Original subtitles

My favorite quotation is from the Marquis of Condorcet,

18th century, who said that, "Power

and the secret of oppression lies not in the armour

of the oppressor, but in the mind of the oppressed."

So consenting to authority is

what makes authority sustainable.

No regime has the capacity constantly to coerce,

through physical means, a population.

This is, therefore, the role of ideology in

convincing the many that a system that is designed

to exploit them, to oppress them,

and to serve the few, is the natural order of things.

Given the financial damage to date, I cannot see

how we can avoid a significant rise in

layoffs and unemployment.

Over and over again, ideology trumped governance.

Our regulators became enablers rather than enforcers.

Their trust in the wisdom of the markets was infinite.

The mantra became, "government regulation is wrong,

the market is infallible."

You found a flaw in the reality...

The flaw in the model

that I perceived is the critical functioning structure

that defines how the world works, so to speak.

In other words, you found that your view of the world,

your ideology, was not right. It was not working.

Precisely. No, that's precisely the reason

I was shocked because I had been going for 40 years

or more with very considerable evidence

that it was working exceptionally well.

I don't blame my fellow economists for pulling the trigger

that created so much devastation in 2008,

and before that and after that.

But I blame them for providing the economic,

the mathematical models, the sermons, a theoretical

and ideological cover, which steadied the hand

of the financiers,

and allowed them to believe that

what they were doing was perfectly okay, consistent

with science, provable mathematically that it was

riskless and therefore

allowed them the mental

and emotional strength

to do a lot more damage than they would've done otherwise.

Economists had been claiming

with extreme arrogance that they

completely understood how to control

and manage an economy.

There were fundamental principles like the

efficient market hypothesis, rational expectations,

and anyone who didn't accept this was dismissed

as some strange kind of moron.

The whole system collapsed.

The whole intellectual edifice collapsed

in a most amazing fashion

and had no effect on the profession.

None at all. We have a moral

and political duty to empower ourselves

and our children to speak authoritatively about the economy,

to become acquainted with the ways of capitalism.

This is the system, the economic system we live in.

So as to prevent economists from fooling us about

how capitalism works.

So economics is to modern capitalism

that which theology was to the Middle Ages.

A body of ideology and very complicated logic,

because you have to remember that theology was very logical,

very Aristotelian during the Middle Ages, the purpose

of which is to legitimise the existing power structures

and the existing status quo.

The moment economics entered the universities in the 19th century,

it had to be sanitised.

The inventor of utilitarianism, Jeremy Bentham, wanted

to prove that redistribution

of income was an important aspect of any good society.

So he came up

with a scientific sounding concept.

The concept of marginal utility.

So he said, "Okay, suppose you're thirsty.

You drink a glass of water and you feel very happy.

If you're still thirsty

and you drink a second one, you'll be happier.

But the additional utility

that the second glass gives you is much less than the one

that the first glass gave you."

Diminishing marginal utility for him was a law of society.

He said, "Okay, let's agree that the more we have

of something that we like, the less the contribution

to our wellbeing, to our utility."

Which means that if you take a stinking rich person

who's got lots of pounds

and a very, very poor person who's got one pound or none,

and you take one pound from the rich person

and you give it to the poor person,

average utility will rise.

Why? Because the loss of utility to the rich person is tiny

compared to the gain in utility of the poor person.

So, if we agree that the good society is the one

that allows the greatest happiness for the largest number

of people, we need to redistribute income.

Now, of course, that would never allow Bentham,

or somebody like Bentham, to get a chair at the University

of Cambridge, at the University of Durham, at the University

of Glasgow if he was peddling those views,

because back then you had to have a sponsor.

Somebody had to pay for your chair.

As if you would find a rich person to pay

for a mathematical model that was

concluding, at the end of it, after the proof,

that his money had to be taxed and given to the poor.

But at the same time, this mathematical reasoning

was crucial for getting economics into the universities.

So what do they do? They introduce one assumption,

that my utility cannot be compared to yours.

Mine is personal, strictly private, so is yours.

So suddenly we can no longer say

we need to redistribute income.

So, you see how, once it enters the universities,

an axiom is introduced to depoliticise it.

And of course, nothing is more political than a

depoliticised model of society

because it means

that it becomes the greatest defender of the status quo.

I'm not a climate change denier. I love science.

I believe that if we need to build a bridge, we need experts

to build it. It would be stupid to build it democratically.

If we all have a view as to what to do

to build a bridge, the bridge will collapse,

and we are going to be responsible for many, many deaths.

But the economy is not like civil

engineering projects.

The economy is society. It's you and me. It's everything.

Anybody who tells you economics is a science is either fool

or is trying to fool you.

As the United States and Great Britain

and other free nations have prospered,

we have seen an almost Newtonian revolution in the

science of economics.

We are learning that the way to prosperity

is not more bureaucracy and redistribution of wealth,

but less government and more freedom for the entrepreneur

and for the creativity of the individual.

The manner in which loony economics

of the right spread out

and became the dominant paradigm, which was essential

for financialisation to emerge,

that effectively took over the world.

It was fascinating to watch.

You and I are living through a revolution. Over the centuries

of European history,

revolutionary change has sometimes brought freedom

and sometimes servitude,

but what we're witnessing now is a revolution

of conservative values, of free enterprise

and of fervent national pride.

My great regret as a young man

who was engaging in the debates of the left

and also looking in awe at the amazing

capacity of the right

to impose their own dominant paradigm on everybody else,

my great regret was that we

of the left no longer spoke about liberty.

We allowed the enemies of liberty

to appropriate the mantle of freedom.

But, in reality,

capitalist relations

of production are not in sync with liberty.

Theft has always been part of human relations...

Bullying, the powerful

imposing their will on the powerless...

But with capitalism,

theft becomes consented to.

And this is a very simple comparison to make.

Before commodification of land, the land belonged nominally

to the landlord, but the peasants worked the land generation

after generation. It was their land.

It was a common land. That it was nominally owned

by the landlord

simply gave the landlord the right to send the sheriff in

and take his cut of the harvest.

And when the sheriff would take 50% of the produce,

let's say, on behalf of the landlord, this was a clear act

of appropriation, of theft.

Everybody saw it.

It could be legitimised on the basis that God had

decided that the Lord would have that right,

but it was still a violent removal of corn,

whatever, you could see it. Contrast this now

to what happened after land was commodified.

You take the peasants, you throw them off the land.

What do they do? They head for the nearest village

and they knock on the door

and they say, "We'll do anything for a loaf of bread."

Suddenly they are the proponents of a trade.

I will give you my labor, you give me a loaf of bread.

A legitimate market transaction. Okay.

And they sign a contract. It is all voluntary.

We will work for, you know, 22 hours a day.

We will drop dead, and we will receive a loaf

of bread at the end of the week, voluntarily.

So everything depends on consent.

That is the liberal legitimisation

of the capitalist process.

What can we say to their argument

that capitalism is based on consent?

What exactly constitutes a voluntary transaction?

If I say, "You have this diamond and I have a gun,

and I'm going to point it to your head

and I'm going to propose the following trade: I'm not going

to pull the trigger and you'll give me the diamond."

Is this a fair transaction, voluntary transaction?

No, it's not, because of the bullet

that would go into your head and so on, the external force.

Okay, but let's take this a little bit further.

You are lost in the desert, in the Sahara,

and you're about to die of thirst.

And I come up to you, you know, I'm a Bedouin. I have a camel

and I have a glass of water, or a bottle of water,

and I come to you and say, "Well, would you like that?"

And you say, "Oh, yes please, I'm dying."

I say, "Okay, well, here's a document, a contract.

You give me everything you own, your house, your car,

your bank account, everything.

And I'll give you that bottle of water."

Now, what's wrong with that? I was entrepreneurial.

I was in the Sahara with water. You were not.

You are consenting to it. I'm not forcing you.

The fact that you will die if you don't take

my water is not my business.

It's your business.

It is clear to, I think, the vast majority

of people out there, that this is no different

to pointing a gun at someone.

So, suddenly, the freedom of a transaction,

the degree to which a transaction is genuinely voluntary,

depends on the alternatives you have when somebody is

presenting a contracts with you, Which means

a fair distribution of property rights, of artifacts,

of food, of shelter, basic goods, is necessary

before you can have consent, before you can have freedom.

Property rights are everything.

Who owns what? That determines who does what to whom.

Now, in capitalism, property rights are by definition

asymmetrically distributed.

The very few own the means of production...

The Googles of the world, the Volkswagens of the world,

the farmland — the very few.

And the very many who are propertyless

only own their own labour,

and they have to sell it in order to survive.

And that creates capitalist dynamics.

In other words, most of property, especially capital,

belongs to the very few who own but do not work.

And everybody else works but does not own.

And money comes to you to the extent that you have

the power to extract value that others have created.

The greatest and most toxic lie at the heart

of the society we live in is

that wealth is produced individually by each one

of us separately, and then somehow the state comes along

and collectivises it through the tax system.

In reality, everything, every single item on this planet

is collectively produced and then privately appropriated.

The steam engine. Okay, it was James Watt

that invented it,

but he was standing on the shoulders of thousands

of thinkers, inventors, physicists,

engineers, to produce that.

When it comes to our smartphones, when it comes to our wifi,

when it comes to satellites, when it comes to all the things

that today Elon Musk is using in order to go to Mars,

create electric cars and so on,

every single one of those technologies was the result

of a state investment.

Some state grant.

So every smartphone consists of little inventions

that were invented by state-run

and state-funded laboratories.

For instance, wifi was produced in Australia

by the CSIRO, a state research organisation.

They gave it away for free

and, in the end,

the Australian state got not one penny for wifi.

Imagine if a company had developed something like wifi!

They would be one

of the biggest corporations in the history of the world.

There is nothing easier for the human mind than

to start developing the conviction that one

deserves all the goodies that one has; to consider

whatever it is that we have accumulated,

whether it's a few records in our record collection

or a few trillion dollars, to consider this to be

deservedly ours.

And it is very easy at the same time,

if you don't have any property,

to begin to hate those who do.

Firstly, we don't deserve what we have.

If you have something — I say to my daughter...

You have an iPhone, you have a laptop, you have this and that,

it's the accident of birth.

If you were born in a different

family, you wouldn't have anything.

It's got nothing to do with your deserving that.

At the same time, hating those

who actually have a lot more than you do

is to miss the point.

And the point is that we live in a society

that is grossly inefficient at distributing

bits of the pie that we collectively produce.

It is grossly inefficient in terms of maintaining a balance

between human beings

and between humanity and the environment.

So effectively we live in a stupid world.

And if we want

to be angry at something, we should not be angry at those

who want to take away what we have

or those who have a lot than more than we have,

we should be angry at the stupidity of the system.

We should be working together to design a better system,

a system which is more in sync with the natural ebb

and flow of the human spirit.

What made you into this searing critic

of the capitalist model?

Well, to begin with, I believe

that we should always be critical of the world we live in.

Whether you live under feudalism or in ancient Athens,

or you know, in China, you should always be critical because

unless you're critical, there is no scope for improvement.

The legitimising story

that I was taught when I was a young man,

before neoliberalism took over, the liberal story is founded

on Adam Smith, the original political economist

who legitimised capitalism.

Adam Smith put forward the argument that

while greed is truly sinful

and horrible, in the context of capitalism

it can be harnessed.

It's like raw energy that can be harnessed

and put in the service of the public.

Because society does not need sermons.

It doesn't need moralising. It doesn't need

more prayers.

What it needs is more food, more shelter, more goods,

that will lift people out

of abject poverty and starvation.

Yes, capitalism is a place full of selfish,

greedy individuals who nevertheless and in spite of themselves,

are producing the good society,

as long as their greed is kept in check through competition

due to the miracle of the market.

The market, like an invisible hand behind their backs,

takes their greed and converts into virtue.

Now, this is the propaganda. What is the reality?

The market system that Adam Smith was

envisioning doesn't exist.

His view was that this only works. Greed becomes good,

only if you've got tiny little family owned enterprises

in complete competition with one another.

None of them has any capacity to change prices

through monopoly, oligopoly, cartel-like behaviour.

He was indeed against the corporation.

He was against public limited companies.

He was against the idea of shareholders.

So, his view of capitalism, has nothing to do with

what we understand as capitalism today.

The notion of competitive capitalism

that Adam Smith was referring to died in

around 1870, 1880.

So the idea of the brewer, the baker, and the butcher goes

and is replaced by Edison, by General Electric,

by Ford... today, by Google, Facebook, and Amazon and so on.

That is not competitive capitalism.

It's a market of monopolists.

What we now have is a gigantic concentration

of market power in very, very few corporations

and very few shadowy financial firms

that control the corporations.

Is there a conflict between democracy and capitalism?

The one thing I learned during my political life,

which is fairly recent, since 2015,

is when a bill comes to parliament,

somewhere in it you will find, if you follow the money,

some vested interest that has created circumstances

for the corrupt enrichment of some oligarch.

If you follow the money, you will find the essence

of corrupt power of oligarchy

embedded in the DNA of what passes

as really existing capitalism.

So if you're Goldman Sachs, effectively you have

a society-given right to print your own money.

When you have that capacity, it's so easy

to buy political power.

To buy political influence. All you need

to do is just fund the various political parties, the media,

the think thanks campaigning for the policies that ensure

that your ATM in your living room

will continue to produce money.

We have captains of industry

and masters of finance that accumulate war chests

with which, effectively, to buy politics.

Democracy and capitalism are natural enemies.

Think about it. In democracy, you have one vote

independently of your means.

Capitalism is all about power

that is proportional to money.

Whether you're in the shops, on Amazon, in the internet,

or in a shareholders meeting, the more money you have,

the more decision-making power

you have, the more votes you have.

So exploitative power, extractive power, the power

to make other people do things against their will on your

behalf is what in capitalism gives you more votes.

Democracy should be and can only be conceived as

a process, a political project of ending the capacity

of the haves to make the have-nots do

things on their behalf.

Once upon a time,

power was one

sphere, one realm.

The lord of the land, the baron, the king

in medieval Europe, let's say, had all the power. Capitalism

ruptured this unitary realm of power,

split it into two different realms,

the political and economic.

And as it did, the political sphere was

increasingly democratised.

Why? Because all the important decisions were

moving to the economic sphere.

This democratisation was only accepted by the proponents

of liberalism to the extent that all the

important decisions were migrating from the political sphere

as the political sphere was democratised.

Let me remind you that in the 19th century, liberalism

was against the idea of democracy.

John Stewart Mill, the archetypal liberal,

was an anti-democrat.

More recently, we had another split.

The economic sphere was dissected between

industrial power and financial power.

So the banker acquired power

and not the Henry Fords of the world.

So this is what has been happening.

We are now in a world where the financial realm

controls our lives.

Industrial power is second.

And the political sphere has lost all power.

Democracy is confined

to the least powerful sphere, the political sphere.

This is why this fragile flower is being crushed.

When I was six, the secret police broke down our front

door and abducted my father.

I'm not a great friend of the state,

but I am equally not a great friend

of any privateer with excessive power over other citizens.

The only guarantee we have, the only weapon we have against

concentrated power, is democracy.

And allow me to finish off by reminding you

of Aristotle's definition of democracy.

It is a system of government in which the poor govern

because, by definition, the poor are in the majority.

What we are experiencing today is an oligarchy

that is pushing us towards an ecological catastrophe.

A capitalist system predicated upon profits,

is driven by profits.

That's a tautology, but it's also the truth

about capitalism.

So economic activity is being channeled into the areas

where there's money to be made.

Now moneymaking

and serving human interests are not

necessarily one and the same thing.

Right now, we are facing a man-made disaster

of global scale.

Our greatest threat in thousands of years: climate change.

If we don't take action.

The collapse of our civilisations

and the extinction of much

of the natural world is on the horizon.

This is all wrong. People

are suffering, people are dying.

Entire ecosystems are collapsing.

We are in the beginning of a mass extinction,

and all you can talk about is money

and fairy tales of eternal economic growth.

How dare you?

GDP is an atrocious measure of progress.

All you need to know is that a bushfire increases GDP.

There is absolutely no correlation between

prosperity, genuine human

enjoyment, and GDP growth.

But at the same time, GDP is the only metric

of the success of capitalism in capitalist terms.

And the reason is very simple:

capitalism is a process of accumulation.

It's all about growing capital.

But for GDP to grow, for capital to accumulate,

you need an ever expanding realm of the marketplace.

Living creatures, biodiversity, when they have no

protection from the steady encroachment

of the market, they get wasted.

They get used up, they're chewed up and spat out.

And it is this which brings together the natural tendency

of capital to accumulate under capitalism

with the physical depletion of the planet.

We need to make one evolutionary step beyond capitalism.

We need to democratise economic life,

democratize the way corporations are, run,

democratise finance, in order to save democracy, in order

to save liberalism, in order to save hope for the world.

Thank you.

Capitalism is consistent neither with democracy,

nor with the survival of the human species upon this plant.

To put it bluntly, either we move

beyond capitalism or we die.

The market will always create profits for the corporations

by depleting the natural resources

to which the market will always assign a zero price.

So the question is, how can you ameliorate for this drive?

Can the state do it?

No, the state cannot do it.

Our states, our democracies, have completely been usurped

by the concentration of money.

Effectively, our politics has been purchased by those

who have an interest in depleting the natural resources

of the planet.