Richard Wolff on the Free Market

"The free market that I just described has never existed... In other words what markets do is distribute whatever is scarce to the people with the money. The most money wins. Well if the market is a game in which those with the most money win then it's a game that favors the people with the most money. This is not rocket science, friends. The market is a system that favors the rich which is why the rich love markets."

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Prof. Wolff's latest book "Understanding Marxism"

[RichardMedhurst]

Richard Wolff is not only an expert economist (Stanford, Harvard, Yale) but he's so great at teaching, it's so easy to understand. Thank you Professor! I do progressive news videos like Kyle Kulinski and Jimmy Dore and reference you often.

[nthperson]

What Adam Smith meant when he used the term laissez-faire was a state of affairs where markets operated without the redistributive effects of monopoly privilege. Making sure monopoly privilege was prevented was the role of government. Only then would markets be "free" and fair.

[vantahawk]

If you can "vote with your dollar", then those with the most dollars get the most votes...

[thePyiott]

Everyone who has played mmos with player driven economies know this. MMO markets are usually run by cartels and bots (bad actors). Players who initially were sold on the idea of an unregulated player driven economy then beg the developers to step in and enforce some form of regulation. This is allways controversial in the playerbase as players dont like change and some may have found ways to profit still, are wealthy enough in game to were they are not affected or engage in real money trading (RMT). The developers themselves also often profit from these conditions as they ways to buy ingame currency for real life money. In many games the frustrations of the Majority "poor" player becomes too great and the game eventually dies out as these players move on to the next new game offering the exact same market mechanics.

[alexgibson]

1. If wages are low, new companies will bid higher wages to attract employees. 2. Antitrust is dark story of governments milking companies. 3. If ice cream prices are high, new companies will bid lower prices in order to attract a new market share. OK! Hit me with your disagreements!

[Karkhash]

Markets only cares about profit, there's no ethic or moral ground in it.

[kckoay]

Since the collapse of the Soviet Union in 1992, the United States has been the only, and an unchallenged super power, accustomed to hegemonic aggressions; and the indiscriminate and unconsidered exercise of its superior military assets, and its overwhelming global, and geopolitical influence. This in turn has given the United States its economic and financial clouts to sustain the greenbacks.

The United States has been exploiting the rest of the world with its indiscriminate borrowings. This is largely made possible because the US dollar is the dominant currency in international trade transactions and settlements. In other words, the United States can continue to print the greenbacks to finance its insatiable appetite for consumption; and to augment the exploit and hegemony of capital.

Effectively, the cost of capital and labour of other producing countries - to the United States - is no more than the cost of printing of the greenbacks.

[Aznboy]

Down the rabbit hole we go.
1) The fact that the free market may not have existed is not an argument against the idea of free markets - that a third party not involved in the exchange should not have authority or say in the voluntary exchange between other consenting parties and why regulations should be as limited as possible.

2) The necessity of a minimum wage is debunked by Wolff himself. If people are willing to "work for next to nothing" the person willing to work for those wages has made a decision that working for low wages is better than being without work and is the market worth of the labor provided by that employee. A minimum wage law is simply a price floor on labor. While there is no change to instituting this rule when the labor provided is already higher the problems arise if the labor provided is currently below the instituted minimum wage which is when the least skilled workers go from being employed to now unemployed - which as previously mentioned is far less desirable. If the issue is low wages, that employee needs to become more productive which will be rewarded with higher wages by the employer or the employer risks having their employee being offered a more competitive rate by another employer who recognizes the actual productivity of the employee. A lack of a minimum wage has never created a large population of poor people - look at Singapore if you need an example.

3) "Monopolies jack up prices" - this argument isn't even true at face value. Businesses that have monopolies still need to price their products or services at a price point that most people can pay to make the most money. Wolff uses utility companies as an example - there literally is no large swaths of people that can't afford utilities because they're too expensive.

It's also the case that the issue Wolff is describing is solved by free markets. If a business has a monopoly on a product or service and is jacking up the prices, individuals in the market recognize there is a huge market that can be captured by becoming a supplier of that product or service and undercutting the existing business model.

4) Wolff's point on supply and demand is also shallow. It is true that when demand far exceeds supply, the price of that good or service will skyrocket due to its demand combined with the lack of supply. However, this phenomenon remains true only if the supply and demand as it exists in its high demand and limited supply remains static. Using Wolff's example, if there is a large demand for ice cream cones to the point that "they don't care, they're rich they'll pay $5 a cone, " this situation now creates opportunities for individuals that are currently not engaged in the production of ice cream cones to produce them and capture the massive financial incentive that the market has signaled. This process also has a secondary benefit: the increase in supply to meet the demand driving down prices. This is how a market becomes efficient by those engaged in the transactions.

[ThePhilosopher]

When the price is bid up by the rich, that creates an environment that encourages an increase of production. Richard Wolff already starts with a fixed pie fallacy (that being that the amount of goods available exists statically). The result of higher prices however IS that more will be produced, especially when one has made significant net profits from it (which allows investment into greater production capacity). While in the immediate short term, all those stupid ice cream cones are gonna be sold out, suppose that would happen, the long term result would be: more being produced. The next problem is that Wolff ignores market saturation. Just because I can potentially afford something doesn't mean I definitely buy it. The rich person will, assuming there's sufficient supply, only buy as much as they want, even if they could afford more. On a larger scale, this means that the supply can only be insufficient when the amount of people wanting to buy it is "too big", meaning too many "poor people", not "rich people", because there are a lot more poor people than there are rich. The price of common goods, especially food, will thus be dictated by the ability of the poor to afford it. As we see in practice: not a single rich person is buying up the entire supply of a store "just because they can, technically, afford it".

I conclude that this video demonstrates the extreme stupidity of Richard Wolff.

[socdoneleft]

great video -- pointing out that markets are only "democratic" if you give the rich many more votes than the poor -- but I'm always a little turned off by how angry wolff gets about it lol

[jordanrugz]

The ice cream cone example is super flawed. Free market dictates that the demand would be met by producing more ice cream not limiting supply to drive up the price. Plus you ignore the fact that free market is about choice. So "the poor" would simply go to other ice cream providers who can provide these at affordable prices.

Also, intervention by gov in free markets is the problem as it doesn't allow the free market to self correct which is one of the benefits. Successful businesses are not looking for just the cheapest labour, they seek the best skills. Therefore if they pay someone a low wage because they can, that person will either build skills and go where they get paid more or produce bad work because they haven't built the skills necessary to get higher wage. Both scenarios cause such a business to fail since they lose good skills or produce bad products/services.

If energy companies all create a monopoly and charge a high price, it only takes the simple solution of a business that charges a reasonable price and they'll win a bigger share of the market.

All in all this is a silly argument

[Sufi_Alchemy]

Goes against about everything I studied in university, but work life experience certainly speak for what you say - its always the big capital who dominate markets.

[RL-fjxz]

So easy to understand, when the teacher knows how to present it and knows the subject.

[serenditymuse]

Free market means anyone that wishes can voluntarily (only) exchange value for value with anyone else without needing to obtain permission from government or others or give government or others a cut of the transactions. It is individual liberty and inalienable individual rights in the economic sphere. Richard sneers at this without really addressing it desirability. Free market does not require or need "perfect information". Nor is it a design for utopian outcomes. It is simply full dynamic self balancing best use of all individual and group capabilities to satisfy human needs and desires. It is much to be sought.
Free markets allow EVERYONE to receive as much value for the value they offer as other believe what they offer is worth without interference or coercion. No system could be more fair to buyer and seller at whatever level of initial wealth.
Richard's argument seems based on notion that the rich would totally dominate all market transactions so deeply that the less rich would have no real chance. But this is not how actual free markets operate as they are markets without coercion of either government or already rich participants. Being rich does not mean you can force others to ignore new offers of superior value for competitive prices.

[robertkelley]

There's no free market with central banks debt as money. No system can work with those two aspects

[GeorgWilde]

4:56 "Market is the system that favors the rich. Which is why the rich love markets."
Woah. You just blew my mind. Just woah. Market doesn't favor the rich. Those who are favored by market become rich. That's a big difference. And i see it is extremely easy to exploit the ignorance here and completley turn it round like you did. This is the top level sophistry. The sport/competition favors the winners, right? No, who is favored by the given type of game becomes the winner. You don't know who is the winner until they compete.

[CUMamerica]

Would love to see him on Joe Rogan. More people should have a chance to hear common sense.

[richardjohnston]

For the overwhelming majority of U.S. history there was no minimum wage legislation yet real wages increased. There is no "minimum wage" legislation in Switzerland. Any guess as to median wages? Why is the median wage in the U.S. about triple the legislated "minimum wage?" In the professor's world, legislators can pass a law making someone's work worth whatever number they come up with. As an economic historian, he should know enactment of 'minimum wage"legislation ending hurting many of the very people it was intended to help.
It is competition for workers that explains this!
Most economists recognize there is a role for regulation, including very importantly, a defense of property rights.
The author doesn't seem to know the difference between demand and quantity demanded.
This economic historian should read the book Forty Centuries of Wage and Price Controls.
It is specifically NOT the rich that always get to buy. People with less money than me outbid me for many things I just don't value.
The professor explicitly ignores that the market gives people the incentive to serve others. Bill Gates didn't get rich making others poorer. My oncologist didn't get richer screwing patients.

[Bobgo]

On the other hand, in a command economy if there are 20 cones and 50 people, the state will just disappear anyone who complains about wanting a cone until there are only 20 people remaining. V good state planning, much equality.

[aidendrake]

This guy would get absolutely destroyed by Milton Friedman in a debate. His arguments are all straw-man.