“Capitalism’s Stunning Contradiction” Interview of Richard D. Wolff, Professor of Economics Emeritus at the University of Massachusetts, Amherst. His latest book is “Imagine: Living in a Socialist USA” on The Real News Network with Paul Jay.

Click for Source Video and Text of Interview of Richard Wolff by Paul Jay on The Real News Network

Richard Wolf says every capitalist tries to systematically reduce wages, then can’t sell what those wage workers have produced



PAUL JAY, SENIOR EDITOR, TRNN: It used to be that to talk about the capitalist system would bring up the demons of McCarthyism and the House Un-American Activities Committee. It was un-American to talk, but that’s changed. The issue of capitalism or socialism needs to be debated out in the open — People are ready for that conversation. Richard Wolff is one of the nation’s most well-known Marxist economists. He’s the host of The Economic Update, a weekly radio show on WBAI. Richard is here to actually talk about Marx and our economic systems and socialism.

WOLFF: It’s an amazing thing to me that criticisms of capitalism the last three or four years is like nothing I’ve ever expected. Everywhere in the country, people want to have that conversation. I’m finding audiences and the conversations are intense, engaged, and very much looking for new solutions.

JAY: It’s getting clearer to a lot of people that capitalism is out of solutions — Blocking financial reforms + financial institutions NOW even BIGGER + Banks and Hedge Funds are still speculating wildly + Low wages + Blocking discussion of Global Warming. So, we are finding this sense that there aren’t capitalist solutions anymore?

WOLFF: Most important is the Banking Crisis beginning in 2007 that lingers and lingers — was not supposed to happen or cut so deep + Banking continues to resist government efforts to change it + People ask questions “Are we in a bigger, longer-term dilemma for capitalism.” I think we are in a long term crisis.

WOLFF: For the 250 years capitalism spread from Europe all the way to Japan and now even China — building factories, offices, and stores. The rest of the world Asia, Africa, and Latin America provided the raw materials. That was how the world was globally organized.

WOLFF: 1970s began radical change as the jet engine could get anywhere in the world in a matter of hours and telecommunications and the computer allowed mangers to monitor a factories anywhere in the world, like it was done the street. And so capitalists have basically said to Western countries “GOODBYE” we’re leaving, we are abandoning you. You are not where the profit is. The profit is in SLAVE LAROR COUNTRIES where we pay a small fraction of those wages and we can operate with impunity. It’s the perfect capitalist scenario. We made a lot of money for 200 years in the West, and now we’re leaving. = DETROIT is BEST EXAMPLE literally ripped apart and destroyed because three corporations decided, for profit, to leave that place and say goodbye and leave behind the desolation, unemployment, collapsed housing, and a city in BANKRUPTCY. We’re abandoning you.

JAY: Starting wage used to be $26 an hour in Detroit. In this great reorganization, it’s now $14 an hour.

WOLFF: Capitalists are saying to the West, we’re leaving. Now, of course, if you make it worth our while not to leave by bringing the wages and the costs down, we might reconsider. But what they’re saying to the American people is, you can slow the decline as we leave by taking MASIVE WAGE CUTS. This is an unbelievable proposition to presented to Western countries.

JAY: But it’s so self-destructive for capitalists who sell to the WEST. They have robbed the West of their consuming power and replacing them with low-wage workers. Where are you going to sell your profits to people so encumbered by DEBTS and LOW INCOMES?

WOLFF: As Marx was fond of saying “capitalists are caught in a stunning contradiction.” Every capitalist tries to lower the wage costs and reduce the number of workers using automation, computers, and machines — While never facing the fact that by systematically reducing wages, they won’t be able to sell their products or services. Capitalists are caught in this contradiction that undoes you by the absence of anyone to buy your stuff. = Back to the naked Contradiction of the Capitalist system MARX defined so well.

JAY: So this is a long-term decline — NOT cyclical? Why is this different?

WOLFF: Well, we still have the cyclicals, but this has certain unique characteristics. Almost nobody saw this Crisis coming and said it wouldn’t last long and would NOT CUT DEEP. That was wrong! The utter failure of anyone in this system to cope with this other than the 0.1%. The politicians and bankers FAILED and the banks that were too big to fail are now much bigger. Nobody is solving it the problems and wealth is RISING TO THE 0.1% EVEN FASTER as the MIDDLE CLASS SHRINKS.



The mass of people are like deer caught in the headlights not knowing which way to go — NO unions to help and socialist are still DEGRADED by the 0.1%. People know this isn’t just a temporary crisis, there’s something fundamental shifting and wrong with the system. NO one quite knows what to do.

JAY: I’ve always been struck by one important thing Marx and Engels said, “socialism isn’t just some good idea. It’s not a better policy that we could adopt. It’s something that actually grows within capitalism.” We see these massive enterprises, fabulously well-planned and efficient like Walmart, who try to drive down wages and use computerization to create a Walmart planned economy. Marx’s whole point is this is the seeds of socialism, except they’re privately owned.

WOLFF: They’re privately owned and driven by the maximization of profit for a TINY FRACTION of the population. They are capable of staggering savings NOT HELPING THE COMMUNITY, because the whole point of it is to gather absurd wealth in the tiny hands. Marx’s point is this WHOLE CONCEPT is completely irrational and EVEN THE BEST PROPAGANDA (public relations) cannot forever cover it up.

WOLFF: We’re in a moment where the short-run crisis and the longer-run decline, the irrationalities and contradictions caused by EXTREME ELITIST-ORIENTED CAPITALISM is rejected by the American working class that’s being exploited on the job and at the same time suffering a lower standard of living NOW for 3 DECADES of MASSIVE DEBT INCREASES even destroying the future of our children. Capitalism is saying to you, we’re going to exploit the hell out of you, but we’re not giving you a rising standard of living. We’re actually giving you a falling one. We’re condemning your students to debt they can’t handle. We’re taking away the benefits. We’re taking away all of the job prospects and hopes for the younger generation. We’re going to work you on the job more hours than ever, and we’re going to give you less for it. Whatever you think about the past, Will American workers find that an acceptable offer.

WOLFE: While traveling around, I see a level of hunger to understand what’s going on. I’ve never seen that before and I see it in audiences of 200, 400, 1,000. What’s clear is they want an explanation of how did this happened to the “SO-CALLED” American dream they thought they were going to get.


NOTES: C H Douglas’s “Economic Democracy” and “The Monopoly of Credit” published in 1920s

Douglas’s Simple equation = Absolutely no point in producing anything if it is not going to be consumed.

Douglas’s = People must have sufficient purchasing power available to consume all production. = DEMAND SIDE ECONOMICS!


FACT: CAPITALISM for centuries = The best way to distribute purchasing power to the general public is through wages.

FACT: CAPITALISM for centuries = Kept the wage component at around 25% to 30% of the total cost of manufacturing = Causes average consumer to stay in a perpetual cycle of debt = Bankster USURY INTEREST MAXIMIZED!

FACT: WAGE SYSTEM = Wonderful for banking industry to MAXIMIZE DEBTS AND THEIR USURY INTEREST INCOMES GROW AND GROW based on an inexhaustible supply of credit “OUT-OF-THIN-AIR.”
FACT: WAGE SYSTEM = Worked as long as the Banks recognized an element of social responsibility and were well-regulated.

FACT: WAGE SYSTEM = FAILED COMPLETELY when Banksters gained deregulation (1980s) and began profiteering (1999) with Exotic and Toxic financial WMDs to far more quicker EXTRACT “EASY MONEY” = BANKSTERS IGNORED SOCIAL RESPONSIBILITY IN EXCHANGE FOR MAXIMIZED GREED!

FACT: For 200+ YEARS manufacturing has annually produced more with less effort = With NEARLY ALL THE BENEFITS FLOWING INTO THE POCKETS OF A FEW (425 BILLIONAIRES) while “humankind” got the result of their HARD WORK until SLAVERY LABOR IN ASIA changed even that!

FACT C.H. DOUGLAS: Sums paid out in salaries, wages and dividends were always less than the total value of goods and services sold each week

FACT C.H. DOUGLAS: Workers are not paid enough to buy back what they had made = “We are living under a system of accountancy which renders the delivery of the nation’s goods and services to itself a technical impossibility.”

FACT C.H. DOUGLAS: The economic system was organized to maximize profits for those with economic power by creating unnecessary scarcity.

C.H. DOUGLAS Published Books: “Economic Democracy” and “Credit-Power and Democracy”

FACT C.H. DOUGLAS: Must bring consumer purchasing power in line with production = Provide workers with a Social Credit to be able to aford the goods produced

A National Dividend to distribute money (debt-free) equally to all citizens, over and above their earnings to increase purchasing power

Adjust prices of goods to the Just Price to minimize inflation = Reduce retail prices annually by SAME AS THE ANNUAL PERCENTAGE GAIN IN PRODUCTIVITY (efficiency).

RESULT OF C.H. DOUGLAS SYSTEM: Consumers are be able to purchase as much of what the producers produce that they want and automatically control what continues to be produced by their consumption of it. = Individual economic freedom was the central goal

Douglas’s 1933 edition of Social Credit said “methods by which enslavement might be brought about can be seen reflected in the facts of everyday experience.”


Please Leave Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s