Capitalism's Crisis Deepens - Richard D Wolff
Richard D Wolff writes with robust and penetrating clarity about the crises which have beset capitalism, culminating in the financial crisis which began in 2007. Those who, for years, had called for the power and control of the state to be reduced found themselves needing the aid of that state to survive. As governments attempted to pay for this by introducing austerity measures, the price was paid by those who were not responsible. Indeed they were the very people who, having their wages cut, or their jobs lost as production was moved offshore, had turned to borrowing to sustain their purchasing power. They were encouraged to do this to maintain demand in the economy. This added to the high levels of debt which had been one cause of the crisis.
Even the New Deal which Roosevelt had introduced, whilst it alleviated many of the immediate problems experienced by large sectors of the population, failed to tackle the inherent problems of capitalism. Bravely, it was introduced at a time of economic difficulty, and included higher taxes on corporations and the wealthy, one of Wolff’s remedies for the crises of Anglo Saxon capitalist economies. His other, indeed his main, proposal is that enterprises should be directed entirely by their workers (“Workers’ Self-Directed Enterprise"). They would inevitably seek to protect their own position, ensuring that the surpluses created by their labour were distributed to themselves. They would not permit their jobs to be relocated to other countries, something which has yielded benefits for companies without them having to pay any of the costs.
Whilst Wolff’s analysis is very persuasive, he doesn’t appear to consider one of essential features of capitalism: the provision of capital to finance an enterprise. He admits that businesses may continue to be privately owned and that dividends may continue to be paid to shareholders. But no note is taken of the risk involved by those who put up capital and own the equity of a company. Their place on boards is because of their financial commitment to the success of the enterprise. There must be room, surely, for a proper balance of workers and shareholders, indeed for all stakeholders, in the management and direction of a business. Who would trust their capital to a business which was wholly run by its employees? Wolff does tell about the pooling of unemployment pay to capitalise a buyout cooperative, but this is a special case provided for by Italy’s Marcora law. Even if similar opportunities were available in other countries, they would apply in only limited circumstances.
Another point to note is that, as a collection of essays, there is a good deal of repetition in the book. This could be useful, reinforcing the points made, but it does mean that the book does not offer a structured argument from start to finish.
What would a Christian perspective on this book be? The bible doesn’t give us any insight into how a large business should be run: there is no concept of the joint-stock company in the scriptures. There is however a strong injunction to treat workers fairly and to pay them adequately and on time.It is clear too that, as the early church began to grow, decisions were taken by the all of the members, all those who would be affected by the decisions.In its early simplicity, this structure permitted rapid growth, at a rate which a modern business would envy. As hierarchical and episcopal structures developed the church became more static, and less able to respond to challenges.
At first sight, the tenants who rent the vineyard in Jesus’ parable (Matthew 21), would appear to constitute a “Workers’ Self-Directed Enterprise.” The results were disastrous for all involved. But Jesus is a perceptive observer of the practices of his day, and it is clear that the workers’ alienation came because they did not share in the ownership of the vineyard, something to which they aspired, even if it meant committing murder. Wolff could have made more of the possibilities for workers to share in the equity, and thus the ownership, and the risk of managing an enterprise.
Wolff is professor of economics emeritus at Massachusetts University. It is good that such an institution has someone who is able to express these views with well-reasoned clarity. Many people anticipate another, perhaps even more grievous, crisis of capitalism. His work offers one way out of the repeated downturns which have dogged the capitalist system. The effects have always been worst for the poor, and it is they whom the scriptures call us to remember and to help.