What’s funniest about this is the context. He is that he is paraphrasing Stalin’s description of socialism.
A lot of people think this bit mocking liberals who don’t understand socialism.
Wolff is saying that, Stalin did not want to tell the Russian people that for all their hard work, they had only achieved state capitalism, and so he used this framework of “socialism is when the government does stuff.”
Here is the source, linked at the timestamp 40:53.
https://youtu.be/ysZC0JOYYWw?t=2453
Poor Stalin. He had to go to the Russian people who had sacrificed unspeakab[ly] in their lives. And what was he going to say to them?
‘Thank you very much, you have sacrificed unbelievably now for the last 15 years,’ it’s 1930, 'since the Revolution. I’m glad to announce to you all, what we have acheived is… state capitalism. We’ve got a whole 'nother sacrifice for god knows how many years to get to – ’
They would have ridden him out of town on a rail! He couldn’t. So he did what politicians do. He substituted the wish for the reality. We’ve made it, we’re here:
‘Socialism is when the government does stuff, and it’s more socialism the more stuff it does, and if it does a real lot of stuff, it’s communism.’