Professor Richard Wolff proposes a major change in how Americans run their businesses. His idea for worker-directed businesses attempts to merge socialism with a market-based system. In some ways, it’s very compelling, and his argument for why we need to change the game is the strongest part of the book. Wolff is an excellent guide to capitalism’s weaknesses. His proposed solution to these weaknesses would definitely improve our lives. But would they actually fix all the critical problems Wolff sees in a capitalist system? That’s a much harder question to answer, and I can’t say he convinced me of it.
First, the good news: this is a clear and compelling look at American economic life in the 20th century. It also explains how and why economic crises have formed under American capitalism. Professor Wolff looks at the economy from a Marxist perspective. This means his view centers workers over the capitalist, business-owning classes. He also believes the employer-employee relationship exploits workers, and we should seek alternatives. Wolff has a reputation for simplifying the basics of Marxist economic thinking. Listening to him discuss it in a speech, video or podcast is more than useful. It’s honestly a lot of fun. He’s careful to use plain language, draw clear connections, and show humor and emotion. I read his book Understanding Marxism and reviewed it here. Wolff’s central argument is that both capitalism and existing forms of socialism failed. They cannot serve as models for use to use going forward. Both manifested their own unique kinds of corruption, poverty and oppression. People are looking for a new model to use instead.
An ideal model might include the best elements of socialism and capitalism. It would also avoid their pitfalls. To build to this, he discusses the history of capitalist crises in America – how they occur and who they hurt the most. American governments also tried various strategies to end them, discussed in-depth here. Wolff also spends time outlining the basics of Marxist economics. This wasn’t super engaging to me, but it’s not Wolff’s fault that I’ve read about twelve versions of this since 2021. What he does give is clear and easy to follow. The crux of it is “the value added by workers in production exceeds the value paid to those workers for the work they do.” That’s the surplus. Wolff points out (as Marx did) that the people who get to use that surplus are not those who labored to make it. The capitalists control that surplus, hire labor to make it and own the means used to make it. They then sell it for profit in a market-based economic system. Some of that profit goes to enrich the capitalists themselves. Another share gets reinvested in the business to expand production further and further.
Wolff discusses existing & past socialist systems, trying to outline how they fall short. He criticizes “state capitalist” systems in places like Cuba and the Soviet Union. To him, these systems weren’t socialism because they didn’t allow workers to direct production. The workers didn’t get to decide how to distribute the surpluses they created. Instead, bureaucracies and officials tended to that for them. I know many on the left who would dispute this idea, as well as many who would support Wolff’s views here. He also cites Yugoslavia’s history of “worker self-management” socialism. In theory, these workers supervise themselves or appoint their own supervisors and management. In this way, they decide how work gets done. But the ultimate goals of production, and how surpluses get distributed, still may not be up to them.
Wolff’s big idea? Workers’ Self-Directed Enterprises, or WSDE’s for short. This system intends to put workers in charge of what they make and what happens to the surplus. Instead of a board of directors (appointed by shareholders), workers would direct enterprises. Wolff argues this method would be superior to the currently prevailing capitalist system.
The book frames itself in the wake of the Great Recession of 2008. It’s proposing a new way forward after our capitalist system nearly collapsed. The situation we faced then, and still face now in a new form, echoes the crisis of the Great Depression of the 1930s. Fresh in our memory is the truth that millions of people can lose their jobs with little warning. Millions of homeowners can fall behind in their mortgages. Banks can foreclose on them. Businesses can collapse after their markets go bust one morning. These things will always happen, here and there, even in a “healthy” capitalist economy. But Wolff’s argument is that capitalism will lead to greater and greater crises. Stock values plummet, companies go bankrupt. People who did “everything right” get left without jobs and homes. More and more of these disasters will happen, at greater scales, until it affects all parts of the economy.
This sort of crisis happened in 1930s and back then, it almost destroyed capitalism. Workers staged strikes across America. Groups of armed farmers stared down potential buyers at foreclosure actions. Socialist political parties arguing for a new political order were on the rise again. Revolution was brewing. The Democratic president, Franklin Delano Roosevelt (FDR), had a choice to make. They could stay the course and beat down dissent, risking a revolution if it backfired. Or they could appease the dissenters & revolutionaries by building a new political order. The “New Deal” is the term we remember from this period for our turn toward “social democracy”. It shifted the balance of power somewhat toward workers & away from banks and business. It directed public spending to programs and investments that helped rescue the economy. The programs and policies we instituted then led to decades of prosperity in the U.S., Wolff argues.
Then, at some point, things began to fall apart. While our workers became more productive, their wages stopped rising with productivity. Employers stopped treating employees as essential, and began treating them as disposable. A political movement led by the likes of President Ronald Reagan busted unions. Reagan pushed “trickle-down” economics. This is the idea that if the wealthy and major corporations receive tax cuts, we will all benefit. Richard Wolff argues – and has evidence to back up his claim – that trickle-down economics did not work. The wealth remains at the top of the economy. And yet versions of this philosophy remained fashionable until the 2008 economic crash. By 2010, when the Occupy Wall Street movement emerged, new ideas were gaining currency. This includes Wolff’s idea of Worker Self-Directed Enterprises (WSDEs).
There are definite advantages to the approach Wolff lays out. With workers directing their own businesses, it’s easy to see work conditions improving. Wages would go up, and the direction of the company could align with what workers desire. Companies would be far less tempted to fire workers to cut costs or to outsource jobs. They could be in better sync with the interests of their local communities. A worker directed board could ensure worker safety, benefits and leave. Wolff’s argument here is intoxicating to anyone who has had to suffer through a bad job. If you’ve had to fight your HR, your HMO, or your boss’s denial of your vacation time, you can find a lot to like here. The benefits of your labor would go where you (and your fellow workers) wish it to go.
Now, onto what doesn’t convince me in Wolff’s work. It’s unclear from this how WSDEs would solve some of capitalism’s biggest weaknesses. Will a worker-owned board be able to avoid overproducing goods and causing crises? Can it avoid the pitfalls of cutthroat market competition, like price wars? Will they respect the environment and use resources wisely? How will workers avoid job fatigue, or move to other firms or duties? Wolff tries to answer some of these questions, but the answers he gives seem vague to me. They often resort to trusting that workers will make the wise long-term choice. Other times, they involve “setting up a fund from part of the WSDEs’ surpluses” to fix problems. Wolff proposes this solution a lot. After a while, it seemed to be more of a Band-Aid covering wounds Wolff wasn’t prepared to treat.
Here’s something I’ve learned from reading a dozen straight books on Marxist economics. Some aspects of a future socialist system can only be nailed down in practice. These theorists don’t have all the answers and we can’t expect them to have them. Adam Smith couldn’t foresee all capitalism’s problems when he wrote The Wealth of Nations. And he foresaw more than many capitalists would like to admit. It’s also clear that there are many different “socialisms”. Many approaches are good in some contexts, but not others. WSDE’s are interesting, and probably worth exploring in a transition away from capitalism. Maybe in a largely post-market socialist society, they can remain in non-critical industries. I have my doubts they can be used as a widespread, permanent solution, though. But at least Richard Wolff is here to clearly explain how we got to this point. At least he’s helping us imagine routes we can take to find our way out of it.
Democracy at Work: A Cure for Capitalism
Professor Richard Wolff proposes a new way of organizing our workplaces. Is this a cure for capitalism's ills, or will some of its worst symptoms remain?
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