Yesterday, Dr. Richard Wolff, a marxist economist who currently teaches at the University of Massachusetts Amherst, was the guest lecturer for Friday’s seminar. It was amazing to listen to him speak about Marxism and the stigma it has in the United States. Most Americans associate Marxism with communism. While it is true that the Soviet Union did borrow ideas from Karl Marx, Dr. Wolff was quick to point out that the Soviet states marginalized a lot Marx’s theory and replaced it with their own interpretations.
Dr. Wolff was then kind enough to provide us with his marxist analysis of how the United States arrived at its current meltdown. While I won’t provide a detailed summary of his accounts (simply because I did not take any notes), I will provide some of the high lights.
Between the 1820 and up through the 1970s, worker wages increased as did company profits. During the 1970s and leading up to today, worker wages remained steady while company profits continued to rise leading to an increasing gap. Since wages did not increase, workers began to work more hours even though productivity increased.
Women began to enter the work force which had two social consequences. 1) The depression level in women increased as a result in the stress of working long hours. 2) The higher depression level affected the family unit (Since most women are the “glue” that keeps families together, it led to a less cohesive family unit).
Instead of paying workers higher wages, companies loaned the surplus money, the gap between the static level of wages and the increasing profit, to employees instead of increasing wages. As consumption continued to increase, more and more employees became more indebted. The increased consumption was further exacerbated by one company; namely Wal-Mart. It provided “crap” products that people consumed and transformed itself from a small retail store into the biggest employer in the United States.
China produces a lot of the “crap” products that Wal-Mart sells. In order continue this level of consumption, China lent money to the United States. I believe the amount that the United States is in debt to China is roughly one trillion dollars.
His conclusion on how to fix the problem is for the worker to become a “partner” in the company for which he works. How can it be that we are allowed to participate in a democracy at the political level, but not at the employment level when the employee knows more about producing the product than any CEO or president? Dr. Wolff did not have a definite answer on how we could go about this, but it certainly put into motion some dialogue and thought about it.
I found this Marxist analysis very enlightening and interesting. It’s quite possible that with this economic blunder, Neoclassical Economics can find itself challenged by the heterodox such as Institutional or Marxist Economics.