[Marxism] A website resource on Marxist economics from Richard Wolff

Louis Proyect lnp3 at panix.com
Sun Jul 25 14:01:24 MDT 2010

Dear Friends,

Over the last year and a half I have been building up my website 
(www.rdwolff.com) so that it might serve as a repository - available 
always and free of charge - of both short and long essays on the 
economic crisis as well as pieces on economic theory, Marxism, and 
strategies for social change. We have also loaded onto the website audio 
interviews and videos of media interviews, lectures and entire 
multi-session classes on the crisis, class analysis,  and Marxian 
economic theory (intro and advanced). Dr. Harriet Fraad and I together 
also produce podcasts and separate blogs on this website's Economy and 
Psychology sub-section. More is always being added to all parts of the 
website. Translations of various items are also available in a variety 
of languages (Chinese, Greek, Persian, Bengali, German, French, etc).

As the time for making up class reading lists arrives, I wanted to 
invite you to make use of the website for teaching purposes (a major 
part of the motivation behind its existence and constant updating). The 
same applies to my DVD "Capitalism Hits the Fan" (cost = $19.95) and my 
more recent, 2010, book, Capitalism Hits the Fan: the Global Economic 
Meltdown and What to do About It (cost = $18.00 retail or around a 
discounted $14 if ordered via my website). All my books as well as those 
co-authored with Steve Resnick can be ordered via my website (and the 
DVD as well) through its automatic hook-up with Amazon which actually 
ships the items to buyers.

I'd be glad to answer any questions about the website, etc.; you can 
reach me by email via the website. Thanks.

Rick Wolff

ps: A sample of the kinds of short written pieces on the website is one 
recent work also published in the Monthly Review webzine, Common Dreams, 
etc. is reproduced below.



Austerity: Why and for Whom?
by Rick Wolff

Clearly, the global capitalist crisis that started in 2007 will be 
neither short nor shallow.  The government rescue of the US financial 
industry pumped enough extra money into the economy and sufficiently 
reduced interest rates to give banks and the stock market the heavily 
hyped "recovery" that started March 2009 and is now over.  What is 
worse, their recovery never reached much of the rest of the economy. 
Efforts to broaden the recovery or extend it beyond one limp year have 
failed.  That failure cost Washington trillions in borrowed funds from 
lenders who now demand guarantees that those loans will be repaid to 
them with interest.  Similar demands now confront many other governments 
who likewise borrowed heavily to cope with the crisis in their countries.

The guarantee demanded by lenders is "austerity."  Lenders want 
governments to raise taxes or cut government spending or both. 
Governments will then have more money available to pay interest on loans 
and to repay those loans.  Governments that fail to impose austerity 
will face higher interest on new and renewed loans or will be denied 
loans which would cripple those governments' usual operations. 
Austerity is yet another extreme burden imposed on the global economy by 
the capitalist crisis (in addition to the millions suffering 
unemployment, reduced global trade, etc.).

Who are these lenders demanding austerity?  The globally active 
financial enterprises -- mostly banks that collapsed in the crisis and 
were rescued by their home governments -- are, together, also major 
lenders to those governments.  Banks own their own governments' debts 
but also other governments' debts.  For example, major banks in France 
and Germany are among the Greek government's chief creditors.  US banks 
and related financial enterprises hold significant amounts of other 
governments' debts and other nations' banks own much US government debt.

Global capitalism's 2007 crisis froze the credit system that sustains 
capitalist production.  Private borrowers -- enterprises and individuals 
- could no longer repay loans because their investments had generated 
too little and their incomes had failed to grow enough.  Banks had 
failed to properly assess risks in deciding how much to lend to whom. 
They therefore stopped lending to private borrowers because that had 
become too risky.  As private borrowers defaulted and new lending 
atrophied, banks' capital and their profits collapsed.  The whole 
capitalist system ground toward a halt because credit became 
unavailable.  The only solution most leaders in capitalist countries 
could conceive was to unfreeze credit by having the government guarantee 
bank solvency, guarantee many private debts, invest massively in and 
lend to private banks, and become the ultimate borrower of a huge 
portion of loanable funds.  Banks everywhere lent to governments because 
it had become unsafe to lend to almost anyone else.  Governments 
everywhere used the borrowed money to rescue banks and other financial 

This peculiar "nationalization" of debt served capitalism by having the 
government temporarily function as the lender and borrower of last 
resort.  Nationalization unfroze the credit system sufficiently to stop 
the crisis from collapsing global capitalism.  Few policy-makers (and 
few others) in 2008 and early 2009 worried much about the consequences 
of so massively increasing government debts.  The looming possible 
capitalist system collapse overwhelmed worry about any "longer run."

The international banks that were rescued (from their own bad loans and 
investments) by governments now worry that governments they lent to 
won't be able to repay those loans.  Banks threaten to make further 
loans much more costly or even impossible unless those governments 
impose "austerity."  Most political leaders recognize that the banks' 
threats, if carried out under their watch, would end their careers 
quickly and badly.  All capitalists see in possible government defaults 
the specter of another credit freeze with terrifying ramifications for 
global capitalism.  Still worse for those banks: governments in default 
would not likely be able to borrow again to rescue banks again.

Nearly all current political leaders of major capitalist countries 
responded positively to the banks' demand for austerity (as in Canada's 
recent G-20 meeting).  This immediately raised a basic political 
conflict always simmering inside capitalism: who will pay increased 
taxes and who will suffer decreased government spending?  Militants in 
Europe have already marched and struck against austerity as an 
unacceptable plan to make workers pay to fix capitalists' crises; more 
general strikes are set in many European nations with a Europe-wide 
general strike now scheduled for September 29.  Meanwhile, capitalists 
work with politicians to define as "reasonable in crisis times" 
austerity programs mixing both tax increases (chiefly on workers) and 
spending cuts (chiefly on workers).

An Athens trucker says, "Public employees here don't work hard enough, 
so it is reasonable to cut their pay."  A Parisian clerk thinks it 
"reasonable to postpone the official retirement age a few years; we all 
live longer now."  A Minneapolis office worker agrees that it is 
"reasonable, in crisis times, to get by with fewer public services."  A 
New York laboratory technician supports a new tax on cell-phones as 
"probably reasonable; after all, people overuse them."  Remarkably, such 
notions of "reasonable" are silent about other possible and, to say the 
least, more "reasonable" forms of austerity.

Let's consider some alternative "reasonable" kinds of austerity (i.e., 
austerity for others) and then question austerity itself.  Serious 
efforts to collect income taxes from US-based multinational 
corporations, especially those who use internal pricing mechanisms to 
escape US taxation, would generate vast new federal revenues.  The same 
applies to wealthy individuals.  The US has no federal property tax on 
holdings of stocks, bonds, and cash accounts (states and localities levy 
no such property taxes either).  If the federal government levied a 1 
per cent tax on assets between $100,000 to 499,000, and 1.5 per cent on 
assets above $500,000, that would raise much new federal revenue 
(everyone's first $100,000 could be exempted just as the existing US 
income tax exempts the first few thousands of dollars of individual 
incomes).  Exiting the Iraq and Afghanistan disasters would do likewise. 
  Ending tax exemptions for super-rich private educational institutions 
(Harvard, Yale, etc.) and for religious institutions (church-goers would 
then need to pay the costs of their churches) would be among the many 
other such alternative "reasonable" austerity measures.  Comparable 
alternatives apply -- and are being struggled over -- in other countries.

A capitalist system that generates so massive a crisis, spreads it 
globally, and then proposes mass austerity to "overcome" it has lost the 
right to continue unchallenged.  Should we not be publicly debating 
whether America (and the world) might be better served by going beyond 
capitalism?  Can we not learn from capitalism's repeated cycles 
(failures) and change to a new, non-capitalist system?  Having learned 
hard lessons from the first socialist attempts during the last century 
in Russia, China, and beyond, can we not rise to the challenge to make a 
new attempt that avoids their failures and builds on their strengths? 
When better than now?

Rick Wolff is a Professor Emeritus at the University of Massachusetts in 
Amherst and also a Visiting Professor at the Graduate Program in 
International Affairs of the New School University in New York.   He is 
the author of New Departures in Marxian Theory (Routledge, 2006) among 
many other publications.  Check out Rick Wolff’s documentary film on the 
current economic crisis, Capitalism Hits the Fan, at 
www.capitalismhitsthefan.com.  Visit Wolff's Web site at 
www.rdwolff.com, and order a copy of his new book Capitalism Hits the 
Fan: The Global Economic Meltdown and What to Do about It. URL: 

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