Phony “Economic Recovery,” Real Alternatives

The crisis persists.  Tens of millions remain unemployed or underemployed.  Millions are losing their homes this year adding to millions last year.  States and municipalities are cutting back on schools, hospitals, programs for disabled and the elderly, etc.  Business and political leaders stretch to keep the public away from blaming the system, capitalism.

So we are told to celebrate a “jobless recovery” because banks, the stock market, and some corporations did better over the last year.  A “jobless recovery” is like a “war-filled peace.”  Such phrases abuse language.  Leaders use them to tell it like it isn’t.   The facts are these.  Bush and Obama poured vast sums of public money into the banks, urging them to renew lending to individuals and businesses that would then buy and hire again.  The banks used the government money to improve their own bankrupt balance sheets, but they never lent it out across our economy.  That was far too risky, they said; bankers often miss irony.  The broad economy kept sinking, but the stock market rose because speculators borrowed the cheap government-provided money from the banks to buy shares at crisis-depressed prices.

In simple English, the plan to overcome crisis by using public money to refinance failed banks did not work.  Rather than admit failure and consider alternative plans, our leaders proclaim that government-refinanced banks and a partly restored stock market constitute “recovery.”

Alternative strategies could yield a real recovery in jobs, production, and healthy budgets for states, cities, and towns.  During the 1930s economic crisis, then president Roosevelt used one such alternative to treat high unemployment.  His administration hired the unemployed directly because private capitalist enterprises had proven unable or unwilling to do so.  Federal programs like the Civilian Conservations Corps and the Works Progress Administration provided over 11 million jobs between 1933 and 1943.  Those unemployed re-hired by Washington built many of our nation’s parks and highways, replanted forests, and delivered re-employed artists into every corner of the US, among other socially useful projects.  Those programs ended only when another government activity provided even more jobs and finally ended unemployment: World War 2.

No direct government hiring program exists now or is being sought by Obama’s administration.  Business fears the consequences of production by and competition from the government.  Millions of government employees would fight hard politically to protect their jobs.  So business uses its revenues to block such government actions by contributing to candidates, lobbying elected officials, and bribing bureaucrats.  Business also spends billions on think tanks, foundations, publications, and academics to criticize the government in principle as the people’s enemy, the cause of its miseries.  And we are surprised by teabaggers?

Another alternative to today’s failed government bailout of banks would extend what FDR did in the 1930s.  The federal government would finance local, state, and national rehiring of the unemployed but with two new special qualifications.  First, at least half of goods and services they produce would have to be green: reduce pollution, restore the natural environment, reduce depletion of energy and materials resources, and so on.  Second, the enterprises created to re-employ people would differ from traditional capitalist corporations by establishing genuine economic democracy at the workplace.

Others have proposed green government employment programs such as building mass transit systems, so I need not discuss them again here.  However, few have so far proposed new organizations of work.  For example, one such proposal would assign the newly re-employed a new kind of job description.  Each of their jobs would include (1) a specific production task and also (2) full and equal  participation in running the enterprise.  These workers would democratically make the decisions that, in traditional capitalist enterprises, are reserved for boards of directors (12-20 individuals selected by and responsible to the major shareholders who are usually a tiny minority of all shareholders).  In such new enterprises, then, there would be no shareholders controlling boards of directors exploiting workers.  The workers collectively would instead be their own board of directors.  They would be accountable to the state that established them, to the communities immediately affected by and dependent upon them, to their consumers, and to other enterprises with whom they exchange goods and services.

This alternative plan offers many benefits.  It employs millions, pays them, and thereby allows them to pay their mortgages (thereby keeping their homes), to pay taxes (thereby adding revenues to states and localities), and to buy commodities (thereby creating jobs).  It restores self-esteem, vitality, and thus productivity to depressed workers, their families, and their communities.  It tackles long-neglected environmental needs.

This alternative plan also represents a commitment to achieving economic democracy.  All US workers could see for themselves how such differently organized enterprises function, whether their employees are more productive and happier than them.  Those enterprises’ activities and results would be made public and transparent.  Over time, people would acquire two new freedoms of choice between democratic and undemocratic enterprises: (1) which they prefer to work in, and (2) whose products they prefer to purchase.  Imagine each commodity labeled to identify the work organization of its production.

This alternative plan could transform a bad thing — today’s crisis and failure of our traditional capitalist economy — into an historic good thing.  It would inaugurate a national effort to diversify our economic system.  This is a win-win plan.  We gain in our relations with the natural environment and we gain in bringing democracy into our production system.

The losers would be those who prefer traditional capitalist organizations of work.  For them, the social costs of environmental and ecological deterioration, of non-democratic work organization, and of the repeated recessions and depressions capitalism imposes on societies don’t seem so bad.  We should not be surprised.  After all, businesses and shareholders are the ones who got government help first as their system broke down over the last 3 years, and they are the ones who made the most before the breakdown.  Will those potential losers be strong enough again to block such a win-win plan?  Or might an alliance of environmentalists and anti-capitalist democrats carry some version of it to victory?

Richard D. Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Check out Richard D. Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, at  Visit Wolff’s Web site at, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.

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