all our jobs are going to washington d.c. and here's what's coming up tonight on the big picture. author and economist richard wolfe joins me for the first half hour in our conversations with great minds discuss the totally corrupted capitalism is playing a role in the demise of our nation's economy and what i replace it plus social security and medicare medicare benefits are projected to run out sooner than expected to do so urge house republicans to stop whining and raise the debt ceiling and there's

a huge production underway on capitol hill two leading stars have to be the senate and the big time for oil executives i'll tell you which one is faking the part when it comes to the oil crisis. for tonight's conversations with great minds i'm joined by an economist who has many books and more than four decades of teaching have focused on marxian economists economics economic methodology and class analysis he's professor of economics emeritus at the university of massachusetts amherst and is currently a visiting professor in the graduate program of international affairs at the new school university in new york city his latest book is capitalism hits the fan a global economic meltdown and what to do about it i'm pleased to welcome from our

studios in new york city dr richard wolfe richard wrangham. thank you very much. eet let's define some terms first of all i am continually astounded on the radio program that i do during the day by the number of people who call or who are obviously. just basic working people who identify themselves as capitals it's what in your in your. business as well as an economist what is the real definition of a capitalist and of capitalism. well capitalism is a system in which we basically organize the production of all the goods and services that people depend on in the following way a small group of people who have a lot of money cut a deal with a lot of people who don't and the deal is i will pay you a wage and

a salary if you come to work and produce for me and at the end of the day when you're done you go home and you leave behind what you've produced because it's mine and the name of the deal is simple i'm going to pay you twenty dollars an hour on one condition that during that hour you produce more for me in the way of goods and services that i will then sell than the twenty dollars every hour that i pay you in other words it's a deal in which the employer gets more from the employee then he pays that extra is the profit and the system runs on the desire for people to be rather in the position of getting the profit then to be in the position of producing that profit for somebody else and so the capital this is the guy who's taking the capital home at the end of the day isn't isn't there an element of capitalism also. some capitalists are literally the guy who makes his living by sitting on his boat

around the pool waiting for the check to arrive you know the dividend check to arrive that it is taking capital putting it at risk sometimes the risk is not so great you know loaning it out for example or helping start a business providing capital and then basically making a return on that capital and never actually even involving themselves in the business and isn't there a difference between back kind of activity and the guy who goes out and starts a business or a man or woman who goes and starts a business with their own money or with sweat equity or with a loan from from you know dad or whatever and and builds a small business with three or four employees with that ladder person the capital. yes the lot of person who has a few employees would be a capitalist but you're quite right the history of capitalism hundreds of years ago was a story of individuals making that effort usually small groups of workers and working usually alongside their own employees and slowly amassing

a reasonable amount of money but it may be disappointing for folks to realize but that's a long ago the number of people that are still doing that in our economy is very small compared to the mass output of goods and services that's now done by huge corporations and there comes the role of the folks you were mentioning in the beginning of your question namely the people who've inherited money from their parents and their grandparents who have no interest in producing anything you've never worked a day in their lives but they have the money to go out and buy shares of a company and if you buy shares of a company with whatever wealth you've inherited you're entitle to get a cut of the profits and that's what creates that small group of people in our society one or two percent of our population not more who have so much accumulated wealth that they can live very luxurious lee off of the income they get from the shares they own but there's a simple arithmetic here if there are people getting lots of stuff who aren't

making it then there have to be people making lots of stuff who aren't getting it and in a capitalist system like ours with big corporations doing the bulk of the business our wealthy community are wealthy class are the people who live off the surplus the profits of corporations earn and who do not have to work most of their lives a fact about which they are very pleased what's the rationale that has been used by actually several administrations over the last three or four decades to say that somebody who works as a worker some. who works by the sweat of their bro by by thought by hands somebody whether they're working in a factory or they're an engineer or a doctor or whatever it may be that they should pay one particular tax rate right now it's a top tax rate of around thirty six percent and somebody who earns their living in

quotes sitting on their body around the pool waiting for the dividend check to arrive at capital is the true capitalist should pay only a maximum of fifteen percent income tax because somehow that kind of work is more important or deferred or what i don't get the rationalization why is it why do we have this this incredible disparity in our tax code at the very well that the true capitals that very that small one or two percent are paying a maximum fifteen percent income tax on the revenue. well it has to do with a a kind of hustle i mean the truth of the matter is taxes are a political decision made in congress of the united states and the wealthy people in america have the political punch using their wealth to keep their tax rates lower than those on the rest of us that's the reality everybody who follows this understands that but a politician cannot go around and get reelected by admitting openly that he or she votes for these tax rates because that's where their contributions and their

campaigns come from they have to come up with a more reasonable sounding rationale and here's the one that they have come up with it's important to keep the taxes low on stock dividends as you explain because then the theory goes people will use more of their money to buy shares of stock and that that will somehow help our economy the phoniness of this is is easily shown the vast bulk of the shares that are bought each year are bought by one group of rich people from another group of rich people the money doesn't go to the company the money goes from the owner of the shares who's who selling them he receives the money and then the other person picks it up there's no impulse here that helps production this is just a movement of wealth around from one group to another so it really doesn't have much of a direct impact on our economy but that's a very convenient story to tell like so many in our culture that serve to

legitimate a to rationalize to make a capitalist system that helps relatively few and these days is hurting many to make it seem reasonable to make it seem appropriate for the questions about it particularly hard questions on air so in fact the only time that a person buying stock is actually giving money to the company in whose stock they're buying would be an initial public offering or subsequent public our friends . when the company itself is basically selling off part of itself by selling stock but if i go to a local stockbroker or go to fidelity or something on line and said i could buy a thousand shares of exxon exxon starting to see a penny of that money it's somebody else who just sold a thousand shares is going to get my money. that's right and any way you look at the stock market you'll notice that the initial public offerings when the new share is issued in the company actually gets the money that's a tiny percentage of the transactions in stocks that occur every day in the united

states and so exxon doesn't see a penny of the money or you know our mythical company there is no benefit to the economy and yet if i can make money playing with that stock i pay a maximum fifteen percent income tax rate is this just seems not to eat the e.u. . the word you have used and associated with you and stephen resnick and others is this word marxian. i've heard of marxist what is marxian economics. well it's just a way of distinguishing the word when it's used as an adjective to describe something else from the time when infused there's a picture of a person so people are marxists but the approach they use the theory they use the ideas they use are marxian ideas that come out of that marxian tradition what are the one of the marxian got now it's i confess it's been thirty years i did read most of das top attala and i read the communist manifesto which was more of

a rant you know marx and engels. but it seems to me that marx is analysis of raw capitalism of uninhibited capitalism or what we might today called libertarian or even big our republican capitalism was fairly accurate but the smaller fish would get eaten by the middle fish the little fish getting by the big fish and you'd end up basically with monopolies or oligopolies. is prescription for at least as it's been played out in several governments around the world doesn't seem to have worked your thoughts on all of that and how even the word marxism causes americans to kind of voluntarily jolt. well it might have made sense to understand that jolt factor during the cold war when our enemy in the soviet union representatives self all the time as a marxist country or inspired by marxist theory but it's becoming very strange and

and worn thin now that we've been over with the cold war for over twenty years one would think you could develop a little more sophisticated notion marxian theory is one hundred fifty years old it was started by karl marx the middle the last the nineteenth century in the period from then in about eight hundred sixty years or so until today little over one hundred seventy years of the growth of this tradition has been phenomenal and it's grown faster on a global scale and christianity or islam or anything else ever did so that now we have marxian theorists and newspapers and organizations and parties in every country on the face of the earth it's a stunning demonstration that there must be something going on in this realm way of thinking that has attracted an awful lot of people and the basic ideas are not complicated not surprisingly when capitalism emerges in europe a couple hundred years ago three hundred years ago it had the people who loved it

and who celebrated it names like adam smith and david ricardo and and all that we've learned in school but it also had like every other era in human history people who were critical who thought that society could do better than this particular economic system and mark set out to be a critic he had basically hoped that the french revolution and the american revolution that came just a few years before he was born would bring the world liberty equality for attorney and all the great hopes of those revolutions but as he lived through the nineteenth century he discovered that the promises were not being kept equality wasn't coming liberty was becoming none of those things and he became a critic and he developed a very safin. take a good set of ideas even if you like capitalism even if you celebrated it's smart as anybody knows to think of how to read what the critics have to say you learn something yo sharpen your own ability to defend in my own of you as i grew up here

in the united states and went to school at some of the best universities in the united states when i encountered marx as writing not a communist manifesto which you quite rightly referred to as a rant because it was a popular pamphlet written in a revolutionary time to inspire people it wasn't the fruit of his long analysis that comes later with capital but he developed a very sophisticated idea of how you could do better than capitalism and it seems to be now if we are mature and confident about the united states we should welcome of debate where we listen to criticisms to see whether in fact they have a point and these days when we have a capitalism that throws millions of people out of work that is throwing millions of people out of their homes every day that is dividing us between rich and poor in an extreme way we haven't seen in this country for decades you'd think that a reasonable person would want to hear whether those criticisms have some merit and

what might be implied by taking them seriously let's look at some of those solutions that can be derived from this right after this break we'll continue our conversation with great minds with author and economist richard wolfe after the break. let's not forget that we can afford great. i think. the tipping point. we never government says will be safe. because of freedom.

and we're back with more conversations with great minds i'm speaking with richard wolffe economist author and professor emeritus at the university of massachusetts amherst as many books include capitalism hits the fan a global economic meltdown and what to do about it dr wolfe what it actually just back up a little bit. two years ago i think it was my wife and i spent a week in spain at the monitor gone collective looking at this as i recall fifty billion dollars or whatever it was the massive enterprise worldwide enterprise in over one hundred countries ten over ten thousand workers or fifteen thousand workers where the c.e.o.

makes three times what the janitors make in the decisions are actually made by the workers and everybody who works there owns a piece of the cloth of this collective this cooperative is that this sort of model to replace what we described in the first part of this of the you know the guy who ones everything to replace modern capitalism that you think is the best. well yes i think it has an awful lot to offer us to put it in context you know what system is a very complicated and rich body of of understanding it's been contributed to by every culture every race every community imaginable advanced countries underdeveloped countries so it's a very complicated thing and lends itself like all great things to different interpretations of the soviet union and people's republic of china and so on they made one kind of interpretation for them the alternative to capitalism was the state being everything taking control of the factories and the offices running

everything planning everything but there were always other marxists who didn't see it that way and it would be folly for us to interpret marxism or to limit our understanding of marxism to only one interpretation to give you an idea of how silly that is it would be as if i interpreted the roman catholic church by looking at the inquisition or christianity by saying gee it was christian folks who brought the slaves from africa to the united states or who fought each other in the most terrible war in the human history world war one that would be silly and kind of childish it would be an attempt to dismiss these things rather than deal with them seriously i think you have to deal with marxism for the rich diversity that it is having said that let me answer your question the mundra gone experiment is extremely important it was actually started by a roman catholic priest in the very northern part of spain just on the side of the pyrenees mountains and he decided at a time of great unemployment that one way to put workers back to work was not to

wait for an employer to come along and see profit in hiring them but to get them together and set up their own industries on the feeling that workers would not only to be able to run their own enterprises they'd be much more motivated to work hard and to work effectively if they directed what they did they didn't just take a. orders from somebody else though they started very small over fifty years ago they are now a huge operation as you described that very very successful proving to the entire world that when workers run their own enterprise when there is no gap between the capitalist who gives the orders and the worker who takes them the capitalist who gets the output and the worker who has to go home without it when you break that model it turns out wonderful things can be done that last a long time many of the mondragon workers are now the children of the first

generation of mondragón workers and it's a demonstration and there are many of them around the world of what is possible when you think outside the capitalist framework when you say look if capitalism can't provide work for people there are other systems that can and that maybe ought to be looked to to deal with that kind of problem i think it's a lesson for the united states as well i'll tell you it was a almost a culture shock experience in you know having been in business most of my life in this country as i guess a capitals as the owner of businesses we were everywhere all the conversation was in basque are in spanish mostly in basque and we were watching an assembly line where they were much making washing machines and this guy comes along in a suit with a clipboard and stops the somebody line and four or five workers are sitting there talking with him they have this long conversation and our translator says they're deciding tomorrow they're going to change the assembly line because the change in

the model card or something something's changed about the washing machine and he's making notes in this conversation and then he leaves and the assumption that the reason i had was that he came to tell him how it was going to be and instead what our translator explained to us was that they were telling him their opinion of how it should be and and how it was going to be in fact and then his job was to go communicated up the line and. it is really quite remarkable if it is this kind of thing my understanding is that this kind of thing is happening big time across south america that from venezuela to on tours to argentina to brazil and that there are a lot of cooperate examples in the united states that are actually highly successful that aren't just the local you know food co-op. that's right it has a long history one of the most dramatic examples is in argentina they had a major economic collapse about ten fifteen years ago and it was so bad in argentina that many capitalists closed their factories took their wealth and left

the country and figured they'd never come back and after a few months in some cases a year or two the workers who were thrown out of work walked back into the factories cleaned up the dust got rid of the rust got the thing going again and began to run the factories themselves and they proved to everyone that the workers themselves if given half a chance are actually better equipped to fix machines to run machines to build the enterprise it's a remarkable demonstration in a very different context of what is possible in this area and if we weren't getting a logically blinded to this kind of thing if we didn't need to call every bad name in the book but actually look at it as a viable option i think millions of americans if given the choice would rather work in an enterprise where they were not just the order takers but part of the process

of designing and cleansing and adjusting as they went along to be a full human being means to exercise your right to design what you do to shape what you do together with others but not always to be the kind of grown up a drudge that most americans feel they are at the job which is why they try to get out of working which is why they try to have another part of their life mean something to them because the work doesn't engage their faculties we might be a much happier people if we organized our businesses very differently and took a page from karl marx who talked about this dr wolfe it seems like we don't even have the language to begin a conversation i was reading an article today. that was recently published in the washington post with the title headline something to the effect of capitalism comes to cuba and the article was about how capitalism is coming to cuba and castro is

going to allow capitalism in is this fascinating and then buried in the article the actual decree or document or whatever that the cuban government put out was guidelines for creating collectives and so it appeared to me from reading the article and i'm no authority on what's going on in cuba. i actually would like to get down there and do some work for that for the next book that i'm writing but my understanding is that it's not capitalism that they're bringing to cuba it is this kind of what's the word for it is a collectivism. yeah it is the it's an interesting thing i read these articles all the time for example in the new york times in which capitalism is defined as a place that has a market or that has little enterprises or even not a little enterprises that's really got nothing to do with capitalism a market has existed in many cities societies that were not capitalist even in the united states in our own history in the slave south before the civil war slaves and

a slave system was what we had but they had a market they produced cotton and they sold it and they even had a market for human beings the slaves and they sold them but because it was a market you wouldn't call that capitalism you call that slavery likewise if workers get together and build their own collective enterprises that they run collectively in democratically amongst themselves without pauses without shareholders the fact that there's a market there is a completely separate matter from this question of how you organize the enterprise the cutting edge of marxism and socialism now has to do with changing the base of society the way we organize the production of goods and services because you know face it that's what most of us do for most of our adult lives we get up in the morning we get ready we go to work and we spend our brains and our muscles at the job five days out of seven for most of us that is an important place if socialism

or something better than capitalism can address and that basic part of our lives it isn't going to be very meaningful to us and i think marxists have understood from some of the weaknesses of the soviet and chinese and other experience experiments in this not to go in there correction but to be a bit more focus a little less focused on planning in property ownership by the state and much more focused on the base of society where the working people are where they focus their lives and to give them a meaningful can. rolling non subordinated life in that situation and that's why monder gone is such an important experiment to have succeeded i agree i devoted a chapter my last book to it was the last question we only have about two minutes left here why do you think it is that libertarianism which has never been tested in any country in the world and has never succeeded anywhere i guess the closest you could get to it right now is probably somalia where the government basically just

provides the army in an hour and a police and court system and nothing else the libertarianism is is embrace to like a religion in this country and yet collectivism or communism or marxism or any of these these whatever word maybe we need a new language is literally not even discussed as a viable option in the united states oh i think of two reasons we don't discuss the option of socialism and communism in marxism because they've been bad words and they've been demonized for so many years it's going to take a while to get over that or do we know you were a way to deal with this. and i think you're right i think we will need new languages or very new definitions of the old words but as to the libertarian i think it's a symptom of the of the weakness and the the decline of capitalism americans are not entranced with corporations they are not in love with his capitalist system of big companies and they go in the first flush of their distance of their critical

position which is new for them to a safe area a celebration of the individual who can do anything they sort of libertarian fantasy is a safe place it's not been demonized for thirty years it's a way to be critical of the status quo in the contemporary capitalism without appearing to be too radical and too different but i think people in america will grow out of that we're not going to solve our problems by everybody doing their own thing in a libertarian way it's going to produce levels of chaos that nobody wants even to think about and probably will never be taken seriously but it is a safe way station you know and you with a story i used to give my students a little piece of paper at the beginning of every lecture and i say what would you like to be when you're five years out of college and they were all answer i want to be my own boss i want the overwhelming majority they did not want to go and work for a capitalist corporation they want to be their own boss that's an interesting criticism

of the of the jobs they're actually going to be able to get and tells you about why they may not be so happy in him but the idea that we're all going to be a little small businessmen is a fantasy and we're all going to have to come to terms with that being not a real option for most of us and so we're going to have to find another way and i think the marxian tradition with its notion of a collective way that you can be part of your own boss is a much more welcome option that americans will come to think about seriously particularly as more and more of them learn about the experiments like unmonitored on where they work and they work well very well said dr richard roth thank you so much for being with us tonight. you can watch this conversation again as well as other conversations with great minds at our website conversations with great minds dot com coming up conservative political consultant tasha meyer democratic strategist erica.