[S12 E32] Recession – Capitalism’s Failure Invites System Change
In this week’s show, Prof. Wolff defines recession and shows its relation to inflation and stagflation in their respective roles within capitalism’s inherent instability. Rooted in the structure of capitalism, recessions represent both costly burdens on employers and employees alike and also strong incentives to question, challenge, and go beyond capitalism. The economics profession has been unable to end recessions despite centuries of trying. The profession often tries to hide the capitalist roots of recession instead. Wolff concludes with how system change might finally “solve” capitalism’s intractable instability problem.
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NEW 2021 Hardcover edition of “Understanding Marxism,” with a new, lengthy introduction by Richard Wolff is now available at:
“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”
Check out all of d@w’s books: “The Sickness is the System,” “Understanding Socialism,” by Richard D. Wolff, and “Stuck Nation” by Bob Hennelly …(read more)
BREAKING: Recession News
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The world has witnessed an unprecedented economic slowdown, with the novel coronavirus crisis paralyzing economies across the globe. The United States, the world’s largest economy, is predicted to experience a recession of up to -34.3% GDP in the second quarter of 2020. Europe too is headed towards an economic abyss, with the European Commission predicting a recession for the EU with a fall of -7.4% in GDP.
Recession, in simple terms, is a period of economic decline characterized by a contraction in Gross Domestic Product (GDP), increased unemployment rates, and a fall in consumer spending. Even though it is considered a natural part of the business cycle, the current economic emergency is neither natural nor cyclical. Capitalism failed miserably to control this pandemic and prepare for contingencies that could threaten the economy.
The current crisis has exposed the existing flaws of capitalism, the system under which most countries operate. It is a system that favors profits over people, prioritizes the interests of the wealthy over those of the poor, and encourages greed and competition. The pandemic has shown us that this system is incapable of addressing a crisis of this scale and magnitude.
In the United States, for instance, the government’s failure to provide adequate healthcare and financial support to its citizens has resulted in widespread suffering and misery. In Europe, the weakened healthcare systems of many member countries have been exposed, leaving the vulnerable sections of society particularly susceptible to the virus.
The crisis is so severe that it has become crystal clear that a system change is needed. Economist Joseph Stiglitz asserts that the pandemic has revealed the need for a new social contract that is based on solidarity, inclusion, and equity, not just growth and profits.
Many governments are taking this opportunity to make draconian cuts to essential services such as healthcare and education, laying off essential workers, and proposing tax breaks to corporations. Governments need to invest instead in vital areas such as healthcare and education, ensure that all their citizens’ basic needs are met, and make income distribution more equitable.
This pandemic has opened our eyes to the critical need for system change, not just reform. We must move towards an economic model that prioritizes the welfare of people and the planet before profits. The Capitalist system has failed to provide this and thus invites a system change. In the coming years, we must embrace transformative changes in our economic system, and protected financial workers must be our number one priority.
So thrilling to hear a powerful, brilliant speaker of truth! Makes me happy to be a human being with people like Richard Wolfe in this world.
My only regret is that I have but one thumb (up) to give to this video.
Love the idea of capitalism as a threatening dark alley that you know is a bad idea to go into but do so anyway because you're in a hurry.
Recession, and inflation are not products of capitalism. They are products of Central banks. The US economy is not even a capitalistic system. People are not free to operate as free agents, in control of their own labor. You must get government to allow you to operate or start a business and then give them how ever much they determine you owe for privilege of letting you labor. The government controlled economy is the problem. The idea that central banks can create money out of nothing and then charge the government interest on every dollar they pluck from air, as promoted by Keynes, and this gentleman are the responsible for the debt based system people call capitalism in this country. No other system, capitalism, not what we have in US, has ever allowed the upward trajectory of the bottom. I also am amazed at the belief that people in other communist systems don't suffer from greed, manipulators, and caste systems of haves and have not that eliminate the ability of anyone trying to climb out of the depths of poverty.
To restate the obvious: Correlation does NOT mean Causation. Duh
so what is the system that doesn't have recession or downturn?
what's the system with no employment or underemployment?
he says there's a link to racism when discussing the "shock absorber" class or underclass, but aren't the majority of people laid off work in America, white?what about the whites who go back to their trailer parks?
look on the Internet, for the new Statistics on Sociopaths and Psychopaths, that will explain the World to you…. if you can find them on the Internet, anymore… they well, can guess why…. But it explained the World to me, finally… the numbers are shocking… and Sociopaths and Psychopaths know who they are, and they enjoy hurting people… i use to call the bad people the 40%ters,the one's willing to work in Concentrations Camps or care if they exist… didn't realize how close i was… and not even know i was talking about Sociopaths and Psychopaths…. if i say the % here, you won't believe me… and the people i've talked to, to 'busy' to care… busy is a 4 letter word…
UBI of a $1000 to every adult in the USA, that's every month, and no Business or Judge, etc, can touch it, would stimulate the economy… and you could get rid of Food Stamps… and maybe unemployment benefits too… Rent would be the nightmare, they'll be raising there Rent $999…. so would have to do some kind of Rent Control… or tax the landlords double at a set point of the Rent…or profit… of what they go over, Double Tax… and it would free some people that are in relationships they don't want to be in… and people would be under less stress, benefits would come out of that… maybe more control of what jobs they will take, and employer's will be coughing up more for bad jobs… Well… if you give it to everyone… and not say not just for people at the poverty level… won't have that Envy problem… won't have people complaining about people being on Food Stamps… Could get rid of Food Banks… and i'm probable just an idiot for thinking it…. but or and, they are studying it here in the US right now, in California, but i have a feeling, THEY will say it really didn't help, we Tried with are study…. but giving a $1000 pre family…. please… who will control that money, etc… every adult should get a $1000… not a joke of giving it to a family… they tried it in Canada in one small town, gave $500 to everyone…. and the Canadians said, all they could see was it made people happier…. but didn't say when people are happier they are under less stress, less health problem, less families fighting and the police coming to your house, etc, those costs… i think the California study will be a snow job too
European Union today announced a Wind Fall tax on energy companies and to be used to help pay bills , now that's very Socialist
Politicians don't want change in the system. They could not 'blame' the other party for the present problems. With too much money in too few hands, the system will never change. Rich don't want money leaving their hands. The rest of the population has no cushion for these feast and famine swings. And when we bring in worldwide markets there is complication for beating each other.
This was so incredibly good
You see Mr Wollf, your use of the word democracy is humiliating and insulting in your titles. You know damn well that a republic is the only one that can stand against the threats, and I really used to look up to you before you got weak
A much needed insight on recession and its social consequences! Muchas gracias, Profe Wolff!
Washington DC is 90% leftists
YOU ruin everything you touch
Who owns the natural resources, water, petroleum, air, minerals and all raw materials of human production; corporations profit at the expense of the general public good, health and welfare
america will either become a wasteland like libya due to its own stupidity, or there will be a communist revolution. anything less is taking aspirin for leukemia.
Why are my subtitles ON??
I need work, is anyone interested in an employee or a coop member?
'invites?' change commonly requires violence, often involves national insolvency, or conquest. usg looking a bit frazzled, but until the generals pull the plug, the politicians will dance to the music of money. a people incapable of revolution will just have to endure, if they can, market their children if they can't.
Well done!
It for sure is traumatic when workers keep getting discarded every 4-7 years, and especially after suffering their authoritarian bosses in between.
Prof. Wolff makes a reference to Richard Nixon setting the price ceiling in 1971. That's fine, but I just learned of another atrocity that Pres. Nixon was complicit in: the genocide of East Pakistan / Bangladesh: https://www.youtube.com/watch?v=eATr7e03N6w
I like the part about the government paying folks to do useful jobs. If i recall correctly, that included painting beautiful murals & building bridges. We could use some of that now. First, we need to raise the minimum wage. $20 an hour sounds good.
People need to send this video to Congress people now!!!
you forgot one "flation, ShrinkFlation
|<<Earning passively has proven to be the best and safest way to stay wealthy for me, I'd be wealthy than rich only Great kinds understand this simple but difficult concept¬>>
Stop using the race card! The reason some groups are behind is precisely the lack of responsibility in some minorities! Mexican are making progress without any special advantage and are moving ahead of many black Americans! Jamaicans are moving ahead of black Americans. They come here to work and black Americans sit around to listen to people like you! “Everything is the white mans fault” Yeah right! Stop whining and take personal responsibility!
When blacks become President or make it then they brag of how amazing, talented and superior to the white man they are but when they fail they quickly blame racism! Sorry you can have it both way!
Socialism books are just like the Bible! Perfect in writing and poor in reality!
Why don’t you show a single successful Socialist REAL socialist country! Don’t come with the famous Utopian lies of Norway or Sweden because they are really capitalist nations! Even China is a capitalist paradise!
Are you getting worst in your analysis or you just enjoy lying to your brainwashed LEFTovers Victimhood audience!
So your perfect system will be to pay people to stay home? Of course if you don’t work you don’t get pay! And alcoholism and depression is not the fault of capitalism! There more depress people in Cuba and even China! And stop lying about blacks and women and they don’t get thrown to their countries or origin!
No you are wrong! The roommate is inviting millions to move in to the capitalism house!
This inflation could have been prevented by this administration that decided to close the economy during COVID. Then started to spend money like a drunk sailor and also their obsession to reduce the world population using climate change as the excuse to destroy economies. Those people sitting at the WEF and other globalist are rigging the game for themselves.
What it needs to be fix is the game that seems to be rigged for the benefit of a few!
What are the failures of capitalism? And to replace it with what? It’s easy to seat and bashed a system without offering concrete solutions. Please show a non capitalist system or society doing better using any other economic model that is successful or better.
https://youtu.be/H0Acmxq7i6U
Excellent summary! Back in the sixties we assumed Keynesian economics would be with us always…
He's got FED action and government overspending mixed up with the term 'capitalism"…
Richard once you realize that there is no conclusion, no cure, no fix for these problems you'll be begging for the fentynal injection that helps the capitalists gangster ring of drug trafficking and pseudo enforcement. I know I'm looking to get back to the US to ovversdose and die in the streets
There's a dynamic, that's not being mentioned. God who sees everybody's personal behavior & thoughts & intents of the heart has a big factor in the ups or down, or blessing or cursing in our temporal & spiritual lives, no escaping this, even if you don't believe in Him, that just makes the downs longer or chronic in duration.
Everyone needs to understand MMT and federal taxes don't pay for anything. UBI is a simple solution that would save capitalism in the short term but defeat it in the long term. Also, everyone out there, you have more value than just that of your labor, not having a job that sustains your economic needs is not a personal failing, it's a policy choice you had no control over.
Love ya Richard, but have to disagree with one point slightly, wars always cause economic downturns as resources are spent on fighting them and other resources are destroyed in the course of war, say, crop fieilds. One of the biggest factors in this "inflation" are the US sanctions on Russia that caused crude supply prices to sky rocktet, also, supply chain issues, but the majority of this "inflation" is just greed and price gouging.
THERE AREN'T ENOUGH PRISONS FOR THE PEOPLE WITH NO JOBS
Recession is the cure for unanchored price inflation. The reason why recessions are so unpleasant is because in the modern credit/debt based economy the boom times expand on credit/debt expansion and when said credit/debt expansion accelerates beyond economic growth in terms of real output inflation unanchores and to control it monetary tightening is implemented which decelerates credit/debt growth which creates huge instability as less credit money flowing into the system can cause a cascade of defaults as current loans for credit money outstanding are unable to be serviced.
Basically the monetary system goes through leveraging boom phases and deleveraging bust phases. To understand capitalism at its core you need to thus understand double entry accounting which serves as the basis of the credit based trade finance system at the center of capitalism.
The capitalist system is only good for the slave owner.
Fun exercise: look up the history of recessions/depressions in the USSR or PRC.
The big fish eat the little fish.
I haven't thought about it like that but recessions are indeed absurd, all that wasted potential on top of the immorality of it all really makes me mad. Thanks Prof Wolff for keeping us focused on the issues, both in mind and in heart