 Hi, Professor Gerald Friedman, University of Massachusetts Department of Economics. And we're here today to talk about the firm, the capitalist firm, where it came from, and well, maybe a little bit about where it's going to go. As I mentioned in the last time, capitalism is a relatively new social form. It's an enormously powerful social form. 300 years ago, 1700, there are hardly any capitalists in the world. 400 years ago, none. Today, capitalism's all over. China, Africa, wherever you go, you see capitalism. Production of commodities for profit by employing wage laborers. Now this is new. Traditionally, human societies have been managed. A human production has been managed on a different basis, a basis of production of things for use. Classical society, classical Greece and Rome, Egypt, the pyramids were built with slaves. Socrates was one of a relatively small number of free people in Athens. Rome was run by slaves, or the work was done by slaves, sorry. It was run by the slave owners, of course. Slavery was a predominant mode of production down into the European Middle Ages, where, well, after the fall of Rome, we had feudalism where serfs controlled the production process themselves, but were themselves controlled by the lords. They were bound to their lord, couldn't marry without the lords' consent, couldn't carry stuff to the village for sale without the lords' consent. That continued down into the late Middle Ages, the 14th, 15th centuries, when in Britain, England, really not Britain, England, northern France, the Low Countries, the Netherlands, Belgium, so again, something new. In all the turmoil of the great, well, we might call the great French Civil War, because England was controlled by French, so when the English came in, what's called the Hundred Years War, it was really a civil war. Anyway, in the Hundred Years War and the turmoil that came with that, serfs began to break free and establish their own production processes. Some of them were particularly successful, and capitalism arose from that turmoil. As soon as capitalism arose, it had, you know, capitalism's distinctive features. As I said, it's production of commodities for sale so that you can make profits, and the production process is controlled by the capitalist who orders the workers around, tells them what to do. When the workers aren't working for the capitalist, they're free to do whatever they want. They're free people. But that freedom also involves a central part of capitalism, that the workers have no independent access to the means of production. They have to go through the capitalist to get work. That gives the capitalist leverage over the workers to get them to work harder, or else be fired. The essential thing about capitalism is not piling up gold, silver, or machine, or any of that stuff. It's the lock on the factory door that you can't work without the capitalist's consent. That allows the capitalist to create a new social status that's previously unheard of, unemployment. Unemployment is the key to the capitalist control over the workers, because unemployed workers are hungry workers, and fear of becoming unemployed is what drives the workers to work hard for the capitalist. It's fear of unemployment that leads to the enormous increase in productivity that we've had under capitalism, where we produce vastly more stuff than ever before. Capitalism works because it involves waste. We could argue about the waste involved in capitalist producing stuff that maybe people don't really need, but there certainly is great social waste behind capitalism, because capitalism depends on workers being fearful. Because to keep them fearful, you have to keep some of them unemployed, Marx called them the reserve army of the unemployed. Because some of them are unemployed, that's waste. But there's also waste involved within the production facility, because the workers are working under supervision, and they need to restrict the information they pass on to their bosses, so that the bosses can't use that information to maybe replace them, or get them to work harder, or whatever it is. Capitalism involves waste within the production process, and waste outside the production process. Capitalism may be, I'm not saying it is, but I'm just putting it out there that some people would say it may still be the best social system, but even those who believe capitalism is the best social system have to admit that it is wasteful and undemocratic. And that's what we'll be talking about for the rest of the semester, whether there is a better alternative to worker control, and we'll pick up from there. Thank you very much, have a nice day. Bye bye.