B (4:51)

Well, that deprived me of my first line. It's a great honour obviously to give the first of the Ralph midterm lectures. I'm not quite sure what Ralph would have been happier about, one of his sons being leader of the Labour Party or the crisis of capitalism which he foresaw so often but in vain for so much of his life actually coming to pass. I'm sure he'd have been very pleased about both events. I thought I'd just start by telling you a bit about how the book came to be, really, because I'm not. I wouldn't call myself a sort of card carrying member of the Church of England or in fact any of any faith. But what happened was that back in March 2009, right at the depth of the economic crisis that followed the banking collapse, this was a period where any of you here for Paul KRUGMAN'S. Lectures last year would remember that the first six months after the banking crisis saw this incredible plummeting in global industrial production and a contraction in global trade. There was a real sense that the Great Depression Mark 2 was upon us. And so Rowan Williams called together a number of people from various walks of life to discuss the crisis. And it was a pretty ecumenical. There was Stephen Green, now Trade Minister, then head of hsbc. There was Adam Lent from the tuc. There was Philip Blond, whose nickname is the Red Tory, the person who's supposed to be putting the socialism into David Cameron's view of life. It was a really wide collection of people to discuss where it had all gone wrong. There was a sense somehow that.

C (6:34)

The.

B (6:35)

Period between the summer of 2007, when the crisis broke, and 18 months later in the spring of 2009, that something pretty fundamental had gone wrong with the global economy. And that went really just not just wasn't just a superstructure problem, went right to the root of the system itself, that there was something wrong with the system of values that caused the crisis and that it needed some fundamental reform. So that was the. That was the theme of the. Of the meeting. Can capitalism ever be reformed to make it better and to reform it? And I suppose I was there because I'd been banging on like this for the previous, virtually the whole 22 years I've been the Guardian. And people at the Guardian saw me walking around with a very big smile on my face and said, those of a cynical nature said, stop, clock is right twice a day, so you've eventually got your wish. But, I mean, I think there was more to it that for me, there were a number of reasons why I had been banging on relentlessly about how we were going to have this crisis. And the first one was, I'm suspicious of fundamentalism in all its forms. That goes for ridges, fundamentalism. But market fundamentalism, the belief in the absolute sort of power and goodness and efficacy of the market, I think had mirrored that religious fundamentalism and was just as dangerous. And I think that what had happened in some sort of schools of academia was that there was a school of thought which said, markets work, markets work perfectly, and the best thing that you can do is get out of the way and let them do that. And anybody who didn't think that tended to be pushed into the shadows. So the great economic journals were dominated by people of a like mind, and essentially the whole economics profession was dominated by this, what I call market fundamentalism. Paul Krugman mentioned this, I think, when he gave his lectures last year that essentially anybody of a dissenting voice went unheard in that period. There was a sort of sense that it had been cracked. The sort of period from 1975 to the Middle of the past decade, there'd been a period where there'd been a fixed view of the world, that government was the problem. The best thing you could do was cut taxes, free up markets, clamp down on trade unions, give capital absolute full access to wherever it wanted to go, and you would get the best of all possible worlds from doing so. And that would lead to at least the best possible outcomes. Well, I mean, that seemed to be the theory, but it didn't seem to be working that well in practice. I mean, that was the second reason why I was kind of quite keen on talking to Rowan and his merry band of men and women was that I looked at what had happened in the past, and it seemed to me that if those who talked about real business cycles and efficient market hypothesis and rational expectations were right, why did things seem to be going so wrong so often in so many places? And if you look at what happened to the global economy from about the sort of early 1990s, what you saw was a gradual borrowing of crises from the periphery of the global economy towards its core. So the first signs of trouble happened in faraway places, of which we knew at the time very little. So you saw a crisis in Mexico in the mid-1990s, followed by crises in Southeast Asia, in Thailand, and in Indonesia, South Korea and Russia, Argentina. And gradually, these crises were happening with rather too much regularity. For those people who said that these things could only happen once in every 10,000 years or a million years, according to their beautiful mathematical models of how the economy was going to work. The real economy seemed to be working in a completely different way from the global economy. And what seemed to be happening was that the problem seemed to be getting ever closer to the center of the global economy, just as it happened between 1890 and 1929, when exactly the same thing happened, that the first signs of trouble happened in countries like Argentina. And gradually the crisis pushed its way ever closer to the core. And the second half of the sort of historical perspective was that capitalism seemed to work. I mean, the history of capitalism, it seemed to be that capitalism did work better when it was regulated, when there were some moral constraints put on it, when there were some sand thrown in the wheel. And that was the sort of theme of quality of the people who contributed to the book. That was certainly the theme of Philip Blond's essay talking about the need to regulate the markets from a conservative perspective. I mean, this is a sort of whole tradition of restraint, knowing your limits. Zach Goldsmith, now Tory MP for Richmond, came at it from an environmental perspective. His argument was that we just cannot carry on treating the world as though we've got three planets when we've actually got one. That actually there needs to be some sense of environmental restraint. And Rowan Williams came from the perspective that economics, yes, it's important, but. But it's only really part of our entire life, while economics is a very key part of our existence. You can't just have an economic existence and make that totally separate from some sort of moral perspective or ethical perspective. So that was really where all those contributions coming from. I think Stephen Green had. He contributed in the end, but was coming from very much the same sort of. Same sort of perspective. And my perspective was that the golden age, if there ever was a golden age of capitalism, really came between 1950 and early 1970s, when growth rates were higher than they have been since, productivity increases were greater than they have been since, unemployment was lower than it has been since, and the spoils of growth were shared much more evenly both within countries and across the global economy. And essentially, this is a point that Polyani made in the great transformation, really, that the great lesson of the 19th century was that the free market, left to its own devices, was incredibly destabilizing and very dangerous. And you had a whole series of both political and social reforms which attempted to put some curb, some restraints on that market. So essentially, the whole period from 1850 to 1950 was a period of control of progressive interference in the market, be that progressive income tax or old age pensions or welfare states or free state education, growth of trade unions, growth of political parties that represented the working class. All these things actually took the edge of the market. And by 1950, you had a completely different sort of capitalism to the one you had in 1850. And as a result, my view, the system worked much better. A lot of the problems that had been evident in 1929, 32, were actually eradicated by 1950. And you had a much more humane and much more workable capitalist system. The third thing that interested me really, about Rowan's idea was it sort of raised questions about what is progress. And there are a number of. Number of strands. I mean, obviously material progress is important, and we're all very much richer now than we were 20 years ago, or incredibly much richer than we were 250 years ago. And I'm not one of those people who says that it would be great if we could go back to some prelaps area time when we all lived in a pre industrial age. I think the modern age has actually led to incredible increases in standards of living. Life expectancy is longer, we live much longer better lives than we did 250 years ago. But material progress is not enough in itself, very. On its own terms, how does material progress square with resource depletion, with the fact that we are seemingly running out of the basics of life, of oil perhaps, of water and of land? That's the first point. Well, pretty obvious one really. The second thing is, can you really have. Can you really have proper progress when the spoils are so unevenly shared? And this is a point that Lester Thoreau made in one of his books, which was that it's quite feasible to have vast inequalities of wealth. But that doesn't really coexist, that only really coexists with authoritarian systems. It doesn't really equate with democracies, that in a democracy you have to inject some form of equity into the system or it won't survive for very long. The third thing that interests me was this. There does seem to be at the moment a great deal of technical progress. I mean, people talk about this being the third great industrial revolution. So we're going to have biotechnology, we're going to have digital technology. Robotics are going to be to the first half of this century what the steam power and coal were to the end of the 18th century and what the radio and the aeroplane and the motor car were to the first half of the 20th century. But it seems interesting, I think it's certainly a question worth asking. Where is the cultural expression of that technical change? And if there is no cultural expression, does that mean that the technical prose in itself is quite barren? So, you know, the end of the 18th century, you saw there's a great era of romanticism. It's the time of Beethoven, Mozart, Wordsworth, beginning of the 20th century, the great era of modernism in art. Joyce, Proust, Picasso. Where is that? Where is that resonance of the technical progress? So where that led me was, are we actually on the cusp of. Of going backwards? Dare Turner's talked about socially useless banking. We have vast inequities in our society. We've seen and seem not to care that much about them. We have Labour, politicians talking about being totally relaxed, about people becoming filthy rich. But more importantly, I think we've got a sort of dysfunctional global political system that seemed incapable of dealing with the problems that actually led to the crisis. And if you look at the crisis, it's not just a crisis of banking, it's a crisis of global imbalances of a world order where you have, you have one half of the world running huge trade surpluses, one half of the world running big trade deficits. And the money that was rolling around the world as a result of that, looking for a home search for yield, as it was known, found its way into Western economies through their very sophisticated banking systems and actually fueled the asset price booms that I think probably laid at the very heart of the crisis. And a lot of people did some very, very bad and stupid things. But essentially the global imbalances that lay behind this problem remain. So we have a dysfunctional global polity that can't even deal with the things that people really fundamentally agree on. So we've had a trade round that's been trundling on in Doha since the autumn of 2001, which is still not anywhere near being concluded. And yet everybody, every policymaker everywhere, you talk to anybody at the IMF or the World bank or the bank of England or the Fed, you know, you go to the G20, you go to any meeting and you'll find people say we must complete the Doha Round. Yet the Doha Round remains incompleted. That seems to me to be a very, very worrying sign. Because if we can't even deal with problems that seem relatively simple, how are we going to deal with these much more intractable problems, such as how do we deal with the global imbalances, how do we deal with the climate change issue? And I think those are really very big, very big issues. And where we stand, I think, is that we have had the financial crisis and we've had the first part of the economic crisis, but it's quite conceivable to see the economic crisis going on. There are lots of people from Adam Posen to Ben Bernanke, who are worried about the fact that we seem to be stuck in a very low, very low growth equilibrium, that we're not really coming out of the recession, but looming large as an energy crisis, an environmental crisis, and on top of that, I would say a moral crisis and a crisis of value. So where does that leave us? Well, there's a very interesting American, I think there's a historian called Stephen Copeland, he's at the Walton School, I think, at the University of Pennsylvania, who compares.

D (20:39)

The.

B (20:41)

Globalization to the medique, to the medieval church. And he says this, that, you know, generally globalization is a System where you have a very strong central authority beneath that, a system of very weak, warring Princetons. That was the medieval way of doing things. So you had the Vatican, Roman Catholic Church, Catholic ideology, system of very weak, weak states. And that seemed to me to have very, very interesting parallels with where we are today. So, you know, for the Catholic Creed, read the Washington Consensus. For the, you know, for someone who, for the sort of lavish lifestyle of the Medici popes, read the people on their 10 million pound bonuses and they're drinking their 40,000 pound cocktails. For excommunication, read the downgrade from the Standard and Poor's or Moody's. For the, for the rap on the knuckles from the Papal Legate, read the IMF hit squad that comes in with their briefcase full of public spending cuts. And it does seem to me that where we got to by 2007 was something that was quite similar to the Catholic Channel. John is of that creed, so maybe this is something that he can respond to. But we had got to a situation by 2007, I think, rather like the Catholic Church in 1500, where it was riddled with corruption and hypocrisy and absolutely right for Martin Luther to come along. So that, I think, was why we all got together. We all wanted to play at being Martin Luther, nailing our thesis to the door. And I'll finish my 20 minutes by saying this, that we are, I think, at quite an interesting, quite a critical point in this crisis. And we have to ask ourselves, what is going to happen if we go back to business as usual, which seems to be quite a plausible outcome here. Back in the autumn of 2008 and in the early part of 2009, it was absolutely joyous to be a social democrat because we really did think that our moment had come. You know, this was, you know, we'd been waiting for 30 years for our sort of. For the, for the system that we thought was so problematical to face the same sort of crisis Keynesian model that we'd grown up in, had run into in the mid-1970s. And not many of you are old enough to remember, some of you are, I suppose, but at that time there was a sort of fully fledged free market expose of the system ready, and there were off the peg policy remedies for the new right governments to take on board and to run with, which they did with great Vigor in the 1980s. And for those of us of a social democratic bent, we thought, this is our moment, we can inject morality back into capitalism. We can actually, we can make capitalism work for more people. We can make it work more efficiently, more effectively, and we can put the constraints back on the system that will make it work. But what's really happened in that period has been quite disappointing, I think, partly because I think of failures of the left polity, that part of the left simply hadn't done any really serious thinking for a long, long time and therefore were unable to meet the intellectual challenge. Partly because the bankers and the supporters of the system are very well dug in and knew what to do in those circumstances, which was to sort of bend with the wind for a while and then hope that nothing happened. And they've been proved reasonably correct there. And essentially what we've seen is not a renaissance of social democracy, but a move back to some of the tenets of the traditional conservative right. So what started, I think remains really a crisis of the private sector has turned into a crisis of the public sector, at least in the minds of the public. And that I think has blunted the appetite for reform with pretty dangerous, potentially very dangerous circumstances. So where do I see things go? Well, I think it's quite tempting, I think, to imagine that 2007, massive crisis, huge shock to the global economy, big policy response. Capitalism is a very strong system. It's all over. I really don't see it in that way. I think that this could well be the start of a very long period of adjustment, which does tend to be the way that the world works after big shocks. If you think about the period 1914 to 1945 when the older in the first global system broke up, people thought that would be repaired very quickly after the war. Countries would go back on the gold stand. In fact, what we had was a 30 year period which involved two World wars, one Great Depression, a drift to totalitarianism in all its dreadful forms. In the mid-1970s, the great inflation led to a very, very long period of adjustment. Probably took 20 years for that to work its way through the system. So to anybody who thinks that this is going to be a flash in the pan or a very quick, there's a very quick fix this, I would beg to dither. I think that, you know, we've had, and if you look at the history of the last six or 70 years, we had a Great Depression and then we had what's known as the Great Compression after the Second World War where incomes are squeezed, very strong growth. We had the great inflation. We had what Mervyn King and others have called the Great moderation in the 1990s and the early 2000s. To me that was actually quite a mirage. That was a prosperity built around a false perspective that everybody could get rich very quickly by borrowing more money and seeing their houses go up in value. And I think what we're looking at now is something I call the Great Reckoning. And I think that is going to be what we're going to look forward to over the next 10 years. Thank you very much. I'll just go on.

D (27:24)

Right. I'm not here to defend Catholic social teaching, but I will say a few words about that actually later. I want to talk about the book and actually come on the back of what Larry was saying at the end in terms of a. There's almost a generic crisis of social democracy panning across Western market economies. You look at the Labour vote at the last election, it was 29 points. SPD in West Germany was. Sorry, Germany was 23% just last week. In Sweden, I think the social Democrats got 30%. So what should have been an embryonic crisis of capitalism, if you want, turns into a crisis of social democracy. And that throws up some really interesting questions to me in terms of reconfiguring a centre left political project. So that's why I want to sort of touch on, because I'm really interested in the book which is available outside. I'll give it another plug because it is an act of philosophical synthesis in that I think Romeo Rowan Williams says at the beginning it brings economics back to the humanities, which is a very interesting, I think, departure point. And I know it's very difficult following Larry and talking about economics. So I'll talk about some of the more ethical issues that are brought to bear in this contribution and some of the sentiment that I think lies behind it and some of the philosophical questions. The contributions are all very varied. And apart from Larry and what he's just said, what is interesting to me is that they all carry a sort of religious sentiment within them. And I think that's quite an interesting thing to worth to explore because it reminded me just reading through it again this afternoon. I was at the Hay Book Festival this year and the standout thing that I've heard all year was a lecture by Karen Armstrong, the historian of religions. And she was giving a talk and she was asked what religion is about, boil it down. And she returned to some contributions by a guy called Haim Maccabee. Now I'm Irish Catholic, working class and this guy's Jewish, so I don't know that much about the Jewish faith. But she was reciting some of his talks and she quoted him in terms of reference to Hillel's Golden Rule. And this basic proposes that people ask a eminent theologian that they will convert to their religion if they stand on one foot and recite in the time that you have, what is the essence of religious teaching. And the theorem goes something like this. Do not do unto others as you would have not them do unto you. That is the Torah. The rest is commentary. And I think that's quite an interesting thing because Armstrong then goes on to explain how this is the kernel of all religious thinking, essential solidarity. And that individuals are social beings. They are located in social relationships with other people. And there's a sense of obligation to care for one another. There's a sense of duty and solidarity that goes along with it. And I think that's quite an interesting departure point because that comes out of what Rowan Williams says in this book. Why I think that's interesting is because what Larry said, we've been dominated by a form of philosophical thinking that is totally at odds with that notion of embedded social relationships. It's about very much an atomized view of human activity. Larry talked about revolutions in the 19th century. I mean, to me, the standout revolution that's important in terms of what this book seeks to challenge is revolutions in the 1870s in terms of neoclassical economic theory that removes value from being embedded in social relationships or labor itself, and is the subjective preferences of individual people which legitimize people's position in society because that's their rational trade off, because of their subjective preferences between work and leisure. And the interesting thing to me is what this book seeks to challenge is that fundamental proposition that has dominate our economic thinking for literally over 100 years. 130 years. Why is that important? Because I think philosophically you can chart two different fundamental propositions which have an isolated individual, philosophically and politically, and one embedded in social relationships with consequential obligations. You can treat it back to Torrens Hobbes, where selfishness is a guiding virtue in and of itself. Ayn Rand, whatever. And I always return to some of the essays that Foucault wrote before his death on neoliberalism, where he talked about how this hollowed out notion of what the individual is becomes naturalized, it becomes biopolitical. And I think that's what the book tries to challenge, actually, in terms of its conception of humanity and obligation and duty. Why is that important? Well, it's important in terms of the political reckoning around social democracy in this country. The most interesting thing that I always use as a Reference point is Philip Gould, you know, the pollster for Tony Blair's pollster. He wrote a book called the Unfinished Revolution. And in that book he said as the fundamental proposition in terms of his lodestar as regards New labor was that his parents wanted to do what was right, not what was aspirational in his mind. So therefore he criticized that because he believed there was a separation between doing what was right and what you aspired to. And it was a very stripped down, desiccated notion of human material gain which lies at the. Which is the cornerstone of neoclassical economics and the movement rightwards, which sees the state as benign, which challenges the role of the state and civil society and comes down to the consequences of the deregulated free market capitalism which Larry has identified over many years and lies behind the crisis that we are all undergoing now. Now, why is that important? Well, it's been the cornerstone, this notion of aspiration that has lied behind New Labour. If you look at. It's very interesting if you look at the speeches of Tony Blair circa 1994, 95, and compare and contrast them to the final one he gave as Labour party leader in 2004, you seem a much warmer generous language at the start which focuses on I am my brother's keeper, John McMurray, some broader philosophical questions of obligation and duty to others by 2005. It's almost a dystopian notion of winner takes all, where globalization, you either sink or swim. And I think that emptying out of the language and the nature of New Labour tells a real story about how it lost its connection and actually became part of the problem in terms of buying into the sort of Greenspan, Gordon Brown worldview in terms of free market deregulated economics which lies behind the nature of the crisis. The very interesting thing for me is what's happening around social democracy is. Well, I was in Manchester last week listening to Ed Miliband, the new leader of the Labour Party. And in his speech to accept the leadership in the Labour Party, he started talking about the notion of the good society, which actually is at odds with that dystopian model that Blair New Labour ended up with. And it's almost a return to questions of the political sphere being the place where politics is about allowing people to realize their potentials across a number of different virtues rather than just material gain. And what underscores it is a much deeper philosophy which I think could possibly open up a different type of politics across social democracy, which I think is very interesting in terms of its policy consequences in terms of the possibilities of labor or social democracy, developing a notion of a good society which rebuilds a notion of a covenant with the people in terms of getting them housed, getting them work, getting good public services, keeping the environment sustainable. The point is, I think we could be at a turning point in terms of what underscores social democracy with reference to how you conceive of the individual in society. And I think that is really interesting because this exercise of synthesis in this book I think is one of the first attempts to flesh that out with recourse to the economists, but also to religious contributors as well as philosophers. And that exercise of synthesis seems to me to be a very interesting space now that the center left could develop around. Put it another way, this book posits that liberal free market capitalism is and of itself not sustainable. In that the notion, the Greenspan model, that there were self correcting elements within capitalism that could lock in growth indefinitely was wrong. Now empirically that was untested for 15 years where you had 60 quarters of growth and then the music stops. Lehman Brothers go for chapter 11. When's that? Mid 2007. And these are the first attempts to grapple with some of the consequences of that failure. The second proposition I think comes out of the book is alongside that it's prone to failure, is that we have to deal with the social wreckage that goes along with it. Patterns of well being, mental health, loneliness and all of those other social characteristics which have been away from the political sphere for so long because of this notion of an atomized notion of aspiration and the accrument of ever more flatter wider screen TVs. So I think it is an interesting sort of philosophical synthesis. Now why do I think it's important? Well, I think that notion of economics, a synthesis with philosophy and theology and some of the religious contributors in the country, allows for the possibilities almost of a virtue politics here. Now why is that important? Well, I think the social democratic sphere has to be reclaimed because I have a fear of a different type of populist politics coming down the road in the context of dramatic cuts over the next years of couple, couple of years. And I'll give you one allegory for what might be coming. I was going to watch a film the other day with my wife and we were walking down the road and she pointed out to a child in front of me and I couldn't work out what she was meaning. She said look, look at this child. And I still couldn't get it. And she said look at this T shirt. And Walking down the road was this big African guy with his child and the child had a T shirt and on its back it just said Pastor Jack Jones. I didn't understand what that, what that meant, but she explained to me, it's obviously at the height of this debate around a mosque in Manhattan. And I thought it was quite interesting coming out of a service, people prepared to wear these Pastor Jones T shirts in London in 2010. And what was that about? And the more you inquire, you can, you can identify linked into phenomena like the English Defence League on the streets. Literally a street fighting machine in this country that's been developing as the bnp, which is older, collapses. You see quite a populist fascistic street army developing alongside links into more intellectual critiques of Islam and certain evangelical movements. And there is an embryonic Tea Party that could be moved, moving in this country over the next couple of years in the context of economic and social rupture. And I think it's incumbent for social democracy to reclaim. Well, Raymond Williams once said to be truly radical is to make hope possible rather than despair convincing. And that dystopian model that's underpinned new labor or neoliberal labor if you want, is at an end and has to be reforged into something that is social democratic. And you can only do that by reclaiming a politics of virtue based around contesting this emptied out, desiccated notion of human acquisition. Thanks very much.

C (39:37)

Well, I'm very pleased to be here to be asked to comment on this book, which I am very pleased to have had a chance to read and I recommend that you buy it because I've met the publishers and they seem to be very nice and I wish them well. But I have to be honest and say I don't share the outlook of most of the people in the book. Although it is a book made up of a range of different perspectives, I don't share that outlook and I certainly don't share the outlook of the people on the stage who have been speaking to you so far. I don't agree with the critiques that's been offered of either the financial crisis or of capitalism, which I think has been to my mind too much of a caricature. It has not really recognized the diversity that there is in the perspective that has been criticized. And I don't think the book really gives us really a very deep critique of financial capitalism. And I think in fact, to my mind you can find a much more powerful and deep critique of this from many free market liberals who have been at odds with one another for the last 50 years, perhaps at least going back to the Bretton woods agreement. So I have my reservations about the book, but on the other hand, I do think you should read it. I just don't think you should read only this book. But let me come to the topic of this seminar, which is actually not just the book, but the question that we were asked to consider. Can capitalism be moral? Or capitalism, can it ever be moral? Now, the title is, if nothing else, a little tendentious. When I saw this title as someone who was obviously picked because he was going to defend capitalism, I thought of a question very famous in have you stopped beating your wife? And of course, once the question's been put, it's very difficult to say, look, my wife's just fine, even if you don't deny it. Anything you say will be read as meaning, the gentleman doth protest too much. So I was really asked here to protest, but I'm just not going to, because if I do, well, then I'll be hanged. So I'm going to try to answer the question, can capitalism ever be moral? And in good academic fashion, I have to tell you, before you can answer this question, you have to ask, what is capitalism? Now, I'm not going to go through Econ 101 or even Political Economy 101, but I'm going to try to give you some kind of answer to this question. So what is capitalism in 30 seconds or fewer? Well, firstly, it's an economic system, okay? So you've got to contrast capitalism with other economic systems, if you want to consider what it is. So you might contrast with socialism or with feudalism, but you wouldn't contrast with other ideologies, say, like conservatism or in another sense, socialism, which is not only an economic system but also a political ideology. Now, at the core of capitalism, at least, I'm going to submit to you, there are at least two things. One is the importance of exchange or trade. If you want to have capitalism, you've got to have a trading economy, an economy in which people exchange things. Secondly, I think just as importantly, it's got to be an economy in which everyone has the right to trade. It accepts all comers, so you're not excluding some people from trading feudal systems. There are many sorts of economic systems where there's trade, but that's not enough. Everyone's got to be allowed to enter into the marketplace. But there are some other things that are necessary for this to become capitalism, and not just any system of exchange. Because after all, Aboriginal people in Australia were exchanging things for a long time, but no one would say they had capitalism. Well, I think you need a couple of other things. Firstly, you need a system in which the productivity of labor is increased by the use of technologies. And I think by technologies here, I mean both physical, very important, and organizational, which I think is even more important. So primitive exchange does not give you capitalism because there's no capital. Capitalism deploys capital. Capital is not just lumps of stuff. I think it's systems that allow you to increase the productivity of labor. So you need that something else. You need to understand what capitalism is. Capitalism is a system in which production serves no predetermined end. What is produced in a capitalist economy is just what people or groups of people create in order to exchange for other things that others create. There's no agent, single or collective, who determines what are the appropriate ends. So these are the things you need if you're going to have capitalism. Let me then make three observations about this. Firstly, capitalism has a brutal side to it. If there are no set ends, people will produce what they want and and demand what they want. Those who produce what no one wants or wants any longer will have to change or just lose out. No matter how valuable they think their products, no matter how hard they've worked, no matter how virtuous they are. No one describes this aspect of capitalism more forcefully than Marx. And I'm sure most people here at LSE have read the Communist Manifesto. If whole ways of life have been built premised on the idea that a community has something to offer and its products are suddenly no longer wanted, that way of life will die. For example, the whaling industry collapsed in the 19th century when John D. Rockefeller started producing kerosene too cheaply for whale oil to compete. We had peak oil. In fact, in the 19th century century, it was just whale oil, not the black stuff Blockbusters. The video company destroyed many small video stores, but it's now being destroyed by Apple TV video Online capitalism feels no regret or remorse. It's like the Terminator. It's pitiless. Milton Friedman, the liberal economist, said that under capitalism, people were free to choose. John Romer, the socialist economist, said that under capitalism, people were free to lose. Both are right. One freedom goes with the other, at least in capitalist economic systems. Second observation, capitalism itself is indifferent to culture and exists in many different societies where the rules governing exchange may vary. Capitalism does not require one specific culture or produce one specific culture. Capitalism is possible where competition is possible. Competition can produce A great variety of cultures and destroy a great variety of cultures. Third observation. Very few people like capitalism, least of all capitalists, especially established capitalists. An inevitable part of any capitalist economy is a network of groups trying to shelter from the effects of competition, which is to say from the effects of others trading. They do this by trying to stop some others trading, by trying to restrict what some others can produce, or by trying to to require others to take what they produce at the price that they and not others prefer. If you want this described in a phrase, I claim no originality for this. Privatize gains and socialize losses. That's what goes on in capitalism. Now the question is, is what we have capitalism? Well, yes, it is almost everywhere, but certainly in the countries of the developed West. I think also in most of Asia, a lot of Africa, because we have trade, we have great labor productivity as a result of technological innovation, we have competition. But we also have what every capitalist society has. People trying to rewrite the rules of exchange to their own advantage. What varies from time to time and place to place is who is successful at rewriting the rules. And what also varies is the reasons given for changing the rules. Here are some of the reasons I think are often given for changing the rules. National security. This has become very popular in recent times. Economic growth, full employment. Securing the future of our children. Protecting vital industries, services, traditions. Preserving our cultures. Protecting our communities. Increasing virtue, fairness. I'm sure you could think of many other reasons people have offered for rewriting the rules in their favor. Here are some reasons that not often heard. I make things no one wants. My business practices are outmoded. I want to live this way. Growing apples on a small unprofitable farm in France. My re election depends on it. Our party's reelection depends on it. Obviously, I think these are some of not all the real reasons, but some of the motivations that are also there for trying to reform the capitalist system. So can capitalism be moral? Can it ever be moral? If one thinks of capitalism as a system built on exchange, if you like, put it in a nicer way, norms of reciprocity, then capitalism is by its nature moral. To the extent that reciprocity and equality of right to ply one's trade or hawk one's wares reveal a kind of morality. But if we recognize that capitalism will always provoke people to try to change the rules of the game to suit themselves or their favorite constituents, then I would say that capitalism will always bring with it immorality. The question is whether it will bring with it More immorality in the sense of self serving conduct than any other economic system. You can guess what I think. So can capitalism be reformed. Now? The answer to this question, I think depends on your standards and perhaps on your nature as an optimist or a pessimist. If the thought is that self serving behavior could somehow and should somehow be eradicated, I think the prospects are limited. Business and conspiracy to defraud the public go together like canes and deficit financing or like political campaigning and promises of a new page chapter dawn era well knew anything really. If the thought is that self serving behavior might be reduced, the prospects are better. But I would not be optimistic. Now many people who have contributed to this book think differently. It is in many ways a book, I think, full of optimism that clear thinking, hard work and little goodwill could produce some serious reform. I'm not so optimistic. To effect reform you need reformers, but not just any reformers. You need the right reformers. But as we've seen, capitalism by its very nature creates people who want to reform it only in their own interest. Commenting on Plato's ideal city ruled by the philosopher guardians, Juvenal famously quipped, but who will guard the guardians? Well, when it comes to capitalism, one could just as well ask who will reform the reformers. Thank you.

A (53:02)

Well, just in case you thought there was going to be a consensus on the panel, I think I am tempted as the chair, before we open up the questions to ask Larry or John, would they like to respond to that just for a moment because it would be interesting to hear how you might respond to it because it does, after all, suggest a very different kind of theoretical and political and ethical position than your own.

D (53:32)

Well, I am, I'm not an absolutist. I mean, I just, I'm pretty pragmatic and I don't want to, I don't want to. About 30 years ago, the Labour Party was, had a, had a flank that wanted to abolish capitalism. I think it's fair to say they wanted to in effect invite the Russians in and abolish the police and a whole of other different things, you know, and it didn't get very far. And I'm a fairly pragmatic social democrat. So to me this is in the inches really, this debate about how you make the place more equal, more just how you struggle to give people. To quote my mum's favorite priest, Oscar Romero, those with, those with a voice should be the voice of the voiceless. It's a question of basic democracy, basic inequalities and Trying to blur the edges of some of the extremes that I seek to represent. If you die now, that might not be, you know, pure and clean, but I don't deal in that world. My world is very practical, trying to get people a job or a house or. But to render that intelligible, you have to. To seek to land it in terms of how you understand human behavior to be. And I think people aspire in their street, in their neighborhood, to build a better street in neighborhood, and they have a sense of obligation and duty to their neighbors. And my own cursory reading of economic philosophy through the ages is that there was a certain revolution in economic philosophy which actually dominated the political sphere increasingly through the ages, especially after the era that Larry talked about, which reached its. Which I think you can have different epochs and understand the world through different epochs. And I think you can isolate an era from about the late 70s through to probably 2008. And you can describe that and compartmentalize it as an era of neoliberalism where certain political philosophy willed out, which is simply aimed at. To strip away some of the checks and balances, the intermediary institutions, the role of the state, which actually safeguards the people I represent. So my job is to defend that and try and make the place more equal.

B (55:42)

I'd say, I think two things, really. I agree that there are many varieties of capitalism. If you look at the Swedish system of capitalism, it's entirely different from the French system of capitalism. Look at the Chinese variant of capitalism. It's completely different from the Italian system. I think the critique of this book is essentially about the Anglo Saxon variety of capitalism, which became, I suppose, the sort of dominant model over the last 25 or 30 years and threatened, I think, to become something of a monoculture. I mean, it did become almost like a monopoly, a monopoly form of capitalist. And that's the first point really, that capitalism ended up sort of eating its own babies. And the second thing, I suppose is that the crisis itself exposed the limitations of the theoretical model. I mean, there is a perfectly justifiable political response to the crisis, which is that the policymakers should have done nothing. Actually, the best thing they could have done would be to assume this was just a wave of creative destruction, allow the banks to fail. And that would have been the best way to have dealt with it. You'd purge the system. It's an enormous capacity, and out of the rubble of the rottenness would emerge a better world. And I think that's an entirely justifiable intellectual position. But not one that I think bears any relation to real policy making because there's no policymaker. It's not just that policymakers are looking, looking out for their next vote or the next election, is that they know that if the banks had been allowed to fail in that sort of very brutal way, and capitalism is brutal in that way, that it would have caused much greater misery than it already did. And I suppose the justification of the book is can we actually without. Like John, I'm not an anti capitalist. I think that we can make the system better. The question is, does the crisis lend itself to a different way of doing things? I think if we just assume that you can just carry on business as usual after a crisis of that magnitude, that's a pretty difficult thing to argue. And there seems to be two ways of going. Either you go with the complete Hayekian, let the system purge itself, or you go with reformist strategy, or you go to the other extreme and say that, you know, this is the final collapse of capitalism around the corner, which I don't believe.

D (58:10)

Just one thing, just one. Correct. The book isn't a book of the left as far as I read it, Larry, either, you being the editor, it seems to me there's contributions from the centre, the left and the right. So I mean it.

A (58:21)

Well, would you like a brief word.

C (58:26)

Before we open up? Sure. Just very briefly, firstly, with. With respect to John's observations, and I recognize that neither person on my right here is suggesting the overthrowing of capitalism. The issue was reform rather than transformation or replacement. So to that extent I completely accept the idea that the thing to do is to think about small changes and small reforms that might be made. But on the other hand, the language of the book is of a systemic disaster of an entire economic system. Now, if that's the language that is being put forward, then that's the language in which I have to address the issue. Now, with respect to Larry's point about there being varieties of capitalism and the books being focused mainly on the Anglo Saxon model, I think. I think what's not clear to me here then is how that is a critique of capitalism. I mean, it could still be, but why isn't it, for example, not a critique of the state? I mean, after all, in this case, what we've got in all of these economic systems is an intertwining of economic systems and systems of political organization. They produce their own distinctive characteristics, their distinctive political economies. Well, if we're going to say this is a critique of capitalism, we've got to Disentangle the economic bits, if you like, to explain why that is the case. And I couldn't quite see this coming out of.

B (59:56)

Well, the answer to that really is that we didn't see this as a crisis of the state. I mean, we saw this as a crisis of too little state rather than too much. And actually we saw the problem as the state being stripped out of the picture over the last 30 years. Regulations, the rules and regulations that were imposed after the Great Depression is being stripped away. And therefore this to the contributors was not a problem of the state, it was a problem of the market. Too much market, not enough state. That was that really our critique?

A (60:27)

Okay, if I could just hold you guys here just for a second and come to the audience. We'll take questions in clusters of five. We'll come back to the panel. Obviously, questions should be short and tight, not smart speeches. We've had a lot of those. So we want a different kind of discourse so we can get some arguments and discussions going. Let me just see where the hands are roughly, so I can get a sense of who wants to ask a question. Starting. Yeah, down there. Yeah, yeah, we need a mic over here. And then we'll come to this gentleman here and then move back. Do you want us to identify ourselves? Eva Marie, and I'm editor of Global Policy. Eva Mariana, LSE Governance Editor of Global Policy. I'm sort of on Chandran's side here, but that's.

C (61:24)

By the way, I was struck speaking to Larry Elliott and John Quettis about the asymmetry in your analysis of capitalism and the social. And on the one hand, it seems to be everything that's wrong is capitalism. And so therefore something. You know, you've already embedded the analysis and the critique and the response to it in one go, but the same doesn't appear for the social. So you seem to have a much more deductive approach to the social. In other words, the social is not seen as people competing, people being violent. All the nasty stuff is not seen as social. But social is somehow up there in an ideal world, but capitalism isn't. And those that doesn't seem analytically quite coherent or logical to me.

A (62:10)

Thank you, gentleman front. And then we'll move back and come up there in just a moment.

B (62:17)

This was aimed at Chandras. Really? You said that capitalism can't be moral and it's competitive and brutal is composition not in human nature. Isn't everything competitive? So what I'd like to raise is what would you class as moral? What is morality?

A (62:38)

Okay, big set of questions there. Yeah, gentleman at the back.

B (62:48)

Yes, thank you very much.

D (62:49)

Robin Smith from the Systemic Fiscal Reform.

B (62:52)

Group, Cambridge based economics think tank.

D (62:55)

I think there's a bit of a crisis with the term capitalism here.

B (62:58)

I think it's really monopoly power we are talking about, so monopolism, but that's just semantics, I suppose. My question is, I'd like to ask the panel about what they think about.

D (63:10)

The difference between earned unearned incomes and.

B (63:15)

Do they think unearned incomes are immoral? And if they do, should we abolish them? Now, let me just remind you of.

D (63:24)

What the biggest unearned incomes are pretty.

B (63:27)

Much in the world. But the same applies in this country. The institution of private property and land and the sovereign right by being taken away from the people to create the people's money by private corporations banking. The total combined amount annually is £400 billion. Do we think that is immoral? Unearned incomes?

A (63:52)

Thank you, gentleman at the back.

C (63:56)

Peter Chalam, Christian Council for Monetary justice the Abrahamic faiths are based not just on the gold, but on a double rule of love God and love your neighbor. And the love God in modern theological understanding, in some quantum theology, means that we have to take all species on Earth seriously. And I feel that the discussion so far has really not taken account of the great planetary boundaries we have recently crossed. There are so many of them that we, we are looking at a situation we have never known before. And so to view it simply from past examples is highly dangerous. And we really have to understand the laws of nature and build an economy within those laws. Do you agree?

A (64:46)

And the last of this five.

C (64:51)

My.

B (64:51)

Question is, John Cronus, do you believe, can capitalism only draw its morals from religion, or will the human need to.

A (65:00)

Benefit oneself always make capitalism immoral? Okay, well, can I just, can we just go perhaps from Larry down, picking up those issues that are addressed to you as concisely as you can so we can get another round of questions in.

B (65:18)

I mean, I'll take the question about the last question was to John, take me in reverse orders, planetary boundaries. I totally agree. I mean, I think I said that we're treating the planet as though we've got three of them. In fact, we've got one of them. And I think that, you know, to my mind, we're not just facing a financial problem here, but potentially facing an energy problem and an environmental problem. So there's a triple crisis here that probably needs some, you know, once we've dealt with the financial crisis, if we have, we need to move on to dealing with the other crisis. So yes, I totally agree that we are running up against resource problems and the boundaries of our space. Yes. And the hope I think at the moment is that technological progress will deal with that, will increase productivity so much that we can actually extract more from the limited amount of resources. I think that's quite a challenging assumption. The question about monopoly control of allowing the banks to collect their own money. This is a huge argument which we didn't really get into in the book. But I think it's a. I mean there is an argument, I think that the banks the control of money should be under the control of the government and that banks should be prevented from using their power of fractional reserve banking. A whole different issue. But I mean it's something that we can get into. I mean, I think the other question was about did we ignore the social side and just look at the problems of capitalism but not the problems of society? I didn't really accept that actually. That's not what we were saying. I don't think either John or I, that we were really talking about. The social problems that capitalism has caused. That's the base that we weren't. I don't really. Maybe you'd like to expand your question. I didn't really understand what your critique of criticism was.

D (67:34)

I'll just come there, Larry, because I thought the basic proposition of the book actually was one, that the current system, the current architecture is unsustainable and two, it creates all sorts of collateral social damage in terms of, let's call it under the general category of well being. And the task at hand is to resolve these two contemporary challenges of our time and that you can locate them in historic analysis, in terms of historic turning points and epochs of capitalist evolution or progress. And what are the tensions within it and what is the nature of the epoch that maybe we've just come through or we're at that sort of space when the old is possibly dying. The yet is big to be constituted and it's the interregnum. I think that's Gramsci. It sounds familiar, but you know, that's the point, I think. So it's not an either or thing about the economics or the social sphere. I think both are actually quite adequately dealt with and seen as parallel issues for the same sort of overarching projects. That's why it's an issue of synthesis, because for two, look, the economics is dominated by the mathematician rather than the humanities and that's explicitly stated front and center in terms of the objectives of the book. And that's why it's an issue of trying to return to what we aspire to be as humans, actually, which is the guy at the top? Do we have an acquisitive side? Sure. I mean, I'm not a neuroscientist, so I'm not really equipped to do that. But there are issues about contemporary debates within neurosciences about what it is the human brain to be, and can you nurture a more compassionate side to the human brain through a more generous social sphere itself? You know, there are different physiological capacities that society has a role in trying to nurture and condition. And finally, on the point there, I agree with Larry about that having a broader definition of planetary issues as well, in terms of sustainability. It's not just economic sustainability, Chandra.

A (69:31)

And then we'll come back to the audience.

C (69:33)

Okay. Well, there were three questions addressed to me. One was from the gentleman in the front about if capitalism was so brutal, what was morality? Paraphrasing your question slightly. It's too big a question, obviously, to answer fully here, but let me make at least a couple of points. One is that exchange is not the whole of morality. So I don't want to say anything to suggest that. And certainly Rowan Williams makes this point, I think, very well in the book. It's only a small part of morality. Also, I think there are two questions here with respect to capitalism. One is the morality of the social structure, if you like, of the economic structure, and then the morality of people within it. And I think those two things have to be addressed separately. I mean, I just can't give you the answer in about 30 seconds here that you would need. On the issue of the differences between earned and unearned income, I guess I'm not so persuaded by the significance of the distinction. Perhaps I would need to hear a little bit more about how that distinction is going to be drawn. Certainly with respect to private property, one would have to get into a whole argument about the purpose of such an institution in the first place, and then into the question of how one comes to acquire property in the external world. Again, these are very large questions. On the issue of money, though, I think I'm a bit more sympathetic, because if you ask the question as a question about why it is that the power to create money has been monopolized, I think that's a very good point, and I think it's a very bad thing.

B (71:23)

But that's a point where the left and right often do agree. Hayek had a very, very strong critique.

C (71:29)

But, you know, That's a broad philosophical point. I'm not sure that if I go and have a word to Mervyn King about this anytime soon, he would be very interested. So, yeah, you're right about that. And on the issue of, you know, a philosophy to take to account the planetary condition and building an economy consistent with the laws of nature, the thing that worries me about this question is that I think it presupposes something that we haven't got, which is the ability to design the planet, let alone the economy. And so if we're asking these questions and thinking about reform in that way, I think it smacks of a kind of hubris that I find very troubling. It's not to say that there aren't serious problems to be addressed, but we've never designed the economic architecture of a whole country, let alone of the globe, let alone the economic and ecological architecture of the entire world. So I think we have to think in much smaller terms. That isn't to say we can't consider big questions, but I'm not going to offer any kind of solution here. I defy anyone to come up with something sensible.

A (72:50)

That's not an invitation now. Okay, Robert Wade, my turn.

C (73:00)

Thank you. Robert Wade, lse, Do you think that it makes sense to say that Scandinavian.

A (73:09)

Countries, the type of capitalism in Scandinavia is more moral than the type of capitalism in Britain?

C (73:18)

For example, the recent UNICEF study of child well being in 21 advanced capitalist.

A (73:26)

Countries ranked Scandinavian countries at the top.

C (73:30)

And ranked the United States almost at the bottom. And it ranked Britain at the very bottom out of 21 countries.

A (73:37)

Would you therefore be prepared to say.

D (73:39)

The Scandinavian countries have a more moral.

C (73:42)

Type of capitalism than Britain and the United States?

A (73:48)

Good question.

C (73:49)

Yes.

A (73:50)

Gentleman there with his hand up.

C (73:59)

Yes. Brian from I'm a grad student here at the lse.

B (74:04)

This is for Esther Elliot.

C (74:06)

I was going to ask you made.

B (74:08)

It quite clear that you see this.

C (74:10)

As a problem of too of not enough state. I wanted to ask how you would respond to the Austrian argument that a.

B (74:19)

Big cause of this was state run central banks that make artificially low interest.

C (74:28)

Rates, thus allowing cash to be lent where no real cash actually is, thus making a very unstable system.

A (74:41)

At the back. Yes.

D (74:42)

Hi.

A (74:43)

Oh, that's loud. I was thinking about the issue of the different types of capitalism and I think that whichever system you are talking.

D (74:51)

About, it's grounded to some extent in.

A (74:53)

What is orthodox in economic thinking. It struck me going through lse that.

D (74:59)

You can learn about financial mathematics for three years but you would never know that John Smith also, sorry, Adam Smith, also wrote about moral philosophy. And so do you think perhaps to.

A (75:10)

Either of the professors, that it is a problem with the way that economics is taught?

B (75:15)

And should all the economics graduates be.

D (75:17)

Forced to do community service and learn about moral philosophy? That's a very good question. That is the nuts of it.

B (75:30)

Gonna direct my question to Larry Early. Can you straight up a bit, even with the mic?

C (75:35)

I'm going to direct my.

B (75:38)

All right. Okay, good. I can hear you now. Okay, I'm going to direct my question to Larry. He said that regulation, lack of regulation, is what caused our current crisis. Our. Can't remember the term. I'm sorry. We have more regulations today than we.

D (75:56)

Ever have in history. If you took piles of books and.

B (76:04)

Stacked them up, you would have much more than you ever had in fine.

A (76:09)

Print than you ever had before.

B (76:13)

How could that be? How could a lack of regulation be the cause with that being the case?

A (76:18)

Okay, thank you. And then finally, a question at the front in this round.

B (76:28)

Thank you. And that's following on from that question. My name is Tarek York. I'm an investigator with the Office of Fair Trading. I've also worked in various other government departments, including the FSA, where FSA regulations, if stacked up, would be 8ft tall. Perhaps the question should be not so much that we don't have regulation, but we don't have the right type of regulation. Should we move towards the state regulating only to make capitalism work well, and that is to protect capitalism, or should we go further and to make sure that we protect ourselves from capitalism? How far should we go?

A (77:05)

And finally, if I may abuse my position, I would like to ask, as it were, both sides, the question. I mean, it seemed to me that what was missing from Larry and John's remarks was any sense that underneath the crisis, there is also going on a changing balance of power in the world, the drift of economic power to the east. And with this pluralization of power and the emergence of multipolarity, we see a pluralization of political discourses, different conceptions of the nature of a political regime and what the political subject means. This means in turn, that there is no, in Rawls's sense, overlapping consensus in the international dominance remain any longer. Not only is the multilateral order of 1945 under pressure, but the discourses that underpinned it have become relativized. And you see that in the playing out of disagreement and the use of language and so on in Doha, Copenhagen discussions of nuclear proliferation and so on and so forth. So I think that makes a challenge of how one reframes capitalism so much more fundamental and much more difficult.

B (78:09)

Difficult?

A (78:09)

It's about whose morality, which morality, on what basis, in a much more multipolar world, makes the problem even harder, in a way. And so it's not capitalism and morality, but capitalism and whose morality and which morality, under what conditions? And to Schindran, I'd really say, I mean, your account of capitalism is intriguing and compelling, but is it really an account of what we have? You said nothing about the concentration of capitalism, the centralization of capital, oligarchic and monopoly tendencies. Are these just dysfunctions of your system or are they endemic? And you said very little about how different sectors of capitalism can become dominant over others. So we have seen the rise of financial capital and its dominance in certain countries over other sectors of the productive economy. And then this closes off politics. It closes off choices. When you have power and constitution, concentrated power in certain sectors, this is then a certain kind of capitalism which delimits and restricts the range of political choices open to polities and to politicians. And that's why I think after the Great Crash, as it were, we've seen so little fundamental reform. And I just wonder how you'd respond to that. So may I give you both two minutes each to sum up?

B (79:23)

Okay, well, I'll just run through.

D (79:26)

Through.

B (79:27)

I mean, I'll start with yours, actually. I think it's a very interesting question. I mean, I did raise the question of the lack of a global polity. I mean, I think what seems to be dangerous about this from a sort of international relations point of view, and why there seems to be some parallels with the period 1914 onwards is that now, as then, we are seeing a big shift in the international balance of power. If you look back to 1914, you saw some parts of the world obviously in secular decline and other parts of the world becoming real world players. So Austro Hungarian Empire, Ottoman Empire, Britain, France to an extent, were on the wane, and you saw the rise of new big emerging powers. Japan, Russia, America. You can see the same thing happening now. There are countries in the world which look to be in secular decline and others which are growing very rapidly. The global balance of power is changing. That fractured state of the world makes things potentially much, much more dangerous, I think so. I think that's a very, very, very valid point. Robert's point about. Is the Scandinavian system more moral? Well, it certainly seems to work better. I mean, that's the. I mean, that's what I would say. I mean, the Scandinavian system, you know it does have quite a lot of, you know it's a system that has very high levels of taxation, very high levels of public spending, does seem to have relatively good out social and economic outcomes compared to the US and the uk. Quite strong high levels of growth, high levels of wellbeing. So is that more moral? Well I'd say it probably is yes. Myself state run central banks, they had a big part in the crisis that's for sure. I mean they certainly cannot be absolved of responsibility but I think they actually bought into the free market paradigm. The idea that Greenspan was some sort of Marxist revolutionary running the Fed seems to me to be pushing it a bit. I mean he really did believe in the whole markets, markets work and the more market the better. So I mean I think it's a general problem of economic philosophy. Should economics be better at all? Absolutely. I thought that was a very good question. I think one thing I didn't add in my comparison between the Catholic Church circa 1500 and today was that the equivalent of medieval Latin is today differential calculus. It's a way of actually making things more obscure and keeping the broad populace away from the subject and just leaving it to a small priesthood. So a period in the paddy fields or the equivalent there will probably be quite good for large numbers of economics staff in my view. Was the problem caused by a lack of regulation? Well that seems to me to be a bit of a no brainer really here. London was actively marketed as a light touch, low regulatory offshore centre where you could do pretty much anything you liked because that was what they London was going to be a financial centre. It was pretty much anything goes. And I think the question have we got the wrong. Did we have, it's arguable we had too much regulation of small firms. I mean what the FSA seemed to me to do was concentrate very heavily on micro regulation to stop bad hats from ripping off consumers. But it sort of took his eye off the 6,600 pound gorilla in the room which was the lack of regulation of the banks and what they were up to. So you know, do we need to protect ourselves from capitalism? Yes, we do, definitely.

D (82:46)

I think the point Larry made about positing whether this is a crisis of over regulation is partly linked to the question of the isolated nature of economics as a discipline actually that you get to the logical conclusion that this is a crisis of over regulation because of the purity, the abstractions involved in the actual modeling and conception of economics within the academy and you can chart that over a long arc of 130 years. And I think we reach its logical conclusions where we see this crisis of the last few years as crisis of overregulation. And sitting where I do, where I deal with on a day to day level, the sort of where in East London with the lowest cost housing market in Greater London with patterns of demographic change, unprecedented. You've almost got globalization ripping through a micro climate. And to see the economic and social consequences of that. I don't see that empirically as a crisis of archives being over regulated and to protected either. But I do see the logic from how you can get to that position because of the purity and the abstraction involved in the emptying out of economics from a satisfactory birth in philosophy and sociology and the society generally in the humanities, which is precisely what this book's about. Not from a left wing perspective, I repeat, but from a. And it's a very interesting debate going on on the right, as there is on the left around this notion of a good society encapsulated in David Cameron's notion of a. What they call it, big society. And Philip Blond, the contributor in this book, there are parallel debates, there are debates around what is behavioral economics or compassionate economics on the right which actually seek to fundamentally question some of the building blocks of the neoclassicists. And I think that is really interesting because it's not a left wing assault on capitalism, it's an assault. It's an attempt to render economics intelligible in terms of the world we inhabit as citizens, as participants in the world, as public policy makers, as representatives and actually as citizens with a view to helping ameliorate the worst elements that this system creates. So that's what I think the task at hand is. That's why I think it is an obligation. It gets back to certain moral questions about. I think actually if you go through the empirical data in terms of the social indicators of well being in the Nordic Scandinavian world, you can argue that the community is better catered for as well as having more resilient economic institutions as well that have buttressed themselves against the sort of the velocity of change, the extraordinary things that are ripping through the deregulated Anglo Saxon model over the last couple of years. So I do think you can make judgments about them as well as politicians and public policy makers, because you have to have preferences, you have to have a view of the world in order to seek to participate in those debates.

C (85:33)

Finally, on the question of Scandinavian models of capitalism, my problem with this issue is that not all systems work in the same Places. I don't think it makes sense to say this model works better in a northern country with one language and 8 million people. We can transfer it to a very different place with 60 million or another different place with 1.3 billion. I spent most of this summer in Singapore and a bit of it in Finland, both countries of about 5 million people. In Finland, the national pastime seemed to me to be going out to nature, collecting mushrooms and communities with the environment. In Singapore, the national shopping system seems to be shopping. That's the, you know, you can't transplant Singaporean capitalism into Finland, but, you know, both seem to work pretty well. Neither of them may be useful for the United States or for Britain. Is there a problem with the way that economics is taught? I don't want to be critical of my economics colleagues. I will say that I share the. The wish that we had more economic history and more history of economic thought, but, you know, it seems to me that there's actually a lot more interesting work going on in economics than people have acknowledged. And if you want to see this in an informal way, go and get yourself a copy of the first edition of Freakonomics, which is a layman's account of some of the things that economists are doing. And I think they're not quite as bad as people are making out. Should the state regulate to make capitalism better or regulate to protect us from capitalism? Well, as someone has already pointed out, there's always been regulation. Capitalism and regulation go hand in hand. So I think the real issue is whether it should protect us from capitalism. And one of the points I made in my presentation was that, well, there are always people asking to be protected from capitalism, especially capitalists. Who exactly are we going to protect? From whom are we going to protect the French farmer from the Kenyans? I mean, we need to be more specific. And then I think we can start talking on David's question. There are many things that I didn't cover, including the fact of the concentration of capital, the monopoly power, the rise of financial capital. I think these are all very important issues and I think that there is actually urgent reform needed. I don't have the tools to describe the current situation. I'll just say I'm a great fan of the work of Kevin Dowd, whose recent book even I can follow. I think it's called Alchemists of Finance. I can't remember the exact title, but it's a. A very detailed look at the way in which current financial capitalism has emerged. And he's a free market economist in a way, but it's extremely critical of financial regulation and the way it's developed and extremely critical of that particular sector. So I think there are important issues to be looked at here, but I don't have the expertise to go into any more depth, I'm afraid.

A (88:49)

This brings us to the end of this session. I'm sorry. We have rules here, sometimes for good purposes, because rules underpin the basis of social collaboration and possibilities. Staff have to go home and some of you have to go off to enjoy the good life, such that it is. So it remains for me to thank our panel.