Transcripts For LINKTV The Cure For Capitalism 20170102

To the Economic System and our position in i it than perhaps yu have heard before. And even more important, and what this book is about, an alternative solution for dealing with it different from what you might have heard before. So, first, where are we here in the United States and in the woworld economy . And im not gonna tell you what you already know, which is that this is the worst economic crisis in myy lifetime and therefofore in you, that it began in 2007, which means it is now coming to the end of its fifth year and that there is no end in sight, that the efforts of governments around the world, including the United States, to end it long ago have not proved successful, that the prognosis is not good, that the problem is almost like a disease in the sense that it begins in the United States in 2007, 2008, and 2009. The europeans look at the United States and thank their lucky stars that it isnt so bad only to discover that it has metastasized over there. And the last 2 or 3 years, its a terrible problem in europe, and americans are thanking their lucky stars that it isnt quite so bad here. The chinese arare discoverering that it is sprpreg to them. The russians and the indians have already discovered it, and the United States s is nowow beginning to recognize that our own chances of coming out of it are being undercut by the realities in russia, china, and so on. It keeps going because they h havent found a sololuti. Most of the effort to explain it involves games of blame. Right now, were all aware that the republicans blame the democrats and vice versa in an endless chorus that begins to sound the same after the 14th speech by whoevers looking for a job promotion in whichever party. And then the blame goes beyond that. People on the left like to blame bankers. People on the right like to blame poor people who take out loans. So forth and so on. I want to break from all of that. I want t us to acknowledge that in this Economic System that we have which has a name; its called capitalismtthere are a set of rules. And that most people, because they really cant avoid it, play by those rules. Bankers make loans in order to make moneney. Corporations dodo whaty do in order to make money, because thats what the people who make decisions in corporations are hired to do, and working people try to have a job thats s decent and try to earn an income. And if they cant do what they think they ought to do as good citizens, as good parents with the jobs and incomes they have, well, then they borrow money, and that works out real well because the banks are real eager to lend it to them, and we have everybody performing pretty much the way they are supposed to. When a society has people who are all playing by the rules and can show you that thats what theyre doing and the end result is the kind of disaster we have, then it isnt any more appropriate to blame this or that actor. Its time to recognize that the system of rules is the problem. Everybodydys playing by y the rules. Everybody hopes that will all work out, butut it doesesn. In my profession of economics, we have a great philosopher with which all economics courses begin. His name is adam smith, and hes famous for ththe following line if everyrybody pursues his or her n selfinterest, itll work out for the best for everybody. Most of you know that thats silly. Its a wonderful rationale to go out there and do what you want for yourself and not care about anybody else, but where that leads is exactly where we are. In a very, very bad crisis. So, lets begin by analyzing this crisis as the crisis of a sysystem. And well go on to talk about this system even when its not in crisis, because thats as big a problem as the crisis itself. But crisis is where we are. 2012 is the fifth year of this crisis. What does that mean . First and foremost, it means that we have in the United States today something on the order of 20 million to 25 Million People who either dont have a job at all, have been without a job long enoughgh that theyve given up looking socalled discouraged workers or folks who have to take a parttime job because thats all they can find, but they would like to have a fullttime job. T the bureauf labor statistics in washington keeps records like this. And so, its roughly 20 million to 25 million of our fellow citizens, something on the order of 15 , 16 of our workforce. Thats staggering. Alongside of these peoplele, theres anotherr statistic. T this one comes from the Federal Reserve. Its a statistic called the Capacity Utilization rate. It measures what proportion of the tools, equipment, machines, office space is being used foror prododuction and what part is sitting idle, what part of our capacity is being utilized. And the Federal Reserve has now pointed out, for some years its roughly hovering around 20 is not being utilized. D. 20 of our tools, equipment, machines, vehicle fleets you name itsits idle. Ok, you dont need an advanced degree in economics i have one, but you dont need itto understand that if there are 20 million to 25 Million People who want to work and dont have a chance, and we have 20 of the tools, equipment, Raw Materials for those people to work with, that a system that cannot put these two together to produce a quantity of wealth that would solve most of our social problems quickly is a system that doesnt work very well. Thats a fundamental problem of our Economic Systemthat it produces a crisis of this sort. I wont take the time to tell you the details of what happens to people who are unemployed, particularly for long periods of time, and the current unemployment is very long for people who are without work. They suffer selfesteem problems. They suffer mental and physical health problems. Their families are more likelely to break up. They losehehe skillss that they once had whwhen theye out of work k for long p periodf time. Their children have more difficulty in school. The costs of these kinds of crisis last for generations. The amount of human damage, the amount of waste of resources is beyond calculation. A system that does this, let alone a system that does it repeatedly, cannot talk about efficiency because whatever the efficiency is of a particular factory or a particular production process is completely overwhelmed by the inefficiency of massive numbers of unemployed people, unutilized resources, and lost output that could meet sociaial needs. But its worse. Its not just that were in a crisis now of horrific proportions for 5 years. Its that this is the second major breakdown of t this capitalist system in the last 75 years. The last one was the 1930s. Begins in 1929 and d isnt realy over until 1 1940, 41. A terrible crisis. And between the end of that one in the 1930s and the beginning of this one in 2007, the National Bureau of economic research, which is the official agency that counts crises, counts 11 more11 more downturns in which millions of americansand im not even talking about other countries lost their jobs, capacity unutilized, output foregone, again and again. Crisis is not an occasional interruption. Crisis is part of how this system works, and it always has as far back as the last 200 yeyears of capitalism. It has a crisis every few years. And its important to stress this, because politicians tend to like, for obvious reasons, to characterize each crisis as if it were a special occurrence. So, for examplple, every presidt in the United States since Franklin Roosevelt has, during his tenure as president , had at least one economic downturn. Every one. And every president said at one point, here are the policies i am proposing, and they have 2 great qualities. Number 1they will get us out of this crisis. And number 2 they will make sure we never have a crisis like this again. Every president promised it. No president has delivered on the promise yet. That tells you somemething. The system is crisisprone, and that is a very serious defect to say the least. But i dont want to limit myself to crises. I want to also talk about the system when its working well, when the unemployment is relatively low. What happens then . First, capitalism has a tendency everywhere to polarize income and wealth. Its a kind of driven system in which the competition, as you all know, of Enterprises One with tthe other, is p pretty cutthro. And most of the time, the company that wins the competition literally eats the one that has been defeated buys its equipment, hires away its workers, and so we get the everlarger winners. Thats why most Big Industries have 2 or 3 left. Theyve consumed all the others. They become very big and powerful. These days, they become so big and powerful, theyre all household names. And when they begin to have trouble, they make us all pay for their problems by telling us theyre too big to fail. Thats how big theyve come. So, we polarize in a capitalist system. We produce poles of great wealth at one end and poles of real poverty at the other. Sometimes, sometimes when the system really breaks down, masses of people get so angry that they begin to push back. Very interesting. In america, that happened in the 1930s when we had a terrible depression, when the unemployment rate, which today is about 8. 5 officiallythe number of adults looking for work as a percentage of our lababor forcece. If you k at the comparable number in the depths s of the depressi, itit was 3 times that25 . Rereally very bad. And interestingly in the 1930s, the American People pushed back. They were not passive. They were active. Let me tell you what they did, because its a part of our history that americans tend not to learn too well in school for reasons i will leave to your speculation. We had the biggest Labor Movement organization that the country ever had. Something called the congress of industrial organizations organized millions of workers in the 1930s in the depths of the depression. Workers who had neverer been in a union before. Wed never seen that in the United States. We had never seen it before, and weve never seen it since. In the midst of that misery of a depression, of that poverty, American Workers decided that a labor union could maybe save them, and they were ready to join. And joining was often tougugh, workingng against government, working against a corporation, working against the police. Alongside the unions, the c. I. O. That did the organizing, were 2 other institutions that were important then, and that may susurprise youou. Socialist partrties here in the United States and the communist party of the United States were powerful. They had a lot of people,e,nd they worked together with the c. I. O. And together, they went to the government at that time, andnd they said 2 things we represent the mass of working people, anand we dont want toto suffer the way were suffering in this breakdown of capitalism. You gotta do something. And they addressed themselves to a kind of middleoftheroad democratatic politiciawhwho had just gotten elected president on a program of a balanced budget Franklin Roosevelt. And they said to him, youve gotta do something for the people. And the socialists and communists said, you gotta do something for the peoeople, but they added a little barb, because we think that theres a better system, an alternative system, to capitalism. And if you keep performing as badly as youre doing in the depths of the depression, were gonna try to establish that alternative. And they pointed across the ocean to the soviet union, said, see . Like them. That scared folks. And mr. Roosevelt was a good politician, smart. He listened, and he responded because he knew politically that these 3 forcesc. I. O. , socialists, and communists had enormous support in the United States, they were very powewerful, and that thehey could mount a serios problem for this country. S so, roosevelt went to his friends. You know, he came from a very wellestablishehed, very y wealy family. And he went to his wealthy friends, many of whom were businessmen, and he saidid look, i think i gotta do something here, because if i dont, wewere gonna have a lof trouble. E. And, dear gentlemene, you who are very wealthy and you who run the big cocorporations, not only d do i think we need to do this, but youre gonna have to pay for it. The government has no money. Were in the depression. Nobodys paying any taxes. Nobody has jobs. So youre gonna have to paythe rich and the corporations. And heres what youre gonna pay for. Im gonna take care of the people. Im gonna help poor people, unemployed people, an American Population thats in trouble. Im gonna help them bigtime, and youre gonna pay for it. And you know why . Because if you dont, coming down the road are thohose socialists and communis, and theyre gonna cut you a lott less attractive deal. And, you know, Something Interesting happened. The Business Community and the rich were split. Half of them did not buy that argument. They were not convinced by mr. Roosevelt. But half of them were. And roosevelt was a good polittician. With h half ofof the businesses in his pocket, he knew he could count on the c. I. O. , the socialalists, and t the communists to kind of work something out, and here was the deal. Im gonna get the money from the corporations and the rich. Im gonna help you on a scale youve never seen before. And in return, youre gonna stop talking about getting rid of capitalism. Youre gonna mute that part of your message. Youre gonna celebrate me as the guy who gives the mass of people something they never got before. So, what did roosevelt do . Three interesting things that ill mention. Onehe created the Social Security system. We never had that before. In the midst of a depression worse than today, when theres no money in the hands of the governmentnone is coming in; its rereally hard; e cant do anythingthe president goes on the radio and announces that every american over 65 years of age whos had a lififetime of work k is now ga get money from the g government for the rest of his or her life. Thank you very much. What . Where would all the money come from . But you knknow. Ive already told you. From taxing the corporations and the rich. And no sooner did he do that than he announced another new program unemployment compensation. We never had that before in the United States. In the midst of a depression, when tens of millions of people are out of work, the presisident anannounces, i want to tell you all that everybody who is out of work is now gonna get a government check every week for a year or two to make this easier. And whos gonna pay for that . Mmhmm. The corporations and the rich. But now comes the third program. President roosevelt says, if the private enterprise system of the United States cannot provide work to tens of millions of american citizens who want to work, well, then, ill do it. And between 1934 and 1941, roosevelt created and filled 12. 5 million jobs. Well, youre hired by the federal government. And who paid for all of that . Mmhmm. The corporations and the rich. Wow. Im not describing the sovoviet union or some fanty or some impossible dream. Im just describing american histstory, and not soso long ago, either. Wow. Just to drive it home, roosevelthow did he actually do this . He was very courageous and clever. In the midst of world war ii, to make this point really strong, he proposed a novel income tax. Heres how it would work. Above a certain leveland the level in those years was 25,000 a year the income tax rate that would have to be paid ispresidens proposal100 . Thats right. 25,0,000 a year would become a maximum income. You know how we h have a mminimum wage . This would be the maximum income, the other end. The republicans, predictably, went crazy. And they fought and they yelled, and they reached a compromise. And the compromise was that above the top, the highest rate, the richest americans would henceforth have to pay 94 . The law signed by the president. If you were rich in the 1940s, every dollar over the top limit, the highest bracket that you earned, you got to keep 6 cents. And the other 94 cents went to the president and to the government. And, by the way, in the 1950s and 60s, it continued. 91 was the top bracket. Republicans endorsed it. Democrats endorsed it. Republican and democratic president s maintained it. And, by the way, why . The answer was easy, and everybody understood it. It went like this. We have just come through the greatest depression of our economic life, the 1930s, followed by the most severe e wr threat wewve evever had, world war ii. The country has to pull together to overcome and rebuild from these two great sequential crises, and from each must be taken their capacity to contribute. So weere taking from the rich theirr capacity. Heres some statistics for you. Beside theincome tax on individuals, in 1945 i did a little calculation for every dollar that the federal government got in income taxes on indivividual, it got from corporations 1. 50. Corporations as a whole paid taxes on their profits 50 more than individuals as a whole. Whats the relationship today . For every dollar that is taken from individualals, corporations totoday contribute 25 cents. And whats the highest tax bracket . Is it the 91 of the fifties and sixties . No. Its 35 . Whats the lesson here . In the 1930s, the gap between rich and poor was reduced because the government took from the rich to take care of the mass of people who had been suffering in unemployment and poverty through no fault of their own. Through the breakdown of the system. No sooner was the war over than the Business Community and the rich went to work to undo what had happened in the 1930s. To undo the high taxes on corporations and brbrig them down to where i just told you theey were, to undo the tax on wealthy people to bring them down to where they are todayy. And therein lies a lesson that it was the upsurge of a militant organized working class that overcame for a while the tendency of capitalism to popolarize. Butut the lesson here was better learned by the business andnd the ricich than by the wog people because the business and the rich went to work. No sooner wawas the war r over, they went to work to undo what had been done in the 1930s. The economic history of the United States in the last 30, 40, 50 years has been the undoing of the new deal. That was the name roosevelt gave to what he did in the 1930s. From which the following lesson can be further distilled. The problem for corporations and the rich, who keep running a system that plunges us into crisis after crisis, who have really no effective way to prevent them, who likewise tend to polarize into rich and poor, the problem for corporations and the rich is thistheyve got an Economic System that constantly provokes the mass of people intnto thinkg that they might be able to use the political system to offset the effects of the Economic System. The danger for capitalism has been, if you actually give everybody the vote e that thehe vote wille the way. The political way will be for the majority to recoup for themselves in politics what they lost in the capitalist Economic System. That is a great fundamental danger for capitalism. And how has american capitalism, and that in other countries, dealt with this . And the answer is, youve got to control the politics. Because if you dont, it will come back and undo what youve achieved in your economic life. They learned that in the Great Depression by watching what the c. I. O. And the socialists and the communists did. So in the last 50 years, the Business Community went to work. They destroyed the Labor Movement. They destroyed the socialist parties. And they destroyed the communist parties. I dont have the time to go into that. But if you read your history, youll see it. In the private sector of the United States today, the official percentage of workers that are members of a unionrepresented by a trade unionis under 7 . 93 of private Sector Workers in the United States have no union. The notion of unions as a powerful social force requires a lack of understanding of whats going on in our society that boggles the mindnd. So what have we got . Weve got all the mechanisms in place that allow the Business Community and the wealthy to control the politics. You u all know these stories. Theyre the ones who fund the candidates; theyre the ones who fund the parties; theyre the ones who hire huge armies of lobbyists to o work on an ongoig basis with whoever gets elected. And they fund all these think tanks that produce endless resources and reports and researchers and specialists for the radio and the television to shape the consciousness of what americans sesee, hear, and think. And the end result are events sort of like the two political president ial conventions in which not a word is said about the system, not a word is said of the sort ive just finished telling you about in which they each blame each other as if the politicos had the power to do much about all of this. But theres no systemic analysis, no systemic recognition. What else about this system is bizarre . Well, one of the results of the shaping of consciousness is the following kind of really strange idea. It goes like this if you give corporations a chance to make profits, then good things will happen. So, for example, we have to create a profitable Business Climate because then businesses, say by cutting their taxes or by deregulating thth or by allllowing them to do all kinds of t things, then good things will happen to the rest of us. Theres a simple logical problem here. If you cut the taxaxes of businessss, then they have m moe money because their taxes are lower. What they do with that money is their decision. And their decision is governed by making as much money as possible. That might mean that they will create a a job, ok, but not h here. In a place where the wages are much lowersay, in asiawhich might be nice for them but isnt particularly good h here. Or they might lend it to a gogovernment or theyey mighthy the stock market. Or they might doi dont know lets see. What did they do over the last 30 years . The most impressive things bibig corporatations did w with the money they saved from taxes and with the profits they were able to get from deregulation, really, one of the most spectacular things they did was to begin to pay Corporate Executives at the top stupefying amounts of money. We are the leader in the world im sure youre all proud were the leader in the world in the gap between what we pay our top executives and whatat the average worker i in that company that the execututie is leadining gets. In other places, the numbers are like 30, 40 times. In our country, its 300 or 400 times. The big people at the top took the advantage of the lower taxes they had to pay to make themselves stupefyingly rich, which in a Free Enterprise theyre free to do. The notion that if you do something good for a corporation, they will in some sense pay you back is childish. Thats not what they do. Thats not what theyre hired to do. In this system, they always try to pay fewer taxes. They always try to find the most profitable thing they can do with their money. What that does for the rest of us, who knows . But theres no control here. Its also like allowing a company to go and close a factory in cincinnati and open it in shanghai. The justification of the logic of the way our culture works is, well, we will all benefit because the prices that they will charge for the things they make over there will be less than what they but t theyre not required to do that. When they close the factctory here and g go to china, its p precisely with the big idea of selling the good at the same price to you in the supermarket but just having to pay lower wages to get it manufactured over there. Why should they lower the price . They make m more money if theyy didnt. Its not theieir job, as they will explain to you, too take care of the american economy. They werent hired by ththe american economy. They were hired by the shareholders of that company to make money for that company. Every technological breakthrough made by capitalism in the last 300 years has been justified by whoever was making it on the grounds that, with this new machine, or, with this new process, human labor will be less drudgery. Machines will replace people. We will not have to work so hard and so long. How interesting. According to the oecd, americans today, where we have the most advanced Technological Breakthroughs imaginable americans today do more hours of paid labor than any other working class in any country on the planet. Where was all the leisure supposed to come from . All the work that was saved . Less work for mom from all those appliances in the store that you could b buy. Meanwhile, mom has to go out and work because the family cant survrvive unless she does. Shshes not doing less work. She now has two jobsthe one in the house and the one in the labor force. Its absurd. And, by the way, thats not the fault of the technology, which really was liberating, but its the fault of a system that has to keep making money whether the techchnologys advanced or not and driveses people, because thats how it makes money. Y. Last thing about this system before i talk about a solution not only does it produce crises and the terrible waste and damage, not onlyly does itit polarize unless people react, and not only does it deny us the fruits of tecchnical change, the fruits of all kinds of breakthroughs, but, even more, what it does to us as individuals needs to be understood. And d thats a perft transition to what i think the solutition is. Most productn in the United States is done by large corporations. We are a society that celebrates Small Businesses. Theres something very poignant about that. Small businesses, we are told, are the backbone of america. No, theyre not. Big business is what runs this economy. Small business is a long, old story. Small business, we are told, creates 3 out of 4 jobs. Quite true. Small businesses also go out of business on a scale that is fantastic and loses 3 out of 4 jobs. See, that little detail is left out. A Small Business is a very hard thing to survive. And the reason is its dependent on big business from whom it buys many of its basic needs and they therefore control. So the big businesses are where the work and the basic employment and production is done in the United States. And how does a big business work . Its a remarkable institution. A tiny number of pepeople make all the decisions. Heres how it works the group is called major shareholders the haandful of people who have big blocks of sstock, bececause in a corporation, you get a vote for each share you own. Its not one person, one vote. Its how many shares you own. So, for example, if you own a million shares, you get a million votes. If your grandmother left you two shares, you get two votes. If your grandmother had no shares and you dont have any, you get no votes. So the major shareholders control the bulk of ththdecisions. S. And whats the most important decision they make . They select the people who run the corporation. Theyre called the board of directors, usually 15 or 20 people. And they make all the decisions to produce; how to produce; where to produce; and what to do with the profits. All the basic decisions. The vast majority of people come to work monday to friday 9 00 to 5 00, and they do what . They make whatever that board of direcectors decides that companys going to makeke, and they make it in whatever way with whatever technology that board of directors decides working on whatever Raw Materials that board of directors presents to those workers. And the board of directors decides whether the workers are here in the United States or over there in india or wherever. And when the work is done and there are some profits, the board of directors decides whats to do with it. For example, to pay the top executives spectacular salaries. Thats a decision they make. Or to move production to another country or whatever. They make that. The vast mass of the workersa thousand in a small company, 100,000 in a big one, or in the case of really big ones, say, walmart, a million. A Million People who come to work at walmart, and a group of 10, 15 people if you look at the boaoard of directctors, yol sesee a stunning number o of thm have e the naname walton. But even if you didnt Pay Attention to that, a a tiny group of people. Now, for a country that defines itself as committed to democracy, theres something stunning here. Democracy means that if youre affected by a decision, you get to participate in it, the idea being if a decision made by a mayor or a congressman or congresswoman or a senator or a president is something that affects us, which it obviviously does, then we all get tto participate. Well, uh, lets see. In where you work, what they make affects your life. How they make it with this chemical or that, that affects your health, your life. Whetherer they do it here or thy fire you and do it in another country, you bet that affects your life. So what exactly is your participation in the decisions you have to live with the results of . Answernothing. You come to work, and you do what youre told. And at the end of the day, youve poured your brains and your muscles into making something. And you know what youre supposed to do. And you all know because we all go to the same schools. At the end of the day, you leave there whatever it is you helped to make. And you go home. And if you forget and try to take with you when you go home one of those things you helped to make, a few hours later theres a knock on the door and people in dark blue uniforms hurt you and take it back. Because its not yours. You made it. Its a very clear idea. You do not participate in controlling your own product. How do you square that with democracy . There is no way to do that. And so we conveniently as a society dont ask the question. Dont think about it. Thats the success of the Business Community and the wealthy who want to make sure we dont think about it because it is an impossible contradiction of the way weve organized things. And it has extraordinary effectcts. Everyone who goes to work for a corporation feels on some levelconsciously or unconsciououslyttheir powerlessness, their irrelevance to the decisions that affect them, including whether they have the job next week or not. That inculcates in people a fafatalism, a lack of care, a feeling of rippedoffness. Id like to remind everybody that theres an interesting admission of that in our culture because on the way home from almost every corporation, when the workers are finished with the day, they pass a bar or two, which invites them to come in after w work to enjoy a happy hour, which is a very subtle wayay of reminding g them what t the quality is of the hos that precedede arrival at the b. Those are the unhappy hours. And theyre unhappy because you are a drudge. Youre a drone. Youre almost like a piece of machinenery. And so y you donte that much about your job. Youre interested in how much it pays because your excitement is elsewhere, maybe with what you can buy with the money you get from working. But the job itself for most workers is purely a means to get money. And yet its amazing, if you think about it, 5 out of 7 days for the major part of the day, you go to work. Its the most important part of your adult life. Why isnt it made to be a learning experience, a joyous experience, an experience that develops you and develops your potential and develops your understanding . It ought to be. But you accept, dont you . We all do that it isnt, that all of that is subordinated to making money, and the people at the top think the best way to make money is to stick you in a little cubicle with a little computer and throw muzak at you until you u go crazy. That has very badad effects on human b beings. And those are ramified in our culture. Many of us think that there really isnt a lot of commitment to our democratic sysystem, even in the little space we have for it, which is politics, because its excluded from our r economic systetem, in n ty i just said. But we do have it in the community, sort of. And so were kind of disapappointed that halalf ththe americacan people dont br to vote. And half of those who do bother to votete seem to be more interested in details, like whether they can have a gun in the back of their truck than in some of the larger issues that might affect them even more thanan the question of whether ththey can have a gunn in the truck. Their attitude towards politics is one of not caring that much, not learning that much. Maybe going in and voting, but who knows . Were kind of didisappointed. Our democracy seemems formal. Well, i got a thought for you if you deny people, 5 out of 7 days a week, any real say in something that really shapes their daily life, which is the conditions of work, youre basically teaching them that theyre not decision makers, that thats somebody elses job. You train in every day. You understand all the decisions are left to people. You dont even know where they are. They sit in a boardroom a thousand miles away. So why are you gonna, then, get excited about politics, which looks to you more and more like the same thing . Somebody far away makes a decision. Youre supposed to get excited once a year, go into a little booth, move a little lever . Youre gonna have some say . Nah. You want politics to be real in t the community, you have too make it real where people are, where their job depends, their income depends, most of their life is spent. Otherwise, you cant blame ththm for not being interested in politics when youve really trained them into not participating, denied them a participating role. Heres another way it stunts human beingswe all have complicated and mimixed capacities. In order to find out what youure really good a at and what your contributions to society can be, you u have to he a chance to see what you can do. And it doesnt even stay the same across your life. You have different capacities at different times. Why should some people have all the control, the design of whats going on, the direction decisions and other people just do what theyre told . If all youre doing is what youre told, youre not gonna develop your capacity to innovate, your capacity to redesign a process, to redirect a process. Because you dont have any place to develop those skills. Imagine how mumuch innovation we could havave if we really gae everybody a chance to learn and how the system works and how the production of thiswhatever you help to makehow thats donene if we gave you some training when you were grorowing up in the design. Wow we would all be different people because we wouldnt have divided the society into a tiny number of people who make all the decisions and therefore have to learn how to do that, and the rest of us whono point in learning that and no point i in teaching ththat to you because youre never gonna do that. Youre just gonna be a barista at starbucks. And for thatat, the amount of direction and skills you need are small. I dont mean to pick on starbucks. I enjoy picking on starbucks, but i dont mean to pick on starbucks. Ok. What, then, is the solution . Well, you can see from the logic of what ive done that it isnt blaming the banker for doing what bankers do, and it isnt blaming workers for doing what they do. Workers are told to enjoy the american dream. They are paid until the 1970s theyre paid more every decade. Its remarkable, the american wage system. A hundred years before the 1970s, wages go up and americans could afford with a rising wage to have a higher standard of living, which is half the reason why millions of immigrants came from all over the world. In the 1970s, as i hope most of you know, real wages stopped rising in the United States and have never resumed. That was, of course, a crisis for the american worker, who had promised to himself, to herself, to his and her children the american dreama home, a car, a vacation, a college educacation. All of i. What a torture to a population that has learned to believe that with every decade, youll make more money and thatll allow you to have these better ththings and to give them to yoyour children, and you promise it and you believe in yourself, as youre capable of d doing i, and suddenly the wages dont go up anymomore. And its not explained to people that the wages didnt go up anynymore. Theyre just left without the wherewithal to achieveve the american dream. And if you dont make it a national conversatition and if you dont explain it to people why that happened, then americans blame themselves individually. I didnt go to the right school. I didnt take the right courses. I didnt major in the right thing. I didnt work hard enough. I didnt please my boss, whatever. Its me. And they turn inward and blame themselves with all the social consequences of that. And when that doesnt solve the problem, they do something very understandable over the last 35 years. They want toto hold on to that dream. And if the wages dont pay for it, borrowing will. And so the American People go on a borrowing binge the likes of whwhich no working class in the world has evever seen. They borrow everything. We had to invent the credit card for mass consumption starting in the 1970s. Thats when master card, visa, all that got going. So everybody could borrow. We now have a new generation we never saw before College Students who come out of college with 100,000 or more in debt only to discover that we have such a collapsed Economic System that they either will not get a job or never get a job to ever get out of that debt. Nobody prepared them for this. And theyre very upset. These are systemic problems. Were gonna blame the College Student for borrowing too much . Were going to blame that worker for trying to hold on to what every advertisement told him or hher was the nature of a sucuccessful life . How cruel can you be. This system isnt organized very well. And its producing lots of dysfunctional people, everyone in this room, of course, excepted. But out there. So what, what do you do if the system doesnt work . Well, you have to take a very big step. You have to ask yourself, what are the alternatives . Is there another system . And americans have been taught for a long time not to go there because that gets you into a dangerous area. But tonight, safe as we are in this place, were gonna go. And i may surprise you as to where i think we ought to go. But ive given you a lot of hints alongng the way, and now youll see. I think we ought to bring democracy to the workplace, to bring it where it has never been brought before. And heres how it would work. And this is not a complex idea. And it t isnt a new idea. And im not the only one who thinks it or pushes for it. Its an old idea, as youll see. But heres the idea. Lets organize our enterprises, big and small, in a new and different way. Lets democratize them. Lets arrange ththat all f the people who come to Work Together make dedecisions. No more major shareholders, no more board of directors. The workers themselves become their own board of directors. Heres a sketch just to have an idea in your mind. Monday to thursday, you come to work. You do what you alwayss did. Friday you come to work, you dont do what you always did. Together with all the other workers, you have meetings all day on friday. And together inin those meetingsone worker, one voteyou decide what to produce, how to produce, where to produce, and what to do with the prorofits your r wok has producuced. Another name for this thats old in american historyand even older in other countriesis called cooperative, community enterprise. Lots of words. I really dont care what word you use. But i want to stress the democracy at work theme because were a country thats kind of obsessed about demomocracy. S so lets use tha. Lets bring democracy to the place where most of us adults spend most of our time most of our lives. Seems reasonable if yoyoure committed to democracy to institute it where you are most of the time. Otherwise, what does your commitment amount to . Wow think about it. Im now gonna take you through some of the implications of doing this because i want you to see potential, where it is. So first. If the board of directors is the workers t themselves, then e of the decisionons they have to make, which is the decision made by board of directors now, is how muchch different pepeople gt paid. Aha in capitalist countries, like our r own, the board of directors decides what to pay the top managers. And as ive already mentioned to you over the last 30 years, they have been extraordinarilily generous, so that top managers of major american corporations get salaries in the millions or tens of millions of dollars every year. Thats normal. Well, if youre upset, as most americans who p Pay Attention to this are, that the gap between rich and poor has become more extreme and that that poses all kinds of dangerous social problems and tensions, then i have news for you. Perhaps the single biggggest factor accounting for the growing divide in the United States are the immense salaries paid by corporations to their top executives. If the workers collectively decided what everybody got, what can you imagine might happen . Would the workers collectively give a tiny number of themselves huge salaries and everybody else would have to scramble and wouldnt have enough . W would the majority of workers vote to hobble themselves in t that way . Nah, not likely. Kind of, gosh, not at all. Not gonna happen. So if youre concerned, as Many Americans are, to do something about the gap between rich and poor in the United States, heres a really powerful way to get at thatmake it a democratic decision. That would allow workers to pay some people more than others if they ththought thats appropriate. But my guess is the ratio would be 3 1 or 4 1 or 5 1, not 300 1 oror 400 1. And, you know, we have a hint an actual practical example to show this. Right now in the world, the single most successful enterprise that has converted to a democracy at work system exists in the north of spain. Some of you may know about it. Its based in a little community, a little city called mondragon in the basque region, just below the pyrenees mountains in the north of spain. This is a company that has been growing since its founding in the mid11950s. So its a good halfcentury old. It started with 6 workers. Its a system of cooperatives. It has grown quite effectively. It now has over 100,000 employees. Its tthe seventhlargegest enterprisise in all of spain. N. And its just a set of cooperatives that t coordinate with one another. In each of them, the workers are their own board of directors. And, guess what, the workers made a rule the highest paid person in the coops, inny of themem, doesnt get more than 6 1 2 times what ththe lowestpaid workeker does. So there is no such enormous gap between rich anand poor. And d if you travel in the north of spain, where e this company s the Largest Company in that part of spain, you will sesee that their cities and townsi was there this summeryou can see right away. You dont have the slum over here and the fancy neigh you dont have any of that. There are people with more and less, but its, the gap is completely different. Its a part of the e world in which you could Say Something like the following and not be lying through your teeth everybodys in the middle class. They really did that. But if you want that, this is a way to get it. Heres a Second Thought you think if the workers made the decisions collectively, they would decide to close the factory or the office where theyre working and open one in china, thereby destroying their jobs, their incomes, and the community . Ehh, i would guess not. Not a big chancece of that. You know what they would do instead . They would say, whatever problems our company haslike all l companies, they have problemsone of the solutions that are not available is leaving. You cant do thahat. And, by the way, theres nothing new about this. Ththere used to be a time not so long ago here in the United States thatat companies said, the only way we can survivewe have to be able to competeis we need to be able to hire these 6 year olds. Its called child labor. And if you dont let us do it, well, then the british will allow it to be done. Theyll do it and the spanish and the french. Well never be able to compete. And you must. And at a certain point, the amerirican people lookeked t the conditions of 6 year olds and we had that working and said, we understand you have competitive problems. We understand you have the. But that you cant do. You cant have kids, and you cant do what youre doing to t them. Thats out. You have to find another way. Now, does that make sense . Why exactly didnt we say to them, uh, you have problems. We understand. Well try to help you. But one option you dodont have is s you canan get up and leave. You cant tell your workers on friday, dont come in on monday. Were m moving to shahanghai. mmmm. Not available. You lose. Find another way. Get a betterer machine. Reorganize your production pro produce Something Else. 50,000 things you can do to try to save your situation, but that you cant do. And you know why . Because it destroys peopleles liveses andt destroys the communitity. Kind of what it does to the children, which is why we dont let you do that. And we dont let you make one worker work 18 hours. Wouldnt let t you do that t ei. Itd be nice if you could, but we dont let you do that. Well, if workers made the decision, they would long ago have ruled out destroying themselves and their jobs. And so the whole question of losing your producer facilities to other countries would not h have happened. Heres another example. Suppose the workers run their own factories. We have a little acronym, wsde. Its called workers selfdirected enterprise. To summarize what were talking about, the e workers mamake ther decisions collectively. They are their own board of directors. Lets turn to the question of using a technology that is difficult or dangerous a bad chemical, a very noisy piece of equipment, something that pollutes the water or that throws something out of your smokestack that is not good for people to breathe. Well, in most american corporations and in most internatitional corporatio, the board of directors sits in new york or london or paris or Something Like that and d they make a decision based on whats best for the bottom line. Thats their job. And if that means a technology thats toxic for people, well, well put a filter on the smokestack, or, well throw sosomething in the water o neutralize the acid, or whatever it is. But if the workers made the decision, you think they would d do that . Its themtheyre the ones who have to breathe in the air, their children. Its their neighbors. Its their community. Theyre not going to do it. Theyre going to be much more vigilant about the environment because they live in it. Theyre not a distant decision maker. Theyre an onthespot. And thats one of the old ideas about democraracy. You make the decision because you live with the results. So i think we would have had a different distribution of income and wealth in this country; we would have had a very different relationship to keeping the jobs and the production here; and we would have had a very different relationship to the environment. Or to make a long story short i could go on with examples all nightwe would have had a different history as a nation. Wed look different; wed feel different; wed relate to one another differently. And guess what. If the gap between rich and poor was narrowed, that wouldnt, then, allow the rich to buy the political system the way they y do nowow, would itit . So itd make a contribution there, too. Wow sounds interesting. Let me take it another step. Is this feasible . I know some of you may be entranced by the idea bubut be wonderiring to yourself, wel, you know, how do you do this . Well, ive already told you about mondragon, which is a very sucuccessful corpororatin composed of hundreds of these coops that coordinate with each other. So t they do prove it can be do. Plus, there are coops all over the place. Not very far from here around San Francisco are a group of bakeries arizmendi bakeries. Maybe some of you know them. Theyre set up like that. Theres a cab company in San Franciscoyellow cabs. 33333 that you call there, thats a coop. Americas full of them. People have figured out that this is an interesting way to organize businesses. So there really is n no problem in d doing thihis. People have figured that out. Well, youou might, say, yes, the examples, like the arizmendi bakery or the yellow cab company, those are Small Enterprises. Youre right. Theyre small. But let me remind you of something historically the origins of capitalism ouout of feudalism, that was always smSmall Businesses. In the midst of big feudal landed plantations, little capitalists grew up. A little capitalist withth 3 workers or 6 workers. Thats how it started in the cities of europe. Out of feudalism, the system that preceded, c capitalalism ws born in little enterprise thats typically how this is done. New systems emerge beginning with small ones. Can they become large . Again, i refer you to mondragon. From 6 workers in 1956 to over 100,000 now. They managed it. Theyre very big. Theyre very successful. Well, the second question you might have is, where are they gonna get the money . How could workers start a collective business . With what . This is an interesting problem. Where would the money come from . And guess what. There are solutions to that, too, because this isnt a new idea. And theres lots of examples. Im just going to give you one to tantalize you with the possibilities. But im going to choose one that comes from the real world just so you know people have tried it and done it. This time, im referring to something called the marcora law, which is a law in italy, passed in 1985. Heres what this law doeses what an interesting idea, which in italy it is still on the books. If you become unemployeyed in italy, you have a choice you can either get your weekly unemployment check the way a person in the United States doesand in italy, it runs 23 years that youre eligibleor you have a second option, which we dont have in the United States. The italian governrnment will give you your entire 23 years of weekly unemployment checks up front as a lump sum on one conditionyou must have at least 10 other workers, unemployed like you, who make the same decision. And the money, the lump sum, has to be used as the capital to start a collective business run by the workers. What . Did i make this up . No. Go google it. Marcora law. Youll read all about it. The italian trade unions and the italian socialist and communist parties surprisepushed for this. Wow. And its been a big success. It has helped launch hundreds of cooperative enterprises in italy, which has a long tradition of this sort of thing. And guess what. Workers surprisechoose rather than being unempmployed and collectig a check, which is a d depressing condition toto be in, to ratherr have a business that they can devote themselves to. They put much more of themselves in it. And guess what. From a social point of view, which is, kind of, better, 10 workers collecting a weekly check k or 10 workers building a whole new business that they really care about . Anand which theyd better care about, because if t that fails, they cant go back on unemployment. Theyve gotten their unemploloyment. A very interesting idea. And the Italian Government provides assistance along the waytechnical assistance and so onand subsidizeded loa. And are there precedents for the government helping in other ways . Of course there are. Here in the United States, for example, we have a longstanding Government Entity called the Small Business administration, the sba. Heres the idea in the United Stateses its been going on for decades Small Business complained that there wasnt a level playing field. When they competed with big businesses, they had disadvantages. And they wanted to have a better shot at succeeding as a small bususiness, so ththey wanted the government to set aside money and support to help Small Businessesnot available to big onesto help thehem compete more success. And we have that. The Small Business administration gives grants, makes loans at a subsidized rate to help small the idea being, americas better off if it has more Small Businesses than would otherwise be the case. We do the same thing with minorityowned businesses for the obvious reason. Heres a thought a workers selfdirected business administration. Why . Because the American Government would like to see these kinds of enterprises develop and grow. And why that . Heres a democratic thought for you if the government supported that, helped to develop cooperative enterprises everywhere, then all americans would have freedom of choice in a way theyve never had it before. We would all, as young people or old people, be able to compare what its like to work in a topdown hierarchical capitalist enterprisebecause theyre all around usbut for the first time, we would have a choice. Thered be lots of cooperative enterprises. Theyd be as commn as a anything around the n neighborhood. And you could ask peopleyour friends and neighbors who work therewhat thats like. You could even intern for a summer or try it for a while and see whether the kind of job youd have, if youre not just a worker, but also a director with other people that are in the same boat with you, might be a much more interesting, much more selfdeveloping, much more exciting, much more democratic workplace. And americans could choose it. And the rest of us could even have the followingwe coululd have a law that says on a piece of clothing or an a appliance or whatever it is you buy in a storethe label no longer simply says made in china. But we could require the label to say, does this come out of a capitalist topdown hierarchical enterprise, whatever words we use, or does it come out of a cooperative enterprise . And we could see which one makes better products, and we could support what we believe in by buying that. Its a lilittle bit of a play on the fairtraded idea that some of you know of. Just imagine what could happen if you thought like this, how different our Economic System would be if we took seriously the idea of democracy at work, and what it could do to get us out of the inequalities we suffer in this society, the loss of jobs and income, the disappearance of our middle class that everybody whines about, the destruction of our environment. Last point. And then well open up to some questions. There has, of course, been a debate in the last hundred years between capitalism, the system weve been criticizing, and an alternative. And that alternative had various names, socialism and communism the most famous. And im not here to give a long discourse about that, but we have to face that. What was the hallmark of the socialist and communist systems, whether they were in china or cuba, russia and so forth . Two things. Onesocialism meant that the property, the productive properertytools, eququipment, factories, landwas no longer to be private property owned by individuals but rather the propoperty of the whole peoe run and administered by the state. So from private property to social property. And the second big difference between capitalism and these alternatives was that in capitalism, you used the market as your mechanism of distributing things, whereas in these societies, governments planned the distribution, decided who would get what and so forth. So the differences between the two systems were understood to be private versus social propererty, markets versus planning. What always struck me is interestingwhatever you thought about that alternative was that nobody said a word in this great hundredyeyear struge between the two about the organizatioion of the enterprprise. Its as if it d didnt matter. Its as if in capitalism, you had a bunch of workersrs going to work evevery day. Then there was a revolution. The flags changed their color. And after the revolution, the workers went to work again, but instead of it being a board of directors selected by the major shareholders, it was a board of commissars selected by the communistst party and the government, and that the actual difference it made to the worker, who was sitting up there doing it, eh, wasnt all that exciting. I think theres a point to that criticism of the socialist and communist alternative, but its a criticism that this idea of democracy at work gets at. Because if the workers are the ones who make the decisions, then its the workers who provide the state with whatever resources it gets. Its those workers who pay the taxes, either as individuals or as the directors of their corporations. The people at the base will finally control the resources of the society. And the state will have to be accountable to them, not just because theyre the voters but because theyre where the wealth is; theyre where the money is; theyre where the resources are. And instead of having fancy ideas about how to democratize the old examples of socialism and communism, this is a practical way to institutionalize the power at the base of the masass of peopl. Closing pointwhether or n not ive persuaded you, let me invite you to take a look at this book. And the point of this book, which is new, is simply to make the best case i can, which, you know, an hour of conversation doesnt alallow me to do, but the best case i can for what ive been talking about. But the real reason to pursue these ideas are two, two real reasons. Oneyou will not hear a word about them from the established voices of this culture. Not frorom the rerepublicans, not from the democrats. Ththey wont make e a criticism of the system because theyre cheerleaders for the system. Whatever their disagreements, its never about this system. If you want to think critically, you have to go somewhere else. And these kinds of ideas open up the space of a change of thinking about the system, not being trapped within one way of thinking how to organize an economic society. And the second reason is that this opens a vista for a whole different kind of life. Imagine what it would mean if all workers now had a new definition. Youre not just a person who does this thing on the Assembly Line or does this thing in the office or has this job in the store. Yeah, you have a particular function, but youre also part of the decisionmaking organization of the work. Youre gonna have whole parts of your brain and personality being developed on the job that were never utilized before, that were never developed before. Were gonna have a whole new kind of human being coming out of this experience. Were going to have to reorganize our educational system. Were not going to have elite schools for a handful of people who run everything and then the Community College for everybody else. Uhuh. Were now going to have to give proper education, finally, to everybody because thats what the job requires. Its a whole new way of organizing life. We do not have to be prisoners and victims of a system tthat doesnt work well. We have options. All we have to do is learn from the past experiences of coops of all kinds how to build on that to make it popossible to change things. And people are doing it around the world and around the United States. You dont have to feel alone. They used toto do it as an interesting experience. Mamany of them did it as a religious commitment. Many of the communes and collectivecome out of all the religious communities. But we now have a new and additional reeason capitalism, like every other Economic System weve had, was born, evolved, and eventually dies, like Everything Else. It may be difficult to understand and scary to see. Weve had a a run with capitalim for a whilefor 200, 300 years, but two major collapses in 75 years. The vast wastste of people e and resources thatat ey one of these crisises produces. And Everything Else ive talked about tonight ought to be more than enough to at least allow us finally to discuss, to debate, to explore alternatives that mmight allow us to live a lot better lives than we do now. Theres a new Political Party in germany that has a remarkable slogan. And it, by the way, sits in the German Parliament with 12 of the vote in germany. One out of 8 germans votes for this party. The slslogan of this pararty is, germany can do better than capitalism. Thank you very much for your attention. [applause] im curiousyour thoughts on the role unions might play, either as they exist today or in some other. Form, other things that come to mind, like maybe, you know, like some more Old Fashioned guild s system where the unions are simply trade based or other ones that operate across industry, likelike im an seiu member, for example, rright . Or are they just sort of anachronistic, sort of workers vanguard spectacles that we can just kind of throw aside . Good. Wonderful question. Let me try to answer. And again, rather than my spinning out my own thououghts about thatat, let me start from a concrete example. Thehe steelworkers unin here in the e United States, one of f the largest unions in the aflcio, here, stunned the world of American Labor two years ago when they issued a press release announcing the formal alliance iill usese their wordsthe fl alliancnce between thehe steelwororkers union of the unid states, whichi dont know how many members it has, but in the hundreds of thousands, big uniononwith mondragon, the corporatethat huge, successful workers selfdirected entterprise in spain. And i remember many of us were taken aback. What an interesting idea. An alliance. What did it mean . Well, the details were hard to come by. It seems as thougugh there was discussion, obviously, between them. They issued a joint press release and had a press conference. But its hard to tell, so im now going to imagine where this might go. Im not saying thats where theyre taking it. I dont know exactly where theyre goingng to take i, or even whether theyre going to take it somewhere, but heres what i would do. Imagine a trade Union Movement with a completely different strategic idea from what it has typically been. Unions have tytypically been organizations who make it possible for workers, instead of bargaining individually with the employer, to get particularr conditions of work. The union bargains for t the workers collectively. Collective bargaining. And so it enters into a negotiation with an employer to get a contract that covers all the workers in a workplace. What unions do. And they try to get better wages than the workers have been able to get, better working conditions, and so forth. Well, imagine now the following the union sits down and bargains for the workers, but it doesnt just say, hey, we would like higher wages or better working conditions, and if you dont do that, we may strike and all the usual that i think you understand. But now they have a new weapon, a new chip, if you might say, to play. If you dont come to a reasoonable agreement with us abouout wages or w working conditions, we have another plan. We may withdraw the workers from your plant and set up our own. What . Thats never happened before. What an idea. Indeed, the union might begin to develop Small Enterprises that do things like a company that theyre bargaining with, just to make it a little more realistic, so that when they say that to the employer, the employerer haa new problem. Imagine an employer saying, i want these and these concessions from you workers, or else im leaving the country. It happens every day in the United States. And the union, what is it going to do . Its afraid of losing the job, so it gives away a benefit program or a wage diss or something, medical coverage, in order to hold on to the job. Its very understandable. Yeah, but suppose a union had another option. Ok. We want you not to leave, and we dont want to give you a concession. But were telling you, if you do not acceptptyou leleave . Were going to take every one of the workers you u fire, and wee going to set up a factory right here. Rigight here. E. We may evn take over the one you have abandoned, buy it from you, and were going to go around the United States and were going to explain to people that you went to china. And they can go ahead and buy it from you, or they can buy it from usthe workers you abaandoned that are here and tht are asking you, as a fellow american, to support us. Ooh. That Company Might think a little longer before it takes off for china because its got a new problem. It might not want to do that. It might not want to take that risk. It might not want to face that kind of competition. Its a whole new ball game. It might also allow unions to do something for workers that ththy cant do now. When workers are unemployed who used to be members of suchandsuch a local or suchandsuch a union, theyre now unemployed. They go get an unemployment check. Supuppose the unions are no, theres Something Else we can do for you. We can help youou. We can brinn specialists. We can help you set up, under the auspices of the ununion, an enterpririse that wl serve this community in all kinds of ways. And we will go to the community because were based in it and urge people to buy from this coop rather than from where theyve been buying. We can begin to develop a network. Thats what mondragon did. Thats how t they grew that way. Everybody helped everybody else. I dont know what all the benefits would be, but let me make a suggestion. A Labor Movement that has been declining without interruption for 50 years better come up with something new because what its been doing hasnt worked. Im not being disrespectful. I mean, i dont have the numbers. The graph that i teach in my classes of what has happened to unions is unambmbiguous. Ththe line goes m here and it keeps going down. Its long overduee to change te strategica, and heres an idea. And wouldnt it be interesting if unionons became known in america not just for doing the work for collective bargaining, for their members in suchandsuch an industry, but part of a social movement to rebuild a new society around a concept of democracy at work, becoming the champions for a whole new way of living and rking. Wouould give the unions a role in society that they once had, as part of a better world for people, a whole new set of opportunities going far beyond the job and the conditions of the particular place where the union was born. What an excicitg new vista for a a labor movovemt which really badldly needs new ideas and newso i i was very exexcited by what the steelworks and mondndragon making an alliae might mean. But itll take many people pushing in that direction to realize the potential. Sir . Because of your interview withon charlie rose im fascinated, first of all. I watch him almost every evening, so i get a pretty good sense of the way he responds to different people. He seemed to be a little bit uncomfortable. Yeah. [scattered laughter] with some of the questions that he was trying to elicit answers, so id like your impression of that. Second. Heh heh im fascinated by this concept of mondragon because i think that, you know, clearly we have a problem that we do not have an answer for. But at the same time, i look at this and i think in terms of the Capital Formation. So one of the things thatd be helpful for me to understand in the context of the employee, since 1956, what did they do to prepare themselves for after they retired . Was there a Capital Formation within the company itself, and within that context, because of their success, have there beeeen other r companies r other organizations within the spanish culture that have fostered likeminded. Companies to go in competition, and what is the result of that . So thats 3. Heh heh yeah, real quick because were running out of time. Um. Charlie roses, uh. Team came to us. We didid not solicit the opportutunity. They ce e in, ani think thats very significant. I think that charlie rose, like other major news outlelets and commentary shows like that, are beginning to recognize that a part of the conversation that folks likeke us were kind of ket from, public conversation, where nowto o make it very simple, the critique of cacapitalism is now part of the national conversation, and that wasnt true foror most of t the last 50 yeyears, one of the poinints i d to make on that program. So i take e it as an e enormousy courageous thing that h he did because he knew he was kind of pushing the envelope there, invite david harvey and myself. And i thought he handled it pretty well. He was very straight with us and he was partly uncomfortable because there was supposed to be a third person there who never showed up, and that always throws a you know, he had gotten prepared for a 3way, and that chair had to be removed, for the tv audience shouldnt see. I understand mr. Eastwood does that, but we cant do that. [scattered laughter] so theres nothe chair had to be removed and he was a little shaken by that. Also, if youve ever been in one of these shows, its a collective hysteria. I mean, it has a logic to it, but theres all these people running around and these lights and cameras. Itsand were all covered with pounds of makeup and its veryits a stressfuli mean, hes used to it, but its a stressful situation. But i was pleased. I thought that t really went prpretty well and that we got a lot of feedback from it. I keep getting, like you, people who have seen it and talked about it, so thats very impressive to me. And i feel grateful that i had an opportunity to talk. Mondragon understood this problem long ago. When youre as big as they are, they developed a number of specialized enterprises. For example, they have their own bank and so they handle all their banking, and that Bank Actually lends outside to nonmondragon entities as well. And they also set up retirement homes, and the bank runs its own Retirement Program for all workerers. So a portion of the t revenue of every enterprise is siphoned off, put into this thing, which it also, then, uses as seed money for more new coops, which then have to repay, and that builds up the fund for retirement. So if you work at mondragon, not only is your job guaranteed, so is your retirement for the rest of your life. And they have a growing retirement industry because theyre so big. They have all these people who arewho need that when they reach 60, whatever it is. Little younger than it is here62, i think. And so they have all of that. I really do urge youand im on the last pointare their people learning . They have a whole apparatus that does nothing but run courses in what they do. They have something called the mondragon university, has 4 different campuses. This is an enormous operation. When you visit them, you think youre walking into an amazing, large Corporate Headquarters because thats what it is. And they have lots of buildings in various towns, and as i say, i went there and i was taken under the wing of a professor at one of their mondragonthats what its called, mondragon university. And he happened to be an american who went over there and he teaches business methods for coops. Thats his specialty, is to help people from around the world who come there from all over the world. You can come for a day, you can come for weeklong seminars, all kinds of programs to teach exactly what theyve done, but with an awareness that in each different country and in each different rregion, there will be the local customs and culture that have to be taken into account. And they can only do so much, but its a very elaborate proselytizing, if you l like, butut all withine university kind of framework, a veryand very beautiful seminar rooms which wewe were taken to and all the latest audiovisual to help teach all of this stuff, and so theyre verya very serious operation and very succccessful. Thats whyand you can go. I mean, you just have to go in advance. You get in touch with them and you can come there, and theyll take you through and answer your questions. Very good english. You know, they make sure to teach the different languages that they have, as europeans. Very sophisticated operation. I was not ready fofor that. The Corporate Headquarters looked, you know, with manicured lawns and fountains and all of that stuff, you know . It looks like alike what it is, a very successful corporation. Theyre very careful to avoid politics. I asked about that. We keep away from spanish politics. They are clearly leftwingers. Thats very obvious. But theyre verery afrd of thethey dont want to become part of the struggles among the parties, so theyre veryand every government now needs them. Every Spanish Government needs them. I should mention, if youre invery briefly that there are special conditions. The beginning of this thing wasthe mans name was arizmendi. Thats why the name of the bakeries in San Francisco is in honor of a catholic priest, father arizmendi, who began this. So already you n notice somethig unusual because this coop was started by a catholic priest. This is aspain is a very catholic country. I mean, its a catholic country squared. I mean, you know, its like ireland or poland. I mean, they take that very seriously there, which is very didifferent from france wherei know from my family thatcatholicism in my famamily, and they are nominally catholic. Its a joke. I mean, the priest is always the butt of a funny story, is anan idiot, ad the way the Catholic Church is viewed by catholics in france, by many, is clownish. It has s o do with the french revolution. Spain is not like that, so its very serious so that it got protection in the early years because it was a project of the roman Catholic Church, and that gave themplus, this is a part of spain thahat is its own ethnc group. Its called basque. Basque. Basque. They have their own language. Im good at languages. I cououldnt undersrd a word of it. T. And they speak ; its not a language for festivals. Its a languauage of every day for many villages in thisits a mountainous area. So they have an ethnic uniqueness, theyre roman catholic, and ththe church protected, in a sense. They couldnt be attacked quite so eaeasily. It w wasnt as if thee communist party did this or Something Like that. It was the church. And finally, theres a long history of the basques not being very comfortable within spain, so they demand independence, they had their own military. There were times when the Spanish Government tried to control themem, but its s a hiy country and they had guerrilla, basically. So the Spanish Government is very eager not to have fights with these people because they fight t back, so between the church a and their n language and d customs and thehr willingness to fight, they had certain privileges, if you like, special conditions that helped make that possible there. Thats true. Maam, i think you were going. What role does competition play here . Do the coops compete with each other . Do they compete against the regular corporations, or what keeps them from becoming cutthroat in order to win . Good question. Again, im going to use a concrete example rather than a hypothetical. Im going to use mondragon because it is a vevery rich source. And there are loads of books and articles on mondragon, including on our website, democracyatwork. Info, where we gather all this material, all of which is available to you at your leisure and no cost and so on. Heres how mondragon has done it. Mondragons first commitment is to preserve jobs. Its very interesting. When you a ask the, what is your bottom line . The answer is jobs. So if, for example, and ill take an example from them. One of their successful production lines is the fagor. Fagor. Its fairly wellknonown in eure and around the world. It produces washingng machines, appliances like that. And the fagor Washing Machine Company has suffered from the International Crisis like eveverybody else, and so the demand for these washing machines has fallen. So they had about 2,500 workers in the town of mondragon, at this factory, and they couldnt use 600 or 700 of them that justthere wasnt a demand for it. So the question is, what do you do . And they have a twostep answer. First answer we are going to share the pain. In other words, if you dont need 600 or 700 workers, the other way of saying that is you dont need as many hours of labor because theres no point in producing the machines you cant sell. But the question is, why would you want to impose the need to cut back on an allornothing basis . Why would a person either be employed or unemployed . Because if what you want is xhundred hours less labor, then it could be that everybody does two houours a week less. That would be whats called sharing the burden of unemployment. So the first t rue they have is, you never impose the unemployment exclusively on a subset of people. That is fundamentally unjust and creates terrible tensions inside the unionif any of you are members of union, you know thihisbetwn the workers who are bitter that they lost everything, particularly whwhen many employs will then impose overtime on the workers still working, rather than bring back somebody whos unememployed. So thatts thet rule. Second rule is, if there are workers that really are redundant because nothing more can be done in this area, or that weve got to a limit of how much we can share the unemployment, then we will find work for those people in another coop because the mondragon is a Parent Company of hundreds of coops, and they do that. Theyre very prproud thatt in the current climate of spain for those of you that are not familiar with it, spain is now the worst economic downturn of modern spanish history, the worst in europe, 25 unempmployment. The unemploymenent rate in spain today is w what it was at the worst of the depression of the 1930s. Young people between the ages of 18 and 30 have a 50 unemployment. Hahalf of them are not working, cannot find work. Its abut not in mondragon. Mondragon hasnt fired anybody. Between the sharing of the unemployment and findingmoving workers aroundbecause thats part of what makes them one companythey hahave held on. Theyre becoming wildmore popular than ever because theyve been able to do that. They have another rule, and that rule is, whenever a member coop buys anything, if they can get a better machine or whatever theyre buying or a cheaper one outside the coop, they are told to do it. We have to be competitive, because otherwise we will die. Thats their recognition that they live in a capitalist world and they have to be able to compete, and so they do. The fagor companyits like aits a bigger building than thisi toured it this summer. Its actually like a football field, but, you know, inside like a big airplane hangar, and it has one huge machinebecause this is highly automatedand that machine is german. Comes from germany, from a german capitalist enterprise which makes this kind of machine that they use. And we asked them, well, why didnt you buy it from one of your own . Andd the answer is the germans make a better machine. Its a better deal, and thats the rule. So we have to s succeed in a capitalist world, but we can do itand this, perhaps, the most interesting thingbecause theres all kinds of advantages we have that a capitalist enterprise doesnt. And they gave me an example. Number one, if youre a capitalist enterprprise, the price you chae for something has to cover your labor costs, your material costs, and alllike that, but it also has to cover Something Else the profitits you pay outo your shareholders. S so with a g grin on their face, they say, we dont have any of those. We dont have to charge that kind of price. Were not a profitdriven enterprise, so we can bring our price down because we dont have to make a profit. They also say, we dont pay our top executives a wild amount of money, and so we dont have to have a higher price to bring in the revenue that pays these people these o outlandish salarieses. So we e havewe c o something that they cant do. Second argument when every worker is a director and every worker understands the problems of competition, every worker is constantly engaged. Every worker is looking for a way to save a buck, to cut a corner, to figure out a way of doing things better, and youre given a lot of recognition and celebration if you come up with a costsaving. A worker in a capitalist enterprise i isnt thinking about that. Hes thininking about happy hour. [audience chuckles] but its very important because the everyday flood of Technical Innovation is much more important than the occasional big breakthrough by the scientist. Its all those Little Things that are cared for by peopleand this an old american idea,a, you know . Its the olold idea if youre invested in it, if i its your little business,f its your home, you take c care of it better than if it isisnt. If its your business in the fullest sense of the word, you have more. Then he gave another example. He says, you know, we are rooted in the community. When something is wrong at the factory, every worker goes and tries to figure out whether the neighborhood they lived, theres somebody who knows something about that who can maybe solve that problem, or someone whos had a similar problem in their line of work. We bring in the entire community because its all of u us. Were notto use a modern term, were not alienated from the wworkplace the way a worker in capitalism is, and so we have a whole raft of these advantages that give us a chance to outcompete a capitalist on many occasions. And mondragon is, again, a paradigm case. They are the seventhbiggestst corporatitionn spain. They have outcompeted all kinds of capitalist enterprises. By the way, just to give you anan idea that might surprise you, mondragon has partners, peopleenterprises in other countries that admire what they do in certain areas and partner with them. They have labs to develop new techniques. Ill give you the name of two partners youll recognize General Motors and microsoft. They could help each other. Microsoft gets some of the technological stuff t that mondragon is ahead, and mondragon gets from microsoft. Might surprprise you. So theyre ququite able. Theyre quitite confident they can compete. Given half a chance, they can compete. Arizmendi bakeries are doing finee in San Francisco,d so is the yellow cab company, and so are many, many others. In amherst, massachusetts because i taught most of my adult life as a professor at the university of massachusetts theres a little copy shop that was seet up 2525 years ago calld collective copieshintand they are a worker coop and theyve been wonderfully successful, and one of the reasons is they appeal to the university. They use lots of students as parttime jobs, and they cultivated a reputation, and theyre willing to go an extra mile for a student whos jammed up and needs something at 3 00 in the mornthey do some things that cultivate a relationship with the community, and they outtcompeted kinko, things like that, and they were able to do that. And, again, i understand these are isolated, small examples, but i want to remind you capitalism comes into the world, beginning with isolated, small examples, and those have to be struggled over and reproduced and grown, and then Something Else is possible. Another waway to put this, and t goes back to your question about the unions, i like to use a parallel l with slavery. There e two ways to react to slavery, and you always see whenever theres a struggle against slavery, as there was in this country in the 19th century with our slavery in the southern states. One response to slalave, of people who are critical of itit, is to work very hard to improve the conditions of slaves. Feed them bebetter, clothe them better, dont allow their families to be ripped apart in the slave market. All those things we understand. And the movement, the Critical Movement against slavery all over the United States, including the south, often took the form of a desire to improve the condition of the slaves. But then there was always another wing of the criticism of slavery the abolitionists who looked at the first group and said, are you kidding . The problem isnt that theyre not wellfed or wellclothed orthe problem is that theyre slaves. And even if we had a big struggle and even if we were successful in improving the conditions of the slaves, as long as theyre still slaves, its always possible for the master to take back whatever improvements in the conditions you were able to extract from him. The way to break out is to end the institution of slavery. And there was a big struggle in the United States between these two groups. In the end, lincoln went and abolished slavery. Well, its really the same issue now, isnt it . Either we work real hard to improve thee conditions of working people their wages, their salaries, their benefitsor we say, wait a minute. The e problem isnt te conditions. The problem is that theyre an employee of somebody else whos the employer. And even if we get the benefits, the employer can and will take them away. I already did that 40 minutes ago when i explained to you that what was won by workers in a Reform Movement in the 1930shigher taxes on the rich, Social Security, unemployment, government jobs all of that was then taken away. You cant leave it, then, that way. The first time you try this and its taken away. Call it a learning experience. But if all that is done now is to do it again, then it isnt shame on them for taking it back; its shame e on us for not having learned the e lesson. Thats wy having the alternative, which can succeed competitively, is crucial to opening up the space to think a little more ambitiously than another round of reformist improvemements that will be taken away. Thats a key part of what this movement is about. Other questions . Please. So what is the new party in germany doing . How is it different than the communist and socialist parties that are all over europe, and does it have anything to do with coops . Yes. The name of the party in germany is called the die linke. Die is the, and linke is the german word for left. They didnt want there to be any ambiguity about where they werere coming from, s so ty basically call thehemselves thte lefft party, die linke, and it is a party y that came together out of two other parties. First was the left wing of the social Democratic Party, the Old Established socialist party that has been in the governmentnt, has been the government. Last leader of germany before angela merkel, the current leader, was a man named schroeder, and he was a member of the social Democratic Party in germany. The left wing under a very, very charismatic leader, which was important, a man named oskar lafontaine, withdrew from the socialist party in orderexcuse meto found this new party the die linke. Thehe other part of the die linke is the party that used to be the dominant party in what was east germany. You know, the east german and west german separation ended, and the two countries were unified early in the 1990s. So theres now one germany again, there arent two, but in the east, which was a communist part of the Eastern European block, that party was called the socialist unity party, sed, sozialistische einheitspartei, and that party dissolved, but large numbers of it moved also into this linke. So its a coalition. In the eastern partthis is something americans tend n n to know f for reasons having to do with our newspapers and our mediain eastern europe, in eastern germany the mass of people still vote for that party. So that party runs a number of the regional governments. In germany, they dont call them states like we do, 50 states. They call them laender, lands. So many of the laender in eastern part of germany are governed by this die linke party now, and increasingly, theyve become powerful in the west. As i said, the last national election, they got 11. 9 of the vote. 1 out of 8 germans votes for a party, one of whose slogans is germany can do better than capitalism. M i like to talk about that party not bebecause is the s same as what we would do here in the United States, but its s an important lesson. The notion that a party could develop politically in a modern, highly industrialized, advanced country, which germany surely is, that is critical of capitalism, you dont have to imagine that its maybe a possibility. There it is, and germany, by the way, is the number one economy i in europepe right now. Its unemployment has gone down over the last 5 years, whereas almost everybody elses has gone up. Germany was a Strong Economy before. Its much stronger now. It is really the center of the europeanthe eurozone, the european common market. So in a relatively successful capitalist economy, the critique of capitalism has a very big resonance in a very large part of the society, and the resonance is magnified because of german law. And let me say a word about that, too. Again, for american audiences, very important. Under german law, every Political Party that gets more than 5 of thehe vote gets two things. Onene, you geget seats n parliament. Theey do not have the american system of winnertakeall. If the republicans gt t 51 and d th democrats get 49 , the republicans get i it and vice versa. All European Countries have whats called proportional representation. You get as many seats in the parliament as you get percentage vote in the population. The idea is s if 20 of the people believe what youou believe as a party you should not just be able to run, but you should be able to participate in the makiking the laws. Otherwise, those people arent represented. Its a kind of idea of, i dont know, democracy. [laughter] because youre not gonna exclude 20 of the people, which you do if the winner takes all, and by the way, in the United States, we do that sometimes. Some of the primimaries of the two parties areif you read that ron paul got x and romney got y , then they each get a certain number of delegates. Thats proportional representation, and weve had that in elections in the United States, too, but we got rid of it. The europeans have it. So in germany when the die linke party got 12 of the vote, they get 12 of the seats in the parliament. So 12 of the people who are in the parliament are members of a party that believes that germany can do better than capitalism. Highly successful, capipitalist economy produces a criticism, and if you get more than 5 , not only do you get your seatsand thats true in the laender, in the state legislatures, toobut you get Something Else. You get money from the government because the democratic idea in germany is if you get more than 5 of the people e interested in what you have to say, then itit is important that you have a platform in which to explain to people what your posititions ar, what your proposals are so that the population can make an informed vote, and so the government allocates money, which is given to the party for educational purposes to bring its view of whats going on to the population. The die linke therefore qualifies, and they get money from the german government. How much money . 80 million euros. Thats a lot of money. And they set up a foundation, which all parties that get 5 or moreand do you know what the name of their foundation is . The Rosa Luxemburg foundation. Hmm. If any of you are not sure who that is, ask me, and i will explain it. Rosa luxemburg, a revolutionary in german history. Thats the name of their foundation, and they give money to people all over thehe world to studydy criticalconcepts critical of capitalism. They just opened an office in new york city. They have offices in many countries around the world. They have opened an office for work here in the United States to meet with and Exchange Ideas of criticism of capitalism with interested americans. Hullo i can see from your faces youre interested. One more fact about germany. T theres a law. W. Every company that has more than 2,000 workers employed must have 50 of the board of directors elected by the workers. Thats the law in germany. Theyre the most successful capitalist country in europe, and they give more power to their workers than any other one. The notion that if you were to do that you would cripple the capitalist potentialuhuh. Its the same silly argument that says, gee. Those europeans, theyre just not doing real well because they have such a big social safety net, National Health for everybody, basically free public higher education, and all the rest. Germany has one of the most expansive programs of welfare for its people, and its the most successful country. Their unemployment is significantly lower than that in the United States, but on the other hand of course, for a german worker, like for most european workers, being unemployed doesnt have the meaning it does here because since they all have a National Health system you get your National Health whether you have a job or not. When you lose your job, you do not lose yoyour health insurance. You cant lose your health insurance. Its yours by right of citizenshipip, but i wouldnt want to go into that because i wouldnt want to get americans upset. [laughter] someone else was about to goplease. As a student, what role would education play in the cooperative ethic, and how could we cultivate cooperative education for people instead of the competition that you see at places like stanford of which im a student . Heh. Ok. I was once a student at stanford myself, so i feel a certain amount of compassion andwiwith your suffering. Excuse me. Your education. [laughter] our Education System would have to radically alter like everythiing else i in our cultu. Were not talking about a marginal adjustment. Were ttalking about a basic change. Production is how we live. What, we get up in the morning and have a cucup of coffee . Thats a product of labor. And we put on our clothing. Those are products of work. And we get in the car. Thats a product of work. Work, production is central to literally every day, every minute of our lives, so if we reorganize that, we are gonna change Everything Else, and education would be an example. Well, i said a little bit before. Let me expand on it. We have a highly stratified, ranked Education System, and since im a product of it in spades, let me use myself as an example, all right . As an undergraduateim the child of immigrants. My parents are european, so i was born in the United States, but english is my third language. I spoke french and german because my parentsmy father was french, my mother was german. So as an immigrant, i came here as refugees. I had no money or anything else. So i go to school, i go to harvard as an undergraduate. Then i o o to stanford because there was a profesessor there i i wanted t study w with, and i i got a masters degree, and then unfortunately this prorofessor had a heart attack and died, and so i completed my education at yale. So here i am, harvard, stanfordrd, and yale, by most american standards sort of a poster kid for elite education. Thats what it is. Its elite education. It i is designed for people not like me. I was one of those allowed to come in, and theyve regretted it ever since. [laughter] allowed to come in on scholarshi had to have financial a aid. My folks didnt have the money, et cetera, et cetera. I had to work all t the time, that t kind of thing, but its s an educationlet me give you an example. As a freshman, we had an orientation about 5 days before the semester began of my freshman year. We all came early, and we were gonna get oriented, and we satwe were brought into a big room, and in those days, harvard was separate from radcliffe, which was sort of the female upthestreet school, and so they didnt meet with us for whatever the thinking in those days was. So it was all young men, and the president , whose name was nathan puseythat was his namepresident of harvard, welcomed us with the following speech, and it stuck in my mind. 18 years old at the time. He said, look at that man on your left, and we all dutifully did that. Look at the man on your right. Said, one of them is going to be a captain of industry, and one of them is going to be a senator. Thats where you are, and were here to teach you how to run the world. Thats what he said you know, youre 18 y yeas old, your head is getting larger as the man talks because youre being given this sense of whats expected of you, whats in store for you, almost nigh what youre entitled to when you come here, and it produces a fundamental human quality that many of you have nototiced in graduates of these institutionsarrogance, mindbending arrogance of the sort that assumes that if you go to one e of these schools something really magical happens to you. I can assure you it doesnsnt. If you have e lead that when you see an advertisement for a barar of sop and the advevertisemenent explas toto you that if only you use this bar of soap overnight your sex life will be transformed, well, you all giggle, as you are giggling now, because e you understand this is an attempt to get you to buy the soap. You dont take seriously that its gonna have that result, and if you did have that result, it probably wouldnt be because of the soap. You kind of figure that out. When harvard says to you that something really extraordinary happens toits like that thing with the soap. Ok. All that would have to change. You could nonot have schools that train the people at the top versus schools that train the people in the middle and schools that train the people at the bottom, which is what we have. We dont admit i t because its a little awkward, but we all know that. We know that. We know it from the way budgets are allocated. We know it from the qualifications of the teachers. We know it from the quality of the textbook. We know it unless we really are committed to makebelieve. We cant do that anymore, and its not out of some abstract idea. Wweve had generations of very good people e trying to chchangr educational syststem by saying, its really not appropriate. We dont know what the skills of young peoplewe shouldnt segregate them this way. We shouldnt track them this way, but it goes nowhere. Its an endless effort of good people, but it never lasts even if they get it for a while. You have to make it an institutional requirement. If workers have to be able to run an enterprise, youre gonna have to teteach theem, too. O. Youre gonna finay have to democratize the education procesess and not oout of some abstract idea because, as many of you think im sure when i said this, when i said to you, the workers will run it, you go to yourself, my god. I can think of a a worker down where i work. I dont t wat him to run. He doesnt know what hes doing. Of course how could he . Why would he . Why would she . Nothing in their lives ever prepared them for this. Their parents never gave them the idea they would ever be in such a situation because they werent. The teachers didnt likewise for the same reason. Why develop an appetite in somebody who you cant ever satisfy that appetite . All that has to change because we need people to have the skills, the qualifications, the sense of themselves, the confidence, the desire to be a director, to be a planner, to be part of the decisionmaking because it makes your life much more interesesting than coming to wok and doing what someone sticks in front of your nose and tells you to do. Thats a fundamental democratic idea, and, yes, i think our Education System would have to change, and again, let me use a concrete example. Because part of my family is french, i go to france a lot, i speak french, i have since ive been a little child, and i remember once years ago having this little epiphany moment speaking to a friend of mine. I went as a visiting professor to the university of paris. Its a bigg university, has several units in paris. University number onetheyre numbered 1 to 10 or 12. One is what used to be called the sorbonne, old, in the middle of the city, oldbeautiful buildings coming out of the louis whatever who built it. So i taught there, and i got to know some of the professors. I sat down with the one who had invited me, and we kind of compared notes about his salary and kind of how he lived and what he got. So let me tell you. Hed get about the same salary i did. So we had the same amount of money more or less exexcept the following things. He had d a daughtereri think she was 6 or 7named sandrine, a common name in france, and the first thing that blew my mind was he was eligible to take her to the local municipal child care center. Thats everywhere in paris. He could bring her 6 days a week from as early as 7 00 in the morning,g, and she could stay there as late as 7 00 i in the evening or any pat thereof, some days, some n not, some hours, whatever you wanted. She would have ashe had a little outfit there. She comes in. You know, french, theyre very nicely done, and then she takes off that and has a little smock that is for the children in the school. Shes given meals if shes there at mealtime e and snacks. A very elaborate program, and the flat rate, whether you use it 1 day a week or 6 days a week, 17. 00. So the first thing i realize he gets the same salary as meheh hehbut he doesntand then i got the other part, the university. It doesnt cost anything, nothing. 100 a year or 100 a s semester, i dont remember, fees, but nothing. Now that doesntthey dont have dormitories, i dont believe, and that kind of stuff really, so thats your own expense. They dont pay for that, but you dont have any expense to go to school, and then i said, my god. Its amazing. What about the private schools . And they looked at me and said, we dont have that. I said, what do you mean you dont have it . Well, they said, if you had a private school and a public school, that wouldnt be democratic. The rich people would all go to the private school, and everybody else would be doneso we dont. Do you have that in america . [laughter] and i told them, yeah, we do, and i come fromehhhthe private one, very expensive. It was a revelation. This was a very worldly guy who knewbut he didnt know that just like americans dont know what i just told you either. They dont know thatthis is common in europe. Very common in europe because its thought of as like having, you know, first and second class in the train, which by the way the french did have. They dont have it anymore, but they use to have on the subway, for those of you who remember, the old metro, the car in the middle was the first class, and the cars on either side were sesecond class, and the ticket was cheaperon the same trainif you went in the one car than ththe other, ad the cars were cleaner and a little neater and a little nicer if it was first class, but then with thein the 1960s, part of ththe great 1960s uprising, they got rid of that because e the populalation said, no more of that. Thats outragegeous. So now its only one class on the french parisian subway. But, yeah, i think unii say all this because universities would have to change, would all become public or would all become a kind of complicated, serious education for everybody. Another way of putting it. Liberal Arts Education was always the idea that what you want is you want to develop a personon with many capabilities. Rememember themany of you notice when youre a freshman or a sophomore youre required to take a course in the arts and a course in social science and a course in natural. The idea is youre a young person. You dont know what your capabilities are. You should take a lot of different courses to find out what really excites yoyou. Maybe for you its anthropology and for you its chemistry and for you its astronomy and so forth. The idea is you want to develop multiple capabilities, and the implicit notion is because youre gonna be a person who runs this society, and if you have to make decisions, the most important thing for you is to know is a lot about things, to have not so much detailed, Specialized Knowledge but the ability to be flexible, to see a situation and imagine an alternatitive, and for that kind of education, you should read some greek drama, and you should read some history of polynesia and a whole bunch of other things that are gonna reverberate in yourand not be a Vocational Education student who learns how to do with a ballpeenen hammer and certain kinds of metal. Not that that isnt a useful function, but it shouldnt be limited to that. We dont do liberal Arts Education except for a very small portion of our population, and it shows because even compared to other countries, like European Countries, theres much more of that kind of generalized education for all kinds of historical reasons. My parents were astonished when i was a young student that we didnt have to learn greek and latin. Mymy parents had to learn greek and latin. They had tto read Greek Literature and latin literature, and when i came hohome and scoffed at mymy pares and said, itts a dead language, they got enenraged an went in to talk to the teachers, who repeated that it was a deaead langnguage. So therefore, who needs this . We only need the latest hot stuff. Very sad. So, y yes, i think it would be a radical reorgananization ofurur educatin system becaususe it would need o give everybody the capacity to be a member of the board of directorrs of a collectively run enterprise. We would need to do that to make this system work justst like capitalism doesnt need to do it, and so it doesnnt. Let me be harard with you for a moment because i spent my entire life as a professor. Thats alall ive evr done, so im an education person. Most of the people that i know who are serious professors hate giving grades. I hate it. Most detestable part of mythere i am. Ive barely met a student over a semester, ive given a bunch of lectures, read a few little exam questions hysterically written by an overpanicked young person whos probably imbibed all sorts of substances in the preceding 24 hours, et cetera, et cetera. Present company excepted. Um, and im supposed to give them a grade, an a or a b. You know what thats like . Thats like e sorting potatoes. Theres an a potato and a b potato. This one has little knobbly things on it. Soo its not an a p potato. Im nt in n the business of potatoto graading, and who is that fofor . And the ananswer is thats for the employers, and its for r te employers to k know who to hire. Im the first grid. You know, you perform nicely, so youre an a. You dont perform, youre a b. You really performed lousy, youre a d. Thats help to the employer. I dont want to help the employer. Thats not what i signed up for. Im not interested in this, and theres even worse. This meritocracy fakery that we do in this society, that is a scandal and a cruel one. We dont have enough jobs in this coununtry fr the e people who are perfectctly capable of filling them. We got a problem. Way too many people with good skills for the jobs we produce. Now the rational solution would be to find the jobs, to give them a chance to do what they want to do and they can do. We dont do that. We have no way of doing that. Were not driven by providing people with work. Thats mondragon. Were driven by making money, so we dont want these people, but its very dangerous. They want an education, and they got t one, o now they want the job, but we dont have the jobs. How do you solve this problem . As and bs and cs and harvards and the local Community College because it allows us to say, we got jobs for you, you, you, but not for you and you and you, but thats not because of anything wrong witith the system. Its because of you. You went to blehh school. You gogot a buhhh grade at a blehh school, so dont blame the system. Its you. You didnt work hard enough, you didnt go to enough school. You didnt take that extra course. You didnt take the princeton prep to get your sat scores up. Buh buh buh buh buh. You know the horrible routine, but the cruelty is youre blaming the individual for a failure of a system to make use of its resources, off its people, and so people geget veryry down on themselves, and they spend their r rest of ththr life feeling g really inferioio. Very, very cruel way to not solve a problem in a rational way. All thatat would h have to stop. Youd have to realally reorganize education, and as someone who has watched this cruelty play out on 10 generations of students, it is awful to watch. My colleagues, who are notas you might have guessed, i am not on the rightwing end of politics, but my colleagues, some of whom are and others who are in the middle, one of the few things we could always agree upon was that there isthe problem with our graduate students and our undwas never their capability. It was mostly their sense e of their o own capabili. They actually had the ability. They just didnt believe it, and by the time theyey got to u, that was so deep in them not to believe in it that it was a selffulfilling kind of belief. Very tragic. C. You know, most people who begin a ph. D. Program in the United States never finisish it, the majority, and thats not because they dont have the capacity. It has nothing to do with it. No correlation at all between the capability shown when a student entnters and the probability of their completion, none. Weve done that work. None. These are psycholological problems. The most imporortant thing that anan Economics Graduate Program in the United States could ever have is a fulltime professional shrink. [laughter] would be the best thing that could happen to the students in theno. Im very serious. Its the best thing that could happen to the students. The success ratio would go way up, the quality of the program. Very serious issue. So im glad you asked the question. Its about a dramatic change in the education that would have to happpen. How many more do we have time for . Last one. Ok. Very quick questionon because this is election season, and given that were in a system that precludes systemic critique, occupy protests not withstanding, to vote, or not to vote . Well, as i drove down here, which by the way since i come from new york city i do have too say in all honesty we dont have traffic as horrific as i just had driving from san frfrancisco. I i sat on 101 forn interminanable amount of time. Incredible. Anyway, as i was sitting in my car, i had the bad lucuck to listen to the Democratic National convention speeches, which were an exercise in b. S. To be as polite as i can about this. Theres not only no systemic criitique, theheres no alternative. The e Solutions Offered are more of f what theyve doneththeyrere pretending that its been wonderfully successfuful because theyre the in president justt like the other guys had to claim it was a bibig disaster. First of all, the president politics in this country is a very peculiar institution. Let me close with that because its really important. The United States is unique in the world, i think, for the following. We have been the most successful in convincing the American People of something thats patently absurd, and that is that when they have an economic problem its the fault of the government. Its stunning. 95 of the p people whwhove lost tr job inin this crisisand ththee are millions of themwere fired bby a private capitalist employeyer. If youre gonna get angry at somebody because of unemployment, the logigical target is the company that fired you. Not in america. Our people are trained. They leap over the company that fired them to the politician, the senator or the congressperson whom theyre very angry at, who had absolutely nothing to o do wiwith it. The overwhelming majority of people whove been foreclosed out of theieir homes were foreclosed by a privivate capitaliist bank or lender, and who are they angry at . Um, um, politician what . Just the best possible system for capitalists. You kick the mass of people, they get angry at somebobody else. You kick them again, they get more angry at somebody else. You are exempt. This is stunning. How did you do this . And then theres this general blame the government, blame the government. The government is the problem. Why do i say its patently absurd . George bush, our president do you remember him . That one who disappeared for the republican National Convention . He must have gone fishing. George e bush vanished, but he and the Republican Party had every interest in making sure that the last 6 months of his presidenency weree not a a timef economic collapse because what it would mean is that the rerepublicanans would be run ouf office on n a rail, which h they were, and his Political Leadership was unable to do anything a about it. They rode bush out of office. Obama rodede in because bush h couldnt stop the economic crisis. Mr. Obama may be ridden out of office for the same reason because he, with all of his clever advisors, has been unable to solve this crisis. So dont tell me the politicians are in control. Clearly if they were in control, they wouldnt possibly do what theyre doing, but thats all they can do, and the reason they can is because the separate decisionmaking is in the hands of the corporations who make all these basic decisions for their own reason and in their own competitive struggles, but thisthis notion of the government and then the blaming the government for everything, it makes the people angry at the government, and why would that be interesting . That goes back to something i said to you before, and its a good way to end. The danger of politics in capitalist systems is that when the mass of people are screwewe bad enenough in the ececonomy theyre going toto turn to politics to try to undo what happens to them in the economy. In the economy, they are dependent. Their jobs disappear, their income is shrunk, all the suffering that we know of, and theyre gonna turn to politics where its one person, one vote. Maybe they have a chance to compensate, to undo the Economic Disaster theyre suffering by a political intervention. The Business Community long ago understoodod you got to dealal h that. Its [indistinct] understanding. If fewer and fewer people become richer and richer, theyve got to worry that the mass of people that are excluded from this enjoyment are gonna get angry, and theyre gonna try to use politics. Solutioncontrol the politics, neutralize the politics. The american trainingthe government stinks, theyre all crooksthese are ways to get people away from the Political Engagement that might otherwise give them a way forward in this situation. Very dangerous, vey strange. So my responsnsewere stuck. We got two terrible problems. We dont have proportional representation, which is a staggering contradiction with dememocracy justst like the way we run our businesses is, and secondly, weve got tweedledum and tweedledee as the two parties, who exchange positions every few years, and we sit there, and with each convention, like the last week and todayby the way, the reason there arent more people here is theyre at home watching barack obama, right, so tough competition for me. So we have to do something to break out of a system that doesnsnt allow minority parties to have a voice the way they y o in all of our allied countries and to have more than the choice of two. You know, if you went into your local supermarket and there were two kinds of soup, chicken and rice, and two companies that made them, campbells and progresso, youd d feel as thouh this was not a very good store. Youd like more choice. We want 27 kinds of toothpaste and 16 kinds of soup and 12 kinds of ice cream, but two parties is enough. What is that . What is that . Why two . What istheir magic number . Its a strange country. Doesnt want more choice than two. Even if its hard to tell them apart, you dont want more than two. Its very strange, but the whole politics is handled here as a bizarre kind of excuse, and the contradictions are legion. The same politician that you mock and that you call a crook, when he sends your kid to war, you go and you stand at the parade. The same politician is a great commander in chief. He was a rotten crook last week. So when it comes to the foreign, ohh, ohh, ohh the contradictions hereif he was a crook at home, maybe hes a crook abroad, too. Its possible. Very strange. All of that has to be opened and questioned, but m my conclusion is its happening, and again, ill use myself. People like me are on charlie rose, and im traveling all over the country, do 1, 2, 3 radio and Television Programs almost t every day, and i turn down as many as i get because i cant physically do it, but the only sad thing is i wiwish theere were a lot morre f me around, but im papart ofa generatioion that didnt prprode very many of meme since it wast what harvard, stanford, or yale was interested in. Madede plenty of good economists but not with a critical perspective. No one helped them do t that, and it wasnt good f for your career, o they didnnt go that way, but this country is changing, and i really am liliving proof. My audience is bigger than anything. In the last two years, ive done more public speaking than in the previous 40, and ive always been active, but its just completely different. Now a critique of capitalism is an acceptable part of what people want to hear. Its not that they necessarily agree yet. No, but its part of the conversation. It used to be outside, beyond the pale, too scary. Thats gone. Thats just gone. Whatever youre worried or thinking about the tea parties and what they represent, sure, theyre there. They represent a point of view, but on the other end of the spectrum, the change has been at least as profound, and so its a wonderful time fofor folks like me because we have audience in the United States we havave never had in at least half a century, and its therefore a time of extraordinary opportrtunity. Weve taken more of your time than we should havave. Thanks again. [applause] announcer from the studios of wric tv, welcome to this week in richmond. On todays discussion, mickey mouse is coming to virginia. Disneys plans to build a theme park have brought about much excitement, as well as concern. What will the new park mean for virgigini . What will it mean for you . Find out today. David when we think of disney, we think f florida, perhaps california, but most recently, our thoughts have turned to virginia. Dana the walt disney company, a leader inin family y te