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.
Your work with Steve Resnick points to the oscillations between private and public capitalism. Do you see the stimulus package and the financial overhaul bill signifying a shift back to public capitalism?
I think that we are having a pendulum swing back to much more state intervention than we had in the past 30 years, a return to a Keynesian economic situation just as the arrival of Reagan in 1980 signified the pendulum going the other way. I don’t see any way for that to stop or any major force preventing it, especially since it was the business community, and more particularly banks facing the collapse of the credit system, that led the way for government intervention. It is now a debate over the extent and forms of government management, not of government management itself. The irony here is that the money the banks now use to lobby the government to shape regulation to their liking is the same money the government gave the banks when it bailed them out; so for example, the pre-1999 legal separation of commercial and investment banking in the US was not re-established.
However, the following contradiction has to be worked out: how to reconcile a massive and unprecedented government economic intervention with a dominant US ideology and politics that has been neoliberal for the past 30 years. The solution was to present government intervention as a temporary device to merely “restart” the economy. The Bush-Obama plan image is then to resume the economy prior to the crisis (e.g. in 2004-2005). This fails to address the fundamental economic and social issue: that real hourly wages in the US have been stagnant for the past 30 years, a situation which was masked prior to the recession by having workers work more hours and take more debt.
What are the political implications of the crisis, both in the Right, with the emergence of the Tea Party, and in the Left?
On the Right-wing: An economic collapse like the one the US is currently facing (an unemployment rate of 17.5%, if you add involuntarily part-time workers and discouraged workers to the 15 million of unemployed) frightens people. Since Americans tend to view economic and social problems as ultimately caused by government and politicians, they focus their anxiety and fears on all levels of government. Among extreme right-wing groups, this tendency is intensified because Obama is black. So they accuse him of secretly leading the US to socialism and other similar fantasies. Despite obsessive media attention to this right-wing, it remains quite small, although it could become larger if the economic crisis worsened again and if no left-wing movement for economic change arose.
The center-left of US politics – the Democratic Party – finds itself now in an awkward position. It does not want to attack the president because it fears the Republican alternative. So the center-left concentrates on attacking “corruption” and “excessive salaries for corporate executives” and becoming the champion of new government “regulations” to “better control the economy.”
The increase in the influence of the more critical US Left emerges now in the realm of culture.
Leftist academics across America are now able to criticize capitalism per se both explicitly and publicly in ways not seen over the past 30 years. The former demonization of Marxism (linked always to a
dangerous external evil empire, USSR, China, etc.) has faded fast. For example, until two years ago, when a bank repossessed someone’s home, it was generally understood as the displaced person’s failure and fault. Now bank repossessions are widely recognized as a failure of the economic system. This broad shift in public attitudes and the openness to anti-capitalist social criticism presents huge new opportunities for a serious left revival in the US. The key question is whether and how left forces in the US can respond to this opportunity.
How have unions in the US responded to the crisis?
Trade unions have been declining in the USA for the past 50 years. Today they are extremely weak. On the other hand, you have some positive straws in the wind. The United Steelworkers of America, one of the largest unions in the US, signed last October an agreement with the Mondragon Cooperative Corporation, in which the two sides stressed their desire to collaborate. This is very important because it marks the first time that a major American trade union has allied itself explicitly with a wholly different vision of how workers should respond to capitalism’s failures. Mondragon embodies the idea that workers stop selling their labor power to others, capitalists. Instead they organize and operate enterprises in which the workers not only produce the goods and services but also function, collectively, as their own employers. Thus the workers themselves would henceforth make the decisions of what to produce, how to produce, and what to do with the profits of their work. This realizes a deep aspiration of workers – to transform their work activities into genuine communities of labor, to make their enterprises “communist” in just that sense. Such workers could thereby democratize production and share power democratically with the communities around them. Capitalists as a special minority with dominant economic and social power would fade away much as kings, feudal lords, and emperors did.
I think the United Steelworkers union deserve enormous support and applause for this initiative. I would only fault them for not seizing the opportunity in this crisis to immediately operationalize this alliance around 1-2 focus proposals that would make everybody stand up and take notice. Let me give you one example: Demand a portion of the US stimulus program of $800-billion to subsidize the formation of Mondragon enterprises by unemployed people. Beyond merely suggesting the Mondragon model, here would be a concrete, achievable program to move in that direction.
Why would it matter to have islands of such “communist” production, appropriation and distribution of surplus in a country that is mostly comprised out of capitalist or self-employed enterprises. Isn’t this self-defeating, unless a complete transformation occurs, and the market imperative is abolished?
At a first level, the presence of enterprises in which workers were collectively their own bosses –“communist class-structured enterprises” – would create a radically different political landscape for the Left. It would create a profound new kind of alliance between Leftists active in politics and culture and working-class people in such enterprises. This would complement and strengthen existing alliances with employees in capitalist enterprises The ability of the Left to develop a base in an organic relation with working-class people operating their own enterprises would be enhanced. This would be of special importance in the US, but likely elsewhere as well. It would transform left politics in multiple ways.
Additionally, I think that it is possible to ask the American people to support such communist enterprises out of a commitment to free choice, both consumer choice and labor choice. “Free choice” is a basic popular slogan in US culture and politics. Americans, we would insist, should have the free choice to work either in a hierarchical capitalist enterprise or in a democratic worker-operated enterprise. Americans should be able to choose to buy products made in capitalist versus communist enterprises. For such choice to exist, the government must subsidize and support the development of communist enterprises.
For the left, a program for such enterprises represents a concrete new idea, practicable now, and yet also a symbol of the social future we aim for. I think that adding this idea to the traditional goals of the left could excite the next generation of young people in ways that the traditional goals alone have not done and cannot do by themselves. These new communist enterprises would need trained specialists, lawyers, architects, managers alongside the workers who are also directors. The left can invite and welcome all the people to become part of a socially revolutionary process to realize this democratic transformation of the world of work.
How do you evaluate the response of the EU to the debt crisis?
Interwoven with solidarity between continental Europe and the US, there has also been competition, hostility, and struggle. One form of that has been the contest between an Anglo-American model of capitalism and a European social or “solidaristic” model. The latter used state-provided social welfare to moderate and manage class struggles.
When the crisis erupted in US capitalism, continental Europe celebrated its social model, its way of managing class struggle. The crisis seemed much worse in the US than in Europe. Moreover, the EU seemed better able to manage the crisis. Yet European leaders, media and much of the public were mistaken to believe that US capitalism’s crisis would not spread to Europe. They did not grasp how the market and other mechanisms would enable the US to shift the costs of the crisis from the US to other parts of the world including Europe.
The US government responded to a severe capitalist crisis by massive costly intervention. It dared not tax Americans to pay for that intervention and it dared not print money since that might jeopardize US gains from the dollar’s role as world currency. So the US government borrowed trillions of dollars to rescue US capitalism. Suddenly, private lenders around the world realized that they could put all of the money they wanted to lend to governments in the one safest country, the US. There was suddenly no need and no willingness to lend to other countries that were riskier borrowers than the mighty US. It was not that Greece or Portugal or Spain had become that much riskier than they had been last year. It was rather that the capitalist crisis in the US had changed the global credit system in ways that brought loanable funds to the US and made them much, much costlier for those other countries. Credit markets were working to shift the costs of the crisis from the US to Europe.
What is the particular role of Greece in the unraveling of the crisis?
Greece happened to have a sizable quantity of its government debt maturing this May. So it was the first European government to confront the fact that lenders preferred to supply loans to the US for its government programs rather than provide them to Greece. Lenders suddenly demanded much higher interest rates from Greece; credit markets helped the US and hurt Greece.
Suddenly Greece confronted the difficulties of resolving its internal difficulties – politicians placating workers and employers by not taxing either of them enough while providing them with much of what each wanted. Greece – like all other capitalist economies – “solved” its class contradictions by borrowing instead of taxing or cutting spending. It thereby postponed struggling over which class pays those taxes and which class suffers that cut spending. That postponement worked for years and would have continued except that US capitalism experienced a major crisis. Then the Greek government and the Greek people discovered the costs of “solving” class contradictions via debt. In a basic sense, capitalism’s crisis in the US confronts Greece with the need finally to confront its own class contradictions at home. Because the US can borrow more to postpone its class struggles, it deprives Greece of the funds needed to postpone its class struggles.
Greece’s capitalists have understood that the long postponed class struggle has now returned. They demand austerity for the workers and advertise it as the policy for which there is no alternative, as the policy required by the EU and the ECB, as the long overdue punishment for “living beyond one’s means.” An alternative would be to raise taxes on business and on the rich while reducing all sorts of subsidies to them. Honest economists always remind people that the competitiveness of any country’s exports depends on their prices which in turn depend not only on workers’ wages but also on capitalists’ dividends, managers salaries, etc. Cutting the latter can lower export prices and thus solve all sorts of problems. Government supports of new economic activities by new social groups can be much more successful than were the old subsidies to a handful of Greek family enterprises. Options to austerity are many.
The whole world is watching events in Greece as postponed class struggles return with intensity. People sense, quite correctly, that what is happening in Greece will happen in many other countries. Capitalism may shift the costs of its crisis onto the workers, but it is also possible that workers will finally move beyond capitalism. Options exist. The claim that no options exist is always an attempt to prevent people from seeing and exploring the options actually present.