(10 am. – promoted by ek hornbeck)
Cross posted from The Stars Hollow Gazette
Professor of Economics Emeritus at the University of Massachusetts Richard Wolff joined Bill Moyers for a look behind the disaster left in capitalism’s wake and a discussion of economic justice and a fair minimum wage:
“We have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, [and] a growing majority in this society facing harder and harder times,” Wolff tells Bill. “And that’s what provokes some of us to begin to say it’s a systemic problem.”
A caveat from Yves Smith at naked capitalism:
Wolff pooh poohs financial regulation, peculiarly dismissing the fact that it worked well for two generations. And what broke it was not bank lobbying but the high and volatile interest rates of the 1970s, which resulted from imperial overreach (Johnson refusing to raise taxes when the economy was already at full employment; he deficit financed the combo plate of the space race, the war in Vietnam, and the war on poverty. And Vietnam was the reason for not raising taxes; the war was already unpopular, and a tax increase would have made it more so). At one point, Moyers brings up oligopolies as another driver of increased concentration of wealth, and Wolff misses the opportunity to take up the idea (the failure to enforce anti-trust regulations is a not-sufficienlty well recognized contributor to rising income inequality).
Minimum wage hike would benefit millions
Moyers opened the segment by saying that even if the country increases the minimum wage to the $9 per hour proposed by President Barack Obama in his State of the Union speech, workers will still be worse off than their counterparts were fifty years ago.
Wolff agreed, “The peak for the minimum wage in terms of its purchasing power,” he said, “was 1968. It’s basically been declining, with a couple of ups and downs, ever since.”
“So, you’ve taken the people who work at the bottom, full time job,” he continued, “and you’ve made their economic condition worse over a 50 year period while wealth has accumulated at the top. What kind of a society does this?”
“Who decided that workers at the bottom should fall behind?” Moyers asked.
“Well, in the end,” said Wolff, “it’s the society as a whole that tolerates it. But, it’s Congress’ decision and Congress’ power to raise the minimum wage.”
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In defense of Wolff, he ignores regulation as a solution to the problems of capitalism because he believes that, like a good Marxist, that capitalism always finds a way around attempts at regulations eventually. To put it another way. Capitalism is relentless in its search for maximum profit. If a capitalist has a chance of making 9.1% profit instead of 9% he/she will sell his children into slavery to do that even if he or she doesn’t really want to. Here’s how the thinking goes: if one person refuses to do what is immoral, eventually (using Game Theory) that person will lose out and another will take his/her place. Again, using Game Theory, we know that the rules being what they are (the essence of capitalism is to make profits) that those whose interest is only in making profits will eventually win out and take over the system. That being the case, individual managers will work tirelessly like ants to undermine any system that blocks their profits and will seize any opening. Thus regulation can stem excesses for a time but eventually, particularly in a culture that officially forbade the study of Marxism for awhile, has no tool to combat the monomania of capitalism as it develops to it’s ultimate destructive point–which appears at this time to be environmental catastrophe because capitalism is a mindless force that wants always more.
Capitalism, according to Wolff is structurally unable to accept reform of any kind. Only by changing the form can we hope to live in a convivial society in the long term. As Marx noted, in the short term capitalism offers great advantages and certainly the balance we have attempted to strike has caused most of human progress in recent decades but it is, in my view, inevitable that this great engine of prosperity has outlived its usefulness must be retired. Sadly, Marxism is not enough to do the job as I think even Wolff might admit–we need something more all-encompassing that gets to the root of the human condition and meaning itself.