1 00:00:08,550 --> 00:00:11,340 Good afternoon and welcome to the automotive school. 2 00:00:11,340 --> 00:00:20,760 Welcome to the last of this term's lectures and thank you very much for coming in such numbers on such a sunny day. 3 00:00:20,760 --> 00:00:29,790 The first we have for some time and it's we've actually had a series that spanned two terms on evolving economic thought, 4 00:00:29,790 --> 00:00:34,170 and it's going to be an extremely appropriate that this is concluded today. 5 00:00:34,170 --> 00:00:41,130 By Eric Vinh, Hooker Eric is director of the Thriving Institute for New Economic Thinking, 6 00:00:41,130 --> 00:00:46,560 and he's also professor of public policy practise at the Planning School of Government. 7 00:00:46,560 --> 00:00:53,730 He's a fellow in economics at Oriel and Extend Professor at the Santa Fe Institute, in addition, before coming to Oxford. 8 00:00:53,730 --> 00:00:59,850 He had an 18 year career at McKinsey, where he was a partner, held leadership roles in the strategy, 9 00:00:59,850 --> 00:01:06,720 practise climate change and sustainability sustainability practise and the McKinsey Global Institute. 10 00:01:06,720 --> 00:01:14,310 Many of you will know him from his frequent writings in the media, and he's also the author of the well-regarded book The Origin of Wealth, 11 00:01:14,310 --> 00:01:22,200 and he's going to talk to us today on the wonderful title New Economic and Moral Foundations for the Anthropocene. 12 00:01:22,200 --> 00:01:32,930 So a small subject in 45 minutes. Eric. 13 00:01:32,930 --> 00:01:36,260 Thank you very much, Joanne, and thank you all for coming in, 14 00:01:36,260 --> 00:01:44,480 it's a real pleasure to be closing out this excellent series on involving economic thought that the Martin School has hosted. 15 00:01:44,480 --> 00:01:54,110 And I'll be building on many of the themes that were discussed by some of the other excellent speakers that have been here over the past term. 16 00:01:54,110 --> 00:02:05,380 I should also note that this is based on a new book coming out, hopefully next year by myself and my co-author Nick Hanauer. 17 00:02:05,380 --> 00:02:09,340 I'm going to start us off with a little quote, 18 00:02:09,340 --> 00:02:15,190 someone once said that it is easier to imagine the end of the world than to imagine the end of capitalism, 19 00:02:15,190 --> 00:02:22,180 Fredric Jameson, a literary critic and I was I was struck by the real truth in this quote. 20 00:02:22,180 --> 00:02:27,940 Think how many Hollywood movies you've seen about the end of the world, you know, with comments or, 21 00:02:27,940 --> 00:02:32,660 you know, nuclear war or climate change, or how many books or novels you've read? 22 00:02:32,660 --> 00:02:37,060 You know, my favourite end of the World Poker is probably Cormac McCarthy is the road. 23 00:02:37,060 --> 00:02:40,540 So we all have this visceral idea of what the end of the world looks like. 24 00:02:40,540 --> 00:02:45,220 But can we imagine how we'd have to change our economic system to prevent that? 25 00:02:45,220 --> 00:02:52,390 What kind of an economic system would we need that would be sustainable with a thriving future planet? 26 00:02:52,390 --> 00:02:58,360 And I thought about why is that so hard to imagine an alternative to what we have today? 27 00:02:58,360 --> 00:03:04,090 And in many ways, just because we're so immersed in it, we're so much a part of the economic system. 28 00:03:04,090 --> 00:03:12,970 It's it's all around us. It's in our heads. It's in our society and our politics that it's very hard to get outside of that and think about it. 29 00:03:12,970 --> 00:03:17,350 So we have to step back and think a bit more fundamentally, what is the economy? 30 00:03:17,350 --> 00:03:23,350 What is this system that we call the economy or capitalism or whatever name you want to give it? 31 00:03:23,350 --> 00:03:28,180 Well, one way to think about it is it's us. It's people. 32 00:03:28,180 --> 00:03:39,750 Economies are made out of people. At the end of the day. But it's not just people individually, it's a set of ideas of collective thoughts. 33 00:03:39,750 --> 00:03:52,560 The historian Yuval Harari has a wonderful phrase he calls the imagined orders that societies always have a set of ideas that they organise around. 34 00:03:52,560 --> 00:04:00,210 And in the economy, we have a set of ideas that organise all these people, all of us, into what we call the economy. 35 00:04:00,210 --> 00:04:05,250 And these ideas are ultimately products of human imagination. They're all invented ideas. 36 00:04:05,250 --> 00:04:09,990 If you look back in history, every one of these ideas up here property law, 37 00:04:09,990 --> 00:04:15,940 productivity, value, corporations, they were all invented at some point in our history. 38 00:04:15,940 --> 00:04:19,740 They're not kind of laws of nature. Part of the natural world. 39 00:04:19,740 --> 00:04:27,530 Their human inventions. Human imagination. So the economy is an imagined order. 40 00:04:27,530 --> 00:04:31,100 But we also know it's an imagined order that has real physical impacts, 41 00:04:31,100 --> 00:04:38,030 that there's a feedback between the two that what we do in our imagined order of the economy causes things to happen in the physical world. 42 00:04:38,030 --> 00:04:43,730 Buildings get built, cars go down, emit carbon. We dig up stuff out of the earth. 43 00:04:43,730 --> 00:04:48,890 We chop down trees. You know, we do things in the physical world. 44 00:04:48,890 --> 00:04:53,690 As a result of the ideas in this imagined order, and they're both evolving over time. 45 00:04:53,690 --> 00:05:01,100 And we've seen a huge evolution over a very long period of time in our imagined order from our hunter gatherer days to 46 00:05:01,100 --> 00:05:08,510 the development of agriculture to the industrial economy and to the modern system of the economy that we have today. 47 00:05:08,510 --> 00:05:17,030 And this, in turn, has fed back to our physical world and caused the shift from what geologists call the Holocene period, 48 00:05:17,030 --> 00:05:22,700 which is the period that humans and a lot of the other life that's on Earth today evolved 49 00:05:22,700 --> 00:05:29,450 in to what geologists are now calling the Anthropocene the age of man or age of humankind, 50 00:05:29,450 --> 00:05:34,880 because we have our imagined order is now had such a huge impact on our physical order. 51 00:05:34,880 --> 00:05:39,900 It's literally changed the planet now. 52 00:05:39,900 --> 00:05:48,630 There's a problem with this imagined order that we have today and that it's failing to deliver on two of the biggest priorities that we have. 53 00:05:48,630 --> 00:05:54,240 So this is my diagram of the failure of the current system in one chart. 54 00:05:54,240 --> 00:06:01,170 So going up the y axis or a set of social indicators of the health of economies, 55 00:06:01,170 --> 00:06:05,990 and I'll show you what they are in just a moment and on the x axis are planetary boundaries. 56 00:06:05,990 --> 00:06:13,140 Some of you are probably familiar with the work by Johan Rockström and others on the safe operating space for humanity or Kate Roberts 57 00:06:13,140 --> 00:06:21,660 wonderful doughnut economics that tries to marry the idea that we need an economic system that is both delivering on human needs, 58 00:06:21,660 --> 00:06:29,010 but is also sustainable from a planetary perspective. And the size of each of these bubbles is the size of the population. 59 00:06:29,010 --> 00:06:35,280 And in this very nice study, they show that there's a set of social thresholds that they summarise in the y 60 00:06:35,280 --> 00:06:41,250 axis and a set of biophysical boundaries that they summarise on the x axis. 61 00:06:41,250 --> 00:06:47,520 And what you see is a huge trade off being countries or economies in the upper right who 62 00:06:47,520 --> 00:06:51,870 are delivering pretty well on the social thresholds but utterly destroying our planet, 63 00:06:51,870 --> 00:06:59,880 crossing many physical, safe operating boundaries. And on the lower left, a set of societies that are having relatively little environmental impact, 64 00:06:59,880 --> 00:07:06,690 but are also failing to deliver on key social thresholds for a healthy society. 65 00:07:06,690 --> 00:07:14,100 You know, this is a trade off that fundamentally has to be broken because we need to be here. 66 00:07:14,100 --> 00:07:24,580 We need an economic system that can deliver on both. It shouldn't be a trade off that we can either have thriving societies or a thriving planet. 67 00:07:24,580 --> 00:07:35,320 Now, let's go back and look inside the imagined order that got us into this situation and try to unpack it a bit and understand it a bit better now. 68 00:07:35,320 --> 00:07:43,270 I like to think of the ideas that we organise our economy around as a set of Russian Dolls nested one within the other. 69 00:07:43,270 --> 00:07:51,100 And so if we start with our biggest Russian doll, the economic system itself and we look inside them, what we see is a set of ideas, 70 00:07:51,100 --> 00:07:59,050 economic and political ideology that informs our politics, informs our policy, shapes our public discourse and media and so on. 71 00:07:59,050 --> 00:08:06,340 And underneath that is a set of economic theories that have been hugely influential in shaping that ideology and politics. 72 00:08:06,340 --> 00:08:10,150 And if you dig into the economic theory you find underneath that a set of behavioural 73 00:08:10,150 --> 00:08:14,470 theories on what human beings are like and how they behave and how they make decisions. 74 00:08:14,470 --> 00:08:18,790 And if you unpack into that one, you get to the little Russian doll at the bottom. 75 00:08:18,790 --> 00:08:23,170 You actually get into a set of ideas that come out of moral philosophy. 76 00:08:23,170 --> 00:08:28,150 And the way I categorise the system we have today is we can give labels to these things. 77 00:08:28,150 --> 00:08:38,500 We can call the current economic system market capitalism or some variant on that in the particularly in the in the developing western countries, 78 00:08:38,500 --> 00:08:45,910 we've had an ideology that can be loosely called neoliberalism that has dominated much of the politics and discourse. 79 00:08:45,910 --> 00:08:52,120 And underneath that has been the set of economic theories historically dominated by ideas from neoclassical economics, 80 00:08:52,120 --> 00:09:02,350 a behavioural model rooted in what economists call homo economics and a moral philosophy that can be labelled maximising utilitarianism. 81 00:09:02,350 --> 00:09:07,210 Now, where did these ideas come from? How did we get these ideas? 82 00:09:07,210 --> 00:09:16,360 Well, they didn't just come down from Moses on stone tablets. They were developed over a very long period of time over the last several hundred years. 83 00:09:16,360 --> 00:09:19,600 So if we look at the the smaller stores, 84 00:09:19,600 --> 00:09:29,950 they really came out of a set of developments building off of work by Enlightenment philosophers in the 17th and 18th centuries, 85 00:09:29,950 --> 00:09:35,380 but really came out of a set of economists called the marginal economists and later the neoclassical 86 00:09:35,380 --> 00:09:44,170 economists who developed their ideas in the late 19th and really through the middle 20th century. 87 00:09:44,170 --> 00:09:50,230 And then that fed the development of a set of political ideas and ideologies that really 88 00:09:50,230 --> 00:09:55,210 came into dominance again in the developed Western countries starting around the 1970s. 89 00:09:55,210 --> 00:10:03,940 And it really split into two broad branches, a kind of more left wing or progressive branch that focussed really more on equity 90 00:10:03,940 --> 00:10:09,700 and issues of social protection and a kind of more right wing conservative branch. 91 00:10:09,700 --> 00:10:14,920 That focus tended to focus more on issues around efficiency and growth. 92 00:10:14,920 --> 00:10:23,070 And then those ideologies were kind of filtered through a set of policies to different forms of organisation of the economy, 93 00:10:23,070 --> 00:10:27,790 as economists have a sort of historical sub branch called Varieties of capitalism. 94 00:10:27,790 --> 00:10:35,380 And we see across the developed world different ways of organising a market capitalist economies from a kind of, 95 00:10:35,380 --> 00:10:39,970 you know, more progressive, more state heavy capitalism, say, in Sweden or, 96 00:10:39,970 --> 00:10:46,810 you know, the other Nordic countries to a more conservative or less state form a la the U.S. But these 97 00:10:46,810 --> 00:10:53,360 kind of varieties or models came into geopolitical dominance through the 80s through 2010s. 98 00:10:53,360 --> 00:11:01,600 Now. If we look at, you know, where most of our debates have been, there's been this kind of big trade off a set of, 99 00:11:01,600 --> 00:11:07,540 you know, economic and political debates between these two branches, more state, less state. 100 00:11:07,540 --> 00:11:15,010 You know, what's legitimate to intervene in markets where the markets deliver better outcomes? 101 00:11:15,010 --> 00:11:22,150 You know, do we prioritise social equity and equality? Or do we prioritise efficiency, growth, productivity? 102 00:11:22,150 --> 00:11:24,940 You know, in a very kind of high level way, 103 00:11:24,940 --> 00:11:30,430 those who've been that's been kind of the sandbox that we've been playing in the set of debates that we've been having. 104 00:11:30,430 --> 00:11:33,460 And they've been very intense fights, you know, very intense debates. 105 00:11:33,460 --> 00:11:41,230 And we're still having them today here in Britain, in the US, where I come from and in lots of other countries. 106 00:11:41,230 --> 00:11:50,560 But the problem is, if you go back to that first chart that I showed you the failure in one chart, both of these branches don't lead to a good end. 107 00:11:50,560 --> 00:11:55,960 Both of these branches are driving our planet over the planetary safe boundaries 108 00:11:55,960 --> 00:12:02,440 and into what scientists are increasingly calling the sixth mass extinction. 109 00:12:02,440 --> 00:12:10,840 So what I'm going to argue in the rest of this talk is that we need to bring the fight back down here and we need to go back down deeper 110 00:12:10,840 --> 00:12:19,450 into the system and rethink things a bit more from first principles to understand how we might start to see our way out of this mess. 111 00:12:19,450 --> 00:12:26,200 Now, I'm also going to argue that this current imagined order that we have is really not built on sound foundations is built on on sand. 112 00:12:26,200 --> 00:12:33,250 One could say that the moral foundations are pretty shaky from a kind of philosophical and behavioural perspective. 113 00:12:33,250 --> 00:12:37,390 The behavioural model will even more strongly say is really pseudoscience. 114 00:12:37,390 --> 00:12:47,220 It's not real science. And likewise, the ideologies have really developed as stories to justify power and privilege. 115 00:12:47,220 --> 00:12:53,390 You know, they'll claim that they claim again on scientific basis, but when you really get under them, 116 00:12:53,390 --> 00:12:58,580 they're really ways of preserving the status quo and power and privilege. 117 00:12:58,580 --> 00:13:03,380 So starting with our little list all down at the moral foundations, 118 00:13:03,380 --> 00:13:11,330 we saw a huge shift in moral philosophy during the kind of enlightenment and into the neoclassical 119 00:13:11,330 --> 00:13:17,450 economic period from an idea that virtue is good to what could crudely be called greed is good. 120 00:13:17,450 --> 00:13:25,400 So before Hobbs invent them, you know there were lots of, you know, philosophical battles and discussions about what it meant to be good. 121 00:13:25,400 --> 00:13:30,800 But there were some, you know, some core ideas that that there was something in human nature about tensions between 122 00:13:30,800 --> 00:13:35,960 the desire to be good in temptation to behave badly and to follow a moral life. 123 00:13:35,960 --> 00:13:37,430 You had to follow the golden rule, 124 00:13:37,430 --> 00:13:44,150 treat other people as you wanted to be treated yourself and somehow kind of restrain or kerb your worst instincts or appetites. 125 00:13:44,150 --> 00:13:50,750 There were also notions that morality was somehow part of character or a way of living or thinking or behaving like Aristotle. 126 00:13:50,750 --> 00:13:58,070 And that also morality was expressed through rules and norms that, you know, people were supposed to follow our camp. 127 00:13:58,070 --> 00:14:03,590 So again, this is, you know, potted hundreds of years of moral philosophy and, you know, one set of bullet points. 128 00:14:03,590 --> 00:14:08,900 So I apologise to any real moral philosophers in the room, but you'll see my point. 129 00:14:08,900 --> 00:14:17,690 But then Thompson Benton came around and created quite a revolution in our thinking this they really turned this logic on its head. 130 00:14:17,690 --> 00:14:25,790 And again, very crudely, they saw human nature, as is a trade-off between pleasure and pain that humans are essentially hedonic, 131 00:14:25,790 --> 00:14:29,840 that they seek pleasure and avoid pain, and that this was neither good nor bad. 132 00:14:29,840 --> 00:14:37,700 But this was just part of how we are, how we're wired. But what matters was the consequences of our actions for the pleasure and pain of others. 133 00:14:37,700 --> 00:14:44,300 So if we're doing something that's causing pain or pleasure, that that defined a moral outcome. 134 00:14:44,300 --> 00:14:50,430 And so then the objective was moral outcomes that maximise the most pleasure and minimise the most pain for the most people. 135 00:14:50,430 --> 00:14:58,010 This is kind of the basic utilitarian principle is the benefit of my version of it and the things like characters and tension rules, 136 00:14:58,010 --> 00:15:05,990 et cetera, don't really matter so much as the consequences are consequential ism of these of these actions. 137 00:15:05,990 --> 00:15:12,560 And this, you know, created a major branch of philosophy that's still alive and well today. 138 00:15:12,560 --> 00:15:20,720 But that philosophy then trickled into economics in a way that I would argue has been quite damaging. 139 00:15:20,720 --> 00:15:26,690 So economists then kind of boil this down into a simplistic model that humans are self 140 00:15:26,690 --> 00:15:31,880 regarding pleasure maximises and utility calculators and rational decision makers. 141 00:15:31,880 --> 00:15:37,430 And this really started around the time of the marginal IST economist. 142 00:15:37,430 --> 00:15:42,050 And part of their interest and reason for adopting this philosophical stance was 143 00:15:42,050 --> 00:15:47,060 because they wanted to turn it into maths and they needed something very simple. 144 00:15:47,060 --> 00:15:54,480 The maths they had at the time was fairly crude, and they needed something very, very simple that they could fit into their mathematical structure. 145 00:15:54,480 --> 00:16:00,200 So this quote from Edgeworth basically says that this conception of man is a pleasure machine. 146 00:16:00,200 --> 00:16:07,250 They justify and facilitate the employment of mechanical terms and mathematical reasoning in social science. 147 00:16:07,250 --> 00:16:14,030 Likewise, they also like the fact that you can just view people as individuals and not have to consider their collective behaviour because again, 148 00:16:14,030 --> 00:16:17,390 they didn't have the maths at the time to deal with things like collective behaviour. 149 00:16:17,390 --> 00:16:25,610 So this quote from Bentham basically arguing that the idea of community is a fictitious body that we're only composed of individuals, 150 00:16:25,610 --> 00:16:33,260 even if we sometimes, you know, think we're in a society and you go straight from Benson's philosophy to Margaret Thatcher's famous quote, 151 00:16:33,260 --> 00:16:43,280 there is no such thing as society. A couple of hundred years later, now Steven Pinker has a wonderful phrase. 152 00:16:43,280 --> 00:16:48,680 He calls some of his earlier philosophical reasoning armchair anthropology or armchair psychology. 153 00:16:48,680 --> 00:16:53,480 And the reason is these as smart is people like Bentham and Harps and Edgeworth were. 154 00:16:53,480 --> 00:16:58,280 The way they came up with these ideas was they essentially sat in an armchair with a drink in their hand, 155 00:16:58,280 --> 00:17:05,450 whatever it was, you know, a glass of whisky or tea or whatever, and said, I think human beings or pleasure machines. 156 00:17:05,450 --> 00:17:11,840 Yes, that's human nature. We seek pleasure and we avoid pain and, you know, write that down and develop a philosophy on it. 157 00:17:11,840 --> 00:17:15,260 They didn't have any data. They didn't have any empirical basis. 158 00:17:15,260 --> 00:17:18,680 They didn't run any experiments, they didn't do any large scale studies. 159 00:17:18,680 --> 00:17:24,740 They just thought this stuff up and tried to reason from first principles in their own heads. 160 00:17:24,740 --> 00:17:29,150 Thus, the phrase armchair anthropology. 161 00:17:29,150 --> 00:17:38,930 Now, this armchair anthropology about human nature, though, led through economics to the idea that not only is greed good, but greed. 162 00:17:38,930 --> 00:17:43,340 Creates prosperity now, most people, if you ask, where did this idea come from and say, 163 00:17:43,340 --> 00:17:48,080 Well, it's Adam Smith, Adam Smith and the invisible hand, right? 164 00:17:48,080 --> 00:17:55,070 Wrong. Adam Smith actually believe entirely the opposite. 165 00:17:55,070 --> 00:18:00,200 And the invisible hand is one of the more misinterpreted bits of economic text out there. 166 00:18:00,200 --> 00:18:07,340 We can go back to that in the Q&A if anyone's interested. But Smith actually held quite opposite views to this sort of greed is good. 167 00:18:07,340 --> 00:18:12,440 In fact, he wrote a whole book on it The Theory of moral sentiments, which was really, you know, 168 00:18:12,440 --> 00:18:20,510 a testament to human empathy and sympathy and other regarding feelings and and emotions. 169 00:18:20,510 --> 00:18:27,410 The actual idea of the self-interest and re-creates prosperity comes from a different set of economists. 170 00:18:27,410 --> 00:18:37,460 Really, the marginal is the folks who took that idea of the maximising pleasure seeking individual turn that idea into a mathematical set of concepts, 171 00:18:37,460 --> 00:18:46,700 world utility, and also created the idea that the objective in society is to maximise the sum of individual utilities. 172 00:18:46,700 --> 00:18:51,260 And this notion of the Pereda optimal, which everyone learns in Econ 101, 173 00:18:51,260 --> 00:18:59,960 that the maximum social outcome is one where everyone maximises their utility without forcing anybody to do anything they don't want to do. 174 00:18:59,960 --> 00:19:07,520 And then this all kind of trundled on to developments in the 20th century, most notably Cantero and Gerard Devereaux, 175 00:19:07,520 --> 00:19:14,180 who showed mathematically that under a certain set of conditions that if you have individuals like this in free markets, 176 00:19:14,180 --> 00:19:20,000 you get this wonderful outcome of the optimal state nearly automatically. 177 00:19:20,000 --> 00:19:25,190 And so this then led to a sort of broad set of ideas that so selfish utility maximising 178 00:19:25,190 --> 00:19:29,900 plus free markets leads to a pretty good state of things freedom and prosperity. 179 00:19:29,900 --> 00:19:39,350 Who could not want that? Now, this then led to a further set of ideas about what kind of a system the economy is. 180 00:19:39,350 --> 00:19:42,980 And again, you know, the motivations for this were not bad ones. 181 00:19:42,980 --> 00:19:55,590 So Leon Walrus, one of the founders of General Equilibrium Theory, wanted to make economics a more mathematical science, which was a good objective. 182 00:19:55,590 --> 00:20:03,050 You wanted to make it more of a science as opposed to the philosophy of Adam Smith and the classical economists. 183 00:20:03,050 --> 00:20:08,930 But he had a bad case of physics envy, and he actually, when you look into the history of this, 184 00:20:08,930 --> 00:20:17,030 he took a specific book guy named Funso, wrote this book on on on the physics of static static systems. 185 00:20:17,030 --> 00:20:23,210 And he literally copied equations out of it and developed his equations for equilibrium theory, and he was quite explicit about it. 186 00:20:23,210 --> 00:20:26,960 He was basically substituting words and concepts in the equation. 187 00:20:26,960 --> 00:20:33,200 So he says, you know, scarcity are here and given scientific meeting like the word velocity and mechanics and the word heat in physics. 188 00:20:33,200 --> 00:20:37,040 So it was an active kind of metaphorical and mathematical borrowing. 189 00:20:37,040 --> 00:20:43,670 And he got out of that set of ideas that have carried on through economics right to the modern day still taught here in Oxford, 190 00:20:43,670 --> 00:20:49,760 in PPE and other courses that economic systems or equilibrium systems that they're optimising, 191 00:20:49,760 --> 00:20:53,030 that they're essentially static and change comes from the outside. 192 00:20:53,030 --> 00:21:00,050 Also again, this idea, there's no such thing as society that is basically a summation of of individuals. 193 00:21:00,050 --> 00:21:02,330 And then also that it's a separable system. 194 00:21:02,330 --> 00:21:10,880 It's somehow closed and you can separate it from other systems like the physical environment or the social and political systems. 195 00:21:10,880 --> 00:21:17,480 And again, this, you know, these people were not dumb. They knew that these were hugely simplifying assumptions. 196 00:21:17,480 --> 00:21:24,710 But given the maths they had at the time, that's what they felt they had to make to make it more like physics. 197 00:21:24,710 --> 00:21:33,830 And this then led to the neoclassical theory that dominated really up until the nineteen seventies in economics and led to ideas of 198 00:21:33,830 --> 00:21:40,520 markets being allocated highly efficient ideas that governments tend to reduce market efficiency unless there's market failures, 199 00:21:40,520 --> 00:21:43,880 that price and value were essentially equivalent concepts. 200 00:21:43,880 --> 00:21:53,660 GDP then becomes the main proxy for welfare and, you know, ideas that growth essentially can be infinite. 201 00:21:53,660 --> 00:22:02,090 Then next came along a set of more political thinkers starting really in the kind of post-war period and up into the 70s 202 00:22:02,090 --> 00:22:09,110 who took some of these core ideas and framings and turned them into what we could think of as political means and norms. 203 00:22:09,110 --> 00:22:18,890 The idea that greed is good, that you know, maximising pleasure and consumption is more of a billion acts of selfishness makes a prosperous society. 204 00:22:18,890 --> 00:22:24,290 The social duty of business is to maximise its profits and maximise shareholder value. 205 00:22:24,290 --> 00:22:28,850 Margaret Thatcher's famous quote again that markets are efficient. 206 00:22:28,850 --> 00:22:37,190 Other institutions are not. So market should be the primary way that we organise society and the value of something in society as its market price. 207 00:22:37,190 --> 00:22:39,490 The idea that because. 208 00:22:39,490 --> 00:22:47,210 If labour markets are efficient and you're paid what you're worth to society and that we have these trade offs, there's no free lunch, 209 00:22:47,210 --> 00:22:53,560 you have to trade off, you can either have more equity and equality and social justice or you can have more growth you choose. 210 00:22:53,560 --> 00:22:57,160 If you're on the left, you choose one. If you're on the right, you choose the other. 211 00:22:57,160 --> 00:23:01,930 And then finally, that the environment exists largely as a resource to be exploited. 212 00:23:01,930 --> 00:23:10,150 Again, these are crude characterisations, but you'll probably recognise them, you know, from our politics now. 213 00:23:10,150 --> 00:23:18,160 I would argue that this neoliberal ideology is really just a story to justify power and privilege. 214 00:23:18,160 --> 00:23:23,950 And we've had stories in our imaginary orders to justify power privilege going right back as far as we can look, 215 00:23:23,950 --> 00:23:30,730 every imagined order has its stories told by the elite to justify their position. 216 00:23:30,730 --> 00:23:42,940 A favourite example is the code of Hammurabi in ancient Mesopotamia, which laid out why the order of the king and aristocracy, 217 00:23:42,940 --> 00:23:48,370 slaves and so on was to just order the right order for society and even went down to 218 00:23:48,370 --> 00:23:53,140 specifying that the value of a free person was x times more valuable than a slave. 219 00:23:53,140 --> 00:24:01,690 And the value of a woman, of course, was much less than a man. And, you know, even put this into, you know, quite specific categories in amounts. 220 00:24:01,690 --> 00:24:07,870 And these arguments always have the same narrative structure, whether it's the code of how Barrabi or neoliberal ideology. 221 00:24:07,870 --> 00:24:13,000 Today that the order today is the natural order, the order today is the best order. 222 00:24:13,000 --> 00:24:19,340 Change will only hurt those it intends to help, and there is no alternative. 223 00:24:19,340 --> 00:24:26,480 That's the justification. Now, inevitably, we always appeal to some source of authority for our current order. 224 00:24:26,480 --> 00:24:32,630 The old days are used to primarily be God to the coat of our morality was handed down by God to the to the king. 225 00:24:32,630 --> 00:24:36,770 Sometimes it was blood and tribe or relations or soil and plays. 226 00:24:36,770 --> 00:24:43,490 Or it's because, you know, the history of the ancestors in this way, so it must be good or post enlightenment. 227 00:24:43,490 --> 00:24:49,130 We start getting appeals to philosophy, science or to our modern God economics. 228 00:24:49,130 --> 00:24:55,000 The economists say this is right, so therefore it must be the natural order or the best order. 229 00:24:55,000 --> 00:25:03,880 Now, just to show you that some more self-aware economists, we understand that they are storytellers in society. 230 00:25:03,880 --> 00:25:10,510 Here's a quote from Ariel Rubinstein, a very respected economist at NYU, says as in the case of a good fable, 231 00:25:10,510 --> 00:25:18,490 a good model can have enormous influence on the real world, not by providing advice or predicting the future, but rather by influencing culture. 232 00:25:18,490 --> 00:25:24,650 Yes, I do think we are simply the tellers of fables. But is that not wonderful? 233 00:25:24,650 --> 00:25:34,910 Now, let me show you how some of these fables work. So an example that myself, my co-author I've done some work on is the minimum wage. 234 00:25:34,910 --> 00:25:40,970 And there, you know, you have a story about, you know, if you raise wages in the market, it's going to be bad for people. 235 00:25:40,970 --> 00:25:49,280 It's going to hurt employment. You know, if the price of something goes up and demand for it goes down, right, if I want a one, raise wages less jobs. 236 00:25:49,280 --> 00:25:54,200 Right? So you have, you know, Milton Friedman noting, 237 00:25:54,200 --> 00:26:03,080 quoting back in the 60s that I'm convinced the minimum wage law is the most anti negro on our statute books and its effects, not its intent. 238 00:26:03,080 --> 00:26:06,920 It will only hurt those it's intended to help. 239 00:26:06,920 --> 00:26:15,860 This wasn't just an issue in the 60s, so here we have just a few years ago as there's been a fight in the US to raise the minimum wage to $15. 240 00:26:15,860 --> 00:26:21,320 Forbes magazine saying, Of course, Black Lives Matter. That's why the $15 minimum wage is a bad idea. 241 00:26:21,320 --> 00:26:25,730 Again, the natural order, the current order is the best order changing. 242 00:26:25,730 --> 00:26:33,290 It will only hurt people. Well, here's the facts the reality and huge number of studies now showing that 243 00:26:33,290 --> 00:26:39,800 basically low wage employment is unchanged by the minimum wage jobs aren't lost, 244 00:26:39,800 --> 00:26:43,610 but the incomes at the bottom of the distribution are significantly increased. 245 00:26:43,610 --> 00:26:48,140 Working poverty is generally reduced, dependence on public assistance is reduced, 246 00:26:48,140 --> 00:26:55,490 and low income African-Americans have been amongst the biggest beneficiaries of minimum wage rises. 247 00:26:55,490 --> 00:26:59,480 So it's been a story now. 248 00:26:59,480 --> 00:27:08,060 I think we need some new stories, new narratives based on more scientific foundations about real human behaviour and how real systems work. 249 00:27:08,060 --> 00:27:12,320 And I'm hoping that will someday look at this quote by John Stuart Mill. 250 00:27:12,320 --> 00:27:15,800 It often happens that the universal belief of one angel of mankind becomes to 251 00:27:15,800 --> 00:27:19,550 the subsequent age so palpable and absurdity that the only difficulty then, 252 00:27:19,550 --> 00:27:30,020 is to imagine how such a thing can ever have appeared credible. We will look back on some of the ideas we've had today and see how absurd they are. 253 00:27:30,020 --> 00:27:35,420 So let's look at some real science, not armchair anthropology. 254 00:27:35,420 --> 00:27:38,990 We're lucky and we've been terrific work on this here at Oxford. 255 00:27:38,990 --> 00:27:46,370 We've had decades of behavioural science across psychology, cognitive science, neuroscience, anthropology, 256 00:27:46,370 --> 00:27:53,720 behavioural economics, all kinds of fields actually looking with real data about how real humans behave and humans sapiens. 257 00:27:53,720 --> 00:27:58,700 Homo sapiens looked nothing like Homo economicas. So real human decision making is inductive. 258 00:27:58,700 --> 00:28:05,210 It's heuristic, it's modular. It's highly adaptive. Our emotions are not a bug, they are actually a feature. 259 00:28:05,210 --> 00:28:11,240 They're very important in helping us navigate the world and social relations and make decisions. 260 00:28:11,240 --> 00:28:16,460 And we are highly, highly social creatures were amongst the most social creatures on Earth. 261 00:28:16,460 --> 00:28:23,330 We can be selfish, of course, but we are highly, highly group ish and we tend to be reciprocal in our social relations. 262 00:28:23,330 --> 00:28:26,450 Highly cooperative, capable of altruism. 263 00:28:26,450 --> 00:28:33,590 Our moral intuitions and instincts are very important, shaping force in our decision making, in our social relations. 264 00:28:33,590 --> 00:28:38,870 We're also, like all other primates, quite hierarchical and we also can be tribal, 265 00:28:38,870 --> 00:28:48,530 which can have some positive side and being able to organise large scale activity, but also highly negative side in terms of things like war. 266 00:28:48,530 --> 00:29:00,200 We also know a lot more about systems than we did back in the 19th century, and we know that the economy is not an equilibrium system. 267 00:29:00,200 --> 00:29:06,130 This is an equilibrium system. It's dead. 268 00:29:06,130 --> 00:29:13,720 In equilibrium system is a system without energy flowing in out of it, without creativity, without novelty, without growth. 269 00:29:13,720 --> 00:29:23,720 It just sits there in a state of equilibrium like the boon here we now have really since the 70s, we had a much better name for what the economy is. 270 00:29:23,720 --> 00:29:28,120 That's what many scientists would call a complex adaptive system. 271 00:29:28,120 --> 00:29:35,110 It's made up of billions of agents or particles. They interact and networks they adapt and change over time. 272 00:29:35,110 --> 00:29:41,590 There's growth, there's evolution and there's novelty creation in the system. 273 00:29:41,590 --> 00:29:47,650 So rather than thinking of the economy as a system simplistic exquisite equilibrium system, 274 00:29:47,650 --> 00:29:54,400 we need to think of it in real world terms as the complex system that it is that it has all these characteristics of dynamism, 275 00:29:54,400 --> 00:30:01,630 non-linear already itself creating self-organising. It's evolutionary also that energy matters. 276 00:30:01,630 --> 00:30:08,320 Economies are powered by energy. They're thermodynamically open systems, and I'll talk about that a bit more in a moment. 277 00:30:08,320 --> 00:30:13,690 And they are embedded in other complex systems, the complex systems of human culture and society, 278 00:30:13,690 --> 00:30:18,460 and they are embedded deeply in our physical environment. 279 00:30:18,460 --> 00:30:25,960 Now we can use these ideas to start questioning and changing our conception of what economic value is so we can 280 00:30:25,960 --> 00:30:33,610 start again with real science and understanding the physical world it one way to look at the economy and don't. 281 00:30:33,610 --> 00:30:42,010 Farmer mentioned this briefly in his talk a couple of weeks ago that we can start with that we take matter and energy from the Earth, 282 00:30:42,010 --> 00:30:46,510 low water, high entropy and like a metabolism in biology. 283 00:30:46,510 --> 00:30:53,140 The economy turns that into higher order, lower entropy products and services. 284 00:30:53,140 --> 00:31:03,790 And it does that by taking in using knowledge from what can be called our physical technologies, such as this laptop or, you know, 285 00:31:03,790 --> 00:31:10,870 or an orchestra and plough, or any other physical items that contain knowledge that we use to organise and build things. 286 00:31:10,870 --> 00:31:18,490 And our social technologies, which are our institutions or ways of organising people to create order. 287 00:31:18,490 --> 00:31:27,310 And just as the laws of physics tell us, such a process of using energy and matter to create order inevitably creates waste waste, 288 00:31:27,310 --> 00:31:33,400 heat gases and waste products which are emitted into the environment. 289 00:31:33,400 --> 00:31:40,420 And this then creates value in what my co-author and I call by solving human problems. 290 00:31:40,420 --> 00:31:49,210 And so we have created an economics metabolism to convert low water to high order to meet our needs and solve our problems. 291 00:31:49,210 --> 00:31:53,950 Now this is a different conception than thinking of humans as pleasure, 292 00:31:53,950 --> 00:32:02,020 maximiser or hedonic that rather one can think of the purpose of the economy is not to just maximise consumption. 293 00:32:02,020 --> 00:32:11,830 Pleasure and growth in GDP or output terms is not just about more, but rather what the economy does when it does, as well as it solves human problems. 294 00:32:11,830 --> 00:32:16,840 I had the problem of I need. I need to eat. So I get a meal. I need information. 295 00:32:16,840 --> 00:32:23,770 I can get it from this laptop. I need to get from Point A to point B. I can take the bus or ride my bike or take an Uber. 296 00:32:23,770 --> 00:32:29,110 So we have created a huge variety of solutions to human problems in the economy. 297 00:32:29,110 --> 00:32:30,940 And it's when we solve those problems. 298 00:32:30,940 --> 00:32:38,890 When you get me from point A to point B or you get the information you need or the calories that you need, that's what creates value. 299 00:32:38,890 --> 00:32:44,170 And our wealth can then be thought of as a stock of solutions to human problems that 300 00:32:44,170 --> 00:32:49,570 it gives us more and better ways to solve these problems and meet these needs. 301 00:32:49,570 --> 00:32:54,850 We can then think of growth not just as about more or stuff that also is better. 302 00:32:54,850 --> 00:33:01,160 Growth is the rate at which we create new and better solutions to human problems and make them available to everyone. 303 00:33:01,160 --> 00:33:05,890 An economy where it's only, you know, the very richest who get the solutions, 304 00:33:05,890 --> 00:33:13,540 their human problems, we would not think of intuitively as a prosperous economy. So how these solutions are made available to people matters. 305 00:33:13,540 --> 00:33:20,470 And by solving problems, we create capabilities and enhance agency. If you aren't getting enough food to eat, if you aren't spending, 306 00:33:20,470 --> 00:33:27,280 if you're spending all your time getting from point A to point B, your ability to fulfil your human potential is very limited. 307 00:33:27,280 --> 00:33:33,820 So this is building on the ideas of what you said in Martha Nussbaum that a key role of the 308 00:33:33,820 --> 00:33:40,300 economy is to create the capabilities and agency for people to fulfil their human potential. 309 00:33:40,300 --> 00:33:49,480 And solving complex problems to meet our needs requires cooperation that prosperous economies facilitate cooperation at scale. 310 00:33:49,480 --> 00:33:54,430 And so where this is all leading is a conception of the economy is really being about supporting this, 311 00:33:54,430 --> 00:33:58,240 going right back to Aristotle, the idea of ammonia or human flourishing. 312 00:33:58,240 --> 00:34:06,000 That is the point of the economy is to support the flourishing of all of us, not just growth in GDP. 313 00:34:06,000 --> 00:34:15,270 And so we can think very broadly of a hedonic economy driven by consumption, self-interest and greed as driving us off the cliff to mass extinction, 314 00:34:15,270 --> 00:34:20,340 whereas preconception of a demonic economy focussed on real human flourishing, 315 00:34:20,340 --> 00:34:25,950 meeting real human needs is potentially leading to a more sustainable outcome. 316 00:34:25,950 --> 00:34:32,760 So putting some of these ideas together, we can start to see in rough form the building blocks for a new thought system. 317 00:34:32,760 --> 00:34:40,260 So starting with a moral philosophy built around our pro-social cooperative behaviours and a real scientific understanding of our moral psychology, 318 00:34:40,260 --> 00:34:47,850 behavioural theories that look like real Homo sapiens, not these cartoon figures out of earlier centuries. 319 00:34:47,850 --> 00:34:55,950 In economic theory, understanding the economy as a complex, evolving system embedded in these other systems of society and the planet. 320 00:34:55,950 --> 00:35:01,140 And we can start to think of a new economic and political ideology that could emerge out of this. 321 00:35:01,140 --> 00:35:10,140 That my co-author and I have labelled market humanism because we do believe that markets continue to be one important social institution, 322 00:35:10,140 --> 00:35:15,300 but they need to be harnessed to these huge human and you demonic ends, 323 00:35:15,300 --> 00:35:22,550 and we can start to envision a path toward a human you demonic economy that supports human flourishing. 324 00:35:22,550 --> 00:35:27,900 Now, we don't have time to go into the details of all that, but I think when you do run through it, 325 00:35:27,900 --> 00:35:38,100 you start to pop out a new set of memes and norms that you know could start being the basis of a new politics. 326 00:35:38,100 --> 00:35:42,600 The first or is bad, let's just say it right out. Greed is bad. 327 00:35:42,600 --> 00:35:48,150 Maximising human flourishing is good. Prosperity comes from solving human problems. 328 00:35:48,150 --> 00:35:54,780 We solve human problems by cooperating. A billion acts of cooperation makes a prosperous society. 329 00:35:54,780 --> 00:36:00,870 Inclusion, fairness and trust are the foundations of cooperation, and thus they are the foundations of growth. 330 00:36:00,870 --> 00:36:04,620 It isn't the big trade off between social justice and growth. 331 00:36:04,620 --> 00:36:11,880 Social justice is essential for growth. The role of government is to foster security and cooperation. 332 00:36:11,880 --> 00:36:16,470 Government is not the enemy of this system. It's a key part of the ecosystem. 333 00:36:16,470 --> 00:36:23,520 But it's not the whole of the ecosystem, that's for sure. So there is a difference from socialist ideologies here. 334 00:36:23,520 --> 00:36:29,580 The role of the markets is to create competitions, to cooperate and evolve new and better solutions to human problems. 335 00:36:29,580 --> 00:36:35,340 This conception markets aren't about efficiency and allocation. They are about creating incentives and competition. 336 00:36:35,340 --> 00:36:38,940 So who can be the best co-operators to solve the most human problems? 337 00:36:38,940 --> 00:36:43,890 That's what markets are good at when they're well constructed, and that's what they're for. 338 00:36:43,890 --> 00:36:49,710 And the social duty of business is not to maximise shareholder value to actually solve human problems. 339 00:36:49,710 --> 00:36:57,120 And the moral duty of humankind is to protect the Earth. Now that's all rather philosophical and nice sounding. 340 00:36:57,120 --> 00:37:04,560 And you know, you may say, OK, where are the policies? We need policies if we're going to change the system, we need policies. 341 00:37:04,560 --> 00:37:07,590 Well, I would argue we have the policies. 342 00:37:07,590 --> 00:37:14,520 We actually have a lot of answers to these big problems and we to a large extent know what policies work and which ones don't. 343 00:37:14,520 --> 00:37:18,570 The problem is they haven't been possible. We haven't been able to do them. 344 00:37:18,570 --> 00:37:23,130 And the reason why we haven't been able to do them is we haven't had the political space to do them. 345 00:37:23,130 --> 00:37:28,050 And part of the reason we haven't had the political space comes back to our Russian dolls that, 346 00:37:28,050 --> 00:37:33,480 you know, the intellectual foundations of our current imagined order give legitimate, you know, 347 00:37:33,480 --> 00:37:38,970 through institutions and education have created a set of political narratives and mental frameworks that 348 00:37:38,970 --> 00:37:46,620 constrain the political space and the policies in favour of the status quo and against transformation. 349 00:37:46,620 --> 00:37:51,170 And so these ideas and policies get shut down. 350 00:37:51,170 --> 00:37:53,960 Whereas my argument is, if we shift our thinking, 351 00:37:53,960 --> 00:38:02,570 if we change the basis of our imagined order and we drive that through our education system through the way we teach courses like economics 352 00:38:02,570 --> 00:38:11,030 and other things and into our institutions that we have the potential to open up the thinking to broader ideas of transformation. 353 00:38:11,030 --> 00:38:17,310 And we will also discover new ideas that we haven't thought of yet. And then we have a shot at actually changing the system. 354 00:38:17,310 --> 00:38:20,330 Now again, you may say that sounds like fantasy, 355 00:38:20,330 --> 00:38:26,060 but I have a reason why I think this is possible because it's happened before and it happened very recently. 356 00:38:26,060 --> 00:38:31,160 There's been some wonderful history is written of the rise of neo liberalism in the U.S. and U.K., 357 00:38:31,160 --> 00:38:39,830 and what you see is an actually quite explicit effort to do exactly what was on this page or with a different set of ideas. 358 00:38:39,830 --> 00:38:43,490 And they essentially rewired elite thinking primarily in the U.S., 359 00:38:43,490 --> 00:38:50,420 but to a large extent here as well over a multi-decade period in a very strategic way through education systems, 360 00:38:50,420 --> 00:38:58,250 think tanks, government agencies, training judges through, you know, business schools, all kinds of vehicles. 361 00:38:58,250 --> 00:39:05,990 They turned a set of intellectual ideas into a real set of policy and politics that dramatically reshaped the order, 362 00:39:05,990 --> 00:39:11,450 not just in those countries, but around the world. So we need to do this again. 363 00:39:11,450 --> 00:39:13,940 But with a different set of ideas. 364 00:39:13,940 --> 00:39:24,090 Now, my hope, which I'll close with, is that if we do this, that we will change our imagined order, and that imagined order will in turn changed. 365 00:39:24,090 --> 00:39:27,960 The physical and real order of our planet, that the ideas in our heads, 366 00:39:27,960 --> 00:39:36,590 that we start to organise the economy around start to look more like this than the ones that I showed on the first chart. 367 00:39:36,590 --> 00:39:42,890 So I'm going to close with a warning and a bit of optimism. The warning comes from Isaiah Berlin. 368 00:39:42,890 --> 00:39:49,370 Over 100 years ago, the German poet Heiny warned the French not to underestimate the power of ideas. 369 00:39:49,370 --> 00:39:55,820 Philosophical concepts nurtured in the stillness of professors study could destroy a civilisation. 370 00:39:55,820 --> 00:40:01,250 So are you professors out here with quiet studies? You're very dangerous. 371 00:40:01,250 --> 00:40:05,000 But my point is that the idea is nurtured in the stillness of professors. 372 00:40:05,000 --> 00:40:08,660 Studies hundreds of years ago are still with us today and still driving what 373 00:40:08,660 --> 00:40:13,550 we do and how we organise the system and has created great dangers for us. 374 00:40:13,550 --> 00:40:18,440 Now finally, on a more optimistic note, we are from Buckminster Fuller. 375 00:40:18,440 --> 00:40:24,350 We were called to be architects of the future, not its victims. So let's start architecting a new future. 376 00:40:24,350 --> 00:40:41,000 Thank you. Thank you very much, Eric. 377 00:40:41,000 --> 00:40:47,420 We now have time for some questions, and I'm sure they're going to be many. 378 00:40:47,420 --> 00:40:50,520 Please just be aware we are filming this in live webcast, 379 00:40:50,520 --> 00:41:02,730 and so only ask a question if you happy with that so we can take this one in the middle here. 380 00:41:02,730 --> 00:41:07,770 I think very much to make quick points or questions, one is how do you feel? 381 00:41:07,770 --> 00:41:16,770 We seem to be going the opposite direction now in today's economy from these sort of very sensible ideas to a very strange, chaotic mix. 382 00:41:16,770 --> 00:41:23,430 And second, what metrics would you use to suggest that we're on course for this sort of new direction that 383 00:41:23,430 --> 00:41:28,320 you're looking for because it's easier to measure growth in GDP than solutions to problems? 384 00:41:28,320 --> 00:41:34,560 Thank you. Do you want to take a few questions or should I have you? Well, since you asked two good ones, I'll do that. 385 00:41:34,560 --> 00:41:41,970 But then maybe they'll have lots of people and we'll we'll take a bunch of them. So first, are we going in the right or wrong direction? 386 00:41:41,970 --> 00:41:47,910 You know, it's a very, very mixed story. So yeah, there are reasons to be optimistic in our group. 387 00:41:47,910 --> 00:41:53,580 Here at Oxford, we've been doing a lot of work on the acceleration of renewable energy sources and, 388 00:41:53,580 --> 00:41:57,840 you know, understanding the foundations of what a sustainable economy might look like. 389 00:41:57,840 --> 00:42:03,430 And you can see how we could get there. And there are probably people in the room who've done actually quite detailed work on this. 390 00:42:03,430 --> 00:42:08,400 You can see the path to get there, but the pessimistic part is we're not doing it. 391 00:42:08,400 --> 00:42:13,290 Largely, I believe, because of the things I talked about, our kind of the political box that we work in, 392 00:42:13,290 --> 00:42:23,490 the mental frameworks our businesses work in and all of us on, how would you measure, you know, progress in a different way? 393 00:42:23,490 --> 00:42:30,300 And I actually think progress is a very good word here because we're talking about shifting our thinking from being about growth. 394 00:42:30,300 --> 00:42:37,530 Again, just more to progress, which is about can be more sometimes, but it's largely about better. 395 00:42:37,530 --> 00:42:42,510 And again, this idea of solving human problems. And we do think we you can measure it. 396 00:42:42,510 --> 00:42:48,600 There was a famous paper by Nautilus at Yale back in the 70s that always intrigued me, 397 00:42:48,600 --> 00:42:54,360 where he measured how many hours a day do you have to work to get a little bit of light through history of happiness? 398 00:42:54,360 --> 00:42:56,120 So have you seen this chart? 399 00:42:56,120 --> 00:43:03,570 It's a fantastic, fantastic chart, but it's a great concept because aluminium light is solving a very important human problem. 400 00:43:03,570 --> 00:43:07,860 And your ultimate budget constraint is your life. That's the real budget constraint. 401 00:43:07,860 --> 00:43:10,560 How many years you have on this planet? 402 00:43:10,560 --> 00:43:19,530 And so how much of your life you have to spend to get that lumen of life is a very nice way of actually measuring it a very tangible way. 403 00:43:19,530 --> 00:43:22,320 The value of a solution to a human problem. 404 00:43:22,320 --> 00:43:27,450 And so we're building off of that idea and actually doing some work in our group about how we might measure this. 405 00:43:27,450 --> 00:43:32,010 One idea is you can create just like four inflation measures. We have baskets of consumption goods. 406 00:43:32,010 --> 00:43:42,430 You can think of baskets of solutions and measuring again, you know how much of a human life do you have to invest to get that, OK? 407 00:43:42,430 --> 00:43:52,360 And there's one here. And. Thank you. 408 00:43:52,360 --> 00:44:01,090 Yeah, thank you. It's for what I found really very uplifting because I've been so depressed by 409 00:44:01,090 --> 00:44:06,790 economics for so many years and there is now a chance you've identified it. 410 00:44:06,790 --> 00:44:15,820 Do you think that with the increasing awareness of the climate emergency, which will gather speed, 411 00:44:15,820 --> 00:44:21,760 I think as time goes by, the children who are striking are doing a damn good job. 412 00:44:21,760 --> 00:44:29,890 But there's other things going on and as people begin to change their own expenditure, lifestyle flying, 413 00:44:29,890 --> 00:44:36,490 if all the people who fly for the university stopped, this would have an immense impact on the industry. 414 00:44:36,490 --> 00:44:48,770 And equally in other spheres. But do you think that if we have to deal with that, which I believe we do, this will affect the economy purposefully. 415 00:44:48,770 --> 00:44:59,530 If you take a couple more, thank you. I I thought your ideas are very good, but will a democracy achieve them? 416 00:44:59,530 --> 00:45:07,600 Hmm. Easy questions here within the context of the old economic system, 417 00:45:07,600 --> 00:45:16,550 when a price was put on sulphur dioxide from the combustion of coal that was very effective in reducing emissions within 30 months, 418 00:45:16,550 --> 00:45:25,780 the price of those credits dropped 80 percent. If we put a price on carbon, we could probably get similar benefits. 419 00:45:25,780 --> 00:45:29,660 When people have done that, they've actually reduced them so much. 420 00:45:29,660 --> 00:45:34,450 The price fell to almost zero, which was a separate problem. 421 00:45:34,450 --> 00:45:38,980 So to what extent do you think the problem is a little bit different that vested interests 422 00:45:38,980 --> 00:45:43,590 have prevented us putting in a price on carbon that would solve a lot of these problems? 423 00:45:43,590 --> 00:45:56,530 Yeah, I take yes. I think there's three. Well, first on the question of, you know, are we, you know, 424 00:45:56,530 --> 00:46:03,280 maybe near some tipping point in the climate debate with the young people striking and the growing movements around this? 425 00:46:03,280 --> 00:46:06,910 I'm actually hopeful that we are in a little advertising. 426 00:46:06,910 --> 00:46:14,650 I've got an article coming out any day now in the US Journal of Democracy on on why I think this may be a tipping point and how we can accelerate it. 427 00:46:14,650 --> 00:46:23,860 And the core of that is that climate has been argued historically in technocratic terms, again largely framed by US economists. 428 00:46:23,860 --> 00:46:30,670 The same bill Nordhaus, who did the nice light graph also, you know, framed climate as a cost benefit problem. 429 00:46:30,670 --> 00:46:32,800 That's where he got his Nobel prise for. 430 00:46:32,800 --> 00:46:40,570 And and that's been very hard to litigate in those terms because then it's seen as these set of trade-offs where the young people. 431 00:46:40,570 --> 00:46:49,360 Greta Thunberg has reframed it as a moral question. We in this generation are doing harm to them and their generation. 432 00:46:49,360 --> 00:46:53,740 That's a moral problem. One group of people doing harm to another group of people. 433 00:46:53,740 --> 00:46:58,720 And you know, we've always talked about future generations in these kind of abstract terms. 434 00:46:58,720 --> 00:47:01,360 You know, the climate will hurt future generations. 435 00:47:01,360 --> 00:47:06,970 Well, the future generations are here and they're angry, and that's what the student strike is showing, 436 00:47:06,970 --> 00:47:14,470 and we have to respond to that and they have moral standing. So I think that actually shifts to bring back the bring into it. 437 00:47:14,470 --> 00:47:20,410 The moral element of this could be quite transformative. Now your question then about what do we all do? 438 00:47:20,410 --> 00:47:23,440 Of course, we should all do things individually to the extent we can, 439 00:47:23,440 --> 00:47:28,510 but we are operating within a system that is geared to make it very hard for us to do that. 440 00:47:28,510 --> 00:47:34,960 And so we do need system change. And again, there's many people in Oxford working on on what that looks like. 441 00:47:34,960 --> 00:47:40,750 But again, my thesis is to get that kind of system change in the time where I live, in a time that we have, 442 00:47:40,750 --> 00:47:45,820 that we have to radically change what's in our heads and particularly the heads of the elite 443 00:47:45,820 --> 00:47:52,600 in policy and political circles to a different conception of what the economy is about. 444 00:47:52,600 --> 00:47:56,260 And again, the neoliberal example show that can happen relatively quickly. 445 00:47:56,260 --> 00:48:07,250 They did that rewiring and about, you know, over the course of 20, 30 years building off of the crisis they had and in the 1970s. 446 00:48:07,250 --> 00:48:12,890 And your question, can this happen in a democracy? 447 00:48:12,890 --> 00:48:24,230 I sure as heck hope so, because if if we can't and then, you know, none of the alternatives are good for it to happen in a democracy. 448 00:48:24,230 --> 00:48:28,460 I think we do need these these Bottom-Up social movements. 449 00:48:28,460 --> 00:48:29,330 And you know, 450 00:48:29,330 --> 00:48:36,350 climate really has to become a mass social movement where politicians lose office and businesses lose money if they're on the wrong side of it. 451 00:48:36,350 --> 00:48:44,300 And in this article coming out very soon, I compare the climate movement to the abolition of slavery movement and what helped that 452 00:48:44,300 --> 00:48:51,920 movement become successful and actually turn into a global movement and drive huge change. 453 00:48:51,920 --> 00:48:57,170 Now that leads into finally the question on carbon taxes. 454 00:48:57,170 --> 00:49:01,060 You know, I'd be delighted if we had a high carbon tax today. 455 00:49:01,060 --> 00:49:06,110 No one would be more delighted than me. Would it have an effect? Lots of studies suggest it certainly would. 456 00:49:06,110 --> 00:49:08,660 Of course, the answer depends on how high. 457 00:49:08,660 --> 00:49:17,990 Now that sets, then the political problem is, you know, we've been talking about carbon taxes for many, many decades, and they're still rare, 458 00:49:17,990 --> 00:49:27,080 and most of them are still very low, and they've actually evaded very few tonnes of carbon relative to other measures and what we need. 459 00:49:27,080 --> 00:49:37,040 So and again, it's been framed in technocratic terms, and I think we need to again start bringing the the moral considerations back into this. 460 00:49:37,040 --> 00:49:43,040 And you know, in the article, I argue that if you look at the abolition movement, you know, 461 00:49:43,040 --> 00:49:47,840 they weren't advocating a slave tax to make slaves more expensive, so we use less of them. 462 00:49:47,840 --> 00:49:52,710 That was not their position. Their position was abolition. We have to stop this. 463 00:49:52,710 --> 00:49:57,100 It's a wrong system, we have to stop it, and we're in a very similar situation on climate. 464 00:49:57,100 --> 00:50:03,180 The science is very clear. We have to get to net zero I circa 20 30 to 20 50. 465 00:50:03,180 --> 00:50:07,800 That's not very long from now, and net zero is a very strict condition. 466 00:50:07,800 --> 00:50:13,320 So we largely, you know, my friend Myles Allen is here who works on carbon capture. 467 00:50:13,320 --> 00:50:20,140 Tell me it's not 100 percent, but we largely have to abolish carbon in that timeframe, not just tax it. 468 00:50:20,140 --> 00:50:25,540 So my my policy recommendation is carbon should be illegal after a certain date. 469 00:50:25,540 --> 00:50:29,740 You laugh, you laugh. Yeah, despite this. That's what we need. 470 00:50:29,740 --> 00:50:40,630 Yeah. Given that given that the clock is ticking and given that all the major institutions, governments, 471 00:50:40,630 --> 00:50:46,480 commerce are determined to conserve the status quo because they're doing well out of it, and I think it's good. 472 00:50:46,480 --> 00:50:50,530 What realistically are the chances of making the kind of changes that need to be 473 00:50:50,530 --> 00:50:56,590 made before we're overtaken by global warming and mass extinction and all the rest? 474 00:50:56,590 --> 00:51:05,170 OK. David. Thank you. 475 00:51:05,170 --> 00:51:10,360 There's a little cluster of us in the audience here who come from a background in wildlife conservation. 476 00:51:10,360 --> 00:51:19,120 Yeah. Surprisingly enough from that very different starting point, we've arrived at remarkably similar logic and conclusions to yourself. 477 00:51:19,120 --> 00:51:23,800 But at the very penultimate stage of your futuristic diagram, 478 00:51:23,800 --> 00:51:30,730 there was a humanistic market or humanistic economy bearing in mind that the very most bottom right 479 00:51:30,730 --> 00:51:38,200 hand output was concerning consideration for all aspects of the Earth and its working parts. 480 00:51:38,200 --> 00:51:45,220 How would you react, ungainly as the term may be to swapping humanistic for non anthropocentric? 481 00:51:45,220 --> 00:51:51,390 Yeah, yeah, I just wanted. OK. 482 00:51:51,390 --> 00:51:54,410 OK, this one first, sorry. And we'll come back. 483 00:51:54,410 --> 00:52:04,040 Okay, so one core feature of the line of argument you advanced in your presentation is that elites can be this really powerful lever for change. 484 00:52:04,040 --> 00:52:09,530 But the two countries, which which I can claim a personal tie to India and the U.S. have elected leaders, 485 00:52:09,530 --> 00:52:16,220 you know, precisely because they either are not or do not claim affiliation with with elites. 486 00:52:16,220 --> 00:52:22,670 Right. So how does that affect your your line of argument? Because we seem to be seeing that elsewhere as well? 487 00:52:22,670 --> 00:52:31,610 Yeah. So I'll first address a question from our wildlife friends. 488 00:52:31,610 --> 00:52:34,970 I actually very much agree with you. 489 00:52:34,970 --> 00:52:42,230 Part of human progress or human progress over long history has been expanding the moral circle you know of where it is. 490 00:52:42,230 --> 00:52:48,500 Our moral consideration lie from, you know, kind of immediate family and kin clan to larger and larger entities. 491 00:52:48,500 --> 00:52:52,390 The final step in that is across species. 492 00:52:52,390 --> 00:53:01,960 And, you know, in my final line and here was that, you know, preservation of the environment is a is a moral duty. 493 00:53:01,960 --> 00:53:11,950 And so while we, you know we do need to recover the economy to serving human needs, 494 00:53:11,950 --> 00:53:19,390 human needs are intrinsically bound up with the needs of all of our fellow species on the on the planet. 495 00:53:19,390 --> 00:53:28,180 So now I think you know that expanding of the moral circle is, you know, will inevitably take time. 496 00:53:28,180 --> 00:53:33,730 But I think it's something that we have to do to get to where we need to need to go now. 497 00:53:33,730 --> 00:53:42,250 You know your question about optimism. If we had one hundred years, I'd be, you know, I'd be pretty optimistic, actually. 498 00:53:42,250 --> 00:53:45,430 You know, human history would give you some reasons to believe that, you know, 499 00:53:45,430 --> 00:53:52,300 we can make big changes and have big transformations in our thinking, our intellectual ideas and our values. 500 00:53:52,300 --> 00:53:59,050 But given the time frames where we're facing, you know, it's going to be a close run thing at best. 501 00:53:59,050 --> 00:54:07,850 Or, you know, I you know where we may be cleaning up a lot of messes as we as we rewire. 502 00:54:07,850 --> 00:54:12,280 Sorry, I'm forgetting that it was about elites are elites. 503 00:54:12,280 --> 00:54:20,230 Yeah. Elites who claim they're not part of the elite as well. Don't tell me Donald Trump's not part of the elite. 504 00:54:20,230 --> 00:54:25,570 You know, I think that, you know, elites. 505 00:54:25,570 --> 00:54:32,650 Also, it doesn't just mean, you know, were you born rich because you may not have been, you know, or you went to the right schools, 506 00:54:32,650 --> 00:54:41,350 but you, you know, coming up in any set of political institutions, you become part of that elite as as as part of that process. 507 00:54:41,350 --> 00:54:49,150 And you know, those institutions, you know, whether there are political parties, civil servants, educational institutions, you know, 508 00:54:49,150 --> 00:55:00,340 they have created this, this bubble of ideas and values that you know, all of them and and all of us have been have been living in. 509 00:55:00,340 --> 00:55:05,980 So it's, you know, there's no single magic bullet answer, but rather a multi-pronged approach. 510 00:55:05,980 --> 00:55:11,380 And, you know, we have to start changing the thinking at every point that touches those elites, 511 00:55:11,380 --> 00:55:20,440 whether it's the children out on school strike or, you know, here in Oxford, how we educate our students or how, 512 00:55:20,440 --> 00:55:26,770 you know, in my shop, you know, we're working on policy issues with elite policymakers, you know, 513 00:55:26,770 --> 00:55:30,760 from central banks and environment agencies and try to work through those channels as well. 514 00:55:30,760 --> 00:55:39,590 So we have to hit it at all channels. There's a cluster of hands over the. 515 00:55:39,590 --> 00:55:43,100 Eric, let me congratulate you on what I think is a spectacular line of thinking. 516 00:55:43,100 --> 00:55:47,180 There just I agree with most of it there just two points. I disagree with them. 517 00:55:47,180 --> 00:55:53,930 Let me just limit that to one. I think you're giving the conservative when you're making your life slightly easy with the conservative, 518 00:55:53,930 --> 00:55:57,950 because earlier on in the talk, you seem to argue that order. 519 00:55:57,950 --> 00:56:04,400 The order today is the natural order, and the order today is the best order is really kind of a cynical statement of where we're at. 520 00:56:04,400 --> 00:56:09,590 I do believe, though, that the strength of what some of the conservative moral foundations bring to us is the idea that 521 00:56:09,590 --> 00:56:15,170 orders are really important in order for societies is very hard to establish a later on and you talk. 522 00:56:15,170 --> 00:56:23,600 You then argued that in a modern theory of value, order is actually of a value is virtuous sort of defined. 523 00:56:23,600 --> 00:56:27,920 You know, the economy you'd like to see by being a state of high order and low energy. 524 00:56:27,920 --> 00:56:32,780 So I wondered whether you perhaps this is just an equivocation and you sort of actually, you know, 525 00:56:32,780 --> 00:56:38,840 think sort of there's order one in order to you or whether you, how you how you see that perceive perhaps an incongruity. 526 00:56:38,840 --> 00:56:42,790 Thank you. Yeah. Thanks. 527 00:56:42,790 --> 00:56:52,180 Well, thank you very much. My question relates around how the Chinese model for running the economy fits into those different levels you've described. 528 00:56:52,180 --> 00:56:59,920 And after all, they've got one for 1.4 billion people, which is not a small fraction of human population. 529 00:56:59,920 --> 00:57:11,530 No. Carries on for them. 530 00:57:11,530 --> 00:57:17,640 This is to piggyback on the last question, in fact, so much of the so much for the solutions, I mean, 531 00:57:17,640 --> 00:57:22,100 use this word lightly are relatively easy for the rich world in these small and 532 00:57:22,100 --> 00:57:26,480 shrinking group in the top right of your human developed human flourishing chart. 533 00:57:26,480 --> 00:57:32,960 The real problem? A much harder solution is going to be getting the large growing population 534 00:57:32,960 --> 00:57:37,400 in the bottom left of the top left without exploiting the natural resources. 535 00:57:37,400 --> 00:57:42,740 How can you envision, you know, even if we manage the rich world to move in the direction you want? 536 00:57:42,740 --> 00:57:46,310 How can how can we really get the developing world where you like? 537 00:57:46,310 --> 00:57:55,160 Thank you. Well, three again, three challenging questions. 538 00:57:55,160 --> 00:58:04,100 My colleague Linus asked a very perceptive question about about order, and it might surprise you because you probably thought this is some, 539 00:58:04,100 --> 00:58:13,550 you know, left wing guy talking about overthrowing capitalism up here. Probably my two to my economic heroes are Adam Smith and Hayek. 540 00:58:13,550 --> 00:58:15,020 That might surprise a few of you. 541 00:58:15,020 --> 00:58:24,350 And precisely because of the point that Linus was making so, you know, societies that have low order are not happy places to live. 542 00:58:24,350 --> 00:58:28,640 You know, if you have chaotic social order and low physical order, you know, 543 00:58:28,640 --> 00:58:33,180 you don't have highly ordered physical objects like, you know, like this stuff around. 544 00:58:33,180 --> 00:58:40,090 That's generally what we think of as poverty. And, you know, so one of the highest great insights was, you know, 545 00:58:40,090 --> 00:58:45,160 understanding writing about how economies create order as an evolutionary system 546 00:58:45,160 --> 00:58:51,100 and and what I'm arguing is we need to understand and harness that again, 547 00:58:51,100 --> 00:58:57,550 you know, toward meeting human needs in a way where the energy and thermodynamic and emissions equations work. 548 00:58:57,550 --> 00:59:01,300 That's another way of kind of trying to put the problem. 549 00:59:01,300 --> 00:59:11,860 And and many of the classical economists, you know, in the kind of smithee and tradition also understood, you know, 550 00:59:11,860 --> 00:59:20,800 that social order and in particular in Smith's case based on, you know, moral principles and moral reciprocity is a very precious thing. 551 00:59:20,800 --> 00:59:32,020 You know, when that breaks down, life is never good, you know, so so there is a natural conservatism to this of how do we hang on to, 552 00:59:32,020 --> 00:59:38,980 you know, a sense of, you know, material and social order that allows the kind of human flourishing that we want. 553 00:59:38,980 --> 00:59:48,190 And in Western societies, you know, those top right countries have delivered on a lot better than the many other societies. 554 00:59:48,190 --> 00:59:53,740 But do that in a way that meets the requirements of the planet. 555 00:59:53,740 --> 01:00:01,180 That is the that is the core problem now. 556 01:00:01,180 --> 01:00:06,040 You could then ask, are any other countries doing that? What about China? To your question? 557 01:00:06,040 --> 01:00:15,070 Well, this is not, you know, by critiquing modern capitalism, I'm not advocating certainly for communism. 558 01:00:15,070 --> 01:00:18,430 You know, this is another point where I agree with Hayek. 559 01:00:18,430 --> 01:00:23,500 You know, central planning and an imperfect knowledge environment is not very good at 560 01:00:23,500 --> 01:00:30,190 actually solving human problems and meeting human needs and creating fifth order. 561 01:00:30,190 --> 01:00:34,480 Markets are an essential part of doing that. 562 01:00:34,480 --> 01:00:40,300 And, you know, modern China is in kind of a halfway house between those worlds. 563 01:00:40,300 --> 01:00:46,120 You know, some parts of it are the most market oriented, you know, 564 01:00:46,120 --> 01:00:50,650 bits of economy anywhere in the world and other parts are still very state controlled. 565 01:00:50,650 --> 01:00:57,400 And, you know, China recognises that it is in a unique position. 566 01:00:57,400 --> 01:01:01,450 It cannot. You know, there are there are many economists in China who have been trained in, you know, 567 01:01:01,450 --> 01:01:06,400 Wharton and University of Chicago and places like that and learnt all the standard neoclassical stuff. 568 01:01:06,400 --> 01:01:11,350 But then they go back to China and say, Well, we can't follow that path. 569 01:01:11,350 --> 01:01:14,940 You know, they used to call the Washington Consensus, never work for China. 570 01:01:14,940 --> 01:01:23,650 It certainly doesn't work today that we need to forge a new path of how do you take an economy like that and get it on this track? 571 01:01:23,650 --> 01:01:31,120 And you know, the same is true for the developing countries that there is no model today. 572 01:01:31,120 --> 01:01:37,210 That's one of the hardest things you can't just say Denmark. Let's you know, let's do that. 573 01:01:37,210 --> 01:01:43,540 And there's a whole literature in the development literature about why getting to Denmark as it has is problematic in itself. 574 01:01:43,540 --> 01:01:48,040 But even if you could get there, you know, Denmark hasn't solved this problem either. 575 01:01:48,040 --> 01:01:52,000 If you look back at that chart, actually the country that was the closest left was Vietnam. 576 01:01:52,000 --> 01:01:55,500 I don't know if any of you noticed I. 577 01:01:55,500 --> 01:01:59,260 It's a good credit I need to contact the authors of the study and delve into that a bit. 578 01:01:59,260 --> 01:02:07,720 I suspect you know that it's, you know, still a really relatively low emissions economy. 579 01:02:07,720 --> 01:02:13,150 Not much industry there, but you know, they've made major improvements in their social well-being of their population. 580 01:02:13,150 --> 01:02:17,560 But that's probably the hardest thing is there is no model for this. 581 01:02:17,560 --> 01:02:28,450 We have to invent a new model. And I do believe that the countries with the most capabilities, the wealthiest, you know, countries like Britain, US, 582 01:02:28,450 --> 01:02:37,180 Japan and other wealthy countries and the fast rising countries in Asia are going to have to be the ones that do this. 583 01:02:37,180 --> 01:02:43,930 So again, going back to Buckminster Fuller, we have to be architects of that future. 584 01:02:43,930 --> 01:02:51,280 Thank you. Okay. Normally at this juncture, I'm afraid we don't have any more time for questions are still first hand. 585 01:02:51,280 --> 01:02:59,110 Normally, at this juncture, I would tell you what's happening next week. This was the very last lecture of the academic year. 586 01:02:59,110 --> 01:03:03,610 There is, in preparation, a whole series on food for next term. 587 01:03:03,610 --> 01:03:12,130 So do please check out our website. But I would just like to thank Eric for a really superb talk. 588 01:03:12,130 --> 01:03:20,110 And I know that there will be many people in this room who are eagerly awaiting the book that you said was the source of many of these ideas. 589 01:03:20,110 --> 01:03:27,550 But I think all of us will be hoping that the ideas that you've expounded do find their way to the people at the top, 590 01:03:27,550 --> 01:03:31,510 the elites, and we wish you every strength in doing that. 591 01:03:31,510 --> 01:03:56,981 So thank you very much, Eric.