146 of 151 people found the following review helpful
on November 3, 2009
The current global financial crisis is not due to new problems, nor was it unexpected. As "Capitalism Hits the Fan" illustrates it's simply the most recent downturn of the disaster prone free-market system. As far back as 2005 University of Massachusetts economist Richard Wolff was sensing this coming downfall of the markets. Instead of taking the liberal approach (blaming government deregulation and a handful of corrupt corporations) or the conservative approach (blaming over-regulation) he targets what mainstream politicians don't dare to target: capitalism itself.
Capitalism has seen two major downfalls in the past 75 years and has been heavily peppered with slightly less painful contractions in that same time period. Many students of economics would simply brush this off as the inevitable consequences of the business cycle that accompanies the capitalist system. Such an explanation might suffice if it wasn't for the all out attack on workers that can't be attributed to the cycle. Dr. Wolff explains what many right and left-wing economist have been screaming for years but, without truly considering the consequences. Americans are working longer hours (the most in the industrialized world) more productively (with a 75%+ increase of productivity in the past 30 years) for ever falling wages.
The most noted effect of such a trend is the pendulum swing between FDR style "New Deal" policies and Regan-Bush style financial deregulation. When one style of capitalism fails, the voters flood to the other style in hopes of rejuvenated prosperity. However, as Wolff explains, regardless of where the pendulum swings both styles of capitalism are met with disastrous consequences for American citizens. Wolff also demonstrates how social democratic policies leave the wealthy with the incentive and the tools to dismantle social programs and sidestep government regulations thus enthroning "laissez-faire" once again.
The author then gives us a history of American industry in terms of wages. For 150 years wages rose with productivity. In the late 70's that trend came to a halt as worker's real-wages flat lined (as union membership declined and free-trade kicked into hyper speed). Industry then substituted lost wages with a wide range of loans to compensate. The loans were not taken due to a lack of "personal accountability" as many claim, but out of a desire to sustain pre-70's consumption. Wolff uses statistics to show the skyrocketing in the cost of living (like college expenses) in this time period, thus necessitating borrowed capital. Capital that of course must be paid with interest, effectively costing Americans twice: once for lost wages and again for interest payments. The results have been mass wealth redistribution from the bottom to the top. Wolff offers all the statistics to show the steady loss of ground for the working and middles classes. Comparing data from 1967 and 2001 brings startling facts to light."According to the US Census Bureau.....the share of total income flowing to the bottom 60% of households fell from 32 to 27 percent. ....the top 5 percent rose from under 18% to over 22%" Pg 11. The bolstering of the rich's strength resulted in speculation and bubbles the likes of which we've never seen. So begins the global economic meltdown (Of course I'm over-simplifying for the sake of the review).
Wolff's primary solution is worker self-management(Others include red-green alliances and coordination among coops). Workers would become their own board of directors. Not the private capitalist or state technocrats as in the Soviet or state capitalist models. Since the workers would probably not cut their own wages by the trillions, export their own jobs overseas, or invest trillions in risky financial investments, this option has always seemed the best to me.
If you're a diligent reader you will finish the book in about a week; It's a very fast read. The book is a collection of two or three page essays covering a wide array of topics but with great coherence. The only downfall is redundancy. Since the book is a collection of essays written since 2005, many of the same phrases (the word "oscillation" is used in virtually every essay) and arguments are repeated. Nonetheless this work is the most vital to truly comprehending the current economic downfall. I highly recommend it!
40 of 43 people found the following review helpful
on February 6, 2010
In this collection of startlingly prescient short essays from 2005 to 2009, Richard D, Wolff presents an analysis of the current economic disaster all too rarely encountered. In each of the book's three chronologically arranged sections - roots, economics, and politics of the economic crisis - he amply demonstrates how, through the decades, capitalism has oscillated from stability to meltdown to recovery and back. Increasingly, Wolff points out, it has been the workers who have borne the great burden of corrective or "recovery." For this, he levels strong criticism at both the right (Republicans) and the "mainstream" left (Democrats, Krugman, Stiglitz, et. al.). Using clearly reasoned arguments and detailed evidence, he concludes that unless capitalism undergoes profoundly radical structural change, we are doomed to endlessly repeat the cycle that produces these crises.
At times, Wolff, a professor of economics at the University of Massachusetts, Amherst, evinces a sour grapes attitude about what he sees as the difficulty of his like-minded colleagues to land plum academic positions. This, he believes, is a major reason the economic debate gets mired in oscillation mode. One look at Obama's staff of economic advisors strongly suggest he has a point.
The only quibble I have with this significant book is that there is a certain repetitiveness to the essays. However, given the import and freshness of its ideas, perhaps repetition is a good thing here.
35 of 38 people found the following review helpful
on August 10, 2010
Professor Richard Wolff is a Marxian Economist working in academia. These two aspects of his being allow for an objective analysis of the current and former economic situations. He sits outside of the necessity of justifying or cheer-leading capitalism in any of its orthodox forms. He can thus see both neo-classical and Keynesian economics objectively. It is a very powerful stance for analysis or criticism but not necessarily the best aspect for prescribing change for the system itself. He has no bias to try to save capitalism for itself, but wants to find a new structure `post-capitalism'. I admire this stance .
In this collection, essays from the run-up and the immediate fall-out of the most recent capitalistic are anthologized. The strength of this organizing principal is that you can see over time the development and concerns that grow and allow you to place it in time. For example, the Professor is able to give the structure and shape of the bursting of the bubble and its fall out as early as October 15, 2005, two years and eleven months before the biggest crisis point in the living memory of Capitalism. As an outsider Wolff is not looking at the economy as a way to leverage profit, so such a call is easy to make. The predictive power of the model is impressive. The only more impressive call would have to put a time-line on the bursting. If he could do that, he could have made money on the run-up and selling everything short. In all honesty, the prescience is impressive. Many were aware of the bubble, if only retroactively. (I know now: when people who know nothing of a subject think they will be millionaires by leveraging whatever prevailing trend, it is time to sell.)
The biggest weakness here is structural and hard to avoid. By having an anthology of essays that are made to stand alone and effective when they do, some of the underlying reasoning behind the author's positions are overstated. Real wages have been stagnant for 35 years; Americans have funded their increased consumption during that time with borrowing. I know this now. I know it in spades. Each three page essay is a structured argument, and at points I wished there was more depth in the evidence which is not available for the formal structure.
The other criticism is on the prescriptive end. In many places Wolff argues for true worker control of the companies. He has a particular animus against corporate boards and feels they should be replaced by the workers themselves. Capitalism, in its private or state structures, has not ever accomplished this. We can see in Germany where in the larger corporations the workers have a seat at the table, but Wolff wants the whole table for the workers. While I am not unsympathetic to such a reorganization, the pathway to this end seems unclear and left out of the argument. Again, it seems that it is much easier to find the flaws in the status quo than to posit the status no. To Wolff's credit he does admit that this new organizing principle would have its own contradictions. I appreciate such honesty.
14 of 14 people found the following review helpful
on June 13, 2011
Capitalism Hits the Fan is full of essays that Richard Wolff wrote for the socialist Monthly Review from 2005 onwards. Being a socialist economist in the USA officially makes him a lonely guy as far as the dominant narrative of saltwater and freshwater economists goes, but Wolff's unique insights make me want to follow his essays in the Monthly Review on a regular basis.
Why? Because Wolff supplies a whole host of insights that you can't get anywhere else, even from such liberals as Joe Stiglitz and Paul Krugman. Who else can bring the issue of fundamentalist Christianity into a discussion on economics? And Wolff's essays at particular points in time make me think that as an investor I could have profited handsomely if only I'd read his essays at the time they were written, and I'd done a little bit of additional thinking on my part. I particularly like the essay he did on the issue of increased risk as it impacts every level of society. Clearly, Wolff is a breath of fresh air as far as economic thinking goes.
The only issue I have with him is his insistence that it's necessary to transform our economy into a new socialist style economy (NOT capitalist) that does not conform either to the traditional capitalist form or state capitalist form, as practiced I presume from Sweden to Germany to Russia. This is Wolff's Achilles heel in his thinking from my perspective.
But if you can get beyond this overly idealistic soft spot, you will be delighted in reading this book. Your IQ will increase, and you will want to read more of him.
7 of 7 people found the following review helpful
Readers should be aware that this book is a set of articles previously published between 2005 and 2009. As such, there is a great deal of repetition. Nevertheless, it is a fun, informative read.
The main point hammered home repeatedly is that Capitalism's crises can only be solved by a radical change in the economic system. The proposed change is to a kind of socialism that has yet to be tried: workers taking full responsibility for corporate decisions. Wolff emphasizes that no communist or socialist state has ever really tried this.
An important subsidiary point: Wolff warns against relying on regulation or the welfare state to mitigate Capitalism's ills. The class appropriating labor's surplus value will always have the resources to undermine regulation and welfare-state programs, having as their goal the neoliberal dream of minimal government, no regulation, everything privatized, and labor made cheap through perpetual anxiety and high unemployment.
Wolff does not provide much in the way of clues as to how a transformation to socialism could occur. Nor does he go into how global corporations could be transformed into worker-controlled enterprises. He sees some signs of encouragement in Europe where Social Democratic parties are losing legitimacy by signing on to neoliberal reforms, using the euphemism of modernizing the economy, thereby provoking a reaction among the working class unwilling to give up some basic protections.
Socialists advocate changing the economic system as the first step toward a better society. Progressives, to oversimplify, cannot wait for Capitalism to destroy itself because it is likely to destroy the planet first. For us, the goals of peace, economic justice, and environmental sustainability are paramount. The system by which resources are allocated is a secondary detail: anything that saves the planet is fine by us. I may not be convinced that Wolff's vision of socialism is either necessary or sufficient to save the planet, but it may be worth a try.
13 of 15 people found the following review helpful
on August 29, 2011
Richard D. Wolff is rare amongst American Professors of Economics: he writes well and can be understood, even by non specialists. His subtitle is: The Global Economic Meltdown and What to do about it. In fact this describes the contents of the book perfectly. In addition to clear thought Wolff is a master of brevity. This book is a collection of articles written between 2005 and 2010 that appeared in Monthly Review, one of Albert Einstein's gifts to humanity.
Professor Wolff groups his articles into three categories: Roots of a system's crisis; Economics of the crisis; and Politics of the Crisis. It makes very sorry reading about accumulation and misuse of wealth by a tiny fraction of the American population, to the detriment of the rest. The analysis is unashamedly Marxist, a system yet to be tried. There was no Marxism in the Soviet Union but much praise of Marx, in the same way as there's no Democracy in the United States, which tries to enforce its failed political system worldwide.
The crux of Marxism is fair distribution of surpluses, profits, the value added by labour, in which labour has rights of decision making same as entrepreneurs and capital investors do. Does Wolff over state the kleptomania of capitalists, the corruption of politicians at all levels of the system, the steady decline in real wages of workers and transfer of work overseas, into prisons or the illegal unregulated labor force? He certainly makes his case clearly and succinctly. It would need someone totally blinkered not to be persuaded that Marx had better solutions to economic problems than any that have failed humanity since 1848.
An excellent read containing much food for thought, enlightening and balanced. If it sends you into paroxysms of anger, think very carefully why it does so!
7 of 8 people found the following review helpful
on October 16, 2011
Richard Wolff spoke here in Santa Fe. He has the capacity to tell the audience about economics and economic theory in a common-sense way that anyone can understand. So I bought Capitalism Hits the Fan. It's a series of essays he has written over the course of five or so years PRIOR TO our CURRENT near-economic collapse. He states the problems occurring, the problems that will develop and discusses the many, many similar crises that have occurred in the US and elsewhere due to...CAPITALISM! He says it's a failed system. Guess what! If you look at the facts about what has happened repeatedly, what is now occurring, and what will inevitably result again--because there are NO effective controls to prevent it and under this system there will NOT be effective controls for the numerous reasons he shows--you realize IT has got to go! His solutions will be strongly attacked by the corporate CEOs and CFOs and such, by the people who actually believe they could be rich and powerful in our present feudal society, and by our bought and paid for President (this one is no exception, in recent years they all are), Congress and Supreme Court. I hope the powers that be in Washington and elsewhere read this book. Our economic system is in such disarray we need a radical change. Richard Wolff offers one.
4 of 4 people found the following review helpful
on March 23, 2012
No doubt about it, capitalism's latest train wreck is there for all to see. Meanwhile political rescuers throw money at Wall Street engineers, leaving hapless passengers to hemorrhage on the ground.
Wolff's book is strong on perspective leading to the crash, but weak on structure. The problem lies in constituting the book's chapters out of `stand alone' periodical articles. Unfortunately, this shift in format without adjusting the text produces a lot of unnecessary repetition. Adapting the texts instead of merely transposing and grouping them would have produced a stronger, more focused result.
That said, Wolff's historical highlights are dead-on. From forty years of stagnant wages to thirty years of steady de-regulation, the sorry results are now clear-- a devastated economy, an over-worked under-employed 99%, and a resurfacing class struggle. Wolff does a good job showing how we got to this sad state, and how a truly democratic socialism offers needed alternative. His analytic knife may not cut deep, but it cuts in the right places. Readers looking for revealing stats, plus how our dead-end two party system deals with crisis, should pick up the book.
50 of 68 people found the following review helpful
on February 7, 2010
Dr. Wolff argues that capitalism, at least as practiced in the US during the last forty or fifty years, has resulted in stagnation of real incomes in the working class and erosion of the middle class. As a speaker, Wolff is an articulate and forceful proponent of the necessity of recasting capitalism. But this book - a collection of essays - lacks continuity and focus. I bought the book hoping for a better understanding of Dr. Wolff's proposals for reshaping the economic order but was left wanting. One only hopes that another book, written to purpose rather than a collection of loosely related articles, is in the offing.
8 of 11 people found the following review helpful
on February 16, 2010
Capitalism needs a bit of maintenance now and again. "Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About it" discusses the recent financial crises which have turned into depression. Richard D. Wolff offers his own thoughts and ideas on how to combat these recent troubles with original and well thought out solutions. With scholarly thought and research, those pondering a way out of the crisis, "Capitalism Hits the Fan" is a worthy read for those who often put thought into the country's economic problems.