"Most People Have No Idea What's About To Happen" − Richard Wolff's Last WARNING

0:00 [Music] Before I start, I have to ask you to understand that old adage that if you don't like the message, please don't take your anger out on the messenger. I am going to be describing to you as best I can what the situation is with the United States's economic system, which has a name. It's called capitalism. And it is to give you a hint of where we're going. It is a system in very deep doodoo. It is in the greatest difficulty that I have ever seen in my life. And you can tell from my white hair that I've been around a while. I never expected to see what I am experiencing. And I imagine for many of you it is the

0:45 same. Unless you are committed to something my psychotherapist wife explains to me as the problem of denial. Not a river in Egypt, but an inability to confront what it is that's going on because it's frightening. It's a very human thing to do. It's like a little child who puts his or her hands in front of her face when there's a scary dog in the neighborhood because she still imagines at age three that if you don't see it, it isn't there. And if you don't see what's going on around us, then perhaps it isn't there. And that is something which our political leaders and our cultural leaders and our economic leaders, that's one thing they

1:30 all have in common with very few exceptions, namely a commitment to denial. So my presentation today is going to try to break through all the mechanisms of denial that surround us in order to tell you what I think is going on. I'm not infallible. I make mistakes like everybody else. But this is the fruit of a lifetime of observing US capitalism, which I was born in the United States in Youngsttown, Ohio. I've lived and worked here all my life. I have never seen anything like the situation we are in now. And to give you the framework and then jump in, I think that the history of the world is a

2:15 sequence with interruptions, but a sequence of empires. the Greek, the Roman, the Persian, the Egyptian, the Chinese. I mean, I could go on. And they all have something in common. They are born usually out of the demise of another empire. They evolve and change over a period of time, running from a few decades to a few centuries, and then they die. They pass away. The most recent one, perhaps the most and best studied was the British Empire, which depending on how you want to count, goes from around the 16th century to the end of the 19th, more or less, so three or four centuries depending on how you count. and out of the disintegration of the British Empire, literally punctuated

3:03 by the war, the independence war that swirled around Boston right where you are, a part of that empire broke away. And in an important lesson, the empire denied that this was building, even though it was building across the entirety of the 18th century, denied it. And then in 1776, the denial blew up in its face as the colonists here in this part of the British Empire, by the way, a relatively small, relatively unimportant part of the empire, wanted its independence. And a war was fought which, to the surprise and chagrin of the British Empire and George III sitting on his throne in England, the British lost. Not to be

3:49 forgetful, let me remind you that in 1812 they tried again and they lost again. And with that set in motion the disintegration of the British Empire which ended in World War I. Out of it emerged the American Empire. American capitalism across the 19th century resolved certain key internal contradictions holding them back. most notably the bizarre coexistence in this country of a capitalist northeast and midwest and a slave south that was resolved by the willful destruction of slavery by the capitalists. Remember the civil war is

4:34 the expropriation without compensation of the single most important wealth of the south in this country. The slave, the slave was emancipated and thereby the white master impoverished. A very stark disregard for the sanctity of private property and capitalism having destroyed its competitor with enormous violence took off. Starting in 1870, the United States capitalism had a century of economic growth. The most amazing thing is if you look at the statistics, crude as they are, especially in the early years, the

5:21 United States grew uninterruptedly for that century, roughly 1870s to the 1970s. Every decade, real wages of workers were higher than the decade before, even across the Great Depression. Profits grew even faster. So you had this bizarre situation, quite rare in the world, of a capitalism that was able to give rising profits to its capitalists and rising wages to the mass of its workers. with of course the exception of those workers with the bad luck to not have been born white. Very important that to sink in. Why? Because if you do something like this, if you have a

6:07 century of economic growth under an economic system like capitalism, it isn't so surprising that you think of the United States as exceptional because in that regard it was. If you're religious, perhaps you think God likes Americans better than he or she likes other people. If you're not religious, you will attribute it to who knows what entrepreneurship. My professors used to like to say, whatever in the world that's supposed to be, but it was exceptional. And Americans, whatever their other orientations, took on the notion that we live in an exceptional place. And they then really ran with that ball and began to imagine that this exceptionality

6:55 was somehow inherent and so it would last forever. It was upward and onward the American economy and it would carry our culture around the world to become the world's culture. Our political system would be the model. our military would push away those backward people who wanted to resist. It became, and I use this word carefully, crazy. And of course when the signs began to emerge that this empire, the United States Empire after a 100year rise up was beginning to show the signs

7:41 of decline, of peaking, of breaking. It's not surprising that the leaders of such a system with such a history would be deep into denying what had happened, not seeing what was exploding around them. Over the last few days, Americans have been confronted yet again with the level of violence committed every day somewhere in this country by the police against the citizens. And again, there are people who want to blame it on this or that particular policeman or woman who will not see that this is a social phenomena.

8:29 It has been going on for a long time and it is getting worse. This the same issue. It's the same denial. Okay. What exactly is being denied? Let's begin. And I apologize. I'm going to begin with economics. But that is what I know best and that is what I have studied all my life. And so if I'm going to be useful to you, I want to share at first what I know best. Over the last 40 years, roughly 1980 to now, we have seen and all economists of all political persuasions understand this and see it. We all use basically the same numbers and with a few exceptions of course always we come to the same conclusion.

9:16 Over the last 40 years, there has been a radical redistribution of wealth from the bottom and the middle to the top. And the more top you get, the top 10% have done really well. The top 5% even better. The top 1% even better than that. And the top onetenth of 1% the best of all. And you know them because in our society we adulate them. I'm talking about Bill Gates or Elon Musk or Warren Buffett or fill in the blank. You know them. Our culture makes sure you know them. They became much richer. The top 10% became richer all

10:01 across those 40 years. This was partly because they're very important that you understand this. It was partly because we changed the tax laws in this country. We relieved taxes from corporations and the rich and we switched them onto the middle and bottom. It was done by Republicans. It was done by Democrats. It didn't matter who was in the White House or who was controlling the houses of the Congress. The Democrats did it a little less quickly. The Republicans were a bit more intense. Speed varied. Content did not. Even more important than the changes in taxes was the phenomena of the relationship between

10:48 capital and labor. That is corporations and business on the one hand and the mass of people employees on the other. As I've told you real wages went up for a century, 1870s, 1970. Why 1970? Do I pick that? Now I can tell you because that's when real wages in America stopped rising. Absolutely epochm change. What is a real wage? It's the amount of money you get adjusted for the prices you pay. So, for example, if your wages go up 10%, you might feel good, but if all the prices you have to pay went up by 10%, you're no better off with a 10% bigger money wage than you

11:34 were without it because the prices have adjusted. We all know that in economics. So, we don't use money wages. We use what's called real wages. Wages understood in terms of what it can afford you to buy. goods, services, food, clothing, shelter, entertainment, education, medical care, whatever. Real wages rose. In other words, the money wages workers had from 1870 to 1970 rose more than the prices did. So, they really got more stuff that they could afford to buy. In the 1970s, that stopped and it has never resumed. The American working class today earns in terms of what it can afford to buy.

12:20 The average American worker earns now what he or she did in 1978. Try to wrap your head around no more real wage increase. For a country that had enjoyed steady real wage rises for a century, this is a traumatic event. How was it handled in the United States? Denial. I won't embarrass you by asking how many of you know what I just said to be the case. How many of you have dwelt in your mind on what it might do to a population used to a rising wage when it is no longer available? There was no discussion at the time or since. No

13:08 debate in this country. What do we do about all of this? The closest you got were vague gestures in which somebody says, "Gee, the middle class seems to be fading away." As if this were, I don't know, some sort of cosmic effect or maybe the result of sunspots or allergies or who knows what, but an analysis either of why it happened or of what its consequences were? No, no, no. Nothing serious. Well, let me tell you what some of the results were. Number one, by far the most important socially, the women of the United States left the home where they had been sequestered for the earlier parts of American history

13:54 and had to go out and do wage labor or mass. The only ones who had been doing that beforehand were black and brown women. They long been doing that cuz they had to. And the poorest among the whites. But now suddenly all women, all the wives and mothers had to go out. There was no other way to sustain the fantasy of growth of the American dream of what had been experienced in the previous century. The second most important effect, Americans began to realize that the only way they could participate in further growth of consumption the way they had been led to believe was somehow inherent in the

14:40 American experience. Besides sending their wives out to work, besides following a career as a worker in a factory, you could now go back to work and be a greeter at Walmarts. But beside that, you could borrow money. In the 1970s, the banks of the United States decided that the consumer to whom they had never lent money before, they would now lend money to. In other words, the credit card, which until then had been American Express in the hands of rich people and businessmen, would now become socialized. Everybody's wallet would be crammed full of plastic cards, live off

15:27 them. And so the American working class from around the 1970s to the present accumulated debt. We are a debtridden society in a way we never were before. We became pioneers not in covered wagons going west but in what we could cram plastic in our wallets. All the growth of consumption in the last 40 years has been based on women's labor, women's earnings and debt. Families have become much more complicated institutions to survive. We have the highest divorce rate in the world. We put our families under levels of pressure that would be impossible for anyone to sustain.

16:12 American women consume more psychotropic drugs than any other population on the planet. Why? Because they are druggies? No. Because we put them under impossible pressures which blew up the family since the mother was what held the emotional life of so many families together. and she was now as exhausted as the husband coming back from her hours of work. The empire's foundation is beginning to crack. Well, you keep it. Assuming more debt, which the American working class did, it borrowed. It had borrowed with government support for its house. That's how mortgages developed. For those of you who don't know, mortgages were never given to workingclass people to buy a home until the Great Depression. To get

16:59 us out of the Great Depression, the government took the step of guaranteeing the mortgages so the banks could lend without a risk. Otherwise, they wouldn't have because they never did. The American Homeowner Society is a product of the government, not of private enterprise, which was too greedy and too frightened to ever do it. Home loaning. Then the car had to be paid for with loans. Could you working class couldn't afford it. Then the credit card so you could buy everything. And then in the last 20 years, a new deadbtedness, the college student. So by now the family is dying, floating in levels of debt it cannot support cuz the underlying wage didn't go up just the debts. And it doesn't take a PhD in economics,

17:44 although I have that for you to understand that if the underlying wage doesn't go up, you can't keep accumulating debt because the time will come and it's called 2008. And that's why that song is so appropriate. When the credit system exploded, cracks in the empire. This system is so committed to inequality that not only did it grow over the last 40 years as wages stopped rising, of course, where would workers income go? They couldn't grow. Their wages were flat. But they were becoming more productive all the time. The last 40 years are the computer, the robot, artificial intelligence, all of that. Workers productivity goes up. Workers wages are flat. Wages are what the

18:30 employer gives you. Productivity is what you give the employer. If what the employer gives you is flat and what you give the employer keeps rising, guess what? You have inequality. You're taking all your growing output and giving it to one small class of people. Employers are 1 2 3% of our population if that they get it. Even across CO 19 pandemic inequality got worse. And what did we do to the working class after we gave them 40 years of losing everything, their families falling apart, their position in American society, their growing wealth, a kind of affirmation that somehow you're doing better. All of that's taken away. Then we hit them with

19:16 COVID. Then we hit them with an inflation. And now we're hitting them with rising interest rates. Let me frighten you if I may. If what I've said hasn't done that job already, there is an example in history of another working class over a small number of years being hit with economic blows on a scale of what's happening here. The example is Germany. And here's how it works. In the second half of the 19th century, as the British Empire is declining, the United States is not the only competitor looking to replace the British. There is another one, Germany. World War I defeats Germany. Britain with its allies defeat Germany. Throw them out of the

20:01 competition. Wipe them out. Impose at the end a reparations they couldn't possibly pay. the German working class which had been built up across the 19th century to believe it was creating a whole new globe in German it's called Dutch that's like the German Empire and it had you know territories in Asia it had territories in Africa and so on all that was smashed when the unthinkable happened in 1914 and 1918 Germany was defeated the empire was taken away literally the British took took the colonies in Africa away from the Germans and made them British colonies. Everything for them destroyed. It was a trauma for the German working class. It

20:50 ended in 1918 with defeat. Within 4 years, late 22, early 1923, literally a century ago, Germany then experienced the worst inflation in modern times anywhere in the West. In a period of nine months, the German currency went from six Deutsch mark to the dollar to four trillion Deutsch mark to the dollar. Prices doubled over weeks at a time every hour of the day. Any savings accumulated by a German family, and they were very frugal, were wiped out. Six generations saving money had enough money put away to buy a quarter pound of butter. They were done. And five years

21:36 after that in 1929 the Great Depression hit Germany. It was too much. You cannot hit a working class even the German working class which was the best educated most productive and most progressive working class anywhere in Europe. No contest. Even that it was too much. And in 1932, those German people, overwhelmed by what they had been put through, turned around and supported a little Austrian with a black mustache, Adolf Hitler, and you know the rest of the story. We're just living out, here we go, the same sad scenario.

22:21 denial, not explaining to people the foundation of what they're assuming, not talking honestly about its disappearance, the cracks, what it means when your empire has that fun ride up begin to be replaced by the much less fun ride down. We're in very deep trouble. For the last half century, we have benefited enormously by the fact that there's one international currency, money. It's the US dollar. It's as good as gold, because it it literally functions like gold. That's over. Ukraine simply speeds up the process. China, Russia, now Saudi Arabia, Iran, Venezuela, and many more

23:10 countries are signing up for another international currency. And it shouldn't come as a big surprise whose currency that is. It's the currency of the People's Republic of China. China shows all the signs of a rising empire matching all the signs of a declining empire here. You may not like that information. You may be upset by it. That's your business. But to pretend it isn't there. Let me give you just some numbers. I'm an economist. We do that. One of the things we do as economists is we look at the size of an economy to gauge relative economic power. And the

23:57 number we use, it's crude like all numbers, but it gives you an idea, is called GDP. It stands for gross domestic product. It's a measure of the output of goods and services in one calendar year. So it helps us if we look at it and we measure it and it's measured for every country on this planet. It gives us an idea of the relative size. Okay. Let's now do a comparison of three countries. Russia, China and the US to get a sense of their economic wealth, their economic power, their economic footprint if you like in the world to give you an idea of and if you didn't know this, think about what that might mean. So, I'll start with Russia. The GDP, most recent year

24:44 of Russia, it's about $1.5 trillion. The GDP of the United States last year was $21 trillion. Do you understand? Russia has never been and is not now anything like a serious economic competitor of the United States. It never was. It never came close. It may have had some nuclear weapons to worry about. It may have had political influence, but an economic unit. Only people systematically denied the simple statistic I just gave you could believe that Russia has $1.5 trillion GDP. The United States alone,

25:32 21. You know who has a bigger economic footprint than Russia? Italy. United States is allied with Britain, France, Germany, Italy, and many other countries against Russia. If you put them all together, it's like 30 maybe $35 trillion against Russia with one and a half. What are you talking about? A war. This is a war between David and Goliath. And you're not going to be happy with who is playing which role. Think about it. Now, China, what's the GDP of China? Ready? $17.5 trillion. That's a competitor. Not Russia, China. That's the empire emerging. Not Russia, China.

26:20 And why? Easy to explain. Over the last 25 or 30 years, annual growth of GDP, how fast is the economy growing here in the United States? 2%. Maybe slightly more, 2.3%. somewhere in there. Let's be generous. 2 to 3%. US average annual growth. China average annual growth 6 to9%. End of conversation. That's why China went from being one of the poorest countries in the world to being the competitor of the United States, one of the richest. You know what it's like? It's a story a little like the colony in North America being a place for furs and then becoming the new empire so that the

27:05 roles between Great Britain and its colony were reversed. Now Britain is our colony as any honest appraisal of the relationship between these two countries would immediately acknowledge. In Britain, one of the most common jokes you can hear is that when the United States tells Britain to jump, the response of Britain is how high. It's a question. China has overtaken the United States in dozens of fields, particularly the highest tech ones. Young people around you are using Tik Tok, that's Chinese, as a social media. What's going on? The United States doesn't know what to do. Having not learned the lessons, having not understood what denial means,

27:53 for a long time, they denied. Because to see the rise of China is to take a step in the direction that might make you confront what's happening to you. And that's a taboo. Finally, the United States figures it out. And what does it do? as if it learned nothing from its history. It tries warfare. It tries to slow down, to stop, maybe even to reverse history just like Britain did. Mr. Trump declared a trade war against China. You remember it's not that many years ago. He applied sanctions. He applied tariffs. He did everything he could to stop to reverse it. None of it worked. It was one big fat failure. Now

28:42 we are in a war. We, the US and its allies, with the most important ally, China had, Russia. That's what's going on in Ukraine. It has got nothing whatever to do with that sad country suffering this war. Talk about being in the wrong place at the wrong time. That's the truth of Ukraine. All the rest is propagandistic foolery on both sides. This is about weakening the ally of China, which Russia is. When the war started, Mr. Biden predicted the Russians couldn't last a few weeks. with this armada of countries and weapons and wealth and you name it. He referred to

29:30 what they were doing as the mother of all sanctions, which it was greatest sanction program ever applied. Russia wouldn't last. The ruble would be valless within weeks. All of that 100% wrong. The Russian economy bubbling along pretty well. took a dip right after, came back most of the way. You know why? Because the sanctions mainly stopped buying oil and gas, which is Russia's lifeline. That's what Russia is, an exporter of oil and gas. I'm exaggerating, but it's the basic story. And Europe said we wouldn't buy it anymore, and that would have crippled Russia, except Russia found other buyers. This is not a complicated story. China bought more. India bought tons

30:17 more. Saudi Arabia is reorganizing its economy. Pakistan is making important agreements with the Chinese and the Russians on the world isn't guess what controlled by the United States. It's over. It's all around you. The United Nations took a vote on Ukraine. The majority of countries did not agree with the United States. They either voted on the side of Russia or they abstained. They refuse to participate. It's over. But you live in an environment which needs to deny it. The divisions in our society become worse with each passing day because they're grounded in a reality that isn't changing. Inequality,

31:03 as I'm speaking to you, is continuing to get worse. Corporations are working as hard as they ever did to pay no taxes. The mass of people are suffering on a scale that is unspeakable. The inflation we're still at, prices are going up roughly twice as fast as wages. That's a destruction of the working class. Prices are going up twice the rate of wages. This is impossible. You can't do this without explosions. Now, the explosions are happening in our country. So, they explode. How? by taking it out on one another. Crime, bitterness, resentment, a politics of scapegoating.

31:50 I mean, how else explain preposterous notions that become serious? This is a country, United States, of 325,30 million people. The biggest estimate I've ever seen of undocumented immigrants in our country says 10 million. Okay, there's no way 10 million of the poorest people there are, immigrants from Central America, are the cause of the difficulties of a capitalist economy of 330 million people. That's silly. That's on a level, you know, that an elementary school kindergarten kid wouldn't come up with something as off the chart as that. You're desperate. I understand that.

32:35 You've been suffering. You have you have a right to be angry and upset. No question. You do. You have been screwed in this system having been led to believe by those hundred years that the opposite was waiting in store for you. Instead, you're being slapped and whacked and deprived with no end in sight. I teach at the university. I'm surrounded all the time with people in 18, 19 into their 20s. They are not happy. this generation, they don't see good jobs. They don't see good futures. They don't see any of it. They were led by their parents and this culture to expect what they now know they're not going to get. And they want some answers, too. The most recent Gallup

33:23 poll indicates that a majority of Americans pled randomly 35 years of age and younger when asked would you rather live in a capitalist or a socialist economy the majority say socialist you know after half a century of ideological pressure against everything social that I grew up in I'm a product of that this is amazing that the point Your view could be twisted like this. And when you talk to students, as I do about this all the time, I quickly learn the polling is correct. But it's not that they like socialism. They have no clue what it is. Those votes, that polling is because they are angry at capitalism. They know

34:09 that that system is not for them. Socialism, I mean, let's try that. But it's not that they like socialism. It's that they don't like capitalism. But that has to be faced. I'm not making these numbers up. You can't come away from what I've just said with an imagination that all is well in this empire. But I'm not done. Now we're blaming Russia. What? Russia invaded. I've been a victim of war in my own family, my own life. I'm against war. War is no way to solve problems. The Russians shouldn't could have done something else. Should have done something else. I get that. But like with every war, you have to ask why did it come to this? Russians have suffered from war as much as any other country in the last century. They're not going to go into a war easily and quickly.

34:56 They're not like the United States upon which no war has been fought in the last century. Both world wars killed more Russians than anybody else. They know. So why? You have to ask why. We don't. So let me end with military. Since the end of World War II, the United States has invaded small countries repeatedly, violating norms, rules-based international order. It invaded Korea. It invaded Vietnam. It invaded Iraq. It invaded Afghanistan. It lost all of them. The wars were lost. Korea, Vietnam, they all were lost. The Communist Party of Vietnam took over

35:41 that country. The Taliban took over Afghan. I could go on. They lost. They didn't win. They lost. And if you look at the line between the Russians and the Ukrainians, it has moved westward. There is no question of who's winning and who's losing. Only in the minds of people committed to denial are these things going on. I'm not asking you to endorse either side in this war. I'm not asking you to endorse China or the Chinese system. I'm just asking you, and I do this with all my public speaking. I'm asking you look at the reality you have in front of you. Don't be afraid. The danger lies in denial, not in facing

36:29 it. And if we face it, there is a lesson to be learned from the British Empire. After two attempts to militarily force the United States back into the British Empire, after those two efforts had failed, the British Empire stopped trying and decided instead to try to work out a relationship with the United States, which it did. Not the greatest job, but did a pretty good job. The biggest waffle came in the US Civil War when the British seriously considered siding with the South. They didn't, but they came close. After that, though, once they could see who won there, they went with the winner. A very courageous

37:14 move once the war was over. But maybe we have to learn that we have to live with the People's Republic of China. It has virtues. We could learn from them just as they could learn from the United States. And that would be a better plan than what they're doing now. The American 7th Fleet is in the China Sea. There is no Chinese fleet on our border. We are there. We are threatening them. We always have. This is a country that is now our economic competitor. Its global political reach is extraordinary and it has four times the number of people we do. And now that they're closely allied with India, you're talking about the two largest countries

38:01 by population on this planet. You better come to terms with them because the prospect of defeating that in a war, that's a war everybody loses. So you don't have that option unless you're crazy. We have to stop the denial and face what is going on. Otherwise, we are going to get ourselves into one mess after another. And who's going to do it? The corporations that are profiting from this system? Unlikely. The rich who have become richer for 40 years. Are they likely to question the system that has rewarded them that way? Unlikely. You know who's going to do it if anybody

38:47 does? It's the mass of the people, the employees of this culture. or if you allow me the old language, the working class because it's their ass that's on the line. They're the soldiers and they're the taxpayers who keep the system going. And that's probably why denial has won over honest confrontation with our reality. Markx once said that the capitalist class will in the end destroy itself. The question for all of us and all of you is, will we let that system take us down with it? You know why Americans celebrate the pickup truck? Why every He-Man has a pickup

39:33 truck? Because it's a symbol of masculinity. Not at all. You had to train the American buffoon to want that truck. You know why? Cuz the profit margin on the truck is way better than the profit margin on a car. And why? Because of the tariff, a tariff was attached to the pickup truck, a big one, 25%. Compared to all the other sedan, 2 and 12%. That tariff has been in effect for half a century.