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Tuesday, August 22, 2017


Sandwiched in between comments on the eclipse and May-December romances were as number of interesting comments on my socialist musings, to which I should like to respond.  First of all, my apologies to Jerry Brown.   Of course social savings means the allocation of a portion of the annual product to investment.  I was not suggesting that society should build fallout shelters stocked with forty years of groceries.  I am afraid I was just assuming everyone would understand that.  And yes, Howie Berman, there is money, there are art museums [assuming people want them], there will, I should imagine, be small businesses, and perhaps some big ones as well.  Stock markets?  Interesting question.  In a huge, complex economy like that of the United States, there have to be institutional mechanisms for allocating investment capital.  Capital?  Of course.  Without capital, we will all be ranging across the foraging for nuts and berries.

Let me begin by recalling the central point of my essay, “The Future of Socialism.”  [There really is no convenient way to talk about an extremely complex subject without assuming an acquaintance with what one has written previously.  This is not a subject for sound bites.]  I built that essay around Marx’s brilliant insight that new economic formations develop “in the womb of the old.”  I argued that central planning and the substitution of quasi-political decision making for simple response to the workings of the market was happening right now exactly where Marx would have predicted, not in government departments or on collective farms but in the executive offices of great corporations.  This transformation, a necessary precursor to socialism, is, I argued, not a consequence of the brainwashing of corporate executives by their rad-lib Ivy League professors.  It is a transformation demanded by institutional developments within corporations as they internalize decisions that can no longer be made merely by heeding market signals. 

The evolution of capitalism into an economic system suitable for socialism is happening right now.  True socialism cannot be imposed on a capitalist system unprepared for it, any more than mature capitalist production could have been introduced into medieval France by an inspired king.  Whether socialism will replace capitalism is, alas, not inevitable, or even likely, for reasons I outlined in the essay I have several times referenced.  But it is possible.

A second point, derived from my reading of Thomas Piketty’s important book, Capital in the Twenty-first Century, about which I wrote and posted a 9,000 word review three years ago.  For reasons that Piketty undertakes to explain, hereditary – or, as he calls it, patrimonial – capitalism has historically been the norm and is reemerging now, after an uncharacteristic retreat in the generation and a half after the two world wars and intervening depression of the twentieth century.  When I ask myself:  What single dramatic step would, more than anything else, move America towards socialism?,  the answer that comes back is:  Impose a 100% inheritance and gift tax on all estates greater than fifty times the median annual income of American households [roughly 2.5 million dollars].  The wealth thus taxed would become the property of the state.  Over not too much time, vast swaths of accumulated capital would be collectively owned and managed.

A response to F. Lengyal’s comment about wage incentives [I apologize for picking and choosing which comments to respond to – there were many worthy of extended replies.]  Let me talk personally about this subject of incentives to work.  [Never mind so-called Game Theory analyses, all of which strike me as simply useless.]  Leaving aside university teaching, which, as Kant says about something else in the Preface to the First Edition of the First Critique, is “rather an amusement than a labour,” I have had a total of four real jobs in my life.  The first, as a sixteen year old high school graduate, was as a waiter in a posh summer camp.  The second, as an eighteen year old after my sophomore year at Harvard, was as a Copy Boy on the old Herald Tribune.  The third, as a nineteen year old college graduate, was as a counselor at a benighted summer camp in Vermont.  And the fourth was my six months in the U. S. Army.  I have never worked in a factory, or in a business office, or in a hospital.  I have never driven a semi, or harvested grapes, or ridden a garbage truck.  So my personal knowledge of the work world is confined to observation.  Here is what I have observed.

Most people work very hard [leaving to one side professors], especially people who earn low wages.  Raising workers’ wages does not lead them to shirk their work, or goof off, or “choose leisure over income.”   For nine years, before moving to a retirement home, my wife and I hired a firm called Molly Maids to clean our apartment every two weeks.  Two women spent the better part of two hours on this job, for which we paid Molly Maids $108.  I asked one of the women how much she made, and she said just under ten dollars an hour.  Since I believe that $15 an hour ought to be the minimum wage, I took to paying each of them ten dollars extra, to bring them up to that minimum.  This was not a tip, it was a wage supplement.  After I started this practice, there was not the slightest change in the character of their work.  If their employer had raised their wages to fifteen dollars an hour, I am absolutely certain they would have done an identical job in every house or apartment they cleaned.  They simply would have made fifty percent more money.

Let me give another counterexample.  Pay in the U. S. military is rigidly determined by rank and years of service in rank [leaving aside housing allowances and some other things of that nature.]  The top pay, for a four-star general with lots of years in grade, is $186,998.40 a year [assuming that I am reading correctly the chart I found on line.]  To reach this rank requires not only a good deal of work but also, almost certainly, service in a war zone, probably a number of war zones, where one can quite easily be blown up or maimed for life.  That is not quite as much as a second year Associate, two years out of law school, makes at Cravath, Swaine, and Moore, a big time law firm.  And yet, the U. S. Army is one of the best run, best managed huge conglomerates in the world.  Lord knows, it is better run that Sears, Roebuck, where my first father-in-law served as Vice President of Public Relations for a while.

The talk about incentives, tricked out with pseudo-math or Game Theory gobbledygook, is a transparent ideological rationalization for keeping the wages of workers low so that profits can swell.  I have a great many uncertainties about socialism, but workers goofing off is not one of them.


Enam el Brux said...

Thank you for your reply. I'm inclined to the same conclusions. What I find interesting is the position that socialism cannot motivate workers is immune from the research that indicates that monetary incentives backfire. Executives and CEOs must be well compensated or they will take their marbles and leave, but economic incentives for employees will backfire. [Forgive me for linking to my own Op Ed. This was a joke that was taken seriously.] We heard the same during Occupy Wall Street from entrepreneurs who threatened to close up shop if their taxes were raised. My question to them was this: why is that a threat? Close up shop. If the "market solves all problems" (whatever this means), then someone else will come along to fill the void. [Incidentally, my surname is spelled 'Lengyel' -- this is the Hungarian word for Polish.

Robert Paul Wolff said...

First, my apology for the misspelling. I loved the op ed. You may have meant it as a joke, but the logic is impeccable, and hence it is only time ... After all, if I have an MRI, it is likely to be read in India! Congratulations on the op ed, by the way.

Enam el Brux said...
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Enam el Brux said...
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s. wallerstein said...

One of the major problems in current society is that the banks and big corporations have almost unchecked power. We need to balance that power with government regulations, strong unions, independent media and blogs like this one.

However, in a socialist society wouldn't all the power be concentrated in the hands of the government and the democratically elected managers? Maybe those who run the socialist government and the managers would come from the same party. Since everyone is going to be paid well, no one has much interest in rocking the boat. As a result, corruption sets in, not only monetary corruption, but the spiritual corruption that affects all of us if our power goes unchecked and uncriticized. The media in a socialist society, whose directors would be democratically elected too, probably would form part of the same ruling elite and there would be no counter-elite or protest from below to make life uncomfortable for them.

The Norwegian (or Swedish or Danish) model seems preferible. We have a private sector and a strong government with power to regulate capitalism and strong unions; and they all keep an eye on one another, so that no one can get too spiritually or economically corrupt.

howard b said...

On the weighty topic of war and peace- contra Friedman who stated flatly two countries with a McDonald's would never go to war, would two truly socialist countries go to war, or would the odds be lessened out of solidarity?
Greek city states warred all the time, but have you any thoughts to speculate with?

Unknown said...

Nationalism overcame the MacDonald's thesis in the Balkans. I see no reason to suspect it wouldn't overcome socialism as well. Working class solidarity pretty much melted away in the patriotic fervor of the 1st World War.

s. wallerstein said...

The U.S. invaded Panama in 1989, and there were MacDonalds in Panama City when I was there in 1984.

Unknown said...

I see that Piketty's book is out in paperback now. It will be interesting to see how it does. I, for one, thought his argument was powerful. It seemed to me that it could be refuted only by discrediting his data, and so far as I know, that hasn't been done. All of this leads me to wonder why the book hasn't had any apparent impact on policy debates, apart from its first burst into the headlines and the best seller lists. Your reference to him is the first I've seen anywhere in a long, long time. I'm not referring to politicians like Sanders and Warren--it would be political suicide right now to advocate Piketty's remedies for the fact that R > G. But where are the scholars and the columnists? Whey aren't the inhabitants of the think tanks running with this?

Enam el Brux said...

David Palmeter asks, "where are the scholars and the columnists?" Here's an article published on May 12, 2017 in the Boston Review: Why are economists giving Picketty the cold shoulder?

Unknown said...

Thanks very much for the link. It looks like the establishment couldn't handle his popularity.

Jerry Brown said...

Professor Wolff, I am very happy you were not talking about social savings as stockpiling commodities for the future even though that is really the only way that a country like the US can have it's government 'save' for the future- in the typical sense of the word. And I really didn't think you were trying to do that but you would be surprised about the amount of confusion that exists about this topic. You have a very erudite group that follows your blog and you're no dummy either, so it is me who should apologize for trying to point out the obviously obvious. So I apologize if no one thinks that if the government taxes more today, or spends less today, that would allow it to save up to spend more in the future.