Economic imaginings

The key aim of this blog, as stated on my “About” page, is to look at “the reality in our fantasies and the fantasy in our realities.”  The phrase was inspired by James Hillman, who used the word “fantasy” to suggest how imagination and the unconscious always elaborate “literal” facts.

These days, nothing seems more literal than “the economy.”  Its worldwide meltdown has caused and continues to cause untold suffering.  The suffering itself is not imaginary – losing a job or a house is all too real.  The fantasy, as Hillman used the term, is found in the fears that keep us up at night.  It’s lodged in the sharply differing stories we hear of what caused the crisis, who is to blame, how bad it is, and what we should do to fix it.

I want to share the best account I’ve ever heard of our impasse.  It’s a story of cause and  effect that reaches back two centuries.  It’s an account by Dr. Richard Wolff, Professor Emeritus of Economics at the University of Massachusetts, who was a guest on Moyers & Company on Feb. 22.

Dr. Richard Wolff on Moyers & Company

Dr. Richard Wolff on Moyers & Company

In an earlier lecture, ca 2008, Capitalism hits the fan, Wolff presented an historical framework to allow us to understand “how big, how serious, how profound” our current crisis is.

For 150 years, from 1820 to 1970, wages increased across every decade in America.  Wolff believes this is unique in the history of the world.

America was blessed with unimaginable riches – minerals, timber, water, and millions of acres of farmland (after the native populations were killed or contained).  Immigrants poured in from all over the world to work in factories and build railroads, convinced that their sacrifice could provide a better future for their children.  For a century and a half, they were right.  This gave rise to the myth of American Exceptionalism, the conviction that we as a nation are unique and this is our birthright.

Collectively, we began to measure our worth and success by this standard, but it failed in the mid 1970’s.  Inflation adjusted wages peaked around 1973.  There are four reasons according to Wolff.

  1. Beginning in the ’70’s, computer technology began to eliminate millions of jobs.
  2. The practice of exporting jobs and entire industries began.
  3. Huge numbers of women entered the workforce.
  4. Successive waves of immigration came to America’s shores.

The combination of many more applicants for fewer jobs held wages in check and has continued to do so.  Americans tried to compensate by sending more people out of each home to work and by working longer hours.  By 2000 we were working 20% more hours than we had in 1970 (why else invent fast food, Wolff asks).  When that didn’t work well enough, we went on a borrowing binge to prop up our “standard of living,” often in the form of credit card debt, at 18% interest.

Forty years later, according to Wolff, we have a working class that’s exhausted, with collapsing personal lives and the anxiety of “a population whose average level of debt exceeds its annual income.”  

With a workforce unable to carry more debt or work any harder, “We have reached the limits of this kind of capitalism,” Wolff says.  “That’s why our current crisis is not temporary.  It’s not a blip.” 

Photo by Ann Douglas, 2010.  CC by-NC-SA 2.0

Photo by Ann Douglas, 2010. CC by-NC-SA 2.0

The same period of stagnant wages saw an unprecedented bonanza for business.  Flat wages plus technology driven leaps in productivity delivered all time record profits.  Along with multi-million dollar compensation for upper management, more and more corporations got into the business of credit, and this, says Richard Wolff, is the key to understanding our economy over the last 30 years.  General Motors, for instance, made more money from interest in loaning people money to buy cars than it did making cars.

Banks and corporations began to loan workers the money they no longer paid them, and this is the system, says Wolff, that is now imploding.

Our leaders don’t know how to fix it.  Traditional economic measures, from stimulus to bailouts to regulation to austerity have been tried before.  They were tried by two administrations during the ’30’s without much success – it took a world war to end the depression.  These tactics have also been tried in Japan since 1989 with disappointing results.

What are the possible solutions?  Wolff does not propose any concrete answers but simply offers one alternative model, based on the cooperative structures pioneered by some Silicon Valley startups.  He claims such a structure offers a better hope of leading toward renewal than any other suggestions of which he’s aware.

“If we don’t take basic steps of this sort, to deal with a crisis that has built over this length of time; if we keep tinkering at the edges with our financial system, because we need to call this a financial crisis, rather than a crisis of capitalism, which is what it is, we will all be very sorry.” – Richard Wolf.


Work is a critical elements of our lives, one of the key factors of wellbeing or its lack.  As such, it is rife with fantasy and arouses huge passions.  Our current political climate of rancor makes that clear.  None of our other issues cause such concern.  What happens when the solutions offered by both political parties fall short?

Photo by windsordi, East Detroit, 2012.  CC By-NC 2.0

Photo by windsordi, East Detroit, 2012. CC By-NC 2.0

In last week’s interview with Bill Moyers, Wolff suggested that the nation as a whole is like the proverbial deer caught in the headlights. He went on to say, “if my psychiatrist wife is right, as she usually is, what happens after that period of stasis, of shock, is a boiling over of anger, as you kind of confront what has happened. And that you were deceived and betrayed in your expectations, your hopes. And then the question is, where does that go?”

Best case, he says, we begin to ask questions about the system as a whole: “I think there’s a wonderful tradition here in the United States of people feeling that they have a right, even if they don’t exercise it a lot, to intervene, to control. There is that democratic impulse. And I put a lot of stock in the hope that if this is explained, if the conditions are presented, that the American people can and will find ways to push for the kinds of changes that can get us out of this dilemma. Even if the political leaders who’ve inherited this situation seem stymied and unable to do so.”

If he’s right, this is the place for fantasy, the place for imagination to plumb the sea of possibilities to bring up something that works in a new world in a new century.

12 thoughts on “Economic imaginings

  1. Not a pretty picture for those of us who believe in capitalism. It’s nice, though, that he doesn’t lay the blame for all our woes at the feet of one or two of our latest presidents. That’s refreshing. I read the opening of his book Democracy at Work: A Cure for Capitalism with the Amazon “Look Inside” feature. Not sure I can buy very far into what he has to say. Interesting post, as always, Morgan. Food for thought.


    • I need to look into his books, since the “Hit’s the Fan” video was merely an intro and several years old. What I liked was his call for more open dialog, as this quote from his conversation with Moyers last weeK:

      We’re living in an economic system that isn’t working. So I guess I’m a little bit like one of those folks in the 12-step programs. Before you can solve a problem, you have to admit you got one. And before we’re going to fix an economic system that’s working this way, and producing such tensions and inequalities and strains on our community, we have to face the real scope of the problem we have.


  2. Nice, well timed post here Morgan. The conversations that we need to have, probably won’t happen now… unfortunately! We are in a climate where no one wants to take the hit and the only way out is if everyone takes the hit together.


    • I might even go farther than that. The phrase “taking a hit” almost implies that there’s consensus on a solution, though it’s going to be difficult. I think we’re at some distance from that. In terms of knowing what to do about the world-wide economic climate, a line from Yeat’s poem keeps coming to mind:

      The best lack all conviction,
      while the worst are filled with passionate intensity.


  3. Great post. I think that you’re already seeing a lot of the anger and resentment stage in the tea party…and I think you’d be seeing a lot, lot more of it if poor black and brown communities in the United States weren’t so intensely policed. The U.S. has incarcerated more people than any other nation in history, enmeshing whole communities in the criminal justice system, and we’ve adopted a policing policy of random stops and zero tolerance. These policies make civil disobedience impossible for many communities – precluding poor people from participating in movements like Occupy where arrest is a real possibility. It also explains why, even though life is getting worse, the United States hasn’t seen major urban rioting in years. Our cities are cleaner and safer, but not because people’s lives have been improved – but because people’s freedom has been eliminated.


    • I spent a day in February on jury standby, where I could vividly see who winds up “in the system.” I didn’t get picked for a trial largely because most of the scheduled cases got plea bargained that day – how the wheels most often turn it seems.

      One seemingly hopeful phenomenon is the blurring of party lines. In the March 18 issue of Time, Jeb Bush is quoted as saying, “We’re no longer socially mobile…It is so un-American.”

      The op-ed piece by Joe Klein (p. 23 in the print edition) states it like this: “the single most vexing structural problem that we face going forward: the stagnation and decline of the great American middle class, the creation of a permanent American underclass and oligarchy.”

      I think Klein is right in saying most of the issues debated these days are froth compared to that.


    • Some of that might be due to the circumstances that allowed buddies to build fascinating devices in their garage (a nice early photo of Wozniak and Jobs -

      Of course we don’t know how many other garage-startup hopefuls went under because their tinkerer founders didn’t have the business savvy they would later need.

      One story that stuck in my mind had to do with the Buck Company, the third generation, family started business that makes Buck knives. A while ago, I heard that they employ some 230 people. California worker’s comp payments and other factors were making their survival impossible. A shift overseas would have been the easy answer, but the management wanted to stay in this country and they felt a sense of loyalty to their workers. They wound up relocating to Idaho.

      They may not be a cooperative, but they proved they could balance the needs of the business with benefits to their workers and the country, so I think of them as nice example of what’s possible when maximum profits are not the only concern.


Leave a Reply to Morgan Mussell Cancel reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s