Original subtitles

I was born in 1971 and was 18 in 1989 when the Berlin Wall fell.

I sat glued to the radio and listened when the communist regime fell.

As a student, I traveled to Romania, Hungary and Russia.

I was there and saw the consequences of the collapse.

I saw a failed economic and social system.

A political system that had promised personal freedom

but instead created misery and political repression.

When the Communist House of cards fell,

the capitalist argument was reinforced

but it went too far.

The fall of the Soviet Union led to an eternal belief in liberalization.

It was accompanied by a new glorification of private property.

As a result, rising injustices increased nationalism and xenophobia

just as before the First World War.

The 21st century scares me, because when I compare it with history,

we risk returning to a capitalist system similar to the unequal world of the 19th and 20th centuries.

In Europe during the 18th century,

capital was concentrated to a small group of people.

The nobility made up one percent of the population.

Money limited social mobility.

You could not climb very high relying on work or study.

Often, in literature, films and popular culture

we can follow the importance of capital throughout history.

It is a darker story than the idyllic notion of development and enlightenment.

The 18th century was no static world.

New political ideas demanded equal rights for all

and an end to inherited benefits.

The French Revolution was to a certain extent based on double standards.

Their vision of "equality" was at best optimistic, somewhat naive and at worst a bit cynical.

It was pretended that it would be equally spontaneous, a bit like a fairy tale.

But political institutions needed educational institutions, health care,

transport and a tax system aimed at high-income earners.

At the time of the French Revolution there was no such thing at all.

It was during this time in the 19th century

that division of labor, inequality and power was established worldwide.

First with slaves and then with a relentless colonial rule.

It is difficult to say how much of Europe's wealth comes from their colonial past,

but the dominance gained during the industrial revolution

was linked to a military rule.

Between 1870 and 1914, Britain and France, the great colonial powers,

owned very much the world over.

They raised so much profits, dividends, interest and rents

that they continued to invest in other parts of the world.

The rest of the world worked for them.

Around 1914, in a city like Paris,

one percent of residents owned 70 percent of what was possible to own.

Two thirds of the population died without owning any property.

Nationalism increased and the countries of Europe began to compete a little

because of the extremely strong social tensions

due to a stagnant standard of living and injustice.

Nationalism, competition between countries, was used by the elite

to forget the class conflict and instead rally around a national identity.

It contributed to the outbreak of the First World War

in the summer of 1914.

If you read John Steinbeck's "Grapes of Wrath"

you understand how enormous the shock was when the system broke down.

When the banks went bankrupt, people lost their money.

Demand in other areas declined, which in turn led to bankruptcies and unemployment.

The great crisis of the 1930s was so traumatic

that the public and their political representatives blamed capitalism.

War itself destroys capital.

First, you bomb and totally destroy cities.

But that's only a third of the capital.

What are the other two thirds?

One third is inflation, which destroyed public debt to private individuals who funded the war.

The other third are new rules such as rent regulation, state ownership and budget regulation.

The destruction of capital was not only bad because society's balance of power was changed.

All are equal in the face of death.

War, all the victims and all the hopelessness, make us realize that we are all human beings.

The new political context ultimately led to the enlightenment and equality proclaimed in the 1700s.

If you follow the evolution of inequality during the 20th century,

the strong middle class is the most striking change.

Until 1914, there was no middle class.

It was almost as poor as the poorest.

During the first 30-35 years after the war, economic growth prevailed.

Purchasing power increased significantly especially among the lower classes and the middle class.

They could buy consumer goods, get a better standard of living,

save for a house and raise capital.

They were not very wealthy, but not poor either, and held much of the country's capital.

But the middle class's share of capital has declined more in the United States than in Europe.

The new direction can be quite alarming if we look at the 21st century.

A major challenge for the future is whether the middle class shrinks

and we risk an impoverished middle class like 100 years ago.

All countries must tell us why they are richer than others or why they have become poor.

That's what Reagan and Thatcher told their constituents.

In the US there was a feeling that Germany and Japan, those who had lost the war, caught up.

Reagan, and to some extent Thatcher, pointed it out and said:

"Look, they're about to catch up. We have to change something, but what?"

"It's the fault of the welfare state brought about by the New Deal."

"It has made us weak."

"We must return to the mythical capitalism of the 19th century and gain new power."

When capital becomes too concentrated,

its influence over the media and the financing of political campaigns and parties that benefit the most increases.

Their motto: "one dollar, one vote" or "one euro, one vote"

goes against the motto of democracy: "one person, one vote".

In 2015, Google Alphabet estimated a profit of $15.5 billion in Bermuda,

but they aren't doing anything in Bermuda.

It is an example of how countries are stealing tax bases from each other.

Another is wealth management.

They sell shell companies, numbered accounts protected by bank secrecy, to wealthy families.

You cannot levy additional taxes on what you can not measure.

We live in a statistical fog about who is wealthy,

who owns the building in New York, in Paris?

When we try to look it up, we find shell companies.

You can fight the tax haven in a fairly simple way.

Penalties must be imposed on countries that facilitate tax evasion

and change the calculation of taxable profits in all countries.

Take Apple for example.

Imagine Apple making $50 billion in profits.

Ten percent of all sales are made in France.

Then France could say:

"Ten percent of Apple's global profit, $5 billion is to be taxed in France."

Today, multinational companies can manipulate a lot of things but not where the customers are.

They are in France, Germany, England, USA, not in Bermuda.

Since the late 1970s, Chinese average income has increased by about 800 percent.

That's a huge amount.

However, the average income for the rich has increased by 2000 percent.

It is a country of growth but extremely unfair growth.

Inheritance has once again become as important during the 21st century

as in the 19th century in England and France.

Inheritance means that a small part of the population can live very well

because the inherited wealth creates an income.

Returns have almost always been higher than economic growth.

If we go back to the 18th century until today, 2018,

the world economy has increased by 1.6 percent per year for 300 years.

This is much less than the return on capital, which is 4-5 percent per year.

Is it a disaster? Not necessarily.

If everyone owns part of the capital

if everyone owns an apartment and participates in a pension fund,

it is not bad if the return is higher.

The problem is in the concentration of ownership and thus the power of society.

It leads to a resurgence of social hierarchies

and increased tensions among the working and middle classes.

There are always politicians who are attracted to the increase in inequality.

This was evident even before 1914.

I'm worried about the 21st century.

We fail to regulate international capitalism,

and don't make multinationals and billionaires pay taxes.

Then we let our anger out on immigrants.

It hurts less than going after the companies.

But to solve the increased injustices, we have to tax capital progressively.

And ownership can not last forever.

Those who have a lot of capital should give back to the general

one, two, three percent, or five or ten if you have billions.

If you continue to invest wisely with high returns you will continue to prosper.

If you get a high return, but do nothing,

the tax will erode that mechanism.

In this way we can control the concentration of capital and then also the political power

as well as the right to property for the middle class.

Many do not want to discuss taxes on income and inheritance

but without it, the attempts to regulate capitalism have terrible consequences for everyone.

The challenge of creating a more just society is different than in the 20th century.

The important thing is that it is not technically impossible.

It is a political and intellectual challenge.

And given the story, we can be optimistic.

If we want a society that is peaceful and harmonious,

we must avoid it being too unfair.

I am in favour of capital control and an overrun of capitalism.

With means that are more democratic, more participatory

and that allow us to see a future in the 21st century.