by Richard D. Wolff, from MRzine
Over the weekend, Fitch — the major rating company that, with its fellow majors, Moody’s and Standard and Poor’s, dominate the business of assessing the riskiness of debt instruments — took a highly publicized step. It downgraded the credit-worthiness of the sovereign debts of many European countries. What a spectacle! These rating companies were distinguished by their laughably inaccurate (to be extremely polite) assessments of the risks associated with asset-backed securities. Those assessments contributed to the economic crisis we are living through. Now the world is supposed to hang on — rather than laugh at — their credit reports.
Europe’s debts — and social tensions swirling around them — are clearly problems. Governments collapsing in Greece, Italy, and Spain show that, among other signs of the obvious. The rating companies’ downgrades of European debt are rather like downgrading the likelihood of good weather while the rest of us are already rushing to close the windows against pouring rain. Read the rest of this entry »
Short comment for Elefterotypia (Athens, Greece daily paper)
by Richard Wolff.
PUBLISHED ON FEBRUARY 7, 2010
2010 marks year #3 of this crisis in global capitalism. This is a systemic crisis with extreme symptoms in different places at different times: now Icelandic banks, then US homeowners being foreclosed, now Mexico losing emigrants’ remittances, then Greece’s government bonds, and so on. Capitalist hegemony cannot admit or deal with the disease of capitalism as a system. Instead, the focus shifts from symptom to symptom to press local institutions to shift the costs of crisis onto workers.
Capitalism’s systemic crisis is no mystery. For 30 years, wages were restrained (by incorporating vast new supplies of labor power) relative to enhanced productivity (via computerization and telecommunications). Exploding surplus and profits produced another capitalist speculation frenzy built on excessive risk. Workers in Europe and especially the US reacted to stagnant real wages by borrowing too much. By 2007, the crisis emerged from: a financially overextended working class, employers with excess productive capacity, wealthy individuals with too many risky investments, and an international economy with severe trade and capital flow imbalances among nations.
Instead of moving beyond a capitalist system that endlessly reproduces such crises, servants of the status quo prefer to blame and squeeze some local workers: this time Greeks.
by Richard Wolff.
PUBLISHED ON FEBRUARY 12, 2010
Global capitalism imploded in 2007. The central causes of capitalism’s crisis include:
the end of real wage increases in the US and the substitution of rising worker debt far beyond what workers could sustain;
the buildup of excess global industrial capacity;
the explosion of speculation and excess risk-taking by banks, other financial and non-financial corporations, and the rich;
the systematic misrepresentation of credit risks by capitalist rating firms;
the failure of supervision and regulation by governments increasingly dependent on corporations and the rich (for campaign contributions, lobbyists’ supports, etc.) over the last quarter century;
the growing indebtedness of governments;
the huge imbalances between trade and capital flows among nations (and, above all, the trade deficits of the US and the trade surpluses of the PRC)
In this list, the role of Greece is minor almost to the vanishing point. But Greek workers loom large among the proposed victims of the capitalist crisis they did not cause. Read the rest of this entry »
by Richard Wolff.
PUBLISHED ON JUNE 4, 2010
Political theater now grips Greece. As with ancient Greek plays, today’s drama also reaches and touches everyone else. We sense Greece’s dilemmas becoming our own.
Her rulers declare that a crisis now threatens Greece. They blame it on the masses. To overcome it, they must impose great suffering on the masses. The rulers’ chorus intones the absolute necessity, the utter unavoidability of that suffering as the only solution. There is, it insists, no other option. The masses waver. Many lean toward resignation, accepting the suffering as punishment for their sins that caused the crisis. For the moment, the rulers exult as their elaborate political theater of blame seems to have successfully shifted the costs of the crisis from them to the masses. And yet, there are also signs of impending oppositional anger from the masses. Huge demonstrations rocked Athens in May. Cathartic moments loom. Read the rest of this entry »
Interview with Athens, Greece daily newspaper, Avgi
by Richard Wolff.
PUBLISHED ON JUNE 6, 2010
At the end of May, Professor Wolff spoke at University in Athens, Greece. There, he was interviewed for the popular daily paper Avgi. Below is the English transcription.
The US has, in the past three years, witnessed a recession and, lately, a recovery which has been characterized as “jobless”. How do you evaluate the prospects of the upturn?
There are some signs that the recovery is, if not over, at least in trouble. Since early April of this year, the stock market has stopped rising, while bank and housing difficulties are beginning to show up again. The problem of unemployment was only becoming worse, while we are only in the early stage of the crisis’s impact on the public sector in terms of lost public jobs, cutbacks in public employment and services, particularly in the biggest states, like NY and CA, where tens of thousands of public employees have already been fired. Particularly hard hit are public educational institutions, which compromises the ability of the US to compete in the long-term, since the majority of the US skilled labor force is trained through public higher education.
There’s no way to predict the future. However, the decline of the euro makes American exports less
competitive in many areas and means that exports cannot, as had been hoped, lead a recovery of production (and not just of finance and the stock market). That is why the Senate now debates another stimulus – pegged at $200 million – and tries to avoid admitting the failure of the first stimulus. The US government is now functioning as the basic support for US capitalism. Read the rest of this entry »
by Richard Wolff.
PUBLISHED ON APRIL 27, 2010
Yet again, business leaders, politicians, academics, and media are blowing smoke around Greece’s efforts to cope with “national debt” problems. Something far more important for the world than this small country’s financial travails is at stake. Indeed, what is at stake affects us all. What is happening in Greece parallels developments everywhere; only details and timing vary.
The struggles in Greece begin with the complex relationship among workers, employers, and the state. Workers and employers are locked into the endless, multi-layered struggles of capitalism (workers vs. employers over wages and working conditions, workers competing for jobs, and capitalists competing against one another for profits). One object of these struggles is the state: varying combinations of workers and employers press the state to (a) serve their interests rather than others’, and (b) shift the cost of doing so onto the others. Read the rest of this entry »
Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne).
by Rick Wolff
Clearly, the global capitalist crisis that started in 2007 will be neither short nor shallow. The government rescue of the US financial industry pumped enough extra money into the economy and sufficiently reduced interest rates to give banks and the stock market the heavily hyped “recovery” that started March 2009 and is now over. What is worse, their recovery never reached much of the rest of the economy. Efforts to broaden the recovery or extend it beyond one limp year have failed. That failure cost Washington trillions in borrowed funds from lenders who now demand guarantees that those loans will be repaid to them with interest. Similar demands now confront many other governments who likewise borrowed heavily to cope with the crisis in their countries. Read the rest of this entry »