 Hey everybody, today we are debating Capitalism vs Socialism and we are starting right now. Have you here for another epic debate? Want to know if it's your first time here at Modern Day Debate, we are a neutral platform focused on hosting debates in the fairest way possible on topics including science, religion, and politics. And so, want to let you know if it is your first time here, consider hitting that subscribe button as we have many more debates to come that we're very excited about. And also want to let you know, no matter what walk of life you are from folks, we really do hope you feel welcome, we're glad you're here. So want to let you know a couple of things for today's debate. First, we are thrilled that you could say this kind of exhibition debate is kind of a charity event as well. So we are going to donate 100% of the superchats that come in today to save the children. 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And then I will hand it over to Brenton, who is co-hosting and co-moderating today, he will be introducing Dr. Wolf. I also want to let you know up front. So folks, we are very excited as Brenton helped put this debate together. He helped us connect with both of our guests. And so we really appreciate that. And want to let you know he is linked in the description. You can check out his channel where he has his own debate with Dr. Friedman if you got to see that one before. So he's got a lot of other stuff going on. I encourage you to check it out. But I want to let you know before I introduce Dr. Dr. Friedman, I want to let you know that all folks want to say, you can find each of our guests links in the description. So if you'd like to hear more or read more, you certainly can. And we encourage you to go down to the description box right now so that you can click on their links. And so first, going to, as mentioned, introduce Dr. Friedman. And then I will kick it over to Brenton, who will introduce Dr. Wolf and get us started with the actual debate. First, Dr. Friedman is an academic economist recently retired from Santa Clara University. Past positions, some in economics and some in law, have included VPI, UCLA, Tulane, Cornell, Chicago, and Stanford. His first book, The Machinery of Freedom, Guide to a Radical Capitalism, was published in 1973 and included a sketch of how a modern society with private property and trade and without government might function. His most recent book, Legal Systems, Very Different from Ours, includes chapters describing real world examples of past stateless societies. He or his other nonfiction books cover economics, the economic analysis of law, and the implications of future technology. He has also published three novels, most of his articles, and many of his books can be read for free from his web page, DavidDFriedman.com. All the books, which by the way, that's linked in the description. And all the books are available on Amazon as print and Kindle. Some also as audiobooks, if you're like me and love audiobooks. He identifies politically as a libertarian and anarcho capitalist. So thanks so much, Dr. Friedman. We are honored to have you. We'll kick it over now to Brenton, who will be introducing Dr. Wolfe. Thanks, Brenton. Yeah, thank you, James. And I'm so happy to have helped to facilitate this clash of the Titans, each of them appealing to a different part of my personality. So I'm in particular really excited to watch this. Richard D. Wolfe is a professor of economics emeritus at the University of Massachusetts Amherst and a visiting professor in the graduate program in international affairs of the New School University in New York City. He is the founder of Democracy at Work and host of their nationally syndicated show, Economics Update. His latest book is The Sickness is the System, When Capitalism Fails to Save Us from Pandemics or Itself. And is available along with his other books, Understanding Socialism and Understanding Marxism at democracyatwork.info. That's democracyatwork, one word, I-N-F-O. All right, both of our speakers have agreed. We've got a great setup here. We're doing 20-minute openings. And Dr. David Friedman will be kicking us off. So Dr. David Friedman, your 20 minutes begins now. Thank you. In preparation for this debate, I looked at some of Professor Wolfe's online material and concluded that we might have a problem. Because it looks to me as though what he mostly wants to defend under the label of socialism, I regard as one of the many variants within capitalism. That is worker co-ops, which, as far as I can see, are a kind of firm, just as a partnership is a firm or an ordinary corporation is a firm. And as far as I can tell, what I call socialism, which is the standard economic definition, system of state ownership and control of the means of production, I think he agrees that socialism, but that's the old-fashioned kind of socialism. We've tried it. It didn't work, so he isn't interested in defending it. But again, if he wants to defend that, we can argue about that. And if he wants to argue for workers' co-ops, whether we call them capitalism or socialism, I have nothing against them. But I don't think it's surprising that they're a fairly uncommon form of firm in capitalist systems. What I wanted to do was to start by explaining socialism and capitalism as I understand them and why I prefer capitalism to socialism. And I start with what economists call the coordination problem, which is a problem that all societies face. Producing anything substantial, even as something as simple as a pencil, ultimately requires the cooperation of hundreds of thousands or millions of people. If you trace through everybody involved, that to have a pencil, you need wood. To have wood, you need chainsaws. To have chainsaws, you need steel and gasoline and a variety of other things. And somebody's got to grow the trees. And that involves a bunch of people. And if you trace back the causal links, even for a pencil and more obviously for an automobile, you realize that somehow, by some magical process, a very large number of people are coordinating their activity to make sure that if someone wants to build cars, because someone wants to drive cars, someone produces enough steel, which means someone has to produce enough iron ore and enough coal and run down the link. And your first instinct, looking at that problem is we must all be dead. Because how could you possibly coordinate that many people in order to make the society work? And there are basically two answers to that problem, with many variants of both, of course. The obvious answer is hierarchy. The obvious answer is that you have someone who figures out what everybody should do and makes them do it. And that system works tolerably well for small groups of people, but it doesn't scale very well. That as you increase the size of the hierarchy, the distance between the CEO and the factory floor gets more and more layers of people, and it's harder for him to tell what people are doing or what they want to do. The other and not obvious solution, which is the one that does scale, is decentralized coordination under a system of more or less private property and voluntary trade. And again, there are lots of variants in detail on how it works, different societies, different things are categorized as private properties, some things are commons, the air, for example, or the English language, which we don't have intellectual property rights to, but for the most part, you've got a pattern of decentralized coordination. And it's a little puzzling at first how it works and the full explanation generally takes about a semester or two of price theory course. I could point people to one of my books that's intended as a substitute for that course. But the basic logic is pretty simple. Individuals are making decisions. They're deciding how much iron ore to dig, how many books to write, whatever they're doing. And we want a system where when I make a decision, the decision it is in my interest to make is reasonably close to the decision it's in our interest to make. And how do you do it? You have a system where the individual who's making a decision bears the costs of that decision receives the benefits of that decision. Hence, if benefits are larger than cost, it will be to his interest to make the decision. If not, you won't. That's the basic logic of decentralized coordination. And the way it works in a market society is that if I want to produce something, I need inputs. I need if I am a freelance author among other things. So I need a cover which requires an artist. So I've got to make a deal with the artist. I need various other inputs for what I'm doing if I'm making a car, I need steel. For all of those inputs on the market system, I've got to pay somebody else enough or offering something else he values enough so that he's willing to do it. So that means that the cost to the worker of spending his time making my cover or spending his time mining iron ore or whatever he is doing has to be compensated in what I pay him. And therefore that cost is transferred to me. When I produce something of value whether a book or a car, the purchaser is then giving me a price which reflects the value to him of that something. So I'm receiving the benefit. So I'm receiving the benefit, paying the cost. Hence, if benefit is larger than cost it's in my interest to do it. That's the basic logic of the system at the very simplified level. And there are lots of complications. In particular, there are a set of problems that economists describe as market failure, which are cases where for one reason or another, someone who makes a decision either can't collect the benefit of it, makes a radio broadcast for example and can't control who gets it or doesn't have to bear the costs or all of the costs. For example, air pollution is a sort of standard example or had my neighbors who have loud parties late at night and don't worry whether or not it's keeping me up. So it's not a perfect system. We don't have any perfect systems but nonetheless is a way of getting decentralized coordination where to at least first approximation everybody makes the right decision. And unfortunately, as far as I know there is no better alternative. Real societies as we observe them contain both hierarchical structures and decentralized market structures. And if we think about the societies that we call capitalist they really have hierarchical structures of two different sorts. First, there are hierarchies within the market. So if you think of an ordinary firm within the firm you can think of a firm as a sort of a miniature socialist planned economy. That is to say that CEO of the firm gives instructions to people through a chain of subordinates and he then coordinates everything theoretically or he and his employees coordinate everything. But the firm is acting inside the market structure. So if the firm wants to get workers it's got to offer those workers better terms and they can get anywhere else. If it wants inputs it's got to pay the sellers those inputs return an amount that compensate them for either producing them or for not selling them to somebody else. So therefore the firm in that system though it's a hierarchical structure is constrained by the fact that if hierarchy doesn't work the firm breaks down. The firm goes bankrupt. And if hierarchy works but for a slightly smaller firm then slightly smaller firms drive out the larger on the other hand if the larger firm does better you have the opposite happen. And for anybody who's really interested in the underlying economic theory the classic articles by Ronald Coase called The Nature of the Firm. And if you want to read it as a book instead of an article it's a book by Oliver Williamson called Market and Hierarchy which is I found very interesting when I read it. So that's one form of hierarchy and something like modern America. The other form of hierarchy however is government action. So that the public school systems are in fact a socialist institution even though it sounds odd to call them that since we're used to thinking of socialism as a bad term and public schools are a very American institution but in fact they are literally socialists that is a government owns and controls the means of production. And the government does not depend on selling its services to willing providers on the contrary the government collects taxes to pay for it. It doesn't even depend on willing attendance since to varying degrees in different states children are required to go to that school or to that school or some other school that the government approves of. Similarly the American military is a socialist institution in the literal sense that tanks and the guns which are their means of production and the fighter planes and the bombers and the A-bombs all belong to the government. They are funded by tax money. So you actually have a mixture in a so-called capitalist system of hierarchical institutions within the market and of hierarchical institutions outside of the market. And if you think about real world socialist systems such as the Soviet Union or North Korea or East Germany they also have a mixture of both hierarchical and non-hierarchical systems that there is typically a black market and illegal market. Quite often there are some legal markets as well with various restrictions imposed by the government. They're informal markets in favors which are working sort of like that although the fact that they're illegal and informal makes it harder to make them function very well. So you really have both forms in both and it seems to me that insofar as I can make a useful definition between socialism and capitalism it's socialism when the top level system the other things are embedded in is the hierarchy and it is capitalism when the top level system is the market. And I would like to see a perfectly an entirely capitalist system in which everything was being produced by voluntary exchange but the real world systems what you really have is a system like the US which has a sizable socialist element but where most of the economy is being run on the market basis. And a system like say the Soviet Union when it was a going concern or North Korea now where there was certainly some implicit or explicit market arrangements but the top level everything else is embedded in is a hierarchical system depending not on voluntary exchange but on compulsion basically. And within the market system you can have a great variety of different ways in which people choose to arrange their lives. You could have workers co-ops you can have ordinary hierarchical firms you can have my own preferred system which is everybody being a freelancer that's what I'm doing at the moment I'm self publishing my books I get somebody to do the cover. I have my editor in house because my daughter happens to be a freelance editor and then I use Amazon to make the books available to other people. And you could have any of a variety of structures law firms are I suppose in a certain sense workers co-ops but only with a very small elite group of workers controlling them and everybody else is an employee all of those. Why is capitalism better? And ultimately the answer is that hierarchy doesn't scale that hierarchy works for a family firm it works for a football team more or less but it doesn't work very well for a national economy. And in theory in the capitalist system you have hierarchical system only up to the size where it keeps working as judged by what people are willing to accept this payments for their inputs and what they're willing to pay for its outputs. In the socialist system the hierarchy is not disciplined in that way and people who support a socialist system mostly assume that it will be disciplined instead by political mechanisms by democracy and some societies by a wise benevolent dictator in which some optimists at various times in history have believed in but by some political mechanism or other. And the political, the problem is I was talking earlier about market failure market failure happens when individuals make decisions where they're not bearing most of the costs to receiving most of the benefits. That is the exception on the market system although it occurs. It is the normal pattern in the political system. There is no political actor who is either receiving all of the benefits of his action or paying a significant part of the cost that if you think of the bottom level of democracy which is the individual voter if you cleverly wisely study all issues and vote for the best guy first it'll probably have no effect because you're only one voter out of a hundred million or so but if it has an effect the benefit is shared with the rest of the population of the country you're getting almost none of it. If you are a judge and you make the wrong decision the costs go to somebody else. If you set a bad precedent which could have enormous costs over a long period of time you never find out and the costs go to other people. If you are a politician and you pass a tariff the benefits of the tariff go to the industry that's protected the costs of the tariff go to people who are buying its products at a higher price and the exporters who can't export as much because we're not importing as much all of those are being imposed on other people. So we don't have any method at least I don't know of any method I don't think we've discovered any method by which you can use political mechanisms to get people to make the right decision and almost always people who are arguing we're doing something politically simply assume their conclusion they say let us have a government which does X and what I wanna do is to impose on the government when we're thinking about it exactly the same constraints I impose on the market just saying under what circumstances or political actors make the right decision or the wrong decision and unless you've got a good reason to expect them to make the right decision you have no business assuming that they will. So that's the problem with all of the proposals to use political action to fix the flaws of the market would certainly exist and that they simply take it for granted that the government actor who intervenes will intervene for the general good rather than in order to get reelected or in order to get bribes or in order to promote those people he likes and not the people he doesn't like or whatever. The real world systems we observe as I say are all a mix but we do have a good deal of evidence because we can observe multiple cases where you have what start out is very similar societies one of which is much more capitalist and one of which much more so she's and within our lifetime the obvious pairs are East Germany and West Germany and East Germany not only worked worse than West Germany it worked so badly they had to build a wall with armed guards to keep people from losing. We have North Korea and South Korea. We have the contrast between Maoist China and Taiwan, Hong Kong and Singapore where Taiwan became a modern developed country with the kind of standard of living that you and I are used to and China under Mao was a place where when things went wrong 30 million people starved to death during the famine during the Great League forward. But we've got China actually gives us a second and perhaps equally interesting comparison because all of those are parallels in space two things that existed at the same time but in the case of China we also have the history of the period since Mao died that when Mao died, China was a dirt poor country. The elite of the communist party who as far as I can tell were intelligent and well-intentioned people finally had the opportunity to go outside of China and see what the rest of the world was like and they discovered to their astonishment that with what they had been told was the best economic system in the world, socialism China was an extraordinarily poor country in contrast to all of the countries around it that they were able almost all that was Vietnam I guess might have been in the same category that they were able to observe and they being said, we have the account of one deputy of premier of China who returned from a visit to England and reported that he had found that a garbage collector in England had several times his income and he concluded that England would be the perfect communist country if it only had a communist party running it. It was a shock to them and since they were as far as I can tell on the whole honest and well-intentioned people they started experimenting and tinkering with the system and introducing various things. One, be a long talk if they were interested but one of the experiments was having little islands of capitalism inside their socialist system so they could study how capitalism works and figure out what the tricks were that they could adopt to make their system work better and the islands of capitalism worked so well that the exception swallowed the rule and by now China is a little less capitalist in the US a good deal less free than the US it did not move to democracy it is still a communist country politically it still calls itself socialism with Chinese characteristics but in fact stuff is being openly bought and sold if you go to Shanghai it doesn't feel very much different from New York or Chicago. So I think those experiments show us in a pretty striking fashion that the more capitalist systems work a whole lot better than the more socialist system. Now I'm in favor as I said of something still more capitalist you can read my book from my web page or we could have another debate on that sometime but that's not the subject here. I thought I would end by giving a quote on just how well capitalism works from a source that Professor Wolfe may be familiar with is the description of the very early stages of capitalism and the quote goes as follows the bourgeoisie during its rule of scarce 100 years has created more massive and more colossal productive forces that have all preceding generations together subjection of nature's forces to man machinery application of chemistry to industry and agriculture steam navigation railways electric telegraphs clearing one minute warning for cultivation canalization of rivers whole populations conjured out of the ground what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor that was written by Karl Marx in 1848 very early in the history of modern capitalism we've done gone further since then in 1800 about 80% of the world lived in what we now define as extreme poverty less than about $1.90 a day income by 2016 it was down to 10% that was not the result of socialism it was the result in large part in the last stages of it of China abandoning socialism of India stopping to depend on five year plans and switching to something at least a little closer to capitalism, a set of changes in which the basic market structure often impeded by governments in lots of ways spread around the world and I think if I found that is time by 20 minutes thank you very much Dr. David Friedman and we're going to move to Dr. Richard Wolfe you have 20 minutes starting now. Okay, thank you. I'm struck listening to Professor Friedman and being at the moment of this election that it does appear that we do live on separate planets. So the people of America can't seem to sort themselves out so why should we expect ourselves to do any better than it? I don't recognize hardly anything in what Dr. Friedman has to say. And given that we've had a similar education and live in the same country over much the same period it tells you something about the society we live in. So let's begin and let me put my cards on the table. I don't like capitalism. I think the human race can do a lot better than capitalism and I'm doing everything I can to move us along in that process. So everybody should understand where I'm coming from. And along the way I'll have some differences with Dr. Friedman and I'll mention those as we go along and maybe folks can pick up on those later if they're interested. Let me begin by dealing with the definition problem because it is very fundamental. It may appear to Dr. Friedman or others that one can define socialism and it is what it is. That might be convenient, I don't know but it is not a rendition that I recognize. Socialism like everything else changes over time and over space. And therefore when you specify what you mean by socialism you got to put a date and a place on it or else you are fudging something that you ought not to fudge. Let's really be quite clear about this. Karl Marx, if we're gonna take him as the leading theorist of socialism and he both was and is that. Karl Marx dies in 1883. That's roughly 150 years ago. In the time since Marxist ideas, Marxist notions of socialism alongside other notions of socialism since Marx is not the only one have spread to every country on this planet. There are Marxist organizations and socialist political movements of every kind and description in every country on this earth. Legal, illegal, some governments, some not governmental. Any intellectual movement, any idea that spreads that diversely in that short a time produces two things. A wide range of differing interpretations and the clash of those interpretations giving a dynamic to the notion of socialism that really ought to be present in conversations. So there is nothing bizarre or strange or unusual in the fact that what socialism meant to people in England early in the 19th century and what they meant at the later part of the 19th century in Germany and what they meant in Russia in 1917 and what they mean to us now are different. The system, the idea has changed, changed with intellectual movements, changed with those efforts starting in 1917 to actually realize in a practical way all of those things have changed socialism. So yes, what Dr. Friedman talks about was some people's idea of socialism sometimes and in some places, that's all. Not in all times and not in all places and certainly not now. Listening to him is a little bit of a time warp for me because I happen to be involved in the socialist universe and I know how much it has changed in part because of what happened in the 20th century and here I'm thinking mostly of the Soviet Union since that was the dominant attempt to realize socialism in the 20th century and from the beginning to the end, it runs the history of the Soviet Union, runs that century. But socialism has gone on since then as indeed capitalism and lots of other things have gone on and at this point, what socialists are interested in, myself included, is really quite different from but indebted to the history of what it meant before. So for example, just to make it really clear that it matters, I don't think socialism is particularly about the government. I would remind you that Marx who wrote a great detail about all aspects of capitalism never wrote a book about the government, barely wrote at all about the government. It was on his to-do list when he died. He never got to it. You know why? Cause it wasn't a priority. The issue of the government came up in a very particular way in socialism. It came up as a strategic idea. The socialist as they became more and more important across the 19th century began to debate. Well, we're big now. We aren't a tiny group. We're growing and we're growing fast. So we better have a strategy. How do we take society beyond capitalism? Cause the one thing all socialists kind of agree on is that they really want to go beyond capitalism. They yearn to go beyond capitalism. And I'll come back to that in a moment, but they strategize that the way we're gonna do it is, you see socialism is something for the mass of the working class. And how we're gonna get it is, well, let's see, what is the way that the mass of the working class might make social change? Well, let's see, we have suffrage in the Western world here in Europe. And we're moving towards universal suffrage. Aha! In universal suffrage, the majority votes and wins the election. And we, the working class, the employees of the system, we're the majority. So a clever strategic objective would be to get our people mobilized to utilize suffrage to grab hold of the state. And that will be an important step. That's all a step, giving us a greater chance to move society along than if we didn't have the state, especially because the capitalists seem to dominate the state most of the time. And both for offensive and defensive reasons, if we could snatch the state away from them, that would be a step forward. The interest in the state is not a part of the principle of socialism. It has to do with a strategic idea of how to move the society forward. Is it true that some societies grabbed the state, like the revolution in Russia, and then never made the transition, got stuck at that stage of the state? You bet, and that's a good criticism. But it's got nothing to do with socialism. As an idea and as an alternative to capitalism. Let me take that thought a step further. Dr. Friedman talked about coordination. All societies that have a division of labor have to have coordination. If I don't do everything for myself, take the bread, cook the meals, make my shoes and fiddle around with my transport, I have to rely on other people to do that. And everybody relying on everybody else requires coordination. And societies that had a division of labor for thousands of years and have come up with a whole host of different mechanisms of coordination. That really isn't all that interesting. Okay, that's a problem. And we can look at how different societies solved it. But there is no one-to-one correspondence with the coordination problem and a market. A market is only one way among a whole bunch of solving the coordination problem. I also find it bizarre to think of capitalism and socialism in terms of governments and markets. And perhaps that's a key point to drive home. Slavery had markets. There's nothing unique about capitalism and markets. You remember American slavery? They bought and sold slaves, that's a market. They bought and sold cotton, that's a market. They bought and sold fill in the blank. So markets existed in slave society. Diddo in much of feudalism. Not always, some parts of feudalism solved the coordination problem in different ways. Not market ways, but markets coexist. So capitalism is not the system of markets because those long predate capitalism. Well, then what is capitalism? I would argue Marx, whose contribution strikes me as pivotal here had a pretty clear definition. That there are different ways human beings have organized the production of goods and services. That's different from how they circulate. Markets are about exchange and circulation. But Marx's focus was on production. So here's three basic ways in modern history. Slaves is one way. You have a master and a slave. Masters is a small group. Slaves is a large group. Slaves do most of the work. Masters tell them what to do. Masters become rich and powerful. Slaves yearn for a better system. Then we have feudalism. How interesting, different, no slavery. Nobody can own anybody, but you have a small group of people again, lords and a large group of people who do all the work, serfs. And one interesting thing is that the serfs yearn to do better. Now we come to capitalism. It's different. That's what's interesting. How is it different? Nobody is anybody's slave and nobody has a personal obligation to another person the way a serf and a lord did. Instead, a contract links the two. There's an employer, a small group of people who tend to become rich and powerful, and a mass of employees. A large group of people who don't. Notice the parallel in these three systems. You might have thought, if you were all excited about capitalism, you might have believed the theorists of the capitalist revolution that they were breaking from all of the earlier systems. They were breaking from slavery. They were breaking from feudalism. And in important ways they did, but they were equally important ways in which they didn't. And one of them was this division of people in production into a small group of people with all the power and wealth, telling all the others, the vast majority, what to do. A modern capitalist corporation is the most undemocratic institution I can imagine. You do what you are told the majority. And if you don't, you lose your job and you lose your income. That's called compulsion. And that's the arrangement. And if you don't like what your employer tells you to do, well, you're free in capitalism and you can go and work for another one. Whoa, what an interesting system. Where does all this conversation about freedom come from or democracy for that matter? You know, if you really believed in democracy, the workplace is the first place you would have installed it. You know why? Because that's where adults spend most of their lives. Working five out of seven days, the best hours of the day, they're on the job. Make the job democratic if you are believing in democracy, but you don't. You allow the owner or the shareholders or the major shareholders or the board of directors or some mix and match of all of them are a tiny minority to dictate, to dictate to everybody else. No one person, one vote, no democratic decision, what to produce and what not. In the minutes that remain to me, two points that Dr. Friedman made, and I understand I'm responding, but partly the order of events arranges that. I find that several statements kind of remarkable. China, let's take China. This lovely story that once upon a time, it was socialist and it didn't do well. And now that it's doing real well, well, it's capitalism. That's a story of somebody who wants to believe that socialism is ineffective and capitalism is good. That is really a stretch. For the last 25 years, China has outperformed the United States in terms of economic growth at a scale of roughly three to one. It's not even close. That's why they are the superpower. I don't know what it means to say a society is successful or not, but if you're a society that gives number one priority to economic growth and you have the record that Chinese do, well, that might explain their position in the world and the popularity of their government. That's not an endorsement of them, but it's a recognition of a basic fact. The fastest economic growth in the 20th century was achieved by the Soviet Union across two wars and a civil war and an agricultural collectivization. They still became the second biggest power having been the most backward country in 1917 in the society. If economic growth is your goal, wow, we have a lot to learn, but those were governmental. So here's my final point. This dichotomy between the government and the private sector, I find bizarre. In slavery we had, next to each other, private slave enterprises, master and slaves, and the governments that existed from time to time in some slavery, they also had slaves, but nobody in my knowledge has ever suggested that it wasn't slavery because there was more or less of a balance between the private slave owners and the public ones. Ditto with feudalism, there were private feudalisms, and then there was the state which also had serfs. So you had private feudalism and state feudalism, but we all deal with feudalism. And you know what? We don't give out much importance to the relationship between the state and the private. So we come to capitalism and we have a bizarre history. Suddenly, whether the capitalist employer is a private individual or a state entity becomes of enormous importance in a way it never was before. So I asked myself, why? We had already made distinction between capitalism and what went before in terms of the master slave dichotomy, the Lord serf dichotomy and its differences and similarities with the employer employee dichotomy. We don't need this weird discussion of the relative importance of the state. So my suspicion to all it is is that that's a convenient deflector away from the core issue for those like me who see in the production relationship something that is fundamentally unacceptable, fundamentally undemocratic, and that which we can go beyond. Hence a socialism that emphasizes worker co-ops because that is the alternative to master slave, Lord serf or employer employee because it finally brings democracy into the workplace, which I would argue was Marx's intent all along, at least in the sense that I make of his thinking. Final point, my family is by origin German. German is my first language, I'm fluent in German and I have studied German history all my life. I don't understand what Dr. Friedman said about Germany. East Germany was a backward, rural part, an agrarian backwater. All capitalist development in Germany had taken place in the West. And when you cut that country in half at the end of World War II, you took the advanced industrial Western part and made it West Germany and an old rural Yonker class, rural backward area. For communists, this is the reverse of the way things should have gone. And that has to be factored in to their different performances without, again, as with China making this night's neat story of capitalism, good and socialism, bad. For me, socialism is a radically democratic reorganization of production. Whether the worker co-ops use market mechanisms to deal with one another, interspersed with non-market mechanisms, and I agree with Dr. Friedman, it's usually a mix, is a much secondary question to the radical social transformation that would occur if socialists had their way and made the democratic worker co-op the core production organization. Happily, that is already present in the world. And for those of you that are interested, the most successful example is the Mondragon Corporation in Spain. The second most successful example is the 40% of the economy of Emilia Romagna, a province in Italy, where you can see how worker co-ops function and have function for many, many decades, so that the reality of them as a real alternative to capitalism is plentiful for anyone interested in looking at it. I'll stop there. Thank you. All right, and you had two minutes left. Do you wanna keep going or do you wanna yield that time? No, let me keep going because being a mathematician before I became an economist, I like to make this point when these kind of issue arises. In mathematics, we have a concept called infinity, when we really don't know when things are so numerous, there's so many, we kind of signal it by taking the number eight and putting it over on its side and saying there's an infinity. Well, here's the problem. Every act of life, human life or any other, has an infinity of consequences. Those that we know and those that we don't, those that happen in the present and those that happen in an unknowable future. Therefore, the notion that we can measure the benefits, that's the good outcome, against the costs, that's the bad outcomes, is absurd because you can't measure an infinity, especially when parts of it are unknown, unconscious and in the future. So one minute notion that we're gonna measure the costs and benefits of anything is a conceit. We don't have that capacity. That's like saying, we're gonna fly over the Empire State Building. We're not gonna do that. No matter how long we practice, not gonna happen and we know it and we know from mathematically, we don't know what all the consequences are. Every act of an economic actor has consequences costs they're not bearing or even know about and benefits they're not bearing or even know about. Number two, whatever consequence you think what you're looking at had, I got news for you. Other influences also made that thing happen. You can't separate out what your object of analysis, what it contributed versus 800 other things. Therefore, you can't measure costs and benefits that way either. Bottom line, it's not an exception to the market that it has externalities. It's in the nature of the market. It never can manage all of that and it never did. All right, thank you very much. That was a wonderful 20 minute openings from both parties and now we're going to go for our 10 minute rebuttal. First to Dr. David Friedman and then we will return to Dr. Wolfe for another 10 minutes. So David Friedman, you have 10 minutes starting now. Thank you. I noticed that Dr. Wolfe spent 20 minutes without ever telling us what he means by socialism other than it's good and it somehow has to do with worker democracy. But he did raise that seems to be an interesting question and that is the question of whether democracy is the good thing. And there's a famous quote attributed to Churchill that democracy is the worst form of government ever invented by the mind of man, except for all the others that have been tried from time to time. And people usually take that as an endorsement of democracy but I take that as a critique of government. What it is saying is that the least bad way of running government works very badly. And I think that applies much more broadly that I don't think democracy is the way you want to run an economy. The way you want to run an economy is what I have sometimes described as competitive dictatorship. That is to say the way we run restaurants and hotels. I have no vote at all on what is on the menu of the restaurant but I have an absolute vote on whether I'm the one who goes to it. Similarly, if you think about how an actual capitalist system including the firms that Professor Wolfe dislikes actually works, those decisions are not really being made by the CEO. CEO can decide to produce something but if the customers don't want to buy it they don't buy it. And if he keeps making decisions the customers don't like the result is that his company goes out of business or he gets fired. Similarly, he can make decisions about the workers but if the decisions are not offering the workers terms on which they're willing to work he doesn't have any workers. That for some reason Professor Wolfe seems to be imagining that the fact that if you don't reach an agreement with somebody in a voluntary trade you don't make the trade amounts to compulsion. I'm curious as to whether Professor Wolfe thinks that this debate should have been arranged by democracy. Should the decision of whether or not he would come have been made by a vote of all of the people who might watch it or should have been made an absolute dictatorship by him just as I had an absolute dictatorship on whether I came and the people running this had an absolute dictatorship on that. So I would have said that a system which each person makes decisions for himself and you then get coordination by voluntary agreement among them which of course means that anybody can prevent anybody else from doing something if that's something depends on that particular person cooperating. When you propose to a woman she has an absolute monopoly. We don't have a democratic system for deciding who she gets married and we shouldn't. Let me keep on. Let me say a little bit about workers co-ops because they are in fact an interesting institution and I don't know why Professor Wolfe neglected to mention the largest scale real example and that was communist Yugoslavia because in communist Yugoslavia you had a largely market framework in which the firms were workers co-ops rather than the kind of firm that Professor Wolfe doesn't like. It worked I would say substantially better than the centrally planned communism of the Soviet Union with the result that people in Yugoslavia were somewhat better off but it worked substantially worse than capitalism in places like Italy and Austria which were nearby and similar. I noticed Professor Wolfe wants to eliminate my evidence for germinate because conveniently enough he can explain it away but he has to explain away all my other cases as well and as far as I can tell implicit in his initial talk is that the reason that he doesn't want to accept socialism has actually practiced his evidence is it worked badly and therefore he ignores the multiple cases where you had fairly close parallels. Taiwan was not a richer place than China. Singapore was a less rich. They had the poor workers who fled there essentially and yet it did very much better than China under Mal. Let me now say a little bit more about workers co-ops. They're not a new idea. My favorite one is the Oneida commune in the 19th century New York which was a group family, a group marriage as well as a commune. It worked for one generation and then collapsed when the founder the charismatic founder pulled out. One of his sons took over restructured into the Oneida corporation which to this day makes silverware. That was an example of an experiment. I discussed the idea of workers owning their firms back in my first book almost 50 years ago. I did some calculations on how many years it would take for workers to choose to live at a very, very bare bone standard, sort of beans and rice standard in order to accumulate the money to buy their firms and conclude that it would be an awful lot easier than running a socialist revolution and yet very, very few of them do. It happens occasionally but not very often. I would like to point out that workers' co-ops are not in a egalitarian system. They may be democratic within the co-op but some workers' co-ops will be successful, some will be failure and the result is you have an unequal distribution of income. Workers' co-ops may discover, I think usually do discover that having democratic bullets on anything, everything works very badly and so they eventually democratically decide to appoint a manager who they can democratically remove if they feel like it. Same system used by 18th century pirate ships, incidentally, the captain was elected by majority vote and could be removed by majority vote, captain and quarter master. That's one of the chapters of the book of mine that I published not too long ago. But they usually will find that somebody is much better at managing everybody else and if they have a very good manager, they may also find they've got to pay him more than everybody else in order to keep some other co-op from hiring him away. So there's nothing particularly egalitarian about that system. It is indeed democratic at the level of the firm but I would much prefer freedom to democracy. That democracy includes the possibility of 55% enslaving the other 45. Talking about slaves, I should have made it more explicit in my explanation of capitalism that part of that private property system was that each individual belongs to himself and I omitted that and you are perfectly legitimate in calling me on omitting that. So a capitalist, a slave system like everything else has some nicks of capitalist and socialist elements but the slavery itself is not part of the capitalist market because the slave owner doesn't have to take account of costs and benefits to the slave. However, a employer does have to take account of costs and benefits to his employees because the employees have the option of working somewhere else. He has to take account of costs and benefits to the suppliers of his other inputs for essentially the same reason. So what I observed is that Professor Wolff wants to define away or explain away the massive evidence we have that socialism in the form it was actually advocated and practiced in the 20th century worked catastrophically badly. I should say he's wrong about the Soviet Union as it happens. The high growth rate of the Soviet Union was an artifact that the Soviet Union was controlling the statistics. We now know if you actually observe you ought to consider that Japan was as poor as Russia at the beginning of the 20th century. Japan nonetheless ended up a great deal richer than Russia by the time that communism collapsed. There were other countries, Taiwan was poorer probably than Russia at the beginning of 20th century and it ended up much richer at the end. So, and in fact, if you look at Russian economic growth in 20 or 30 years before the communists took over it was growing relatively rapidly. It was still quite a poor country but the idea that the Soviet economic growth was enormous, maybe you made the mistake of reading Samuelson's textbook. As you may know, Samuelson for edition after edition claimed the Soviet Union was outgrowing the US about two to one. Addition after addition he had the date at which the lines would cross at which the Soviet GNP would pass the US GNP. And addition after addition that year stepped crept steadily ahead at about the rate at which time was passing because in fact, the Soviet Union was not growing faster. Samuelson was mistaken. He was observing that the Soviet Union invested a larger fraction of his GNP and ignoring the fact that it matters how you invest things whether in things that actually work or don't work. I was also surprised a little by the claim that markets are not part of production because the way production is realized in a market system is indeed by the market. The GM does not have its own steel mills. It probably doesn't have its own glass factories. It has to coordinate with the other people involved in that very elaborate productive activity. If I don't know if Professor Wolff as a socialist economist has or hasn't studied conventional price theory but there really is a useful way in which markets provide signals of costs and benefits to people and they're not perfect signals but most of the costs that I impose when I do something are costs on the market that I've got to pay for and most of the benefits for most not all things are benefits on the market that I get paid for. Thank you, I think that probably covers the point. Your turn. Right on the dot there. All right, and we are gonna go over for a 10 minute rebuttal from Dr. Richard Wolff. Okay, again, we're talking, I believe, at cross purposes, the whole point of my mathematics was to explain that every economic act, every purchase, every investment, anything has an infinity of consequences. You cannot know what they all are, you cannot measure them and therefore a decision that the costs exceed the benefits or vice versa is made up nonsense. It has no mathematical content. Teaching people to do cost benefit analysis requires that you do not explain to them the impossibility of what they're setting out to do. What you end up doing is selecting a few costs and a few benefits, because that's all anybody could do and that's fine as long as you don't imagine that anything is relevant other than your principle of selection since what you left out could easily swamp or reverse whatever conclusion you drew from those you look at. There's no way out of that dilemma and to repeat it suggests that we're not debating anymore that we're just repeating our positions. I love the story about the CEO who's governed by the market. One of the largest industries of modern capitalism is called advertising. And it is the attempt by the CEO to either create or manipulate or control the market that he is ostensibly responding to. Corporations long ago learned, they have to work on both sides of the market, the supply and the demand. And precious few of them avoid both the opportunity and the obligation to do that. Therefore to celebrate that what they do is governed by the market is an attempt to magically whisk away what the whole premise of advertising is. And then again, this remarkable, it didn't work well. There's no universal standard of what works well. You have yours, I have mine. If your standard, and I was careful to say that repeatedly, if your standard is economic growth going from poverty to a middle class to an upper class or upper income society, if economic growth is a key or dominant variable then that's the way you measure that society if you have that standard. If you have a different standard you measure it correspondingly differently. But to talk about something as successful or unsuccessful without being clear what your standard is or even why one should use that as a standard is bizarre. I was careful to suggest, because it's of course relevant to most countries in the world they put a high priority on economic growth. And the Soviet Union and the People's Republic of China remain the two outstanding examples of rapid economic growth over the last century. You can fiddle around with the statistics. For the last 25 years, I have every year read about how China's statistics are unreliable. Okay, I used to be a statistician. All statistics are unreliable. I'm sure theirs are unreliable too. But in fact, over time with enough observations you begin to get a sense of whether they were completely made up whether they were exaggerating, which the best you can do. The Soviet Union's development from 1917 to where it was in 1975 is extraordinary. If you realize it encompassed two world wars mostly fought on Soviet territory and the civil war and the revolution the achievement becomes absolutely stunning. And the Chinese have done them one better. Whether you like or not like the Soviet Union has nothing to do with it. It has to do with recognizing that they set a priority they committed their public and private resources and they did really well. You're stuck with that. There's not much to do with socialism but you're stuck with that reality. As to not saying my definition I thought I gave my definition. For me, socialism is a production system a production system a way of arranging for the factories the offices and the stores to be organized democratically. One person, one vote to decide what to produce how to produce, where to produce and what to do with the profits that everybody has held. That's a radically different way of organizing production from slavery, feudalism or capitalism. And for me, that's what socialism is mostly about. It is also a way to ground socialism so that whatever government does or does not appear temporarily or not has a control from below that makes it responsive to the people as a whole. They didn't do that in the Soviet Union. They didn't do it in China. Nor am I willing to be a Monday morning quarterback dismissing them, which is kind of silly as far as I can see. I expect that the early experiments in building socialism will have been experiments that teach people a great deal both what to do and what not to do just like the early experiments in capitalism coming out of European feudalism included some that lasted weeks some that lasted months and years before all the conditions were there to really make a social transition. Russia, China, Vietnam, Cuba these are early experiments how to do it, how to avoid problems and we're learning all of us. And part of what we've learned is that the macro focus who owns the means of production the focus on the government lacks a micro foundation and the transformation of the enterprise into a democratic institution is the kind of micro focus transition that will make socialism not only more effective learning from its experience but it will be more attractive because we all live in a society that has demonized the socialism that isn't there anymore and therefore we aren't prepared lucky for us as a society to be quite so dismissive of a socialism that redefines things on a micro level for which the defense mechanisms in American society are badly underdeveloped. I'll stop there. All right, you have three and a half minutes left. Do you want to yield that time? No, no, I won't ever want to yield any time. You need a market where you can sell me the time. No, no, here's the thing that for me is astonishing. Let me tell you about my education and socialism and coming and capitalism. I went to Harvard as Dr. Freeman reminded me we both did, I went to Harvard and when I finished there, I went to Stanford and I got a master's degree in economics at Stanford and then I left there because the professor I went to study with died and I finished my education at Yale which is where I got my PhD. So I'm a poster boy for American elite education, aren't I? And throughout the 10 years that I spent in that Ivy League my professors tried over and over again to persuade me of the very things that Dr. Freeman believes. They tried and they included some very good professors, no problem. They didn't succeed, as you can see, they didn't persuade me, they tried very hard. Occasionally, until I learned better, I would ask them questions about Marxism and socialism. And what I could see in their eyes was fear. They not only didn't answer my questions, they were so uncomfortable since I liked the number of them, I had no interest in making them uncomfortable so I stopped asking the questions. But I couldn't miss what was going on. They were afraid. They were afraid to go anywhere near these topics. The few that sometimes ventured there were dismissive in a way that was intellectually insulting but they'll put it aside. They were afraid. I learned what the Cold War meant. In the 10 years of the Ivy League only on one semester was I ever assigned one word of Karl Marx. That wasn't a balanced education. That was a fear driven education. They had been won over by the Cold War and they went to the extreme, the sad extreme of thinking that the way you demonstrate your loyalty is by pretending that the criticism of capitalism articulated by an immense socialist literature isn't there. Only when I would go to the library did I discover all that was left out of my education. Very sad, but it is a basic shaper of the incompetence at the level of government that both Dr. Freeman and I notice. Of course they don't know how to manage these crises because they don't even have courses in economic business cycles anymore the way they once did. They have to pretend it's all under control. Very sad that the market will heal itself or that the government will come in with Keynesian mechanisms to fix it. No criticism of the system itself. Endless fixing, but never the daring that the system itself has to pass like every other system in the history of human economics. The belief that this one will last forever is bizarre. All right, and time. Thank you both very much, that was incredible. So we're gonna go into, this is gonna be a slightly shorter open discussion than we normally have, but we're going to go into 10 minutes of open discussion where you can talk directly to each other please continue to be respectful and the 10 minutes are starting now. Yeah, Professor Wolf wanted to know what my standard was. It's not economic growth. My standard is human welfare and the simplest measure of human welfare is which way people choose to move. And what we know is that when we had much more socialist and much more capitalist systems adjacent to them, the capitalist system sometimes put up walls to keep people out and the socialist systems put up walls to keep people in. That's a very simple measure. Similarly, I agree the statistics are often very hard to evaluate. And in the case of the Soviet Union, it eventually collapsed. And the simple measure for all of these systems is to look at the beginning point and the end point and see how they changed. And we know that at the point when the Soviet Union collapsed, it was much poorer than Japan which had started out at a roughly similar level. It was something of a shock when the Japanese won the battle of Tsushima Straits because everybody knew that Russia was stronger. That was the beginning of the century. We know that at the point when China stocked being socialist, it was still the same dirt poor it had been when it started being socialist that China's economic growth occurred after it started moving away from socialism and it has been very successful. But of course it was catching up. It had the advantage of having done everything wrong for a number of decades. It now could learn a whole lot of better ways of doing things that if you chose to do things badly enough, your growth rate would be very, very high when you stopped doing it. So, and I was curious, by the way, you say you weren't assigned marks. I wasn't either because I didn't take any economics courses. I've never taken courses in either of the fields that I've taught in as it happens that I don't much like the whole credentialism system that's gotten too common. But do you have any courses in Ricardo? Ricardo was a slightly earlier than Marx. He had a much larger influence on modern economics. And my guess is that like other early 19th century economies he didn't cut covered very much. Your perception, your point of the beating that we live in different worlds struck me because you're right because we were both in the academic world and Dr. Friedman, really quickly, I just wanted to, just because we only have 10 minutes you've been talking about for about two and a half. So I want to give Dr. Wolf a chance to respond. His turn, absolutely. I spent my time studying the Chinese economies. I'm at a loss of where you get your ideas from. The Chinese economy has an enormously important role given to the Communist Party and to the government. It has been an important role throughout the history since 1949. They achieved enormous economic growth even in the early years after 1949. It depends again on how you measure and what you look at. If you understand what human welfare means you will know that people understand it in very different ways. To measure human welfare by migration is a bizarre and I don't know of anybody really who does such a thing. Migration can be one but it's a little bit like going to a doctor having him look at your left ear and tell you you're fine. Your left ear matters but it's not an adequate description of what health you have let alone what human welfare you have performed. And again, as to the education there is no excuse for the education we've had. I'm glad you didn't take any economics courses. I can assure you, you didn't miss much. It was an endless repetition of how wonderful markets are and how wonderful capitalism is. It wasn't an education, let me just finish. It was a training in how to be a cheerleader for capitalism. That's what it was about. The questions are not just by me by other students that raised real difficulties were brushed aside. Usually I guess because they couldn't answer them but sometimes because they just were afraid to go anywhere near there. And I think we have to understand that when we have a conversation including a debate like this that what we're doing is we're asking for something that has been celebrated crazily for 75 years to debate against something that has been demonized for 75 years. And it's gonna take a while before the terms of the conversation the basis of a conversation can be erected. Otherwise we'll continue to do a bit of what we did tonight which is talk past each other which is a loss for all of us including Dr. Friedman and myself since if we had a bit more of a shared basis we could probably teach each other something. That's certainly possible. I'd be perfectly interested if we had more time to just discuss the question of workers co-ops because I think there are real economic problems with them. They have some advantages as well and you will observe that it's perfectly legal to have a workers co-op in the US it has been throughout and nonetheless most workers don't choose to organize themselves that way and I think there are reasons. The vast majority of American workers have never expressed themselves on this subject. Number one, so there's no basis for this. Number two, whatever their status in the law and believe me it's very variable particularly in this country even from state to state. There are some states that don't recognize that they exist there are other states that give them all kinds of rights and privileges having to do with American history. Number three, banks don't lend to worker co-ops so they don't understand how you make a loan and you don't have a corporate CEO to sign off on it. They don't want to do it, insurance company. It's been difficult in this country for worker co-ops that exist all over the United States by the way, right now, but it's been difficult for them to get anything like equal standing or equal footing with capitalist enterprises. On the other side of the coin the Mondragon Corporation in Spain which started in 1956 has 70 years or roughly of history and in that history it has out competed its capitalist competitors. It is now the seventh largest corporation in all of Spain. It has demonstrated how you can scale worker co-ops and get a very big worker co-op as well. They had problems along the way just as capitalist firms did. But there's a lot of history, a lot of reality. They're so successful in Mondragon that they have their own university. It's called the Mondragon University where you can go and learn everything you wanna know and more about worker co-ops. It's a viable democratic alternative to the capitalist hierarchical undemocratic firm and when Dr. Friedman said that he saw it as the dictatorship part of it as preferable I don't have anything more to add to that. That's the reason I'm opposed to it. And I think that the yearning of slaves to go better than slavery and of serfs to go better than feudalism is parallel by the yearning which is becoming more prominent in America now of the mass of working people to get beyond capitalism and for pretty much parallel reasons. Going back for a moment to the question of how we judge how well off people are I believe in revealed preference. I believe that you can discover people's values by the choices they make. And that somebody who has lived in a country knows much more than you do about what it's like. And the fact that people who lived in one country chose to move to another is pretty strong evidence that on the whole the other country was better off. And the same thing applies across. And I don't think that saying that it's just sort of an unclear question how well systems worked. China under Mao had a famine where 30 million people died. That's the current estimate. Russia under Stalin had a deliberate famine in the Ukraine where some unknown but several million people starved to death. And that is not, I really don't think that it's sort of an open question is that a good or a bad thing? And I don't know if they're having people poor is better than having people rich. And we know that China under Mao people were poor and China when it started. Well, we're coming down to the wire so please let Dr. Wolf continue. Too many things to say. I find this game of numbers of dead people a remarkable reversion to what the Cold War was all about. During the 20th century, there were two world wars. They were fought about and by capitalist societies who went to war against each other Germany and Britain and Italy and the United States and Britain and they killed way more people than anything you just mentioned. Capitalism also achieved in the three centuries before today something called colonialism during which they slaughtered people on a scale that is stunning, looking for gold, for food, for raw materials, for cotton, this driven by the capitalist system. If I wanna add up dead people the way you do it would be easy and we could then compare using your metric of dead people what these two systems have accomplished in the way of piles of dead people and you would lose that conversation but I don't have it because it strikes me as bizarre as does the notion of migration. There are lots of migrations going on in all kinds of directions. It's a very dangerous president you said. There are now tens of thousands of Americans applying every day to go to Canada, and we are out of time. All right, thank you. All right, so that was a wonderful open discussion. We're gonna go into five minutes closing and we're going to start with Dr. David Friedman and then Dr. Richard Wolff will be closing out his five minutes. So David Friedman, you've got your five minutes now. Yes, let me say a little bit about workers' co-ops because that's actually something where we maybe have some common ground. The problems, workers' co-ops are certainly a workable system. They've existed in various forms at different times but they have some significant disadvantages. One of them is it is harder from the borrow money because it is harder for them to say to the lender the way a company that sells stock can do, if we end up cheating you in some way you get to take over and throw out the CEO which is the position of stockholders. They have a problem because if you have a workers' co-op where the firm in effect belongs to the workers, any additional worker dilutes the value of what the individual workers have. So there is judging by the US lobby experience some tendency to stay below the optimal employment size for a firm for that reason. And what Dr. Wolff is talking about as successes are successes within a market system. The story about his view of advertising that somehow the CEO can decide what people want reminds me of a real story because I happened to overhear an argument between my father and the person who ran the garage where he got his car fixed. This was in New Hampshire where we spent our summers over a new car that Ford had brought out. And the man, my father was arguing with me saying, look, all they got to do is spend enough money on advertising the car and of course people will buy it. And Professor Wolff may perhaps remember the Ed Soul which was the car they were arguing about. It's certainly true that firms try to persuade people to buy their products just as Professor Wolff has been trying to persuade people to buy his ideas and I've been trying to persuade them to buy mine. But nonetheless, when they try to persuade people to buy something that they don't want to buy they end up losing money. Similarly, they can try to persuade workers to come to work for the firm to some extent they do but unless they offer terms that the workers find acceptable they don't get workers. So the ultimate dissidiquity and the idea that democracy is an inherently good thing just democracy majority vote includes the possibility of 55% of the people deciding to enslave the other 45. That would still be democratic. So no, I don't want democracy. Professor Wolff seems to have missed my point about dictatorship which was that competitive dictatorship which is the way restaurants are run is a good system where it's possible because that means that some particular thing is controlled by somebody but it interacts with everybody else on a voluntary basis and therefore has to provide other people terms they like. Professor Wolff's comments about cost benefit analysis such sound to me like the old proof of the unworkability of conventional socialism back from the calculation debate which he probably knows about back between World War I and World War II. And it is true if you try to calculate from the top all of the costs and values and maximize it doesn't work. That's one of the reasons why that version of socialism crashes but the whole point of the market system from an economist standpoint is that prices give you actual signals of value. They aren't perfect signals but they're signals and if I choose to buy some hamburger at the store it has lots of effects but for reasons economists have worked out most of those effects are reflected in the price I've got to pay and most of the benefit is reflected in what I'm willing to pay. And this could again be a long talk. I have no idea how familiar Professor Wolff is with the economics that he rejects but in general I think we have certainly been living in a different world because when I went to Harvard there wasn't orthodoxy all right and the orthodoxy was not capitalism. The orthodoxy was he would as Wolff may consider capitalism it was more or less Keynesian liberalism. I have variety of stories from that time. Goldwater got 19% of the student body voting for him because he was for a much more capitalist system than the rest and my impression was of the people I interacted with didn't know the arguments for capitalism. They didn't know arguments for socialism neither probably most of them but it was not a system where anybody I one minute would have been afraid of being considered to be a socialist but when I was a student there was a Maoist group an active Maoist group I know cause I argued with them there were various other groups of that sort and today I think you would find that the number of Americans willing to label themselves socialist is considerably higher than the number willing to label themselves an macro capitalist I don't feel scared either and they even be larger than the number willing to label themselves libertarians. So socialism has been a live minority view for a very long time and Professor Wolf basically wants to explain away the evidence of its failure when it was actually tried in a direct head-to-head calculation on the grounds that his improved version which doesn't seem to be a socialist has no time to be better. Thank you and we were going to give the last word to Professor Richard Wolf. Very good. Now the last question is the last things I think I wouldn't say without wanting to repeat myself yet another time. The comparison of Taiwan and China is the equivalent of comparing a flea and an elephant. One has a 1.4 billion dollars and has been a pariah object of American covert and overt hostility. The other one is the example the United States has propped up since day one to be an alternative laughable as that is to the mainland government. The notion that you're going to compare these two utterly differently globally situated economies the way you do is really silly. So I'm not going to go there beyond saying it. Nobody at Harvard when I was there could talk about socialism not a single one of my professors one who came closest with John Kenneth Galbraith and he was afraid. He was at least honest enough to say that he was afraid. And so we left it since he was a good teacher and I didn't want to pursue it but it was fear that drove all of that. And we're living with the consequences of a whole educational system for which the entire literature. That's why we had to begin today with explaining that socialism has moved on from the bit of a caricature of the government deciding everything. The government never in a position to decide everything. Then the caricature of democracy the majority can enslave the minority. Every democracy has as one of its conditions writing the rules for how things are going to be worked out and enslaving is a rule that you can decide you don't want. Otherwise the CEO could enslave one of the workers you lose your job or you become my slave. Oh no, we say that can happen because there's some rule outside the enterprise that precludes it. Those rules are not only in capitalist systems they would be in effect everywhere. The notion that democracy is going to be dismissed by a caricature like that is a sign that you don't want to deal with the reality of the alternative. Worker co-ops are more efficient. There's a professor of business administration that leads university in England. A woman named Virginie Perotin if you're interested follow her work. She systematically compares comparable enterprises worker co-op organized here capitalist hierarchical non-democratic over here. And she shows that the worker co-ops last longer that the worker co-ops grow faster and that the worker co-ops do better. Okay, it's one of the few examples of this kind of research but there it is and you're stuck with it. Why? Well, it isn't hard to understand if worker co-ops function. And by the way, it's not about worker ownership. That's a different matter. To own something is different from how you organize the work in it. A worker co-op is when the workers become their own board of directors whether they also own the enterprise or sell stocks or have other owners. We have all those as examples of how actual worker co-ops function. But the one thing common to all worker co-ops is the democratization of the workplace. The notion that since everyone at the workplace has to live with what decisions that are made there they all have a right to participate in there. And I wanna end by saying notice in this conversation that is the socialist like me who's emphasizing the profound importance of the democratic structure and the democratic impulse. And it's the celebrant of anarcho-capitalism for whom the democracy is pushed away. That's an important difference here and maybe one that you can take with you when you think about all of this. And I'll stop there. Wonderful, right on the dot. And so we are going to have a shorter Q and A than normal just because I know Professor Wolfe has a TV engagement immediately after this. So we're gonna jump right into it. Everyone, please do your best to keep your answers as quick as possible. So first, Sparta 344, thank you for your super chat. Question for both. Can both panelists please comment on the Kibbutz system in Israel? Sure, the Kibbutz system in Israel rather like the Unitecon unit I mentioned earlier worked for one generation. Basically it was a version of certainly it was done by people thought of themselves as socialists and it was, I think, socialist in Professor Wolfe's sense but it worked only as long as you had enthusiastic people rather like the Unite commune like a bunch of religious communes evidence for and it was then succeeded by the Moshevim which were a semi market, semi private system and mostly has lost people since essentially the second generation did not have the enthusiasm for five founders with the result that it eventually withered away. My response would be very simple. In order to nurture a new and different system there have to be the conditions for that to happen. You have to have in place the conditions and that's what happened in feudalism with capitalism that I mentioned before. The early efforts in capitalism withered and died or they lasted a generation or two because the conditions weren't there. In Spain in 1956 there were no conditions either but the effort there was able to create the conditions. They had a certain protection being in a poor part of Spain. They were done within the framework of the Roman Catholic Church which gave them protection. So they were able to get and tap conditions that allowed them to become what they are today probably the most successful worker co-op, a family in the world in terms of their size, their scope, their range of activity. So you're observing in one case Israel conditions that were not conducive and in another conditions that were. The lesson to be drawn which has been drawn is that you pay attention to those conditions because they will determine as by the way they do in Emilia Romagna in Italy they will determine how successful your new and different way of organizing production can be. Wonderful and now we're gonna go on to the next super chat. Thank you Vaclav Miller for your super chat. Does Richard believe that under socialism worker co-op should operate in markets? What role should the state have if all firms are worker owned and would there still need to be state regulation? My guess is at least in the early phases that a worker co-op based economy, which is what I'm after, would use a mixture of market and non-market systems of distribution based on how they work, what their side effects are and so on. And I would also assume since it has always been the case that if they use market mechanisms as well as non-market mechanisms that they would regulate them. The notion of an unregulated market is a utopian fantasy and I'm not against utopian fantasies but we've never had such a thing. If you go back to Aristotle and Plato they fought over the question of markets and they concluded that they're disruptive, they're bad for economic equality and so they have to be regulated. That was their resolution. Every actual market has had to have regulations because of the costs that they encountered when they tried not to do that. Wonderful. Next super chat is from Shirt Son. This is a question for Dr. Friedman. Dr. Friedman, if the only way of voting is to go to a different business, how do you account for all of the businesses being bad or not worth voting for? I'm not sure I'd call it voting but I would have said that if all of the restaurants are doing a bad job then there ought to be a good opportunity for you to start a restaurant that does a good job. The question, in general, it doesn't make sense to assume an outcome and then analyze it as opposed to assuming a set of institutions then figuring out what outcomes they will produce or looking in the real world at what outcomes they do produce and I observed that in the case of restaurants where there is no democratic process compelling people to have restaurants in various cuisines or expensive ones and cheap ones but I observed that in fact, the people who want to start restaurants find that it is in their interest to serve food people want to eat at a price people are willing to pay if they didn't they restaurant would not succeed. So I think, in a sense that saying how does capitalism solve you if the world ends? It doesn't have a solution if the world ends unfortunately neither does socialism. So if things are terrible, things are terrible but the nice thing about capitalism is that on the evidence of the last several hundred years it results in things being a whole lot less terrible than alternative systems. Excellent. Now, I think this is a question for both of you. This is a Super Chat, James W. Thanks for your Super Chat. In an environment where each day fewer workers are needed than the prior day aside from a decline in population does the market have any non-socialist solutions to provide for people? This is an argument that people have been making for several hundred years and somehow the mass unemployment that it predicts doesn't seem to have happened. Over the history of the US the number of people has increased by about two orders of magnitude and the number of jobs has increased by about two orders of magnitude. During that time there have been a few fairly short brief short periods when the two differed by as much as 10%. That's not the result of there being a fixed number of jobs and a fixed number of workers. That's a market equilibrium where if there are more jobs than workers wages go up if there are more workers than jobs wages go down and similarly across all different specialties and that will continue to happen. So I see no particular reason if people become more productive they have the option of either getting a higher wage per hour and working fewer hours or if they like working with more workers. You look at what's happened though, a little over a century ago roughly half the population of the US was in farming. Now a couple of percent are and yet we don't observe that 43% are unemployed. Technological progress results in raise income is going up. Now it benefits some people better than others. It's true if you have the talents to be a Silicon Valley programmer you will do a good deal better than if you have the talents to be a restaurant waiter. But if you look over time both categories have generally gone up. Again, I see this completely differently. I think the notion that we have no responsibility to the people that are displaced by technology is a very convenient way to let capitalism off the hook of one of its consequences. If we have technological advances because capitalists find it profitable to install them which is why and when we have them and that results in people losing their job that's a cost associated with their technological advance. A cost they conveniently don't have to cover. They can just tell the person to go get lost and he or she can suffer whatever psychological and other costs are associated for an indefinite length of time until another capitalist looking to make profit might find it profitable to hire them and they pick up all the costs of the in between. That's a system designed to benefit capitalists. From the point of view of society, it is irrational. That unemployed person continues to consume but because he or she is unemployed they don't contribute. They just withdraw goods and services without being able to do what they want which is have a job. If we had a properly functioning economy it wouldn't allow that kind of irrationality. It would have a menu of jobs that people who were losing a job in one place could automatically select another and all of that could be worked out in a way that would be more humane, more decent but then that would be socialism with an attitude towards working people that a capitalist is unlikely to enjoy. Wonderful. So this is from stars over Stalingrad. Thank you for your super chat. This is for Dr. Friedman. Dr. Friedman, have you read Thomas Sowell's new book on charter schools and what do you think of charter schools in general? I have not read that book. I've read one of Sowell's books, Ethnic America which I thought was very interesting. Sowell, well, that would be another long discussion and I've looked at one of his other books that I found depressing because it was convincing me of something I didn't want to believe namely that the people who disagreed with me were bad people and not just disagreeing but he's certainly a bright guy, but no I don't. I think in general I would prefer a system of competitive private schools which is why I'd rather shift to a voucher system and I do not know how well charter, I don't know enough about charter schools to have an opinion on how well they work my impression is they work a little better than ordinary schools but that's just a guess from casual information but if it's a good book maybe I should read it. Great, this is a super chat I believe for Professor Wolff from Old School Egyptian thank you for your super chat. Does Marxism disregard the importance of family and national pride? Well, first of all Marxism is an immensity. I mean, as I said in my talk it's a set of ideas and interpretations that varies across the globe and across the last 150 years. So any sentence that has the word Marxism as a singular and then attaches adjectives or descriptives to it is fooling you or is done out of ignorance. So are there Marxists who have devoted themselves to the questions of national identity? Answer, absolutely. Are there Marxists who have devoted themselves to analyzing the family and the relationships among people and families and the relationship of the family to the larger economy? The answer is also, yes, there is an immense literature in all of these topics. And the reason it isn't on the tip of your tongue or you haven't encountered it is again the same legacy of the Cold War. There'll be lots of sections of the library about nationality and lots about the family but you'll have to work a little bit to find the Marxists and the socialists among them. You might be interested, if you want to, to look at a remarkable pamphlet written actually by Marxist colleague, Frederick Engels, way back in the middle of the 19th century that has prompted an enormous literature ever since. It's a short pamphlet. It's called the origins of the family, private property and the state. And it tries to explain how these institutions arose before and then changed in capitalism. But it'll give you right at the beginning the enormous importance that Marx and Engels assigned to the family, to the nationality and so on. And it has continued to be an object of Marxist work ever since. Wonderful, question for Dr. Friedman. If I am a starving person in capitalism, do I truly have an uncoerced choice to work for food or not? Is this not a form of forced labor on threat of death? Thank you, Dale Wilson for your super chat. Yeah, that's an interesting question. If I, I'm sorry, if I could interrupt, I have another engagement. I just, I didn't want to just sign off. I want to thank you all, including Dr. Friedman. I appreciate the opportunity to have this sort of debate. I wish I didn't have to go, but I do. But if you want to do this once again in the future, please know that I'd be glad to participate. Thank you so much. We were pleased to have you as a true pleasure, Dr. Wolff. Thank you. Let me try to answer that question if I can. I think most of us make a distinction between costs that other people get by our action and by our inaction. And I guess the clearest case is something just a little short of starvation that some of us have experienced, which is where the woman you want to marry doesn't want to marry you. And you can say that that's a sort of compulsion and that if she says here are the terms you have to agree to that she's compelling you because losing the person you're in love with feels almost as bad as starvation though. I admit I've never been starved, so I don't, maybe I'm mistaken. But nonetheless, I don't feel as though she's compelling you because she belongs to her. Similarly, if somebody has food that he's legitimately gotten, say food he's grown himself and someone else is hungry and is starving to death and says give me that food. And the first person says I will do that only if you do X, Y and Z. I suppose certainly it feels like compulsion from the hungry person, but it is not I think compulsion in a morally relevant sense because people don't belong to each other. And therefore if I have grown food you are certainly entitled to ask for it but you're entitled to get it only if we can reach a mutual agreement. And I think that's true in general. That question I didn't get to ask Dr. Wolf which I was curious about was how his workers' co-ops coordinated with each other if not through the market. Because if a workers' co-op has what we need in order for our workers' co-op to survive does they're charging for an amount to compulsion? So no, I think you could certainly have situation in which people had only bad alternatives but I don't think that the person who is offering the least bad alternative of those which is the person with the food offering a job in your example can really be counted as somebody who's injured someone or has exploited him or has compelled him. Thanks so much. I think, pardon my interruption, Brenton just because we do want to respect the speaker's time and because perhaps, no guarantees folks maybe we'll get to have our guests on again we hope to as this has been an absolutely I'm just, it's hard to put it into words how enjoyable this has been and how special this has been so we want to say a huge thank you before we wrap up. I want to say first thanks so much to Dr. Wolf and Dr. Friedman, our guest speakers it's been a true pleasure. They're linked in the description folks so if you'd like to hear more from them I encourage you please do click on their links which are in the description and also want to give a huge thanks to Brenton Langle as Brenton has actually helped us connect with the speakers in order to help this get set up and so we really do appreciate that he's linked in the description and there you can find his own past debate with Dr. Friedman and so it's been a true pleasure. I want to say thanks folks for your donations to the cause very excited that during the stream I think it had a number up there. Oh yeah, so it's over 100 bucks, 143 as of right now so thanks so much for those donations to save the children and I'm sorry we didn't get to every question but do want to say thanks for all of those questions we got through most I think and we really appreciate you guys hanging out with us we're excited as we do have another upcoming debate this one's coming up this Saturday I think most of our guests here would enjoy it we'll have Dr. Ben back with us he'll be debating Kay Fellows and that should be a controversial and juicy one so we hope we see you there if you want to remind her hit that subscribe button and with that want to say one last thank you and goodbye to our guests thank you Dr. Friedman it's been a true pleasure. Thank you Brett. Absolutely yeah and if you guys if you do want to see an after keep an eye on my channel because we should have David Friedman and Professor Wolf on my channel shortly after this in the next few days which I'm hoping for. Absolutely thanks so much and folks we hope you have a great rest of your day or night depending on where you are thanks so much for hanging out with us and we will see you next time.