Capitalism and its critics
01:23:34 Share

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. Hi, everybody. That wasn't for me. I don't have any notes.

I'd like to thank LSE first for inviting me here. Last time I was here was actually 15 years ago, I realized, when I wrote my previous book, which was on the financial crisis and the sort of economics behind it, called How Markets Failed. And LSE Center called the Center for Dysfunctional Finance invited me. So it's great to be invited by a new center. There's always dysfunction in capitalism, of course, and good to see that...

LSE is responding to it in this new political economy program. Now, LSE, they asked me if I could give a brief lecture. I'm not a lecturer, of course. I'm a journalist. I've been a journalist for, God, 40 years now. First at the British paper, the Sunday Times, and for the last 30 years at the New Yorker, where I've had a sort of first-hand view of evolution of sort of Western capitalism, I guess you'd call it, over the last 40 years.

one of the first stories i wrote was about the um great crash of 1987 and then i followed it through the 90s the rise of globalization neoliberalism great crash of 2008 2009 its aftermath obama rise of trump and here we are today so that's a brief

synopsis of who I am. I originally come from Leeds. I'm a scholarship boy from an Irish working class family and I got a scholarship to Oxford and then got another scholarship to the US. So I was basically a product of the British post-war welfare state, sort of Keynesian social democratic experiment, which at the time didn't seem like an experiment. It seemed like a permanent fixture of the world.

how permanent it is or how permanent it could become in the future, of course, is subject to the themes running through it. The idea for this book came in 2016 when I was covering the American election. And at the time, you'll recall Bernie Sanders was running from the left with a left-wing critique of global capitalism and Donald Trump was running from the right with a right-wing critique of global capitalism. And...

At the time, most journalists and I think most political commentators wrote them both off initially as sort of extremists who wouldn't really make much headway. I remember telling people, you know, Trump, I think he's got a chance, and people laughed me out of court. And then, of course, what happened is Bernie and Ailey won the primaries. It was a sort of, you know, shocked Hillary Clinton, and Trump swept the Republican field and basically conquered the party and has dominated it ever since.

And it seemed to me then at that time, this wasn't as I say, not just a one-off, a product of disaffection with Obama, but really it was something deeper, sort of, there was an emerging sort of crisis of confidence or even a crisis of legitimacy of the economic system of global, sort of neoliberalism, whatever we want to call it, the post-Cold War system. So I thought, you know, there's probably a book in that somewhere, how am I going to do it?

I originally thought I'd do a sort of history of economics and economic debates post the Cold War, starting off with sort of Thatcherism, Reaganism, and bringing you to today.

But the more I looked into it, the more I realized that all the themes that, well, number one, lots of people have written a history of neoliberalism and, you know, the libraries are, shelves are quaking with histories of neoliberalism. So I thought nobody's going to read another one. Secondly, I thought that's not going to be the most interesting book because a lot of the themes which you have to, if you're going to write a history of neoliberalism and how it got in trouble, lots of the themes which you have to address like globalization, wage stagnation,

climate change, labor displacement, sweatshops, things like that, all actually go back to the origins of capitalism or industrial capitalism. So I thought,

How far back should I go? Then I thought, maybe I'll go back to the start of the post-war era, the construction of the Keynesian system. And I thought, well, if you do that, you've got to explain where that came from. And then you've got to go into the Great Depression. And then I thought, well, where did the Great Depression come from? So it was a process of infinite going backwards. I immediately decided, you know what? Let's just do the whole thing. Let's do industrial capitalism from the beginning until now and discuss the sort of themes and tensions running through it.

So then I had a book. Great, I've got a book. How do I write it? It's a history of the last 250 years. Where do you begin? Having worked at the New Yorker for 30 years, one thing they do teach you is how to write narratives, or you learn or you perish. And I think the essence of writing... I write some very boring...

sort of tracks on economics, but the pieces which always get the strongest readership and last longest are ones which have people in them. So I thought the way to do this is through the people and which people, people who thought most deeply about capitalism and the people who criticized it most deeply. So I thought I'll do it on a biographical basis.

choose one or two big thinkers from each era and try and tell the story of capitalism through the eyes of the critics. That was the sort of... It's a big book and a huge project, obviously, but the thought that kept me going was that idea: tell the story of capitalism through the eyes of the critics. So that's what the book is about. There are about 28, 30 chapters with different, very different perspectives. And it really is a historical narrative.

I think if you're going to write a book about capitalism, you have to have some sort of tentpole figures and theories. This is, by the way, it's an economic critique. There are cultural critiques, there are literary critiques, there are political critiques of capitalism. This is very much from an economic perspective and the sort of inner workings of capitalism and how they evolve and the critiques of that. So, you know, if you're looking for a history of capitalism

you know, the post-structuralism or the cultural Marxism. It's not in this book. I'm not saying they're not valuable perspectives. That's just not my perspective. I don't have expertise in that. So I sort of stuck to my knitting and kept it narrowly focused on the economy. So where to start? Industrial capitalism, obviously, didn't come from nowhere. It was built on the existing system, mercantile capitalism, which...

was basically colonial capitalism. So I started with that. The first chapter is about a whistleblower from the East India Company who

in the 1770, who came back to London and wrote a tell-all book because he'd been fired by the company, the East India Company, I'm sure you know, had a monopoly of trade in India and all places east of India, made a fortune for the people who worked there and a fortune for the company. It was a global multinational corporation with a headquarters in the city of London. So it's very modern and very capitalistic.

The idea that there are big firms that are a product of the last 50 years is just not true. There were these colonial monopolies, the Dutch East India Company starting off, the British East India Company, the British Africa Company. And they received royal monopolies and

They embodied a sort of, you know, a quite coherent economic model where you were based on protectionism and monopolies and slavery as well. The slave trade was part of mercantile capitalism. The British Africa Company played a large part in setting it up originally, transporting the slaves. So William Boltz came back from India and wrote this tell-all book

At the same time, the East India Company itself had got in another very modern crisis. It needed a bailout. How does a, how does a rapacious monopoly need a bailout by the government? A very good question. But, but A, they, most of the money they earned they gave to their shareholders in very generous dividends. They paid like 10 or 15% a year dividend. And most of the shareholders were members of the British aristocracy and, and, and lots of them were members of parliament.

So when they got in trouble because they had to finance a private army in India to keep the natives down and protect their monopoly. And that's very expensive. They were fighting wars against India was a lot of independent states at the time with various monarchs. They were fighting them and it cost too much. They were basically and then they had some problems with the climate famines and things.

so they got into big financial trouble they came back to london and said excuse very much like 2008 sorry but we need a bailout and um that caused a political kerfuffle as did the 2008 bailout but it um it just showed you or it showed me that the sort of this sort of nexus of capitalism and the government

which is very intrinsic, essential part of modern capitalism. You can't tell the story of modern capitalism without government playing a central role. The idea that there's the free market and the government and they're two separate spheres, never interacting, is just nonsense. Government's always been an essential part of capitalism. But anyway, that provided me with a starting point into it because it shows how capitalism has existed in various forms.

mercantile cabinet which Donald Trump is basically trying to reinvent Merkel-town capitalism with his tariffs and his monopolies and his crony capitalism. It's very 18, has a very 18th century view of the world, 17th century view. So I started out there but then it so happened at that time the industrial revolution was starting where I'm from in northern England. I'm from Leeds. It started in Derbyshire with a

Richard Arkwright's Crompton Mill, which is now a World Heritage Site. That was the first cotton factory. And it was a sort of technological revolution of the sort we're seeing now, but on an 18th century basis. So I basically take it from there until today. One of the first figures I talk about is Adam Smith. Why is Adam Smith in the history of critics of capitalism? Because in his day, he was a big critic of capitalism.

If you read Wealth of Nations, he explains in the introduction that the reason he wrote it was to criticize mercantile capitalism. When I was in Washington back when I was young, covering the H.W. Bush administration, I think it was at the time, all the conservatives used to wear Adam Smith badges. The Adam Smith Society in Washington, if you were an ambitious young Republican, you joined the Adam Smith Society. Conservatism was then associated with free market conservatism, the Adam Smith view.

But Smith in his own day was actually a radical. He was a radical critic of mercantile capitalism. He didn't believe in slavery. He thought the market, if you let it work, would have provided enough workers.

He thought that free trade was a better idea than high tariffs. He actually wrote a second edition of the Wealth of Nations to get some more digs in at the East India Company and other monopolies who he described as rapacious monopolies. He was also very suspicious of individual businessmen even. There's a famous passage in Wealth of Nations where he talks about how

Whenever a group of businessmen gather together, after five minutes the conversation inevitably turns to how to raise prices and screw the consumers. He didn't say screw, but that was the idea. But his solution, of course, was competition. Smith wasn't an apostle of capitalism, he was an apostle of free competition and the free market. And ever since then there's been this tension within conservatism between the sort of free market...

Smithite wing and the more traditional, I guess represented by Edmund Burke in Britain, and the sort of old colonialists, a sort of much more managerial protectionism, monopolies.

economic nationalism, which again is coming back. So what you've seen in the last... That's why the themes in this book, they run forever. I mean, Trump looks like a very modern person, but a lot of the themes he's expostulating, not that he's ever read The Wealth of Nations, of course, but he just instinctually has a sort of, you know, has a grasp and a sort of likeness for the economic nationalism model.

Where he got it from is a source of some mystery. He claims he got it from the sort of Alexander Hamilton and the protectionists of American 19th century. Some people suspect he got it from Hitler and autarky. But wherever he got it from, you know, it's an instinctual thing to him. So anyway, so I start off there and then I try to tell the story

of capitalism spreading out through the world. Of course, we start out in the UK, so the first few chapters are about the British Industrial Revolution. And I start out with the Luddites, again, very modern. They were being displaced by technology. You know, the AI of their day was the steam engine. They were artisans. They were well paid for their time. And suddenly their existence was threatened, not just threatened, in case the handloom weavers, for example, was taken away from them. And...

initially reacted peacefully and petitioned parliament now britain wasn't we'd love to see ourselves or the british love to see themselves i'm british and american these days as a sort of cradle of democracy but of course in the early 19th century britain wasn't in democracy at all it was an oligarchy vast majority of the population didn't have a vote including virtually all the north of england and the new cities like leeds liverpool manchester

So, the... a lot of these artisanal workers actually, they, you know, they did what good liberals would do, they raised a petition

and they sent it to Parliament saying, "Look, these rapacious capitalists are introducing these new machines and they're throwing us all out of work." And, you know, it goes against the natural reciprocity and it goes against these... In the sort of feudal system, the post-feudal system, artisanal workers were protected. There were restrictions on entry, there were restrictions on what sort of new technology you could introduce. That was all thrown out in the Industrial Revolution. So Parliament washed their hands of it, of course, and said, "We don't want anything to do with it. Tough luck."

And that's when they started machine breaking and the Luddite riots of sort of 1810 to 1815, which produced mass repression by the government. They actually hanged some of the Luddite leaders, imprisoned a lot more, sent some of them to the colonies, penal servitude, etc. Very brutal repression, but it did succeed in putting it down and sort of industrial capitalism was given life.

So I take it from there through the sort of first critiques of it, what Marx and Engels called the utopian socialists. I tried to resurrect William Thomson who was actually an Irish laird but was the man who invented the term surplus value, was an early socialist and actually gave the first utilitarian argument for socialism.

based on the idea that, I don't know if you are economists here, but he basically made the argument that as you get richer, the marginal utility of income goes down. So if you want to maximize everybody's utility, you need a flat income distribution. He didn't put it in math, but it's exactly the same argument people later on used for sort of justifying the humanitarian perspective. Anyway, he was a very smart guy, completely ignored. But the other side of the...

The other side of that movement, the cooperative... He was part of the cooperative movement, another sort of forgotten part of early capitalism.

with Robert Owen, who was more famous, the wealth industrialist who set up the new Lanark plant, which was a sort of model of capitalist factory production which didn't exploit the workers. He created new buildings for them, he created a factory shop where they could buy food on a reasonable basis. So people came from all over the world to see the new Lanark plant, which was up near Glasgow. And he then got even more ambitious and

tried to set up these new model communities. He couldn't do it in the UK, so he moved to America and set up the famous New Harmony community in Indiana. And it failed in a couple of years, as did Thomson's attempts in England and Ireland to set up similar communities here. The cooperative movement survived, and we still, of course, have cooperative shops and

My cousin who is here, I don't know, are you still chairman of the co-op? Chairman of the co-op, yeah. So the movement survived, but the idea to build cooperative communities based on there were sort of self-sufficient local communities

That failed and Marx and Engels when they came along dismissed it as utopian socialism. But again, it's another idea which sort of got cast into history and is making a bit of a comeback in the form of the sort of degrowth movement and the localist movements. People think that's the idea of setting up local communities which are somehow disengaged from global capitalism, which was the original idea for these communities.

is making a comeback in some ways. So again, that's another theme which sort of was forgotten and runs away. Anyway, then I move on from there to Marx and Engels. I give a sort of potted version of their theories, very much based on my reading. One of the things I did in this book, my only rule was don't rely on other people.

You know, there are 25 different theories of Marxism by people far more learned than me. But I actually said, you know, if you're going to write it, go and read the book. So I went and read Capital, The Communist Manifesto, parts of The Grundies, parts of Volume 2 and 3, etc. There's a reason it took me 10 years to write the book.

So it's very much a first-hand account. It's Marx and Engels in the words of Marx and Engels, not of the, you know, the Marx school. I move on to them a bit later on. But anyway, I tried to give an explanation of that. Then capitalism, of course, starts expanding and moves to the Americas and Germany. So I move across the Atlantic and right

Write about America in the Gilded Age the great age of industrialization in America and I concentrate on two figures Henry George another forgotten forgotten figure who actually wrote a book called progress and poverty which was the best-selling nonfiction book in America in the 19th century apart from the Bible he was a Big celebrity his celebrity done was you know? He was a sort of Thomas Piketty of his day I guess and he made tours of England and Ireland and Europe and

so i tried to bring him back his big idea was that the big division in society is not between labor and capital but between labor and capital and landlords he thought the landlords were the villains of the peace which is based on a sort of agricultural view of things and you say well that's sort of ancient isn't it and he said we should tax land instead of taxing capital or taxing labor land tax so you think oh sort of antiquated who cares about that land is now makes up such a small proportion of the um

but actually what he was talking about was a wealth tax because most of the wealth in the United States at that time was land. So he was actually an early proponent of a wealth tax, which is another very modern idea which is coming back. Then I move on to Thorstein Veblen. You probably all know Veblen was a great sort of theorist of conspicuous consumption. But also I would concentrate more on his second book, The Theory of Business Enterprise, which is about the robber barons.

And he had a very sort of modern in a way view of business and entrepreneurship. He was a big defender of sole proprietors and people who sort of got their hands dirty, the factory owners who walked around and actually made things. He called those the business class, they were legitimate businessmen. But he was completely coruscating about the robber barons who owned many businesses and especially Wall Street and the financiers who he called the pecuniary class.

And he thought the pecuniary class were basically parasites. Not basically, he thought they were parasites. And he thought, not only that, he thought the financiers sometimes deliberately destabilized the economy so that they could profit from the sort of change in asset prices, etc. So he was a sort of early critic of Wall Street and the City of London, although in those days it didn't really exist in modern form. But the idea, you know, this idea of a

financialization of the economy he uh he was onto very early so i anyway america then i come back to europe and um basically tried to tell the story of the 20th century

when capitalism goes global. So I have a couple of chapters on imperialism. John Hobson, the British liberal, who I don't think went to LSE, but was certainly a London liberal. And he wrote a book on imperialism in South Africa after visiting South Africa during the Boer War, which was very influential, not just among liberals here, but actually among the Marxists on the continent. And Lenin and Rosa Luxemburg, who is my other colleague,

one of my other subjects they picked it up and their theories of imperialism largely regurgitate actually a lot of what um what john hobson said lenin actually credited hobson a lot in his theory in his theory you know capitalism is the highest imperialism is the highest stage of capitalism so rather than writing lenin i thought you know go to the original source and write about and luxembourg um of course

At that stage there was still a realistic belief that you could replace capitalism with a socialist system and I had to deal with that. And the way I didn't want to just write another history of Lenin or Trotsky, there's a million of those. So I did that through Kondratiev, Nikolai Kondratiev, a Russian economist who lived through the revolution, was a member of the SRs, was actually a member of the original Menshevik administration.

the agrarian socialist revolutionary party, who originally took power with the sort of liberals. He was the Minister of Agriculture in 1917. Then the Bolsheviks took over and he was fired. But for the first few years of Bolshevism, there was actually quite an open system and they allowed debate and he set up a

an economic institute, like all economists like to do, set up his own institute in Moscow. I think he originally set it up in St. Petersburg and then moved to Moscow. And he came up with... He had two theories. One, he believed in a sort of mixed economy, really. He believed in state controlling some heavy industry, etc. But he thought agriculture and small industry should be left in private hands, which, of course, the Bolsheviks didn't like. That made him very unpopular.

And then he had a second theory, which is called now known as the theory of long waves, which is that capitalism in the, in the Marxist theory, capitalism has a one wave, right? It goes up and then it comes down and then it crashes. And that's that. Um,

We can argue about how long it takes, but that's the basic theory. And Kondratiev said, no, that's not true. Capitalism is more durable than that. It exists in long waves. He thought they lasted about 50 or 60 years. Lastly, technologically driven. And you get a slow rise and then a slow fall. But then at the bottom, when you think it's going to collapse, a new technology comes along, investment driven, and you get a new long wave.

Modern economists debate until the cows come home whether that's accurate or not. But I think there's some underlying truth in it. But the Bolsheviks didn't, and they locked him up. When Stalin took over, Kondratiev was locked in jail for 10 years, and then he served his time, and instead of letting him out, they tried him again and shot him. So that was the end of Kondratiev.

In the book, the study of capitalism can seem like a very sort of abstract academic pursuit. I tried in this book to make clear that it's much more important than that. And people have given their lives for the sort of study of it. Kondratiev being one, Rosa Luxemburg being another. She was eventually killed in the German revolution of 1918.

So I try to keep it focused on people who were very much part of their time politically as well as sort of intellectually. And the next two figures I go on to very much meet that...

me that rubric first is Keynes obviously you can't write about capitalism without writing Keynes why is he a critic of capitalism obviously he was a Victorian liberal at heart or an Edwardian liberal and believed in capitalism but he thought it had a fatal flaw which is that he had a tendency to get into recessions and get stuck and in the great depression of course seemed like that was going to bring down the entire system

So Keynes came up with his great blueprint for saving capitalism, basically. At the time, a lot of his students in Cambridge were joining the Communist Party. Some of them became members of the Cambridge Five, later on, famously. But Keynes was resolutely anti-communist and anti-Nearby. He was very derisive about Marx. He said he tried to read it once and it made no sense to him. But he was derisive about a lot of people, Keynes. And...

So he's in there basically as a critic of sort of unregulated capitalism and along with obviously the man who's the most famous professor here ever, William Beveridge, they set up the basis for the post-war welfare state. So I deal with Keynes as a sort of internal critic of capitalism but not somebody obviously wanting to overthrow it. In fact, in the book...

This is quite funny. I did an event last week with Jared Bernstein, who is Biden's former chief income advisor. He said, I read your book. I really loved it. But it sort of confused me because there's so many critics. I wanted to sort of taxonomy. So Jared came up with the taxonomy. He said, what you've got in that book, you've got critics of baseball and critics of zoos.

I said, "What do you mean, Jared?" He said, "Well, they're critics of baseball. They love the sport, but they think it's been ruined by something. Too much money. They've changed the rules too much. The strike-down's too small. Free agency doesn't work. Whatever. They've screwed up, but they want to reform baseball and make it, you know, make it great again." To you, Thomas Fraser.

But then there are critics of Zeus who basically, not basically, just do not believe in Zeus. They think that Zeus is just intrinsically cruel, inhuman, they should all be shut down and we should consign Zeus to history. And I thought, you know what, that's a very clever taxonomy. I'm going to start using it in my talks and probably in the next edition if there ever is one.

Because that's very true. The book is about critics of zoos and baseball. Keynes, of course, was a critic of baseball. He wanted to reform the system, not to overthrow it. The other interwar figure I focus on is Karl Polanyi, who originally was actually in the sort of critics of zoos camp. He...

a great social theorist rather than economist. Started off as an economic journalist, so he's an inspiration to me, of course. But he started out in 1920s Vienna, Red Vienna, which is a great socialist experiment where they created a lot of working class housing and communal baths, social services. People from around the world in 1920s flopped to Vienna as a sort of example of how you could create a new economic system.

When the Nazis came power in Germany, the neo-Nazis or full-on Nazis, whatever you want to call them, took over in Austria, Dollfuss, and Austrofascism came to the fore.

Polanyi was Jewish, so he had to flee. He fled first to London, where he stayed for a few years, couldn't find a proper job. Eventually got one at Bennington College in America and went over there, joined the war, and wrote his famous book, The Great Transformation. But Polanyi was a sort of forgotten figure for a long time, but he's actually very contemporary for two reasons. Number one, he raised the question of, are capitalism and democracy compatible in the long term?

when i grew up people weren't really asking that question certainly not in the uk i think most of us thought of course they're compatible you know we've had decades of it 100 years of it and it seems maybe we've got inflation but it seems to work reasonably well and um but since then of course the whole keynesian system has collapsed and been replaced by a much more rapacious form of capitalism i call it people call it neoliberalism i call it hyper capitalism sort of globalized capitalism which has produced this um

great counter reaction on the right and on the left as well which that's, I won't go through the individuals but that is the last third of the book, a sort of history of those things but it's in the shadow of Polanyi. Polanyi in the 30s was very very pessimistic he argued that in a famous paper called Fascism or Socialism that they were the only two sustainable outcomes for a capitalist economy

Democracy and capitalism, he said, produced... He was a sort of neo-Marxist, produced too many inner contradictions which eventually come to the fore. The only way you could have a sustainable outcome was to go to one of the extremes. A state socialist economy, which he then supported, or a fascism in Germany and Austria at the time. Again, that's obviously a very dark vision, which, when I was young, seemed to be...

by events, but what's happened in the last 10, 15 years and the rise of right-wing populism and Trump with his authoritarian tendencies, we can debate how deep they are or whatever, but

the sort of specter which polanyi raised is back is back i think so that's the sort of intellectual background for the last third of the book where i discover where i discuss the rise and and fall of sort of neoliberalism but as i'm doing that i also try to take a more global perspective

because capitalism is global right now. I mean, Marx and Engels in the Communist Manifesto said it was global 150 years ago, and to some extent it was global in mercantile capitalism because that was the system we straddled three continents or four continents and actually shipped labor around the world in the form of slavery. But...

we have this sort of hyper-globalist system now. And so I tried to reflect that by, I have some thinker, I have a thinker from India, J.C. Kumarappa, who, again, another forgotten figure, who was Gandhi's economist, actually, in the 1930s. And he, again, was an opponent, he was,

At the time in India, there was a big debate about decolonization was clearly coming. The British didn't want to give up India, but the cards were on the table. It was clearly coming. The Congress Party was going to take over at some point. So what economic model were they going to follow? And Nehru, who eventually took over, wanted to basically follow the Soviet model with democracy, but large-scale industrialization, five-year plans, huge electric industrial combines, etc.,

Gandhi didn't like that idea very much, he wasn't an economist. And Jesse Kumarape, who was an economist actually,

did a master's degree in New York at Columbia. He had a vision which was sort of more Gandhian, a bit going back to the cooperative communities of the 19th century, basing the Indian economy on the villages. India's always been a village-based society outside the huge cities. And he had this vision of sort of self-supporting local communities with handicrafts.

and artisanal labor. He was a very great critic of consumerism, much like Veblen. He thought most consumerism, once you achieved a sort of basic standard of living and you weren't starving anymore, was sort of driven by competitive urges and sort of keeping up with the Joneses and didn't actually add to well-being or welfare. So he thought, and he saw it as dehumanizing.

So it was a sort of degrowth agenda for the 1930s. So he's starting to be brought back as a sort of profit of sustainability. So I mentioned him and I have also have a chapter. I had to deal with slavery and capitalism, which is obviously a huge question. And I thought the best way to do it is actually through Eric Williams, the Trinidadian, who wrote this classic book in the 1930s.

He wrote it in the 30s, came out in the 40s, Slavery and Capitalism. And he went on to become their first prime minister of Trinidad and Tobago and took, didn't only write Slavery and Capitalism, which argued that slavery was an essential precondition for capitalism, but also he then took part in the sort of post-colonial debates and was an early...

realized very early on that even though the new decolonized countries in Africa and in the Caribbean were nominally independent, they were still entirely, virtually entirely dependent on the sort of core, you know, the Britain, the United States, and the sort of core capitalist countries. And that they had very little freedom to maneuver because they had very little capital. So they had to go begging, you know, cap in hand to the IMF and the World Bank, etc.,

He intuited that, and not just intuited about it, but wrote about it very early. So that's obviously a very important strand of modern capitalism.

And I had nothing about Latin America so I decided to write about the dependency movement there which was sort of neo-Marxist movement in the 60s and 70s who were very, very skeptical about the possibility of benefits of integrating economies in sort of global capitalism. They thought global capitalism was so exploitative that any country that got involved with it at all couldn't develop. Now, you can argue that China and India have disproved that.

but it was a very interesting period and it ended

with the Pinochet overthrow and the sort of start of neoliberalism really. So it provided a really, just in pure narrative terms, I am a writer, it sort of was the modern, say modern, I guess the pre-modern age if we call post-modern Trump, the pre-modern age, the neoliberal age started in Chile with the rise of Pinochet. So I give an account of that, the Chicago Boys arrived, Milton Friedman's,

Milton Friedman's students, actually Al Harburg's students mainly, he was a colleague of Friedman. But Friedman did go down to Chile and met Pinochet and advocated shock treatment. That was his phrase, shock treatment, that's where it comes from. So I take you through all that and then move into the modern era, globalization. And I finished the book with two chapters,

One on Thomas Piketty and as a way of talking about the inequality debate, global inequality, I give an account of Piketty's theories and I think Piketty had two great contributions. One was just the empirics that he did with not just him, Tony Atkinson in Oxford, Manuel Saez, some other French and eventually around the world. They set up a world income database which now covers I think 90 or 100 countries.

And it used to be inequality used to be a very abstract subject in economics. People talked about Gini coefficients and Lorenz coefficients. And I learned about them too, but it's very hard to explain them to yourself and remind to the general public.

and those guys came along and they said, okay, that's interesting, but we need something more graphic and, you know, more political, really. So they came up with the charts, the U-shaped charts, basically the income shares of the top 0%, the top 0.1%, the top 1%, the top 5%, the top 10%. And they documented it in a way that the right couldn't

They tried to knock it down, but they couldn't, basically, which shows the famous U-shaped curve of inequality peaking in 1914. And then as sort of Keynesianism and reformism comes in, it goes all the way down to the like 1979, basically, when Thatcher and Reagan come in, and then it goes back up again.

it basically reattains the levels of 1914. So that was a huge, not just a huge economic contribution, it was a huge political contribution. And certainly in the United States, it changed the whole terms of debate about equality. Second thing Piketty had, which he later walked back, was this idea that there are sort of inexorable laws in capitalism again. Famous, if R is greater than G, you know, you lead to R is the rate of return, A the rate of profit, G is the growth rate.

And nobody, it's a very simple thing once you realize it, but nobody had really pointed it out or emphasized it before. If R stays quite a long way above G, as it seems to have done for 30 years, it's because...

wealth is so concentrated, you're just going to get ever accentuating inequality. So that I think was a sort of Marxian insight in a way. Piketty in a subsequent book backed away from it and said actually, you know, inequality is more about narratives and ideology. And he got attacked by some academic economists for his, he tried to cast it in a classical sense, but that was an academic debate. I think his great contribution, as I say, was to bring the equality debate

into the public in a manner that educated but not economically trained people could understand so he's the penultimate person and then I end up sort of with a where are we now and what can be done to go back to Lenin and I think I should leave that for the questions and answers because I'm sure lots of you would say you've written this massive history book but what are the lessons of it

Happy to address those questions in the Q&A. Thank you, John. That was amazing, yeah. Thank you. That was super helpful as an overview of this book. There's a lot more in the book, so... But that was... I'm going to actually go straight to the specter of Polanyi and the zoo critics, because it feels like, in particular, we're at a moment, even if you think about when you published the book, and, like, right now, just those months that have happened in between...

I'm struck by, you know, even if you take away all the people who are the general critics of capitalism, even my students who are here at the LSE refer to late-stage capitalism. Right. Right? And so the idea that, you know, there is an inevitable decline of capitalism and it may well lead to fascism or socialism. Yeah. Looking at that now, even through the lens of what's happened over the last two months, the response to all of the tariffs and the trade wars...

What is your view on all of that? Where we're going? I'd say two things. I mean, the way I have to write about Trump every day, so not every day or every week. So I think there are two things going on. One, Trump himself is sort of causing crises and eruptions, obviously, with his trade war. And it turns out he's hemmed in by the markets.

the democrats have got no power whatsoever the republicans are completely supine they're all terrified if you go nobody has gone against trump in the republican party and survived nobody they run a primary

in america there are congressional elections every two years so you're always up for re-election senators every six years but quite a few in the first term people did speak out against trump but they're not there anymore they've either retired or been primaried so there's there's no political constraint on trump um

the financial markets turn out to be the constraint. So he's done a U-turn on tariffs or a partial U-turn, who knows? And the question is, will he do a U-turn on the taxes? Because people are starting to talk about a Liz Truss moment because it's such a... So that's Trump every day. You know, you cover him. But I think...

The manic focus on the daily headlines missed the sort of bigger picture, which is that Trump, even though he's an agent of chaos and an agent of sort of crisis, but he's also a reflection of it. The whole Trump, you know, economic right-wing movement, I think, is a reflection that the sort of... Keynesianism exhausted itself and sort of collapsed in the 70s in stagflation, which...

The famous Phillips curve, another great economic idea that came out of this institution on employment and inflation are supposed to be inversely related. They started growing up together.

Keynesians didn't have a long, a good answer for that for a long time. Now, the liberals didn't have a good answer to the sort of perils of globalization, wage stagnation, rampant inequality, rampant sort of erosion of labor standards, all that stuff. Trump, whatever you think of him, and I don't think much of him as you can imagine, I've been, covered him for 40 years. I covered him when he was a businessman in New York as well.

He has a very simple solution for his voters. He just says,

we're going to fortress america basically we're going to stick up tariff walls and force all the multinationals who've betrayed you by putting their plants overseas they're going to have to come back at the same time we're going to lock out all the foreigners who've been flooding in to take your jobs and a third thing we'll have a sort of industrial policy we'll spend money we're not all style republicans we're not going to slash welfare and we're going to spend some money on certain industries crony capitalism basically

That's a very simple message and it resonates with a lot of people, especially in the middle of America, who didn't do well out of the pre-existing system. So I see Trump as basically a creation of a sort of set of crises in capitalism. I say in the book capitalism is always in crisis, recovering from a crisis or heading to the next crisis. And I think in this case there are sort of three long-term crises. The crisis of globalization, which I've talked about, the crisis of climate change, which...

we haven't really discussed but it's obviously huge and then the crisis coming crisis of ai and technological displacement etc so trump sort of comes along with very simplistic solutions to all of that stuff and people on the on the left or the center left even the center right really struggle to come up with a sort of bumper sticker alternative to that and

And I think is the reason why we see him now struggling. For me, what absolutely fascinating is how compelling the simple narrative is. And a lot of that is because there isn't a fundamental understanding of the actually how the market forces work or how, you know, even something as simple as trade. Yeah. And so, um,

You know, there's Justin Wilfers, who's my graduate classmate, out there on MSNBC trying to do little classes on how do you have trade lead to positive sum gains for people. Yeah, I mean, I think that's right. But people like Justin Wilfers during the Obama administration were sort of defending the existing status quo. Right. So a lot of economists who depended globalization and free markets and completely open borders, not completely open borders, not for people, for goods,

They sort of got discredited, I think, in the eyes of the public. So the anti-elitism extends to economics. Hugely. I mean, we see that here in this country also in the Brexit debate. And I think we've tried to confront that in the economics department at the LSC, thinking about what is our role in kind of citizen economics and helping people understand the underlying science of economics without being experts.

I mean, I think you can say to people, look, not all trade is bad. So Trump overstepped the mark where he's, you know, when he starts to put tariffs on uninhabited islands in the Antarctic. You know, even some guy in the Midwest who got thrown out of his job because the plant got shut down because they moved to China probably thinks, well, there's no point in tariffing penguins. So, yeah.

Trump always oversteps the mark, but still the basic underlying theory that we're going to stick up for America, which Farage is of course now doing here, he basically just copies the Trump playbook page after page, is a very potent one. And the left and the central left, I say we, I come out of that tradition, we haven't really come up with a sort of

I think the... I'm sure I'll be asked about it. I think there are... The economics of it we can deal with, but the sort of political economy of it is very, very difficult. So...

Let me go back a little bit to more of the beginning of the book, but which relates to the third kind of crisis you're talking about in terms of automation, AI. I'm intrigued that you said you're from Leeds. So the last few years, my co-director of the lab, Oriana Banderas, also a professor, we spent some time, several weeks, in qualitative work with factory workers in Leeds. Right. Really trying to understand...

the automation that's happened there, the kind of how people have responded. There aren't many factories left. You must have... There are. We were in the factories that were left. We were with a lot of people who had lost their jobs, but a lot of people who were still there in fear of their jobs. Many of the jobs had come back because the Russian factories had been shut down. So it was a very interesting dynamic, but also a kind of perspective on what is happening.

And actually, I was just curious, like having seen your perspective on what happened in the 19th century in terms of the destruction of machinery in the mills, how does that understanding of history help us think about automation and AI? On a personal basis, I mean, it's very much reflected in the book.

I mean, in a way, this book is sort of my life in full circle, because when I was young, I grew up in the middle of Leeds, and I used to play golf in a municipal golf course, which was called Gotts Park. And I never really thought much about it. Nobody mentioned it. It had a big mansion there, but nobody really spoke about it. It was just a very run-down part of Leeds, next to Arnley Jail. And subsequently realised, and

I learned a lot more about it writing this book, that Benjamin Gott, the person who he was named after, was one of the original factory owners. The Industrial Revolution started in Manchester with cotton textiles, but spread across the Pennines in woolen textiles in Leeds, which was, I guess, the second industrial city. But William Gott, actually, was one of the factory owners of the Luddites' attack to

So I found myself writing about this guy who was, you know, golf course I used to write about 50 years, 50 years ago, writing about events which took place 210, 215 years ago. So it did, I mean, you know, how much that reflected, you know, it's reflected in the book, I don't know, but it is my lived experience, as they say these days. So I certainly come at it from that. And I think...

It gave me a sort of maybe a bit more of an empathetic view of the Luddites than most people have. Because when I was growing up, certainly, to be called a Luddite is a term of abuse. It meant you were stupid. It meant you were anti-modern. You were basically anti-Diluvian, you know, you stupid Luddite.

But actually, Luddite's critique, as I tried to explain a bit there, wasn't really an economic one, it was a moral one. They thought industrial capitalism was amoral, or immoral, sorry. That, you know, it just wasn't, what right did these factory owners have to come along, steal their livelihoods, and take all the money for themselves?

And that question sort of got subsumed, really, because the capital is a free market value. It's won out for some very good reasons. You know, capitalism is immensely productive. Over 200 years, living standards have gone up enormously, even though in the early Industrial Revolution, wages were stagnant for 50 years. But over the very long term, there's no doubt it's produced, you know, unprecedented GDP growth will leave out inequality for a minute. But...

I think what's happened now is we got this, what I call hypercapitalism. And AI, it seems to me, is going to bring those sort of moral questions back again because it seems to me, again, I'm not a technologist, but I talk to technologists and I talk to economists who study it very closely at Harvard, your former university, and MIT. And most of those people do think it's going to be a new industrial revolution, but one that targets the educated classes, the cognitive workers, white-collar workers,

So, you know, that's a very intriguing and alarming, be intriguing because if the educated middle classes are going to be sort of turned into unemployed sort of proletariat, are they going to become the radicalized workers of the future? I don't know, but I think it sort of raises possibilities which, you know, you need to think about on the left.

The great problem on the left now is, the left was a creation of the labour movement. It was basically in a light, the British labour movement anyway, the German one less so, was an alliance between trade unions, working class manual workers and liberal intellectuals at places like this. And they built Kenyanism and they built social democracy. So if you're looking to sort of recreate that system in some way, as I am and as I would imagine a lot of people here are, for the 21st century,

How do you do it in a world in which you don't have the labour movement as the sort of underlying base and a lot of the actual working class are moving to the right?

That's why I say it's a political economy challenge rather than a... And a moral one that maybe has to do not only with income and income distribution, but really with the means of production, with the dignity of work, with the meaning of work, these sort of deeper questions that even if we solve redistributing and compensating people for losses that occur as a result of new technology...

we still have to face. Yeah, I mean, you know, there's an optimistic view here. I mean, going back to Keynes, I mean, the famous Keynes's book on economic prospects for our grandchildren, which he wrote, a famous essay in 1930, in which he said, look,

capitalism is incredibly productive productivity goes up every year in 100 years time productivity and wages will be sort of eight i think he said eight times the level they are today so everybody will be relatively well off he was talking about britain he wasn't talking about the rest of them but in britain everybody will be relatively well off and they won't need to work eight or ten hours a day because

Really, why do you need to do that once you've got your basic needs satisfied? So they work three or four hours a day, and then the rest of the time they'll spend on leisure. Now, to Keynes, it was a great aesthetic. Leisure meant going to the opera or going to the ballet or the theatre. But I think he had in mind that ordinary people would do whatever they liked. They might go fishing or they might engage in sport, whatever. But it would be a positive outcome.

And I think some people in Silicon Valley still have that sort of idea, but how you get from A to B. If the machines are going to do all the work, in one way you think, well, that's great, I don't have to go out to work. But what do you do then? Actually, with these same factory workers, we had that conversation, and they said, well, but, you know, now they had a debate among themselves. They were like, well, we could go out and do poetry, but I don't want to do poetry, I want to do this work.

And that's what I think is really important, is that some people really want to do this work. No, I mean, I think there's two things. Number one is a lot of people get the meaning in life through their work. So if that's taken away from them, how do we deal with that? But number two, there's just a more basic economic question. How do you structure society in a way that...

sorry, in a world in which capital basically controls everything. I mean, look, one of the strange things about capitalism, where we've had all this class conflict for 100 years, basic distribution of income between labour and capital...

It's been pretty constant. It's changed in the last 20 or 30 years, but it's always been roughly 70% of national income goes to labour and 30% goes to capital in various ways. Now you can see if the labour force is decimated, a big shift in that, maybe 50%. People who run the society and will gain all of it are the owners of the AI programmes. So how do you structure a society in which a lot of the value

to an even smaller subset of the population than it does now. Now, if you speak to Elon Musk or Altman of OpenAI, they say, oh, we've got a solution. We'll just give everybody UBI, Universal Basic Income. Okay, are you willing to pay for that, Elon? Are you willing to face a very hefty wealth tax?

Those sort of questions, I think. Yeah, I think there are some people who are willing to, but again, it then raises other questions that that's not potentially enough for what we want to create. But the other thing is there's a very intriguing view on AI, which is that, in fact, what it does is decentralize. So the capital becomes much less important, essentially. Right.

once everyone can have access to this type of technology, you're able to have a decentralized means of production that would actually lead to a less concentration of wealth. Yeah, I'm so skeptical of that because people used to say exactly the same thing when the internet came along. You know, they said, you know, we're going to have peer-to-peer networks and we'll recreate the economy on the basis of peer-to-peer networks and decentralized production and everybody will be a sort of gig worker.

Gig workers work for Uber and Lyft and places. So they're actually employees. And it's a sort of parallel in AI.

You're like, well, there is no work. Actually, there is a lot of work that goes into AI. There are two sets of work. Number one, they're stealing all the stuff you've put on the internet to train their models. There's a lot of human labor there. It's unpaid human labor, all the stuff you put on the internet. The labor theory of value isn't completely thrown out. The LLMs, the value comes from the data which is provided by people. So in a way, if you're going to pay the people, if you're going to...

do the sort of old socialist thing of paying in proportion to productivity, the AI programs should be public utilities because the public creates them. Second thing, of course, they're massively power-centric. So you can see a world in which you already see it. You see Microsoft buying a disused nuclear power station in Harrisburg in Pennsylvania, which was buried in concrete for 30 years.

So it's very resource-intensive. Now maybe there's a technological way about it. Their solution is nuclear power, basically, and modular nuclear. You have a nuclear reactor in your backyard.

Which, you know, maybe that will work, I don't know. But if it doesn't work, it's going to be very resource-intensive. So actually, it's a labour-intensive economy and it's a resource-intensive economy. So the AI, to me, it doesn't sort of... People say, oh, you know, the old rules don't apply anymore, capital versus labour, it's all outdated. I don't think it comes in back through the back door, I think.

Great, thank you. So we're going to open up the floor for questions. You can just raise your hand and there will be a roving mic. Please introduce yourself and your affiliation. Make sure you ask a question. And those who are sending your comments online, please say where you're from. We're particularly eager to hear from students, so...

Please, ask about anything. And your critical questions, I welcome them. If you think I'm full of it, just say so and ask me why. Thank you. I'm Peter Thalasson from Reuters Breaking Views. I'm a former student. I just wondered, John, if you could talk a bit about China. How did you deal with the rise of China in the book? And are there any thinkers about Chinese capitalism that we should be...

pay more attention to? That's a very good question. I mean, if I was going to critique my own book, I'd say I don't have the China critique of capitalism in there. But I do deal with the right... China is a big part of the globalization chapter. And in the final chapter, I do consider... I basically lay out what are the options. You know, we've had this sort of 40 years experiment with neoliberalism, and now we've

That seems to be at an end what's going to replace it. And one of the candidates obviously is Chinese, what I call state capitalism, where you have a marriage between the Communist Party and entrepreneurship.

So that is one model, which would be, it's not a Western thing, but it is a mixed economy. The Chinese left in place a lot of the public sector companies and they built on top of it on the private sector. But the private sector is still quite strictly regulated and if you don't do what the Communist Party likes, you get disappeared like Jack Ma did for a year. So I think that's a pretty difficult sell to the West that you might get disappeared. Although Trump's disappearing people, so who knows?

But anyway, I think that's right. I mean, I could have done a chapter on Mao or somebody, but I didn't. Yep, there's a chap at the front here. - We can, if you want to put up your hand, we'll put the mic there to Gratia. - Hi, Aiden, former student here, now market reporter. Would it be safe to say that things aren't really going your way? And if that's the case, how do you avoid despair?

Yeah, I mean, obviously they're not going my way. I mean, personally, I'm doing very well. I have a great job at the New Yorker and they let me write about what I want. So Lake Capital is, and I have a family and I have health care and things you need. So Lake Capital has been good to me. But yeah, of course, the course of history at the current moment is going against the things I sort of think I associate with.

Why do I give up? I spoke to actually a, who shall remain nameless, a prominent progressive in the UK today who was a big proponent of the Green New Deal. And she said she is despairing and thinks we may be headed towards some sort of techno-fascism or whatever. History...

does show that that is a possibility. Obviously, that's where we ended up in the 1930s. But it also shows... I take sort of hope from the fact that it also shows that capitalism is very malleable. It's not one thing. I mean, there's one lesson of history. It's that there's lots of different models of capitalism. There was the original sort of mercantile capitalism. Then Britain produced what the closest thing we've ever had to a free market, really, in sort of early 19th century capitalism in the raw. Then...

There was a sort of reaction to that and the slow but steady expansion of the welfare state and what I call managed capitalism, which took place, started out in Germany with Bismarck, of all people, you know, sounding the social insurance programs as a way to head off the rise of the Socialist Party and then spread to Britain with the great liberals and

came through this place with beverage and in the US the New Deal etc. So that system did actually work very well for 40 or 50 years but it couldn't deal with inflation and then it was threatened with globalisation as well. But to me there is hope there. As I said there are

There are lots of market failures, but we do know in theory how to deal with them. The question is how do you generate political support for them in an era where it's very easy to demagogue and the internet sort of distorts the information flow. So that does give me some despair. But I think history teaches you, you know, let's say I lose and Trump is in there for 10 or 15 years or whatever. I don't think he'll ever voluntarily leave. Or his advance is in there after him or whatever.

Their economic model is not going to deliver widespread prosperity. It worked for the Nazis for a while, having autarky and using Eastern Europe as their cheap labor. But it's not going to deliver shared prosperity and productivity growth and everything. So I think, very much as Polanyi said in his double movement theory, there'll be a reaction against that. And the ideas which are now out of fashion will come back.

well once i once interviewed milton friedman milton friedman's in this book as a critic of keynesian capitalism and i asked him professor friedman you know he was i think he'd already won the nobel prize then and he was a huge figure because he was reagan's economic advisor informal economic advisor as well so he was already a huge figure and i asked him i said what i was writing about economics as a subject and i said what role do you think economics plays in history or ideas and he said

actually pretty marginal on a day-to-day basis, but the essential role is the sort of idea, the ideas driven economist sort of keeps ideas alive, he was talking about himself obviously, until the sort of political conjuncture comes around when they can be put into force again.

So I think there's a role to people to defend the sort of Keynesian managed capitalism thing. Now, even if it looks like at the moment the political constellation isn't there. Milton Friedman was out in the wilderness from the 40s, 50s and 60s. You know, he only became sort of great prophet when Keynesianism failed. So if we are in a world of sort of economic nationalism and Trumpism and Farageism, it won't work economically in the long term. So it will generate. Now, the problem is

Between here and there, terrible things could happen, and did happen in the 19th century. So I'm not Pollyannish at all, but I do think there is hope.

Hello. I just want to address the thing you said about the left not having much ideas. I think that's disingenuous. People like Donald Trump back the Democrats. He famously came out and said he was a back of Hillary Clinton. And it's people like him that back the centre-left, back New Labour. And for the sole purpose these capitalists back these people,

centre-left people is so that the left and the middle class are therefore weaponised to attack any ideas that come from the left and anybody competent and capable of standing up and neutralised by this weaponising of the middle class. So that's the only reason why the left has no power and no... The question is, what do I think of that? The question is...

the middle class are just a mirror image of Donald Trump. It's just that Donald Trump's further down the game than the middle class. You mean middle class in the English term or in the American term? Middle class in America means the working class. Just the middle class who have the means of wealth to have a good education, to be able to be in positions of power and authority. Most of them don't support Trump anymore.

No, I'm saying that they are no different to Donald Trump because they have been paid by people like Donald Trump. Thank you very much. Well, I obviously disagree with that because I think Keynesian social democracy is a much better system than the one we're heading for now. But I wasn't trying to say there aren't any good ideas on the left. If I said that, I misspoke. I think the left does have a coherent outlook. And, you know, the whole degrowth movement is an important movement.

I'm not saying there aren't any ideas. If you've heard me saying that, you're wrong. But the idea that the sort of centre-left is just a conspiracy to keep the capitalist class in power, I don't agree with that because I'm not a Marxist.

We have some questions up here. We're going to take these. I just want to double check because I'm not getting any of the online questions into the iPad. So if you all have sent them, maybe someone from the comms team can help me with that because I'm not receiving any of the online questions.

Frank Milan, Joe Public, a terrific lecturer. Thank you very much indeed. Thank you. A two-part question, if I may. Who is more economically literate, Farage or Truss? And secondly, who was the last great British politician, economically speaking? That's a good question.

Farage and Truss is a tough one. Part of it is I don't really follow British politics that closely despite my accent.

I think in the short term, obviously, trust. I mean, what we discovered in-- or what I discovered in trust is that what we used to be called in Britain when I was a kid the sort of balance of payments constraint, or the left would call the City of London constraint, still exists. So that, I think, explains one of the reasons

I think the new Labour government is far too moderate too. One of the reasons I think they are is because they're terrified of sort of trust redux, that if they announce big spending plans, there'll immediately be a run on sterling and a run in the gills market, and they'll suffer the same fate. Now you can say that's just a conspiracy, but as long as the markets exist, it isn't. And it could well happen.

So I don't think that's a justification for some of the things they've done. Cutting benefits was insane politically and it didn't make any sense economically either. But so back to Truss and Farage. Farage, I think,

is a much cleverer politician than Truss. And he realizes the sort of political appeal of Trumpism and sort of economic nationalism. And also, crucially, sort of realizes that if you're going to run on that ticket, you've also got to at least say, you probably won't do it in actuality, but say you're going to defend the welfare state, which is what Trump did. He said he'd never attack Social Security or Medicare, and he actually...

It still sticks with that even though the Republican budget would decimate Medicaid which is the medical program for the poor. So you see Farage yesterday when I arrived outflanking Labour with his I'm going to restore the benefits and I'm going to restore the seniors. Now people in the City of London are saying well it's not costed so if he ever gets into power it would cause a crisis.

he doesn't care about that. He's like Trump. He's an opportunist. He'd deal with that when he comes into power. So I don't know if he's more economically illiterate than Truss, but he's certainly much savvier politically. The last question was about the last great British economist or politician. I guess, well, I guess Clement Attlee, but he wasn't particularly economically literate, which maybe was one of his great strengths that he just let the beverages of the world...

Gordon Brown, I think...

I think Gordon Brown was a major figure and had good intentions, but I think he put too much faith in the sort of neoliberal free and financial markets view of the world. They really thought, I covered Blairism quite closely, and they really thought that Britain's comparative advantage was sort of in the city, so you had to encourage the banks, etc. And that that would deliver...

It's a growth project, just as this is a growth project now that they're trying. Social democracy has always depended on growth because then you can redistribute the growth. You don't have to sort of do massive redistribution. I think that aspect of it is going away because some of the trends I talked about, I think there's going to have to be significant taxes on wealth. But I think Gordon, they put their eggs in the sort of financial deregulation basket and that turned out to be a disaster. So that's why I don't think he was...

I can't rank him without leave. So we're going to stay on the UK from the online. This is from Anthony, an LSE external alum. In recent elections like Canada, which is my country, it's really wonderful to watch what just happened there, Australia and in Europe, the pro-Trump right-wing candidates lost due to associations with Trump.

So why does Farage buck that trend? Are UK people just different? Sorry, the last bit was what? Are UK people just different? Canadians are different. I think they are. But I think nationalism is a very strong force. And if you've got it on your side, it's a great thing to have. And that's what Trump gave the ruling party, nationalism, back in Canada. They were basically on their last legs, right? And they were going to be voted out.

So just the very fact they stood up Mark Carney, you know, he's a technocrat. You had him over here for years as head of the Bank of England. He's not exactly a... I've never been a politician. Never been a politician. Never been a public officer. I was going to say, not only is he not a great politician, he's not a politician. But he was willing to stand up to Trump and say, you know, go screw yourself, we're Canada. You know, we're not selling out. So I think, yeah, the Canadians, obviously their model is different too. It's much more closer to Europe and social democracy than to the American sort of Anglo-Saxon model.

But I think Trump basically played into their hands. Yeah, 100% that. But also, I guess, there is a trend in Europe and Australia that we're not threatened by sovereignty concerns that went in that way. That could be very temporary.

Yeah, I mean, I think, you know... Is there something different about the UK or something different about the UK economy where this is just much more compelling as an argument? Yeah, I mean, the UK, you know, we get into the whole what's different about the UK, UK exceptionalism in Europe, etc. It has always seen itself as sort of on the side to some extent, and even when it was part of the EU, it demanded the sort of opt-outs in everything, etc. So, no, definitely you can't understate sort of cultural...

historical factors. 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.

Thank you very much. An excellent expose of the history of capitalism. Thank you very much. My name is Patrick Stahlgren. I am a former student and currently working for the European Bank of Reconstruction and Development. Worked and lived many years in Africa before. And that's where I want to take the origin for my question. Arguably, Africa and the persistent poverty that we see there is the biggest victim of capitalism and the free trade system. And you touched on that in your expose. Right.

If you would advise a leader of a decent African country, if there is such a thing, let's say Kenya or Uganda, on the political economy that they should pursue and possibly also on a moral argument for their pursuit of a better economy and more happiness, what would you say? Right. I mean, it's probably above my pay grade, that question, but I'll try and answer it as best I can. I mean...

Africa, you could say, is another lacuna in my book. I couldn't cover everything. I do cover Samir Amin, the African Marxist who was a great critic of globalization, etc. I think the Chinese and Indian experience has to bear large for Africa, too. So the idea that you can not integrate yourself into the global economy, just sort of do an African solution.

I, you know more about it than me, but I don't think that's a realistic option. So the question is, how do you integrate yourself in? Do you just go the sort of low route, the sort of labor arbitrage route, which everybody went on, you know, beginning in the Far East, copy that. Wages, I guess, in parts of Africa are still low enough to do that, and I understand there is some offshoring going in some places. Is that the route? If it is, I think, you know, you need to...

Much better labour standards have got to be part of it, surely. The old Washington consensus model, I think, is pretty much dead. I'm sure even the EBRD and even the IMF and the World Bank don't give the same advice they used to be. They used to. But, you know, I think there are great possibilities for Africa. I don't buy the idea that, you know, Paul Collier's idea, maybe I misinterpreted,

I misattributed it to him, but Jeff Sachs' argument that geography is destiny and that these African countries can't modernize and can't get richer because geography is too adverse. I don't believe that, especially in a sort of high-tech world. So I guess that's all I'd say. I don't have an Africa plan. Do you?

Of course, yeah, education, yeah. I mean, that's why I say the high road rather than the low road. But where do you get the money to finance the education system? It's a chicken and egg situation, right? The EBRD is providing some of it, I'm sure. No, well, that's another terrible thing of Trump, of course, that these whole foreign aid budgets have been cut, and the Labour government even did it here, which is another disgrace, I thought. So, again, that's another...

Back to the chap at the front here, that's another example of how the world is going against those sort of ideas. But it's surely got to be in the West's long-term interest to support, especially in Africa, given the population explosion, to support education and economic development in Africa. Hello.

My name is Marin and I'm an A-level student. I wanted to ask how pragmatic is capitalism and is that a bad thing, whether morally or like... Sorry, how what? Pragmatic. Pragmatic? Yes. Well, I mean, I wouldn't say it's pragmatic. I would say it's malleable and difficult to sort of get rid of. I think...

I think what has been shown through history and through the last even 50 years, never mind 40 years, sorry, never mind 250 years, is that...

You can adopt very different rules of capitalism. You can have and manage capitalism. You can control capital controls, for example, which were a part of the whole Bretton Woods system. That seems unimaginable now, but it was in effect for 30 or 40 years, and it had a big impact. Financial sector used to be a lot smaller than it is, and...

The technical phrase is financial repression. Nobody sort of announced where financially repressing was, but that was what it was. So there are things that can be done. I mean, that's why I disagree with my friend over here who thinks it's all just a charade. But obviously, getting political support for all these things is increasingly difficult. We'll move back down here. Yeah.

Hi, John. My name's Rory. I'm also from Leeds. So good to hear you mention Leeds a few times. I work for a political consultancy called Blakeney. I'm interested in what you were saying about Nigel Farage and Trump's political economy and what a politically attractive progressive alternative might be in terms of a political economy agenda. Well, I think there are various...

I don't think there's an overall sort of, as I said, a bumper sticker version of what the alternative is. I think there are various parts of it which the progressives, Labour Party should support and they go back to the sort of old post-war model. When you don't have strong unions, how do you keep wages up?

is a big problem. So you need minimum wage laws, but you need more than that because minimum wages mean different in different parts of the country because the living is very different. So maybe we should go back to wage boards, setting minimum wages in different industries, etc. Very old idea which came out of the 19th century. But you

You need some way to prop up wages. Now full employment helps to do that. We've seen that in the US. That's the sort of case. Since 2015, wages have actually gone up for the poorer people for the first time in 30 years because, to use the Marxian idea, the reserve army of unemployed isn't there to bid down wages. So if you have full employment, employers have to pay higher wages. So full employment is also part of the solution. It strengthens labor. That's part of it.

I think the tricky thing is this whole

I guess you'd call it a cost of living crisis. So many basics that people rely on now seem increasingly out of touch. I live in New York City. Real estate is incredibly expensive. Even young people with reasonable jobs find it very difficult to get anywhere to live. That's a huge problem. In the US, healthcare is incredibly expensive. Here we still have the National Health Service, but of course it eats up more and more of the budget.

So that's a problem, education being the same. And it's an economic problem because those sectors of the economy are the low productivity sectors, historically speaking. There's a phrase called Baumol's disease, Bill Baumol, an economist at NYU, who pointed this out in the 1960s very prophetically, that the state is going to get burdened with all the low productivity sectors, which take more and more resources relative to the rest because

you know factories can increase productivity you can build car build more cars than you used to be able to but it's very hard to increase the productivity of a surgeon or a teacher now ai may be a way into that but um that's that's a recipe for the state always being short of money and that's what we see and which causes terrible problems for all incumbent governments but especially labor and progressive governments so how do we deal with that i think one thing you have to do is sort of

an expanded tax base in some way. And I think the only way you can really do that, given that the marginal rates on labour are already quite high, is some sort of wealth tax.

because in the old days people who argue for wealth tax they'd come back from the sort of center left was always well there isn't that much wealth at the top so even if you tax it it won't raise that much money but now that's completely flipped in the last 40 or 50 years the agglomerations of wealth at the top are so huge that if you could tax them it would actually be a large source of a large source of revenues and the problem is

The problem is it's very difficult because capital is mobile. So you've got the whole tax. Multinationals, why is Dublin booming? Because all the American multinationals shift all their profits through Dublin. And you look at Irish GDP, it looks like it's the richest country in the world. It's not. It's all the Microsoft profits.

So how do you deal with that? Now, the Biden administration tried to do that, to give it a bit of credit through this sort of, got to do it on a global basis, plucking down on tax havens and setting an international minimum for a corporate tax. The Irish didn't like it, but they had to go along with it for a bit. Trump, of course, comes along and says he's getting rid of all that stuff. So there are solutions to, there are, you know,

I think practical solutions to a lot of these things, but putting it together in a way which can counter the blame the foreigners and basically go for economic nationalism and blame the government is very tough.

So I know there's a lot of other questions, but we're going to have to close, actually. But John will be on the stage signing. Can we have any more? One more? Two more? I think there was one more here in the red. We just wanted to have you guys be able to ask.

I'm Dina, a GCSE student from Henry O'Sebanor. I was wondering what do you think with leaders such as Donald Trump, who's like from business, and then Mark Carney from economics, what do you think the impact of this will be as opposed to traditional leaders? Yeah, I mean, it's tough for traditional politicians because everybody hates politicians. So, I mean, Trump's great appeal is that he's not a politician.

If you talk to people, I'm a political reporter, among other things, I go out to talk to people. And one of the things they say, you say, look what Trump's doing, all these terrible things. And they say, oh, he's not a politician. You've got to ignore a lot of the things he says. So if you get tagged these days as just a boring politician in a suit, it is very difficult. So I think you do need, in the Internet era, you need a great communicator for one thing. And you need somebody who's sort of native, authentic.

Trump, somehow, he's an 80-year-old man, but he's an online genius. You know, he just clicked early that you could create a movement online and disintermediate the media, just go over their heads. And it was a brilliant strategy, and everybody else tries to copy it now. But there aren't that many people who are good at it. There are a few. I mean, in America, AOC, Ocasio-Cortez, the young New York woman politician, she's brilliant online and has a huge following. But

But you do need, I think, somebody like that to not just go through the old mediums and the old... You've got to be seen to some extent as an outsider or you don't have any purchase. Please join me in thanking John and for all of you. Thank you.

Thank you for listening. You can subscribe to the LSE Events podcast on your favourite podcast app and help other listeners discover us by leaving a review. Visit lse.ac.uk forward slash events to find out what's on next. We hope you join us at another LSE Events soon.