Alternatives to capitalism
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Welcome to the LSE Events Podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences.

Hello everybody, sorry about that slight delay. It's great to see so many of you here and to welcome you to London and to the London School of Economics. My name is Richard Davis, I'm a professor in the School of Public Policy and tonight we're going to be discussing alternatives to capitalism. You've come along, I'm sure, because you know about the LSE and you probably know something about my guests.

So I'll let you go through their biographies in detail online. But to my left, I have Ryan Shorthouse, who is a centre-right, I would say, thinker, founder of Bright Blue. On my right, I have Grace Blakely, who is the author of Vulture Capitalism, amongst a book also on the financial crash and a book on the coronavirus economics.

And to my far right, I have Abby Innes, who is the author of Late Soviet Britain, Why Materialist Utopias Fail. Both Grace and Abby will be on hand after the event to sign copies of their book. And Ryan hasn't got copies of a book to sell, but he has got a great report. Well, a 350-page report. I can't say I've read the whole of it. I presume some of it's great. Coming out tomorrow, which he can tell us about.

What we're planning to do is to keep this as discursive as possible and to get as many questions from you guys as possible. This is a huge question. If you look across the world, clearly people are hugely dissatisfied with the way capitalism is working for them.

their families and their communities. So what I've asked the panel to do, and we'll keep it simple, Ryan, let's just start with you and run across to the right, is just to come out and set out their stall. Just tell us what do you think needs changing in two to three minutes, if you will. And after that, we'll dig into the problems they've identified, maybe some of the solutions, and hopefully a route forward before opening it up to you guys. So without further ado, Ryan.

Well, you won't be surprised that I'm here perhaps to defend capitalism. But I would say that capitalism is not perfect, but it's the best damn socio-economic model that we have. It gives the investment and incentives to create technologies, scale businesses, and fund public services and redistribution.

I think capitalism is largely responsible for the gains in living standards that the average person across the world has experienced over the past half century or so. And the experiences we have, the products that we can access, which previously were only really affordable to the elite, is largely down to capitalism.

And I have quite a positive view of human progress in recent decades. And Professor Steve Pinker, in his book Enlightenment Now, gives a good overview of those metrics where we've had progress. Child mortality rate, for example, fell from 18, this is globally, 18% to 4% between the 1960s and the noughties.

An average person from a developed country will work a quarter less of their lifetime than they did in 1960. A woman today will spend less time on domestic chores than she did many decades ago, much more time working and spending time with her children.

And away from these facts, Steve Pinker, I think, gives quite a remarkable quote about what capitalism has done.

And he said, you know, just over a century ago, small children stood on boxes to tend dangerous machinery in mills, mines and canaries, breathing air thick with cotton or coal dust, kept awake by splashes of cold water on their faces, collapsing into sleep after exhaustion, still and with very little food in their mouths.

So all the doom-mongering that we hear in the media, I think we need to put in perspective. But that's not me defending the status quo.

And it's not me saying that capitalism alone is responsible for the progress that we've experienced. Indeed, I'm not an advocate of free markets. The state always has a role to play. Indeed, there is no such thing as a free market as Harjun Chang, the academic, has talked about. For example, all markets have some kind of state regulation. Here in the UK, you can't, for example, use child labour. There is a form of regulation there.

The question is the degree of regulation. I'm more pro-market than free market, believing that government plays a crucial role in improving the efficiency and equity of capitalism. It can do that through redistribution, giving people the resources to participate in and support a capitalist society by co-investing.

to ensure that the riskier parts that the private sector won't take can be funded through the public purse, and also, of course, to deliver essential public services which are free and universally accessible to people. Steve Pinker says there is no libertarian paradise. All advanced capitalist societies have large public spending opportunities.

And, you know, part of that is down to the profits that come from capitalism. So I'm very much a believer in a social market economy, what the Germans called auto-liberalism in the post-war period. But just, I'm conscious of time, so final, final three points on capitalism.

on how we can improve, not replace our capitalist system. The first is we need to democratise ownership of capital, housing, businesses, investment. That will need more state support through tax incentives, benefits, more social housing, for example, incentives for more mutualisation and

employee-owned business. US, for example, has much more employee-owned businesses. Even people on low and middle incomes own shares in the companies they work for. Less common here in the UK.

tougher state regulation to break up monopolies and anti-competitive practices. But in other areas, we might need less regulation. For example, in blocking the planning and infrastructure development that we need. So it's not state regulation, good or bad, it's where it's appropriate. And finally, in the taxation system, which I think needs radical reform, we overtax, I think,

from enterprise, effort and entrepreneurialism and we undertax income from assets, especially rent-seeking behaviour on assets. So,

So I'd like radical reform where you broaden, for example, national insurance so it applies not just on payroll taxes but on rent, on dividends, on pensions too. And generally I'd like to see a more simplification of taxation so there's less loopholes and exemptions for special sectors and more simplification across the board to get rid of perverse incentives.

So I'm a big defender of capitalism, but realize it still needs to change, and here are some ideas to do it.

Great, thank you. Grace, I'm going to hand over to you now. One of my roles is going to be jargon buster this evening. And the first bit of jargon we need to bust is actually what do we even mean by capitalism? And right at the start of your book, you've got a couple of sections where you talk about that. So I'm going to allocate you a bit more time. Give us your opening salvo. But will you also explain a little bit about your perspective on capitalism and the fact that it

Lots of people, I think, equate it with free markets. And you're very clear that we shouldn't do that in the start of the book. Yeah. Thank you very much for that introduction. And I suppose, yeah, my response to this question would be to say that part of the reason that it's so challenging having these discussions when we're talking about how to change capitalism is that for a very long time, we've basically been lied to.

about what it is. We're often told that capitalism is a free market system, or it's defined by private ownership of the means of production. And for a very long time, we've had this divide in our politics as set up between free marketeers who want a small state and let's say more corporate control over the economy versus people on the left who say, actually, we need state regulation to kind of contain and control the ups and downs of the market and to regulate what's going on within the corporate sphere.

Now, the argument in my book is that capitalism is not a free market system, nor is it particularly democratic system.

Instead, capitalism is a system that is defined by the class division of society. Some people own and control all our most important resources and other people are excluded from that ownership and from those democratic processes, what should be democratic processes, to determine how those resources are used. And when we set up in our political debate, and you see this in party politics, you see this in academic discussions,

discussions about capitalism, and we set up this debate as between free markets and states, we lose so much of an understanding of capitalism as a class system. Because what you see when you analyse actually existing capitalist societies are big corporations, financial institutions, governments, all working together, basically along the same tracks.

Now, this was a much more controversial point, I think, when I first brought out this book. I've got loads of examples, and I'll talk a little bit about those in a second. But this has become a very obvious point, I think, in recent months, when you've seen Elon Musk, one of the wealthiest men in the world, literally being parachuted into the White House to help Donald Trump implement his particular economic agenda. But it's something that you see repeatedly across time and space, throughout history, all the way back to the origins of capitalism. You had the East India Company, which was a very, very important company.

which is, you know, in some ways the archetypical capitalist entity. It was a joint venture between markets and states. And Adam Smith, one of the kind of earliest theorists of capitalism, called the East India Company a strange absurdity because it was a market in the disguise of a state.

And this is exactly how you can describe many of the massive corporations that we see today. You can look at Amazon, for example, which is simultaneously a market, a provider of infrastructure and an institution that is deeply and profoundly involved in politics throughout the whole world and indeed at the regional and federal level in the U.S. particularly.

An example I use at the beginning of the book, which has recently become relevant again, is the example of Boeing. You guys may have seen the Air India crash the other day. This is just one of many recent scandals to have hit this company, which is one of the biggest recipients of corporate welfare in the US, an integral part of the military-industrial complex.

There's a revolving door between senior management within Boeing and the American state. And it was implicated a few years ago in two massive plane crashes, the 737 MAX disasters, in which 350 people were killed. It later transpired that senior executives at Boeing had known about the flaws in this plane before it went to market. The regulator that was supposed to be regulating it was being run according to a principle of self-regulation, which you may remember as the same principle that regulated the banks before the financial crisis.

So Boeing was being regulated by a unit of the FAA that sat inside Boeing and whose workers were being paid by Boeing. So that's what you get when you have this kind of regulation of capitalist corporations. And then when all of this came to light and Boeing was charged with a criminal conspiracy to defraud the United States government, it got away with it all and then got another bailout during the COVID-19 pandemic.

Because when you look at how capitalism really works, you don't see a nice, decentralized, free market paradise where you have lots of little individual corporations competing with each other to produce little widgets that they can sell on free markets. You see a system of concentrated power dynamics.

that unites elites across the public and private sector in pursuit of the maintenance and expansion of that power and control. And that is, I would argue, the root of all of the crises that we face today. And the only alternative is to deliver on the promise of democracy.

to deliver real democracy, which is, when you understand capitalism as a system that's based on domination and hierarchy, that democracy is the real alternative to a system of centralisation and control. Thank you. Brilliant. Thank you very much.

- Abi, over to you. I have to say, reading your book, there are some brilliant bits in it. There's one particular bit where you talk about Michael Gove's reform as a parody of Soviet planning.

And I think actually that links to something that Grace was talking about, because what you're talking about there is something that people trying to essentially mix an efficient market with a well-organized kind of public system and it not working. So give us your opening salvo, if you will.

I want to get to that question moving on to whether we can kind of mix these two systems together, whether some middle way is possible, because I took it from your book that maybe it isn't. Thank you. So I think Ryan is right that capitalism has clearly changed over time and there are more or less mediated versions of capitalism, but I think the main reason that the last...

45 years of capitalism have become so extreme is it became governed under a philosophy we think of as neoliberalism, but neoliberalism is rooted in our mainstream economics, which is neoclassical economics, which is based in formal mathematics. It's an attempt to become a science in the allocation of things.

starting from the late 19th century, but really coming into its own in the neoliberal era. And the argument in my book, the point I'm making in the book, is that what we've, as a sort of dark historical joke, which is that in thinking of the economy as a machine, as the world and society as a computable, programmable world, we've reproduced Soviet conceits in capitalist form.

So the idea that you can make a science of the perfect allocation of things using the price mechanism and rational individuals is, if you like, the photographic negative of the Stalinist idea that you can have a perfect central plan, perfect allocation, allocative efficiency using the whole production regime put onto the planning table and written out. And we've been trying to sort of disappear a lot of the really difficult aspects of the production regime and

theorize about incentives and frameworks and models and forecasts and so on. But it's basically the same metaphysics, which is that we live in a machine world and we can make that world knowable. We can make it scientific. And because it's based in mathematics and formal reasoning from logic, it thinks in two dimensions.

rather than three dimensions. It thinks in logical time, not historical time. And it's consequently incredibly naive about the historical evolution of capitalist institutions, firms, finance. It can't see it, literally. Things that you can't make to conform with the models get sort of written out of the theorising and consequently of the policy making, which leaves us in this very peculiar situation. The point I want to make, I want to add a spanner to the works in this discussion, which is the planet.

So the point I want to make is that capitalism has changed over the centuries, but it is ecologically blind. Neoclassical economics.

is a mathematical attempt to make economics scientific. It's incredibly bad. It thinks of the world as sociologically flat. It's very bad at reading social evolution. And it's absolutely hopeless at understanding ecological breakdown, which is where we are. So I want to assert the Herman Daly point, which is the economy is a wholly owned subsidiary of nature.

And until we have an economics and a form of organization that conforms to that reality, our situation will only become increasingly precarious. How would I change it? I would change it by moving from machine models of the economy to ecosystem models of the economy, ecosystem thinking about the economy, and that instead of thinking about

efficiency and optimality in a machine world, which doesn't exist, has never existed. The world is always becoming something else. We're imaginative, so we're always making the world something else. We need to change our priors, and those priors need to be about resilience, adaptability, the capacity to read the horizon,

and the ability to include everybody in decision-making so that we can make ourselves resilient while we regenerate nature. We have a highly complex set of tasks ahead of us. They are absolutely impossible to solve if we stick with the models that we have. Thank you. OK, I'm going to go round again. Thank you. And what I'd like to try and get to do before we open it up to the audience is to try and work out...

some things we potentially agree on, and then to work out what we really disagree on and think about a route forward. So one thing from reading all of your work, and I'm going to put it to you, I'll ask you again to go first, Ryan, is the problem of market power and the problem of large corporations that are able to influence everything from regulation to the political sphere. And I don't think that anybody...

And certainly nobody on this panel has written that that is a good thing. So, Ryan, first question is to you, is that one of the top things you would tackle? And then I'm going to put it to the others. If tackled, would that be enough to soothe some of their concerns about current capitalism? Yes, I think I agree that there is too much dominance by very big corporates.

However, where I disagree with Grace is that somehow democratic and corporate power have become the same thing, when actually we know that democratic power often overrides corporate power, quite rightly. So the government, you know, again, this idea that we've been living in a neoliberal world since the 1980s, I disagree. There was a rise in the minimum wage, which many corporates disagreed with.

There has been a recent increase in employers' national insurance, which lots of corporates, the CBI, the British Chamber of Commerce, disagreed with. So the point is that democratic power can override corporate power, and quite rightly. And if it was the case that...

corporate power was so entangled within democratic power, why would these companies spend so much money on lobbying? They wouldn't need to spend any more money on lobbying because they've already got control of the democratic system. So I agree that we need to break up

monopolies, I agree that we need to, you know, for example, in the tech world and social media, the evidence now on the harms that tech particularly is doing to children, smartphones and social media, I think is quite compelling. So there needs to be action on that from government. But I don't think it's true that democratic power cannot overcome corporate power. It can, it should, and it has.

Grace, you cite some really important evidence in your book on the rise of large firms. And I think we should take that. I think we should all agree that that is part of the fact base. That's, you know, independently done work, Thomas Philippan, Jan Eckert and so on. Basically, what people have found is that over time, companies are getting bigger and bigger and bigger. And because of that, they have market power and particularly market power over wages. So they're able to pay people less more.

And because of that, the share of pay going to workers has gone down and the profit share has gone up. I think we can... That's a fact. We can measure that. If we could get rid of that and get to this world which you kind of pose as fanciful, which it is given the current world we live in, of lots and lots of small firms competing and so on, would that be enough to soothe your concerns over capitalism? Because it places in the book...

you write in a way which made me think that actually any small company, when that person has got some surplus and got some capital, almost like the first person they hire, that's a power structure which you wouldn't want to exist.

So, yeah, I mean, you know, I'm a Marxist. So I think of capitalism in terms of this class divide between owners and workers. I oppose exploitation of the latter by the former. But there's also, I think, a more kind of subtle point here that comes out when you and this is actually how I came up with the idea for the book. It was in the middle of the pandemic. I went back to capital and reread Marxist capital over again. And there was a section where he talked about the concentration and centralization of capitalism.

and described this as a kind of inevitable process that takes place over the course of capitalist development. And I think there's a very strong case for that. Having said that, you know, it's very clear when you have these debates about market concentration that the argument is always, well, if there's a political force that can exist to check

centralization and concentration of market power, then this isn't something that has to happen inevitably. And, you know, we see this in the US with the antitrust movement, actually. It was a movement before it became legislation. You see it take place all over the world during the social democratic era, a much more, a state that was much more geared towards controlling and limiting corporate power.

My response to that would be that the kind of political governance that we have is not separate from the way that the economy works. And to understand why, we really have to think about what we mean by the state. You know, I do lots of events like this. And anyone who goes to events like this will hear people like me come on the stage and say, well, to fix this problem, we need to do X.

But there's never really any indication of who we is or how that process is going to happen. You really need to understand how policymaking takes place within modern democratic societies to figure out how you get from A to B. And when you look at that and kind of talking with regards to Ryan's point as well, you know, why would any state, why would any corporation, sorry, need to lobby if they had total power? This is when a kind of more subtle understanding of the way that political power and state power works in a capitalist economy is really important.

Because there's an insight in a lot of kind of the theory that I draw on, for example, theorists like Antonio Gramsci, Nikos Palancas, who would describe the capitalist state as a social relation. What does that mean? It really means that outcomes within the state reflect the balance of class power within society. So it's not the case that the state is just a thing that corporations kind of pick up and use to do what they want to do.

Equally, it's also the case that it's not a thing that any technocratic elite or any political party can just pick up and use to do what it wants to do. It is an intricate set of social relationships. And the balance of power between the groups that operate within the state reflects much wider social forces.

So why is it the case that, for example, despite the fact that we all know that climate breakdown is a disaster waiting to happen, we still have energy policy, climate policy that is largely oriented in maintaining a fossil fuel economy? Well, it's because companies like, for example, ExxonMobil have an extraordinary amount of leverage within particularly the American state, but also in states around the world. That isn't automatic.

They spend a lot of time and energy not just lobbying politicians directly, but also disseminating thought leadership, advertising campaigns. You know, ExxonMobil knew about the greenhouse effect as far back as the 1970s. And what it did was take funding from its climate research team and put that funding into spreading skepticism.

skepticism about climate breakdown. It didn't say climate breakdown isn't happening. It said there's mixed scientific evidence and then sponsored our own think tanks to spread this and to spread it within Congress and to make sure that any attempts to kind of curb greenhouse gas emissions didn't end up happening. So

So you see this kind of complex relationship between different social groups playing out within lots of different social institutions that are influencing policy. Now, the times when capitalism has been fairer, it hasn't been because our policymakers all suddenly realized that they needed to do things better and be nicer. It was because we had organized political and social movements that were able to force them to act in the public interest.

Why do we have the welfare state? Why do we have the antitrust movement, right? It's because we had strong, powerful unions that were able to meet the power of corporations as they attempted to get their way within the state. The same with loads of other social movements that we've seen since then. In fact, I write in my book that...

this neoliberal shift that we had in the 1980s, you know, we're told that it was about free markets, right, that it was about shrinking the state and creating more space for markets. It had nothing to do with that. Neoliberalism was about rigorously reasserting class control in the context of what one sociologist has called a crisis of ungovernability.

Workers were too powerful. Unions were too strong. The peace movement was too powerful. The anti-apartheid movement was too powerful. And all of these movements were checking the power of capital, the power of politicians, the power of those at the top, and pushing back against their influence within all of these social institutions. And it created this crisis.

for this system that relies upon centralised, almost authoritarian control. And that's where we got neoliberalism, which was crushing the labour movement, crushing social movements. It's why today, in the wake of all these crises, we have these rigorous, rigid laws against protest, trying to keep everyone in their place.

You know, this is how state power works under capitalism. And if we want to change it, it's not just enough to say we need to do this. We need to influence this policy. We need to build movements that can make politicians just as scared of ordinary people as they are of big corporations. I'll be linking that to your concerns, your environmental and ecological concerns, too.

If we had a world of small kind of textbook idealized competition, lots of small firms all competing,

and we had strong, clear government regulations on things like carbon emissions, maybe a carbon tax, these kinds of things, do you think that would be sufficient for us to get control of the environmental situation? Or do you think that it goes deeper than this? I tend to think it goes deeper. Because if the basic native logic of capitalism is maximum financial accumulation through expanding things that you can do for profit...

That fundamental logic is simply incompatible with a fragile planet that operates, that requires balance. So I think we do have to change the logic a bit more fundamentally.

I mean, we could talk about why the logic has become so extreme, and I think there is reaction and politics, but I also think there's cock-up in the story of why the economy is as bad as it is, in the sense that mainstream economics and the Treasury is trained in a form of economics that, in principle, sees companies as productive stewards of the economy and financial intermediaries as those most able to organise the efficient allocation of capital.

Having tried to organise the regulatory world as if that was true and discovering it's not true, we end up with these incredible...

bureaucratic, brittle regulatory exoskeletons trying to mend the fact that that's not true. So we end up with the worst of both worlds. We end up with very extreme forms of capitalism and incredibly brittle bureaucratic states. It's fantastic. It's really quite an achievement. But I do think there's more cock-up than conspiracy in a lot of that. What do we need to do? I think we need to switch profit for purpose. So I think we need to make the corporate and financial duties...

Articles of association are primarily about a social or environmental purpose, the achievement of which allows you to make profit, but you subordinate profit to the achievement of that purpose, which in a way is what post-war companies used to do much more of, actually. It's what SMEs tend to do. If you think it's otherworldly,

Britain has the highest, fastest-growing group of so-called benefit corporations that do this. And actually, I think the trick is to look for what works, not to come up with some sort of... And the last thing we need is another utopian. So what we need is to look at what are the organisational forms and forms of collaboration that are most effective at being inclusive, being ecologically regenerative, being socially inclusive,

of problem solving and scale them up. And they exist. We can go through a lot of versions of that if we had the time. But I think that should be the strategy. And we need all the different coordinating mechanisms we've got. We need markets. We need administration. We need relationships. We need charities. We need cooperation. We need mutuals. Everything that works, we should use. What we don't need is capitalism.

OK, we can bin it. Ryan, you respond on that. So I'm hoping to open up to the audience pretty quickly, so I'm going to ask the panel to be brief in the final round of comments. But, Ryan, I know you wanted to comment on Grace's point. Yeah, just a few things. Firstly, I don't believe that we've been in a neoliberal state since the 1980s. And I say that because...

Real terms increase in a state-owned health service, which is quite unique compared to other countries, is still there. The minimum wage was introduced and has been increased quite consistently. We now have the highest level of public spending, highest level of taxation, highest level of borrowing that we've had in a long time.

So this idea that we've... And then during the pandemic, we had huge amounts of money spent to keep people in their jobs through the furlough scheme. So the idea that we've been living in a neoliberal state, it just doesn't ring true for me. On the environmental stuff, look...

economic growth has been decoupled from emissions. The UK has been a leader in the G7 in reducing its overall emissions. And

It's interesting... Growth can be decoupled from emissions, I guess that shows. Say again? Growth can be in some countries, but it's globally... But also because we've exported carbon intensive... I mean, it's an issue of how you measure it, but in the UK, yes. But there's also... Sorry, I really need to jump in there because we think of the green transition as an energy transition, as a way to have cheap energy to kick-start capitalism. We are in breach of six out of nine planetary boundaries globally.

And we forget the other five, or indeed the other eight, but there are eight more that we would have to decouple in order not to be in a state of ecological collapse. And those systems are interdependent. So it is an artefact of the kind of inertia in the way we think about things that we think, cheap energy, great, business as usual. A category error of lethal proportions. OK, I mean, my view is...

My view is that the capitalist system has been able to deliver reductions in emissions and actually both state investment and private investment in technologies like nuclear, onshore wind, offshore wind have been crucial to that. And what's interesting is that actually for a long time, companies, due to political direction around a legal target on net zero, have had to change and

and incorporate ESG investments. The reason why there's been a slight shift back away from that is not because of corporates, it's because of Trump and his political power. Corporates have responded to the political power of Trump. So this goes back to my point of democratic control overcoming corporate control.

And then the final thing I would say is around, again, this sort of idea that corporates are getting away with things, the state is the same class and it's all sort of working together. I mean, for example, there are, you know, this week we know that, or I think it was last week, Ofwat fined, quite rightly, Thames Water quite a considerable amount because of what it was doing around polluting rivers.

So this is, again, an example of state power over corporate power. There's been no sort of compromise there. They've told them, you've done wrong, and the state has stepped in, and quite rightly. And then the final thing I would say is, I mean, I disagree with this idea that somebody who sets up a business and employs the first person, and the owner is still the first person, is the person who set it up, that that's somehow exploitation.

A job has been created, an opportunity has been created. Maybe that person would have equity stakes in that company, which would be transformational. I mean, if you have assets, this is why I keep talking about democratising assets. That is the real way in this economy where you get social security and social mobility. But, you know, most people in this country work in small businesses. They do not work in these big corporates which are being attacked.

And the profits that small businesses are trying to secure are often to expand the workforce. They're often to provide for their own family, their own children, to make their lives better. So not all capitalism is motivated by greed. A lot of it is motivated by wanting to do better for myself and my family, which is about love. It's not about greed. So...

I just want to put that, that people who are acting in this capitalist system, particularly in small businesses, are not acting in a greedy way. They're trying to better themselves and their families. Okay, thank you. Well, we've definitely got some points of disagreement, which means that the answers to the questions will be really interesting because you'll get a variety of answers, I'm sure. I'm going to come back.

So you can come in first in the answers to the questions, Grace. So what I'm going to do is collect questions as groups, please. So we've got one just to your left there. Yeah, so your right. Yeah. And then behind you and then a gentleman here in a red shirt. So those would be our first three. And whoever's collecting the questions online, please type them into the Q&A box and I'll try and come to some of those as well. So those are our first three questions.

Hi, thank you all for everything that you said today. My name is Shivangi and I'm an LSE alumni from environmental economics.

I was just reading this book, Homo Deus, by Yuval Noah Harari, and he said something which fits directly into what we were talking about, that capitalism, sorry, saving the environment is a great idea to have, but when it comes to actually doing it, you care more about paying your rents and your mortgages more than you care about melting icebergs. So my question is, is there really an alternative to capitalism in the world?

which presents a case where you don't damage the environment, where you just leave the environment as it is. In contrast, you invest to progress towards a more cleaner environment, where we're still paying our rents, in a way, while we're also concerned about the melting ice caps and the deforestations that are happening. Thank you. Who am I? Just behind you.

Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy. LSE IQ asks social scientists and other experts to answer one intelligent question. Like, why do people believe in conspiracy theories? Or can we afford the super rich? Come check us out. Just search for LSE IQ wherever you get your podcasts. Now back to the event.

Hi there. My name is Alex. I'm an A-levels. I've just done my A-levels. And a lot of talk, particularly between Grace and Ryan, has been the conflict between people and unions and corporations and how they operate with state and market forces. And my real question is, we've seen...

both extremes with union militancy in the 70s and backlash against that. And now we're seeing, as Grace has pointed out, corporate interference within the state.

Clearly there's demands from both sides and there's a need to meet these demands. So how can we reconcile both people and corporation demands in a democratic sense whilst also fulfilling state and market needs? Great, thank you. And then a gentleman in a red shirt just along there.

I just want to pick up on something Ryan said. This is a bit technical, but you mentioned the planning and infrastructure bill connected to the housing crisis, which is going through Parliament at the moment. And, you know, there is a big debate at the moment about BATS and news being responsible for the fact that we don't have houses and being...

leading to this real crisis in terms of housing. But this is very superficial, making these kind of sweeping statements, because actually if you go back to the Thatcher's era, about 90% of government spending on housing was actually spent building social houses. Now it's almost nil, and in fact 90% of the money is now spent on housing benefits to pay private landlords. So

So, you know, there is a real discussion to be had here about the housing crisis, what underpins it and what we want the housing market to look like. But just to say that we need legislation to get rid of bats and newts is far too superficial. And I think that the other thing is also to do with distribution.

What I say to people, and that's what the Resolution Foundation said, I didn't believe it at the time myself, they said there were 26 million empty bedrooms in this country. And I found that quite gobsmacking. Now, I'm not saying that all of those 26 million empty bedrooms don't serve other purposes or will be put on the market. But even if 5% or even 1%, it would make a dramatic difference. But the underlying point really is about distribution.

is actually we have a lot of housing. We have a lot of empty commercial properties that could be repurposed. We have a lot of brownfield sites. We have a lot of blocks of flats that could be built above supermarkets and car parks and so on and so forth. You don't need to trash Greenfields or Greenbelt to solve the housing crisis. But also solving the housing crisis is not the same...

as building executive boxes on Greenfield or Greenbelt that nobody can afford. And even when you have to, like 20% have to be affordable housing, the housing associations turn around and say, but we don't have the money to pay for what you term affordable housing because it's not affordable.

So I think it needs to be this issue. I just think this issue sums up so much of what the project is. It's a hugely important point, but I can see we've got about 50 questions that we want to get to. So, Grace, go for it. OK, yeah, I want to hear everyone's thoughts as well, so I'll try and be brief on this. But I think in response particularly to the first question, and to an extent the second question,

I do think there's this tendency to see capitalism as an obstruction, right? And to see it through the arguments of free marketeers versus socialists versus libertarians, rather than actually looking at how this system works on the ground everywhere. And when we look at the history of capitalism, we see that it is just deeply interwoven with the exploitation of fossil fuels.

to such an extent that it is very hard to imagine capitalism without the exploitation of fossil fuels. And that's not just for all of the very eloquent reasons that we've heard already, which is that capitalism prioritises profit, which makes it very hard to consider any other kind of social or ecological issues. It's because fossil fuel capitalism, and I do call it fossil fuel capitalism, Andreas Malm is very good on this,

is based on the need for and the production of scarcity in energy markets. The problem with renewables is not, as we've been told, that they're expensive. They're not expensive. They're now, in the ways that you measure this, actually cheaper than fossil fuels. The issue is that they're not very profitable.

Why? Because once you've built a wind turbine or a solar panel, you can't enclose the sun. You can't enclose the wind. You can't create scarcity when there is no scarcity. Whereas as we see every day with fossil fuel companies, with OPEC, with whoever, it is much easier to create scarcity in a fossil fuel economy. Right.

And that means that that is an extremely profitable sector with an immense amount of political leverage. Whereas when you look at the renewable sector, it is much harder to create large, powerful, profitable companies on the basis of the kind of economic model that we have today. What you need is kind of big upfront investment in rolling out all of this infrastructure, which is then useful for a very, very long time to come. So that is a problem that sits at the very heart of the way that capitalism operates.

Very briefly, I just wanted to come back quickly on something that Ryan said, because this idea that we don't have neoliberalism right, again, because we have state spending.

And again, I think this comes from this tendency to treat capitalism as an abstraction. Part of the reason I wrote this book, the idea for which I had at the very beginning of the COVID-19 pandemic, when I was being kind of brought out onto all these breakfast TV shows to speak to Piers Morgan and whoever else, and they would always ask me, the government's spending loads of money now. So it's basically like Jeremy Corbyn won the election. We have socialism now. You should be very happy.

And I just thought this was so funny that everyone seems to think that when the government spends money, that's socialism. You know, we have one of the largest rearmament programs taking place that we've seen in recent years across the whole of Europe now. That is going to release. There was a study the other day that said that rearmament is going to release potentially 200 billion tons of CO2 into the foreseeable future. Who's benefiting from that? BAE Systems, right?

and weapons companies all over Europe. Companies that have an extremely close relationship with the state. Also fossil fuel companies. Who else is benefiting from this rearmament program? You know...

all of the kind of corrupt authoritarian regimes that exist within this cycling process of the exchange of fossil fuels for military equipment, for aid. There is this imperialist, militaristic, fossil fuel driven economy that sits at the very, very heart of the way that capitalism operates. And that's going to be very, very difficult to challenge. So again, you know, treating capitalism as an abstraction, seeing all of these

issues as kind of just not interrelated and able to be solved if we just had the right state or the right political will is, I think, wrong. What we need to do in answer to your question, you know, how do we balance all of these different interests? It's through real democracy.

It's through being able to build social and political movements that can represent the interests of ordinary people within state institutions, within the economy. You know, I would argue today the promise of socialism comes from the extension of the principles of capitalism

of liberal democracy into the realm of the economy. Because right now we have a political system that nominally functions according to democratic values, but which is largely controlled by moneyed interests. And an economy which is entirely divorced from what the ordinary people want and need to see when it comes to the production and allocation of our resources. Thank you. Abi. Thank you.

In 10 minutes' time, and only 10 minutes' time, we're going to invite everyone in the room to join us for a drink and snacks over there. So for that reason, we need to speed up. Sorry, I said I was going to be brief and I failed. That's okay, that's okay. I spoke too long in the meeting. So that applies to everyone on the panel and everyone in the room, okay? And as a fellow LSE staff member here, you're going to give us the demo. So could you give us those really important questions from Shabandi at the front, though, about...

How are we going to deal with the ecological crisis that you set up? It's a brilliant question. How do I solve the ecological crisis and feed my family in the week, right? So the incredibly good news is that benefit corporations, those that put purpose over profit, are more successful on every metric. They have higher profit, ironically, higher turnover, higher quality employment, longer duration of employment,

Guess what? Because they're motivated by people with intrinsic motivation. The people who work for them feel like they're solving problems, so they work incredibly hard and productivity is higher. So actually, if you had an economy made up of such firms of different scales...

we might not be having the dichotomy that we think might exist there. The question with what we do with that money is then something that also has to fall within boundaries of regulation. Wonderful paper called The Purpose Dividend, if you're interested in the nature of those companies and how successful they are, in fact. On the point about the tie between corporations and politics, get corporate money out of politics. Have publicly funded parties...

Get money out of politics. And that will clean things up quite significantly. I think, finally, we've never had neoliberalism. Well, the Soviets never had communism either. The point is...

Aiming at it and continuously failing. And so one of the reasons the state is so large and brittle and bureaucratic and expensive is that by turning the state into a giant of outsourcing, instead of that being an interface between users and providers, the state became a giant of enterprise planning.

in capitalist form. So it reproduced Soviet enterprise planning pathologies, but now with added profit-taking. It's one of the reasons it's become so expensive and more centralized than it has ever been in British history.

Thank you. I'm going to go to the gentleman down here at the front next. Put your hands up if you'd like to ask a question. And so you're going to be our demonstrator in how to ask a brief question and not make a statement, okay? Actually, I'm going to tell you what is an alternative to capitalism. Please. We're all ears. When I say me, a very wise man has already said that and given us an answer to that. Here it is.

The development, upliftment and enrichment of human life rather than a higher standard of living with scant respect for human and social values. Wealth and property should be held and utilized by individuals and businesses as trustees rather than as absolute owners. Mahatma Gandhi wrote a pamphlet and he called it the principles of trusteeship. So the title alternative to capitalism is trust.

that we all become trustees and as soon as Bill Gates or anybody else become trustees, then all these other issues, housing, ecology, everything could be sorted because as a trustee you have a good feeling about your people and how you spend your wealth that you have created, not for yourself.

So the alternative to capitalism is the principles of trusteeship. Thank you. I like it. Okay, anyone else that has a question? Online, yeah. Where are they? Oh, thank you. I think I'm going to ask three questions. One for Grace, one for Ryan, and one for Ali. Great.

It's just, they're very short questions. Can Grace clarify why anti-apartheid movement is antithetical to capitalism? First, the supposed rise of neoliberalism did not prevent the end of apartheid, nor are apartheid systems commonplace in OECD countries. There's one for Abby. Is the EU becoming a new Soviet Union?

Okay. And then there was one for Ryan. Sorry, forgive me my disorganization here. Well, let's start with those. Say apartheid. Okay, there's a great book by Quinn Slobodian which looks at the deep links between the apartheid movement and neoliberal thinkers and economists in South Africa. And

And basically his argument was that capitalism relies upon the insulation of the economy from democratic pressure. And whilst many neoliberals believed that there would be mechanisms that could allow them to insulate economic rules from populist pressure, some of them thought that they needed to go a step further and either advocate authoritarianism, as you saw in Chile with Pinochet, one of the earliest neoliberals,

or advocate the kind of seizure or maintenance of power by a very small group generally of kind of propertyed interests that could be trusted to respect the principles of the market and this was something that was argued by several neoliberal thinkers you

You can read about it in Quinn Slavonian's book, which is called, I can't remember, but just Google it. The High Expansion is the most recent one. The one he talks about apartheid. It might be globalists that he talks about apartheid. Yeah, but both of them are very good books. And I think there's a more general argument here as well. Very briefly.

In the book, when I talked about that point I mentioned about anti-apartheid movements, it was referencing the work of a French sociologist called Grégoire Chamayou. And his book, The Ungovernable Society, was basically explaining the neoliberal turn as a crisis of ungovernability in capitalist societies that rest on centralised authority and control.

The idea being that we live in these kind of very rigid hierarchical systems where obedience is an incredibly important currency.

workers have to obey bosses they can't get too confident and start organising debtors have to agree to pay creditors if we all suddenly decided we're going to stop paying our debts or our rent the whole system would collapse and equally citizens have to be forced in some senses to obey governments which are again as we've seen very much aligned with the interests of corporations and when you get these moments

of crisis, when the obedience that kind of glues the system together starts to fracture, that's when you start to see panic. It's when you start to see the veil removed and the authoritarianism that underpins this system is exposed. It's what you're seeing in LA right now. It's what you saw after the financial crisis. It's in a big sense why we've got austerity. It's what you saw in the 1970s.

And the response to that, to that authoritarianism that is always revealed as soon as anyone steps forward to try and challenge this deeply corrupt and unjust system, the only response to that is when we start getting organised and demanding change. Not simply saying there'll be a technocratic fix here and a regulatory change there, but saying if anything within this society is going to change, we have to all agree to stop obeying

Thank you. Abi, does your thesis, does your analysis here for Britain apply to the EU?

No, because the EU is... So Britain is an extreme case, right? We're an extremely neoliberal state. To be more precise, we made an extreme effort towards neoliberalism and are suffering the consequences.

that effort was less extreme across many European states and so there are varieties of capitalism within Europe and Europe is not, you know, Europe is an attempt to coordinate, to gain mutual advantage across a diverse range of European countries and it's certainly not socialist and it's certainly not aiming at communism so I'm confident at this point that it is not a new Soviet Union. The

Sir, your point about Gandhi's trust model, I think what would be amazing is to have a spectrum of new forms of social enterprise. You could have lots of different kinds, but one of the most effective would be exactly that, would be where ownership is shared but can never be dispersed, so profit is never dispersed. It's always reinvested back into the enterprise, always, always, always.

And it's a very interesting model because it means it's like putting the plug back in the bath in terms of what it can then manage. Great, thank you. Online, we had a question for Ryan. Then we'll have time for two more questions. There's a lady right at the back who's had her hand up for a long time. And then just in front of her, a gentleman nodding. Yeah, go ahead.

So, for Ryan. The UK purchases phones. There's child labour in Africa, just as you have just described. But just because this is not in your backyard, Ryan, are you saying it doesn't exist? When looking, we surely have to look systemically UK as part of a whole. Well, it does exist, yes, but it doesn't exist in...

catalyst societies. Yes, it does. Well, there is, yes, there is modern slavery that exists, but it is obviously outlawed. Just a few points because there's ones I want to come back to. So Shivani on the environment,

I mean, you know, there's general consensus the public want to go towards net zero emissions, which I fully support. And the evidence is very clear that we should do that environmentally and economically. But as we move to a transition period now where it's a little bit more invasive in terms of the way we heat our homes, the way we travel, the way we eat.

it's going to become more costly and impractical for people. So we need to think about remedial policies, particularly for people on low to middle incomes. But capitalism provides an answer here for the investment that is needed for new green technologies. And by the way, in the committee climate change's pathways to getting to net zero, there is a space for unknown technologies to make sure that we achieve that.

So, you know, capitalism has been very good with state support in achieving things like carbon capture, heat pumps, nuclear fusion, all of those sorts of things. Alex's point around reconciling unions and corporates, I think that's a really good point. And there has to be a balance. Of course, there has to be a balance.

You know, if corporates just have too many gig economy jobs, too many zero-hour jobs, don't provide enough security, that's worrying. But equally, if the rights are too stringent, then employers won't take a risk on hiring people. And as you've seen in France, that has an impact on people entering the labour market, fewer young people entering youth unemployment being employed.

The gentleman here talked about housing and planning. I wouldn't reduce it to bats and newts, but I do think environmental assessments are particularly too burdensome on infrastructure projects.

I think more of the problem is that planning is not consistent across different local authorities. So there's no certainty and that makes it hard of developers. I certainly agree with you that we need more social housing and should invest in more social housing. We did a study recently where there were four London boroughs where over 40% of the population, including the elderly population, the whole adult population, was on some form of housing-related benefit.

That's a huge number, and that's because a lot of the housing benefit is going to private landlords rather than via social housing. On outsourcing, it is true that in some areas that's been a total disaster, like on probation, for example. It didn't work. On health, however, there is strong evidence that it has worked. So the work of Carol Proper at Imperial College...

She sees that where there's been more contestability for NHS services and contracts, so private and third sector providers can deliver those NHS contracts, there's been an improvement in both the costs and the performance of it. So actually outsourcing can work at some points.

Just quickly on Grace's point around the rearmament programme and who that benefits. I think that benefits the security of Europeans against an incredibly belligerent Russian state and also creates jobs in this country as well for people, which I think is very important. And then the other thing is this idea that only movements create social change.

You know, all of us can be motivated by different intentions. Yes, we might want to seek profit. Yes, we might want to have trusteeship. It's okay to have multiple intentions. But it just isn't the case that any social economic change has only been caused by mass protest movements. Indeed, if you feel that, you know, the whole system is controlled by a certain class, then

then why would those movements succeed?

They couldn't succeed because the capitalist class has too much power. So surely what has happened has that there have been reformers in government, in state, which has led to positive social changes for the wider public good. Can I take the opportunity to agree with Ryan on a lot of that? Because I feel like we've been sort of disagreeing on a lot. But I agree with a lot of that. OK, well, I will try and very briefly respond there. Why would...

Very briefly, please. Okay, very briefly. Why would they work? Because as we've just heard, as I've just been talking about...

The capitalist state is based on... What happens within the state is based on a balance of power within society, right? So you have moments where a certain group is able to be extremely well organised, extremely powerful, and is able to basically direct policy in certain ways. Equally, you have moments in time when that right is more contested. Social democracy was based on the greater... We talked about contestability, the greater contestability of political outcomes between basically organised labour...

and vested interests within the private sector and that delivered a more equal and sustainable model. Whether or not that always comes from mass protest movements, I don't think it always comes from mass protest movements. I think it comes from

us as people pushing back against an individualistic ideology that encourages us to seek out change on a issue-by-issue, person-by-person level, and instead forming cooperatives in our local economies, getting involved in local politics to create participatory budgeting movements.

forming unions at various different stages, forming workers' co-ops, yes, forming protest movements, forming movements of all kinds that bring us together in a way that allows us to realise our collective power in a system that wants us divided and competing against one another. Thank you very much. OK, we've kept you all from your drinks for far too long. So just for me to wrap up, Grace will be around to sign copies of her book, Vulture Capitalism.

Abby will be around to sign copies of her book, Late Soviet Britain. You can see from my notes how good these books are. They're absolutely full. And Ryan has got a fantastic report. It's full of really interesting and practical, I would say, policy ideas. Out tomorrow.

Which you can read at brightblue.org.uk? Yes, it's on the future of the European centre-right. So basically what we're arguing is what are the key priorities and policies that the centre-right should stand for to beat a status left and a populist right. So that's the general thesis. So take a look at that if you're interested. But thank you to everyone on the panel and please do join us for drinks. Thank you.

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