Jason starts the show talking about financial literacy in the nation. He looks at why foreign buying is starting to slow down, giving way to domestic buyers. Jason looks at different commercial spaces in America and discuss the on-going change.
Later on the show he hosts Dr. Richard D. Wolff, professor of economics and author of Understanding Marxism. They have a discussion on the global economic meltdown discussing the global economic meltdown. Wolff goes into his interpretation of Marxism and then the two of them discuss capitalism in the US.
Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:53
Welcome to Episode 1502 1502 and I am so excited Today Why am I so excited? Number one, because we are going to talk with a comrade. Yes, a comrade. Comrade will be talking about communism. And he is a communist. Yes. Really, really? Now, I don’t know. I don’t know if I want to go that far. I think I asked him that question in the interview, which we will play in a moment. But, you know, he really makes some interesting points. And I originally saw a video online of him speaking and going on a rant against capitalism and talking about all of capitalism’s failings, and Hey, I’ll, as a capitalist, a self proclaimed capitalist myself, I will admit that capitalism certainly has a chair of failings, no question about it. In fact, I think those failings are pretty well pronounced in some areas, and we all kind of know what they are. But, as you’ll probably hear, come through in this interview I would argue that what a lot of people think of as capitalism really isn’t capitalism. So that’s my contention to a large degree. But we’ll go into that a moment when we get the comrade on because he’s the expert. And I think you’ll really enjoy this interview. It’s, it’s a pretty spirited interview. And he’s a good guy. I like him. He’s got a good, good demeanor and really make some salient points. So take it for what it’s worth. You don’t have to convert your political ideology. But you’ll you’ll you’ll find it interesting. Okay. And coming from me here we’ve got a libertarian debating a communist. So it’s interesting. It’s like, you know, reading the daily worker alongside a newsletter from Well, I don’t know, I can’t think of one right now. But anyway, whatever. You get the idea. Okay, but why else am I excited? I am excited, because I have a speaker announcement. A NEW SPEAKER announcement for our upcoming meet the masters of income property virtual conference. 22nd anniversary of this conference, you have been buying tickets like crazy. So thank you for joining us. So all those who went to Jason Hartman, calm slash masters and got your tickets, good job on that this is going to be a great event. And again, I got to tell you, in so many ways a virtual event is just better than a physical event because you can just pull from such a broader talent base, because the speakers, all they have to do is jump online with us for their speaking slot and boom, you know, they can, it’s really nice. It’s really nice. So very excited about this event. Now, let me tell you about this speaker. And before I give you her name, I just want to tell you a little bit about her. Okay, so in 2008, George W. Bush appointed her to the President’s Council on financial literacy. Okay. And then during the Obama administration, she was on the President’s Advisory Council on financial capability, I guess I don’t know if that’s the same exact thing inside the White House, or if they changed the name of it when the administration changed, not sure about that. But she was in a ceremony in the Roosevelt Room and the White House. So in these two presidential administrations, she worked with a council composed of 19 members, from business organizations, faith organizations and nonprofit community organizations to shape the course of a financially literate nation, which is sorely needed, as you know, I mean, that’s what we endeavor to do. That’s what my Charitable Foundation endeavors to do. And again, my foundation, I haven’t talked about that in many years. That’s simply my own money. I don’t take any donations and I just use it to increase financial literacy and for some other causes that we like, and that’s what that does. So the council was charged with gathering information about financial literacy and its condition across the United States, recommending improvements to National Bank. policies to the President and the Treasury Secretary, and to assist the American people in understanding and addressing financial matters. Here’s what President Bush said about her group and her involvement in, okay, we want people to own assets, we want people to be able to manage their assets, said President Bush in his remarks. We want people to understand basic financial concepts, and how credit cards work and how credit scores affect you, and how you can benefit from a savings account. Okay, now, obviously, that’s only to an extent, you know what I’m gonna say about that, because you’ve got to invest in after that. That’s what we want. And this group of citizens has taken the lead, and I want to thank them. She was Woman of the Year in 2013, recognized by the National Bank of Arizona, who honored her with this award. She got the positively powerful woman award for philanthropic leadership in 2012. And she has written a bunch of books that you already know what they are, in fact She co authored an entire series of I think 10 books that you know very well. And she is going to be talking to us that meet the Masters about her fantastic book that I bought a copy for everyone in the venture Alliance mastermind a couple of years ago, because I just I just love this book. I was so surprised in the title of it. It was really not what I thought I’ll put it that way. But this book is great. And it’s from the author of thinking Grow Rich, of course, that’s Napoleon Hill. But she worked with the Napoleon Hill Foundation, and created this book that you’ve probably heard of, it’s fantastic. It’s called outwitting the devil, the secret to freedom and success. And of course, that series of books that I talked about a moment ago, that would be none other than the Rich Dad Poor Dad series, and it’s my pleasure to announce that we will have Sharon lechter speaking to our group on Friday evening to kick off our Virtual meet the Masters conference. And that is going to be absolutely fantastic to have her. It’s our first time having Sharon at one of our events. She’s been on the show before over the years. And she also guest hosts my women investing network podcast, the Wynn podcast, that’s the acronym. Go check that one out if you are so inclined. And Sharon guests host that for us once in a while. So it’s great to have her involved there and she will be at meet the masters. So get your tickets, Jason hartman.com slash masters Be sure to do that. And before we get to our guest, and we talked to the comrade, I’ve got a couple of updates for you on some interesting things going on in the marketplace. So foreign buyers, the United States has been very successful economically by really being very open to FDI foreign direct investment, where foreigners can directly own assets in the US. This is a very Easy country to deal with in that respect. Some countries, they cut red tape lengthwise, and they just discourage people from investing in their countries. And so this is a big deal in the US real estate market. Hey, if you practice traditional real estate where I did for Gosh, yeah, about 19 years in Orange County, California, Southern California, you would have seen the impact of this. It was mind boggling. The number of foreign buyers just boom boom boom, snapping up real estate that Americans really kind of failed to appreciate sometimes in these foreign buyers just bought it up like crazy. Well, I live in southern Florida area, I guess, little north of southern Florida, or South Florida, and a big market for foreign investors is none other than Miami and Fort Lauderdale. Now, this tide has turned a bit but extremely but it’s definitely turned. Okay, so I’m looking at Wall Street. The article right now, that says foreign Home Buying dries up, easing the way for domestic buyers. You know, there’s two sides of this foreign buyers definitely crowd out domestic homebuyers. And when you have more buyers in a market naturally, they’re attacking a limited supply. And so they’re going to drive prices up. We’ve seen this in many areas all around the world, certainly in the United States, in Dubai, in Canada, the seven main cities of Canada, Vancouver, Toronto, Montreal, right, a lot of foreign buyers in these areas, as well as many other places around the world. And so this is a change, but, but but we’ve got to understand what segment of the market are we really talking about here. And I will tell you that the major segment of the market that these foreign buyers are going after is higher prices. It’s expensive properties. I couldn’t believe I really Frankly, I felt so envious so many times when I was back in traditional real estate in Southern California, because I would see a Chinese family or a Middle Eastern family that was client of mine, and they were buying expensive properties for their kids. I mean, I remember talking with a Middle Eastern couple, and they want to do have me find them a property in Crystal Cove or Newport coast where I lived in Newport coast for their son, who was going to college at UCI. Newport coast where I lived was one of the most expensive zip codes in the entire country at times. I don’t know where it is now, but it’s way up there. Okay. It’s very expensive. I mean, think about it, a college kid.
Jason Hartman 10:52
And the parents buy them houses like this. Now, a lot of that wasn’t really well. It obviously wasn’t really an investment per se sometimes. But a lot of it was really just a way to park money outside of their own country. And some of them lived in the US. Some didn’t. It was both okay. But it’s just amazing that just the mountains of money that would come in and buy up this higher end real estate, mostly, that’s where it affects the market. Now, we certainly have a lot of foreign buyers. I mean, look, those of you listening are from 189 countries worldwide. I mean, there’s only about maybe 200 countries give or take in the world, depending on how you count them. I mean, is the Vatican a country is Monaco country is Palestine, a country, you know, we can all argue about this stuff. The point is, maybe there’s 196 countries. So we have clients from all over the world, certainly, and that’s wonderful. But most of them aren’t like you. Most of you are buying prudent income properties that follow my commandment number five, And hopefully all my other commandments. And commandment number five is Thou shalt not gamble. So the property must make sense the day you buy it or you don’t buy it. And the types of properties most foreign buyers are going after is nothing like this. It’s nothing like this. Now we’re seeing that foreign buyer population diminish, as as China, one of the biggest parts of it, they’re just putting on more and more capital controls and making it harder and harder for foreign investors or, well, not foreign to China, but for them to move money out of the country. Okay. So just a couple clips from this foreign buying of us homes was a driving factor in markets from California to Florida, being everywhere, basically, okay, but largely on the higher end. Now, the pandemic, reduced travel and immigration restrictions are further undermining and weakening international demand. Overseas residential real estate purchases climbed steadily from 2011 2017 peaking at 150 $3 billion in the year ended march of 2017. Now, you know what question to ask, you know what question to ask right? The question is 150 $3 billion, compared to what?
Jason Hartman 13:18
See, they never tell you the size of the overall market. So you don’t know how much 153 billion is. Sounds like a big number. But in a multi trillion dollar real estate market, maybe it’s a drop in the bucket? I don’t know because they never tell you the comparison, which is ridiculous. Anyway, about 60% of foreign buyers are recent immigrants or foreigners who live in the US, while others buy us homes as investment properties or vacation homes according to the National Association of Realtors. So, investment, in quote by them as investment properties, a lot of these investment properties make no sense whatsoever and we’ve covered this. I’ve reported to you on this many times over the years, but all you have to do is look at any of these big, expensive overpriced cities in which you should never invest in these silly high rises that are completely overpriced with massive association fees that are $1,000 a month, maybe they’re only $700 a month, what a bargain. Maybe they’re, you know, 1800 dollars a month just for the HOA in some of these high rise buildings, okay. And you look at those buildings, and you drive past them day after day after day, or I should say night after night after night. And you see like, there’s no lights on what’s because a lot of these buyers that you know, especially Chinese buyers, they just buy them and leave them vacant. And remember, I reported to you I think it was last week about the vacant home tax that the folks in California want to initiate in LA County. Oh my god, that’ll be a disaster and a half. Why are you keeping that $3 million high rise condo vacant when you could rent it out to a homeless person. We’re gonna talk about You really incentivize you to rent it out to a homeless person? Because there’s a housing shortage? No. The reason there’s so many homeless people is because you don’t know how to manage your stupid city. Okay, these idiot politicians don’t know how to manage anything. They create the housing shortage, through their draconian, idiotic policies, and they create the problem by running businesses out of their state. And that’s why you have a homeless problem. You know, these people could have a job, a lot of these homeless people, if you didn’t run their employers out of the state, or out of your city. Its job, don’t get me started. Anyway. So the foreign buyer thing is a big deal. But thankfully, it’s not going to affect you very much in terms of your investments, your investments, still pretty darn good. Now, let me give you a couple numbers, then we’ll get to the comrade okay. So, total foreign investment in American residential properties. Now this is a slightly different time frame. And it’s also residential. Specifically 33.2 billion again, they never tell you compared to what, which is super annoying, but whatever take it for what it’s worth, okay. In American residential properties $33.2 billion for the year ended march of 2019. Remember the other number I gave you is 2017. But what’s interesting about it, where you do have a compared to what is that this is the lowest annual number, since 2011, the lowest annual number since 2011. Now, this is a complex issue. You got capital controls in their home country, where they’re making it harder for people to move money, you’ve got currency exchange issues. So when the dollar is stronger, makes our real estate look more expensive to them. So that will discourage foreign investors. Or I really, really call them buyers because a lot of them aren’t really investors at all. They’re just speculators, gamblers, they don’t follow commandment number five, but whatever. There’s still capital As investments investors, so anyway, there’s a lot to that issue. So let’s look at another one. This is interesting. The decrease in foot traffic at American gyms. Okay. Now, why is this important? Because in the retail space, of course that’s been decimated retail properties have been decimated over the last several years, the retail apocalypse. We’ve been reporting on that for many, many years. But one of the few bright spots in the retail apocalypse was gyms health clubs. These were one of the bright spots for landlords. Well guess what? The traffic to gyms and health clubs is down by 57% during the last year, and these gyms are struggling, of course due to the Coronavirus Health precautions so pretty grim there. Okay. Wall Street Journal article, gyms were one of the few bright spots for retail owners until COVID-19. Landlords feel the pain of delayed openings bankruptcies, or just a general drop in interest from fitness buffs. Quote, it’s not worth risking my life. You’re gonna risk your life slowly because you’re going to be out of shape and you’re going to die young because you’re gonna be out of shape but pay at least you won’t die quickly if you get get the virus right. There you go. You know, people are very afraid of going to gyms. So that’s the that’s the state of that. So interesting. So Aren’t you glad you followed my advice? And you stuck with housing the thing everybody needs? When all these other people were talking about making fortunes in commercial real estate? Well, guess what? didn’t work out that way for them bit. Anyway. Alright, let’s get to part one. And let’s talk about economics, and what I call the most successful economist of all time. That is Karl Marx. I hate to say it, but it’s actually true. And the reason I don’t give Adam Smith credit for being the most successful economist with the Wealth of Nations and the invisible hand, is because what Adam Smith talked about was completely natural. I say that’s natural. I say capitalism is natural, and communism is unnatural. But here, you’re gonna hear another viewpoint, I think you’ll find it very interesting.
Jason Hartman 19:28
It’s my pleasure to welcome Professor Richard D. Wolf. He’s a professor of economics emeritus at the University of Massachusetts Amherst and a visiting professor at the new school in New York. He’s the number one best selling author of Democracy at Work, a cure for capitalism, and the capitalism’s crisis deepens essays on the global economic meltdown, and the new book, understanding Marxism and Richard I II, as I told you, before, we started I would mostly really pick a fight with a guy like you. But I watched a few of your videos and I found myself strangely agreeing. I’ve told my listeners before that Karl Marx is the most influential economist in world history. I don’t think it turned out very well the application of his principles. But, you know, what do you think? I mean, you wrote a book about understanding Marx was his stuff just applied wrong. And that’s why there was, there was so much travesty, or was it misunderstood? I mean, what what happened?
Dr. Richard D. Wolff 20:29
No, I think it you know, he is one of those people that come along historically, for reasons we never quite understand. I’m sure it had something to do with his mother and his father in the community and all the rest, who’s just ahead of his time. I mean, he sees things. He pulls together different strands of understanding and comes up with insights that we keep going back to, you know, he was deeply respectful as Marx was of Adam Smith. For example. Long Run great detailed analyses of Adam Smith’s work. I would say Adam Smith is another one another one of these people that comes along and for whatever complicated reason, they get it, they see things that other people don’t see or don’t see for a long time. And then periodically others get a glimpse and realize that he saw it already back then. And it’s not that it doesn’t change. It’s not that we can’t do better than marks. We can, we should. And he would have been the first one to agree. But it’s an enduring level of insight. And the way I would explain it to people is that there’s no great mystery here. If you think of Adam Smith and David Ricardo, they’re usually the people consider that the founders of modern economics. They had something in common. They thought capitalism was spectacular. They loved it, they welcomed it. They thought it was an immense progress over feudalism, and so they will call them this They were analysts who also celebrate what Marx was coming after them. What Marx was was a person who said, I agree that capitalism could have, and should have brought the wonderful things that Smith and Ricardo thought they would. They thought capitalism would bring in the slogans of the French and American Revolution, liberty, equality, fraternity, democracy. Marx loved all of that. But he felt coming, you know, 50 years later after them that capitalism had come, but it hadn’t brought the gifts it didn’t bring the Liberty, Equality, Fraternity and democracy. And he felt that capitalism, and he used this phrase once he was saying he is Karl Marx. Yeah, he is. Come on. His view was that capitalism had somehow not delivered the goods not delivered on its own promises. And he posed him So the question, why not? And again, make a long story short, his answer was that inside capitalism are the reasons the blockages you might say, for why it couldn’t deliver on the promises that it made. And the his life’s work was to show how and why capitalism prevents the achievement of Liberty, Equality, Fraternity and democracy. So again, long story short, what you have in Marx isn’t a critic of the system. What you’re having Smith and Ricardo, are the lovers the celebrant surface. And you know, a balanced education and economics should include both
Jason Hartman 23:45
Yeah, Fahrenheit.
Dr. Richard D. Wolff 23:46
Of course, yeah. Like you want to if you want to study I don’t know French literature. Read people who think it’s the greatest thing you know, ever and read people who are critical of it and then make your own conclusion. Oh, yeah. The only thing that matters They Americans like me to have a little bit of an edge when we talk is that we were denied that. Look at me, I’ll speak very personally. I’m a product of America’s elite education. I went to Harvard as an undergraduate. Then I went to Stanford to get my master’s degree. And I finished up with a PhD from Yale. It’s like a joke, right? Right here 10 years of my life, and hear me now, I was never assigned a word of Karl Marx, in those three institutions, in terms of his mature economic analysis. I’m not talking about the Communist Manifesto. That’s a political document written in the heat of a revolutionary time. Sure, it’s worth reading, but that’s not where you go to get the the core analytics of a person. So I feel kind of ripped off by American education, that they were so frightened by the Cold War when I was a student. They almost took pride in not having anything to do with Marxism, socialism, communism, any of that stuff. It was all disloyal. Somehow it was all scary. And so we as students were protected. I like to use the analogy. It’s like if you protect your children from learning about sex, you’re not doing them any favor at all. But they’re gonna discover it later. And when you could have helped them have a healthy attitude about it, or now, it’s going to be a mess a little bit, a little bit of the edge you sometimes pick up from people like me, because we had to learn it on our own. We had to go and find the books and all the rest. We could do that they were in the library, that censorship wasn’t 100% but you know, the professor, if you asked a question about marks the professor looked at you as if you had forgotten to wear your pants that day, you know, you are
Jason Hartman 26:00
But not in a modern University today, some on the right would argue, anyway.
Dr. Richard D. Wolff 26:07
Just a footnote on that, yeah, I am occasionally confronted by that. And it’s one of those moments where you say to yourself, do we live in different planets? I mean, I’ve been a professor all my life in half a dozen American universities. I’ve given lectures at at least 50 universities in my life, the notion that Marxists have any kind of significant presence in American higher education. I mean, that’s nuts. That’s not the case. They were weeded out if there were very many, and I don’t think there ever were but if there were a bunch, the cold war did a number on them. What you do have is you have a lot of liberals, but you got to be careful, a liberal and a Marxist are not the same. They will
Jason Hartman 26:57
tell us about that. But then I gotta fire some questions. Explain that one that’s that’s worth worth it. A liberal and a Marcus Marxist are not the same thing. When you say that what do you mean?
Dr. Richard D. Wolff 27:07
What I mean is that a liberal is part of the consensus of support for capitalism. liberals and conservatives, in my judgment, are both like Adam Smith and David Ricardo celebrants of capitalism. They have some disagreements about how you best support and help and endorse capitalism. The Conservative tends to believe our laissez faire that the government should keep minimum position a minimum role interfere as little as possible, either not at all if you take it to libertarianism or minimally maintain the currency and courts and police and military but that’s it. Right? The liberal says, No, no, no, you leave capitalism to its own devices. It produces business cycle collapses. It produces inequality,
Jason Hartman 28:01
how to regulate it and construction a little bit.
Dr. Richard D. Wolff 28:04
Yeah. And you have to control it, you have to eliminate it. The only agency capable of doing that is the government. And so the proper support for capitalism is to have a judicious targeted interference by the government in an ongoing way and these six manner and and periodic
Jason Hartman 28:24
so if we’ve got that spectrum from libertarian to conservative to liberal, then what’s a Marxist complete redistribution? No, no, no, not at all. liberal. Okay. It’s okay. We’re Workers of the World unite. What? Where, where? Where do we put Das Kapital in here?
Dr. Richard D. Wolff 28:40
Okay. preface. capital is a very rich piece of work. Yeah, it is. And it is in different ways by different writers. Hmm. Just like Adam Smith, just like the Bible, just like just like
Jason Hartman 28:53
anything, just like iron Rand.
Dr. Richard D. Wolff 28:54
Yeah, exactly. Alright, so I’m going to answer the question the way I understand it. But I’m not claiming that everybody who calls themselves a Marxist would agree, okay. But for me the critique that Marx offers, particularly in volume, one of capital, but in other places, too, is a critique that says, the root of the problem, why you have an unequal distribution of income, why you have instability, business cycles, and all of that has to do with the organization of the workplace, the enterprise, we in capitalism organize it in a fundamental way with which Marx disagrees. And the reorganization, the changing of that organization, is the root problem, which, if it isn’t solved, renders all the efforts to solve capitalism’s other problems unsuccessful. So Marx would argue, for example, that the reason we are worried about poverty today in capitalism is the same as the reason that we 20 years ago worried about public And 40 years ago worried about poverty, that as long as we’ve had capitalism, the gap between rich and poor has animated an immense array of social criticism, ditto our business cycles. Everything we’ve tried to do to deal with those problems has failed. Why? Why is it fair? Why are we now as I speak with you experiencing one of the worst collapses of capitalism in its history? And why have we had three of them in this new century? I’ve
Jason Hartman 30:30
got a question to illuminate that. That’s my next question area, but finish up with that. Yeah, okay.
Dr. Richard D. Wolff 30:35
Don’t want Marx’s answer. Long story short, as usual, given the constraints of time, Marx’s answer is capitalism didn’t make the break from feudalism and slavery that it thought it did. That breaks still has to be made. And Marx is the analyst who explains to us what it is and here The summary okay. in slavery you divided the people involved in production into two groups, master slave, the master had all the power literally owned a slave controlled the situation amassed great wealth. In feudalism, you divided people in again, in the production of goods and services into two groups Lord and serf. Same story. Yeah, capitalism, criticize those systems, criticize them for their inequality, but all that, and it promised to break from that. That’s what the French Revolution and American Revolution slogans were about. Yep. But it failed. And the reason it failed is it replicated the split, only now it wasn’t Lord and surfer, master and slave. It was employer and employee, its
Jason Hartman 31:49
labor and capital. Basically,
Dr. Richard D. Wolff 31:51
that’s, that’s the solution. The Marxist critique of that goes right there and says you To organize the economic life of a society, meaning the micro level of the enterprise in a radically different way, a democratic way, because capitalism is not democratic. The owner does not consult the workers as to what it is he’s going to do. The Board of Directors doesn’t either, but you could have an alternative women could have an alternative in which it was run as a worker, co op. In other words, everybody has one vote, and you decide collectively, what you’re going to produce, what technology gonna use, where you’re going to do it, and what you’re going to do with the profits collectively that all of you have helped to produce. Marx’s argument is that turning the enterprise into a community, hence the word communism is the way forward has nothing to do with the state, Marxist Right about the state wasn’t interested in the state. So when you asked at the beginning about misunderstanding, yeah, people made some decisions that the way to get to a communism was by seizing the state either with elections or with revolution. And then they got a little bit waylaid along the way, they got really in trance with the state. And you got this peculiar 19th and 20th century aberration I would call it in which they focused on how you get to, rather than what Marx said was the place you were going and ended up stuck in the middle with a very powerful state, but they couldn’t make because they didn’t understand how to do it. And so they ended up with what we would call state capitalism and not not a transition.
Jason Hartman 33:49
Right. So I’m guessing then you would say that the former Soviet Union was not Marxist did not have a Marxist system then right? That’s right. Okay. Because the goal meant administrated all of the co op, if you will, versus the workers with the company. Now, just to answer that one objection, or that one statement you made about, you know, the workers, unless it’s an employee owned company, it’s not really a cooperative or a community or a commune. Right? And that is rare. Okay, but it does exist out there. But the argument any capitalist would say to you is, look, it’s a free market, the employee can just go somewhere else, they don’t have to work there. So they’re not a surfer a slave or they’re not indentured either. Right. But rather than get off on a tangent, which we could discuss for three days, I want to ask you, do you so we determined and I agree with you that the Soviet Union did not really have true Marxism. Fair enough. I agree with that. Did any country to China under Mao have that or no?
Dr. Richard D. Wolff 34:49
Oh, you know, I don’t know like pure Marxism is they and I would rather use this line okay reinterpreted Marxism in their way. Look, Karl Marx dies in in a To 83. So we are basically 150 years since Marx died right? In that time his writings have become important in every country on the face of this earth, the spread of Marxism found in every corner of the planet, people excited by it, absorbing it using it.
Jason Hartman 35:23
Sure. Like I said, He’s the most influential economist of all time.
Dr. Richard D. Wolff 35:28
One of the things you know, if you like the bad news that goes with the good news, you spread very fast and 150 years to your it means you’re entering Marxism is entering countries with very different economic situations, political situations, historical trajectories, cultural institutions. Of course, you’re going to get all tene different interpretations.
Jason Hartman 35:52
Of course, of course, no, no, yeah, no,
Dr. Richard D. Wolff 35:54
no, no problem. Rather, I would rather say that what you had in the Soviet Union wasn’t interpreted of Marxism, different from mine, I’m critical of theirs, then probably would be critical of mine, in which you gave a kind of peculiar priority to the state. And I would call it state capitalism in which the state hires people, you know, and okay, but you haven’t then broken the employer employee, you’ve just added the state as another employer alongside private, okay. By the way, slavery and feudalism did that too. We would never have thought of saying it isn’t slave because the government had slaves where it is futile because the government had served. Why do we say it’s socialism or not capitalism, if the government also employs people,
Jason Hartman 36:44
okay, so we agreed that the former Soviet Union did not really have Marxism. But do you say that the United States of today has capitalism? Yes. Really. Okay. So I disagree. And here’s why I think we live in this. And I interviewed the professor who wrote the book with his title The winner take all society, you probably know who that is. I forgive me, I can’t remember his name. But that’s what we have. We have this winner take all society. We’re just because of the way public markets work and Wall Street, which is not capitalists, that’s a crony. We have a crony capitalist system. I mean, you know, it’s an insider’s game. And it’s all so rigged. And these, these certain companies get to be huge and control everything and everybody else is just a little peasant.
Dr. Richard D. Wolff 37:33
You know, it’s, it’s, this is not capitalism. It’s been totally perverted. But they give the same answer that you admitted to go along with it. Give me about what a worker can quit and become a capitalist, right? But well, if you really
Jason Hartman 37:48
well, they can become they can become an entrepreneur. Sure, yes, they can quit. They can do their own their own side hustle or whatever, even while they’re working. But the point is, we still have these giant companies that have had massive access to capital that other companies don’t have.
Dr. Richard D. Wolff 38:03
So their answer to you is the same one you just gave me. You can, you can go out and borrow. You can go out and issue shares of stock. If you hit comes the punch line, which no one wants to say because it’s ugly. If you weren’t stupid or backward or if you would have been Amazon. Yeah, right. Jeffrey Bezos wants us all to believe that he’s just smarter than we are. Yeah, he got there. We could, but we didn’t make it. Okay. It’s like telling the worker, you could be a capitalist. There’s a reason why a very small number of people are capitalists and a very large number of people are workers. It sounds like
Jason Hartman 38:41
when you say capitalists, you mean entrepreneur. Those are synonymous, right? And yes. Yeah,
Dr. Richard D. Wolff 38:46
I like the word employee. Okay, right. For me, there are structural reasons that keep the capitalists, the employers a small number and the employees large. I don’t attribute that to smarts. I don’t attribute The personal differences, we have differences. But that’s not the explanation. The explanation is a system that reproduces these divisions, generation after generation. Just like we have monopoly powerful companies on the one hand, and a mass of junior partners have those big eyes. On the other end. For me, capitalism is what it is that we produces these divisions. It’s a set of institutions, that makes a few people, employers and a few among them giants, who are able over decades, sometimes even longer than decades, to hold on to what are effectively monopolies as we call that in economics, like Amazon or Facebook, or Google or a whole bunch of others that you can name and they push back. They hold on to their monopolies by constantly spending a ton of money on lobbyists, lobbyists to keep the law in place, it’s right here. They’re monopolies. But ideologically, they tell us that they are just smarter and quicker and better equipped and they are getting their reward for their superior performance in economics, we teach this absurd theory called marginal product and we explain that one worker gets more than another because he or she is more efficient or more productive. I tell you, as a mathematical economist, that’s complete nuts that there is no way to measure that thing. This is make believe, but it’s very powerful ideologically, like many make believes in your human history have been, this will be continued on the next episode. Thank you for listening and happy investing.
Jason Hartman 40:47
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