Richard Wolff has emerged as one of the most prominent progressive economists in America. He appears on Free Speech TV, Link TV, and Pacifica Radio, and has been a repeat guest on Bill Moyers’s program, as well as appearing on Charlie Rose’s show. His books include Capitalism Hits the Fan, Occupy the Economy, and Democracy at Work. Wolff got his B.A. from Harvard, a Master’s from Stanford, and a Ph.D. in economics from Yale. He is a professor emeritus at the University of Massachusetts in Amherst and a visiting professor in the graduate program for international affairs at the New School University in Manhattan, where he lives. Born in 1942 in Youngstown, Ohio, he’s the son of working class parents who were refugees from the Nazis. After his family moved around the Midwest, they relocated to New York. In the 1980s, Wolff ran to be New Haven’s mayor and city councilman on the Green Party ticket.
I caught up with Wolff during a January California tour, where he was mobbed by overflowing crowds wherever he spoke.
Q: For most of your life, you’ve toiled in obscurity. How does it feel to finally have a mass audience?
Richard Wolff: I’ve got to pinch myself; I’m having the time of my life. But it’s not me; it’s the message.
Q: And that message is?
Wolff: The capitalist workplace is one of the most profoundly undemocratic institutions on the face of the Earth. Workers have no say over decisions affecting them. If workers sat on the board of directors of democratically operated self-managed enterprises, they wouldn’t vote for the wildly unequal distribution of profits to benefit a few and for cutbacks for the many.
Q: Why do business leaders in the United States and Western Europe favor austerity? Doesn’t it reduce demand for their products, and thus lower their potential profits?
Wolff: The question is good. Why are executives of corporations constantly looking for every conceivable way to lower labor costs? The more successful capitalists are in cutting their wage costs, the less money workers will have to buy back what those same capitalists produce. It’s a contradiction.
Sure, businesses would like lots of purchases. But the only way to deal with a depressed economy would be to tax the rich, who are hoarding their money, and move it into the hands of the middle and lower classes, because they’re in a situation where they’ll spend it as fast as they get it. That would solve the problem of demand, but only at the expense of the rich and corporations.
They’ve made a choice: They’d rather tough it out—stick it to the mass of people, even at the cost of losing customers—than be the one who gets hit with the tab for boosting the masses’ purchasing power.
Here’s where globalization comes in. U.S. businesses favor austerity here because they want to decrease the power of labor and save on labor costs, and they see a way to pull that off by shifting the sales of their products from the U.S.’s depressed, austerity-riddled economy to the exploding economies of Brazil, China, India, and so on.
Globalization gives American businesses an option: If austerity cripples purchasing power here, they still get to sell goods; they’re just going to sell them elsewhere. The United States is being reconfigured to become more of an export focused economy. That’s Obama’s policy. It’s a way of managing demand when austerity crunches your own working class’s income.
Q: What do you think of President Obama?
Wolff: I look at Obama by linking him and the role he plays to the broad contours of what’s happening in the United States. The last half-century of American history has been the system-atic rolling back of what had been achieved by the pressure from below in the ’30s and ’40s.
The rollback of the New Deal finally eventuated in 2008 with a really serious economic crisis, which was the closest thing to the Great Depression we’ve ever had. You needed more than ever a distraction, somebody who could seem to be an “outsider,” a fresh new face: a young, active African American. How much more outsider within America can you be?
Of course, it is a remarkable phenomenon that someone kept outside of America—the African American, marginalized, subordinated—could actually find his way into the White House.
But Obama’s Presidency is continuing the reversal of the New Deal. Unfortunately, that’s the role Obama has played and the legacy he’ll leave.
Q: What do you think when people accuse Obama of being a “socialist”?
Wolff: It’s a reflection of the fact that we live in a country that has so confused and demonized socialism that anyone can call anybody the word. It has all the clarity of saying “he’s bad” or “he’s not nice”—the point of it is to condemn, but the term’s so vague and abstract now that it has no meaning. When it comes from the right it has no more meaning than that Obama is someone who believes the government has an important role to play in economic life. It’s verbal emptiness, a way to get others to think badly about somebody you don’t like.
Certainly, Obama has never claimed to be—nor has he done anything to qualify him as—a socialist by any definition. It’s gibberish.
Q: With power increasingly in the hands of CEOs, there is still a myth that shareholders control corporations.
Wolff: You’re correct, but what you’re referring to is a “formal right,” but not a “substantive right.” Yes, you can buy a share of stock but that doesn’t have any real meaning for a corporation because a tiny segment of U.S. shareholders owns a huge portion of all the shares. Participating in shareholding in any significant way is not something most people in capitalist societies have ever, in fact, been able to do.
In most capitalist enterprises, and certainly most major corporations that dominate capitalist economies, the organization of work is highly stratified. At the top are the major shareholders, typically ten to twenty people who own major blocks of shares in the company. Because of that, they have the voting power of all those shares and that gives them the authority under the law to select the board of directors, between fifteen and twenty people.
Together, the major shareholders and the board, thirty to forty people, make all of the decisive decisions in a corporation: What the company will produce, how, where, and, finally, what to do with the profit the enterprise generates. The vast majority of workers in a capitalist enterprise are required to live with the results of all of the decisions that are made by a tiny minority.
Q: What’s the alternative?
Wolff: A cooperative enterprise is the key alternative to a traditional capitalist enterprise. All the workers, whatever they do inside an enterprise, have to be able to participate in collectively arriving at the decisions about what, how, where to produce, and what to do with the profits in a democratic way. One person, one vote should decide how these things are done.
The reason why we’re interested in making a transition from the top-down capitalist organization of enterprises to a radically different cooperative or democratic organization is simple: We believe the capitalist organization of production has now finished its period of usefulness in human history. It is now no longer able to deliver the goods.
It’s bringing profits and prosperity to a tiny portion of the population, and delivering not the goods but the “bads” to most people. Jobs are steadily more insecure, unemployment is high and lastingly high, benefits are increasingly being reduced, and the prospects for our children are even worse, as more of them go deeper and deeper in debt to get the degrees that do not provide them with the jobs and incomes to get out of that debt.
The crisis we endure is the product of an economic system whose organization is something we should question, debate, and change.
Q: What is your definition of a cooperative and of a collective?
Wolff: The word “cooperative,” to define a business, is very old. Cooperatives have existed for many centuries, all around the world, as well as throughout the history of the United States. It means a variety of things.
Sometimes, cooperative means that a group of producers who make something will get together and share—cooperatively own—one of their inputs. For example: A group of
farmers, none of whom individually has enough money to buy the land they need to work, can sometimes form a cooperative so that they pool their money and then they can collectively afford to buy land. They agree to farm different portions of the land but to own the land cooperatively.
Another example is in winemaking. Around the world, particularly in Europe, it’s very common for wines to be produced and sold by a cooperative.
The actual growing of the grapes and making of the wine is done by individual farmers, with or without employees. The word “co-op” doesn’t apply here to the actual work being done, but the farmers get together and literally pool their wine. They pour the wine each of them has produced in their vats into one central vat and then cooperate to sell it. They can do better selling wine in larger quantities to larger buyers than they could doing it by themselves. This is sometimes called a marketing or sales co-op.
The word “collective” is not so often used because it has been basically used by socialists and communists and has a different history. The word “cooperative”—as I’m interested in it, and as people now in the United States and other parts of the world are becoming more interested by the day—means the workplace itself is organized cooperatively, rather than in the conventional capitalistic, hierarchical form.
Q: What are some examples of U.S. cooperatives?
Wolff: We’ve produced a website where a whole host of examples are given: www.democracyatwork.info. The Arizmendi Bakeries provide one example. There are five of them all linked together in one parent corporation, located in the Bay Area. They’re completely run by the workers—those who bake the bread and pastries, make the coffee, do the buying, maintain the premises, et cetera. On many days, they do the specific tasks in the division of labor they’ve created for themselves. But then periodically all of the workers get together and they don’t do their particular task. Instead, they collectively discuss and debate what to produce, how to produce, where to produce, whether to expand, and so on. Those decisions are decided in a democratic way.
There are hundreds, perhaps thousands, of these worker co-ops or producer co-ops. Many companies, including famous names like Apple computers, if you go back and look at the early days you may be surprised to find out that they were co-ops. The original founders were often workers dissatisfied by being mere employees in somebody’s company, so they got together with others, often at young ages, and pooled their enthusiasm and energy and set up a different kind of enterprise. This is very common in Silicon Valley.
Every year, hundreds—in some years thousands—of engineers quit their jobs in big companies like IBM, Oracle, or Cisco, and get together with friends and say: “OK, we want to start a different kind of business. We’re all going to take our laptops and gather at Harry’s garage, and we don’t want to come to work every day in a suit and tie or for some executive who doesn’t understand anything about computers telling us what to do. We don’t want any of the rigmarole; it’s stifling, it kills our creativity. We’d like to go to a place where there are no bosses, where we’re all equal.”
And that’s what they’ve done. And in many cases they’ve been very strict: All decisions have to be made by consensus. Everybody is equal.
Nothing would more quickly and definitively reduce U.S. income inequality than allowing every worker in all businesses to participate in deciding the range of incomes from one worker to another. They would never do what is now a matter of normality: give one person millions, in some cases billions, while others have barely enough to make a living.
In America, we debate everything except capitalism. If there’s an institution in your society that’s above criticism, you’re giving it a free pass to indulge all of its weaknesses and darker tendencies.
An honest, healthy society would never shrink away from debating where we’re at with capitalism. Can we do better? How might that work?
Moving to a cooperatively organized enterprise is one of the best ways to really do something about unequal distribution of wealth.