Ask Prof Wolff: Demoting Profit from the Bottom Line

A Patron of Economic Update asks: "Dear Prof. Wolff, Douglas Lane, on the Zero Books podcast, recently summarized a critique of worker co-ops from "a Marxist perspective," saying that "market forces" determine that co-ops can only reduce work hours or raise wages if the enterprise remains "profitable." If profit is the surplus value that owners extract from labor, and co-op workers are the owners, in what sense must a worker co-op be "profitable"? In what sense does profit even enter into a worker co-op? (Maybe he was confusing "profitable" with competitive?)."

This is Professor Richard Wolff's video response.

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“Hennelly brilliantly analyzes our capitalist crises and how individuals cope with them, tragically but often heroically. He helps us draw inspiration and realistic hope from how courageous Americans are facing and fixing a stuck nation.” - Richard D. Wolff
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[AndyMcGehee]

The advantage of co-ops is that the people that run them own them, and can decide if _excess revenue_ should be reflected in their future wages, distributed as bonuses, reinvested in the enterprise, put into a “rainy day” fund for when business isn’t quite as good, or put aside for old-age pensions for when workers retire.

[judymanning]

The more I listen to you the smarter my father gets ❤

[MarkHopewell]

The world should be driven towards sustainability first and foremost above that of profit.

[mauibill]

Other non profit transactions occur within the family. No one charges for doing the laundry, cooking the food, making the bed, etc within the family. Well, no normal family. Also, many transaction occur with the friend network you may have. Somehow, if you're not family or friends, you're fair game for capitalism.

[TheBigGSN]

You can create money by typing on a keyboard. Creating and maintaining an environment for humans to live, not so much. We either get past the profit motive or say goodbye.

[earlgibbs]

Gross domestic happiness supersedes that of gross domestic profit. The fragile state of existence today makes plane this actuality considering life on earth is on the cusp of human self-imposed extinction. The long-term success of hunter-gatherer tribal societies for hundreds of thousands of years substantiates this fact as well.

[darthjarjarbinkstherealsit]

*Waves hand*
You will feed the algorithm

[vivalaleta]

For profit, as religious orders, is immoral to the hilt.

[theskepticai]

Worker coop depends on revenue not profit and the maximize of it.

[archangel]

What about competition? Any co-op will have competitors. If the co-op cannot beat its competitors on price then the argument about profit becomes moot. Losses rather than profits means that your organization needs to fold. What do you do then?

[billyoldman]

This clarifies a lot about Wolff's image of co-ops. What is most telling is what is left unsaid for obvious reasons.

[BBBarua]

Profit is important for the current system. In order for profit to happen, workers need to keep working, and consumers need to keep spending. There's a capitalist who can sit in the middle to pull strings on both (supply and demand) sides to squeeze more enormous benefits. They will often argue, It is free-market, and both buyers and sellers can choose whatever is best for them. If that statement is true, why do sellers/ businesses have more information about buyers and exploit it to get higher profit? All these data gatherings and analyzing consumer just for profit numbers is no good for society. Although it may seem like consumers have information and choices, consumers don't have that many options in the real world. Therefore consumer must control their spendings and buying. If workers and consumers don't care about their money and spending, then we shouldn't complain about capitalist profit-making motives. If we as workers and consumers want businesses to care for society, we must exercise our power in buying/spending. Free Market is not a free market when consumers and government/regulations aren't exercising their power in the market.

[MrDXRamirez]

More important we understand the impact of science and technology on the labor-process, these are two variables.
The labor -process is made a dependent variable because productivity goes up the cost production price to the capitalist goes down, that investment rate is spread over a greater amount of goods, higher volume the value per unit cost drop, the impact on the labor-process is fewer workers to produce as much or the same amount or more. All corporations share the same impact of this double movement on their internal structure losing more jobs shows the impact of technology and science on the labor-process.
This is because tech and science are independent of the labor-process and control or regulate worker productivity as an outside investment the workers have no control over. The outside investment is the independent variable, variable because the investment size of the capital can vary, the science and technology of the corporation are a utility to themselves, they are an alternate reality to the labor-process, outside of their users T&S is applied to accommodate the aim even if it means violating physical limits of human endurance of its users. The workers have not yet begun to act for their share of the profits generated from the insertion of T&S into the labor-process. T&S control labor-power and the labor-process through the tools, instruments, science and technology of capital. The new class struggle takes the form of T&S versus Humanity!

[jamessmith]

Cooperative business is the best social business system. That said, they still work for profit, they simply cannot work for loss, why work at all? In a competitive system they must provide a superior product that sells. -Only within a controlled economic system by a central government, - "can work, profit, prices, and production capability (or necessary means to produce) and frequency of output allowed into the market for distribution be shared for the survival of all." This would also limit the damage to our ecology by limiting the production and consumption of everything.
As for education from public schools to Universities, they suck in more cash being right up there with medical, defense, state courts / legislature and other too big to fail industries and civil service powers of take. This from a middle class schmuck who forks out 100 grand for a university education and two thirds of my property tax annually to public schools. So Yale (and others) accept grants and charity from alumni, and other financial sources when times are hard who have accumulated great capital wealth -"through capitalism"? What would happen if the backbone of middle class tax providers stopped working and profiting? who would subsidize us or your high salary university employees and everyone else who feeds on those institutions? Would we all work for a same LOWER return under a barter system for services without cash or would they consider their offer or services more "valuable" than mine??? At this point in our present state, path and our lack of understanding the gravity of the problem, we start losing respect for government, law, economics and our own intelligence.

[ibukunogunfeitimi]

POTENTIAL: Increasing global productivity innovatively (i-percap employee-employer) would mean investments on both sides in the long-term. For example, redistributed INCOME will go a long way to addressing fundermental challenges, by way of (New) Social-Capital INNOVATION Pioneered by Build Back BEST AFRICA global outcomes - New Knowledge Economics by YNN ☮️🕸️ comment on global finance (fi-Markets)✍️

[PoliticalEconomy]

If you want to hire me to write your scripts for you I will, thanx

[thekreal]

What does the red word on the Yellow vest say?

[imnotanalien]

If you are risking your money ( taking out loans) and have invested time in developing a product ( maybe years, think of a doctor)… you would have expectations of a profit. Otherwise why would you do it?? Also, if you don’t allow a doctor ( who invests time and money) to make a profit… no one will want to go into that field. In Nigeria, right now, doctors are leaving the country…. why? because the government is not paying them enough… no profit! And they are now having a shortage of doctors. Supply and demand… nothing to do with religion….

[catherinemoore]

But as long as money is used to make a profit, ‘socially good investment' such co-operatives have little chance to prevail. People with capital will invest in currency, sell and resell debts, buy gold and shares in gambling casinos instead: that's where the profits are. Profit is the oxygen of the system. Restrict it and the system gets angry, rebels , cheats and finally it'll crush any form of socialism.. Yes, an economy working for people instead of just profit would be ideal but can money work without metastasing into profits first and foremost? Tax profit: that's the key I reckon...🤔

[PoliticalEconomy]

LOL I get your point Wolff but you really need to use better examples next time and better research. For example Yale's endowment fund is $32 billion, the Mormon Church's endowment is $160 billion, and hospitals are subsidized by taxpayers in which top managers make million $ salaries. Yes, even so called nonprofits make a profit.