Ask Prof Wolff: Worker Co-op and Stock Markets

A Patron of Economic Update asks: "Professor, in your idea of a gradual transition to 'Democratic or Co-Op Business' from purely Capitalistic, how do you expect the stock market to react? While I agree that our current system is broken, I still am highly dependent on my 401K to sustain my income. I have to think many of us are."

This is Professor Richard Wolff's video response.

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“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.”

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Follow Wolff ONLINE:

[nancylarson]

Thank you Dr. Wolff! Wishing you and your staff every good thing!

[tomschmidt]

Great discussion of the nuts and bolts of a new economic system.

[sigmazeta]

I had this same question, thanks for answering Dr.

[unitedstatesdale]

Professor Wolff called the current situation we are in 7 years ago.
Were living it now

[bartoszdobroslaw]

Great stocks and I just bought in on them, but I'm interested in making short term profit, let say turn a $150K to $500k in 6months, I'd appreciate tips on how what stocks to buy to make this much profit.

[BBBarua]

Whether heck in the system or system improvement, the Employers have full control over "how much" and "who" gets the information. They can simply make changes with a few clicks. This is called the digital information age, and they will dictate however they see fits fair or unfair. No one can back-check their actions. The more we go that route, the more inequality will grow in the future.

[GhostOnTheHalfShell]

It sounds like dividends. The other notion is well paid workers have money to save. However, I would suggest to move also away from the concept of earning interest and lending. The troika of growth is price unstable, systemically unstable and a ridiculous method of managing the velocity of money. Demurrage as with Bractaeten used in 13th and 14th century Germany cities and the city of Wörgl after depression in Germany establish that these forms of stamp script ensure vibrant commerce. Lending still occurs but the price of money is actually totally market driven. Yet its supply is guaranteed because hoarders of cash use it or see it “taxed” by 25% after 3 or 6 months.

[davidl]

I don’t think that anyone that doesn’t work in the company to have a stake (like today’s shareholders) because at some point, they are gonna get decision-making power

[rogersmith]

The government should provide a guarenteed investment vehicle FDIC insured, such as savings bonds with a somewhat higher interest payment. Most of these state pension plans are heavilly underfunded and depend on idiotic returns from the sketchy stock market to avoid default. If you want silly returns go to Vegas or try the lottery.

[mjnyc]

It's hard to imagine enterprises on the scale of Walmart evolving into worker co-ops.

[clarestucki]

Gov't bonds have to pay interest, and have to be redeemed when they mature. Wolff doesn't say a word about how the gov't will pay the interest and redeem the bonds when they mature. His new economic system is meaningless without explaining how it should be financed. Does he plan on taxing the new co-ops to pay for the bonds?

[paladinsorcerer]

If civilization collapses, then the old institutions wouldn't be replaced with new ones. There would just be a lack of institutions. If the majority of people are dependent on Capitalism, would there be a collapse of civilization before a change could take place to resolve the dependency? In other words, would the change to worker coops be instantaneous, or would it be done piece-meal, so that society could adjust as new issues arise? Is civilization collapse more of a red herring than a real concern?

[manuelmanolini]

Many worker coops (democracies where all workers vote about what the co op does ) cannot compete with traditional dictatorial capitalist enterprises. One likely reason is that capitalist-run enterprises are more nimble because fewer people participate in the decision making. For instance, a law firm or medical group would have a hard time running its operations and competing based on the voting decisions of legal secretaries or office clerks. I also wonder how to avoid worker co ops from becoming monopolistic/oligopolistic enterprises, victimizers of consumers and/or environmental malefactors when co ops are trying to make as much money as possible for its worker owners. Workers are not saints. Moreover, worker co ops would not necessarily be able to avoid the business cycle--recessionary and inflationary --that capitalist societies suffer today. I sympathize with worker co ops but they are not the panacea to all capitalist ills. We need government intervention and regulation of the economy with or without worker co ops.

[publicdomain]

Turns out failing unions can mean the pension scheme gets cut. Here today gone tomorrow.

[SueEmmDee]

You left out urbanization and the Industrial Revolution and the rise of the Middle Class in the 1800s.

[CesarGarcia-ogrz]

The employers will fund these co-ops 😬
In return your entitled to profits?
Except co-ops don't produce profit.
So how do the workers ever stop needing to fund a non profitable co-op ?

[jgalt]

You gotta love what happens when you win the "question lottery" on "pay-tree- on"...
and the fact that old Prof Wolff rarely ever, actually reads the question asked...today
he spent two minutes explaining the question...when it would have taken far less time
if he actually read it.

Then the professor intimates that the questioner is in sympathy with the move from capitalism
to worker co-ops! This IS the actual question.

"Professor, in your idea of a gradual transition to 'Democratic or Co-Op Business' from purely Capitalistic,
how do you expect the stock market to react? While I agree that our current system is broken, I still am
highly dependent on my 401K to sustain my income. I have to think many of us are."

It seems that the Professor has assumed "sympathy" from the " While I agree that our current system is broken"
it does not indicate in what way the system IS broken...and while it seems similar to Wolff's anti-capitalist rantings,
the description of the present system as "purely capitalistic" when there is little to no "capitalism"
involved...is simply an indication of someone else, who doesn't know what capitalism is.

Now having given his "interpretation" of the actual question Wolff begins to "unpack it". ( for
those unfamiliar with the purpose of this exercise...this involves the historical distortion that
is required by the "everything is the fault of capitalism" schtick, which begins with the attempt
to equate the "stock market" with "capitalism"...when it is simply an extension of the "rentier"
economy of late feudal/mercantilist age...when the aristocracy and merchants, controlled
the land, businesses, and banks, and then began "investing" in exploration and trade...directly,
as opposed to that funding coming directly from the ruling monarchs, as it did with Columbus,
and other explorers, of the time. The number of these companies was "limited" as were
those that could participate...and one doesn't see any Dickensian urchins, hanging out at
the stock exchange betting on stocks, as one sees with shoeshine boys, rendering advice in
the 1920's before the crash of 29. Joint-stock companies...like the East India Co, or the Dutch East
India Co...were essentially tied to the "national interest"...while "speculation" was essentially
tied to various "commodities" directly...sugar, tea, cacao tobacco, etc.

Then we have the "irony" of the unpacking...which leads back to the reality that "worker co-ops"
in transition...are actually "capitalism"...and require "profits" for all the reasons
that any business does...and now with "bonds" or "stocks" will require even more
"profits" to satisfy the "debt/investment" in them.

This leads us to the question: How is this NOT exploitation? Because it would
be voluntary as in the worker co-ops would agree to it? ( and because if they
didn't they wouldn't exist in the first place? ) How is this any different than a worker
voluntarily agreeing to work for the wage offered??? ( except that in the latter case
the worker gets paid whether or not his work produces a profit . ) In
this new world of "capitalism" the worker co-op would be liable for their debt
if they also failed to produce enough profit to satisfy their debt.

This would seem at a minimum to end the fantasy of the Wolff myth that in the
current system...workers are responsible for all the profits and take all the risks...
wherein this new modification, those things would actually be true...the workers
would be "democratically" responsible for the profits realized or the losses.

The more things change..the more they stay the same.