Welcome, friends, to another
edition of Economic Update, a weekly program devoted to the
economic dimensions of our lives: jobs, debts, incomes — our own and our
children's. I'm your host, Richard Wolff. I want to devote the entire program today to
responding to a series of questions many of you have sent to me. They boil down to this: Where are
we going? What is happening to the United States is so profound, so deep in what it means and
what its implications are, that the assumption of many of you — and I think you're quite
right — is that this will have long-lasting, history-making effects. And I want not only
to reinforce your insight on this point but to try to spell it out, to try to use history —
because that's all we have — to make an educated guess about where we're going, what some of the
major outcomes of this crisis we're going through are likely to be, to enshape our own
coping, planning, and understanding. So let me begin by underscoring something I hope
many of you have already understood. We are living through what really should be called capitalism's
worst nightmare. What do I mean? Well, capitalism has a problem, as we've discussed on this program
many times: It is an extremely unstable system. Everywhere where capitalism has settled, every
four to seven years, on average, it has an economic downturn. Millions of people lose their
jobs, thousands of businesses collapse, cities and towns don't have the revenue or the government
to help us at a time when we especially need it. It's a disaster. It's very, very unstable. We've
had three so far in this century — one every six and a half years, on average, in this century
— so we're right on target with the history. That's bad enough. But the worst nightmare
comes in when capitalism has to worry that there might be a coincidence in time between
one of these recurring periodic downturns and some sort of non-economic crisis. If that
were to happen at the same time, it's your worst nightmare. What do I mean? Well, you could
have a war at the same time that your economy tanks, or you could have a climatic disaster — a
spectacular flood, a spectacular drought — and all of these things have happened. And there's another
kind of non-economic crisis you could have: a health disaster. You know, like a viral pandemic.
That's why we're in capitalism's worst nightmare, because we have as bad an economic downturn
as we've ever had — on a par with the Great Depression of the 1930s — and at the same time
a global health catastrophe, the COVID-19 virus. So let's be clear that we are going
through something spectacular, and not to downplay it, and not to pretend
that, you know, a solution is around the corner. It isn't. This is as bad as this kind
of crisis for capitalism can get. And that means that some of the mechanisms that help us
get through economic crises on other occasions won't work now. They're not big enough.
They don't act fast enough. They can't cope with something this bad. That's why all the
money being pumped in by the Federal Reserve just isn't doing it. And that's why whatever
is being done about our public health isn't really doing it. We're trying. It's
better than nothing. But we are in trouble. And we can't rely on what the system has also
done, which is a tragedy, but I have to speak to you about it. Capitalism has been unable, having
tried throughout its history, to cope with its recurring crises. Capitalists with half a brain
have always known that their worst nightmare could happen, that you could have one of these downturns
at the same time as you had a non-economic crisis, and then where would you be? And the answer is:
where we are now. They knew, but they didn't deal with it. They couldn't solve the instability;
they never could. That's why we have it again. So what they did was kind
of a second-best for them, which is to take a part of the population and
say, you're going to be where the instability of capitalism hurts the most. You're going to be
the shock absorber for this system's periodic, every-four-to-seven-year shocks. And you
know who those people were; you really do. They're the African-American community,
they're the Latino community, they're women, and they are immigrants — people who you hire when
things are good, and then you fire them the minute things turn south, which, as we know, is every
four to seven years. You throw the immigrants back to where they came from. You throw the women
out of the labor force back into the household, to be the wives, and the mothers, and the
caretakers. And you throw African-Americans into the pool of the unemployed. I mean,
we do know that is our history as a nation. But our crisis now, being capitalism's
worst nightmare, is too big for all of that. Women are returning to the household,
immigrants have been thrown out of the country, and brown and black people are suffering
disproportionately during this crisis, both from the virus and from the
unemployment. So, true to form, we're doing everything we can do, but it is
not enough, because this crisis is too big. So what sense can we make? How can I do
what this program today is designed to do — give you a sense of where we're going —
when we are, in a sense, at such a critical moment in this crisis-ridden system? And
here's where the history comes in. Can we find an earlier period when there was a comparable
collapse — a worst nightmare, if you like — and can we see what happened, and then ask,
well, could that happen again? Or could some form of it happen again? And luckily — not
for the folks then, but for us — there was. I've mentioned it before, but I want to
spend a little time with you on it today. I want us to go back to the 14th century —
long time ago, 14th century — in Europe. And there they had a combination, yep, of an economic
catastrophe, a collapse of a different economic system — it wasn't capitalism; it was feudalism,
the system of lords and serfs — and they had it together in the 14th century with the worst public
health disaster that Europe had experienced, as far as we know. It was called — it had
two names — the “Black Death,” or the bubonic plague. It was a disease, a virus, carried
by fleas that in turn lived on rats, and the rats spread it across Europe. It is reputed to
have killed — get ready for this — one third of the population of Europe at
that time. Unspeakable disaster. Who died? Huge numbers of people. Who were
they? Let's go through it. The serfs — the mass of people who died were serfs, like the mass of
people who are dying now are working-class people. Not employers; employees. Well, it wasn't lords
who were the major people who died, although many of them did; it was the serfs. And when the
serfs died or got sick, they couldn't work, which means that the feudal manor, where all
kinds of agriculture was produced, and all kinds of food, and clothing, and crafts
— and all of the production of the feudal society — couldn't continue. That's why the
economic downturn was fed by the disease. But it worked the other way too.
Part of the reason the disease was so terrible was that feudalism was having
more and more problems in Europe already in the century before. Food couldn't
be raised, partly because they did not know about soil fertility, and they couldn't
raise crops and animals the way they had. The yield per acre was just shrinking, while the
population was going up. And that made people hungry, it made people ill, it made people weak.
So that when the virus came, they were vulnerable, just as today. If you take a look at who
gets sick and who dies from the virus, it tends to be people with pre-existing health
conditions because of our society's tendency to have people with bad diets, to have people
with diabetes, obesity. Same parallel then. Lords in large numbers died, so there was no one
to run the manor, where the serfs were already sick and couldn't function. The system fell
apart. There were cities developing in Europe at that time, and they also suffered the Black Death.
The people in the cities weren't lords and serfs; they were small craftspeople and merchants. They
died too. So there was a disintegration of feudal society, just as I would argue we are in early
stages of the disintegration of our capitalism. So now comes the interesting
part. What did feudal Europe do? Well, it had to do something. The serfs
were not keeping the manors going. The serfs were running away from the manors where
they and their parents and grandparents had been born and lived. You know the stories
of serfs who ran away into the forest to escape the feudal system that was collapsing around them.
In the forest they made bands of outlaws, one of whom became real famous. We call that the story
of Robin Hood, which is exactly what that was: escaped serfs in the English countryside. So
the lords couldn't hold onto the serfs. The lords were sick. The serfs were dying. They were
running away. The whole feudal system was shaking. Many people ran to the cities to get away
from the disease in the countryside, only to discover that the cities had it too. And so
the merchants, who had hired people in the city, were losing their employees. So they couldn't
move product from one area to another, which is what merchants did.
The system was falling apart. So what did they do? Well, in the time
remaining for the first half of the show, I'm going to tease you by telling you one
of the things they did. And then we'll talk about the second one, and how capitalism
is now looking to go down a similar road. The first thing that the feudals did —
that shaped the whole last century of European feudalism — was to say, we have got to
re-establish order in our feudalism. We have to stop the disintegration of the system, and we have
to do it even though millions of serfs are dead, even though huge numbers of lords, and merchants,
and city dwellers are dead or sick. And the way we're going to do it is, we're going to change
feudalism. Up until that time, feudalism — from the end of the Roman Empire, roughly 500 ad,
to this point in the14th century — feudalism had been a remarkably decentralized
system. A lord here with his servants, the lord over there — no central government.
They had gotten rid of the Roman Empire, which was a central government, and everybody
for centuries had been decentralized. Well, when decentralized feudalism fell apart,
it decided, we need centralization. We need to have a powerful government sitting on top of our
society. And they did that. They took one of the bigger lords and they made him the super lord, the
lord over all the other lords. And they gave him a name. They called him the “king.” And that's
the beginning of this kind of monarchy system that then became the so-called absolute
monarchies of late feudalism. Keep that thought in mind: A powerful state is
a response to a disintegrating system. We've come to the end of the
first part of today's show. Before we move on, I want to remind you that we
recently published my third book for Democracy at Work. It's called The Sickness Is the
System: When Capitalism Fails to Save Us From Pandemics or Itself. It's a compilation
of essays that aims to explain how and why capitalism is the sickness we need to worry
about. Please stay with us; we will be right back. Welcome back, friends, to the second half of
today's Economic Update. Before the break I was explaining that we have a model, if you like, an
example from the collapse of feudalism that can give us some guidance as to where we are going,
now that our capitalist system is tottering the way that it is as we go through this crisis. And
I had gotten to the point of beginning to explain one of the two major reactions that happened in
European feudalism, when their system collapsed as a consequence of the Black Death,
the bubonic plague of the 14th century. The decision of the feudal society, accumulated
slowly over time, was to go from a decentralized system to a highly centralized system. From a
feudalism that from the 5th to the 14th century had been very dispersed — very little contact
between the lord and serfs over here and the lord and serfs over there. Relatively little
trade between, say, Poland in the north and Portugal in the south. There even weren't
places like Poland and Portugal, because those are nation states, and they didn't have that.
They had a dispersed feudal society, a kind of reaction to the centralization of the Roman Empire
that came before feudalism took over in Europe. And so they decided that they
needed to re-establish order, that they needed to re-establish the dominance of
the lord, the subordination of the serfs. In the collapse of feudalism, lords had turned on each
other. They had to stop that. And, by the way, if you're ever interested in understanding
how lords fight with one another in feudalism, read Shakespeare's plays. Half of them are all
about that. It was a disaster to that society, as it was in Shakespeare's time as well,
for feudalism, and order had to be brought. And the way you did that, they decided, was to
give one lord a superposition: the super lord, the lord who lorded it over the other lords and
had so much concentrated strength that he could protect all the other lords from fighting with one
another, and from trouble from their serfs below, and could keep the cities from becoming
dangerous in a way I'll explain in a moment. And they made that super lord the king. He
became the monarch, the most powerful lord and the dominating controller of society. So at
the last of what we call late feudalism — the 14th, 15th, 16th, 17th centuries — this
was what evolved in European feudalism: highly controlled states, led by an
emperor, or a czar, or a kaiser, or a king. These images some of you know from your
history, or if not from that, from the movies. But there was a second thing that happened as
feudalism fell apart. The effort to save it was accompanied by an effort to go beyond it. The
whole structure of lord and serf was more and more unacceptable. The serfs understood that they
hadn't been fed properly, that they didn't live properly, that they had been decimated by disease
— in part because of a system that wasn't prepared to handle the disease, that hadn't fed them,
or clothed them, or sheltered them in ways that could enable them to survive. Feudalism looked
lousy to large numbers of people, and they left. They could because feudalism was falling apart.
And they went to the cities. And in the cities they were no longer on the land. They no longer
had a feudal lord. They were just “citizens.” And now they were free from the barriers
and the limits of life in the countryside. And a new system developed. Those who had a
little bit of wealth approached those who had nothing and said, hey, we'll make you a deal. You
come and work with and for me, and I will give you a certain amount of money at the end of the
week. We'll call it a wage. And you come and work for me, and everything you produce while you're
working for me is mine. And that's the deal. I get from you the fruits of your labor, and I give you
a wage. And the reason I'm willing to do it is, the value to me of the fruits of your labor
is greater than the wage I have to pay you. So I'm going to accumulate wealth by doing this.
The person who worked for a wage had a choice: work for a wage or starve to death. So
that was easy too. And they got together. But that's a different system. That's
not feudalism — lord and serf. That's capitalism — employer and employee. And that
system began to grow, inside feudalism, in this town, in that city — decentralized, all over the
place. And in some cases, it couldn't survive. Lords would come in, and were frightened
by this new system, and could destroy it. It took a long time, but slowly capitalism
got stronger, until by the 18th century, it wasn't willing to live under a feudal king
anymore. And so the mass of workers in the city — employees — together with their bosses,
turned on what was left of feudal society. You know what happened here in the United
States: We got rid of King George Ⅲ. We didn't just get rid of England as the colonial
master. We could have done that and had our own king here. But we didn't want kings. Kings
were no good anymore. We wanted the new employer-employee system of capitalism. No kings.
And the French did the same thing, only there they took it a step further and literally cut off the
king's head, as we all know, with the guillotine. So you had two reactions to the collapse of
feudalism that happened in the 14th century, the disintegration of the economic system, made
much worse by the Black Death, the bubonic plague: You had the strong development of powerful
states, instead of decentralized feudalism. And you had the growth of a new
system inside the shell of the old. So now let's do the work. Let's see what
part of this applies now. Here we go. Capitalism is in deep trouble. It's
capitalism that has made so many people poor, diabetic, overweight, obese, with inadequate
medical care, inadequate — you figure it out. It makes them, therefore, very vulnerable
to a pandemic. You have a system that didn't prepare. It didn't have the hospital
space ready to go, it didn't have the tests, it didn't have the masks, it didn't have — it
wasn't prepared, as it could have been. This is not the first pandemic we've ever had. This
is not the first economic downturn. We know what the worst nightmare of capitalism always
was, and we knew a year ago, but we didn't do, as a society, what was necessary. So capitalism
has got a bad reputation, which it deserves. So what are we seeing? Interestingly, the
failure of capitalism, which is global, was less pronounced where — here we go — the
government was active and strongly involved. And it was worse, this pandemic and
this crash, where the government wasn't. The more decentralized capitalism,
the more laissez faire capitalism, the more libertarian capitalism, the more the government
kept a distance because the private capitalists didn't want the government, the more
devastating the collapse has been. Look at Boris Johnson in England, look
at Donald Trump in the United States, look at Bolsonaro in Brazil, look at Modi in
India. These are people who are buyers into the notion that we don't need the government, that
private capitalism is an engine of efficiency. And all of that storytelling meant that they weren't
prepared. And they're not used to having the government come in and play a major role. They're
advocates of the government playing a minor role. And that's going to be reversed now,
just like they did in feudalism. We're going to demand that the government get us
ready for the next economic downturn, get us ready for the next pandemic, get us ready for the
worst nightmare of their happening together. You're going to see a return to a government
actively involved — which for Americans won't be that much of a new thing. Because the
last time capitalism started to crumble, in the 1930s, you know what we got? The Roosevelt
New Deal, which was a massive increase of the government's intervention in the economy because
capitalism was shaking. That's the lesson. But it's not the only lesson. Remember I
told you that there were two big responses within feudalism to the Black
Death, the bubonic plague. One was a powerful state apparatus
emerging, playing a much more powerful role. But the other one was a development of a new
economic system. As people saw that it wasn't just the black plague, it was the feudalism that made
the plague so bad. And it was the feudalism that left the society unprepared for that plague.
And that the system was as much a problem as ever the Black Death was. And so
there was a running away from feudalism, to the city, to this new system of
employer-employee called capitalism.
And around the world, we see something
parallel too. We see a growing interest, as you know from this program, in worker co-ops.
In a new economic system that has neither lord nor serf, or employer-employee, but a
radical, different system that says work should be a community affair, that we
should do it communally — one person, one vote. A democratic community that understands
that it has to be prepared for droughts, for pandemics, and it has to run an economic
system that isn't so unstable in the first place.
A worker-co-op economy would never allow
unemployment because it is so irrational. Unemployment means people want a job, and
society needs what those people can help to produce. So obviously they should be working,
because that's a win-win. Why in the world would we ever let people be unemployed? In the
United States today, to be very blunt with you, we have something called a “capacity utilization
rate.” It's a measurement of how much of the machines and equipment, and factory
and office and storage space is being utilized, and how much is
sitting gathering rust and dust. Well, today, as I'm speaking to you, the capacity
utilization rate in the United States is about 70, 71 percent. You know what that means?
Thirty percent of the capacity to produce is not being used. You know why? Because we have
30-plus million people not using it. And therefore we don't have the output that could rebuild
our cities, that could make us ecologically independent of the damage we've been doing to
the environment, that could deal with our poverty and therefore our social divisions.
We could make a great society. It's the capitalists who hold us back. They don't want the
government to come in and give everybody a job because what does that make them look like? Well,
people are seeing this, and they want a different economic system, just as, in their way, the
serfs of feudalism voted with their feet, to go to the cities and to get out of the
lord-serf relationship. And that pressure built. And it didn't take all that long,
historically — a couple of hundred years, because things went slower then — to get to the
point where the new system threw the old one into the dustbin of history.
So we're in for what — solution? conclusion? We're going to move towards
the state having a much more powerful role dealing with the crisis that capitalism could not
handle. And we're going to have growing interest in alternative, non-capitalist economic systems,
because capitalism proved it's not a reliable way to produce what we need and secure the public
health. And more than that you can't say. An economic system is measured by how well it
takes care of our health. That's number one.
I hope you found this analytic interesting
as a way to understand the longer-term implications of this capitalist nightmare we
are living through. This is Richard Wolff, and I look forward to speaking
with you again next week.
Good historical perspective and analysis from Wolff on the current crisis, and some predictions on what might be to come from a historical perspective.
Watch him often. He is a good source.
Quite good but … Wolff does not take into account that one of the most deadly consequences of the last decades of capitalism is the destruction of our one and only home: the Earth. We have set it off, and now it's unstoppable. It's too late. And it's just getting started. We are only seeing the beginnings of it. Very soon, living conditions on Earth will be such that we won't have the opportunity or time needed to design new systems to replace capitalism. That will never happen.
Excellent, thanks — very useful historical perspective, and a half-hour well spent.