The inflation that plagues the United States and beyond results from a decision made by employers. Within the larger population, the employer class (under 2-3 percent of that population) controls the prices of goods and services. Each member of that class decides when, where, and how much to raise the prices of what that member sells. The employer class excludes the employee class from participation in its pricing decisions. Employers in banks and most other lending institutions likewise control interest rates: the “prices” charged for lending money. Employers comprise a tiny percentage of the American people while employees form the vast majority. The self-employed are a small minority between employers and employees.

This article was produced by Economy for All, a project of the Independent Media Institute.

Prices are what employees pay to employers. Wages are what employers pay to employees. Throughout the current U.S. inflation, prices rose considerably more than wages. The inflation thus worked, like so much else in U.S. capitalism, to redistribute wealth from employees to employers. Struggles over price and wage inflations are very much class struggles.

The employer class wields great influence over wages and salaries paid to the employee class. True, the classes have to bargain a bit. But with only about 10 percent of employees unionized in the United States, employers’ wealth and organization give them much more power to set individual wages and salaries than employees can wield through bargaining. Employees can quit individual jobs, but they rarely escape their class position. Most of those who quit will then have to submit to some other employer to survive. Employers, on the other hand, can respond to workers’ demands for higher wages or salaries in multiple ways: They can automate (replace workers with machines), relocate production (to other places where workers accept lower wages), or turn to immigrants or others willing to work for less. Employers can also close down production for a while to teach employees a basic economics lesson. In capitalism, the prevailing power is in the hands of the employer class. The employer class prefers capitalism because capitalism prefers it.

The class of employers wields a kind of dictatorial power. Employers are neither elected to their position by employees nor accountable to them. Small and medium employers are mostly accountable to themselves (and partly to taxation and regulatory departments of governments with regard to some decisions). Corporate employers—boards of directors—are elected not by employees but rather by shareholders. Shareholders do not elect boards of directors democratically (one person, one vote). Rather shareholders have as many votes as they own shares. The richer the shareholder, the more votes they have.

Because the richest Americans own the bulk of the shares (the 10 percent of the richest own 80 percent of all shares), their votes choose the employers. Not surprisingly, over the decades, those with the most wealth have largely joined the employer class. Corporate boards often found it advantageous to add rich shareholders to their boards. Rich shareholders, likewise, often found it useful to join the boards of corporations they owned. The children of corporate directors and major shareholders attend the same schools; often live in the same towns, cities, and neighborhoods; and often intermarry. Employers donate to politicians to make sure that their taxes and government regulation are minimized. “Regulatory capture”—when those ostensibly regulated control the regulators—is the capitalist norm. It has been the way to offset the occasional ability of employees to act collectively through the state to enact pricing regulations and other key enterprise decisions, which are otherwise made exclusively by the employer class. The top politicians and government regulators are drawn, in the main, from the ranks of the top employers. The United States has normalized and routinized these class formations and differentiations for a long time.

In the century after the U.S. Civil War, the employer class congratulated itself for the rise of the U.S. economy and empire against the accumulating difficulties of the British Empire. The remarkable upswing of white Americans’ standard of living led the employer class to claim not only that its profits caused “prosperity for all” but also that capitalism was the best possible economic system and American capitalism its greatest expression. Employers and their ideologues invented the notion of “American exceptionalism,” based on a particular interpretation of Adam Smith’s work. That interpretation’s logic held that because the U.S. facilitated the highest profit maximization for each employer, the economy was able to achieve the greatest wealth and growth, as if led by an invisible hand to that happy outcome. By the time Milton Friedman repeated that interpretation, U.S. capitalism was peaking. The beginning of its decline moved the employer class into a new and increasingly uncomfortable social position.

Since the 1970s, U.S. capitalism has delivered stagnant average real wages to the employee class. With productivity rising, that stagnation meant that growing output accrued chiefly to employers as rising profits. This situation would likely have crashed U.S. capitalism (as such situations have often done around the capitalist world) except for the explosion of consumer credit during the same period. The soaring profits enabled by stagnant wages were partly lent back to the employees who borrowed to buy homes and cars, use credit cards, and afford costlier higher education. They were only able to afford all this by carrying ever larger debt loads. Employees’ standard of living could only rise (seeking the “American dream”) on a foundation of rising debt. Employees henceforth produced not only profits for their immediate employers but also interest for the financial employers from whom they borrowed. The United States entered a period of rapidly growing inequality of income and wealth favoring the employer class.

Rising household debts became increasingly costly and anxiety-provoking as stagnant real wages moved them nearer to unsustainability. This eventually led to the credit system collapsing, and the 2008/2009 Great Recession ensued. Beyond its massive economic losses of wealth, the Great Recession saw a policy response of record low interest rates. That rendered minimal the carrying charge for the massive old and new debts. Cheap credit was desperately needed not only to cope with and get beyond the Great Recession but also to soften the impact of U.S. capitalism’s transition from exceptional growth to plateauing on credit to post-2008 decline.

Underlying wage stagnation and deepening inequality led to much greater questioning of capitalism. At first, it could not be spoken as such. Even Occupy Wall Street in 2011 dared not foreground a clear, anti-capitalist position. But Senator Bernie Sanders’s (I-VT) campaigns raised socialism’s profile sharply and quickly. The emerging consciousness was more a matter of anti-capitalism than an endorsement of Bernie’s very moderate socialism. In the last few years, capitalism has returned to the realm of daily acceptable discourse as it had been before the Cold War, albeit more for its critics than its defenders.

Along the way, anti-capitalism has also provoked a shift in the definitions of capitalism. Across the 20th century, capitalism was private property and markets, while socialism and communism were public property and central planning. After the shifts of the 1970s and 1980s—the collapse of the USSR and the above-discussed decline of U.S. capitalism—definitions changed. Capitalism became more closely associated, definitionally, with the employer-employee dichotomous organization of enterprises than with who owned them and whether the distribution of resources and products took place through the market or by plan. Socialism likewise shifted from a macroeconomic focus on the state as an owner and planner to a microeconomics focus instead on a different, democratic organization of enterprises along the lines of worker cooperatives.

These shifts reflected a shifting mass consciousness that looks to hold employers socially responsible for what they do as a class. The environmental movement was particularly important in targeting fossil fuel and other employers for their decisions. The #MeToo movement helped bring greater accountability against sexual misconduct in the workplace and beyond. More and more through to the present, the employer class and its dominance within capitalism have become the target of those seeking progressive social change. For capitalism’s victims and critics, the buck stops not with the political and governmental leaders viewed as puppets, but rather with the employer class viewed now as the puppeteers.

What comes after capitalism—what its critics claim as their goals—are less matters of state versus private property or planning versus markets. Rather it is the democratization of the workplace that critics cite as a crucial element missed by generations of social critics. That democratization of enterprises—their transformation into communities of equals—is understood to be required for a democratic society to exist and persist. Capitalism’s defining class struggle has always been that between the employer and employee classes. And the victory of the latter ends that dichotomous organization of workplaces (factories, offices, and stores) that grounds and defines capitalism’s class structures and struggles. Indeed, the victory of the employee class could thus finally close the sequence of all those dichotomous class structures (master/slave and lord/serf).

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

Economies around the world were shocked and damaged over the course of 2022. Global capitalism had been brewing conflicts among the major powers (the United States, China, and the EU) for some time as their relative strengths and vulnerabilities shifted. U.S. capitalism and its empire are widely perceived as waning. Europe’s role as a U.S. ally and indeed its economic future became correspondingly riskier as a result. China’s economic growth encountered problems but continued to be remarkably positive and often crucially supportive of world economic conditions in ways that were once more closely associated with the role of the United States. China’s deepening alliance with Russia as well as its burgeoning global economic reach frightened many in the United States. Years of increasingly aggressive competition, tariff and trade wars, and bans and subsidies, mostly initiated by the United States, culminated this past year in global economic warfare.

This article was produced by Economy for All, a project of the Independent Media Institute.

The key fact is not the military war between Russia and Ukraine, so far a limited, secondary affair except for the massive on-the-ground suffering of the Ukrainian people and the soldiers on both sides of the conflict. The year’s key reality is rather the economic warfare between the United States and the EU versus Russia and China: sanctions and countersanctions. Their ramifications (energy price spikes, supply chain disruptions, and massive market shifts) worsened the inflation already troubling many countries. These, in turn, provoked central bank interest rate increases that added more disruptive and costly shocks to an already problematic 2022 global economy.

For decades, wealth and income have been redistributed upward—with minimal protest by the working classes who were harmed by that redistribution. During 2022, working classes in many countries were no longer willing to defer their needs in the wake of that redistribution. Labor militancy, unionization, and strikes have all been renewed with remarkable energy and enthusiasm. Increasing numbers of workers are unwilling to wait and see whether or not long sluggish center-left and center-right governments and parties would do anything adequate to change the deepening inequalities, instabilities, and injustices of contemporary capitalism.

Capitalism’s victims increasingly rediscovered and resumed alliances with its critics. Thus, they know that stagflation, not recovery, may well be the result of inflation plus interest rate hikes. The emergence of the Global South as an important player in great power politics and its current realignments took further steps during 2022. Widespread feelings that an old capitalist world is falling apart are not fading.

Those feelings emerge into public view during a period of massive contradictions—for example, the resurgence of both white supremacy and anti-fascism, or the blows against abortion access in the U.S. following the Supreme Court’s decision to overturn Roe v. Wade in contrast with France’s enshrining of abortion access in its constitution. Chinese workers demand better wages and working conditions while the dishonesty of global capitalist polluters gets increasingly exposed.

Meanwhile, global changes in great power alignments risk being misunderstood or undervalued because clashing capitalisms disguise themselves, yet again, in great principles. Russia versus Ukraine gets rewritten as anti-Russian North Atlantic Treaty Organization (NATO) expansion versus Ukrainian self-determination. U.S. capitalism’s shift from neoliberal globalization to government-led economic nationalism to counter China’s rise in the global economy gets rewritten as required by “national security.” The further fracturing of Europe’s unity gets rewritten, in truly upside-down fashion, as a rebuilt U.S.-EU-NATO alliance. Proliferating delusions need deciphering.

Global capitalism has already stumbled badly three times in this new century: the dot-com crisis in 2000, the subprime mortgage crisis in 2008, and the COVID-19 crisis in 2020. Calling each crisis by a different, conjunctural name thinly disguises a cyclic instability intrinsic to and as old as capitalism. The capitalist system that dominates globally today organizes 99 percent of its workplaces/enterprises with a small minority of employers who direct the large majority of employees. It forces today’s great powers (the United States, the EU, and China) to mobilize their allies and compete to shape the decisions of the Global South. The post-World War II years of U.S. hegemony governed and held together a particular global arrangement of economies. The culmination of short-term instabilities and long-term trends inside and outside the great powers has undermined U.S. hegemony. A struggle to shape the emerging “new world order” is underway. That struggle is the economic reality as 2022 ends.

The hegemonic war of maneuver is our context now; it will last until or unless a new global arrangement arrives. The French think tank École de Guerre Économique (EGE) has for 25 years been studying the shadow wars for dominance over the global economy with interesting, provocative results. In October 2022, EGE released a book, Guerre Économique: Qui Est l’Ennemi? (Economic War: Who Is the Enemy?), which presented the findings of a survey of French business experts that was conducted by EGE’s Centre de Recherche 451 (CR451) in July 2022. Respondents were asked to name five foreign powers that most threaten France’s interests. They answered that the United States was France’s greatest threat, with China, Germany, Russia, and the UK following, in descending order.

It would be wishful thinking to mistake this result as peculiar to the French. Many leaders and influencers around the world criticize and resent the last 75 years of economic hegemony wielded by the United States. That perspective on current events has only strengthened in recent years as the U.S. global empire has lost power, the United States lost wars in Asia, and China emerged as the first serious economic competitor against the United States since at least 1945. The Ukraine war has so far served mainly to validate and thus harden that perspective.

The U.S.-China conflict has provoked ongoing changes and shifts among all players in the global economy. After more than two decades of doing poorly in competition with China, the United States has shifted from a policy of neoliberal globalization to one of economic nationalism. The presidencies of Barack Obama, Donald Trump, and now Joe Biden illustrate the shift (even as orthodox economics finds it awkward having celebrated laissez-faire for so long). Objections from European, Canadian, and other corners flood into Washington against new U.S. subsidies for automobiles produced inside the United States. Those self-serving U.S. policies are said to threaten deindustrialization elsewhere. Europe’s traditional subordination to and alliance with the United States since 1945 is fraying, notwithstanding the loud claims to the contrary coming from the United States and the EU. The deep economic and political decline of the UK before and especially after Brexit has the United States considering reliable, alternative agents for its European interests. Germany is the likeliest candidate if it could play that role without jeopardizing its dependence on exports to China. Maneuvers inside Europe force the UK and each EU member to strategize how best to respond to them as well as to the United States and China. Oil and gas price inflation resulting from the U.S.-EU sanctions against Russia intensified all these conflicts because they disadvantage Europe relatively more compared to the other players in the world economy and also European nations vis-à-vis one another.

Secondary themes distract many from grasping the global reorganization now underway. Among these are principles like “national self-determination,” “freedom of the seas,” and “rules-based international order.” They serve mostly to hide the global reorganization as if, suddenly, such principles were the dominant reality requiring protection. The principles, rather, provide convenient veneers for another period of great power realignments like those witnessed in capitalism before.

Before 1914, contesting capitalisms fought over their respective colonial possessions amid those capitalisms’ shifting relative strengths. A declining British empire struggled with the major aspiring contestants to replace that empire (the United States and Germany) and the minor aspirants (France, Russia, and Japan). Caught up in their global power struggles were a disintegrating China and a Global South that was prioritizing decolonization above all else. Within each nation, class struggles—especially a rising socialism challenging capitalism—further complicated their external power maneuvers. Those conflicts culminated in World War I. That war also changed everything: the global power configuration and, likewise, the internal class struggles.

The U.S. empire replaced the British empire. The USSR replaced Russia. Germany’s empire was erased. Japan tried to build an Asian empire and splinter China. Anti-imperialism gained strength everywhere. But so did the capitalist economic system—the structure of production that positions a tiny minority of owners/directors—the employers—over a vast majority of workers—the employees. True, the USSR led global movements against capitalism, but they mostly focused on displacing private employers with state officials as employers. For most in that generation, capitalism meant private employers, whereas socialism meant state employers. Capitalism’s basic workplace structure—employers versus employees—persisted in both its state and private forms. Capitalism’s two forms contested and worked their profound influences everywhere, culminating in World War II.

Britain, Germany, Japan, and Russia were all deeply damaged and weakened, leaving the United States to expand and solidify its empire for the next 75 years. The USSR was strong enough to provide some counterweight to U.S. military power, chiefly by creating space for the emergence of replicas of its socialism (state employers rather than private employers, in conjunction with state-planned distributions rather than free markets). China took advantage of that space but soon diverged into its own version of socialism, a hybrid of Soviet-style state enterprises and private capitalist enterprises, both with similar employer-employee structures.

Now, yet again, capitalism’s contradictions are driving toward another war that would, likely, once again change everything. But now we can discern a certain pattern that would likely be repeated, more or less. An old empire (the United States) is now clearly in decline, and a new one (China) is emerging. The only other potential major power is the EU, but the disunity among its members greatly weakens its competitiveness relative to the United States and China. Secondary global powers are Japan and Russia, which are aligned with the United States and China, respectively. Lagging behind the major and secondary powers by varying degrees, there are other countries, including many in the Global South, that have become economically stronger but whose economic power remains relatively limited given their own divisions and divisiveness, as some play the major powers against one another (or try to).

The collapse and disappearance of Eastern European socialism after 1989 and China’s major opening to both Chinese and foreign private capitalist investments in recent decades have combined to produce a broad crisis in socialism. European social democracy has steadily lost support across the continent. Neoliberalism had undermined social democracy ideologically even as economic realities provoked socially divisive immigration, automation, and job exports. Much the same had happened in the United States to the center-left represented by the Democratic Party, thereby paving the way for Trump. China’s rise has challenged the declining U.S. empire and provoked it to adopt increasingly desperate economic nationalism in response. BRICS (Brazil, Russia, India, China, and South Africa) and other related international blocs reflect and advance the rising strength and voice of many in the Global South who are moving toward alliances with China and Russia (accelerated by the Ukraine war and sanctions regime).

Propaganda, trials, and errors characterize efforts by all sides to navigate a dangerous, tension-filled time of change. One side’s “freedom fighters” are characterized by the opposing side as agents of domination by major powers. One side’s expansion of its international trade and capital is branded “aggressiveness” by another side rattling its swords. Shifts from neoliberal globalization to assertive economic nationalism are all rationalized as requirements of “national security.” Decades earlier, devotees of neoliberalism celebrated its contributions to “peace” by merely existing as a passive contrast to economic nationalism and its characteristic propensity for wars. The less fantastic propaganda has its traces of truth, but they are faint. Repression of internal dissent occurs in all powers, more or less. Efforts by socialists and other working-class advocates are repressed or barely tolerated if carefully disconnected from global power politics.

Socialists were split by World War I. On one side were those (Rosa Luxemburg, Eugene Debs, and Vladimir Lenin) who upheld the primacy of the anti-capitalist class struggle and transition to a post-capitalist economic and social system. On the other side were those who took sides in the global power struggles of capitalist powers and found convenient socialist-sounding rationales for doing so. World War I split socialists even as it strengthened a broadly defined socialism. World War II did the same. It not only hardened the splits within socialism (such as social democracy and Soviet socialism) but also extended the social reach of socialist variants of anti-capitalism, especially to the former colonies and China.

Capitalism has been the context and ultimate cause of world history’s two worst wars. Many had thought, hoped, and worked so that those horrific wars might enable and empower first the League of Nations and later the United Nations. The goals of these organizations were to secure peace in place of global power politics moving toward war. They tried to achieve that goal without fundamentally challenging capitalism, the organization of an economy whose production entails a powerful minority (private or state) owning and operating enterprises. These organizations seem to have failed, but their failure left a lesson we can learn and build on.

A truly internationalist socialism would not tolerate the inequalities within and among the nations of the world. Drastically reducing those would be the top priority. Providing full guarantees of food, clothing, and housing for all—across each individual’s lifetime—would be the second-highest priority. Democratizing not only political life (one person, one vote for all major community decisions) but also economic life (ensuring each employee has one vote on all major workplace decisions) would be the third key priority. A world committed to these goals—the concrete meaning of “going beyond capitalism” or “socialism”—could overcome causes of capitalist wars and hopefully also of wars in general.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

With its disguises as “high finance” for the mystified and “Keynesian fiscal policy” for those “in the know,” deficit spending by the government was quite a successful scam for a long while. When the UK’s ex-prime minister opened her new government in September, Liz Truss followed tradition by trying to run the oft-used scam again. But this time it did not work. Eventually, even successful scams stop working. Its failure became hers but also her party’s, the Conservatives.’ Neither of them understood the scam’s limits. Perhaps its disguises had worked best on those who repeated them most in thought and word.

This article was produced by Economy for All, a project of the Independent Media Institute.

In its UK version, the deficit spending scam entailed the Conservative (but also some Labor) governments repeatedly cutting taxes on corporations and the rich. Serving their donors explains most of this. Without this scam, such behavior would have forced governments to act in traditional ways they now sought to avoid. One way would be to raise taxes on others to offset tax cuts for corporations and the rich. Governments only dared to do that partially, never enough to compensate for revenues lost from the tax cuts benefiting corporations and the rich. The other way would be to cut government spending. Governments did that also, especially when the Conservatives recast public services as unnecessary, wasteful, counterproductive, or in short, “socialistic.” But doing so angers the masses and risks losing votes for the government. Even when the masses could be distracted by campaigning against select foreigners (via Brexit against Europe and via Ukraine against Russia), public service cuts never compensated for what corporations and the rich were saving by having their taxes cut.

Enter the scam that claimed deficit spending “solved” the governments’ problems. Governments could 1) keep cutting their rich patrons’ taxes, 2) avoid offsetting tax increases on the middle and poor, and 3) avoid social service cuts. The scam was to spend without imposing taxes to raise the funds required to support spending (“deficit spending”). While deficit spending violated traditional rules for governments to balance their budgets, new and extreme economic threats (the dot-com crash, the Great Recession, the COVID-19 crash, and the sanctions war against Russia) justified trying to implement the scam. Alternatively, deficit spending could be justified as practical, a regrettable necessity of managing those recurrent business cycles.

Deficit spending came to be politicians’ magic sauce. It enabled them to boast about all they could spend on (for employers and employees) without raising taxes as if doing so flowed from the governmental efficiency of politicians. Governments could pander to corporations and the rich without it leading them to impose government austerity measures on the rest. The 1 percent gained a lot while the 99 percent gained a little.

The scam’s seamy side was massively “underreported.” It was and still is a fact that UK governments borrowed most of the money for deficit spending from the UK corporations and the rich. Once the government had cut taxes, the money saved by those corporations and the rich could be and was often lent to that government. The scam offered a certain “no-brainer” opportunity to corporations and the rich. Instead of making a one-time tax payment to the government (like other taxpayers do) corporations and the rich can instead lend that money to the government. The government security obtained in exchange provides repayment in full in the future plus annual interest payments till then.

This scam has worked for many years across global capitalism. After former UK Prime Minister Boris Johnson lied his way out of office, Liz Truss presumed she could and would run the scam again, loudly and proudly, with the usual political applause. All her predecessors had. But this turned out to be the time and the place where the scam would hit its limits. Ironically, the very beneficiaries of the tax cuts Truss proposed for the corporations and the rich were the “investors” who balked. They took a good look at the UK government’s financial conditions and decided not to lend it more money without much higher interest rates (and maybe not even then). Very quickly—as these things often go—higher interest rates drove down bond prices threatening UK pension plan assets. Suddenly, the unraveling of the UK economy could be glimpsed as could be its risks for global capitalism. Leading the blind, President Joe Biden said of Liz Truss that she had “made a ‘mistake.’”

The old scam’s Achilles’ heel: at some point, corporations and the rich might see too much risk in lending the government money they saved from their cut taxes. The very repetition of the scam over decades might accumulate levels of the UK’s national debt plus conditions in global capitalism that are rendered risky. Lending the UK still more money suddenly made little sense as an investment; other options were better.

It is true that the capitalist political economy positions the government in a structurally impossible dilemma. Both employer and employee classes want government services for themselves and likewise want to pay minimal taxes. The wealth and power concentrated with the employer class make them consistently more successful in tilting public finance their way. They get the services they want and likewise, shift the tax burden onto others. When conditions change and no longer enable the employer class to prevail that way in determining what the government does, big changes happen. In the 1930s Great Depression, John Maynard Keynes showed how deficit spending could fix broken capitalism without endangering capitalism itself. In the awful depths of that crash (capitalism’s worst to date), there was no time or space to worry that deficit spending’s “fix” was only partial and temporary or about limits to its effectiveness. That would excuse Keynes, but hardly the multitude of politicians, academics, and journalists who could have and should have seen—but never saw—the scam and the injustice involved.

Will the UK working class learn that prevailing economic theories and policies have always been partisan in the class sense of serving and favoring employers over employees? Most of what passes as “the economic policy we need now” is really pleading by a self-interested employer class. Raising interest rates to fight inflation is the big example these days. Among the forms and fields of class struggle, debunking economic policies’ claims of being class neutral is an ongoing battle.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

At the end of July, an economic adviser working for Bank of America wrote a memo that got leaked. It made bluntly explicit the long-standing common knowledge among savvy investment advisers: those “economic policies” debated among politicians, economists, and dutiful mass media operate at two different levels. On the public level, debaters discuss what “we” need to do to fix “our economy’s problems.” It reeks of that “we are all in this together” language that reminds us of commercial greeting card poetry. On the other, private level, insiders discuss how the government should respond to economic problems in ways that boost employers’ profits even if at employees’ or the public’s expense. Insiders express their preferred solutions in that nicely neutered term: “policies.”

This article was produced by Economy for All, a project of the Independent Media Institute.

Inflation, that “problem” torturing capitalist economies these days, offers us the first example of such policies. Inflation is a general increase in prices. Employers, not employees, decide the prices to charge for whatever goods and services their employees’ labor produces. Employers are at most 1 percent of the population while employees and their families constitute most of the other 99 percent. That 1 percent is not accountable to the other 99 percent of the population. Inflations directly impact—reduce—the standards of living of the 99 percent. The only exceptions are those employees who are able to raise their wages or salaries at least as fast as inflation raises prices. That is a tiny minority of the employees in general and also right now during the 2022 U.S. inflation. If inflation raises prices faster or more than wages, that represents a redistribution of income and wealth upward from employees to employers. Simply put, raising or protecting profits motivates employers’ price-setting decisions. Indirectly, inflation deeply impacts societies that suffer them, yet no democratic process determines where, when, or how employers’ decisions to inflate prices lead to those impacts. In modern capitalism, inflation reveals the class struggle in economics. There it operates without the constraints that formal democracy (voting) imposes on politics.

“Quantitative easing” (QE) intoned Treasury Secretary Janet Yellen, repeating what Fed Chair Jerome Powell had said while offering a policy solution to recession. The technical-sounding phrase simply referred to the Federal Reserve’s particular economic policy to slow or stop the sharp economic downturn that had started in 2020 and was worsened by the COVID-19 pandemic. That Fed policy created a vast new amount of money and provided it, via loans and security purchases to big banks and other large financial institutions. To be clear here, the Fed made vast new monetary resources available to some of the largest and richest financial employers. The stated goal was to stimulate “the economy.” The Fed hoped that the financial employers it enriched would find it profitable to use this money to lend more to non-financial employers who would then hire unemployed workers. Note that QE favors the employer class. It works first and foremost to enrich the top 1 percent and then “hopes” the latter’s gains trickle down to the other 99 percent. Note further that the fresh new money is not provided to the mass of workers with the hope that they spend it thereby generating sales and profits for employers. Such a “trickle-up” approach to “stimulate the economy” would favor workers. That is why it is rare and almost never the primary focus of “expansionary monetary policy.”

Against inflation—the other scourge of capitalism’s instability—the Fed’s preferred policy is reversed to become “quantitative tightening” (QT). This policy reduces the quantity of money in circulation and raises interest rates. To these ends, the Fed sells securities chiefly to major financial institutions (inducing them to buy by charging attractively low prices for those securities). Those major financial institutions then pass on the higher rates (plus a markup for their own profits) to their customers (individuals and businesses). In short, the major financial players profit from Fed policy while offloading its costs onto the smaller economic players they service with loans. Note that the policy favors the biggest financial players and merely “hopes” that costlier loans will dissuade borrowers who will then demand fewer goods and services and thereby “induce” sellers to inflate their prices less. All the “ifs” and “hopes” concern the ultimate results of such policies. They immediately convey cash advantages to major employers, especially in financial enterprises. QT policies likewise favor the richer among all individuals and businesses. That is because higher interest costs are a heavier burden, and a greater risk, the smaller the size of a business or of an individual’s wealth.

Note that inflations can be and have been reduced in other ways less favorable to capital as against labor and to the richer as against the rest. Wage-price freezes, like the one then-President Richard M. Nixon imposed in August 1971, provide alternative anti-inflationary policies. Likewise, rationing can replace markets as a way to stop inflation. Former U.S. President Frankin D. Roosevelt used rationing in the early 1940s. But precisely because such policies are less favorable to the employer class, they are only used rarely. The dubious achievement of President Joe Biden’s administration (and the complicit GOP) has been to speak and act as if QT were the only policy that exists to fight inflation. Yellen’s and Biden’s past verbiage of “concern” about U.S. income and wealth inequalities might have acquired some teeth had a freeze of prices combined with wage increases been able to actually reduce those inequalities. That would have been an anti-inflationary policy doing double duty, reversing rather than exacerbating existing inequalities.

Fiscal policies work quite like monetary policies in terms of the class favoritism built into them. When recession is the problem, expansionary fiscal policy—for example, increased government spending—usually favors spending on infrastructure, defense, and other objects where well-established, large capitalist enterprises prevail. The government spending to moderate a recession then flows first and foremost into the hands of large employers. They will in turn use that money much as they do with all their capital and revenues: minimize labor and other costs so as to retain the maximum as profits and funds for capital accumulation. Only when it becomes politically unavoidable will government spending bypass employers and flow directly into the hands of the employee class. “Transfer payments” or “entitlements” encounter the most resistance, delay, undoing, or reductions resulting from pressure from the employer class. Thus, for example, the extra governmental outlays in 2020 and 2021 supplementing unemployment insurance and mass assistance during COVID-19 shutdowns stopped even as negotiations for massive infrastructure spending and “chip subsidies” to employers proceeded.

Similarly, when anti-recessionary fiscal policies entailed cutting taxes, history shows that taxes on corporations and the rich were disproportionately cut. Certainly, the massive tax cut under former President Donald Trump late in 2017 followed that pattern.

Class warfare lies behind how many politicians, mass media, and academics explain the economic problems requiring the solutions that their policies offer. For example, consider the typical analyses during 2022’s inflation as it became a hot public issue in the U.S. and beyond. Prices rose, we were told, since demand had risen (because of COVID-deferred spending) and supply had fallen (because of disrupted supply chains). Conservatives stressed the demand side: huge fiscal stimuli responding to COVID-19 (government checks and additional unemployment cash) that would be funded by budget deficits. Liberals stressed on supply chain disruptions instead (attributed to, say, China’s lockdown policies such as COVID-19 and Russia’s invasion of Ukraine). Note how both sides neatly removed employers’ profit-driven price increases from their respective analyses.

Yet employer decisions do play a key role in modern capitalism’s inflations. When demand rises (for any reason), most employers know they have a decision to make. They can either order more goods and services to be produced and sold to meet the rising demand or they can raise the prices of the goods and services they already have. Whatever mix of higher price and availability of more products they choose will be determined by what they deem as their more profitable course of action. Their choices in 2022 produced major inflation in the U.S. and beyond. Yet the vast majority of discussions by mainstream media, politicians and academics about inflation omitted to mention, let alone analyze, how employers’ profit-driven choices led to the inflation. Capitalist competition provides incentives for enterprises to accumulate significant market share. Enterprises with such a share and the pricing power this often entails could well choose price increases as their most profitable course of action. And if that is the case, then inflation is caused in part by employers’ profit-driven choices. Note that avoiding that conclusion was, consciously or not, a key component of anti-inflationary policy debates throughout 2022. That was why the debates so bizarrely left out employers’ decisions as if they had no choice and thus no responsibility for the inflation.

Endless policy discussions focus on raising or lowering taxes or government spending as ways to counter recessions or inflations. Rarely is the discussion focused instead on whose taxes should be raised or lowered and which recipient of government spending should get more or less. Yet it is well-known that cutting taxes imposed on middle-income and poorer individuals and their families is usually more stimulative than cutting taxes on corporations or the rich. Likewise, government spending on middle-income and poor people is more stimulative rather than spending on corporations and the rich. Discussing and voting on fiscal policies in terms of aggregates of taxes or spending abstracts precisely from those policies’ class dimensions.

A class analysis of economic policy reveals that its goals include much more than solving an immediate economic problem. Policies are carefully selected and pruned to leave intact the employer-employee structure of enterprises and thus the basic economic system. Exposing that bias can enrich all policy discussions by opening them to policy options that are now kept off the social agenda. System change can then come into view and focus as another way to solve the problems ailing the economic system. Given the accumulation of problems confronting global capitalism today, bringing system change into the discussion is long and desperately overdue.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

“Market mechanisms” and “market solutions”: politicians, bureaucrats, media pundits, and academics like to refer to them as if they were somehow politically and ideologically neutral, above partisanship. They are not. Or as if they were uniquely fair and optimally efficient, which they are not either. The market is just another human institution invented and reinvented periodically across human history. Just like other institutions, markets were strictly regulated or altogether excluded when human communities rejected their outcomes as socially unacceptable. Philosophers such as Plato and Aristotle shared profound criticisms of markets and debated over efforts to exclude or regulate them. Many more critics and debaters followed, thereby enriching the tradition of market criticism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Markets are one way of distributing goods and services from producers to consumers. They are established when divisions of labor occur in communities rather than having each person or family produce all that it consumes. Markets involve quid pro quo exchanges between those seeking to sell and those seeking to buy goods and services. Alternatives to markets always existed and also do now. Councils of elders, chiefs, local governmental authorities, religious authorities, and various cultural traditions, separately or together, have distributed products from producers to consumers, deciding who gets how much. Within households or families, kinship rules, including patriarchy and matriarchy, have organized the distribution of products from producers to consumers.

The market mechanism is very simple: People with wants or demands engage with people who own the goods and services. Owners enjoy the right to sell what they own if those who want it—prospective buyers—offer in exchange something the seller seeks to acquire. The two owners, one on each side of the exchange, bargain or negotiate over the precise terms of the exchange: what quantity of one item equals the quantity of the other item being traded. If and when a ratio of exchange (a price) is reached that both sides accept, the exchange is made. The market is thus “cleared.” It has successfully distributed the products to consumers.

The problems with the market system of distribution arise immediately once one asks how the market manages distribution when sellers and buyers arrive with very different plans for what they have to sell and what they wish to buy. If—for any reason—buyers seek to acquire 100 of any item while the sellers have only 50, the markets will respond in a very specific way.

Word spreads that a “shortage” of the item in question exists; demand for the item exceeds its supply in the market. Buyers immediately compete for the item in short supply by bidding up the prices that they can offer for it. As prices rise, the poorest buyers drop from the bidding as they cannot afford the higher prices. If, nonetheless, prices keep getting bid up, the buyers who have slightly more purchasing power than the poorest also drop out because they too cannot afford the higher prices. Eventually, the number of buyers is down to 50, the shortage is declared over, and the price stabilizes at whatever higher level was needed to equate the demand to the supply. Exactly the reverse happens when demand is lesser than supply.

The market mechanism thus distributes any item in relatively short supply (short relative to demand) in a manner that discriminates against those with little or no wealth relative to the rich. Markets are in no way neutral to or “above” conflicts between the rich and the poor. Of course, the seller in this case might have chosen not to raise prices and instead to have produced or ordered more products to sell. Free enterprise capitalism leaves in the hands of employers (under 1 percent of the population) the decision of whether to respond to supply shortages by raising prices (causing inflation) or raising production. Employers make their decision based on what profits they thereby gain or protect. The rest of us live with the consequences of their decision. These days employers seem to be profiting from inflation.

Defenders of markets retort that the rising price is how the market “signals” to producers to manufacture more so that they can tap into the high profits generated by high product prices. However, this “signaling” feature is well-known to all employers. They know that if they were to respond to the signals by producing or ordering more, the high prices and profits they are enjoying would quickly disappear. So the employers often exhibit no rush to produce more. And as high prices proliferate through the market system, more and more sellers begin to explain and excuse raising their prices because their “costs have risen.” The rest of us watch this spectacle of employers profitably using one another as an excuse for the rising prices even as they collectively impose inflation on the rest of us.

Capitalists long ago learned that they could profit by manipulating both supply and demand to create or sustain “shortages” that would enable them to get higher prices. Capitalism created the advertising industry to boost demand above what it might otherwise be. At the same time, each industry organized to control supply (via informal agreements among producers, mergers, oligopolies, monopolies, and cartels). Social conditions and changes beyond the control of capitalists require them to constantly adjust their manipulations of demand and supply. In reality, markets are useful institutions for capitalists to manipulate for profit. In ideology, markets are useful institutions for capitalists to celebrate as somehow ideal-for-everyone pathways to optimal efficiency.

Looking for, finding, and taking a job offer is also handled by markets in modern capitalism. If working-class people looking for jobs outnumber the available jobs, employers can lower wages knowing that desperate people will often take lower wages than risk going without wages. That process repeatedly went so far that it provoked a backlash. Workers demanded and won a legally enforced minimum wage. Employers mostly fought and opposed minimum wage laws and, once such laws were implemented, most employers resisted raising the minimum wage, often successfully. The U.S. federal minimum wage rate of $7.25 per hour was last raised in 2009. Employers also encourage automation (replacing jobs with machines), relocating jobs abroad, and bringing in immigrant workers. These steps involve several levels of manipulations of the job market’s supplies and demands to the end of slowing, stopping, or reversing wage increases. Employers manipulate labor markets, like product markets, for profit.

Another market handles loans. Lenders and borrowers negotiate an interest rate they can agree on to enable the credit to be given and the corresponding debt to be incurred. These days the central bank of the United States, the Federal Reserve or the Fed, is raising interest rates to slow or reverse the inflation it failed to prevent or slow over the last year. That raises the cost of all borrowing (for mortgages, car loans, credit cards, and more). Once again, the poorest among us feel the pain the most, followed by the middle class. Higher interest rates are likely to bother the rich less. Also, the rich, who are themselves lenders in many cases, tend to benefit from higher interest rates.

The Fed could have pressed President Joe Biden to follow former President Richard Nixon, who in 1971 imposed a wage-price freeze to stop inflation then. He decreed and enforced that the market would not be able to influence and set prices for a while. Doing that again now would at least discriminate less against the poor and middle class, instead of protecting the rich. One might have expected that from the Biden regime, which controls both houses of Congress, but market-fetishizing and neoliberalist thinking and policy seem to rule both, the U.S. Senate and House of Representatives.

The employer class itself often suspends and displaces markets. When the profitable manipulation of markets becomes too costly, capitalists often merge with or acquire one another. The external (to each enterprise) market relations between them then disappear. In their place, directly planned internal (to the enterprise) production and distribution of goods and services occur without exchanges.

Markets existed long before capitalism, but capitalism, as Karl Marx noted, made them ubiquitous, almost universal. Capitalism also raised and praised markets—and their prices—to give them an ideological importance, which leaned toward the absurd. As R.H. Tawney so brilliantly showed in his Religion and the Rise of Capitalism, early European capitalism had to fight hard to displace the notion of a “just” price inherited from the medieval Catholic Church. The “just” price—consistent with God’s laws and Christ’s teachings as interpreted by the church—differed often from the “market price” that equilibrated supply and demand. To win in that fight, defenders of capitalism found it useful to build a kind of secular religion around markets and their equilibrium prices, attributing God-like qualities of efficiency, fairness, and other similar attributes to them. However, as capitalism sinks into ever deeper trouble, it is time to topple false Gods as part of the process of finding our way to better institutions, and indeed to a better system.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

A deafening silence defines “debates” among U.S. leaders about stopping or slowing today’s inflation. Alternatives to the Federal Reserve’s raising of interest rates and curtailing money supply growth are ignored. It’s as if there were no other ways to rein in price increases except to add more interest costs to the already excess debts of workers and small and medium businesses. Were the last two and a half years of the deadly COVID-19 pandemic plus the economic crash of 2020 not sufficient enough burdens on Americans without piling on the additional burden of inflation that has been imposed by U.S. capitalism?

This article was produced by Economy for All, a project of the Independent Media Institute.

As usual, the profit-driven concerns of big business and their result—a remarkably selective historical amnesia—fuel the silence about alternative anti-inflation policies. So too do the right-wing ideological blinders that now constrict U.S. politics. Yet, policy alternatives always exist, no matter how desperately partisans promoting one policy seek to obliterate debate and discussion of others. The narrow dogmatism of U.S. politics these days is on full display around the issue of an anti-inflation policy focused on raising interest rates.

I will present three other anti-inflation policies that do not entail interest rate increases—there are many more—that could and should be part of today’s policy discussions. All have precedents in U.S. history. For the first, we return briefly to World War II. U.S. President Franklin Delano Roosevelt’s administration grasped the risk of inflation during this period as the supply of many consumer goods shrank relative to the demand for them. The war effort was diverting many productive resources away from consumer goods and toward munitions and other defense products. Had the government allowed the market to handle the prospective shortage of consumer goods, an inflation of their prices would have resulted. Rich Americans would have bid up the prices of scarce consumer goods, rendering them unaffordable for middle- and lower-income people. That is how markets work. They favor the rich (who return the favor by funding economists and others to promote markets as marvels of “efficiency”).

For Roosevelt’s government, the war effort required a national unity that the market threatened to replace with bitterness, envy, and division, pitting the poor and the middle class against the rich. The U.S. government thus substituted rationing for the market mechanism. It printed ration books containing ration stamps and distributed them across the U.S. population. Rationed goods could only be sold to those with ration stamps. No small irony (at least for those familiar with Marxism and socialism) attaches to the following: 1) the U.S. government distributed ration books according to people’s needs, and 2) the U.S. government’s explicit goal was to render the distribution of rationed goods (and especially food) “more fairly” than what the market would have done. Rationing forestalled the looming inflation. It could work equally well now to slow or stop inflation.

Another anti-inflation policy, other than raising interest rates, came in August 1971, from Republican President Richard M. Nixon. Responding to serious inflation, Nixon declared a 90-day “wage-price freeze.” He and his advisers knew that U.S. wage and price controls had also been deployed during World War II. Some had even read John Kenneth Galbraith’s 1952 book, A Theory of Price Control, which showed how well such controls had worked during the war.

As a result of Nixon’s action, employers on one side and employees on the other were formally denied the right to raise prices or wages, respectively. Any move to the contrary was seen as a criminal act, rendering the perpetrator subject to police arrest. In response to these measures, the inflation shrank, the stock market rose, and Nixon was reelected in 1972. For him, the policy worked. Other countries have also imposed wage-price freezes to similar effects.

Each alternative policy to control inflation (raising interest rates included) has its particular strengths and weaknesses, virtues and flaws. Honest discussions of how to respond to inflation would involve comparing the strengths and weaknesses of all—or at least many different—policy options. Honest national leaders would not pretend only one policy exists. That approach—dominant in the United States today—yields both policy mistakes and leads to crucial opportunities being lost. It does, however, serve the interests of those who advocate for that one policy.

There is a third alternative policy to controlling inflation as an inherent risk recurringly faced by a private enterprise capitalist system. If profit is the “bottom line,” if the system’s mantra is “charge whatever the market will bear,” and if rewards and punishments follow the rise and fall of profits that depend on prices, we can hardly be surprised when capitalists raise prices. Nor can we be surprised that when they do it, it both provokes and excuses others following suit. Inflation results from private capitalists’ pricing decisions. They are driven chiefly by their private profit calculations; they need not and do not generally take into account those decisions’ larger consequences (social as well as economic) such as inflation.

The socialization of private capitalist enterprises is thus another anti-inflation policy. A government, for example, will generally consider the inflationary consequences of any set of price increases. On that basis, it can either limit or reject them. To the extent that the government is held accountable politically for inflation and its effects, it has an incentive to control them. The Fed is, at best, held accountable only indirectly. That helps explain why the Fed has repeatedly failed to prevent or control recessions and inflations across the last century. Of course, such socialization of private capitalist enterprises raises the question of how genuinely democratic the government is. Yet, the degree of genuine democracy the government upholds will influence all alternative anti-inflation policies.

Across the United States, insurance, utility, and other public commissions limit private capitalist enterprises’ freedom to raise their prices in the markets they regulate. Private capitalists in such markets cannot raise prices without the permission of those commissions to do so. A government could establish all sorts of commissions in all sorts of markets with criteria for granting or refusing such permissions. Suppose, for example, that some or all food items were socially (democratically) deemed to be basic goods, such that no producer or seller could raise its prices without approval by a federal food commission. Fighting inflation could be among the approval criteria in this case (just as that is a criterion now for the Fed’s monetary policies).

In most capitalist economies, the tiny class of employers (perhaps 1 percent of the total population) has enormous powers. That class 1) shapes wage and salary levels of their hired workers, 2) determines the quantities of all purchased inputs and all outputs, and 3) sets outputs’ prices. That tiny class includes many employers who justify their price increases by blaming them on input prices raised by other employers throughout the supply chain. More shrewdly, the employer class’s wiser members refocus blame instead on workers and wages, blaming them for the price increases even when, as now, wage inflation is far lower than price inflation.

Of course, commissions to govern prices can be and have been “captured” by the industries they were established to control. Private capitalists have thus been able to weaken, render toothless, or even eliminate controls over them. While that is indeed true of the many state-level utility and insurance commissions, for example, it is no less true of the Fed vis-à-vis the nation’s major banks. Rationing systems and wage-price freezes can likewise be captured. Historically, the price gouging by and corruption of private capitalist industries have led to public demands that their businesses be transferred to government responsibilities. Capitalism’s undiminished profit drive then incentivized the affected industries to “capture” the government bodies charged with controlling them.

The solution to that inherent contradiction of capitalism is surely not an endless series of oscillations between private and public control. That is what has failed in the capitalist system. Rather, the alternative solution that beckons is system change, putting all the workers in democratic control of the enterprises (instead of a tiny separate class of employers). A system based on a democratized workplace community interdependent with a democratized residential community offers a much better way to prevent and not merely “manage” inflations and recessions.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

Russia’s war on Ukraine both reflects and deepens a global split that should remind us of Karl Marx’s famous remark: “No social order ever disappears before all the productive forces, for which there is room in it, have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.” The United Kingdom already lost its particular social order—its empire—while the United States is now losing its. Despite differences, both of these social orders shared a mostly private form of capitalist relations of production (the organization of enterprises centered around private employers and employees). That social order has given way to a different, mostly public form of capitalist relations of production where state officials are major employers. The latter form of capitalism is developing most dramatically in China.

This article was produced by Economy for All, a project of the Independent Media Institute.

As defined by its core productive relation of employer/employee, capitalism is now developing its productive forces and its gross domestic product (GDP) growth faster in China’s public form of capitalism than in the United States’ private form of capitalism.

The role of the state is central to this decline of capitalism in one area and form and its ascent in another area and form. In the West, the relation between capitalism, and especially its defenders and ideologues, on one side, and the actuality of the state apparatus, on the other, is hypocritical. Endless hostility toward and denunciations of the state match systematic reliance on and support for strong state apparatuses and the economic interventions imposed by them (especially to help manage capitalism’s endlessly recurring crises). Consider the parallels with the endless rejections of racism in societies that institutionally reproduce that racism or with celebrations of family within societies that systematically undermine them.

The need to denounce what the system relies on has tangible effects. Western capitalist economies are declining in good part because they throw obstacles in the way of their states’ participation in managing their economies. The developing economies, such as China, have strikingly avoided that pattern. Their defenders and ideologues celebrate their states’ powerful economic management position even when they criticize a particular policy or official. It is how they explain China’s ability to grow its GDP three times faster than the United States consistently over the last generation.

Part of China’s embrace of a strong state emerged from its affiliations with the USSR and the history of socialism in the 19th and 20th centuries. Most socialists then ascribed to one or another version of the idea that the transition from capitalism to socialism required the workers to seize the state via ballots or bullets. The state became key to this transition to a socialist system. Many socialists advocated strong state apparatuses on the basis of what they hoped such states might then do, namely make the social transition to socialism beyond capitalism, i.e., beyond the employer/employee production relationship. Yet those states, where and when socialists achieved power, proved to be limited. They never accomplished that transition beyond short-lived experiments. Ever since, socialists have analyzed and debated the lessons of those experiments.

A more basic and important cause of today’s developing state capitalism is the history of capitalism itself. Its earliest incarnations in Western Europe emerged from and against the strong states of dying feudalism (as seen in Europe’s “absolute monarchies”). Early capitalisms had thus strongly advocated against strong state commitments in concepts such as “laissez-faire,” “free enterprises,” and “free markets.” When British and then U.S. capitalisms achieved profitable global empires, they credited their professed success to their anti-statism. The hypocritical tendency of this claim resurfaces in the fact that it was their state apparatuses whose military arms acquired and secured their colonies and whose administrative arms ruled them.

Competing capitalist empires produced catastrophic world wars and global economic crashes. They learned the need to increasingly rely on, fund, and legitimize strong states. That learning found expression in various fascistic impulses and movements, in Keynesian economics, and in the ever-greater popularity of socialist interpretations of what strong states could and should do. As the earlier Western capitalisms accommodated ever-stronger states, their ideologues’ anxiety and ambivalence about doing so generated imaginary reasons for rejecting what was happening. Ayn Rand’s influence, libertarianism, and free market advocacy spread and got louder in proportion to the system’s movement in the opposite direction. Where socialists today decry the global economy as “capitalist,” these libertarians insist that it is not genuinely capitalist enough (or not capitalist at all) precisely because the state has so much power over the economy.

After World War II, the majority of the world that broke free of colonial subjugation immediately embraced strong states in their Keynesian or socialist forms to accomplish the “economic development” that they prioritized. Western capitalism was yet again torn in its ambivalence. Capitalists wanted to grab the profits of rapid growth. Ideologues warned against the strong states in the “emerging economies” as the leaders of that growth. The result was a global resurgence of both strong-state-led economic growth on the ground and intense ideological reversion to anti-statism. No wonder the name “neoliberalism” stuck to the time.

Both old Western capitalisms and the newer mostly Eastern capitalisms have evolved considerably over the last generation. Those evolutions are now offering a limited resolution for the inherited tension between actually enhanced social tendencies toward strong state capitalisms and the remaining ideological objections thereto. Everywhere, even in the United Kingdom and the United States, those ideological expressions are weakening. The strong states are now increasingly advocated by “conservatives” such as former U.S. President Donald Trump and current British Prime Minister Boris Johnson, as well as social democrats and liberals. China’s economic performance has carried the day even as Western capitalists try not to admit that publicly.

Russian-born economic historian Alexander Gerschenkron noted in his 1962 Economic Backwardness in Historical Perspective that the state becomes more crucial to capitalist development the later capitalism settles in as a region’s dominant economic system. His notion needs to be amended and extended globally in light of the last 60 years of history. In China, a powerful state apparatus combines with a powerful political party apparatus to supervise and control an economy divided into private capitalist enterprises (private individuals as employers and employees) and public capitalist enterprises (state officials as employers and private individuals as employees). China’s performance not only of economic growth but also of remarkable initial control over containing the spread of COVID-19 suggests that the final stages of capitalism may well be in the state-capitalist forms such as the form the Chinese have developed. The state can transform “backward” forms of capitalism into more “advanced” forms.

Before a post-capitalist system (where the employer/employee relation gives way to democratized workplace organizations that reject the employer/employee division) can take hold, the state-capitalist form enables the system’s productive forces to be most fully developed. We are living through that period right now. We might add that the social left thus finds itself in a situation rather like what it faced at the end of the 19th and early 20th centuries with an important difference: The socialist left now, as during earlier centuries, advocates for an economic system that does not yet exist in any nation.

However, the socialist left does so with the knowledge of what happened to those experiments in socialism that turned out to be and still are forms of state capitalism. Hopefully, 21st-century socialism will not need to repeat those experiments. It can attend to what they lacked, namely the transition at the micro level of workplace organization. That means transitioning enterprises (factories, offices, and stores) from the employer-versus-employee organization to the democratic community (or worker cooperative) organization. The state that achieves that transition will thereby accomplish the end of the capitalist social order. With it might then come that decline of a social necessity for the state that Vladimir Lenin theorized as its “withering away.”

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

To the motives for war in human history, capitalism added another: profit. That motive drove technological advancement and created a genuine world economy. It also built new capitalist empires such as the Spanish, Dutch, British, French, Belgian, Russian, German, Japanese, and American empires. Each of these countries built its empire by various means including wars against prior systems operating on their own territories, in their colonies, and in foreign “spheres of influence.” Wars likewise characterized interactions among empires. Global warfare (“world wars”) accompanied the globalization of capitalism and its profit motive. The war in Ukraine is the latest chapter in the history of capitalism, empire, and war.

This article was produced by Economy for All, a project of the Independent Media Institute.

Capitalism means enterprises run by small groups of people—employers—who preside over large groups—hired employees. Employers are driven to maximize profits: the excess of the value added by hired workers over the wages paid to them. Employers are likewise driven to sell outputs at the highest price the market will bear and buy inputs (including workers’ time) at the lowest possible market price. Competition among capitalist enterprises pressures all employers to plow profits as much as possible back into the business to help it grow and to gain market share as means to maximize profits. They each must do this in order to survive because competition’s winners tend to destroy and then absorb the losers. The social result of this competition among enterprises is that capitalism as a system is inherently driven to expand quickly.

That expansion, inside every capitalist nation, inevitably overflows its boundaries. Capitalist enterprises seek, find, and develop foreign sources of food, raw materials, workers, and markets. As competition becomes global, competing capitalist enterprises seek help from their nations’ governments to expand. Politicians quickly learn that companies in their nations that lose in global competition will blame those politicians for insufficient support. Meanwhile, companies that win in the global competition will reward such politicians for their help. The social result of this is that capitalism entails national competition alongside enterprise competition. Wars often punctuate capitalism’s national competition. The winners in those competitions thereby often tended to build empires, historically.

For example, in the 17th and 18th centuries, wars helped British capitalism to build a global empire. In the 19th century, more wars punctuated the completion and consolidation of that empire. Empire growth had itself stimulated all manner of challenges and competition, eventuating in more wars. For example, as capitalism took root and grew in Britain’s American colony, colonial enterprises eventually encountered obstacles (limited markets, taxes, and limited access to inputs). These obstacles eventually grew into a conflict between them and their colony’s leaders, on one side, and Britain’s capitalists and King George III, on the other. The war of independence resulted. Later, British leaders went to war against the United States in 1812 and also considered siding with the enslavers in the South against the capitalist North in the American Civil War.

The 19th century saw countless efforts by other nations to compete with, challenge, undermine, or reduce Britain’s empire. Competitive capitalist enterprises engendered competitive colonialism and many wars. The United States and Germany grew into the major national competitors for Britain. Wars punctuated the growth of capitalism across the 19th century, within the United States and Germany, as well as elsewhere across the globe. As capitalist enterprises combined, centralized, and grew—resulting from the competition among them—so too did many nations consolidate into fewer numbers of nations. Wars became larger too, culminating in the devastating first of the two world wars.

The British Empire fought the German Empire in World War I. That destroyed them both as contenders for global dominance. Having been far less damaged by World War I, U.S. capitalism grew fast in replacing the global capitalist positions that Britain and Germany had lost because of the war. World War I also established capitalism’s responsibility for the tens of millions who died, were injured, and were made refugees in what was then considered the worst war ever. Germany tried to regain its global dominance a few years later, allied with the newest capitalist empire, Japan, to undo the results of World War I. It failed, as the United States defeated Germany and Japan to demonstrate its economic and military (nuclear) superiority. A consolidated U.S. global empire prevailed from 1945 until recent years.

The United States then learned what the British had discovered earlier. Building and consolidating a capitalist empire provokes an endless succession of challengers. Among capitalist enterprises, competition’s losers’ employees move to work for the winners; the winners’ enterprises grow, and the loser’s decline. Winners’ growth often entails still greater profits and more competitive victories. That growth invites and promotes new competitors. Fended off for a while, eventually one or more new competitors discover how seriously to challenge the older dominant firm and displace it. Capitalist empires and their challengers exhibit parallel histories. As the competitive new enterprise destroys the old, the same happens with empires. That has been capitalism’s history, and that is what is now being seen in Ukraine.

Britain, after the end of the reign of Napoleon Bonaparte, won a century of global dominance. The United States after World War I did so too. Both empires provoked endless challenges. Nations large and small developed enterprises, industries, and political leaders who wanted to make changes or move in directions that differed from/challenged the U.S. global capitalist hegemony after World War I. For example, across Latin America, references to “manifest destiny” resulted in small wars to remove competing challenges in the region. Likewise, when Iran’s prime minister in the early 1950s, Mohammad Mosaddegh, or Patrice Lumumba, the first democratically elected prime minister of the Democratic Republic of the Congo, showed signs of breaking away from the U.S. empire’s control, both were removed. The one repression attempt by the U.S. that failed was in Cuba. The United States then isolated and economically hobbled Cuba via sanctions and embargoes. Warfare could be economic as well as military. Ukraine is another example, but with a peculiarity: U.S. support for Ukraine is an effort to repress another country that challenges U.S. hegemony, namely Russia. And repressing Russia too is a peculiar indirect way to get at the greatest threat to the U.S. capitalist empire, namely China.

The USSR’s survival after 1917, its World War II victories, and its development of nuclear weapons after 1945 created a potential challenger for the U.S. capitalist empire that had to be confronted. Former U.S. President Franklin D. Roosevelt and former Prime Minister of the United Kingdom Winston Churchill had accommodated the USSR’s control in Eastern Europe after 1945, but that represented a “loss” for U.S. global dominance. Thus, Eastern Europe quickly became the site of an ideological or “cold” war that pitted freedom and democracy against communism and totalitarianism in the USSR and its “satellite states.” It had to be a “cold” war because the consequences of a nuclear war would have been extreme. Before World War II, U.S. wars against other communist challengers of its empire had not demonized them as “evil communists.” During World War II, the United States even allied with the USSR to jointly defeat the immediate challengers (Germany and Japan). But after 1945, that was the preferred ideological terminology used for the USSR to justify protecting the U.S. empire. Then, when the USSR and its hold on Eastern Europe collapsed in 1989/1990, the old terminology faded in favor of a new terminology, used to begin a new war on a new challenger: Islamic terrorism.

The 30-plus years since 1989/1990 have changed both the U.S. empire and its challenges. Russia proved too weak to hold on to most of Eastern Europe. The United States reintegrated much of that region into Western capitalism via EU and NATO memberships, trade agreements, and Western investments. Slowly, over the last 20 years, Russia overcame some of its post-1989 weaknesses. The meteoric rise of the People’s Republic of China (PRC) brought new challenges for the U.S. empire, including a Russia-China alliance. Russia is now a capitalist economic system allied with the PRC (whose economy has a larger private capitalist sector than at any time since the Chinese Revolution of 1949). These two powerful capitalist economies are the largest globally by geography (Russia) and by population (China). They present a major problem for the U.S. global empire.

Russia evidently felt finally strong enough and allied with a much larger economic entity so it could hope to challenge and stop further “losses” in Eastern Europe. Thus, it invaded Crimea, Georgia, and now Ukraine.

In stark contrast, the U.S. empire’s ability to suppress challenges to its global dominance shrank. It lost wars in Vietnam, Afghanistan, and Iraq, as well as its intervention in Syria’s civil war. Its global economic footprint decreased in relation to that of the PRC. It proved unable to bring nations like Venezuela and Iran to heel despite trying hard for many years.

In Ukraine, on one side is an effort led by nationalists who would bring another nation further back into the U.S.-led global capitalist empire. On the other side is Russia and its allies determined to challenge the U.S. empire’s growth project in Ukraine and pursue their own competitive agenda for part or all of Ukraine. China stays with Russia because its leaders see the world and history in much the same way: They both share a common competitor in the United States.

Ukraine, per se, is not the issue. It is tragically a war-ravaged pawn in a much larger conflict. Nor is the issue about either Russian President Vladimir Putin or U.S. President Joe Biden as leaders. The same history and confrontation would prevail upon their successors. Meanwhile, former U.S. President Donald Trump’s effort to force change on the PRC by imposing the biggest sanctions action in history (i.e., a trade war and a tariff war) utterly failed. Trump was caught up in the same history as Biden, even if each focused on attacking the Russian-Chinese alliance differently.

Eventually some compromise will end the Ukraine war. Both sides will likely declare victory and blame the war on the other among propaganda blizzards. The Russian side will stress demilitarization, denazification, and protection of Russians in eastern Ukraine. The Ukraine side will stress freedom, independence, and national self-determination. Meanwhile, the tragedy goes beyond Ukraine’s suffering. The entire world is caught up in the decline of one capitalist empire and the rise of yet another. Conflicts between the capitalist empires can occur anywhere where differences between them flare up.

Perhaps the greatest tragedy lies in not recognizing the responsibility of the capitalist system with its markets of competing enterprises run/dominated by the minorities we call employers. That system lies at the root of these historic repetitions. The minority employer class controls or is the leadership of the nations that have absorbed and reproduced the competition that capitalism entails. The majority employee class pays most of the costs on both sides (in dead, wounded, destroyed properties, refugee lives, and taxes). A different economic system not driven by a profit motive offers a deeper solution than any on offer at present. Perhaps the war in Ukraine can awaken an awareness of its capitalist roots and teach people to explore alternative systemic solutions. If so, this war and the resulting devastation from it could lead to an important turning point that eventually results in some positive outcomes in the future.

Author Bio: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

The growing disconnect between the capitalist system and the economic realities plaguing the United States is now nearing completion. On the ground, the accumulated problems of U.S. capitalism undermine its empire and challenge its very future. Meanwhile, the ever-deepening inequalities of wealth and income conjure up images of ancient Egypt’s pharaohs. Three economic crashes opening the new century (2000, 2008, and 2020) have shaken the system; so have the two wars America lost against very poor countries in the Middle East: Afghanistan and Iraq. The worst public health crisis in a century during the COVID-19 pandemic has further exposed how unprepared U.S. capitalism was and is, thereby imposing massive new human and financial costs lasting into the future.

A government that serves U.S. capitalism first and foremost borrowed trillions and enabled trillions more of new debt (corporate and household) that was used to fight long, losing wars and shore up a faltering economy. Now, after two terrible years of COVID plus an economic crash, with 3 million fewer jobs in 2022 than before COVID hit, a sharp inflation looms. Meanwhile, aided partly by profit-driven U.S. capitalists who moved their operations to China, the Asian country is now in a position where it is challenging U.S. capitalism globally.

Above the troubled ground sit two old political parties, the GOP and the Democratic Party, which are formed by and are stuck in the old political economy before all these problems accumulated into crises. From 1820 to 1970, U.S. capitalism experienced cycles, but these cycles were securely anchored in a long-term upward trend. Real wages rose every decade, at least for white workers. Recessionary downturns only interrupted the long trend up (and even then not for long). The Republican Party and the Democratic Party rarely went beyond the routine rituals of orderly contests over who deserved the credit for economic growth and who deserved the blame for the interruptions during recessions.

The one big exception resulted from the one super big interruption: the 1930s Great Depression. This shook U.S. capitalism to its core. Mobilized and led by a coalition of militant unions (CIO), socialist parties, and a communist party, the U.S. working class shifted sharply to the left. This shift won a New Deal from the administration of President Franklin D. Roosevelt. That deal taxed corporations and the rich significantly more. It then poured much of those funds into the new Social Security system, unemployment compensation, and a massive federal jobs program. Because of the New Deal, Roosevelt was reelected three times, and was the most popular president in U.S. history. Correspondingly, U.S. corporations and those they enriched felt seriously threatened during this period.

The GOP reacted strongly. Once FDR died and World War II ended, the Republican Party took the lead to undo the New Deal. It did this by splitting the coalition (which included the CIO, socialists, and communists) from the Democratic Party and the coalition partners from one another. Anti-communism, McCarthyism, and the Cold War served as the weapons of choice for the Republican Party. The GOP succeeded partly because the Democrats offered mostly weak opposition or none at all. Postwar Democrats were largely complicit in destroying most of what the New Deal had achieved (with the help, ironically, of many of the Democratic Party’s own prewar efforts). After 1945, the White House, Congress, and state and local governments resumed orderly political contests between the GOP and the Democratic Party. Both endorsed a musical chairs type of rotation of public authority personnel between them (until this system was undone by former President Donald Trump in 2020).

The old, established leaders of both parties still do not grasp or accept that the orderly rotation of public authority personnel is now over. Unable or unwilling to critically evaluate U.S. capitalism, these leaders missed the signs leading up to the accumulation of capitalism’s problems that now overwhelms them. The Bushes, Clintons, President Joe Biden, and their ilk want the old political system to persist. After all, for them this old political system did well. But now their disconnect from the capitalist reality that ultimately controls them threatens to render them blatantly ineffective, sadly out of their element. Because they cannot or dare not criticize that reality, its increasing difficulties and resulting mass disaffection are beyond their reach with the old tools, arguments, and spins that used to work.

Given the disconnected mainstreams of U.S. politics, mass disaffection provokes escapism and scapegoating. The GOP eagerly validates many of them (anti-immigration, white supremacy, quasi-fascism, culture wars, and anti-leftism) to enlarge its voter base. The Democrats, meanwhile, try to fight the extreme forms of that escapism and scapegoating (as in “basket of deplorables”) without offering any real alternative to it. The socialism represented by politicians like Senator Bernie Sanders (I-VT) and Representative Alexandria Ocasio-Cortez (D-NY) is so soft-pedaled by them that, given mainstream media biases, it only marginally hovers at the edges of the national political conversation.

What people increasingly need is protection from a beleaguered capitalist system itself, from its intrinsic instability (the accumulated crashes and their effects), intrinsic inequalities of wealth and income (and their effects), devastating ecological damages, and profit fetishism. But the GOP and the Democratic Party have long ago lost the ability to see or contend with any of that. They keep repeating neoliberal ideology (and its reframing of a U.S. empire as “globalization”) so often that they actually believe and are thereby imprisoned within the system.

Thus, a peculiar political theater of disconnectedness has emerged. The Republican and Democratic leaders cannot see what most of us can. They see “the big issues” as not being about capitalism. Yet what they do see and the solutions they propose will in fact be their response as capitalism’s crisis deepens. Thus, under Trump, the Republican Party has moved toward fascism. His GOP has used and will continue to use government to enforce capitalism as it totters by extinguishing what remains of unions, crushing the left, and militarizing media and culture, much as other dictators have, including Adolf Hitler in Germany after January 1933 and Benito Mussolini in Italy after October 1922. Like them, Trump has used hyperpatriotic nationalism mixed with racial superiority to justify all his actions. That is the real meaning behind Trump’s campaign slogans and his audiences’ cheers of “save America” and “Make America Great Again.” How far down the German and Italian fascist paths Trump and others like him will go depends on circumstances.

Capitalism’s crisis exists neither for Biden nor the Democratic establishment he leads, just as it does not for Trump and the GOP. The Democratic establishment defines itself over and against Trump. It is not about to go down the fascist road. It proposes instead to “protect democracy” from what Trump represents. That difference will frame many electoral campaigns in 2022 and 2024; it already does. The Democrats will “protect democracy” by “returning to the pre-pandemic normal.” The Democratic Party’s version of “Make America Great Again” is a resurrected post-World War II political economy, complete with U.S. global dominance based securely, they imagine, on a fast-growing U.S. capitalism.

Both the Republican and Democratic establishments warn their megadonors and the public that allowing the other to take political power will disrupt civil society and prevent America from becoming great again. The GOP screams that antifa and the Black Lives Matter movement will destroy white America and will result in a civil war. The Democrats counter that Trump and January 6 type “insurgents” will dissolve social peace inside the United States, provoke counteractions, and thereby lead to civil conflict. Social peace, each side insists, requires political war to defeat the other side. Neither side glimpses the absurd contradiction of its claims.

Which way U.S. politics will go depends less on the two parties or their disconnected rhetoric. What matters far more are the actualities of U.S. capitalism as the U.S. empire continues to decline and U.S. capitalism’s accumulated problems worsen. These latter factors will determine how the public views the parties’ disconnected policies. Today’s inflation offers an example of this. As a further slap in the face of the U.S. working class who have dealt with two years of economic crash plus the health catastrophe of COVID-19, inflation and the rising interest rates aimed to stop it will ultimately shake capitalism and shape politics.

How many angry working families will now sympathize with a politician who offers big changes versus a politician who offers “stay the course”? The business community wants inflation stopped. The responsive Fed will thus resort to quantitative tightening and raising interest rates. The responsive Biden will applaud the Fed. Those Fed actions can and likely will threaten jobs. So Biden must choose between the electoral risks of inflation versus those of job deterioration. That is the risky dead-end “choice” that the problems of capitalism will dump on Biden. And if 2022 proves to be the year when capitalism’s crisis breaks into the explicit open, will most Americans tilt toward Trump-type fascism or the “democracy protection” offered by the Democrats to protect themselves from capitalism’s crisis?

Hitler’s and Mussolini’s fascist solutions to crises in their nations’ capitalisms did not end well. Yet today’s leading U.S. capitalists seem not to know or care about historical precedents. They continue to perform their disconnected politics comfortably, oblivious to the imploding capitalism and the resulting damage to Americans. In that, they resemble the upper classes in Russia (up to 1917), in Germany (up to 1933), and in Italy (up to 1922). The most important questions thus become whether or not and how soon a new left can emerge that targets capitalism per se, proposes an alternative system, and charts a transition to this alternative system.

The declines of U.S. capitalism and of its imperial position provoke fear among its mainstream politicians. Their response, in large part, has been to deny that any such decline is happening. These politicians do this partly by acting as though the U.S. remains in the globally dominant position it occupied in the second half of the 20th century. Thus, to maintain this illusion, they start wars in the Middle East, maintain military bases in dozens of countries, intervene in other countries at will and describe the U.S. as the global guarantor of peace, security, and democracy.

Yet these U.S. politicians also sense what the population feels: that decline of capitalism and U.S. hegemony is actually happening. So repeated denials, while comforting the citizens of the country, do not suffice to control popular opinion and thereby common sense. Mainstream politicians in both Republican and Democratic establishments work to anticipate and deflect these popular feelings at any chance that they might evolve into a systemic critique. These politicians, who have seen the critics of U.S. capitalism grow in number and become increasingly vocal over the last decade, are slowly turning popular feelings relating to the decline of capitalism into anti-capitalism. The critics, meanwhile, blame capitalists and their established systems for this decline.

To forestall the success of the critics of capitalism, U.S. mainstream politicians promote popular rages against a series of “causes” relating to the very decline of capitalism they cannot admit or openly acknowledge. Their goal is to displace popular anger and to redirect people’s desire to protest the economic and social decline impinging on them due to this decline of capitalism. This is accomplished by loudly and repeatedly blaming certain scapegoats: immigrants, China, Russia, Black and Brown people, secularists, women, and liberals.

Mainstream politicians have divided their labor in this regard. Some politicians focus on the denial of the decline of capitalism, and others focus on the displacement and deflection of the anger being felt by people over the crumbling system. Some do both. Few recognize and even fewer admit the contradiction involved: what is denied ought then not be displaced, or what gets displaced entails an admission (not a denial) that there is something that needs displacement.

READ: How unchecked capitalism and massive inequality made America a bully nation

Because the U.S. lost its wars in Vietnam, Afghanistan, and Iraq, these wars must be denied, displaced onto someone else, or perhaps both. The same applies to the shrinking U.S. ability to control the politics of Latin America as evidenced by Cuba, Venezuela, Chile, and many more countries in the region. Similarly, because China’s rapid rise challenges U.S. global hegemony (after being long denied), the country is now treated as a “threat.” Blame for that threat must thus be displaced onto the Chinese, China’s ally Russia, or U.S. politicians who came before and failed to adequately prevent or dispose of the threat. Ironically, the fact that capitalist corporations, the U.S., and others profited greatly by moving production and other related facilities to China is rarely mentioned as causing the threat to U.S. global hegemony.

U.S. politicians’ program of denying and displacing is borrowed from the corporate sector (as is so much else that the government does). The profit-driven fossil fuel companies long denied that burning these fuels causes climate change or that their monopolistic practices destabilize and often inflate global markets. At other times or places, these corporations have blamed climate catastrophes and fluctuating energy prices on everything they can think of other than themselves and the profit-driven organizations representing the energy industry.

U.S. political leaders in both major parties failed utterly to anticipate, prepare for, and cope successfully with the ongoing COVID-19 pandemic. With the United States accounting for about 4 percent of the world’s population, the country suffered approximately 16 percent of the world’s COVID-19 deaths as of the end of January 2022 (despite its national wealth and developed health care system). Many other countries like Singapore and South Korea performed far more successfully in curbing the spread of the virus. Once again, mainstream politics on this issue is divided between deniers and displacers. Those who chiefly deny the failure relating to the handling of the pandemic by the United States do so by focusing instead on the rising and falling COVID-19 statistics relating to infections and deaths and celebrating whatever little progress is made regarding testing, masking, and vaccinating Americans, while carefully avoiding any comparisons to foreign efforts to combat COVID-19. Various displacers choose to blame the rising number of COVID-19 cases on the nation’s leading infectious disease expert Dr. Anthony Fauci, the Centers for Disease Control and Prevention, former President Donald Trump, President Joe Biden, or the Chinese. One major displacement project stresses opposition to government or private mandates (to mask, vaccinate, or follow other public health guidelines) as a matter of personal freedom. Such displacers irrationally shift blame for the virus onto blame for the mandates and those who issued the mandates. Carefully exempted from blame is the profit motive that drove producers of tests, masks, and ventilators, as well as hospital operators, to invest elsewhere and not in the production and safe storage of tests, masks, and ventilators. U.S. capitalism failed to produce what is needed to manage pandemics known to cause menace to societies from time to time. Likewise, exempted from blame is the private profit motive that delayed investments in vaccine development and still further delays in the global distribution of COVID-19 vaccines. Denial and displacement work well to keep capitalism out of and away from public discussion, and from being targeted as the problem to be solved.

READ: Explaining 21st-century capitalism in a way everyone can understand

More recently, mainstream U.S. politicians—again, establishment figures from both major parties—applied the denial and displacement mantra to the problem of inflation in the U.S. economy. The denial with which they confronted inflation was oddly focused on the future. Americans were officially assured that the inflation would be limited in extent and would be merely transitory. Its possible depth and duration were denied. Federal Reserve Chair Jerome Powell and others down the bureaucratic ladders confidently predicted inflation’s future decline. When the lack of evidence behind such denials about possible future decline in inflation became clear when the real inflation data were announced, attempts at displacements by politicians and bureaucrats grabbed the limelight. The no longer deniable inflation was dutifully blamed on supply chain disruptions, Federal Reserve monetary policy, the Democrats’ fiscal policies, the Chinese, Trump, or Biden.

Yet again, virtually nowhere did politicians or media commentators refer to capitalism’s role in causing this inflation. As every business school teaches its students and as capitalists have repeatedly admitted, profit is the bottom line, the goal of business decisions. One such decision is setting prices to maximize profits. After nearly two years (2020 and 2021) of a depressed profit situation for most businesses, employers across the U.S. wanted to recoup their lost profits. They hoped to do so by raising their prices as much as the market could bear. In capitalism, employers (a tiny minority of the population) exclude employees (the vast majority) from making price decisions. Especially in the latter half of 2021, many employers raised prices of their goods and services. They thereby caused an inflation to improve their profit situation: what they are in business for. For the employees, who are in the majority and were already hurt badly during the two years of the ongoing pandemic plus the 2008 economic crash, an inflation, especially one outrunning their wage increases, was unspeakably bad news.

Denial and displacement serve mainstream politics in capitalist societies. The politicians who are part of the system hide, as far as possible, the complicity of profit-driven capitalism in causing social problems. They obstruct (or actively undermine) public policies that might solve these problems and ignore the systemic changes that might be needed to resolve these inherent issues that form part of the capitalist system.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

The U.S. wars lost in Iraq and Afghanistan showed imperial overreach beyond what even 20 years of war could manage. That the defeats were drawn out for so many years shows that domestic politics and the funding of the domestic military-industrial complex were, more than geopolitics, the key drivers of these wars. Empires can die from overreach and sacrificing broadly social goals for the narrow interests of political and economic minorities.

The United States has 4.25 percent of the world's population yet accounts for about 20 percent of global deaths from COVID-19. A rich global superpower with a highly developed medical industry proved to be badly unprepared for and unable to cope with a viral pandemic. It now wrestles with a huge segment of its population that seems so alienated from major economic and political institutions that it risks self-destruction and demands the "right" to infect others. Refusing to accept lifesaving COVID-19 vaccine and mask mandates in the name of "freedom" mixes a frightening stew of ideological confusion, social division, and bitterly rising hostility within the population. The January 6 events in Washington, D.C., showed merely the tip of that iceberg.

Levels of debt—government, corporate, and household—are all at or near historical records and rising. Feeding and thereby supporting the rising debts is the Federal Reserve with its years of quantitative easing. Officials at the highest levels are now discussing the possible issuance of a trillion-dollar platinum coin to have the Fed give that sum in new credit to the U.S. Treasury to enable more U.S. government spending. The purpose goes far beyond political squabbling over the cap on the national debt. The goal is nothing less than freeing the government to inject still more massive amounts of new money into the capitalist system to sustain it in times of unprecedented difficulty. The Fed learned that today's capitalism needs such quanta of monetary stimulus thanks to the three recent crashes (2000, 2008, and 2020) witnessed by the capitalist system. A desperate empire approaches a version of the Modern Monetary Theory that empire leaders mocked and rejected not very long ago.

Extreme inequality, already a distinguishing feature of the United States, worsened during the pandemic. This inequality fuels rising poverty and rising social divisions among the haves, the have-nots, and the increasingly anxious think-they-haves. Attempts by employers to recoup the profits lost to the pandemic and to the capitalist crash during 2020 and 2021 have led many to impose additional squeezes on employees. This has led to official and unofficial strikes that continue amid a reawakening labor movement. On an individual level, the rate of workers who have been quitting their jobs has been hitting record highs.

Attempts by employers to recoup profits lost over the last two years also show up in the ongoing inflation besetting the empire. Employers set prices for what they sell. They know the Fed has juiced up the potential purchasing power by flooding markets with new money. Demand, pent up by the pandemic and the economic crashes, will help, at least for a while to support inflation. But even if temporary, the inflation will further worsen income and wealth inequalities and thereby set the U.S. up for the next crash. On top of this new century's three crashes (2000, 2008, and 2020), each worse than the one before, another crash, which could be still worse, could challenge the capitalist system's survival.

Fires, floods, hurricanes, droughts: the signs of climate catastrophe—not to mention its fast-climbing costs—add to the sense of impending doom provoked by all the other signs of empire decline. Here too, the tiny minority of fossil fuel industry leaders has succeeded in blocking or delaying the social action needed to cope with the problem. Empires decline when their long habits of serving minority elites blind them to those moments when the system's survival requires overriding those elites' needs, at least for a while.

For the first time in over a century, the United States has a real, serious, ascending global competitor. The British, German, Russian, and Japanese systems never reached that status. The People's Republic of China now has. No settled U.S. policy vis-à-vis China has proven feasible because of internal U.S. divisions and China's spectacular growth. Political leaders and "defense" contractors find China-bashing attractive. Denouncing China serves as popular scapegoating for many politicians in both parties and as support for an ever-increasing defense spending by the military. However, major segments of large corporate business have invested hundreds of billions in China and in global supply chains linked to China. They do not want to risk them. In addition, for decades, China has offered one of the world's lowest-cost, better educated and trained, and most disciplined labor forces coupled with the world's fastest-growing market for both capital and consumer goods. Competitive U.S. firms believe that global success requires their firms to be well established in that nation with the world's largest population, among the world's least-costly workers, and with the world's fastest-growing market. Everything taught and learned in business schools supports that view. Thus the U.S. Chamber of Commerce opposed former President Donald Trump's trade/tariff wars and now opposes President Joe Biden's hyped-up program of China-bashing.

There is no way for the United States to change China's basic economic and political policies since those are precisely what brought China to its now globally envied position of being a competitor to a superpower like the U.S. Meanwhile, China is expected to catch up to the United States with equality of economic size before the end of this decade. The problem for the U.S. empire grows, and the United States remains stuck in divisions that preclude any significant change except perhaps armed conflict and an unthinkable nuclear war.

When empires decline, they can slip into self-reinforcing downward spirals. This downward spiral occurs when the rich and powerful respond by using their social positions to offload the costs of decline onto the mass of the population. That only worsens the inequalities and divisions that provoked the decline in the first place.

The recently released Pandora Papers offer a useful glimpse into the elaborate world of vast wealth hidden from tax-collecting governments and from public knowledge. Such hiding is partly driven by the effort to insulate the wealth of the rich from that decline. That partly explains why the 2016 exposure of the Panama Papers did nothing to stop the hiding. If the public knew about the hidden resources—their size, origins, and purposes—the public demand for access to hidden assets would become overwhelming. The hidden resources would be seen as the best possible targets for use in slowing or reversing the decline.

Decline provokes more hiding, and that in turn worsens decline. The downward spiral is engaged. Moreover, attempts to distract an increasingly anxious public—demonizing immigrants, scapegoating China, and engaging in culture wars—show diminishing returns. Empire decline proceeds but remains widely denied or ignored as if it did not matter. The old rituals of conventional politics, economics, and culture proceed. Only their tones have become those of deep social divisions, bitter recriminations, and overt internal hostilities proliferating across the landscape. These mystify as well as upset the many Americans who still need to deny that crises have beset U.S. capitalism and that its empire is in decline.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Socialism, and Understanding Marxism, the latter of which is now available in a newly released 2021 hardcover edition with a new introduction by the author.

This article was produced by Economy for All, a project of the Independent Media Institute.

Now that so many people have realized that the capitalist system is riddled with problems, they want a clear explanation about the functioning of the system. They are dissatisfied and impatient with how school courses, politicians' statements, and mainstream media treat the subject. Basic economics literacy is notoriously low in the United States even as its citizens show great interest in the financial aspects of their lives. So this short article aims to present the system's essentials.

Capitalism is just one particular way of—a system for—organizing the production and distribution of goods and services. It differs from other systems such as slavery and feudalism but also shares some similarities with them. Capitalism, like slavery and feudalism, divides those engaged with the production and distribution of goods and services into two groups, one small and the other large. Slavery had masters (few) and enslaved people (many), while feudalism divided the groups into lords (few) and serfs (many). Employers are capitalism's smaller group. They control, direct, and oversee the economic system. The employers use production and distribution to grow their wealth. Capital is wealth engaged in self-expansion. As the systemic agents who are socially positioned to perform that expansion, employers are capitalists.

Capitalism's much larger group comprises the employees (or workers). As the majority in the system's workplaces, they do most of the work. Employees are divided into two groups. One group, often called "productive workers," are those directly involved in producing goods or services. In a company that produces chairs, for example, they are the makers of the chairs (people directly transforming wood into chairs). The second group of employees, often called "unproductive workers," are not directly involved in contributing to the workplace's output. Rather, unproductive workers provide the conditions and the context that enable the productive workers to directly produce the output. Examples of unproductive workers in a workplace include clerks who keep records and sales and purchasing departments' employees who secure inputs and market outputs.

Capitalist employers alone decide the mix of productive and unproductive workers they hire, what each of them does, what technologies each deploys, where their work is done, and what happens to the fruits of their labor. While productive and unproductive workers are excluded from participating in those decisions, they live with the consequences of these decisions.

Productive workers use tools, equipment, and buildings that are paid for and provided by the employers who hire them. Productive workers transform raw materials likewise purchased and provided by their employers. These "means of production" (tools, equipment, facilities, and raw materials) bought by employers contain a certain value that carries over into the finished product. The productive workers add more value by expending their transformative labor and utilizing those means of production provided to them by the employers. Thus, the finished output of each capitalist workplace contains the values of the used-up tools, equipment, and raw materials, plus the value added by the productive workers.

The key point to grasp here is that the value added by the productive workers is significantly more than the value of the wages paid to them by their employer. For example, an employer may agree to pay a productive worker $20 per hour because—and only because—during each hour, that productive worker's labor adds more value than $20. That key difference between value added and value of the wage payment is often called the "surplus value." The capitalist employers receive (or better, take) that surplus value and withdraw from it a portion that they call "profit."

The simple arithmetic of capitalist production can clarify its structure. First, the value of used-up means of production plus the value added by productive labor equals the total value of the output. The employer receives, owns, and sells that output in the market. Second, the excess of the value added by productive labor, over and above the value of the wages paid to the productive worker, provides employers with the surplus value. Part of that surplus value is used by employers to hire unproductive workers and to provide the conditions that enable productive workers to generate that surplus value. Included in these conditions is the interest paid to creditors who lend to the capitalist and the dividends paid to those who purchased shares in the enterprise.

The rest of the surplus value is what capitalists call profit. They use profit to grow their enterprises and support their own levels of consumption. In the modern capitalist corporation, the capitalists are the boards of directors who retain the profits in their hands and use them chiefly to grow the corporation and enable enhanced consumption by leading corporate officials (such as CEOs) as well as directors.

Capitalists get surplus value while employees get wages or salaries. That difference is crucial. Because employers occupy the dominant decision-making position in workplaces (enterprises), they use that position to ensure that enterprises produce profits as their first priority, their "bottom line." Employers seek to reduce, as far as possible, the wages or salaries they need to pay to hired workers, both productive and unproductive. The more they repress wages or salaries of productive workers, the more surplus value they can take. The more they repress the wage or salaries of unproductive workers, the greater the share of the surplus they can take in profits.

Capitalism's high priests—the professional economists—spin the tales (they prefer to call them theories) that justify the system. Thus they seek to persuade us that capitalists' "profit maximization" achieves the greatest efficiency, economic growth, and the greatest good for the greatest number. We are to believe that the self-serving (profit-driven) behavior of the employer class is, magically, the best for employees. In parallel fashion, earlier priests insisted that slavery and its self-serving masters were the best possible social arrangement for enslaved people. The priests during feudalism likewise praised it and its self-serving lords as the best possible social arrangement for serfs.

Because profit maximization serves capitalist employers, mainstream economics celebrates profits. In recent decades, that mainstream borrowed from mathematics the abstract notion (model) of a simplified system in which maximizing one aspect of it automatically maximizes many of its aspects. They then insisted that such a model captures (adequately represents) how capitalism works. Don't be fooled; it does not. The mathematical model is simple, but capitalism is not. Maximizing and taking the profits out of each capitalist enterprise is how capitalists accumulate wealth. That is good for them but not at all for the rest of us. Keeping profits away from employees keeps them needing employment from capitalists. That too is good for employers. The profit system reproduces capitalism over time by reproducing the capitalists at one end and the workers needing jobs at the other. Capitalists and workers have never been equal beneficiaries of the system.

The market is another institution capitalism utilizes to reproduce itself. Markets had existed long before modern capitalism arose to become today's globally dominant economic system. Slavery and feudalism had markets, but not in a unique way and not to the extent that capitalism does. Capitalism inserts the market into the core relationship between the system's two major positions: employer and employee. The employer purchases the labor power of the employee from the latter (who owns it). In contrast, enslaved people were purchased in markets, but their labor power was not theirs to sell. Neither serfs nor serf labor power was purchased by feudal lords. Only when slavery and feudalism declined did some markets emerge for labor power and, thereby, signal some transition toward capitalism.

For capitalism, markets provided the means to secure its crucial ratio: the difference between the value paid for labor power (the wage) and the value added by the laborer's work effort. That difference is the prerequisite for surplus value to be produced by the productive laborer and then appropriated and socially distributed by the capitalist.

Profit maximization and markets were always carefully limited and designed to serve the reproduction of capitalism. That is how markets evolved once the capitalist organization of production and distribution displaced the systems of slavery and feudalism that preceded it. Those other systems had either rejected markets or else shaped markets to reproduce those different, noncapitalist systems. Only a narrow, ideological fundamentalism raises markets, profits, or capitalism itself to a status above history as if any of them had the power to stop the flow of change.

Capitalism's profit and market systems do not represent a suprahistorical absolute of maximal efficiency or optimality (favorite words in mainstream economics). Let's remember that previous economic systems always spawned powerful ideologies insisting that they too were permanent, optimal "ends of history." That alone ought to have imbued contemporary economists with some self-critical disciplinary consciousness. Instead, most of these economists merely advanced yet another set of absolutist claims on behalf of capitalism. Mainstream economics has had great difficulty including any such self-criticism. Capitalists' demands for ideological loyalty from their workers may have played a role in that difficulty.

History has not stopped. Every other economic system in human history was born, evolved, and ceased to exist at some point. The most reasonable expectation is that capitalism, having been born and evolved, will also cease to exist one day. Human beings have often been impatient with the economic systems they had and eager for something better. The number of people feeling that way about capitalism is rising globally. Clarifying the basics of capitalism, which is to be superseded, can help move society forward now.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Most Chileans recently voted out the remnants of military dictator Augusto Pinochet, along with Milton Friedman's policies and many U.S. interventions. They are at work on a radically new Constitution. In the United States, former President Donald Trump and President Joe Biden gave diminishing lip service to (or just ignored) neoliberal orthodoxy to push for and get massive government interventions into U.S. capitalism. Most of what remains of private capitalism is surviving on unprecedented, massive government life support, monetary and fiscal. A tired rerun of Cold War-style demonizing provides the ideological cover for the fading neoliberalism. Both major parties endorse huge and growing government economic interventions as urgently needed, homeland security-driven, anti-China policies.

Pity the poor libertarians. Their audience fades because the same intrusive government they blame for all economic ills demands loyalty in its fight with China. Former President Richard Nixon was less dishonest 50 years ago when he reportedly said, "We are all Keynesians now." In contrast, today's GOP mouths "conservative economics," yet merely quibbles over details of the government's gigantic money creation and deficit financing.

Today's declining U.S. capitalism can no longer repeat its previous bland celebrations of private enterprises and free markets. Too much is going wrong, provoking criticism, and deepening divisions across U.S. society. The last time U.S. capitalism stumbled this badly—the Great Depression of the 1930s—public health did not suffer massive failure at the same time. Yet, then too, criticism of capitalism reached far, wide, and deep. It was expressed in the unionization by the Congress of Industrial Organizations (CIO) of millions alongside zooming enrollments in two socialist parties and one communist party.

Yet, the New Deal negotiated by former President Franklin Delano Roosevelt and the employer class, on the one hand, with the coalition of unionists, socialists, and communists, on the other hand, achieved then much more than what President Biden seeks now. The pendulum then swung much farther from private enterprise and free markets to broad and deep economic interventions by the government—exemplified by Social Security, unemployment compensation, the minimum wage, and the federal hiring program. The pendulum now swings likewise, if less far, from the neoliberal tradition of Margaret Thatcher and Ronald Reagan to the government-led and government-regulated capitalism focused on "winning" the competition with China (or, as Trump promised, punishing the "cheating" performed by U.S. trading partners).

Then, the poles of economic debate mirrored the policy oppositions. It was private self-regulating and self-healing capitalism versus government regulatory interventions to save capitalism from self-destruction. Now, something basic has changed. The three capitalist crashes in 2000, 2008, and 2020, each much worse than the previous one, plus the failures to prepare for or cope with COVID-19, ushered in massive, ongoing government economic intervention. The Federal Reserve has smashed all prior records of money creation. The Treasury has smashed all prior records of financing government budget deficits with an expanding national debt. The private versus government parameters of economic debate are gone, replaced by de facto debates over the size, duration, and appropriate beneficiaries or targets of government interventions, monetary and fiscal.

Of course, government interventions in the economy were needed, solicited, and obtained across U.S. history by its private capitalists. But the latter feared that widening and eventually universal suffrage could turn government toward serving the interests of labor (the majority) rather than capital (the minority). So it was important to demonize the government's economic interventions, to compare their effects unfavorably to what private capitalism had accomplished and could yet achieve. But now what remains of private capitalism increasingly depends upon and expects government interventions as the equivalent of life support in medically extreme situations. The old demonization of government economic intervention sounds increasingly hollow and out of touch with reality. To modernize Nixon, we might say, "We are all interventionists now." And this has its inevitable effects on economic debates in academia, politics, and the media.

The die-hard libertarians and other supporters of free-market, private capitalism increasingly lump together liberals, social democrats, insufficient "conservatives," Keynesians, socialists, and communists. They comprise an evil, awful bloc of "the other," advocates for government economic intervention. While there are gradations among them, ranging from Xi Jinping to Donald Trump to Joe Biden, they are all viewed as advocates of massive government economic intervention. By articulating such a perspective, the die-hards inadvertently isolate and marginalize themselves as well as the economic debates defining them.

Contradictory discourse proliferates. U.S. officials denounce Chinese private megacorporations for their close ties to the Chinese government and military, as if their U.S. counterparts do not have comparable ties to the U.S. government and military. Chinese officials have celebrated their "socialist" achievements over the last 25 years, as if China had not invited and enabled private capitalist enterprises to enter and fuel those achievements. Increasingly, spokespersons in economies with greater degrees of private capitalism refer to economies with greater government intervention as "models" to be learned from. Thus, "we" must "learn" from "them" in order to better compete with them.

Slowly, the realization dawns that maybe it never was appropriate to center analytical attention and doctrinal disputation on the private versus public sectors of capitalist economies. Maybe all capitalisms mixed private enterprises and free markets with public enterprises and publicly regulated enterprises, markets, and economic planning activities. We do know that slave economic systems mixed private slave enterprises with public slave enterprises and state regulations of slave enterprises. We know that the same applies to feudal economic systems. It was a distraction to focus on the private versus public dispute as if it were central to understanding capitalism's place in history and in modern society.

Perhaps economics as a discipline is shifting gears to focus on a different basic discourse and debate. At the micro level, this debate would contrast and compare the functioning and effects (economic, political, and cultural) of two alternative organizations of workplaces. One of them, contemporary capitalism—embodied in both private and public enterprises—entails a version of the dichotomies inherited from slavery and feudalism. In these dichotomies, a small minority—enslavers in slavery, lords in feudalism, and employers in capitalism—makes all the key workplace decisions, holds the major power positions, and accumulates disproportionate wealth relative to what the majority—slaves, serfs, and employees—gets. The alternative workplace organization now struggles to emerge from the shadows and margins of those dichotomous discourses and realities. It exhibits a communal, collective, or cooperative organization of the workplace. Instead of hierarchy, this alternative is a horizontal organization that makes all workplace participants equally powerful. Each has one vote to decide democratically what to produce, how and where, and what to do with the surplus or profits to which all workplace participants contributed. These are called worker self-directed enterprises, or WSDEs (see Democracy at Work: A Cure for Capitalism).

At the macro level, the emerging debate would focus on how key institutions—markets, planning apparatuses, relations between workplaces and residential communities, schools, government, political parties, and so on—would link differently to the alternative enterprise organizations. The whole capitalism versus socialism debate would then be reorganized around this question: which enterprise organization—capitalist versus WSDE—best serves the interests of the communities engaged in such a debate.

Capitalism versus socialism debates would then stop being about private versus public ownership and free versus government-regulated (or planned) markets. They would refocus instead on hierarchical-capitalist versus democratic-collectivist organizations of workplaces (factories, offices, and stores). The original notion of socialism as a basic critique of and an alternative to capitalism would thereby return to displace its detour into debates over private versus public.

This article was produced by Economy for All, a project of the Independent Media Institute.

Throughout its history—wherever it arrived and settled in as the dominant economic system—capitalism provoked struggles over the redistribution of wealth. In other words, this system always distributes wealth in a particular way and likewise produces dissatisfaction with that particular distribution. Those dissatisfied then struggle, more or less, consciously or not, peacefully or violently to redistribute wealth. The struggles are socially divisive and sometimes rise to civil war levels.

The French Revolution marked the end of French feudalism and its transition to capitalism. The revolutionaries' slogans promised the transition would bring with it "liberté, égalité, fraternité" (liberty, equality and fraternity). In other words, equality was to be a key accompaniment to or product of capitalism's establishment, of finally replacing feudalism's lord-serf organization of production with capitalism's very different employer-employee system. Transition to capitalism would erase the gross inequalities of French feudalism. The American Revolution likewise broke not only from its British colonial master but also from the feudal monarchy of George III. "All men are created equal" was a central theme of its profound commitment to equality together with capitalism.

In France, the United States and beyond, capitalism justified itself by reference to its achievement or at least its targeting of equality in general. This equality included the distribution of wealth and income, at least in theory and rhetoric. Yet from the beginning, all capitalisms wrestled with contradictions between lip service to equality and inequality in their actual practices. Adam Smith worried about the "accumulation of stock" (wealth or "capital") in some hands but not in others. Thomas Jefferson and Alexander Hamilton had different visions of the future of an independent United States in terms of whether it would or would not secure wealth equality later dubbed "Jeffersonian democracy." There was and always remained in the United States an awkward dissonance between theoretical and rhetorical commitments to equality and the realities of slavery and then systemic racist inequalities. The inequalities of gender likewise contradicted commitments to equality. It took centuries of capitalism to achieve even the merely formal political equality of universal suffrage.

Thus, there should be no surprise that U.S. capitalism—like most other capitalisms—provokes a widely troubling contradiction between the actual wealth inequality it produces and tendentially deepens (as Thomas Piketty has definitively shown) and its repeatedly professed commitment to equality. Efforts to redistribute wealth—to thereby move from less to more equal distributions—follow. Yet, they also disturbingly divide societies where the capitalist economic system prevails.

Wealth redistributions take from those who have and give to those who have not. Those whose wealth is redistributed resent or resist this taking, while those who receive during the redistributions of wealth develop rationales to justify that receipt. Each side of such redistributions often demonizes the other. Politics typically becomes the arena where demonizations and conflicts over redistribution occur. Those at risk of being deprived due to redistributions aim either to oppose redistribution or else to escape it. If the opposition is impossible or difficult, escape is the chosen strategy. Thus, if profits of capitalists are to be taxed to redistribute wealth to the poor, big businesses may escape by moving politically to shift the burden of taxation onto small or medium businesses. Alternatively, all businesses may unite to shift the burden of such redistributive taxation onto higher-paid employees' wages and salaries, and away from business profits.

Recipients of redistributions face parallel political problems of whom to target for contributing to wealth redistribution. Will recipients support a tax on all profits or rather a tax just on big business with maybe some redistribution flowing from big to medium and small business? Or might low-wage recipients target high-wage workers for redistributive taxation?

All kinds of other redistributions between regions, races and genders display comparable strategic political choices.

Conflicts over redistributions are thus intrinsic to capitalism and always have been. They reflect but also deepen social divisions. They can and often have become violent and socially disruptive. They may trigger demands for system change. They may function as catalysts for revolutions. Because pre-capitalist economic systems like slavery and feudalism had fewer theoretical and rhetorical commitments to equality in general, they had fewer redistribution struggles. Those finally emerged when inequalities became relatively more extreme than the levels of inequality that more frequently provoked redistribution struggles in capitalism.

No "solution" to divisive struggles over wealth redistribution in capitalism was ever found. Capitalisms keep reproducing both theoretical and rhetorical appeals to equality as self-celebrations alongside actualities of deep and deepening wealth inequalities. Criticisms of capitalism on grounds of wealth inequality dog the system everywhere. Divisive social conflicts over capitalism's unequal wealth distributions persist. Endless efforts to find and implement a successful redistributive system or mechanism continue. The latest comprises various proposals for universal basic incomes.

To avoid divisive social conflict over redistribution, the solution is not to distribute unequally in the first place. That can remove the cause and impetus for redistributive struggles and thus the need for endless and so far fruitless efforts to find the "right" redistribution formula or mechanism. The way forward is to democratize the decision about distributing wealth as it emerges from production. This can be accomplished by democratizing the enterprise, converting workplaces from their current capitalist organization (i.e., hierarchical divisions into employers—public or private—and employees) into worker cooperatives. In the latter, each worker has one vote, and all basic workplace issues are decided by majority vote after a free and open debate. That is when different views on what distribution of output should occur are articulated and democratically decided.

No redistribution is required, necessitated, or provoked. Workplace members are free to reopen, debate and decide anew on initial wealth distributions at any time. The same procedure would apply to workplace decisions governing what to produce, which technology to deploy, and where to locate production. All workers collectively and democratically decide what wage the collective of workers pays to each of them individually. They likewise decide how to dispose of or allocate any surplus, which is above the total individual wage bill and replacement of used-up inputs, that the enterprise might generate.

A parable can illustrate the basic point. Imagine parents taking their twins—Mary and John—to a park where there is an ice-cream vendor. The parents buy two ice creams and give both to Mary. John's wails provoke a search for an appropriate redistribution of ice creams. The parents take away one of the ice creams from Mary and hand it to John. Anger, resentment, bitterness, envy and rage distress the rest of the day and divide family members. If affection and emotional support are similarly distributed and redistributed, deep and divisive scars result. The lesson: we don't need a "better" or "right" redistribution; we need to distribute more equally and democratically in the first place.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Capitalism's "conservative" defenders yet again oppose raising the minimum wage. They fought raising it in the past much as they tried to prevent the Fair Labor Standards Act (1938) that first mandated a U.S. minimum wage. The major argument opponents have used is this: setting or raising a minimum wage threatens small employers. They may collapse or else fire employees; either way, jobs are lost. What is conveniently assumed here is a necessary contradiction between minimum wages and small business jobs. That assumption enables opponents to claim that not setting a legal minimum wage, like not raising it, saves jobs. The system thus presents very poorly paid workers with this choice: low wages or no wages.

"Liberals" in the United States have mostly accepted the assumption of that contradiction, the necessity of that final choice. However, they try to demonstrate that the social gains from a higher minimum wage would exceed the social losses from the reduced employment they admit. Their idea, in effect, is that a higher minimum wage would increase demand for goods and services. Any workers fired because of the minimum wage would be rehired elsewhere to meet the rising demand. Countless empirical studies by conservatives and liberals yield, as usual, correspondingly conflicting conclusions.

In the actual history of U.S. capitalism, the minimum wage has been undercut from the outset. In real terms (what the minimum wage can actually buy), its long-term decline began from a peak in 1968. It was last raised in 2009 (to $7.25 per hour) despite a rising consumer price index every year since then. U.S. business interests plus the "conservative" politicians, media, and academics they support have inundated the public with the idea that raising the minimum wage will hurt poorly paid workers (by losing mostly small business jobs) more than help them. This debate over the minimum wage, intensified whenever proposals to raise it gain public attention, has been "won" chiefly by the conservative/business side.

Despite its political effectiveness for conservatives and big business till now, their argument—like the entire debate—is flawed logically. Its underlying, shared assumption is unnecessary and inaccurate. It serves chiefly to undercut the level, purpose, and social effects of the minimum wage in the United States.

Paying a decent living wage to workers by raising the minimum wage need not threaten the viability of small businesses. The latter need not collapse nor fire workers when minimum wages are raised. Indeed, raising the minimum wage can and should be one basis for a mutually beneficial alliance between wage workers and small businesses.

Few dare quarrel with the notion that in the U.S. today, paying the federal minimum wage of $7.25 per hour is an outrage against decency. It is among the very lowest minimum wages of industrialized economies: quite the achievement for one of the "richest countries in the world." So the defense of such an outrage has always begun by focusing attention elsewhere. We are asked to sympathize with the small businesses whose profits and thus viability will be undone if they are required to pay a raised minimum wage. We are asked likewise to sympathize with the plight of minimum wage workers who will become jobless when their employer cannot pay a raised minimum wage. Thus the conclusion beloved by opponents of raising the minimum wage: it lies in the interest of low-paid workers and small businesses to join the opposition to raising the minimum wage.

So many flaws attend such logic that it is not easy to decide where to begin its demolition. We might note that it clearly implies that were we to drop the minimum wage even further, below $7.25 per hour, we might achieve lower unemployment rates. But that is so gross an idea that right-wingers rarely go there. They don't dare.

There is a parallel example we can draw from the history of wage workers when they included children as young as five years old. The parallel logic then held that allowing child labor (with the oppression and abuses it entailed) was doing poor families a favor. Were child labor to be outlawed, capitalism's defenders then insisted, two tragedies would necessarily follow. First, poor families would suffer an income loss because they could no longer sell their children's labor power to capitalist employers for a wage. Second, businesses whose profits depended at least partly on low-wage child labor would collapse and render adults jobless too.

It is important to note that after sustained political agitation, child labor was in fact outlawed. The logic of its defenders was rejected and rarely resurfaced afterward even in right-wing and "conservative" literature. Former capitalist employers of children found other means (paying adults more, improving productivity, economizing on other inputs, and so on) to profit and grow. As we know, U.S. capitalism over the last century prospered without child labor. And where U.S. capitalists relocated abroad to employ children, opposition there has replicated what happened in the United States, albeit slowly. What happened to child labor can and likely will happen as well to abysmally low minimum wages.

How then might a civilized society raise its minimum wage to provide a decent livelihood to workers and protect its small businesses? The solution is straightforward. Offset the extra labor costs for small businesses from a higher minimum wage by providing them with some combination of the following: a new and significant share of government orders, tax breaks, and government subsidies. Such supports now overwhelmingly favor big business and thereby facilitate its many efforts to destroy and replace small businesses. Those supports should be reapportioned with special consideration/targeting for small businesses. To be eligible, small businesses would need to show how raising the minimum wage increased their total wage bill. In this way, society can concretely support small business and a decent minimum wage as twin, shared social values.

In effect, this proposal changes the terrain of the minimum wage debate. It brings into stark relief that raising the minimum wage leaves open the question of which part of the employer class will bear the burden of compensating for that in the short run. An effective political coalition of low-wage workers and small businesses could require big business to pay by losing some of its government business, paying higher taxes, or obtaining lower subsidies—all to compensate small businesses for a raised minimum wage. For decades, an alternative political coalition—of big and small business—blocked or delayed minimum wage increases. Nothing requires this latter coalition to always or, indeed, ever prevail over a competing coalition of labor and small business that seeks a higher minimum wage for one plus greater state supports for the other. Likewise, nothing warrants continuing the current debate over raising the minimum wage as if only small business would always have to absorb its possible costs.

The debate over the minimum wage has been lopsided for a very long time. Uncritical media coverage of the debate has allowed big business to evade its proper share of paying to sustain a viable small business sector. Meanwhile, workers and small businesses pay taxes that favor big business. Most Americans want a thriving small business sector. Most also increasingly criticize big business: "antitrust" remains part of government regulation as well as a part of popular ideologies. We can and should correct the old debate now to enable a different political coalition to shape minimum wages in a different way from the past.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Modern capitalism began in England in the 17th century and spread eventually throughout the world. Its particular evolution produced a global economy organized around centers and a periphery (colonized economically and often politically as well). In those centers—chiefly Western Europe, North America, and Japan—capitalism concentrated its accumulating assets. Factories, offices, stores, distribution centers, and transport networks built fast-growing cities. Supporting institutions of government, schools and universities, and hospitals likewise grew into the centers of urban capitalism especially in the 19th and most of the 20th century.

However, new centers of capitalism have emerged and grown especially quickly over the last half-century. China, India, and Brazil are leading examples where jobs, real wages, consumption, profits, and investments are growing. Their size and global impact not only make them the new centers of capitalism but also require attaching the adjective "old" to capitalism's earlier set of centers.

The blunt truth of modern economic development is this: capitalism is leaving its old centers and relocating to its new centers. About this leaving we can and should borrow the phrase: this changes everything.

U.S. capitalism achieved global dominance during the 20th century after two world wars plus anti-colonial movements destroyed the European empires that might have contested for such dominance. Impressive as it was, U.S. capitalism's dominance did not last long. With no little irony, it was the big capitalists of the old centers whose profit motives led them to leave and help create new centers. The latter's much lower wages and fast-growing mass consumer markets drew them. Many of the biggest capitalist corporations relocated (or expanded) from the old to the new centers. As those corporations that moved early profited mightily, competitive pressures accelerated other corporations' decisions to follow their example. Capitalism's relocation of its centers continues.

The U.S.'s economic footprint in world trade and capital flows has been giving way steadily to other countries' rising footprints. The global dominance of the U.S. dollar confronts increasing transactions using other currencies. Trump's wholesale attacks on China via trade wars, tariff impositions, and persecutions of individual Chinese corporations and executives did not stop or change China's economic development. Neither did the hostile denunciations of China's policies on Hong Kong, its Uighur minority, intellectual property, and so on. Across 2020, China's economy grew 2.3 percent while that of the United States fell by 3.5 percent. China's record on containing COVID-19 proved far superior to that of the United States. In short, no end, let alone reversal, of the relative decline of the United States vis-à-vis China occurred.

The aspects and implications of such relocating capitalist centers touch almost every aspect of our lives. The costs and debts plaguing U.S. higher education contrast sharply with the huge expansion of Chinese higher education. Even starker has been the contrast between China's preparedness and containment of COVID-19 and that of, say, the U.S. and the UK. Of course, in terms of public health, India and Brazil show that even new centers of capitalism can experience severe difficulties when their governments fail to mobilize both private and public resources to achieve prioritized social goals (like defeating a virus or maximizing sustained economic growth).

Old and new centers of capitalism deserve the same key noun—capitalism—because both organize their enterprises/workplaces in the same dichotomous way. A minority are employers while a majority are employees. The minority decide exclusively what the product will be, what technology will be used, where production will occur, and how net revenues will be distributed (to whom and for what). While old and new centers of capitalism usually display different mixtures of private and state enterprises, it is noteworthy that both types of enterprises in both centers are organized in the same employer/employee dichotomy that defines capitalism.

Declining capitalisms' problems differ from those of rising capitalisms. In the United States, Western Europe, and even Japan, many capitalist corporations pursue defensive strategies (relocating elsewhere, merging, or shrinking). Cost-saving automation is often the more attractive profit-raising strategy than output expansion. Thus, communities agonize over "runaway shops" and joblessness cutting tax revenue: must they reduce public services or impose rising government debt burdens? Real wages stagnate. The jobless move or emigrate looking for work and disrupting their and their families' lives. Inequality soars as the top 5 percent (major shareholders, top executives) get most of the profits from relocating capitalism to low-wage countries and from automation. The other 95 percent struggle to minimize the costs and burdens on them from capitalism's relocating centers and other profit-driven strategies.

In contrast, China, India, and Brazil have the problems of fast-growing capitalism, rather like the problems that beset 19th and early 20th-century capitalism in its old centers. Resistance, unions, and socialist movements arise from workers streaming into cities and industrial jobs and adopting correspondingly new ways of thinking and being. Crowding, environmental pollution, and inadequate housing and sanitation trouble the new centers more or less. Ruthless competition produces horrific working conditions as does internationally mobile capital seeking quick profits. Business cycle instability and deeply embedded tendencies to ever-greater income and wealth inequality provoke social criticisms. The latter are often borrowed and adapted from the labor, socialist, and communist movements that grew in capitalism's old centers.

On the one hand, the movement of capitalism from old to new centers plunges the old into a long-term decline evident in decaying industries and cities. Politics shifts away from prioritizing growth, adjudicating internal conflicts in ways that reproduce growing capitalism, and shaping the world into a distinctive center-periphery pattern. Instead, policies shift toward maintaining the global status quo against the many forces eroding it. For many politicians that shift of focus degenerates into scapegoating amid cascading social divisions and decay.

On the other hand, capitalism finds profitable new territory in its new centers. Growth there offsets a decline in the old centers. The global 1 percent get richer because they draw increased wealth from both the old and new centers. What happened inside capitalist countries—movements, say, from old Rust Belt centers to new high-tech centers—has been transposed onto the world as a whole.

The great social question is whether the different problems of capitalism in both its old and new centers will cumulatively undermine the system or provide it with a further lease on life. Perhaps growing conflict between old and new centers—expressed, for example, in the struggle between the United States and China—will follow the ancient path from economic to military conflict. Then the great social question will go unanswered and global capitalism would have fulfilled one prophecy of its critics: that its internal contradictions will prove self-destructive.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.