on our society, which is mostly people producing for themselves and consuming their own stuff or if their specialization, the leaders of Athens, the democratically elected leaders, would divide things up. What will happen if we don't have the old system but we have this new distribution system, the market? And you may be surprised to learn that Plato and Aristotle, ready, hated markets, denounced them. And why? Because they destroyed the community. When people are at each other constantly fighting, “I'll give you three of these, but I want six of those. You just wanna gimme five. I'm not gonna do, I'm gonna go find somebody else who's gonna,” this kind of relationship, this kind of haggling at every moment in which we interact with one another such that I want to give you the least possible and get from you. The most possible was a disruptive asocial human activity that should be banned.

So I always love it when people give up a start with a speech about our great forefathers, intellectual giants of great Western tradition, Aristotle and Plato, and then work seamlessly into a celebration of the status quo. We live in a market society, they hated market societies and they're not the only ones. It's been disputed ever since it's been disputed now. I just say that because before you take it, that markets have always existed. They haven't, human beings have done real well thank you for a long time without 'em. And when they came, they were fought over to imagine that everybody today could or should or would agree with a market system simply not means you don't know much history. Okay? So we have markets.

The Collective & Time

Next step, how is it all organized? Well, we live in a peculiar system that is not only market arranged, but we have a very peculiar way of organizing the production of goods and services that are then traded and distributed by means of a market. How do we do it? Well, let's see. We have work to produce a shirt, a microphone, a briefcase, a camera, anything it takes lots of different people coordinated doing various parts of the job to produce a finished good. How do we organize that in our economic systems in the history of the world? Lots of ways. Sometimes people got together understanding that, look, I can only do a certain amount myself, and If I wanna do something more complicated than the things I can do myself, I'm gonna have to hook up with other people to be able to get that more complicated thing done. Like a bridge or a house. Hard to build a house with one or two people. You need a kind of a bunch and it takes a lot of time. So how are you gonna organize this? How's it gonna work? And human beings have done it in a variety of ways very quickly. One is just to get a group of people together and you agree amongst yourselves. We're going to work together. Each of us is gonna work for, you know, six months. Each of us gonna work, I don't know, five hours a day. And then we're gonna build something like a barn and we'll start by building a barn for you Harry. And when we're done, we'll build a barn for you, Mary, and Mary, you'll help building the house for Harry and Harry. You'll help building the house for. And so it we, we work it out in that arrangement, we work it all out together. We sit around, have meetings, how are we gonna build the barn? Who's gonna be built first? How's it gonna, and we work out a plan and then we all more or less abide by the plan. And if anyone thinks out, you know, we use the usual modes of persuasion that people have developed. Everything from a nice conversation to a nasty gossip and whatever else is necessary to get the work done.

That's a collective. You might call it a community way of organizing or you might take that other word that comes outta the same route of community and call it, I don't know, communist, that'd be one. It's a community. That's one way. Have people done that in the history of the world? Always in ancient times, medieval times. And last week, I can tell you all around the United States and elsewhere, that kind of work gets done in that way. Okay?

Slavery & Human Commodification

Second, a completely different way in this second way, some people do all the work and other people don't. Wow, let's do that again. Some people do all the work and other people don't. I'll give you one example. It's a society that organizes people into two groups just to get it working. Like this one group is called slaves and the other group is called masters. And there's a lot of ways this gets comes into being, but we have lots of examples in history of a part of society called the slave and a part of society called the master. The slave is the property of the master, rather like a horse might be or a chair or a house, we allow in those kinds of societies, human beings to be the property of other human beings. And then the master owning the slave, having dominion over the slave as a property can treat that slave pretty much as he sees fit.

And he says to the slave, “I have an idea. You do all the work, you build a house, you make the shirt, you cook the omelet. And you do not only do that so that you yourself can survive. And as you cook an omelet, you eat, you make a shirt you wear, that's fine, but you're going to have to do ready more than that. You're gonna have to do more work than is what taking care of you because that's what you're gonna have to give to me, which will allow me to have an omelet, a shirt and a chair. And I'm not gonna do nothing. You'll do it for me, or else, I'm the master.”

Surplus

It's a very peculiar arrangement because it means that writing the production process, instead of us all getting together to work together to produce what we all need, we are introducing a big new difference, conflict, tension, anger, resentment. Why? Because some people are doing all the work and producing more than they get. A more that we nowadays call the surplus. The extra what is produced by workers when they produce more than they themselves consume slaves, produce a surplus that masters, get masters. Use it not only to have a lovely lifestyle but to make sure that this system continues because they like it but the slaves don't. Not so much. And the reason shouldn't be hard for you to figure out they're getting to use a technical term in economics, screwed big time.

Feudalism

Then there's another system…

…By the way, slavery systems last a long time. They exist all over the world. They have nothing to do with any particular race. Americans tend to think that slavery has something to do with black people because in America we happen to have that particular arrangement. But slaves have existed in all continents and come in all colors, just like masters have likewise come in all colors. There's no correlation between race and slavery. Never was. There's no need to be parochial….

Third arrangement, different. Here again, it's interesting, some people produce a surplus other people get, but the people producing the surplus are not slaves. They're nobody's property. We call this kind of a system but a different name. Just to keep it clear. In our minds we call it feudalism. It's sort of what existed in Europe from around 500 ad to around 1500 ad.

No more slaves, nobody owns anybody. But a serf is a person who gets born in a particular piece of land and by custom, by religion, by the law stays there. You're born most people as the child of a serf, you are therefore also a serf. And you owe an obligation to the lord to some big shot in the area. Those of you who ever visited Europe, you'll make tourism your activity, you'll be taken to Chateau. That's the French word for an English castle or a German word. Schloss. These are different words, but they're about where the the Lord lived, the futile Lord. And here's how it worked. If you were a serf, you worked three days on the land and the fruit of that work you did was yours to keep. Monday, Tuesday, Wednesday, Thursday, Friday, Saturday you went to another place of land and you worked. That was the land of the lord. And whatever you produced those second three days was his. You went back home and on seven days, on the seventh day you rested. And you know what institution presided over that the Roman Catholic church in Europe presided over feudalism. You went to church on the seventh day and you rested and then you resume next week. So the serfs produced in the first three days for themselves in the second three days, the surplus that allowed those chateau to look so grand. You ever been to Versailles outside of Paris? You'll see just how grand it can be if you have hundreds of thousands of serfs working for you, which King Louis or whichever one it was had when he built the chateau at Versailles.

Capitalism & Liberalism

Now we come to the next… but just notice these are different ways in which we have specialization and we have production organized in different arrangements among human beings…

Feudalism was overthrown after a thousand years, lasted a long time, overthrown Uh, 1500, 1617 hundreds about when in Europe overthrow the serfs had had it. The problems of the lords together with the anger and resentment of the serfs blew the thing up. The most famous moment, the French Revolution of 1789 when the angry masses of the French people grabbed Maria Antoinette out of her castle, her futile castle and cut off her head to make a point. And it happened in other parts of Europe as well. And a new system came in.

And this new system we now call capitalism, it's the one we still have. It's about three or 400 years old, that's all. Which as systems go, it's kind of young, been around a while. How does it work? Well it's different from slavery because we don't allow people to own one another. And it's different from serfdom because we don't say, if you're born over here to a serf, that's it, you're a “serf” too. We allow much more. And this is very big individual liberty and mobility, no matter who you're born to, I mean do what you can. And here's how that system works…

Everybody looks for what he or she is going to do. Those of you that are young are in that process. Now, where am I gonna go to school? What am I gonna study? What course am I gonna take? Who am I gonna study? I what credential, what mechanism to find a place in the division of labor? What am I gonna do? Some of you worry a lot about it. You even pay people to advise you how to do it. You go to an institution that promises you that if you go there and you do real well and you take the exams and you get the course credit and you get the degree, then you'll get a job that that's not happening anymore, but many of you haven't figured that out yet. And the hope of the system is you never will. But the smarter ones among you have already noticed. And the rest of you will find out soon enough. We're gonna come back to that in a few minutes.

Jobs

How does this capitalist system work? It's interesting. Here's how it works. The vast mass of people, here we go, look for a job, which by the way, they take as axiomatic as the way life is. Even though in fact if you follow what I've said, that's not been the way life is at all. The child of a slave knew exactly what he or she was gonna do. Didn't need a school, didn't need an advisor. They were gonna be a slave too likely to the same master or the children of the master. The serf knew where he or she would be, what their lives would be like. No confusion there, no anguished adolescence trying to figure out what I'm gonna do with myself. No problem.

Capitalism brings you that dilemma 'cause it's kind of open-ended. So you go around looking for a job. Now let's look at that for a minute. When you look for a job, you are actually looking for someone to do something to with, for or at you. I'll leave it to you to decide which preposition to use. You look for a boss, you look for someone to do something remarkable with you, to hire you, to engage you, to employ you. A serf never did that. A slave never did that. People who got together collectively did it. Did nobody hired anybody else for the vast majority of the history of the human race, that is a very peculiar arrangement!

And here's how it goes…

You go to an employee, you say, here I am, I just graduated from MIT, look at how white my teeth are. Please give me a job. I am very good at whatever. And you hope the employer will do that. That's why you went there. You're having an interview and you have a conversation and you talk about the work. You'll be expected to do the work, you would like to do all of that bullshit. And then you come to the key moment. How much am I going to get paid? 'cause you need the money. Why? Because you need to buy a lot of things in order to avoid painful death. Food you need. You don't grow at yourself other than the little pot. With the four arugula plants, you don't have much, right? So you need food, you need a, you know underpants 'cause it's polite and all the rest of the things you need. And you don't make those yourselves, most of you. So you need money to acquire them. And the job you're going to get is going to give you the money to buy the things that will allow you to survive at at least and have a pleasant life maybe if you're lucky at best.

So you enter into that key part of the conversation, “How much dear Mr. or Ms. Employer are you going to give me?” And this is a very interesting moment.

And let's say you agree on something. Let's say you agree to be paid $20 an hour or an annual salary that works out to $20 an hour or $30 or if it doesn't make any difference, but let's stay with $20. It's a nice night round number. So the employer agrees to pay you $20 an hour and you must agree in in return to do a number of things. That's how this system works. Number one, you agree to come nine to five Monday to Friday that you have to come. You have to be reasonably well dressed, you have to be able to apply your brains and muscle. And you have to be willing to do what you are told to do with whatever the raw materials are there for you to work on. And whatever tools and equipment, uh, are there for you to work with.

And one more thing really crucial. At the end of an eight hours, typically that you've used your brains and muscles in the way you've been told to on the raw materials you've been given, you will have transformed those raw materials. Remember what I said at the beginning? Something provided by nature, you will have worked up into something else. Whatever the product is that your employer produces, a good or a service, whichever. And here comes the crucial thing. At the end of the day that your work is embedded, embodied in the finished product that you've been told to produce, you must go home and leave the product of your work there. You made it but you don't get it. And if you take a little of it home with you, the employer calls those men in blue uniforms and they come to your house and they hurt you… …to help you understand, no, no, no, you make this stuff.

Then you go home at home, you drink beer, take off your shoes, go to sleep watching boring television so that you're in shape tomorrow morning to do it all again. Okay? The employer takes the fruits of your labor and the employer decides what to do with it.

Now the most important point of all, the only way, the only time, the only circumstance on which an employer will ever give you $20 an hour or 30 or 60 or a hundred or any indifference, one condition has to be met… …During that hour that the employer pays you X worth of money. Your labor has to produce for the employer more than X worth of extra stuff for him to sell. Why? Because otherwise there's nothing in it for him. If he pays you $20 an hour and your hours worth of work produces another $20 worth of whatever the product of that company is, which he sells for $20, what's he got?

He sold for $20, used the money to pay you, he's got squat. And much as he likes you and his fellow man and woman, it's not gonna happen. So there's one condition in capitalism under which you will get a job. You will have to produce more for your employer than the employer pays you.

So for those of you that have been saying to one another, “I'm not gonna work for anybody, It doesn't pay me what I'm worth.” You don't understand this system. That's not gonna happen. You are in the wrong country at the wrong time. Historically, that's more likely for you to be hit by lightning than to discover that situation. You are always gonna be ripped off in your job in capitalism because that's the way the system works.

But don't worry, there are a lot of people, including lots of economics professors, who will give you one story after another instead of what I just told you so that you don't get distressed while you're being ripped off because it might make you resist, which we can't have that.

Individual Slavery - Conflict, Tension, Anger

But in capitalism it turns out we've got exactly the same kind of system as we had in slavery and feudalism. Why? Because the worker has to produce more a surplus then he gets, which goes to somebody else. It's the employer who sells the hours worth of output. You help produce for $40 and pays you 20. And what's left over he gets just as the master got the surplus, the slave produced or the feudal Lord got the surplus that the serf produced. One of the great insights of the most profound thinkers about capitalism is that capitalism wasn't the end of slavery or feudalism. It's a changed form of them. No more slave, no more serf, but surplus being produced by one part of the population enabling another part to live off of it. That hasn't changed at all. And that means what also hasn't changed is in the heart of the capitalist system is a conflict, a tension, an opposition, a resentment, an anger and a bitterness between those who are constantly producing more than they get and those who live off that difference.

Exploitation

And if you are a capitalist, an employer, what of course is your interest to give the worker the least possible while getting the most out of them? Because that's the biggest surplus they can get. And the more surplus they have, the more secure they'll be. It's the same old problem, same problem the slave master had in relationship to the slave or the futile Lord in relationship to the serf. So for those of you that have already worked in your lives and wondered why at the end of many a day, you felt somehow ripped off, it's because you were!

And if you tried to find a place where you could shake off this sense of being ripped off, you found one, the neighborhood tavern that offered you at the end of your day a happy hour that you know was there and given that name precisely because it was in a remarkable way different from all the preceding hours. It wasn't there. So even a society like ours that doesn't wanna face or admit any of this, does it despite itself can't help itself. Capitalism is a system premise on what mark's called exploitation, which he defined very simply and very careful. Exploitation exists if and when. The people who do the work produce a surplus that other people get and distribute as they see fit. That's why slavery is one kind of exploitation. Feudalism is another, and capitalism is a third. What's the alternative? I already told you at the beginning of this little monologue, that's when the people who produce the surplus, the workers are themselves, the people who get the surplus.

Worker Cooperatives

How would that work? Take any factory, take any office, take any store in America today here in New York. Change it as follows. No more board of directors. Most things are done by corporations that are run by a board of director. No more board of directors don't eat it. Here's how we're gonna do it Monday to Thursday where all the workers come to work and do what they were always doing. You cook bread, you clear the table, you set the table, you do the dishes, whatever. If it's a restaurant set Friday we have a different arrangement. You come to work, half of you and you do your regular job and the other half of you sit around making the decisions, the menu, the investment, the redecorate, all the decisions that used to be made by the capitalist, the boss the following week, the group of you that had meetings all day Friday last week. You do the work in the restaurant and the other half of the workers have a meeting instead. Where they go over these decisions, workers become their own board of directors, workers become their own capitalists. Or to say the same thing another way the worker capitalist division dissolves.

Is that an alternative? Of course it is. Do we have examples of that in history? Loads! Do we have examples of that in the United States today? Loads! Do we understand as an alternative to capitalism? No, no, no, no, no.

Marxism

People like me, our economics professors are very carefully trained to avoid explaining any of this to you. That's what we are. I don't say this for the obvious reasons that you will expect, but I will tell you I went to Harvard, then I went to Stanford and my PhD in economics is from Yale. So I'm a poster boy for the education I just described. Major mediocre, an education designed to give you a very different understanding of how this system works from the one I just gave you. The one I just gave you comes from the work of Karl Marx. Uh oh. And in my education we were kept as far away from Karl Marx as you were from certain parts of the town you grew up in where you were supposed to never go, especially not in the evening.

And we, for us Marx was, I don't know if any of you saw it. Uh, I was on that uh, television program last week. Charlie Rose and he asked me questions about my education at those institutions and he could not believe 'cause he didn't want to, that I didn't get much of an education in Marxism. Exactly Zero in those places because they were afraid. Marxism tell tells you, uh, this is a system that leaves a lot to be desired and has an awful lot of problems. Whereas we're supposed to believe, aren't we? That we live in an economic system that really is about the best thing since slice spread works like a charm is the best thing the human being could ever come up with and therefore shut up. Well, it's one way of organizing an education, but it's not the one that I like.

The Fall of Capitalism

Having said that, let me move into the real topic for today, which is the economic crisis. And here's the connection. Up until two or three years ago, most of the kinds of talks I would give because of the pedigree I have, I get invited because I've been a professor all my life. I get invited, we call the academic world, people like me, protective coloring. It's like a pheasant that has those feathers. You don't see it quite for what it is. Aha. So what has happened to change? Or why would a person like me be on the Charlie Rose Program last Thursday? How did that happen? That happened because the capitalist system that we've had for several hundred years has in the last 75 years stumbled badly. The first time was in the 1930s when it really crashed. We call it the Great Depression started in 1929.

And we weren't done until 1941 and we weren't really done then because what finally put people back to work after 11 years of Hubble unemployment footnote, we are currently in year five of the current one. So for those of you that think this is a will be over soon, maybe, but maybe not. The last one we had like this lasted 11 years and we never got all the people back to work until the thing that happened right after 1941, which we call World War II, where we took all the remaining unemployed millions of them in America, we divided 'em into two groups, half of them got a uniform and the other half got a job making the uniform. That's what we did. That's what we did. That's how we solved the problem. Okay? I said two big stumbles. What's the other one? We were in it in 2007, a crisis crashed down on capitalism that has made all the glib predictions about how this economic system is an engine of progress, an engine of prosperity, a mechanism for efficiency. All of that looks very poor now, doesn't it?

The Divided Gap

Well it should. In 2007, the number of people officially counted unemployed in the United States is about seven, seven and a half million. Today. That number is 15 million. You notice anything, it got worse. Over the last four years, several million Americans have been thrown out of their homes by a legal procedure called foreclosure, which means in America today, we have a remarkable achievement of capitalism. On the one hand, several millions of people who are homeless and on the other hand, several million homes that are empty, they stare at each other. There's efficiency for you. Millions of people without work. What do they want a job? Let's see. Is there machinery, equipment, and raw materials for them to work with? Or a uh-huh? The Federal Reserve keeps a number called the capacity utilization rate. The proportion of our, uh, industrial capacity that is being used as opposed to the apportion that is sitting there gathering rust and dust.

What's it currently at? Yeah, depending on who you listen to, the consensus number around 79%. So something like 21% of the tools and equipment are sitting there. Okay, let, let's do this now. Millions of people who want a job don't have one. All the tools, equipment and raw materials one could ever want for them to work with. And guess what? If we put the people who want a job together with the equipment and the raw materials, they would produce lots and lots of, let's see the word, uh, wealth, which we could use to solve our social problems, rebuild our cities, help the poor give money to other countries. We could do a lot of wonderful things with the wealth that could be produced by the people who are unemployed, but want a job working with the stuff that's gathering rust and dust. Capitalism is an engine of progress and prosperity. What planet are you on?

What did you drink to have such a view? So when the system is as badly performing as this one, and we're now in year five, the current downturn is dated to have begun in December of 2007. So we're in the fifth year and there's no end in sight. Two days ago, the government announced that the rate of economic growth in the last quarter was much lower than they had hoped. That the one and a half percent instead of over 2%. And the one thing that means is we are not growing jobs as fast as young people are entering the labor force. Which means not only are we not putting the unemployed back to work, we don't even have enough jobs for the new people coming in.

This is not a system that's working real well. This is a system that is working real badly. So in the remaining time I have, I'm going to use the theory that I've described to you a little bit to try to explain to you and answer one overarching question.

The Interest Crisis

Why is this crisis so bad? Why is it lasting so long? Why is there no end in sight? Okay, big questions. And before I start, let me just remind you 'cause I'm a professional economist. All my life I've had to pay attention because this crisis was not supposed to happen. My generation was told that having gone through the great depression of the 1930s, we learned the lessons to make sure that nothing like that would ever come back to plague the young people of the future. And so we were okay. It was so repeated, this nonsense that even the courses that once existed in American universities as recently as the 1940s and fifties, courses that were mandatory for econ majors called the History of Crises.

The business cycle where students could at least learn to take a look at what had happened, to see what the governments tried when things got bad, what worked, what they said. They had some idea by the sixties, we didn't need those anymore. We didn't have crises. One of the reasons the government is so wonderfully adept at screwing everything up is because they, they don't know what to do in this situation. It wasn't supposed to happen When it hit in 2007, the first thing our then president said, George W. Bush, oh, this is a minor crisis in the housing market. It'll be over in six months. Six months later being the kind of president he won, he said it again. And Obama basically repeats with variation, the same story. They're using the same advisors, the same economists sitting at the top of the system, a collection of remarkable people we can perhaps discuss a little later, but they don't know what they're doing,

And it shows they have one solution after the first stimulus would solve the problem. It didn't. The second stimulus would really do it, didn't do it either. We're now waiting for the third one, which will come later this year. The Federal Reserve has don't know what to do with that. Brought interest rates down to virtually zero in a number of countries. In case you don't follow this, the interest rates are negative. You know what that means? That means if you borrow a hundred dollars from the bank, you are required at the end of the year to give them 99. Lemme do that again. The bank pays you to lend them money. Excuse me. The bank pays you to lend you money. It's remarkable. The system isn't working. It's a disaster. And there's no end sight. And I'm not gonna bore you 'cause I hope you understand it.

Psychological Effects

If you have millions and millions of people unemployed, you have staggering social problems. Every index, physical disease, mental disease, school, children having problems in school, breakup of relation, romantic relationships and marriages. Everything goes like this with rising unemployment. People interrupt their educations never to go back. The long-term effects of this kind of economic breakdown last for decades. The psychological effects more. The costs are incalculable of all of this. Try to understand what a child goes through if one or both of the parents lose their job, even if they don't, but have to be forced out of their house with a sheriff who comes and takes your furniture and puts it out on the street. Or you have to be wrenched out of your set of friends to go to another school in another place. Uh, just do it. Think we are imposing this on tens of millions of people in this country and abroad.

Business Cycles

Okay? So why, why did it happen? Why did it last so long? First part of the story, and I promise you this is the only time I'll draw anything on the board. And the ideas here are so simple that nothing will be difficult for you to understand, I promise. Okay? We're gonna look at the history of the United States because one of the key reasons why this crisis is so bad is because it is a kind of culmination, as you're gonna see in a minute of the history of the United States. It's not just another one of the business cycles. Oh, by the way, footnote capitalism is a highly unstable system. It has business cycles every few years between the great crash of the 1930s, 1929 to 1941 and the beginning of the current crisis, 2007 in that interval, 11 other business downturns, right? I tell a joke in all my classes at the universities where I teach, if you lived with a roommate as unstable as capitalism, you would've moved out years ago or demanded that your roommate get professional help. But you stay in an economic system that is exactly the same and you imagine it's your job to adapt. How interesting.

You should wonder why you do that and why you think like that. So it's a highly unstable system, but clearly the ups and downs, which on average last a year or two, sometimes have a disastrous kind of downturn. And we're in one of those now second major collapse of capitalism globally in 75 years with 11 in between. If we weren't an ideologically befuddled country, would we have allowed there to be no national debate about capitalism as a system, given all the other systems I've talked to you about, and there are many more that I didn't, a, a sane society would've said, whoa, with a performance like this, we ought to at least have a conversation. Could the United States do better than capitalism? Think of it. We are a society that are proud, aren't we? We've debated our education system made major changes. We allowed charter schools, we allow private schools.

Hypocritical Liberalism

We have debates over that. We have debates over what curriculum should be half the country teaches creationism and the other half evolution and all the rest. All the rest we debate, we fight 'em, we debate our transportation system. We just spent two years debating the medical insurance system of the United States. Should we have a single payer system? Should we have a government funded system? Should we have only a private, you know, you've all been in on It came to a head again when the Supreme Court decided to validate the, uh, the Obamacare bill, et cetera, et cetera. We've discussed most of the systems that make up American society over the last 50 years with, by the way we even debate what is marriage? Geez would've thought that was kind of sacrosanct. Now we have marriage between people of opposite sex. People of the same sex underneath of the whoop be. We can do it, we can have the debate. But there's one thing, there's no debate over the economic system. It's a complete taboo. For 50 years, Republicans and Democrats stumble over each other to be cheerleaders for the system. There's no debate, there's no question. There's no room for people to say, Hey, this stinks. Or Hey, we could do better. Uh, how about this? What about this? No, no, no. Capitalism!!…

…Wonderful. Isn't it wonderful? Oh, it's a Republicans, Democrats, liberals, conservatives, they gush. What is this? This is childish. This is a fear ridden society that is so frightened that no matter how badly this system works, no debate, no conversation in the five years of capitalism's grotesque dysfunction over the last five years, no single person, including the few heroes that many of you have, Bernie Sanders, any of them have been willing to say the system doesn't work Well, the system has to, it's not a question of finding the bad guy and punishing him. The banker who did something nasty. The poor person who borrowed money when he or she couldn't afford a house. Left wingers have their bad guys, right? Wingers have their bad guys and we wanna put 'em all in jail. What does that do? It simply means that if you take Jamie Diamond at Morgan Stanley and you fire him, his next of I was about to say kin, his next of of bureaucracy will take his place and be subject to the same system with its rewards, its incentives and its punishments. If you ask people on the hedge fund business, and I know them real well, why they do what they do, their answer is real simple. Because I'll lose my job if I don't do that. And they're right. That's exactly right. And it's true for all of them. They're behaving according to the rules of the system. And when people behave by the rules of the system and it and bad result, it ain't the behavior that's the problem. It's the system which normally people could think about, but not here. Here we have a taboo. We can't. Strange you ought to wonder about that and how it's shaped your life.

Real Wages & Production

Now let's do a history quickly to show why this crisis is so bad. And we're gonna start with 1850. We could go back further. The basic story here is that for the first 150 years roughly of our country's history, these two lines went up nicely together. The lower line is a measure of the real wage Americans got. How much money you got for for an hour's work or day's work or week's work adjusted for the prices you pay. It's not interesting that you have so much money unless that can buy you the things you need. So the real wage is a measurement of the money wage. You get adjusted for the prices pay. So if it rises like this from the beginning of our country to around the 1970s, which is what it did, then we have to explain that.

That's really interesting. Real wages, what you were able to afford with the wages you were paid, rose steadily in this country for 150 years at least. That's really interesting. For several reasons, one, no other capitalist country was able to do that. Wow. American workers experienced something in American capitalism that workers in capitalisms in England, France, Germany, Italy, Japan or any place else you picked didn't for 150 years. Of course, Americans became, there's a wonderful German word, “astounding,” It has no English translation. Astounded what? Astounding. Okay, astounding. That's not quite what I want, but close enough, as good as I can do. They became what?

Um, wages went up and Americans became absolutely entranced. There we go with this phenomenon. Religious Americans believed clearly that God obviously preferred us to other people because look what he was doing. Well and Americans lived in a charmed place and this was our greatest country in the world. You know what every American politician has to say to get elected? Everyone is obnoxious, right? But we do that because there's partly part of our culture. This is really, and it is exceptional. That's part is right. And Americans got this idea. Every generation lives better than the one before. I'm better off than my parents. My kids will be better off than me. And somehow built in what was going, why? Why did we have 150 years of wages rising? The answer here is really fundamentally very simple.

Genocide By Profit

We had in this country a problem. Everything we needed for a successful capitalist growth was here. We got rid of the local people. So there were no competitors. We ethnically cleansed the country. Those that were not dead were put in little reservations off a corner. You know the story or you should fantastically fertile soil, wonderful climate, two oceans, lots of harbors, rich with rivers full of fish and game. And they got wonderful. So capitalists who came here, people who came and wanted to start a business were able to do it quickly and easily. Everything was in order with one exception. One thing wasn't here enough of workers, this country had a perpetual labor shortage. And how did you get people from other parts of the world, particularly those parts from which the capitalists themselves came Europe to come here? Well, Americans solved the problem in two ways.

For the southern half of the United States. The solution was African slavery. You brought the people here by, by buying them, by collecting them through military means and so on, and bringing 'em to the south. But for the rest of the country, the north, the Midwest, and remember the rest of the country wasn't settled then You had to do it by raising wages to make a foreigner in Europe rip up his life or her life, tear herself away from family, friends, culture, religion, geography and everything else. To make a dangerous trip across the ocean to an unknown place, you've gotta provide a lot of incentive to get people to do that in any numbers. So that was done by selling to the Europeans. The idea in America you could start anew and you could do way better than anything you could hope for in your native country, which for 150 years was true. So that the letter is sent back by the immigrants brought more immigrants 'cause they validated this story.

Deracination

It turned out for the employer, not only do I have to raise the wages to bring them from Europe, but no sooner do they come here and they, they can run off into the interior at any time. There's so much free land that they can become. Once again, peasants, which is what most of them had been in Europe anyway, they knew how to do that. So you had to raise wages to bring 'em. And then you had to keep raising wages to keep 'em. So wages rose and it worked for capitalists because the upper line, the line of productivity, how much output each worker produced. That was rising too because people worked hard here because immigrants were the kind of people who had the extra to come this distance to work real hard because they were driven hard by their employers. And because they were paid well, they worked.

So it was a nirvana capitalism, rising productivity, rising wages, a capitalism in which both sides were doing real well, catching up and eventually overtaking the older capitalisms in England. Above all, wow, believing you lived in a charmed country better than anywhere else. Unbelievable opportunity for working people. You know it all because those of you that are Americans have grown up in that. And now you understand the historic roots. Try to imagine with quickly then what happens in the 1970s when all of this stops and it stops in the 1970s because the labor shortage is over and it never comes back. So let's quickly see what happened. First, the computer. The computer, an important modern inter invention replaces huge numbers of people. Think of a grocery store. You once needed an army of 50 inventory people to keep track of how many boxes of Rice Krispies moved off the shelf so you would know when to order more replacements.

Replacement

Now, as you all know, it scans by a computer as your Rice Krispy box goes across the scanner. And somebody sitting in Boise, Idaho can tell you what, how many boxes of Rice Krispies have to be sent to every grocery store in America. And it can tell you that on an hour by hour basis, computers wiped out the need for millions of people. Number two, by the 1970s American capitalists had an incentive of course to in use computers because wages had been rising for 150 years. They were higher in America than any other capitalists had. And by the 1970s, the peculiar position of the United States after World War II, when we were the only capitalist country that was left, everything else had been destroyed by the war that was over the Japanese and the Germans led the recovery of our competitors. By the 1970s, they were competing. By the 1970s Americans were getting used to learning new names for cars. Instead of Ford, Chevy and Chrysler, they learned Toyota, Dodge, and all the rest.

Outsourcing

So Americans were worried, we are at a disadvantage 'cause our workers get paid too much. Ha ha a computer. I got rid of the work. Who needs the worker? I buy one computer, I can fire 50 high priced workers. Second thing capitalists did beside instituting computers is to move production out of the United States. Big time where to where workers hadn't had this experience, which is where everywhere else in the world to take advantage of cheap. Why did they do that? That goes back to what I told you because the capitalist gets more surplus the less he has to pay the workers for the work they do. So of course you move from here and reopen the factory in Shanghai. Of course Starbucks is opening more new coffee shops in China than it is in the United States. Now, of course, you know what? You have to pay a coffee producer and a a barista in, in in Shanghai?

And more or less, nothing.

White Women Betraying Duty

I mean it's more than nothing. They have to live but not much more and by American standards. Fantastic. So two other things. Not only are jobs disappearing because the computer and export of jobs is happening, but suddenly more Americans or people in America are looking for work first and most important adult white women move into the paid labor force by the millions starting in the 1970s. Whether you call that women's liberation or you call that a changing culture or whatever you call it. There's a movement of a whole new part of our population who used to define themselves as mothers, homemakers, and all of, and wives and all of that. They want a job now. They want a job out there in the world just like the men do. So they're coming in in huge numbers.

Non-White Invasion & The End of Real Wages

And finally, we have yet another wave of immigration for a whole host of reason, but not from Europe this time. Mostly from Latin America coming in, looking for work, women looking for work at a time when the computer and export of jobs that the labor shortage is over. The supply of workers now exceeds the demand. And what does capitalist do? Whether or not he's ever gone to a business school, he realizes I don't have to raise wages anymore, ever. I got loads of people who want a job and can't find one. If any of my workers complained and I've stopped raising wages, I say to them, have a nice day. There's 400 people out there would take your job tomorrow. So be real quiet and I won't slam the door on you. And you know something, most employers don't have to tell that to workers. They already figured it out.

Real Wages in stagnation, Production is too high

Notice this line. That's the line of real wages in the United States. They stopped rising in the 1970s and they never resumed again. Oh my God. An American people who believed they're in a promised land, a land cherished by God, where it's their birthright to do better, to have a higher standard of living, to promise their children the American dream can't do it because the wages to pay for it aren't there. American workers do two things, by the way. Why? Because what I'm showing you, these graphs was never discussed in the United States. No national conversation wasn't begun by the president at the time, by the congress, by the leading opinion makers, by the universities, blew nothing.

The Problem Of Liberalism

So this horrible change in our situation was experienced by the American people, the way they experienced most social changes, as if it were an individual problem.

You your wages aren't going up? You are a dummy. You didn't take the right courses, you don't have the right degrees, you don't work hard enough, you drink too much, too much pot, whatever.

And Americans felt bad. They blamed themselves. We are the leading country on earth to do that and we blamed ourselves. So what did Americans do? They responded to the end of rising wages by making more people go out and work. Another reason for the adult women to get out there because if the family was gonna have the American dream, it now needed two people working full time, not just one old people came outta retirement, teenagers learned the joys of a Saturday job, et cetera. Today, Americans do, according to the OECD, a major research association, Americans do more hour of hours of paid labor per year on average than any other working class in any country on this planet. We work ourselves to death and that's a reaction to this. But that didn't make, didn't solve the problem. It didn't make enough extra money because in our strange society, when women go out to work, it turns out that the family has a whole bunch of new expenses.

Against The Natural World

The mother who stayed home made all the food. When she works a regular job, she can't do that. So now we buy, you know, fast food. It's expensive, it's expensive, and mother has to have a transportation. We don't have a public transportation system in this country and 90% of our country. So it meant a second car. She has to have another set of clothes to go out and work in the office. You put it all together, the net income left after her income with all the extra expenses can't solve the problem. So the American working class becomes a new pioneer, not anymore crossing the uh, the continental United States. We did that a century earlier.

The Normalization Of Debt

The working class of America becomes the first working class in modern history to borrow a quantity of money for its regular daily life that no other working class had ever imagined.

Let, let, let alone undertake it. You in this room are used to going into a bodega in New York City when it's hot and you want a bottle of water and handing someone a credit card, that means you are borrowing the money for the bottle of water. That's a level of credit use and debt. That's unheard of in the history of the human race. Americans went into debt. They borrowed, they kept borrowing. Okay, you don't need a PhD in economics. You really don't take it from someone who has what? You don't need it. But if you keep borrowing and your wages are flat, pretty soon you're going to be in a lot of trouble because the wage is what you have to pay back. The debts you're accumulating. And if the wage is going nowhere and your debts are going up, then say by, I don't know, 2007, you are busted.

You're done. The American working class in 2007 is dead. It can't, it hasn't got the wages and it can't borrow any more money because it can't pack. Pay back the money It already borrows. It can't. That's why the crisis lingers because the mass purchasing power of the United States is exhausted by a history of the whole country, not just by the last couple years. Now quickly, let's look at it from the capitalist point of view. How have the years since the 1970s been for them? Spectacular. Unbelievably best time ever in the history of American capitalists. Why? Real simple. The upper line productivity workers became more productive over the last 30 years just as they had become more productive in the earlier years. Why a worker with a computer can do more things in an hour than a worker without one. Not a tough one. Workers' education was getting better.

The Fallacy Of Efficiency

Workers' discipline was getting better. Capitalists were driving their workers harder for all those reasons. Productivity and what is productivity? The amount of goods and services a worker can deliver to the boss per hour of his or her work. Your productivity, how much stuff you can produce. Okay, again, remember I promise you don't need PhD. If for the last 35 years the wages were flat, what is the wage? It's what the boss gives you for coming to work flat. What productivity is what you give the boss when you work, it goes up. Okay, come on, you can see where we're going, right?

The surplus. What you produce over and above what you get out of what you produce. That's the difference between these two lines. That's what the surplus is. That's what the, these lines measure. So the surplus goes nuts. In the last 35 years, we have the greatest peace time stock market boom we've ever had in our country. Of course the stock market is the people who get pieces of this surplus! That's what they do when they buy and sell stocks.

What do the capitalists do? Ooh, they can't get over it. It's like they were born at the exact right moment, or not born, but I mean arrived at being the head of Dipsy Doodle Corporation. And this is as true on Wall Street as it is on Main Street. A distinction that only in the American imaginary could figure as important. Every capitalist took advantage of this. I don't have to pay my workers anymore because we don't have a labor shortage anymore, but I can get out of 'em as much as another computer and another pressure can can generate. They all did that. The little ones with six workers, all of whom they know by their first name and the big corporation with 10,000 employees, they all did it the same.

They're all equally “kupabah,” as the French would say. Guilty, guilty! Okay, so they're sitting on a mountain of money getting bigger. What do they do with it? They have to speed up a little now quickly. But I can see I have your attention so I'll play with it.

The Fallacy Of Leadership

Number one, the capitalists looked at this situation and they were smart. They did not make the analysis I'm presenting to you because that would make them what? The leeches who cashed in on a social situation that made wages uprising. They wouldn't like to think of themselves as leeches. Most people don't. So they came up with a different story. Ready here. It was.

The reason corporations are making all this mountain of money is because they're led by entrepreneurial geniuses. No, no, no. I mean it's real. Seriously. Those of you that are a little bit older, you remember names like, uh, Lee Iacocca or Jack Welch. Iacocca was the head of uh, Chrysler of Ford or one of them. Jack Welch was the head of ge. We began to have in the 1970s and eighties all these books about this FTIC corporate executives who were making all this money. They were telling a story that they did something. I always thought that was wonderful because if they, if it was their genius that was making money, then it must have been their stupidity that was preventing it back there. But that was an implication they didn't worry about. There was method to their madness and madness. It was because of course if the reason the company is making a ton of money is the great leadership of the top executive rather than the end of a labor shortage, then it would be reasonable for the top executive to say, “pay me because I'm the one making all the money.” In the 1970s, the average of what a CEO got in relationship to the average wage of a worker was 43 to one.

Last year it was over 400 to one. You understand the difference. You understand the difference. So the first thing that this mountain of surplus was used for was to create a whole new class of super rich people who either were top executives or had shares in the companies and were given big dividends and so forth as this situation exploded. They're the people that live in the right neighborhoods that have the apartments, the co-ops in Tribeca, the houses in the Hamptons, sorry, and so on.

Leaving America

Okay, second thing that corp that was done with the surplus, expand the movement of jobs out of the country for an American corporation to close a factory in in Schenectady or to close an office in the Bronx and move to China is very scary too. It's kind of the reverse scare of an immigrant coming here. It's dangerous, it's risky, you don't quite know it. Something you hesitate to do unless you're flushed with money.

A good part of this money was used to keep the whole system going by moving production out of the country cause they could afford it. Now they had the money to take those risks and that's when you see the acceleration of moving businesses to India, China and all the rest.

Third, third money was used by these wealthy people, top CEOs and the people becoming very rich because they were the top CEOs. They understood something with wealthy people have always understood; if your society, especially one like ours that celebrated that we're all in the middle class and everybody's more or less equal. If you suddenly wrench this society into a polarizing rich and poor the way we have done for 30 years, which is why Occupy Wall Street did that 1%, 99% slogan if you do that, the 1% understand the ultimate problem capitalism has always had just like feudalism and slavery had it too.

The Oligarch Minority

If a tiny number of people have a ton of stuff and a vast number of people don't, you're gonna have trouble. And especially in a society where the political system, at least on paper says everybody gets a vote, which we do. So then rich people understand we are screwing the hell out of them really well the mass of people in the economy. But they may decide to use the political system to undo the screwing they're getting in the economic system. They might use their control of politics. They have the votes to get the taxes changed, to get the government spending changed, to get everything changed, to get back politically what they lost on the job. So the only way the wealthy can protect themselves is Dave gotta control the politics. And over the last 30 years, that's what they did. They bought it 'cause that's what they had money and they went in and they bought the parties and they bought the politicians.

You know all that. You don't need me for that.

Meanwhile, the massive people, because remember what I told you about how they reacted to this situation. They sent more people out to work, they borrowed more money.

The Destruction Of The Family

The average American family is freaked out. It's working too many hours. It's got no time to do anything. It's worried sick about its debts. The emotional life of the family, which used to be held together by the mother can't be 'cause she's as exhausted from her work as the father is and he never learned how to do it anyway. Well it's a very serious problem.

The family is falling apart. 30 years ago, the standard comedic program on an evening TV was a wonderfully intact family. Remember Ricky Nelson and the other family, the father goes out to work, the mother waits for him with a big smile when he comes home with a briefcase and they all have dinner together with the dog.

Today we turn on the television. What do we see? A couple who can't stand each other, who haven't had sex in so long, they forgot what it's like. They don't know their children, they it. And we laugh with the recognition of the dissolution of the family. Hello. This is a family who is so freaked out, so worked up, so anxiety written, they don't go to political meetings anymore and since they don't participate they don't pay any attention. So of course over the last 30 years, the mass of the American people, the working class withdraws from politics. We haven't become right wing. It's that the support for the left wing that comes out of the 1930s, the new deal, the Democrat that stopped being political and any came the people with the money who replaced them. And of course we therefore have what we have a system corrupted by what?

By the same basic capitalist way of handling this situation, nothing has changed.

To Protest

Now to answer my questions in the remaining five minutes, have wages started to go up? Not at all. Has productivity stopped rising? Not at all. That's why the profits reported by business remain robust. Of course they do. In fact, wages are tending down now because of the competition of all the unemployed who need work and will work for less and less. There's a strike going on now in the Caterpillar uh, company in Peoria, Illinois, 800 highly paid technically adept factory workers. The demands of Caterpillar six year, no wage increase commitment, six year, no pension increase over those six years, prices are rising currently two to 3% a year due the arithmetic. You don't get any increase in your pension, you don't get any increase. You are taking a loss in what you can actually afford. That's what's offered by them. And when the union said no strike, they don't care. They're moving production out of the country anyway.

Corporations have no incentive to change this. Why should they? When it is said to them, you know, Americans who are unemployed, Americans who, whose wages are not going up, will not be able to buy things. They say, of course they won't. And they use the following language from economics. The United States is a mature economy as anybody over 40 knows. The minute you hear that word mature, you're in trouble. There's a polite word for an unpleasant thought. The United States is a mature economy, means it's not economy that's growing anymore. It's an economy that's shrinking in the way that matters to capitalists. They won't buy. So if you're a company that needs to grow to survive, to compete, your growth is gonna be somewhere else, which means we're now entering a new phase of American history after 35 years in which first manufacturing was moved out of the United States and now white collar work has moved outta the United States, we now have the final step. Corporations see their market as elsewhere in the world, so they're not gonna spend a lot of advertising dollars in Michigan. They're gonna spend it in Mumbai. They're not gonna o open an office to look for new contacts of new business in Peoria. They're gonna open it in Eastern Europe or Latin America. That's where growth is happening. Brazil, Russia, China, India, not here. So those of you who think that corporations will save us because Americans have to have the money to buy, no they don't. They're looking for other people.

So with a political system dominated by them and they see no need to change, no change is gonna come from the top last point. What happened in the 1930s? In the 1930s it was different. The depression was very bad, worse than it is now. Unemployment 1933 was 25%. Today it's eight and a half percent, three times worse. Numbers are not exactly comparable, but you get the idea. So the situation then was worse than it was today. There's no money. Every city and state like today, we don't have the money. We have to cut back their services. We have to lay off people. We have to, we have to. We have to. Company's not hiring terrible. In the midst of that impossibility the way today, Obama and what's his name, Romney, uh, are discussing what cuts have to be done and the Democrats pose as those who will cut us less.

Social Security

The Republicans will cut us more In the middle of that, something happens in the 1930s that ought to make you sit up and take notice. Roosevelt in 1933 and four begins to do what would now appear to be bizarre things. He gets on the radio and he says, I'm gonna create the social security system. We never had that before. I'm gonna give every American 65 years of age or older in the depths of the depression money every month for as long as you live here, have a nice day. Wow, where was the money gonna come from? But before anyone could even answer the question, he goes on the radio the next day and he says, I'm gonna create for the first time an unemployment compensation system. If you lose your job for no fault of your own. We didn't have that before. Just like we never had a social security system before that the government will give you for a year or two, a weekly wage for not working.

Whoa. You can see why the American anthem would become popular. Wow. Wait, was there were tens of millions of people unemployed? We talking big bucks and then the third day he went on the radio and said, yeah, the two things I'm spending money on, I already told you about. It's nothing. Wait till you hear this. He created, he created and filled 12 and a half million federal job jobs working for the federal government, social security for old people, unemployment, compensation for the unemployed and jobs. Where did the mountain of money come from? Answer. Roosevelt went to the corporations and the rich and he said to them, fellas, remember he comes from that, that were his friends, his neighbors, his relatives. He says, I got really bad news. You see all those people marching in Union Square in New York carrying banners. Those are people from the CIO - Congress of Industrial Organizations, the greatest union drive in American history, in the midst of the depression, the CIO unionized millions of workers who had never been in a union before.

And he did that with the help of the Socialist Party, the Socialist Workers Party and the Communist Party, all of which were powerful in the United States at that time. And Rose and they were in the news every day. They were marching everywhere and he went to the rich in the corporation. He said, well, you got two chair, you got two alternatives, gentlemen. One, you give me a shit load of money so that I can take care of these miserable people suffering through the depression. I gotta give them something big because if you don't, coming down the road behind me of the CIO, the socialist and the Communist, and they're gonna cut you a lot worse deal than I'm offering. Half of the rich and the corporations understood what he said and went with him. The other half didn't buy it.

The other half are what then rebuilt the Republican party after the war to to make sure that never happened again. But the half that went with Roosevelt allowed him to go back to the a Ffl, CIO. Well it was then just the CIO and the socialist and the communist and he said, look, I'm gonna get you something for the mass of the suffering people who are creating your movement, I'm gonna give 'em social security, I'm gonna give him unemployment insurance. I'm gonna give 'em a job. I'm gonna give them what you are demanding, but you gotta forget that crap about going beyond capitalism. You gotta drop that stuff because then I can't get them. That deal was made. That deal was agreed to by all of 'em. Some with more grief about it, some with more, but they all bought it. That deal was done.

They paid the money in taxes, highest taxes, corporations and rich people ever paid in America in those years. It's been cutting those taxes ever since. Okay, top income tax bracket in 1943 in the middle of the war, 94% rich people, every dollar they got over about $60,000. They had to give 94 cents to Uncle Sam. They got to keep six. The same rate. Today, 35 cents they give to Uncle Sam, the other 65 they keep to themselves. In 1944, Roosevelt Whit went to the Congress and presented a bill that would create a maximum income in the United States. Nobody could earn more than what the equivalent is. Today it was $25,000. Then the equivalent today would be 350,000. For every nickel that any American earned above 350,000, the tax would be ready 100%. You don't get it. That was proposed by the president of the United States. And when the Congress went ballistic because of the business interest, the deal, the compromise was that 94%. So he got the money out of the rich and he created that.

The Movement

And that meant that the Great Depression wasn't as horrible on American people, even though it was the worst depression. Then the current crisis is, which isn't so bad a depression, but there's no cushion, there's no help, there's nothing. Why? Why? Why is it so bad? That's the question I promised to answer. The final answer beside all the analysis is that there was a movement then Roosevelt had to go to the rich because below was coming. Something very scary. Not only demanding all these benefits, but threatening social change, economic criticism. They were making the concrete demand to debate and change the economic system and they were so scared the people at the top, they gave them all of that, by the way, was the politician who made this happen. Roosevelt taking a great risk the way Obama has his people tell Occupy Wall Street, I can't do these things.

I'm with you, but I can't do these things. It's too difficult. Roosevelt did these things and as what was his reward? The most popular president in the history of the United States, he was reelected four times. No president had ever been reelected four times. The Republicans were so freaked out by it that after he died, they got the law passed. That gives every president only a maximum of two terms. <laugh>, this wasn't a political chance Roosevelt took, it's what made him the most popular president in the history of the country. It was the movement from below that observed no taboo that made the difference. And final irony, and if you understand this, you understand a lot of what Hegel tried to teach us about social.

The Great Undoing, By Liberalism

When the war was over, when the depression had been overcome by the war, that half of the business and rich community that had never bought the threat from below that were prepared to fight, didn't go with Roosevelt. They made sure to undo as their number one priority. The movement that had gotten Roosevelt to provide for people in the depths of the Depression. They went to destroy the labor movement. They went to destroy the socialist parties and they went to destroy the Communist party and they have succeeded. Over the last 50 years. The labor movement has declined in its strength every single year. It's a line that looks like that the A-F-L-C-I-O today represents less than 7% of private sector employees in the United States. It's done. You can't do anything.

The socialist and communist parties are virtual. I mean they exist, but their political influence is a, is a, is nothing compared to what it once was. They went after them, they destroyed them. And now the irony, big historical question. Could capitalism have survived an 11 year depression in the 1930s? Had the leader not provided for people's social security, unemployment, compensation, and jobs, would things have polarized? And then what the argument that was always made was that the movement from below saved capitalism from its own excesses. If that's true, then you must wonder whether the system has now destroyed the only chance it has to avoid the cataclysm. It avoided last time because it destroyed the left. That might have made this society handle this crisis in a different way. Europe is moving ever closer to the edge of a cliff. The United States is literally talking about a fiscal cliff at the end of this year, if you pay attention to these things, we are a have a capitalism that is spinning outta control.

It produced depression and a collapse that was not expected. It has shown itself unable for five years to handle it, to overcome it, to fix it. And it is now pushing ahead as if it doesn't have to deal with this problem. It can just go on. Occupy Wall Street is the first sign. Uh oh. The same mechanisms are reviving again, nobody knows how that'll develop or where it'll go, but it's a very peculiar capitalism that produces these kinds of catastrophes and develops a politics that makes it uniquely incapable of handling its own problems. The only bad news in all of this is that you and I are living and have to live through this. And the only way to change it is if another movement from below can be created either to reproduce what happened in the thirties, at least a softer, gentler depression or the alternative that was avoided in the thirties, which is a final coming to terms with whether capitalism is indeed the best this country can do.

But lest you think I'm ending on a pessimistic note, which I'm not, I can assure you that speaking across the country as I do doing the media work that I do more interest is in the kinds of analysis I've just tried to present to you in the last two years than in the previous 40. Whatever you hear and read about the Tea Party, something very big is changing in the United States below the surface where the interest in the openness to the literal hunger for analytic explanations of the sword I've just given you is greater than anything. And I was active in the 1960s. This is from that point of view, a much better situation than we had that much more interest, much more response.

Thank you very much for your attention.

-R.D.W.

END.

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Keywords

bargain - an agreement between two or more parties as to what each party will do for the other.

borrowed - take and use (something that belongs to someone else) with the intention of returning it.

boss - a person who is in charge of a worker, group, or organization.

capitalism - an economic system where private individuals own and control the factors of production, and prices are determined by supply and demand, where profit is in command.

collective - done by people acting as a group.

commodification - a raw material, primary agricultural product, or something from the Earth, that can be bought and sold, and transformed into something of value.

debt - something, typically money, that is owed or due.

distribution - the action of sharing something out among a number of recipients.

employ - give work to (someone) and pay them for it.

exploitation - the action or fact of treating someone unfairly in order to benefit from their work.

festivals - a day or period of celebration, typically a religious commemoration.

feudalism - the dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants (villeins or serfs) were obliged to live on their lord's land and give him homage, labor, and a share of the produce, notionally in exchange for military protection.

goods - merchandise or possessions.

haggling - dispute or bargain persistently, especially over the cost of something.

interview - a meeting of people face to face, especially for consultation.

job - a paid position of regular employment.

liberty - the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.

lord - someone or something having power, authority, or influence; a master or ruler.

market system - a system where a regular gathering of people meet for the purchase and sale of provisions, livestock, and other commodities.

Marxism - the views and philosophy of Karl Marx (1818 - 1883).

masters - a man who has people working for him, especially servants or slaves.

method - a particular form of procedure for accomplishing or approaching something, especially a systematic or established one.

mobility - the ability to move or be moved freely and easily.

money - a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively.

produce - make or manufacture from components or raw materials.

product - an article or substance that is manufactured or refined for sale.

ritual - a religious or solemn ceremony consisting of a series of actions performed according to a prescribed order.

rule / custom - one of a set of explicit or understood regulations or principles governing conduct within a particular activity or sphere.

serf - an agricultural laborer bound under the feudal system to work on their lord's estate.

service - the action of helping or doing work for someone.

slavery - the practice or system of owning slaves.

slaves - a person who is forced to work for and obey another and is considered to be their property; an enslaved person.

specialize - concentrate on and become expert in a particular subject or skill.

surplus - an amount of something left over when requirements have been met; an excess of production or supply over demand.

the division of labor - the assignment of different parts of a manufacturing process or task to different people in order to improve efficiency.

the market - a regular gathering of people for the purchase and sale of provisions, livestock, and other commodities.

time - the indefinite continued progress of existence and events in the past, present, and future regarded as a whole.

together - with or in proximity to another person or people.

trade - the action of buying and selling goods and services.

transformed - make a thorough or dramatic change in the form, appearance, or character of.

work - activity involving mental or physical effort done in order to achieve a purpose or result.

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-pe

2-7-2025