Capitalism Hits the Fan. Richard Wolff on the Economic Meltdown

Capitalism Hits the Fan. Richard Wolff on the Economic Meltdown. A Media Education Foundation Production (mediaed.org) DVD 2009.

This video is a real tour de force. In just 57 short minutes U. Mass economics Professor Richard Wolff lays out in macro terms the contours of the present crisis of US capitalism. He does this in a clear, concise way avoiding by and large the use of jargon. Any relatively informed person can easily understand the message. Throughout, actively moving graphs and charts liberally sprinkle the text and aid the viewers’ understanding of the message. The presentation (filmed before a live audience) is broken down into 10 short subsections each with a single central theme. Brief pauses between sections allow one to digest what has been said and at the same time prepare for what follows. Some of the mini topics covered include: How We Got Here: American Exceptionalism; Bust and No Boom in Sight; Why Re-Regulation Won’t Work.

Wolff’s central argument is clear. During the long century between the end of the Civil War and the 1970s, US capitalism experienced a steady expansion fueled by the introduction of new technologies. The resultant rising levels of production and productivity allowed capitalists to raise wages consistently while maintaining profits. Although this growth did not occur without its blips, notably the several mini crashes of the late 1890s and the Great Depression, it nonetheless proved lasting. Built into this scenario lay the idea of American Exceptionalism (The USA as a unique nation where upward and onward for all forever existed) and of The American Dream (a house, a car, and consumerism) as every person’s birthright. Sometime during the 1970s things began to change. First, the introduction of computers led to rising productivity but without increased job creation or rising wages. Second, a second great wave of massive immigration led to more competition for jobs. Third, outsourcing became available to capital as a way to drive down costs and put a ceiling on pay packets. Fourth, foreign competition from low-wage areas hurt both domestic and foreign sales. This brought the long wave of rising wages to a screeching halt.

As a result of the above, workers’ real wages have leveled off from the 1970s (and even declined more recently) to present. But, as we know, in order to survive capital must expand. While surging exports certainly help keep the wheels turning, the US home market is vital to capitalism’s survival. The ruling class (a term used sparingly by Wolff incidentally) hit upon a great new idea. Why not take the surplus value created by the workers and lend it back to them with interest? This produces a profit upon the profit and it allows the internal market to keep churning. And so the great credit bubble of the past decades came into being as money flowed to literally anyone with a job or a home and even apparently some without. But all good things come to an end and this is where today’s reality comes in: the credit expansion has reached its limits. Hence today’s crisis, which is not just another blip in Wolff’s opinion, but a real stone wall up against which the system has crashed.

I showed this video to a group of 30-year-olds and the reaction proved universally favorable. Some of their comments follow. “Wolff’s conversational approach to the lecture was effective, creating a striking sense of urgency.” “Excellent video because it was a stimulating and informative overview on the crisis of capitalism and it makes you think and made me ask questions and want to know more.” “This video felt like a crash course in American Economics.” “Even a high school student can understand it.” Almost unanimously, however, viewers thought (and I agree) that Wolff should have spent more footage suggesting what to do. In this sense one is left with an explanation of the crisis, capitalist greed, and workers’ exploitation, but few suggestions how to confront them. While to his credit Wolff does show that the adjustments made in the 1930s and in subsequent crises proved only palliatives – like everything suggested so far by the Obama administration – , he clearly leaves any other alternatives almost entirely to the viewers’ imagination. Perhaps he should produce another video entitled “If the Workers Ran the Fan” and fill the gap.

Hobart Spalding Professor Emeritus City University of New York hspalding@cnpt.org