Kind: captions
Language: en
the real Foundation of Marxist political
philosophy was the economic argument
that there would be a tendency for the
rate of profit to
fall and that tendency for the rate of
profit of fall would lead to capitalists
battening down on workers harder paying
them less than the subsistence uh a
Revolt by workers against this and then
you would get socialism on the other
side so his he what he called the
tendency for the Rader profit to fall
played a critical role in his explan for
why socialism would have to come about
if you look at Marx's own vision of the
Revolution it was going to happen in
England okay the advanced economies
would be first to go through the
revolution the Socialist the the
Primitive economies would have to go
through a capitalist transition and this
is the difference between the menik and
the and the bolik so the menik and hman
Minsky came out of the menik family the
menik believed you had to go through a
capitalist phase Russia had to go
through a capitalist period before it
become socialist the Bolsheviks believe
that I could get there in one
go the following is a conversation with
Steve Keane a brilliant Economist that
criticizes much of modern economics and
proposes new theories and models that
integrate some ideas and ditch others
from VAR thinkers from Carl Marx to John
May KES to Hon Minsky in fact a lot of
our conversation is about KL Marx and
marking economics he has been a scholar
of KL Marx's work for many years so this
was a fascinating exploration he has
written several books I recommend
including the new economics and
Manifesto and debunking
economics this is the Lex Freedman
podcast to support it please check out
our sponsors in the description and now
dear friends here's Steve
Keane let's start with a big question
what is economics or maybe what is or
should be the goal of economics well it
should be understand how human
civilization comes about and how it can
be
maintained uh and that's not what it's
been at all uh so we have a discipline
which has the right name and the wrong
Soul what is the soul of Economics the
soul of
Economics really is to explain how do we
manage to build a civilization that
elevates us so far above the energy and
and consumption and knowledge levels of
the base and environment of the Earth
because if you think about and this is
actually working from work I've learned
from Tim Garrett who's one of my
research colleagues who an atmospheric
physicist and his idea is that we have
these we exploit these highgrade energy
sources from the Sun itself to Coal
nuclear etc etc which means we can
maintain a level of human civilization
well above what we'd have if we were
just still running around with rocks and
stones and Spears so it's that elevation
above the base level of the planet which
is human civilization and if we didn't
have this energy we were exploiting if
we didn't use the environment to elevate
ourselves above what's possible in the
background then you and I wouldn't be
talking to microphones you know yeah we
might be doing drum beats and stuff like
this but we wouldn't be having the sort
of conversation we have so it explain
how they came about that what's the
economics should be doing and it's
not so this is the greatest thing that
the Earth has ever created is what
you're saying this conversation yeah
we're the most elaborate Construction on
the planet and like that's not what
we've done we've denigrated the planet
itself we don't have respect for the
fact that life itself is an incredible
creation and I I My ultimate if I had to
see how humanity is going to survive
what we're putting ourselves through
then it would we'd have to come out of
it as a species which sees its role as
preserving and respecting life I like
how you took my silly incredible
statement and made it into a uh uh a
serious one about
how amazing life is life is incredible
and humans don't respect it enough we
trash it and and that's what's economics
I think has played a huge role in that
so I actually regard my discipline I
would never call it a profession let
alone of science uh my disciplin has
probably helped bring about the
termination potential the feasible
termination of human civilization strong
words okay let's return to the basics of
Economics so what is the soul and the
practice of Economics what what should
what should be the goal of it because
you're speaking very poetically but
we'll also speak pragmatically about the
the tools of Economics the variables of
Economics the metrics the goals the
models practically speaking what are the
goals of Economics well in terms of the
tools we use we should be using the
tools that Engineers use frankly and
that's sounds ridiculously simple
because you would expect economists are
using upto-date techniques that are
common in other Sciences where you
dealing with similar ideas of stocks and
flows and interactions between the
environment and a system and so on and
that's fundamentally systems engineering
and that's what we should be using as
the tools of Economics now if you look
at what economists actually do uh the
sophisticated stuff involves difference
equations and like difference equations
you know if you've done enough
mathematics as you have you know
difference equations are useful for like
individual level processes if you're
talking about a autonomous time it will
go from State T to t plus1 t plus 2 and
so on but not when you're talking at the
aggregate level there you use
differential equations to measure it all
economists have been using different
equations so there's like a a book I
think it's by Sargeant and one other
called Advanced methods in economics
using python two volume set it's about
close to 2,000 pages and four of those
pages are on differential equations
the rest is all difference equations so
they're using entirely the wrong
mathematics to start with for people
listening what is difference equations
versus differential okay difference
equation is is like you can do in a
spreadsheet you'll have this is the
value of NAU and naughty this is the
value of not 91 92 93 94 so you have you
have discrete jumps in time uh whereas
the differential equation says there a
process moving through time and you will
have a rate of change of the of a of
variable is a function of the state of
itself and other variables and rates of
change of those variables and that is
what you use when you're doing an
aggregate model so if you're modeling
water for example or fluid dynamics you
have a set of differential equations
describing the entire body of fluid
moving through time you don't try to
model the discrete motion motion of each
molecule of H2O so at the aggregate
level you use differential equations for
processes that occur through time and
that's economics it occurs Through Time
you should be using that particular
technology but some economists do learn
differential equations but they don't
learn stability analysis so they simply
assume equilibrium is stable and they
work in equilibrium terms all the time
and that uh it is the the the technical
level it's it's an incredibly
complicated uh way of modeling the world
using entirely the wrong tools okay we
we we'll talk about that because it's
unclear what the right tools are maybe
it's more clear to you but I've got to
make it clear to an audience well so
this is a very complicated world it's a
complex world you talk about there uh
some of the most
complex systems on Earth are the human
mind the economy and the biosphere yep
so we'll we'll we'll go you know I'm
we'll go to that place I'm I'm uh
fascinated by complex systems I'm
humbled by them even if they're simplest
level of like cellular
atoma um I'm not sure what the right
tools are to understand that especially
when
part uh part of the complex system is
like a hierarchy of other complex
systems well you said the economy is a
fascinating complex system but it's made
up of human minds and those are
interesting those are those are
interesting perhaps impossible to model
uh but we can try and we can try to
figure out how to approximate them and
maybe that's the challenge of econ omcs
okay we'll keep returning to the basics
let us try to learn something from
history I also see as part of Economics
is us trying to figure out stuff and
there's a few smart folks that write
books throughout human history and
sometimes they name schools of Economics
after them so let let us take a stroll
through history okay can you describe at
a high
level what are the different schools of
Economics perhaps ones that are
interesting to you perhaps ones that the
difference between which reveal
something useful or insightful for our
conversation okay so you know you could
neoclassical post kenian Austrian I like
the
biophysical uh economics and so on other
heterodox economic schools that you find
interesting okay I actually find
interesting a school which went extinct
about 250 years ago that's where I'd
like to start from and they're called
the
physiocrats and the name itself implies
where the knowledge came from because if
you go back far enough in history we
didn't we didn't do autopsies but when
you started doing autopsies they found
wires they found tubes etc etc and they
started seeing the body as a circulation
system and they played the same sort of
logic to the economy and they came out
of an agricultural economy which is
France and they saw
that the wealth came effectively from
the Sun so they saw all wealth comes
from they said the soil but what they
really mean is Sun the soil absorbs the
energy of the sun one seed plants a
thousand fle seeds come back there is no
Surplus uh we are simply mining what we
can find out of the natural economy
that's where we should have stayed and
developed from that forward uh we then
went through the classical school of
Economics which comes out of Adam Smith
and Smith uh coming from
Scotland looked at what the physiocrats
said and what the physiocrats argued was
that agriculture is the source of all
wealth and the manufacturing sector is
sterile that's literally the term they
use to describe the manufacturing Sy
what does sterile mean sterile means you
don't you don't extract value you simply
change the shape of value so the the
value comes from the soil yeah it comes
from the soil that's the free gift of
nature that's literally the phrase they
used and we then distribute the free
gift of nature around and we need
carriages which was the manufacturing
term they used at the time uh as well as
uh wheat so we to make the carriages we
take what's been taken from the soil and
we convert it to a different form but
there is no value added in manufacturing
yeah so Smith looked at that and said
well I'm from
Scotland and we've got these easy now
Industries you know we make stuff and
it's machinery and he said no it's not
land that gives us the source of value
it's
labor yeah now that led to the classical
school of thought and that said that all
value comes from Labor uh that value is
uh is objective so it's the amount of
effort you put in that the price two
things will exchange for reflects the
relative effort that's involved in the
manufacturing so this computer takes two
hours to make and this bottle takes 2
minutes to make then there's this is
worth 60 times as much as that okay they
didn't talk about um marginal cost it
was absolute cost effectively they
didn't talk about utility as a
subjective thing they ridiculed sub
subjective utility
theory that led to Marx and Marx is
probably the most brilliant mod in the
history of Economics the only other
competitor I'd see is Shuma possibly
kanes but in my terms of ranking of
intellect would be Marx Shuma canes in
terms of the outstanding capacities to
think but Marx then turned that
classical school which was pro-
capitalism and anti- feudal into a
critique of
capitalism which led to the neoclassical
school coming along as a defense of
capitalism but they defended it using
the ideas of the subjective theory of
value so that value does not reflect
effort it's the satisfaction individuals
get from different objects that
determines their value marginal utility
it's the marginal cost that determines
how much they sold for capitalism
equilibrates marginal cost and marginal
utility and the concepts of equilibrium
and marginal this and marginal that
became the neoclassic school and that's
still the dominant school now 150 years
later so that's the one that everybody
learns and when you first learn
economics if you don't have the critical
background that I managed to acquire uh
that's what you think is economics the
marginal utility equilibrium uh oriented
analysis of mainstream economics and for
example they ignore money okay people
thinks economists you must be an expert
on money because you're an economist
well in fact economists learn literally
in the first few weeks at University
that money is irrelevant they say money
illusion so they they they they
represent people's uh tastes using what
they call indifference curves and
they're like isoquants on a on a weather
map if you look at an isoquant it shows
you all the points of the same pressure
so you can be you can be here or you can
be in Denver and the air pressure can be
the same if you're in the same weather
unit so you just draw a cell that links
together well they do the same thing
with utility and say lots of bananas and
very few coconuts can give you the same
utility as lots of coconuts and very few
banan and you draw a basically a like a
hyperbola running down and linking the
two and they'll say well that's that's
your utility that describes your tastes
and then we have your income and there's
given your income you can buy that many
um bananas completely or that many
coconuts or a straight line combination
of the two and then if we double the
price nominal price of coconuts and
double the nominal price of bananas and
double your income what happens and the
correct ANW is are nothing sir you know
you stay at the same point of tangency
between what your budget is and which
particular utility curve gives you the
maximum satisfaction so that gets
ingrained into them and they think
anybody who worries about money suffers
from money illusion you know you you
therefore uh ignorant of the deep
insights of economics if you think money
actually matters so you have an entire
theory of Economics which presumes we
exchange through b you know like I'll
I'll swap you that Microsoft Surface for
actually I'll take two of those for one
of these you know now we do this
bartering type arrangement in fact that
only works if money plays no creative
role in the economy and that's where
you'll find reading schuma uh the
Insight that's the school of thought
that I come from that says money is
essential money actually adds to demand
and I'll talk we'll talk about that
later on so that's the neoc classical
school that ends up being subjective
theory of value
uh non-monetary
as as though everything happens in B and
focusing on equilibrium as though
everything happens in equilibrium or if
you get Disturbed from equilibrium you
return back to it again and that mindset
describes capitalism his most
interesting feature is that it reaches
equilibrium now what planet are we on to
believe that because if you look at the
real world the real uh uh exciting world
of capitalism in which we we live change
is by far the most obvious
characteristic of it there's no
equilibrium there's no equilibrium it's
unstable and as a mathematician it's
easy to you work with stability analysis
you know you work out what the the
Jacobian is you work out your leop and
of exponents in a complex system you're
used to the idea that equilibrium is
unstable but economists get schooled
into believing that everything happens
in equilibrium and they don't learn
stability analysis so all that stuff is
missing so onto the schools of thought
um the treating the economy as an
equilibrium system which was what the
class neoc classical school did is what
can's
Disturbed and he really disturbed by
talking about fundamentally that
uncertainty determines our decisions
about the future so when we consume you
know you know if you like visor or what
whatever particular drink we want to
have you know the current situation but
to invest you must be making guesses
about the future but you don't know the
future so what do you do you extrapolate
what you currently know and that's he
said this is a terrible basis on which
to plan for the future but this is the
only thing you can do when there where
there is no possibility of solid
calculation so investment is therefore
subject to uncertainty and therefore you
will get volatility out of out of out of
investment you will get uh fads of
course booms and slumps coming out of
that as people to extrapolate forward
the current conditions and that's the
normal state of a capitalist economy and
scheder argued that that's what gives
it's it's creativity as well the fact
that you um Can perceive a potential
demand but you don't first of all you
don't know whether that demand's going
to work secondly you don't know who your
competitor is going to be whether
somebody's going to be ahead of you or
behind if there's a fadile
overinvestment
violence and creativity of capitalism
that's what we should be analyzing and
the post kigan school has gone in that
orientation um they've been in my
opinion inhibited by learning their
mathematics from neoclassical economists
so they don't have enough of the
technology of complex systems there's
only a really tiny handful of people
working in complex systems analysis in
post canian economics but that is to me
the most interesting area so there their
tools may be lacking but they
fundamentally accept the instability of
things that's right that's right and so
that's what makes them interesting so
let me let me try to summarize what you
said then you say how stupid I am okay
so then there was the uh
physiocrats that thought value came from
the land yep then there's Adam Smith who
said nah value comes from Human
Labor uh that was that was the classical
school MH and then neoc
classical is uh value comes from like
bananas and COC as the prefer human
preferences y like human happiness how
how happy how happy a banana makes you
mhm and then uh the kenzan and the post
kenian were like yeah well you can't you
can't you can never the moment you try
to put value to a banana and a coconut
you're already working in the past yeah
it's always going to be chaos and
stability and then you just you're
you're fishing in uncertain Waters and
that's we have to Embrace that and come
up with tools that model that well uh
and also Joseph sha peder what school
would you put him under is he a kenian
or is he uh Austrian economics or he's
an Austrian austrians
deny okay that's the intriging he's from
Austria but he's not an Austrian
Economist there are elements of the
Austrian School of thought which are
worthwhile what what is Austrian
economics in this beautiful Whirlwind
picture that you pained okay Austrian
economics grew out of the out of the
Rebellion against the classical school
so you had three intellects who mainly
led the growth of the neoclassical
school back in the 1870s was William
jevans from England uh manga who's from
Austria and vas from France and but vas
tried to work out a a set of equations
to describe a multi Eon multi product
economy where there's numerous producers
and numerous consumers everybody's both
a producer and a consumer and you try to
work out a vector of prices that will
give you equilibrium in all markets in
instantaneously and that's his
equilibrium orientation jeans is also
one about equilibrium but he worked more
at the aggregate level so there's a
supply curve and a demand curve and
that's what G Marshall ultimately
codified MinGa was pretty much saying
that well you yes there might be an
equilibrium but you're going to get
Disturbed from it all the time you'll be
above or below the equilibrium and what
came out of the Austrian School was an
acceptance of that sort of vision that
the market should reach equilibrium but
then said well you'll get Disturbed away
from the equilibrium and it's that's
what gives you the Vitality of
capitalism because an entrepreneur will
see an Arbitrage advantage and try to
close that Gap and that will give you
Innovation over time and shumer went
beyond that and saw the role of money
and said that entrepreneur an
entrepreneur is somebody with a great
idea and no
money yeah okay so to become a
capitalist you've got to get money and
therefore you've got to approach the
finance sector to get the money and the
finance sector creates money and also
creates the debt for the entrepreneur
and so you get this financial engine
turning up as well uh and you will get
movements away from equilibrium out of
that you won't necessarily head back
towards the equilibrium so Shuma has a a
rich vision of capitalism in which money
plays an essential role in which you
will uh be disturbed from equilibrium
all the time and that is really I think
a much closer vision of actual
capitalism than anything by even a even
the the the AUST leading austrians you
know haek U etc etc they they and
certainly rard I find totally like
reading a cardboard cutout version of uh
of the wealth of of The Wealth of
Nations it's uh I find his worth trivial
um but shaa was rich but with the same
foundations as the austrians but because
he talked about the importance of money
that took him away from the Austrian
Vision which is very much based on a
hard money idea of capitalism sha said
you needed the capacity of the financial
sector to create money to empower
entrepreneurs and that's very important
Vision so Shan peder's argument is the
deviation from equilibrium that's where
all the fun happens that's where all the
magic happens that's the magic of
capitalism and like the austrians
because they focus on the deviation from
equilibrium are better than NE
classicals but they still have this
belief in the you know you'll reach
equilibrium ultimately or you'll head
back towards it uh whereas they they
don't they don't have an explanation of
capitalism that gives you Cycles apart
from having the wrong rate of interest
okay so there's no role for an
accumulation of debt over time so what
Sher gave us was a a vision of the
creativity of capitalism being driven by
entrepreneurs who are funded by money
creation by the finance sector and
that's fundamentally the world in which
we live uh so there's also kids these
days uh are all into modern monetary
Theory what's that about okay modern
monetary theory is accounting I want to
summarize it bluntly it's simply saying
let's do the accounting because what
money is is a creature of Double Entry
bookkeeping okay what's double entry
bookkeeping Banks this was invented back
in the 1500s in Italy uh I've forgotten
the particular Merchant who did it based
on some Arabic ideas as well but the
thing is if you want to keep track of
your uh Financial flows then you divide
what you uh all the Financial claims on
you you divide into claims you have on
somebody else which are your assets
claims somebody else has on you which
are your liabilities and the gap between
your two the two is your Equity so you
record every transaction twice on one
row okay so for example if you and I uh
do a financial transfer uh you have a
bank account I have a bank account uh
your bank account will go down mine goes
up okay and that's the sum of the
operation is zero okay but on the other
hand if I go to a bank and borrow money
then my account goes up they put money
in my deposit account the bank's assets
go up okay and there still the same sum
applies assets minus liabilities minus
Equity equals zero now that's simply
saying money is an accounting a creature
of accounting it's not a creature of a
commodity so if you think about how
austrians think about money and how gold
bugs think about money Bitcoin
enthusiasts if there are any left think
about money uh what they see is money as
an object okay and uh you you and I can
both have more gold if we're both
willing to go to this you know a m a
mine somewhere and dig a few holes and
get a few specs of gold out so there's
no competition or no interaction between
you and me if money is gold and they
think money should be an object a
commodity but money fundamentally is not
a commodity it's a it's a claim on
somebody else that's money is its
Essence so when you do it you must use
double entry bookkeeping to do it and
then when you do you find all the
answers that come out of thinking is
money is a commodity or wrong so for
example I've got Elon on this one so
want to get this through of Elon because
I saw him making a comment about this a
few weeks ago on Twitter he said that
it's wrong for the government
effectively it seems wrong for the
government to always be in deficit MH
okay now when you look at it and say
well how is money
created how does money come about when
it's not a commodity like gold when you
dig up out of the ground when it's
actually social relations between people
that create money well money is
the they're fundamentally the
liabilities of the banking sector when
you if we make a transfer between us
your deposit account goes down my
deposit account goes up those are
exchanges on the liability side of the
banking of the of the banking sector but
if we have a transaction with the bank
uh then if the bank lends US money it's
as it's Lo go up its deposits go up
again that same balance so you've got to
look and say money therefore is
fundamentally the liabilities of the
banking sector so how do you create
create additional liabilities you must
have an operation which occurs both on
the liability side and the asset side of
the banking sector so if you and I make
a transaction no money is created money
is existing money is redistributed but
if you go to a bank and buy take out a
bank loan then money is created by the
bank loan so the liabilities of the
banking sector rise the assets rise
they're balanced but more liabilities
means of the banking sector means more
money okay so that's what that that's
how private Banks create money and
that's what I first started working on
when I became a academic about 35 years
ago the actual dynamics of private money
creation but the government has the same
sort of story if the government runs a
deficit it spends more money on the
individuals in the economy than it taxes
them which Mak means their bank accounts
increase so a government deficit creates
money for the private sector okay so
that's where money creation occurs from
the government so it's it's it puts
money in people's puts more money into
people's bank accounts by spending by
welfare payments then it takes out by
taxation so that's creating new money
and then on the other side on the bank
the money turns up in the reserve
accounts of the banks which are
basically the private Banks Bank
Accounts at the central bank so rather
than the asset of private money creation
being loans the asset of government
money creation is
reserves okay right money creation money
creation is a good thing so you
mentioned a bunch of stuff like private
money Creation with the liabilities and
the banks and then the how the
government is doing then the reserves
blah blah blah at the end of the day
there's a bunch of printers that are
printing money uh what is money and then
you also said something interesting
which is social relations between humans
is what creates money I think my mind
has blown several times over the past
minute um so it's it's difficult for me
to reconstruct the pieces of my mind
back together but
um basic question is money creation a
good thing or a bad thing money creation
is a good
thing because money creation is what
allows Commerce to happen isn't there a
conservation of no there isn't I had had
arguments with physicist over this and
it took me a long time to answer it they
thought the sum total of all money is
zero yeah okay uh it's the sum Ty total
of all assets and liabilities is zero so
if you imagine um your assets minus your
liabilities is your equity and your
asset is somebody else's liability and
your liability is somebody else's asset
when we're talking about financial
assets and this is another mind-blowing
thing that I've just recently solved
myself so the sum total of all Financial
assets and liabilities is
zero okay wait wait I'm going to
interrupt you rudely what are assets
what are liabilities assets are your
claims on somebody
else so uh specific give me give me give
me an example of an asset okay do you
have a mortgage for this house no I'm
renting you're renting there you go well
if you had a mortgage that would be your
your liability that would be my
liability okay the mortgage with the
bank's asset right okay if you add the
two together you get zero okay so that's
zero that's zero the money is the
liability side of the banking
sector okay okay assets are the the the
the assets on the other side can be
either created by the banking sector
which is where you get bank loans or
created by the government where you get
reserves but money is the liabilities
money is if you think about protons and
antiprotons in that sense money is like
the anti-proton it's the negative the
liability but wait wait the Li
liability is the negative how's that
money I thought money is the positive
what is a liability for the banking
sector is an asset for you and me and
asset includes money yeah yeah okay if
you have a bank like you got you'd have
a bank account and you'd have some cash
okay okay those are your assets but the
bank account is a liability of the
banking sector and the cash is a
liability of the Federal Reserve okay so
what what's money well money is money
money is the promise of a third party
that we both accept to close our
transaction and this is that's a bank
with that's a bank yeah this is this one
of the most important works I've ever
read is a work by a wonderful now
unfortunately deceased tiny Italian
economist called austo graani and he's
the most wonderful personality
austo made I met him on a few occasions
is one of the few human beings who can
speak in perfectly formed paragraphs mhm
okay superbly eloquent and what he did
was wrote a paper called the the
monetary theory of
production you can find it uh downloaded
on the web it's uh it's pretty much open
source now uh and what he said is what
distinguishes a monetary economy from a
barter economy so I said in in a in a
bter economy what we do is you know I'll
give you two of these for one of those
yeah okay B just working at a relative
price there were two of us involved and
there were two Commodities so with money
money is a triangular transaction okay
there is one commodity I want to buy
that can of drink off you uh two people
and the price that's worked out ends up
being in a transfer from the promises to
pay the bank that the buyer has to the
promises pay the bank that the seller
has so if I we so what you have is a
monetary transaction in a capitalist
economy involves three agents the buyer
the seller and the bank
so the bank also has to be part of it
well the bank has to be part of it what
when when I hand you the money you
accept that as uh you've now got rather
than it's the bank promising to pay me
something it's now the bank promising to
pay you something and we exchange the
promises of Banks and that's
fundamentally
money so
money is fundamentally a threesome and
everybody gets fucked is that a good way
to put it no
le now know I can use French in this
conversation that's good that's not
French that's um that's a different
language I'll explain it to you one day
but um you Australians would never
understand okay uh if I can return to
we'll jump around if it's okay it's fine
uh so you mentioned KL Marx M as um one
of the great intellects economic
thinkers ever he's he's he might be
number one you study him quite a bit you
disagree with him quite a bit but you
still think he's a powerful
a powerful mind yeah a powerful mind so
first of all let's let's just explore
the human
um
uh why do you say so what's interesting
in that mind in the way he saw the world
what are the insights that you find
Brilliant the Marx once described his
major work as towards a critical uh
examination of everything
existing okay so he's a modest bastard
yeah um so he he he wanted to understand
and criticize everything yeah and uh
even he he he wasn't trained directly by
Hegel but he was his teachers with
hegelian philosophers and what Hegel
developed was a concept called
dialectics and dialectics is a
philosophy of change and uh when most
people hear the word dialectics they
come up with this unpronouncable Trio of
words called thesis antithesis synthesis
I can barely get the words out myself
yeah and that actually is not Hegel at
all that's another German philosopher F
Oh I thought it was K no fck well I'm
not sure you I mix them up all germ look
the same to me yeah
yeah um so but if you look this
beautiful book called Marx in
contradiction you want to find a great
explanation for Marxist philosophy I
forgotten the author I think it's wild
wde Marx in contradiction and he points
out the actual origins of Marx's
philosophy I didn't know that when I
first read Marx so I became exposed to
Marks uh when I was a student at Sydney
University and we'd had a strike at the
University over the teaching of
philosophy and uh what happened was the
philosophy Department had a lot of
radical philosophers in it and a
conservative Chief philosopher and uh
the the radicals wanted to have a course
on what they called feminist aspects of
philosophical sorry philosophical
aspects of feminist thought and the
staff voted in favor of it this is back
in the days when University departments
were Democratic the Professor opposed it
he got it blocked at a high level the
staff Le frogged over that and then
finally the vice Chancellor blocked it
so that led to a strike over the
teaching of philosophy at Sydney
University which at one stage over
probably over half the students were on
strike okay wow economics began out of
that over teaching of a philosophy of
feminism yes God it's good to be that's
such a different life to what we're
living now that that's the academic mure
in which I developed all my ideas and
and and I had become a Critic I've gone
from being a believer of mainstream
economics when I was a first year
student to disbelieving it halfway
through first year okay and I then spent
a long time trying to change it getting
nowhere and then this philosophy strike
happened and we took it on in economics
and we formed What's called the
political political economy movement and
had a successful strike we actually uh
managed to pressure the university into
establishing a department of political
economy at St University as well the
department of Economics what was the
foundational ideas were you resistant to
the whole censorship of why aren't we
having why can't you have a philosophy
of anything kind of course well it was
it was much more libertarian in the
genuine sense of the word period of time
uh at the end of the end of the 60s
beginning of the 70s than the word
libertarian has been corrupted since
then but it really was about free
thought and you went to University to
learn it was about education I remember
having a fight with my father once where
was angry about the marks I was getting
for some of my courses and he said if
you don't get a decent result you won't
get a a decent job and I said I'm not
here to get a job I'm here to get an
education oh wow okay now the thing is
ultimately it's been a pretty good job
for me as well this is in Sydney by the
way and Sydney in summer is absolutely
gorgeous and what US US bunch of lefties
decide to do during summer but read KL
marks yeah on the beach or uh actually
inside the uh room of the philosophy
department at the University of Sydney
in the the main quadrangle Sandstone all
around us and we bunch of about 20 or 30
of us reading our way through marks
Capal like what which volume one volume
one capital and I remember walking off
to that meeting with one of my friends
uh who's a law law student and we this
was a period of a huge construction boom
in Sydney so the whole Skyline which we
could see from the campus was full of
what they call Kangaroo cranes which
were an Australian invention that are
cranes that can know Lea frogged over
each other to build a a skyscraper so
here you are reading KL Marx looking at
the at the mechanisms of capital and I
looked at those mechanisms and I knew
marks argued that labor was the only
source of value yeah and he said
Machinery doesn't add value so the
cranes are worthless I'm looking at
these cranes and thinking I want a very
good explanation by Marx as to why these
cranes don't add value So reading
through the first seven chapters of
capital what you found was marks
applying this dialectic and like the fic
and stuff is shit that is not how Marx
thought at all I was reading trying to
find the thesis antithesis synthesis and
it's not there at all in any of Marx's
works and I've read everything is ever
written on economics from 1844 to 1894
when his last books were published
there's not one word of mention of that
what he does talk about is foreground
and background and tension and his idea
of a of a dialectic is that there is uh
a Unity will exist in society and that
Unity can be an individual there can be
a commodity anything at all the unity
will be understood by that
Society one particular aspect will be
focused upon so if you think about the
human being in capitalism the focus on
the human being as an object is their
capacity to work you're a worker okay
that it's put in the
foreground the fact that you're human
and you want to play a guitar and go
surfing and make love and all the other
things that humans do is pushed into the
background MH there's a tension between
the two of those and that can transform
that Unity over time and that's a
beautiful Dynamic
vision of change so dialectics is a
philosophy of change so synthesis
antithesis is uh what does every idea
have a counterargument yeah there's a
positive and negative and you bring them
together somehow and then Marx has this
forrr
foreground is all what we think of as
economics and background is all the love
making we do as humans that sort of
thing and and why is what's why is there
attention well because you imag if you
imagine the unity like if if you take a
human in a any pre could you go back to
chromagnon days when we're you know
living in caves and and we've got to go
hunting and cook food and stuff like
that but there's no social hierarchy as
we've become used to so you don't get
labored as a worker or a capitalist
you're just a human in that situation
then you'll you've got more of an
integrated view of who you are and I
think that's one of the appeal of of a
tribal a genuine tribal culture that you
get treated for the whole of who you are
you've certainly categorized you're male
you're female you're young you're old
you're a hunter you're a you're a tool
maker etc etc but you're treated as more
an integrated object when you get put in
a complex society like a capitalist
Society then one side of you is
emphasized and the others are
de-emphasized so is it fair to say that
the background is like our basic
fundamental humanity and the foreground
is the machine of capitalism effectively
and when you look at in terms of of a
human but what Marx did is applied this
to a commodity he said what is the
essential unity in a capitalist economy
and the essential Unity is a commodity
okay that's essal the essential unit the
essential Unity what's Unity Unity is an
object in society okay okay so he he
started from the point of view of trying
to understand what how exchange occurs
how do we set prices and his starting
Vision was to say that a commodity is a
unity in a capital economy the part of
the
unity that we focus upon is the exchange
value a capitalist produces a commodity
not because of its qualitative
characteristics but because it be sold
for a profit so the foreground aspect of
a commodity is its exchange value the
background aspect of it it won't succeed
as a commodity unless it has a use value
so the background is the utility thing
yeah see if you made something which
didn't work okay yeah then it has you
might be able to sell it but it has no
utility that can't you can't make that
into commodity a broken thing can't be
sold does that have the subjective yeah
it has to have the subjective side so
people enjoy as well as the objective so
the objective is what capitalist worry
about I'll give you my favorite counter
example of that I was in uh I took a
bunch of Australian journalists to China
Way Back In the period when the gang of
four was was being on trial and we did a
tour of the Forbidden City in uh Beijing
and at that stage all the artifacts of
the royal family the emperor were
actually in the building still and we
walked past one of them and it was this
gold Solid Gold Bar about this long
shaped like a fist turned over like this
and on this side there were rubies
emeralds diamonds you've never seen
gemstones I mean gems that big okay and
one of the journalists asked me what I
thought it was and I said oh it's
obvious Jane it's a back scratcher hahaa
mhm I walked away she caught up with me
about 20 Min said I asked one of the
guides it is a back scratcher wow so
here's a back scratcher for the emperor
made of solid gold with diamonds and
rubies and emeralds during the
scratching yeah now that's that's a
commodity in a feudal society okay the
cost doesn't matter you want the most
elaborate beautiful thing because you're
the emperor so in that in a feudal
society the commodity what's focused
upon is the utility and the cost of
production when you when you're the
emperor is immaterial capitalism
reverses the that so the commodity in a
capitalist economy is a plastic $2
scratchy you can get from Kmart or
Target yeah and so the the the use value
is necessary but irrelevant to forming
the price now that was a completely
different vision of Exchange in
capitalism to what I found in the
neoclassical Theory because that says
it's the marginal utility and the
marginal cost of everything that
determines the exchange ratio and the
the crazy thing about that is not so
much the marginal utility but the
argument in in the neoc classical theory
is that the price rati the price will um
when there's an exchange going on
there's two person two commodity
exchange of of two commodities for
between two people uh they will CH the
the price will change until such time as
the ratio of the marginal utilities is
equal to the ratio of the marginal costs
right they're supposed to be the
equilibrium now Mark says that's
bullshit a previous Society where you
exchange stuff that you happen to have
for Stuff somebody else happened to have
without any real production mechanism
being involved and he said that's like
when you when you have an two ancient
tribe two tribes meeting for the very
first time and one tribe can make
something the other tribe can't make and
they will therefore the price they were
willing to pay will reflect how unique
this other object is that the this one
tribe can make and the other can't so
for example the story of Manhattan being
sold for 40 glass beads it's actually 40
glass trading beads I believe it is a
true story but thing is the Indians
couldn't make glass beads so they valued
the glass beads at the island of
Manhattan okay which is a utility based
comparison what Mark said that's the
very initial contact over time even if
you don't know the technology over time
you you start to realize how much work
goes involved to making what they're
selling you versus what you're selling
to them and you start making stuff
specifically for sale so you know elon's
not losing personal utility each time a
a model 3 goes out the door there's no
he might get utility out of the fact
that he's created that vehicle that
concept and manufactures it and so on
but he's not losing utility each time a
Model T Ford goes out the door for for
going back for the Ancient Ancient
commodity there so the utility plays no
role in setting price in Marx's model
whereas it's a IAL in the neoc classical
model what's the difference between
utility and marginal utility what does
the word marginal mean and why is this
such a problem it turns marginal utility
well the utility itself has different
meanings in the two schools of thought
if you take the classical school of
thought which when marks comes from
utility is effectively objective so the
utility of a chair is that you can sit
in it okay not how comfortable it makes
you feel yeah okay now if you think
about the utility of the chairs we're
both sitting and they're identical from
a classical point of view we're both
sitting okay but from a neoc classical
point of view it's how comfortable it
makes you feel and that depends upon
your subjective feelings of comfort you
might be far more comfortable in The
Identical chair that I'm sitting in than
I am yeah and therefore the comparison
is difficult and therefore working out a
ratio involves you've got a decline in
your each time you give away a chair in
exchange for a iPhone you have a fall in
your utility okay but and and then
therefore you want a higher return
because you're losing more utility each
time the the more chairs you give away
the less utility you're getting from
chairs there's a decline in your utility
that's your your marginal utility so
it's including your subjective valuation
in setting the price and what Marx
pointed out is this is a a caricature of
actual change in a capitalist economy
because we have in a capitalist economy
huge factories turning out huge
quantities specifically for S they've
got no utility to the um seller unless
they're sold mhm okay so it's a it's a
it's a very different vision of where
how pric is set and Marx used that to
explain where profit comes from but he
made a
mistake and his argument was that
talking about a worker uh as as an Alle
your Unity this your foreground
background tension thing the foreground
is that you hire a worker uh for their
cost of production and the cost of
production is a subsistence wage okay um
the utility to the buyer is the fact
that they can work in a factory now it
might take 6 hours let's say to make the
means of subsistence and that's the
exchange value and that's what the
capitalist pays as a wage to the worker
but they can work in the factory for 12
hours that's the
utility 12 - 6 is six surplus of value
hours and that's where profit comes from
that was Marx's argument and I thought
it was brilliant but it also applied to
Machinery right okay let's let's no no
deep deep deep is good just want to
Define uh terms don't take that
statement out of context the internet
please okay uh you said buyer seller
worker in a factory who's the seller
who's the buyer well uh why is the
worker the buyer well the worker is the
commodity in this case because when when
if you're going to make stuff in a
factury you've got to hire workers yes
okay and what Marx is saying the buyer
in that situation is a capitalist so
what does a buyer pay he says he pays
the exchange value that's they get back
to the commodity thing that it's just
because that's the starting point is
that the essential unity in a capitalist
economy is the commodity a commodity has
two characteristics exchange value and
use value okay The Exchange value of a
commodity in a capitalist economy will
be its cost of production the use value
is what you do with it okay once you
purchased it but labor is a commodity in
this case when you when a worker is
being hired for a job yes so the
workers's labor has an exchange value
and a use value as well yeah use value
use value of a worker's labor exchange
value let me think about that so that so
the hours they put in is the use
value interesting so what uh what does
the worker want in this what are the
motivations are we not considering the
worker in this context as a human being
with want you come and that's actually
that's that's the next layer what what
marks give was just like a a layered
cake starting from a foundation of
saying straight commodity exchange and
then saying well you're treating a work
as a commodity now a commodity is
something you know like this
okay that has so far as I'm awar no soul
okay yeah not going to be complaining if
I turn it upside down it'll fall over
but you so that's there's no soul there
as a human is both a commodity and a
non-commodity yeah and therefore
there'll be a tension in the person I'm
being treated as a commodity here I'm
being paid just enough to stay alive you
know I've got a wife and kids back at
home yeah so that that is another layer
of of of thinking in marks and and on
that layer he then says well workers
will therefore demand more than their
value so that's when you get like
political you get political and you get
money coming above that and so on but
the basic idea starts from the
Commodities the fundamental unity and
capitalism the important commodity in
Marx's thinking was the worker because
that's where he said profit came from
yeah okay and then that explains the
motivation of the capitalist and that
ultimately leads to the labor theory of
value and Marx's arguments about how
capitalism will come to an end okay okay
okay so first of all what is the labor
Theory of value and actually before that
what is value is that um this is like me
asking what's happiness uh is there
something interesting to say while
trying to Define value you vary and this
is a huge problem in economics is
arguments of what does value mean and
the neoclassicals came down as that it's
subjective it's value is whatever you
get out of it it's your personal
evaluation of something your personal
feelings so they've got that very
subjective idea of value whereas the
marxists and being inheritors of the
classical school talk in terms of
objective
value so the value is the number of
hours it takes to make something or the
effort the value is value is the effort
that goes into making something in the
classical school well that's just like
one measure of objective where do you
fall huh where do you fall I subjective
versus subjective versus objective
Spectrum I think have you have to have
the capacity to to move between one and
the other in a structured way model of
value yeah well my my base model is the
objective okay but above that as soon as
you start talking you did about the
worker for example um then you get
involved in subjectivity because a
worker will be
angry and justifiably so about being
treated as a commodity because I'm I'm
not I'm not a commodity I'm a human
being okay and that's where Mark saw
political organization coming from from
so and that's subjective now and then
when you get to money itself Marx
actually said well what's the what's the
value of money now if you use an
objective theory of value you would say
well the cost of money the value of
money is its cost of production what's
the cost of producing a dollar it's
about 2
cents so he said it can't be the value
of the money cannot be its cost of
production or the must value I think if
you remember the phrase properly what
must is value here is it must mean the
effectively uncertain expectations or
subjective
valuation uncertain expectation or
subjective valuation okay but he's okay
with that he was okay with that because
he could move between different levels
because he had a structured Foundation
of this dialectical
Vision foreground background tension uh
commodity having use value exchange
value and a gap between the two when
you're talking about machines when
you're buying stuff for production and
then
at the next level he could look at
workers worker organization and say
that's driven by being treated as a a
commodity when you're a non-commodity so
the basic uh labor theory of value that
is ascribed to KL Marx is that value at
the base layer fundamentally comes from
the labor you put into something yeah
and you say well there's some deep truth
there except he misses one fundamental
point which is machines can also bring
value to the world he was saying they
don't he was he was uh the only thing
that matters is human labor not not
labor how do you measure what's the role
of the uh whatever value machines bring
to the world this is this is another
intriguing history because Marx when he
first started had what you can call a a
an exclusivist explanation for why lab
created value that and that was to say
that uh there's the labor is the only
commodity with both what you call
commodity and commodity power so you
have Labor and labor power labor is the
and I get fuzzy about this I haven't
read it for something like 30 years but
labor has both commodity and commodity
power the commodity is you can buy labor
which is the means of subsistence labor
power is the capacity to work inside a
factory there's a difference between the
two therefore that difference will give
rise to Surplus and there's no other
commodity that has this essence of
commodity and commodity power so that
was his exclusivist argument in the
middle of the
1857 he was um visited by a guy called
Otto brow in his home in Chelsea and
Otto returned to Marx a copy of of
hegel's phenomenal I think it's called
phenomenology of right I haven't read it
but that's the book and Marx was then at
that stage reading through all the
classical theorist again and he was
suddenly he read Hegel again and if you
know hundes Thompson mhm okay course
okay who doesn't know H Thompson
somebody who hasn't had enough drugs
obviously yeah but hes Thompson he comes
to you in a dream after you take your
first or whatever if you know your drugs
well enough you can tell okay he's
stoned okay he's on cocaine you know
well Mark suddenly his writing style in
the middle of a book called The Granda
completely changed he switched from weed
to cocaine from Ricardo to Hegel okay
and what in Ricardo he had this
exclusivist argument about Labor and
suddenly Hegel is back talking in terms
of dialectics not actually using the
word but foreground and background and
tension and then he that's where this
use value exchange value attention thing
came from is rereading Hegel 13 years
after he stopped reading philosophy
because made in 44 he was reading just
the economists so you're saying Karl
Marx is human after all he's human he
could be in I would love to have a beer
with Carl for one for Carl he's Carl to
you m he's Mr Marks to Me Maybe Call to
me I'm afraid after all these years yeah
yeah you've you've had quite a journey
together so that's where after Hegel his
interpretation of the dialect comes in
the form of background foreground and
background and then on page 267 of the
penguin edition of the
grandr literally your memory one and a
half pages long footnote it's pretty
hard to forget cuz what when when I did
this when I first read marks way way
back when I was uh how old was I 20 okay
I tried to explain my explanation of
Marx's use value exchange value stuff to
my colleagues in this philosophy
discussion room at Sydney University
during a beautiful summer that we are
inside concrete Sandstone walls
discussing marks and I went to say look
the use value exchange value argument
can be applied to a machine what's the
exchange value of a machine it's cost of
manufacturing it what's its use value
its capacity to produce goods for sale
no relation between the two there will
be a Gap a machine can be a source of
profit mhm now I said that and I got
laughed at I quite literally laughed at
so when I went back to University 13
years later to do my Master's Degree uh
I chose to read through and find in
marks where he first came across this
Insight so I made a my first Master cees
failed by the way and justifiably so
okay I was learning I I didn't know the
level of of um academic discourse
necessary I had an advisor who didn't
understand what I was writing he got me
to write for his um new cannan audience
and it was a mess and it got failed so I
got rid of him did it get failed because
like why do you think it wasn't a good
thesis it was I didn't know the level it
was written for audience my my
supervisor thought that I should be
writing for MH and it was a mess and so
I met another guy Jeff Jeff
Fishburn uh as a lecturer at my in New
South Wales University and Jeff was
open-minded he was not a a conventional
neoc classical thinker and I realized I
was i' throw out the half that Bill had
got me to do focused just on marks and
so I decided to read marks in
chronological sequence from his very
first works of Economics which are
called the economic and philosophical
manuscripts of 1844 and he wrote those
in a Garrett in Paris after he'd been
expelled from Prussia and so he decided
to read uh the having been an expert on
philosophy and regarded as the Towering
intellect of of hegelian philosophy in
in Prussia but driven out because he was
a radical he he ended up uh writing a uh
running a newspaper or being writing for
a newspaper and he was reporting about
the eviction of of peasants from the
forests taking away their feudal rights
and so this is where his passion for
economics and Humanity came from and he
was a poet as well he wrote Love poetry
to Jenny Von West West Halen that's his
first published Works were pretty much
in poetry he was a rouseabout he was you
know a wild character we'd probably F
fight like crazy I imagine if we
met over the beers I'm I'm slightly even
though I can be um I can get involved in
an argument like no nobody's business no
really no really but I'm a bit more
peaceful of Personality oh you think
Marx is feistier than you he was feisty
but uh feisty with he could be arrogant
like I'm i' I've got an intellectual
arrogance I've come to accept that but
there's like a fundamental humility to
you saying Marx is like has ego that's
hard bit too big ego yeah I'm guessing I
mean I'm never going to meet him well
the beard says ego to me the beard is Hu
yeah that's that's that's huge okay so
this is so you went
chronologically the development of the
human being through his works yeah and I
was trying to find the point at which he
discovered this use value exchange value
idea and it occurs in a footnote on page
267 to 268 of the penguin edition of the
griesa which his notes he was taking
literally not meant for publication
literally sitting at a stall inside the
British museum I think reading all the
classical authors in chronological
sequence and then somebody throws Hegel
at him and suddenly he's talking in
hegelian terms and he suddenly says is
not uh because this whole value issues
what is value is it exchange value use
value how do they relate to each other
that's what he was thinking about he
said is not uh use value which was left
out of the classical school a
fundamental aspect of the commodity is
there not a tension between the use
value and exchange value just so we're
clear in that context use value is kind
of the subjective thing exchange value
is the objective thing and Marx was
found a way to integrate the two but he
was focused
on uh labor being the only thing that
can generate both the US value and the
exchange value but no if you look at the
classical school they focus on Exchange
value objective look at the neoc
classical they faces upon use value
subjective well they call it utility so
Marx coming from the ricardian tradition
basically dismissed the role of utility
and then when he reads Hegel he's
suddenly starting to think in terms of
unities and exchange value and use value
is the unity of the commodity and he
thinks well I Can't Ignore use value so
rather than leaving it out completely
which is what Ricardo and Smith does
I've got to somehow bring it in and this
healan Insight occurs to him and you
it's it's remarkable to I really
recommend taking a look at the book even
just a look at that particular page
because what it would have been shown as
a footnote but it would have been him
saying oh wow and he asteris asteris is
not U use value a fundamental aspect of
the unity of a commodity so in the notes
you see the discovery of an idea in the
human mind the integration of an idea
and he actually writes does this have
significance in economics question mark
and then he probably went home that
night and like that that that idea
changed him yeah he changed him
completely okay and from that point on
his writing was completely different but
he still had this idea from the
ricardian days of saying that labor is
the only source of value using an
exclusive argument to say there's
something unique about Labor that
explains why it's a source of value but
suddenly this Insight occurs to him and
he thinks I can get a positive
derivation I can use use value and
exchange value and the fact they not
related to each other as a dialectical
tension to explain Surplus value and
that's what he does so he goes from a
negative explanation of where value
comes from to a positive explanation on
that page of the gresa and he then
triumphantly uses it to explain why
labor is a source of value you buy it
for its exchange value you use its use
value they're unrelated the use value
will be bigger that's where profit comes
from then he does exactly the same thing
for Machinery about 30 pages on mhm he
says uh it also has to be contemplated
which was not done before this is wrot
nice to himself by the way that's it's
written really in a colloquial style
that the use value of a machine
significantly greater than its exchange
value he actually left out the word is
it's use this is OB be a ter it'll be a
translation into English of the German
I'm sure I don't know I haven't I
haven't seen the original notes I'd love
to see them but uh he says he lives out
the word is it also has to be
contemplated that the exch the use value
significantly greater than its exchange
value I.E that the contribution of the
machine to production exceeds its
depreciation and that was an Insight
which undermined his explanation for
revolution okay can you say that again
the uh the cost of production exceeds is
depreciation
is that can you Ling on that um well
what marks argued and you read this in
capital and I read this in capital when
I first
saw the contradiction in his own thought
he said that no matter how useful a
machine is uh whether it has uh took 100
hours to make or cost 150 it cannot
under any circumstances add more to
production than
150 which in his old exclusivist logic
he could justify by and which in his mod
his his post 1857 argument is bullshit
Can you steal man his case can we go to
the mind of Marx and thinking if a
machine costs 100 bucks it can't be ever
more bring more value than 100 bucks but
that contradicts his previous logic
because what he said what he said is uh
youd have a commodi is the essential
unity in
capitalism capitalism focuses upon the
exchange value that pushes the use value
into the background and there's a
tension between the two what that means
is the exchange value of a commodity
sets its price the use value is
independent he called them
incommensurable he literally would used
the word incommensurability between
exchange value and a use value whereas
neoc classicals make them commensurable
so you're saying exchange value and use
value in Inc
commensurable and that normally means
that exchange value is objective like
the number of hours it takes to make
something use value subject of how
comfortable the chair is the fact you
can sit in a chair uh so that's
incommensurability but when you apply it
in production The Exchange value of
something is objective it's how many
hours it takes to make a machine or how
many hours it takes to make the means of
subsistance for a worker the use value
is also objective you're making
commodities for
sale and the worker does 6 hours six
hours of work will make the the the uh
means of subsistence for the worker but
the worker will work a 12h hour day and
the 6 hours becomes a gap now that's
incommensurability between use value and
exchange value of labor but when you
look at what he said about no matter how
long it takes to make a machine or how
many pounds it costs he's saying they're
identical and that's contradicting his
own logic well what's what's the use
value of a machine fact that it can
produce uh goods for sale exactly the
same as the worker now what I in my
modern re interpretation of marks which
brings in my work on energy I see both
labor and Machinery as a means to
harness energy and produce useful work
and they can both do that in fact they
they do it together it's a collective
Enterprise okay
so and we'll go to that so there's no
there's no fundamental difference from
an exchange value and use value
perspective between a human and a
machine and therefore they're using the
same logic they can both be a source of
surplus yeah which is what marks
contradicted because his explanation for
where socialism would come from is that
only profit comes from profit comes only
from labor over time will add more
Machinery than labor that will mean a
falling rate of profit and therefore a
tendency towards socialism and what he
did in that Insight in 1857 is
contradict his own idea about what would
lead to socialism and he couldn't cope
with it okay what's the difference
between marxian economics and
Marxist political
ideology the gap between the two the
overlap the differences what the the
real the real Foundation of Marx's
political philosophy was the economic
argument that there would be a tendency
for the rate of profit to
fall and that tendency for the rate of
profit of fall would lead to capitalists
battening down on workers harder paying
them less than the subsistence uh a
Revolt by workers against this and then
you would get socialism on the other
side so his he what he called the
tendency for the Rader Prophet to fall
played a critical role in his
explanation for why socialism would have
to come about he was saying it would
have to come about or is it a good thing
for it to come about um should come
about he had a should but he was trying
to say it
must so you if you look at Marx in the
history of radical thought he was
preceded by what were called utopian
socialists say
even the Cadbury's company came out of
utopian socialist and they had an idea
about a perfect Society in the future
where people were properly rewarded were
treated as human beings rather than cogs
in a machine and all this sort of stuff
and they said socialism should come
about because it's it treats humans
better than capitalism does Mark said I
can prove that socialism must come about
so he preferred he had a utopian vision
of a future Society but he thought he
could prove that it had to come about
and the the proof relied critically upon
tendency for the rate of profit to fall
and that relied upon labor being the
only source of
profit what what was his utopian view so
this this idea from each according to
his ability to each according to his
needs yeah is that the
utopian I think it's utopian in in the
context of our modern world it it it
says that you you rather than being
rewarded like Jeff bazos gets enormous
Fortune uh you get what you need not
what you want necessarily all all needs
is fulfilled it it was it was a vision
of Utopia where he could be a fisherman
in the morning um a poet in the
afternoon and a chef at night okay this
paraphrasing one of his phrases so he
did have a utopian vision of a future
society and he did think human
creativity would be much much greater
under socialism than it was under
capitalism he was
wrong uh so let's explore in different
ways where he was wrong you're saying
there's a fundamental flaw in the
logic but also if it can link if it can
explore the high level philosophical
concepts of socialism too like the
dreams of a Utopia yeah uh so what uh
first of all what is
socialism that's another loaded term
what it is socialism particularly in
America is a very loaded term and what
Americans call socialist is um u a large
amount of provision of services by the
state which is Common Place in Europe
it's still moderately common place in my
own home country of Australia uh and and
that Americans will call you know public
education socialist it's a total parody
of the word uh strictly speaking what
socialism meant is the public ownership
of the means of production no private
ownership of the means of production
what is the means of production What
factories factories so all the goods
that are produced in factories no the
means of producing the goods is owned by
a centralized entity yeah centrally
planned this is what what actually was
done under God's plan under the Soviets
uh and even with the collective
Collective Farms as well you no longer
owned your own the state owned your
owned the land you worked on the land
and this was supposed to be a Utopia
right now it didn't turn out to be one
and we'll talk about maybe your ideas of
why it didn't turn out to be one uh so
the the fascist did same so is fascism
also fascism so-called national
socialism it's also a kind of socialism
so yeah but I there was no it wasn't
public own it there was public Direction
so the state would tell factories what
to do with there still private profit
and a large part of why the Nazis
succeeded was the extent to which they
managed to co-opt Major manufacturers in
Germany uh so it's you know Direction
versus ownership it's a dictatorial I
mean that's a very particular
impementation so you have you have to
consider the full details of the
implementation but it's basically
dictator guided yeah if you want to if
you want to take owned if you want to
take a a proper Vision then you have to
say it's the ownership of the means of
production by the state yeah okay versus
the ownership by private that rules out
the Nazi period they use the word that
again they're bastardizing as much as
Americans do in the opposite
direction well what do ownership exact l
mean
it's became incredibly complicated and
this is um the and this is actually the
best work on this is done by a recently
deceased Hungarian Economist called
Janos corai and corai tried to explain
why socialism failed okay because why
did socialism fail in your view in his
view in giannis's view in your view I
think jannis is 100% correct and it's
it's a brilliant piece of work so I'm
going to be really paraphrasing his View
and he imagined a ideal socialist
society and there wasn't a Stalin there
weren't purges and you lded up to all
the ideals that Marx had for socialism
so he said in but you do it in a in a
context of a economy which is incredibly
primitive Russia okay because if you
look at Marx's own vision of the
Revolution it was going to happen in
England okay the advanced economies
would be first to go through the
revolution the Socialist the the
Primitive economies would have to go
through a capitalist transition and this
is the difference when the menix and and
the bolik so the menik and hman Minsky
came out of the menik family the menik
believed you had to go through a
capitalist phase Russia had to go
through a capitalist period before it
becom socialist the Bolsheviks believe
they could get there in one go okay by
bypass the capitalist phase du the
development under uh socialism rather
than under capitalism and this is what
Yana Yannis was actually analyzing you
start from A Primitive you uh feudal
economy very little industrialization
and you want to jump to a in advanced
industrial society from that
foundation so he said what you uh have
then for is a whole range of Industries
all of which need as much resources as
you can get for them okay so you want to
develop agriculture uh mining industry
every little division of it they all
have legitimate demands on the resources
of the country and the state that means
that all your resources are fully
employed and they're probably
overemployed okay so you have a resource
constraint in that Society the easiest
way to cope with a resource constraint
is to produce last year's commodity not
to innovate not to make change so what
they will give you is as you start to
add you know you invest so you now have
a beginnings of a steel industry
beginnings of a car industry and so on
you start investing but you continue
producing the same product you made last
year and I have a perfect personal
example of that which I'll throw in now
if you like pretty heavy conversation I
my first major girlfriend uh had a
brother who wanted to get a motorbike
but he couldn't afford a Honda or a
Kawasaki at the time they cost about
$3,000 for a
650cc Japanese motorbike he found he
could buy a CAC mhm for
$650 $1 per CC so I was there when per C
this is in this is in Subban Sylvania
Waters in in Sydney so this crate
arrives with the CAC motorbike inside it
so we take it apart it's then got all
these wooden palings we have to pull off
the wooden palings to open it up then
there's oil saked rag over this thing
which is tied on a on a wooden base yeah
we take the oil soak rag off and we
stare in all its glory in a not in 42
BMW yeah okay it was exactly the same as
Steve McQueen and Great Escape so the
Russians for 30 years were making the
same bloody motorbike it had a bicycle
seat yeah okay and this is what that's
how they cope theyve just made the same
damn machine every year they said so
that's that's the outcome you you
actually want the best possible world
you're trying to build as fast as
possible you're paying workers as high
wages as you possibly can and that leads
to a world where you don't
innovate but he said capitalism on the
other hand pure capitalist economy
you're trying to pay workers as little
as possible you have competitive
Industries you're trying to take demand
away from your Rivals you have Kawasaki
versus Honda versus you know um BMW etc
etc the way you get demand away from
your competitors is by innovating so
what you will get is cycles and Booms
and slumps but you will innovate and
change over time so what you found with
this huge gap between socialist volume
production with no innovation and
capitalism with innovation
so that was the the fundamental failing
that jonos corai saw so why did why did
socialism not innovate because if you go
back to this famous historical incident
with krushev in the United Nations bangs
takes off his shoe and bangs the death
says we will bury you he literally meant
we're going to bury you in Commodities
yeah we're going to produce more output
than you are and he was
wrong because fundamentally in the long
term to bury somebody in commodity
production you have to innovate yeah and
like there's also there's another um
remarkable Soviet engineer who was given
the job of interpreting Marx's ideas of
industrial sectors so you had the uh
commodity sphere the industry sphere
sector one sector 2 sector 3 uh sector
one producing consumer goods sector 2
producing capital goods sector 3
producing luxury goods for capitalists
and so he had a three sector model of
the economy and he was talking about the
Dynamics between them and what Feldman
did was reinterpret this as an engineer
would reinterpret it which was brilliant
work um so what he said was uh you you
need to produce the means of production
if you want to grow quickly you focus on
producing the means of production rather
than Commodities so you don't make cars
you make car factories okay you make a
few cars but most of the effort goes
into expanding how many factories you
have and what he did was do a
mathematical model where you'd start off
with very low levels of consumer good
output but then you would just go
exponential
okay now I took a look at that back when
I was doing my Master's Degree training
in mathematics I took Feldman's
equations and then looked at what was
actually driving it was he was imagining
correctly a huge pool of unemployed
labor if you go back to the earli stages
of Soviet industrialization back in 1917
post the second world post the first
world war you had all these unemployed
workers you had all these peasants you
could take off the land and put into
factories so you had a huge supply
of
workers what you had to do was build the
factories see building the factories but
at a certain point you exhaust the
supply of un lowly employed or
unemployed labor and so rather than
having this this exponential takeoff you
hit a ceiling and then you can only grow
as fast as the population because you're
not innovating okay so that's what
actually hit the S Soviet system and
it's why they never buried the Western
consumer goods and instead why
Eastern consumers looked in Envy of the
goods being purchased by their Western
people and said if that's exploitation
we want
exploitation so okay there's a lot of
interesting stuff to ask here which is
so Marx's vision for the
Socialist Utopia is you have to go
through
capitalism the menix were true to Marx's
original idea right so is there a case
to be made that in the long Arc of human
history on like human civilization on
Earth that we're going to live out
Marx's vision for Utopia which is like
will we run into a wall with capitalism
I think we are running into a wall with
capitalism in fact I think we've already
gone through the wall and we haven't yet
realized we smashed our skulls okay
okay but on the other side we're
bleeding and everything like that uh
is does Marx have any insights on what
the other of Capal what is beyond I
think that beautiful phrase of from each
according to his ability to each
according to his needs describes what we
we should end up with and I think that's
actually if I think about you know you
know I'm a Elon Musk fan that's what I
think is partially going to be the
nature of society if we build one that
functions on Mars because and I've
actually seen interview with his the
Italian Who's involved in designing what
the future Colony will look like he was
actually asked this question can there
be enormous inequality in Martian
civilization the guy said absolutely not
because the resources again resource
constraint applies uh you simply can't
give somebody a underground bunker 100
times a size of somebody else's 100
underground bunker there's a the the
scarcity of resources imp imposes a need
for uh for for equality overall is that
always that's interesting I mean this
scarcity or resource wait but I feel
like that's the contradiction I thought
you thinking classical about scarcity
yeah I'm I'm barely thinking at all
it's
uh uh so wait
I I thought scarcity the best way to
build on top of scarcity is a capitalist
type of machine well now this is this is
where again our vision of what scarcity
is is wrong
because and Ricardo said this actually
better than Marx cuz Ricardo said there
are some products uh whose value is
determined entirely by their scarcity
yeah paintings rare wines etc etc said
they are things you cannot reproduce in
a factory so the essence of capitalism
is what you can make in a factory and
therefore for these unique objects these
rare objects Picasso painting um uh you
know a beautiful bottle of wine etc etc
then the utility it can't be reproduced
uced easily so its price will be
determined by subjective valuation you
said what we're talking about in
capitalism is the stuff you can make on
mass okay and that that that is the true
focus of a capitalist economy and that
is not about scarcity that is
about the only scarcity applies when you
don't have the resources to make them
anymore or you can't use the energy
involved because you'll damage the
biosphere too much which we've already
done okay but fundamentally the scarcity
the neoclassical have B us think about
and austrians think about as well is is
non-reproducible but the essence of
capitalism is the commodity the back
scratcher the two buck back scratch that
anybody can you know the cheapest chips
to make and that's why it can make a
profit out of them um not not the
elaborate gold thing with diamonds and
rubies that only the king gets so we
think we our vision of scarcity has been
perverted by neoc classicals analyzing
the exception to capitalism and calling
it
capitalism okay fair enough so you know
let's put Mars aside cuz I think there's
a lot of uh strange factors that have to
do with a whole another planet
civilization that we don't quite
understand like how economics
works with um with different Geographic
locations one of which have new
challenges which is what essentially
this is I don't I don't know if you can
apply the same economic I'm saying your
question I think we we'll be forced into
that ultimately by having to make a
compromise with the
ecology and we've been ruthless about
the Ecology of this planet and we're
going to pay the price for it so if you
have a a planet where you can't be
ruthless okay yeah okay you have to mind
it as carefully as possible then those
that that utopian might be imposed upon
you for the needs for survival on that
planet back here uh Marx's Utopia was
still the one that ignored the ology and
I think uh if I have a vision of a
Utopia in future it's got bugger all to
do about what humans get out of it it's
what humans respect they have to respect
life so I don't see that as I see that
as a as a oneeyed Utopia a Utopia for a
single species as if it can exist on its
own which we should know it can't yeah
quick bathroom break yeah bad be great
we took a little bit of a a break and
now we're back we needed to take a break
CU my brain broke and I'm piecing it
back together you mentioned ecology and
life and the value of all of that we'll
return to it if we can MH but
first we said why this kind
of this idea of why socialism fails can
we Linger on this a little bit
longer in how did the ideas of Karl Marx
lead to stalinism so this particular
implementation yeah um is there
something fundamental to these ideas
that leads to a dictator and that leads
to atrocities there's something about
the mechanism of the bureaucracy that's
built that leads to an um a human being
that's able to
attain
integrate uh absolute power and then
start abusing that power all that kind
of stuff like some of the history of the
20th century is that inextricably
connected to the ideas of car I I think
to some extent it is but I'm going to
also say that if it hadn't been for the
Bolsheviks interpreting Marx and saying
we can reach socialism without going
through capitalism
then it might not have happened so if
you look at the like the menix were
rival political group in Russia uh and
that's where hman Minsky who's a huge
inspiration for me so he's an economist
who was maybe can we take it a little
tangent who was hman Minsky yeah hman
Minsky uh was the person who
developed analysis of capitalism based
on financial
instability and he was actually the uh
PhD student of Joseph
shampa and an Austrian Economist as well
his name I've forgotten temporarily um
and he asked him he his parents were uh
both refugees from Russia during the
stalinist period because the menik were
being wiped out uh in Russia just like
any other opponents to uh the bik were
being eliminated so I think his parents
met in Chicago MH still remained
socialist still remain politically
active and he was educated in a family
that was just imbued with Marx as its
Vision he end ended up fighting in the
Second World War
on the American side coming back to
America and studying mathematics and
then also doing an economics degree
leading to a PhD and the question he
posed for himself is what causes great
depressions and he put it beautifully
said can it happen again it being the
Great Depression and if it can't happen
then what has changed between the
society before the SE first second world
war and after that makes a depression
impossible mhm what's the answer to
those two questions can it happen the
answer was yes it can happen again but
what has prevented it happening by the
time he started writing about it which
was the um late 50s to the m mid 80s
late 80s we met once but only once over
a beer or over a beer or no he gave a
seminar at New South uni and he bit of
an obstreperous bastard what's what
aous wow what is it it means argumented
and and likely to dismiss you so like a
good a good mate of mine was the guy who
brought him out to Australia guy a guy
called Graham white we're still good day
grahe we're still good mates good day
Graham I love your language and your
accent it's a great actually there's a
there's a really good Tik Tok I saw
earlier today with an Aboriginal Guy
saying he loves the Australian language
because it's absolutely ironic you ask
Australian a question and he'll give you
an answer which is the opposite of what
he means and you got to work out the
rest for yourself yeah he goes up to
another Aboriginal mate and says uh good
day mate says how are you saying oh not
bad what have you been doing recently
well not much uh uh when are we going
it's so not not not not too far not too
soon yeah whereas they're not too far
away it's all negatives and he's
beautiful beautiful rendition yeah yeah
that's the cool thing about the internet
culture that's that's they appreciate
that ironic side like for example the
best compliment you can give as an
Aboriginal to somebody else's that's
deadly that's deadly that's a compliment
that's deadly okay one another mate of
mine this comes to the Australian if I
call you a bastard that's a compliment
yeah depending on how I insonate the
word
bastard bastard basted that's deadly
yeah I love that and there's something
unfortunately there's something about
the British accent that makes people
sound maybe brilliant maybe
sophisticated uh but
actually yeah now that's unfortunately
the downside of that you can sound
pompous there's something about the
Australian accent that you just can't
sound
brilliant it it humbles you you sound
like you're having a lot of fun there's
wit there's all that kind of stuff but
you just can't be like Carl you know KL
marks in an Australian accent would just
not come off that is a very good point
he would not be able to pull off the
beard yeah I mean I just yeah it's
fascinating that that the accent
determines you know
something about the person maybe it's
the Chicken and the Egg too it drives it
drives the way of the discourse
obviously there's a lot of Brilliance
there's a lot of Brilliance in your work
yeah but it sounds like you're always
having fun yeah and and like this PO
Poncho has got a lot of Australian mates
here yeah he spent uh what about a how
long in Australia year and a half year
and a half and he's got all these mates
who are play Aussie Rules Football in
Austin you should join them one day oh
well it's actually it's a very creative
sport it's much more fun it's different
than rugby oh very rugby is hopeless rug
rug is two two morons smashing their
bodies against each other easy no sorry
sorry we not me to offend the rugby fans
in the audience well okay what's so it's
too simplistic it's too simplistic it's
it's it's I mean there's skill in it
I've seen some really skillful Rugby
Union and rugby league plays in my day
yeah but it fundamentally if you hit
somebody hard enough they go down yeah
okay whereas in Aussie rules it's about
catching the ball and then kicking the
ball and more skill and it's it's a and
the bodies of the athletes uh I can
actually get off me measure what a sport
is like by the bodies it creates and you
get these incredibly elegant uh L
muscular forms out of Aussie rules say
beautiful words you have in your
vocabulary life I don't even know but I
I I'll assume you know what it means and
maybe somebody in the audience okay
so all right fine fine we should also
mention that you've in your youth
uh you know like like last year have had
uh Olympic weightlifting as part as part
of your life so you're long time ago and
and like you said tennis I also played
tennis for many many many many years
okay yeah it's a it's a fascinating game
it's a wonderful game yeah that's my
favorite
game KL Marx and
Stalin yeah so how how do we get onto
Aussie football in Australian and the
accent I'm not really sure talked about
um the way I said something about KL
Marx and would KL Marx anyway we we got
there yeah we got there and now we
return but back to Marks I think it's
not the destination it's the JY marks
the failure of of socialism with Janos
corai captured beautifully this idea
already called demand constrained versus
resource constrained economies MH and
capitalism is demand constrained okay
and and this is again where neoclassical
theory is completely wrong empirically
completely wrong so the ne classicals
have a vision of capitalism being
resource constraint and it's about
maximizing your usage of resources
subject to constraints and as Corno said
that's really what happened under
socialism what happens under capitalism
is that you have 15 20 companies
producing automobiles MH they are all
trying to capture as much of the market
as they can if you add up their
marketing plans you're going to get 12
130% of the actual market so they're all
going to have excess capacity when you
build a fact Factory you're building it
with a plan for it to exist for 5 10 15
years you have to have excess capacity
in the factory so that means that
capitalism has far greater productive
capacity than it actually uses and then
the way that you manage to get demand
into your factory is to innovate and
produce something nobody else does or
you're producing in volume and when
somebody produces like a bung tire comes
out of Firestone then good year is ready
to expand its production and take
advantage of that so that's that's the
actual nature of competition in
capitalis
and that means that we get a cornucopia
as of goods even if we're lowly workers
the variety of goods in capitalism is
overwhelming and and that's just doesn't
happen in socialism you get your 1942
kostak as your motorbike that's it when
you put your money down to buy a
refrigerator it'll arrive in 10 years
because the factory is already fully
constrained uh so all these resource
constraints mean that people aren't
happy under socialism and if you got a
whole bunch of people that aren't happy
then the best way to control them is to
suppress them so I think in that sense
ultimately yes it does lead to something
like
stalinism so it's easier to give happy
people
Freedom yeah I mean happy people get
pretty silly outside I'm not
particularly the extent to which
Americans overuse and distort the word
Freedom drivs me bomy um well but you
know the all of these words can be
distorted but they all at the core have
some fundamental power and beauty and
and then we just distort on the surface
for the fun of it just start battles on
Twitter and so on but what citizens of
the Soviet world didn't feel was Freedom
yeah not just in first of all it wasn't
freedom to buy Commodities the
Commodities were supposed to be on the
shops weren't there uh the volume
couldn't be produced and what you then
got out of that as well was the you know
the classic Soviet joke they pretend to
pay us and we pretend to work okay yeah
so you're not motivated oh look I I went
to Cuba about 8 years ago y invited to
give a talk there and I staying in a
hotel itself the hotel is a story there
one day my meetings were cancelled so I
thought I might go down to the beach and
they had a in in the hotel they had a
wing which is the Tourist office and
there were three women working inside
the office so I thought I just go up and
ask them you know how do I get to the
beach and one of them says to me and I
stood there just stood in the in in the
room waiting to see if they'd make eye
contact with me three women nobody else
in the place none of them looked at me
so I finally went up to one of them and
said I want to go to the beach and do
some surfing work she said I can get a
taxi
outside now fundamentally is she saying
well I'm being paid shit money here I'm
not going to I don't want to work uh I'm
not going to do anything uh apart from
sit here and and qualify for my time and
as much as there are reasons the Cubans
have suffered from American embargos and
all that sort of stuff you've still got
that fundamental shortage economy that
uh that Corno spoke about coming out of
the the structure of central ownership
and central control of distribution and
investment breaks my heart because I
think some of the effects of that
persist throughout time it become part
of the culture too yeah yeah it's it's
very inter negative culture yeah yeah
well from from the Western perspective
well even from the people living through
it I mean like I had enough conversation
with Cubans you know meeting him on the
street hopping in a
cab there one guy I was talking to was a
he was an industrial chemist and you got
a bit of money being a cab driver
because he could make money out of
taking foreign tourists from the airport
to the city by the way this episode is
brought to you by delicious
cocacola that's why I didn't want to
have it on camera but anyway no maybe
they'll actually sponsor you want you
want to make sure you rotate the label
to show this is capitalism what are we
talking about here even though it's
red uh red black is actually anarchist
uh I should tell you I don't know if you
know who Michael malice is Michael
Michael malice he's an anarchist and he
lives next door he's does he okay now I
I've lost touch with anaka philosophy I
actually used to read read you know
kotkin and bikunin and so on and I
enjoyed their philosophy and then I
helped organize an anchus conference
once and that was the biggest antidote
possible to being an anarchist that
sounds like a entry point to a joke help
to organize an anarchist party it is I
mean I we literally spent three days
arguing over whether there should or
should not be a chairperson for
conversations yeah well that maybe that
uh Mon Mon Life of Brian was lived out
live ah look at the bright side of life
all right so part of that explains why
for example even to this day in some of
those parts of the world
entrepreneurship
does not does not flourish there's not a
spirit in the people to start businesses
to launch new Endeavors and all those
kinds of
things um we're just taking all kinds of
strange little strolls but how do you
explain the mechanisms of China today
where there's quite a bit of sort of uh
flourishing of businesses and so on it's
a very peculiar kind of Entrepreneurship
they got a wife in central control uh
but it's it's but they still manage
Central political control but
Diversified economic control so there's
uh you could it is possible to draw a
line between politics possible and I
think in some ways China is more likely
to survive as a society going into the
future than Western uh capitalist
societies are um so it's like uh if if
we do the the KL Marx the the the
foreground and the background you can um
centralize the politics the the
humanity the subjective stuff and then
uh distribute the objective stuff you
got to have the goods and that's the big
change from Al D sha ping was the
characterizing that little saying that I
I don't care whether you have a black
cat or a white cat so long as it catches
mice and there was a level of pragmatism
to the dong sha ping Revolution over Mal
and mam Mal in particular and that was
manifest in the desire to get as much of
those Western Goods as possible and I
was actually in China in ' 81 took a
group of journalists there so I
mentioned earlier for a tour we we ended
up going to the Sichuan free trade zone
and that gave us an idea of why um China
was going to succeed because they had a
rule that you couldn't just come in and
exploit the cheap wages you had to also
have a Chinese partner and within 5
years the Chinese partner had to earn 50
% of the business which is huge and that
gives you an idea of the reduction in
wages these American corporations are
looking at they'd shut down the factory
in the what's now the Rust Belt of
America it might be paying somebody
there you know that time maybe $2 an
hour and they come across to China and
they're paying 2 cents an hour so they
were the enormous amount of wages that
they dropped they were willing to foro
half the profits and the ownership of
the firm so what the chines were doing
wasn't just exploiting their labor force
it was also building a capitalist class
and that meant that you had this that's
where all the you know Chinese
corporations have come from so they were
building a capitalist system within a
socialist command political system and
that worked and it's still working so
there was the centralization of the
economic stuff the G plan approach I
think that was where the Soviet failed
uh and and what the Chinese realized
after what they went through under Mal
was you have to have that capitalist
period but they weren't going to abandon
the Communist control politically the
country at the same time and that worked
out brilliantly and there's a huge
amount of innovation taking place in
China today and they also will do
gigantic infrastructure projects you
know breathtaking planning going into
that if youve you would have seen videos
of you know building a skyscraper in a
day the planning that has to go into
that the pre-preparation that's
necessary is and enormous so there's a
real respect for engineers as well in
that society which does not apply on the
west what do you think about the from
the Western perspective the destructive
effects of
centralized control of the populace of
the ideas of the discourse of the
censorship and the surveillance all
those kind of things so it's bit like we
were talking about Russia to some extent
beforehand uh with centralized versus
decentralized
corruption and when you had it the
centralized
political stuff means you know you can't
criticize within China but so long as
you don't criticize you can do what you
like and how destructive is that to the
human Spirit would you say from the
American perspective that feels
destructive before I've been to China
quite a few times over my life a lot in
the last not for about four years but
for the six years before that a few
visits and I staying in second and third
and fourth tier cities
so you know populations of only 4
million people which is quite small on
Chinese standards and I had a lot of
happy people that I was interacting my
girlfriend at the time her Social Circle
um and like you you can feel when people
can't discuss a political issue for
example in Thailand you can't discuss
the king okay they still have you know
uh less majest laws so you can actually
be jailed for discussing the king and
you can feel that to some extent and
it's is a political issue and land now
but in in China what I got back from
most people it was a bit like a
benevolent big du Big Brother mhm okay
but then when you get things out like
the lockdown which has applied recently
then you get the the failings of the
Soviet system is still there in the
Chinese system in that um the easiest
way to avoid criticism is a underling
carrying out instructions of people
above you is to carry those instructions
out to the letter mhm Beyond what the
people actually want you to do at the
top so we had a a classic illustration
of that when I took these journalists
there was a news report saying that uh
China's output of Light Industry had
grown by 177% in the previous year but
heavy industry had fallen by 7% we just
did don't compute so we kept on asking
why did this happen every time we asked
a question this is back in ' 81 the
answer would be the initial answer we
followed the directive of the Central
Committee of the Communist Party of
China MH okay we finally got a guy to
elaborate and say what that was he said
well the Central Committee sent out a
directive to promote FL industry so what
did you do quote unquote we stripped
heavy industry factories and turned them
into Light Industry yeah okay now that's
destructive of everything okay and
that's the overlay that you've still got
sitting over the top of of China but a
huge part of the industrialization was
simply saying uh produce whatever you
you know you you can make Goods Market
them sell them and you get that
Innovative component of humanity is
respected and the goods turn up and
everybody's well fed food in America
Russ China is far better than food in
America um so in terms of material
satisfaction uh and and freedom to for
example Joy enjoy dancing I mean you we
went to um um I think somewhere in
Shanghai and there's this line of people
involving a woman who would have been
close to her 90s and a kid who was about
six or four partying it up partying it
up in the open air and doing this
Chinese Collective dancing you have to
be really careful about that kind of
thing so in terms of
measuring the flourishing of a
people by looking at their
happiness I have so many thoughts on
this but I'm imagining North Korea and
if you talk to people in North Korea
I think they would say they're happy no
well let me let me let me try to
complete this
argument not an argument but a sort of
challenge to your thought which
especially in the bigger
cities because they don't know the
alternative so what else do you need
there's enough food on the table we have
a leader that loves us and we love
him we are full of our hearts are full
of love our
table is full of food they would say
because it's enough
food um what else do you want from life
no I think okay like that's so let me
sort of CH because like that's that's an
alternative I mean i' I've spent time in
Romania so let me sort of complete that
sorry because I'm taking the most
challenging aspect when there's
centralized control of information that
you don't know the alternative
that you don't know how green the grass
is on the other side and so your idea of
Happiness might be very constrainted so
uh you know you could also argue that is
happiness if you don't know like
ignorance is bliss ignorance is bliss
and then so is happiness really the
correct
measure for for the flourishing it's not
but I I mean there's actually a classic
book and movie as well we called M's
last answer okay and that is a young man
explaining his progression from being a
dancer in the cultural revolution
through to a leading dancer in American
and ultimately stran ballet um and he
explicitly says at one point that he's
told that the Chinese people have the
highest standard living in the world and
the reaction of him and his kids like
his you know fellow six-year-olds is God
it must be miserable elsewhere in the
world then okay so they knew they still
know they still know there's no such
thing as that complete ignorance but
what I'm talking about is the
experiences in trying to say back in
about 2016
2014 um there was a feeling of
Freedom within limits you didn't want to
transgress because the system was
working so if you like it's kind of like
marriage pardon it's kind of like
marriage hey that's a good example
there's limits there's limits there's
limit you have fun within those limits
that's right okay and and people did
have fun and they did feel free but they
didn't want to go and get divorced but
that dilemma um was accommodated because
the boundaries until you started hitting
restrictions were wide okay um and like
when you look at it I mean look at the
again with the Chinese Communist Party
the administrators of that are often
highly qualified
Engineers who can then make Intelligent
Decisions about what should be done as
infrastructure and so on uh and you go
to China and you got incredible
High-Speed Rail uh uh fantastic
infrastructure internet
telecommunications and so on uh rapidly
evolving solar uh there's there's a
range of things there that are so well
done that respect reflect the fact that
the selection process that gives you
your political Elite is partially
focused upon sucking up etc etc it's
still there but it's also focused upon
your skill levels and you get people
making decisions who damn well know what
they're talking about like Australia's
Got a classic example the internet in
Australia sucks the reason it sucks is
that the the labor party which is our
version of the Democrats was in control
during the global financial crisis and
as part of that they wanted to bring in
uh uh optical fiber connections to the
house so have optical fiber backbone and
an optical fiber you know right to your
T100 output from your home and the
Liberal Party fought that and said
that's going to beo too expensive uh
take too long to do we're going to do
cable to the node and then have a copper
Network linking from a node on a street
to all the houses in the street it's
going to be cheaper and faster have it
more soon blah blah blah well there a
total technical fuckup okay and
Australia now has internet that's about
50th or 60 as Fest in the world it's
dreadful for the internet two political
political figures made that decision
Tony Abbott and and Malcolm
Turnbull rivals and leaders of the um of
the conservative party we call liberal
over there now that was shitty decisions
that wouldn't happen in a country like
China because you've got actual
Engineers making the decisions they say
you can't get decent speed if you link
optical fiber to Copper it's going to so
what you get is even though you can't
make the decisions yourself a vast
majority of the decisions are made
intelligently and therefore you expect
it yeah it's
but don't you worry about the
corrupting aspects of power oh yeah that
that you start you know you have
Engineers making Intelligent Decisions
but at which point does the fat
king uh starts saying oh these Engineers
are annoying I have good internet I
don't understand bring me the grapes
well that you know you get your cular
effects that can happen like Z from what
I've seen has got elements of that so
friends of mine who are Caucasians and
get away with it they have a game where
they play at conferences scoring how
often people use with Z's name in a
presentation and giving extra points for
the number of photographs of Z that turn
up in the whole thing so you got this
sort of Personality cult coming along as
well but at the same time the the the
planning for the infrastructure that's
being built the social
services um the the General Freedom that
exists is so great and like any Chinese
person alive today like somebody who
Chinese my age uh was would have been an
adult under the early period of the late
period of ma and God Almighty that
changed the Improvement they've seen in
their lives they that's what they think
about so but it's the if you just look
at the history of the 20th century your
intuition would say that some of the
mechanisms we see in China now will get
you into trouble in the long term so it
seems to be working really well in in
many ways in terms of improving the
quality of life of the average citizen
in China but you start to get worried
about how does this go wrong well yeah
but at the same time maybe I mean often
people will say you know what's your
vision for the future and what they mean
is what vision for the future do you
have that I'm going to like right okay
now what if you have a vision of the
future you don't like it's
Dreadful me that's the ecological crisis
I think we're walking blindfolded into
well that's
uh right that that that part of the
picture we'll have to we'll have to talk
about yeah how fundamental of a problem
that is okay but what does that have to
do with the future of China that has to
do is that if you wish to impose
dramatic controls on the consumption of
the rich which would be necessary to
reduce our consumption burden so that we
can get closer to the ecological
envelope we've destroyed already then
you're going to be more likely
successful doing that with a centralized
system where people accept centralized
political control then you in a country
where it's all Diversified and you
screams Freedom every between every
point in a tennis match and I'm I've
literally seen that when I was in
Philadelphia some time back um so the
ideology accepts a collectivist attitude
may be more successful in controlling
our reducing human consumption levels
because when we talk about democracy I
mean who's voting here how many horses
and elephants
birds get to vote okay it's very what's
a bird yeah you don't see them around
here uh it's a very human Centric Vision
we have of this planet yeah and we're
going to pay a price for that okay so
you're saying to deal with global
catastrophic
events centralized planning might be
maybe I think we'll work better period I
mean like again but there's some
centralized stuff in the United States
for example oh military yeah I know no
no okay all right now now's that now
there's that feisty
Australian uh so besides the military
there is that's the ideal of the federal
government in the United States is that
there is some centralized uh
infrastructure building there's some big
project but there's some and the qu the
question is when you deal with greater
and greater Global catastrophic events
like the pandemic that we're just living
through that the government would be
able to step up mhm and impose enough
centralized planning to allow us to deal
sort of enable empower the citizenry to
deal with these catastrophic events in
the case of the pandemic a lot of people
argue that the uh first of all the world
but also the United States
failed to uh effectively deal with a
pandemic on the medical side the social
side on the on the financial side the
supply chain all everything in terms of
community iation in terms of um
inspiring the populace with the power of
science on all the fronts they they
failed but the the ideal is they would
be able to succeed you would have to
have a small efficient the ideal the
American ideal you have a small
efficient government that's able to to
take on tasks precisely like the
pandemic but the thing is maybe it
shouldn't have been as small as it was I
mean my favorite instance of that
actually involves the UK because the
whole neoliberal approach is about small
efficient government okay well small
efficient government works when You Face
small efficient challenges when You Face
something systemic rather than episodic
then it's going to break down and like
this is I mean one of the things I I
greatly respect is tb's idea of
antifragile you want a society which is
antifragile not easily broken whereas
neoliberalism has pushed us towards this
vision of efficiency but it's easily
snapped like in the UK I've forgotten
the government Minister involved but she
was she asked her expert committee how
many this is before well before the
pandemic how many masks should we have
on hand in case of a pandemic and the
answer from the experts was about a
billion MH okay that's 50 masks that's
20 masks per person okay oh that's too
many let's just make 50 million masks
that's one mask per person it was gone
in a matter of a day okay and therefore
that's why they told us well masks don't
work you know what they meant was we
don't have enough masks for our health
people let alone for you and the public
so we're going to bullshit you until
those masks don't really work and then
people don't wear masks and then we've
got enough mask we rush up the
production job and by the time it comes
along people have got their skepticism
about masks so who does the uh can you
elaborate who does the blame in that
case go on to the blame comes down to
the philosophy that says government
should always be
small no but do you do you really think
that bigger government would be the
solution to the mask issue so let me let
me push back sort of it's possible that
that that's capitalism solves that
problem well not not if there's no money
in really long-term planning and
capitalism okay there's money there's
money
init isn't it possible to construct
isn't possible for capitalism to
construct a system that ensures against
catastrophic events not when they're
systemic the cap you can ensure against
episodic events if you occasionally have
a really bad storm but in general the
weather's not so bad that all the
infrastructure is being destroyed then
you can share that around on a
percentage basis if you have a gussian
distribution for your events and and you
don't the mean doesn't move around too
much and the standard deviation doesn't
change all that much then Insurance
works fine but if you have an EP if
that's episodic if you have systemic
stuff where the climate is changing
completely and you're going to wipe out
your agricultural cap capabilities uh
you you simply can't do insurance on
that front you you can't make a profit
out of catastrophe and
capitalism okay that so that example of
um climate change let's talk about it
okay so you you
mentioned that the human brain the
economy and the biosphere are three of
the most complex systems we know mhm
okay and you also criticize the
economics Community for looking at the
effects of climate change when measured
as you know the effect on the GDP yep so
you're saying it's a catastrophic thing
that the biggest challenge our society
our world is facing why if the The
Economist disagree with you the the
effects on the GDP will be
minor uh so we'll deal with it when it
comes MH that's that's the argument
against That's The Devil's Advocate
you're saying no it is uh a thing that
will change our world forever m in ways
that we should really really really be
thinking about okay okay make the case
of why I disagree with the case is
simple economists have made up their own
numbers to say that it's trivial and you
didn't I no I haven't even tried to make
the numbers I'm reading what the
scientists write okay okay and what the
economists have done and like this is
William nouse in particular Nobel Prize
winner ex-president of the American
economic Association literally assume
that a Ruth will protect you from
climate change
he didn't say it in those words what he
said was 87% of American industry occurs
in carefully controlled environments
which will not be subject to climate
change now the only things that all of
manufacturing all of services he
included mining as well forgetting about
open cut mining uh government activities
in the finance sector all they have in
common is they happen benath a roof so
he's basically saying climate affects
the weather climate is weather okay mhm
okay now now that is not at all what is
meant by climate change it's mean
changing the entire pattern of the of
the of the weather system of the planet
for example the most extreme form of
climate change would be a breakdown in
the three circulation cells that exist
in each hemisphere the Hadley cell the
ferah cell I think it's called on the
Polar cell 0 to 30 30 to 60 60 to 90
those are the main bubbles if you like
in the atmosphere now if we get enough
increase in the energy in the atmosphere
that like just like you turn the
temperature up on a stove and you have
nice bubbles occurring in a pot of soup
and then turn the temperature up and
they all break down and you've got
bubbles everywhere uh that's called the
equable climate if that
happens then most of the rainfall is
going to occur between 0 and 20 and 70
and 90 and The Middle's going to be dry
except for extreme storms uh we would we
we built our Societies in a period of
extreme stability of the climate and
when you look at the long-term
temperature records it's up and down
like a you know like a seesaw a s like a
sore tooth blade between say one degree
warmer than now and 4 degre or 6 degre
cooler over the last million years but
when you look at where we evolved it's
just at a turning point on the peak of
one of those ups and downs those I've
forgotten the name of the Cycles but the
Cycles caused by changes in the Earth's
rotation around the Sun uh and so
we we evolved our civilization just at
the top so coming up from a a cold
period and then we're going to head down
to another cold period and that's when
human civilization came along it's about
a period of about 12,000 years so across
that period the temperature Has Changed
by not much more than half a degree up
and down now we're blasting it well and
truly out of those confines and I'm my
way of interpreting what what climate
change means is the stability of that
climate that enables to build sedentary
civilizations and not being a nomadic
species is being destroyed so the The
Challenge and by the way I'm playing
devil's advocate here uh the the
question is is there something
fundamentally different now about human
civilization that we're able
to um build
technology that alleviates some of the
destructive effects that we have on the
climate we don't
know we're going to find out the hard
way and the uncertainty you think would
be very costly extremely many of the
trajectories we might take would be much
more costly than they're profitable yeah
and and like when you're seeing some of
the storms that are happening now in
Europe the ones that you know washed
away a village in Germany some time ago
the the far storm that hit Canada of all
places I forgotten the name of the town
that was burnt down but enormous
temperatures in Canada uh again the
storms that have been happening back in
Australia these are all manifestations
of a complete shift in the weather
patterns of the planet and they can wipe
out like you know a village just
disappears it's wiped out by
unprecedented rains and this keeps on
happening we've we've we are still
living in a sedentary lifestyle when
we're a neomadic species okay so to be
able to maintain that sedentary
lifestyle we do need to to engineer the
planet we need to keep it within that
range of plus one you know one plus half
a degree Cel minus half a degree which
is really what it's been like for the
last 10 12,000 years instead we're
blasting it right out of that range and
we know some of the past climates that
have existed then we can model what they
imply for our our food production
systems for example not the only example
but obviously crucial so when you look
at what are called Global Climate models
produced by scientists uh one of the
examples was published by the oecd last
year
2021 uh in the chapter on what would
happen if we lose What's called the
Atlantic meridional overturning
circulation or amoc and people would
colloquially know that as the Gulf
Stream and that's what distributes heat
around all the oceans of the planet it's
it's part of a huge chain called the
thermohaline circulation but the part
that goes across from the um the equator
to the North Atlantic that's called the
amok and Gulf Stream to colloquial way
if that disappears in the context of a
22° c increase in average global
temperature then the proportion of the
Earth's surface which is suitable for
producing wheat will fall from 20% to
7% proportion for corn similar sort of
fall the proportion suitable for Rice
will go from 2% to 3% now that means a
catastrophic and that's the word used in
the report catastrophic collapse in food
production okay so that's what we're
toying with and we are one and a half
we're actually less than we're about
we're about halfway there to that two
degrees
2.5 uh and Economist on the other hand
this is Richard toll okay uh published a
paper 2016 claiming using what he calls
an integrated assessment model that
Economist developed that losing the Gulf
Stream would increase Global GDP by
1.1% now that his model this is what
really pisses me off about these people
it's the worst work I've read in 50
years of being a Critic of neoclassical
economics the gcms the one SST produce
of course include precipitation as well
as temperature the imams that the
economist produce and this is stated yet
again in a paper in
2021 do not include
precipitation they simply have
temperature so they assume that if
temperature improves by moving towards a
temperature which is better for
producing agriculture okay then so will
precipitation now that's completely
wrong they've left out a crucial imagine
trying to model the climate while
ignoring the fact that there's rainfall
right that's what they've done so their
work is so bad so dreadfully bad it
should never have been published so they
over all right okay I'm going to go for
them sorry this is well no no 100% as
they deserve it so it's an
oversimplification but I also want you
to steal man people you disagree with
criticize people you agree with if if
possible yeah uh to be sort of
intellectually honest here you do say
sort of to push back on the catastrophic
thinking about uh climate
change that the uh ecology the biosphere
is a complex system yeah economics the
economy is a complex
system so how can we make predictions
about complex systems how can we make a
hope of um having a semicon predictions
about the complex system so the
scientific Community is very confident
about uh the complex system that is the
biosphere and the uh the crisis that's
before us on the horizon
yeah uh and then the economists are as a
community I don't know I don't know what
percentage but too much too much uh that
part of the community is very confident
looking at the economics complex uh
complex system in saying that no this
system we have of Labor and money and
capital and so on would be able to deal
with that crisis and any other crisis
and uh they kind of construct simplified
models that
justify um their confidence so how do we
know who to believe for a start if you
believe the economists you need you need
your bre your head red because when it's
not an argument no it's not an argument
it's a summary of an argument and that
is no that sounds a lot like an opinion
and an emotional I know I know I'm so
angry about it listen I I'll tell you
I'll tell you where I
stand and I've begun looking studying
the climate change yeah much more I used
to
be on things I don't understand have not
spent time on
I have so many colleagues that are
scientists that I deeply respect Y and I
trust their opinion MH um I have
seen the Lesser
angels of my colleagues on the on the
pandemic side on the co side okay yeah
the confidence the arrogance that in
part blinded I
believe the the jump between basic
scientific research to the uh to public
policy yep yep and then that so I become
a little bit more cautious in my trust
on climate change I'm still in the same
place on and not I don't mean climate
change on anything scientist say I'm I
become a little bit wait a minute
um how does the basic scientific facts
of our reality map to what we should do
as a human as a human civilization yeah
there I want to be a little bit careful
so whenever now I see arrogance and
confidence I become suspicious well I'm
the same and that's why I'm being angry
about the economist because there's
incredible arrogance incredible
stupidity the arrogance assumptions
which you look at it and think how did
anybody let that get published sure okay
the the the economic analysis of the
effects of climate change are poor in
many cases incredibly poor yeah and this
is like
bjon lomborg starles himself as the
skeptical environmentalist and
criticizes the environmental models he
doesn't take a look he doesn't criticize
the work come out by economists you look
at it it's so bad is it possible to do
good economics modeling of the effects
of climate change yeah it is possible uh
very difficult or is it like one complex
system St it's to in that case yeah I
mean like to to me the what what you
should be looking at is saying what are
the scientists saying are the
consequences probable consequences not
not guaranteed but probable consequences
of increasing the energy level of the
atmosphere by the amount we're doing
what can the scientist say in terms of
like the effects because it's so
complicated the effects of sort of
Shifting
resources so basically what are the
effects of climate change how can we
really model that because it's it's
basically you're looking through the fog
of uncertainty yeah cuz there rising sea
levels how can we know what effect that
has well all we know there'll be a lot
of change yeah this is I I don't
actually I think the actually sea level
one is a poor argument and I don't focus
on it what I mainly focus upon is the
the weather
patterns okay and if you look at like we
got the the the wheat belt in America
goes through what Idaho and count places
like that and you've got incredibly deep
top soil Ukraine is another classic
example the depth of the top soil in
Ukraine is remarkable and that's the
wheat bowl of of Europe and that
requires both the right temperature for
growing wheat and the right rainfall for
growing weight now when you look at the
models that uh climate scientists are
building of of of that you have pretty
much your ultimate Foundation is is the
Loren model of of turbulent flow and of
course that's that's the first model
which we saw Chaos Theory complexity
that beautiful simple model three
variables three parameters an incredible
complexity out of the system uh but and
what that meant was you also had an
exponential decay in the accuracy of
your model over time so if you have if
you're accurate to a thousand decimal
places then in a thousand days you'll
have no data whatsoever because each
time you're losing an order of magnitude
of accuracy okay so that's the point
about the inability to predict for the
very long future but what you can just
say well there's a prediction Horizon
if we're close enough to the if our if
our statistical measurement of where we
are is close enough to where we actually
are and our forecast Horizon is narrow
enough to to not extrapolate too far
then for this PR forward we can make a
reasonable fist of predicting what the
weather's going to be and that's the
foundation of meteorological uh the
stuff we watch on TV you know the most
of the time the forecasts are going to
be correct these days 40 50 years ago
most of the time the forecasts were
wrong so that's the the background
Foundation to these gcms but even
they've got to massively simplify the
world so you have this enormous sphere
where they might divide it down to 100
km by 100 km by 10
km
Cube rectangles whatever um Oblongs that
that's how they're modeling the
transition of where weather from one
location to another so they've got a
chunky vision of the plan which they
have to they can't model know down to
the line last molecule so you're losing
yet right it's getting better and better
and better better oh yeah I think that's
that's just too much processing power
but you you you're going to have some
confined you can't go I mean if you look
at the models to do the weather they
used to be of that 100 km I think about
10 km grids now I don't know but so the
processing Powers let us get more and
more precise that way I do know that the
models now include chemical mixing that
occurs above cities yeah they've added
that complexity to them over time so
you're looking at the increasingly
accurate models of weather patterns the
effect they have on agriculture on food
yeah and you're you're saying that
there's a lot of possibilities in which
that's going to be really destructive to
Society on on the food production side
and if you have that increase in
temperature you're going to get a change
in precipitation and it could mean that
where the rainfall and the sunshine are
adequate for growing wheat is an area
where there's no top soil so like a huge
part of the models that the models the
economists use which only use
temperature don't include precipitation
they predict that a large amount of the
wheat of the wheat output of the world
is going to occur in
Siberia in the Frozen Tandra what about
so that that's a straightforward
criticism of oversimplified models what
about the
idea that we innovate our way out of it
so uh there's totally new what is there
there's uh a silly poor example at this
time perhaps but lab grown meat sort of
uh engineered
food so a
completely
shifting uh source of um of food for for
civilization so therefore alleviating
some of the pressure on agriculture that
comes down to the difference that Elon
makes between between producing a
prototype and prod and mass producing
the Prototype you can you can develop
the idea very rapidly to put that into
production on the scale that's necessary
to replace what we're currently doing
six years yeah and we haven't got years
we've got we might have decades we
certainly haven't got
centuries um so in the time frame we've
got I can't see that engineering going
from prototype to production levels to
Pro replace what we're currently doing
in the stable environment the currently
destroying what do you think about the
sort of the catastrophic predictions
that people that have thought have
written about climate have made in the
past that haven't come to to that's
mainly unfortunately involving Paul elic
and the population bomb and the
predictions po was a few individuals or
one individual in that case yeah so I'm
mostly Playing devil's advoc this
conversation and enjoying doing so um I
do
think uh I'm in agreement with the
majority of the scientific Community uh
but you still see that argument made I
still see the argument made and I also
I'm a little bit worried about the
arrogance and the ineffectiveness of the
arrogance this is the problem it's
ineffective and and that's that's what
worries me because it's all been um put
into the sort of you know sea level rise
um temperature changes uh it's it's not
put into the
fragility of the system in which we
currently live and the Earth Will
Survive and there's a wonderful science
fiction book called the Earth abides
about a world in which humans get wiped
out there's only a tiny band left and
then the Earth reasserts itself so the
Earth's going to survive us will we
survive what we do to the Earth that's
the question and my
feeling is that we have underplayed the
extent to which the civilizations were
built have depended upon a relatively
stable climate and as then there that
there's that turning point in the
maximum in the global average
temperature that we evolved right on the
top of it and if we had done nothing we
could find that heading back down
towards another Ice Age could equally
destroy the possibility of sedentary
life we example we'd never devel
developed fossil fuel based Industries
uh we'd never built super of phosphate
so our population would never have
reached 1 billion people uh and we were
still living like fairly sophisticated
animals but you know like 17th century
level of load on the planet then we
would have gone down that Decline and
the approaching Ice Age would have
started to wipe out our our farming
areas the glaciers would have encroached
and we would have been driven out of
like agricultural sedentary Civilization
by that change so it's just the fact
that we evolved on this stable period in
in the overall temperature cycle of the
planet and that stability is something
which just reflects that's a turning
point in a in the regular cycle malich
cycle I think it's called I've forgotten
the actual name but it's the cycle
caused by you know changing the Earth's
orbit around the sun U reflectivity and
so on that that
cycle it's just that tiny top bit that
we evolved in so what we should have
done is so that's that's really useful
for us we should stay at that level now
if we hadn't done it we'd go back down
here and that would be the end of our
Civilization by an Ice Age instead we're
going up here really rapidly and we we'd
causing a change in temperature compared
to that long-term cycle 100,000 times
faster so yeah I mean my my biggest
worry is um even subtle changes and
climate might result pressure in
geopolitical pressures that that then
lead to nuclear war and that's yeah I
mean there's there's an argument that's
actually behind to some extent not the
Ukraine war so much but the Arab Spring
the the wars in Syria which partially
has led to what's happening in Ukraine
so and our weapons are getting more and
more powerful and more and more
destructive more and more nations are
having these destructive weapons and now
we're entering cyber
space where it's even easier to be
destructive hyper baric weapons which
didn't exist in the second world war so
you know you don't need nuclear weapons
to have you know catastrophic attacks on
each other so yeah it's incredibly scary
that that the warlike side of human
nature could
be extremely enhanced by climate
breakdown so in this world on a happy
note uh I don't know how we went from
Marxist and stalinism to ecology but all
those are beautiful complex systems uh
What uh is the best form of government
would you say on the P we talked about
the economics of things
um you ran for office so you care about
politics too how can politics what
political systems can help us here I
think we first of all have to appreciate
where one species on our planet out of
millions and as the intelligent species
we should be enabling a harmonious life
for those other species as well yeah can
we actually Linger on that what is you
mentioned we need to acknowledge the
value of life on
Earth you know can we
integrate uh the labor theory of value
can we integrate into that the value of
life um so there's human life I I I
think if you if you take like that that
structure that I talked about of Marx's
use value exchange value dialectic the
forground background that only exists
that only works because we're exploiting
the free energy we find in the universe
there could be no production system
without free energy which is a you know
the first law of thermodynamics that
there is free lunch after all and it's
grounded in the energy that's provided
to us by yeah that's the free lunch
that's what we're we exploring it's the
only free lunch we get you know Ginsburg
summary of the laws of thermodynamics
don't you Alan Ginsburg said the f the
the the laws of thermodynamics summarize
a you can't
win okay B you can't break even yep C
you can't leave the
game nice yeah beautiful summary
beautiful summary okay uh but the fact
that exists in the first place is the
free lunch okay so we're exploring the
free lunch but to be able to do it we
can't put waste back into that system so
much that it undermines the free lunch
and that's what we've been doing and
once you respect the fact that we have
to living on on the biosphere Planet
we're actually on uh we have to enable
that biosphere to survive us because of
it doesn't survive us we won't survive
it disappearing and there's not that
realization in humanity in general and
uh when you say the value of
life you know all the different living
organisms on Earth are part of the
biosphere yeah so in order to maintain
the biosphere we have to respect like
pragmatically speaking what that means
is actually respecting all of life on
Earth even the mosquitoes uh I've got
some
no so I person parasites I mean we we
are a parasite when you look at we're
we're the mosquitoes of the human of of
the the the large organizations you if
you're a fan of the Matrix movies at all
sure okay you know this where what I'm
wearing absolutely I was wondering what
the inspiration was I was thinking it's
not really inspiration we are living in
a simulation okay and I have a
conversation offline to have with you
about that okay' been misbehaving and
we're going to have to put you back in
line so what what's agent Smith says
when he's got uh Morpheus in his
possession he said I've been trying to
classify your species I've decided
you're a
virus okay now there's truth that we
have intruded into everything okay we
have taken over every element of the of
the biosphere and and we think we can
continue doing that the thing is we're
breaking that we're exploiting it so
much we're breaking it down and IO I
think it's IO Wilson who argued with the
50% rule he believed that we should
Reserve 50% of the planet for nonhuman
species in other words we make 50% of it
off limits humans cannot go there and we
just let that evolve as it does and then
we control the other 50% I think it's
probably giving to much to us I think we
should actually say like 20% 25% Max and
the rest of the planet we let life go on
and evolve as it
does without our interference without
our dominance
now that's neither a Dem democratic
system nor an authoritarian one it's one
which starts off with saying we the
first thing humans have to do is respect
life
itself okay so would we do
that we have done it obviously I don't
think the Soviets would have done it if
we had a generally Soviet system we
haven't done it a capitalist uh we
continue intruding so we we I think we
have to go through something like a Star
Trek a Star Trek you know catastrophic
200 years to realize that ultimately if
we're going to survive as a species we
have to respect life in general and then
that means we parts of parts of the
planet we can no longer
touch while we also try to maintain the
planet at the temperature that we
founded in what we now call the
anthropos scene okay um so politically
we have to
have like in in many ways what Native
societies often have a vision of the
cycle of life not this exponential
progression we've developed over the
last 250 years um and again I'll use
another movie The Avatar type respect
for the cycle of life we need to have
that as part of our innate nature and
then on top of that the political system
comes out now that political system has
to be one that lets us feel like we have
a say
in the direction of society while that
part is sacran okay we can't touch it
but we also because we are now living
with so many challenges created by our
own civilization I mean the main threat
to the existence of human civilization
is the existence of human civilization
it's both a feature and a bug yeah and
therefore we need to have people who can
understand complex systems making those
decisions now that means it isn't a
political system as much as it is an
appreciation that the world is a complex
system and therefore effects which we
think are Direct effects will actually
come through an oblique fashion and we
cannot U there's no simple linear
progression from where we are to where
we want to be so you have to see how
everything feeds together in a systemic
way and that's why one reason I designed
the software I'm wearing this on our
Minsky is to have it's nowhere near to
this scale I hope it one way will be but
something which means we can bring
together all that complexity all those
systems and perceive them on an enormous
screen where we have all the various
inters and we can see what a potential
Futures and and that then guides us so
it isn't a case of democracy and you
know ourside winds a vote and therefore
we ban abortion or we don't you know
whatever else happens it's seeing what
the respecting the fact that we're in a
complex system and being uncertain about
the consequences and not making the the
Bold uh
expansionary ideas that we've been doing
so like being a little bit more in
uh humble humble humble is a good word
but wouldn't you like to apply that same
humility both to the considerations
of the uh the pros of capitalism and and
to the catastrophic view of the effects
of climate change yeah and also like I
think we we can we can afford to be bold
in
space and that's one reason I respect
the Practical vision of musk and soar
impractical vision of Bezos that if
we're going we look for the very far
future the only way we can continue
expanding our knowledge of the universe
is to move
our
civilization the productive side of off
the planet offsite backup yeah so can
you actually Linger on this so let's
actually talk about this so first of all
you have the new
book uh humbly name uh named the new
economics a Manifesto publisher chose
the title yes no but I'm I'm joking but
um maybe I will ask you about why
Manifesto but we'll go through some of
the ideas in this book we have been
already uh so some of it is embracing
the fact that the economy our world our
mind is a complex system so this t-shirt
that you're wearing yep like it out yeah
is uh
software I'll do that if you
like you're
wearing
infomercial so this a t-shirt that says
Minsky um after not not not my Minsky
it's your Minsk notman so hman Minsky
not Marvin Minsky not Marvin Minsky
right so that's so AI Minsky is is
Marvin and then uh Harmon it all Rhymes
so stability
is free open source system Dynamic
software invented by Mr Steve
Kean uh coded by Russell sish it's on
Source Forge
it's destabilizing stability is
destabilizing so that's sort of
embracing the the complex aspect of it
yeah so how can you model the economy
what are some of the
interesting were they're detailed or
high Lev big picture ideas behind your
efforts with Minsky okay Minsky um the
meaning the software the modeling
software that that models the dynamic
system basically what msky is doing is
System Dynamics modeling so it's if
anybody's used Stella or venim or
simulink um then they've used exactly
the same family of software that Minsky
is part of so I didn't invent that that
was invented by Jay Forester who's one
of the great intellects one of the great
Engineers uh in American history and the
idea of of of forester's system was uh
complex interactions mhm so he was doing
his work in the 50s um uh people don't
don't know Foresters work he actually
built the models of the
did the mathematics for the gun turrets
on American warships in the second world
war mechanical systems obviously so he
had to work out of you know how to give
a feedback system that meant when the
boat rolled in One Direction the the
tower did not roll the other way all
that stuff was his work so marvelous
engineering and then he realized if you
want to look at a even like a factory a
factory is a complex system and so you
get Cycles generated out of the
interaction between different components
of the factory that he was first inv D
in taming that he built the software to
model complex interactive systems so
Minsky is that the thing that Minsky
adds which is unique is The Godly table
and that's the double entry bookkeeping
so you can model the financial system
Godly The Economist Godly the economy wi
Godly another great great man so there
there's like this so you're modeling it
it's like a state diagram yeah
fundamentally so actually just circuit
diagrams it's exactly what Engineers
have been using for decades almost a
century uh so you're using a circuit
ground to model the economy and that's
uh that's the so other packes have done
it what they what they haven't had in
the circuit diagram is a way of handling
the Dynamics of the financial system so
what The Godly table does is bring out
um Financial flows as being uh
everything goes from somewhere and ends
up somewhere so you have a positive and
a negative if you're looking on the
liability side uh a positive and a
positive or negative and a negative
you're looking at assets liability side
and Minsky gets the accounting right for
that so you can do an enormous complex
model uh looking at the economy
financially from the point of view of a
dozen different actors in the economy
and know that the mathematics is right
even though what you're building is a
set of differential equations which
might be 50 differential equations with
350 terms in them if you get The Godly
tables right you know the mathematics is
correct so that's the main Innovation
that Minsky adds and you're operating
there at the macroeconomics level yeah
it's definitely macro it's top down it's
not it's not agent based and then this
I'm just opening on a random page that I
think is very relevant here uh the
process this is referring to Minsky not
the software maybe the software I don't
know the process can be captured in an
extremely simple causal chain Capital
determines output output determines
employment the rate of employment
determines the rate of change of wages
output minus wages and interest payments
determines profit the profit rate
determines the there's a very nice
circuit here the profit rate determines
the level in
investment which is the change in
capital which takes us back to the
beginning of this causal chain and the
difference between investment and
profits determines the change in private
debt and there's some nice uh the Keen
Minsky model and the intermittent route
to chaos on page 86 of your book these
are do these come from the software yeah
yeah I mean I first did that in
Mathematica uh back in 1992 August
1992 uh mathematics is another amazing
piece of software yeah I find it it's
very much a programmer's approach to
mathematics I prefer like a program
called mathcad which is what I'm using
for all my when I do my mathematics on
the computer I write math CAD or cab CAD
okay it's been ruined by bad management
they chucked out all the good engineers
and I'm still using a version which is
12 years old if only Engineers ruled the
world if only Engineers rather than this
particular case there was a bunch of
marketers for CAD software are great I'm
definitely a fan of Engineers what are
the plots that we're looking at here
growth rate private debt ratio
employment versus wages employment
versus debt income distribution so what
this is across years like different
tradeoffs is there something interesting
to say about the plots and the insights
from those plots that are generated the
software um that's um that's particular
parameter vales to give that outcome but
what happened when I first simulated the
model I took a model by a guy called
Richard Goodwin who's one of the great
neglected economists uh American Marxist
mathematical Marxist and what he did was
build a model of cycles and he he
actually wrote a paper called um it's
only about a five-page paper published
in a in in a book and a very very
obscure conference paper and what he was
doing was trying to build a model of
marks okay so if you he wrote it in 1967
and it was putting in a mathematical
form of model that Mark came up with an
1867 so it was a Centenary birthday
present to Marx and what Marx had argued
in chapter 25 I think of volume one of
capital section
three he um he built a verbal model of a
cyclical system and it's quite out of
character with the rest of the book so
when you read volume one of capital
people think Marx has got a commodity
money view of money he doesn't at all he
simply did he the idea was he had like
an onion you start from the middle level
and you ignore the out low then you
bring the out Aon and so on and so forth
anyway in this model in in volume one of
capital he normally just workers got a
subsistence wage that's it but in this
little chapter he said that if um if the
economy is effec the economy is bming
then workers will demand wage Rises okay
and the wage Rises will cut into the
profit so that capitalists will not get
the level of profit they're exped
therefore they will invest less and the
economy will slump and the slump will
mean workers become unemployed and have
to accept wage cuts and it was a model
of a cyclical economy and as it happens
Mark's been his later years trying to
learn enough calculus to be able to
model it himself mathematically and he
never managed there's marks and
mathematical notes on calculus which are
quite fun to read and if you have a
mathematical background did he get far
no he got too caught up in the whole
philosophy and it never really got to bu
the model but what what um Goodman mized
was a predator prey model okay they lock
the voltera model was the basis of the
idea so what the idea is you have a have
a prey like a and the example that that
Locker actually used initially was grass
grass is the prey and then you have a
predator and the Predator were cows so
you start off with a very few cows lots
of grass and then because of lots of
grass the numbers of cows grow and they
because the cows grow they start to eat
the grass so the grass runs out so the
cows star and you get a cycle and what
LO was amazed by was that the Cycles
were persistent they they didn't die out
so Goodwin got that vision and he then
built a predator prey model and I first
of all read Goodwin and really found it
really hard to follow his writing it was
he's not a very good writer but a guy
called John blat who was a professor of
mathematics at New South Wales
University wrote a brilliant explanation
of the good On's model in a book called
Dynamic economics systems and I read
that it was superb and you said a way
you could extend this was to include
Finance so I thought okay what I'm going
to have is that what Goodwin presumed is
capitalists invest all their profits
okay so you get a boom when they're when
there's a a high rate of profit because
they invest all that money and then a
slump when there's low profit because
depreciation will wipe away capital and
you'll go bman slump so I simply added
in well capitalists will invest more
than their uh profit during a boom but
lessen their profits during a slump and
that therefore means they had to borrow
money to finance the Gap and pay
interest on the debt so I ended up with
a model with just three system States
the income share the wages distribution
of income between workers capitalist and
bankers uh the level of employment and
the level of private debt and those
three equations are fundamentally like
going from the Lo voltera model with
just two equations and therefore you get
a fixed cycle to to the Loren model
where you have three and therefore what
I got out of it was a chaotic outcome so
what you're seeing is a a manifestation
of chaos complexity in that those plots
but the fascinating one of the many
fascinating Parts about it was that uh
as the level of private debt
Rose I in my model I had capitalists
being the only ones who borrowed but the
people who paid for the high level of
private debt were the
workers the rising Banker share mhm
corresponded exactly to a falling
workers share so you're you can infer
from that that the workers are the ones
paying effectively the workers end up
paying for it they get a lower level of
wages and it's the basic Dynamic is that
capitalists uh when you have a three
social class system your income goes
between workers capitalists and bankers
now in the system that good one did
they're just workers and capitalists so
if workers share Rose profit Capital
share had to fall okay but when you have
three social classes then Capital share
can remain constant while workers fall
and
bankers workers Falls and bankers rise
so that's what actually happened uh
because capitalists the the simple way
of model it was there's a certain rate
of profit at which capitalists invest
all their profits above that they borrow
more below that they pay off debt so
what would happen is when you got back
to that point then the level of
investment would be a precise share of
GDP and therefore you get a precise rate
of economic growth but if there was a
higher percentage going to bankers and
offset by a lower share going to workers
it didn't affect the capitalists so what
you get is the Cycles sort of diminish
for a while because uh
there's there's the other the so the
income distribution effect is important
so the the workers pay for the
increasing level of debt but the other
side of it was that the Cycles would
diminish for a while now what you get is
a period of diminishing Cycles then
leading to Rising cycles and technically
this is known as the U uh P Pomo manille
route to chaos and it's one particular
element of Lorenzo's equations and fluid
dynamics so what they found was in in
examining lamina flow and a fluid you
have a period where the lamina flow got
more lamina and then suddenly it has
start to get less lamin and go turbulent
and this is this is what actually goes
on in the model so in my model of Minsky
so what you have is a period where
there's big burms and Cycles then as the
debt level rises the booms and Islams
get smaller and that looks like what
neoclassical economists call the great
moderation so I when I first modeled
this in
1982 I finished up my paper which is
published in '95 with what I thought was
a nice rhetorical flourish saying the
the chaotic dynamics of this paper
should warn us against regarding a
period of relative stability in a
capitalist economy is anything more than
a lull before the storm now I thought it
was a Grace Pat of rhetoric I didn't
think it was going to fucking happen
happen but it did because you had this
period from 1990 through to
2007 where there were diminishing cycles
and the neoclassical labeled that the
great moderation and they took the
credit for it they thought that the
economy was being managed by them to a
lower rate of INF inflation a lower
level of unemployment less instability
over time and they literally took credit
for it and I was watching that and
thinking that's L my model running and
I'm shit I'm scared as shit that
there'll be a breakdown I ended up not
um working in the area for a while
because I wrote debunking economics and
I got involved in a fight over the uh
modeling of competition in neoclassical
theory that took me away for about four
or five years and then I got asked to do
a court case uh in 2005 end of
2005 and I used Minsky as my framework
for arguing that somebody who was
involved in predatory lending should be
able to get out of the debt they were in
and I explained Minsky's Theory and I
used this run throwaway line of saying
debt levels been private debt have been
rising exponentially and then I thought
well I can't as an expert just make a
claim like that I've got to check the
data and the debt ratio was Rising
exponentially and I thought holy shit
we're in for a financial crisis and
somebody has to warn about it at least
in Australia I was that somebody so can
you given this chaotic Dynamics idea can
you talk about the crisis is ahead of us
in the future so one of the things I
mean it's a fundamental question of
Economics is economics about
understanding the past or predicting the
future because
uh you can construct models that do
poetic like in 95
poetic inclusion yeah and then you can
you know watch years come fly by and
some of the predictions in retrospect
that you make turn out to be true but
you you know you all kinds of gurus
throughout history have done that kind
of thing um and you can call yourself
right and forget all the many times
you've been wrong let's talk about the
future what kind of stuff you you
mentioned about the importance of the
biosphere but what other crisises are
ahead of us that this that that a
chaotic Dynamics
view allows us to predict what really
our saw coming out of it with leaving
aside the ecological wasn't a crisis it
was
stagnation because what we got out of
the the crisis was caused by a rising
level of private debt okay now you reach
a peak level where the willingness to
take on debt
collapses and so you go to a period
where debt is rising all the time so
credit which is the annual change in
debt and that's credit is part of
aggregate demand and aggregate income so
credit goes from positive to negative
and that causes a slump what what uh so
can you describe why that causes a slump
so when credit goes to Nega yeah if you
ask Paul Krugman he'll tell you credit
plays no role in aggregate demand okay
give me a second uh credit plays no role
aggregate demand so the vision the
vision that the neoc classicals have of
the banking system is what they call
loanable funds is Paul kman by the way
the uh the knight at the front of the
army that is the neoclassical Economist
yeah fundamentally sure okay um he he's
he's politically reasonable which makes
him more Danger dous than those that
aren't he's politically yeah there's
quite a lot of people that would
disagree with that characterization of
Paul Krugman as he's politically
reasonable you should see you should see
the people behind the Alternatives okay
okay okay fair enough okay that's not a
negative or positive statement that's
just he can be feisty as well oh he can
he can but he's like the human face of
neoclassical economics he doesn't
deserve having a human face it's
anti-human Theory tell me what you
really think I got you all right well so
uh so but the credit does not have any
effect on aggregate demand demand in
their model and you're saying that's not
the case at all it's absolutely crucial
to aggregate demand so what they model
is again the example of you lending to
me or vice versa if I lend money to you
I can spend less you can spend more okay
so credit credit is the change in debt
so if there's if I lend money to you
then there's a level of private debt
Rises okay so there's an increase in
credit but that increasing credit comes
at an expense of my spending power so
you can spend what I've lent you but I
can't spend what I've lent you so credit
cancels out but when you look at that's
learnable funds but in the real world
and the bank of England has said this is
the real world and the textbooks are
wrong categorically in
2014 um when the bank lends it adds to
its asset side and says you owe us more
money and it adds to its liability site
and says here's the money in your bank
account now you spend that money so what
happens when you do your your sums
credit is part of aggregate demand and
aggregate income and that's something I
first solved in 2019 I think 2000 it's
only recently proved it mathematically
so what that means is credit can is a
component of aggregate demand and credit
is also very volatile so consumption
demand never goes negative investment
demand never goes negative but credit
can go from positive to negative and
when you take a look at the long run of
American history after the second world
war there was no period uh until
2007 where credit was negative it was a
positive component of GD positive number
therefore when you do it as a percentage
of GDP it was a positive percentage of
GDP it peaked at 16% of GDP in
2006 2007 it fell to minus 5% in 2008
2009 so you had a 20% of J DP turn
around an aggregate demand now when you
plot that against unemployment the
correlation of credit to
Unemployment uh across the period from
about 1990 to
2010 is about minus. n okay enormous
negative correlation now according to
the near classicals it could be slow to
zero M empirically it's bleeding obvious
it's not and it applies to every country
in the world that had a financial crisis
at that period so it's it's bleeding
obvious in the data and they ignore it
because credit's not part of that model
and you're saying it's causation not
just causal today we sit there is
extremely high
inflation what uh does inflation what
role does inflation play in this picture
is a little bit of inflation good we
talked about money
creation um at the beginning what's a
little bit of inflation good or bad a
lot of inflation good or bad How
concerned are you a little a little of
is good for a simple reason that like
again it's taking me a while to get my
head around around this but if you think
about how people say what are the
functions of money they say money it's a
unit of count account so you're
measuring it's a means of exchange okay
and it's a store of value okay now yes
okay it has those three roles but the
last one is contradictory to the
previous two because and this is why we
see this with the Bitcoin phenomenal and
if you want to hang on to money as a
store of
value then if prices are falling the
value of money is rising and it's
actually in your interests as a store of
value to hang on to it and not spend it
okay so that contradicts its role as a
means of exchange now if you have money
which depreciates and this was actually
tried in this in the Austrian town of
wargle during the second before during
the Great Depression if you have money
that depreciates then if you don't use
it you lose it fundamentally so it has a
high rate of circulation so there's a a
monetary theorist called Sylvio gazelle
and he wrote this proposal that money
should
depreciate and he was a ridiculed and
opposed and dered but Kane said he was a
great intellect and the mayor of town of
wargal in Austria during the Great
Depression was facing an unemployment
rate of 25% pretty much gery had the
worst experience in the Great Depression
in the world as as bad as America
slightly worse than America and so he
thought how can I stimulate demand here
so he produced a script which could only
be used for buying goods and services in
wargle and uh and could be used to pay
your local rates but it was depreciated
by putting a stamp on the money if you
didn't use it so what happened was
people would pay their rates they they
needed to pay the rates using this money
so the the script so they use the script
and it because it depreciated you'd use
it rapidly so people were using that
money this alternative to the Austrian
Shilling and the economic activity in
town took off and unemployment fell to
zero and it was an absolute miracle and
maybe loved a wle experiment and the
Austrian Central Bank sued them for
establishing an alternative form of
money and shut it down unemployment back
up to 25% again and Austria voted you
know what 99 what was it 99.6%
for the Nazis something crazy number
like that when when Hitler marched in so
the wargle experiment showed that a a
depreciating currency led to a high rate
of circulation but of course we're not
talking viar Republic levels of
inflation so when you get that much
inflation and that's normally caused by
as the as the as the Yar inflation was
caused by the reparation terms imposed
on Germany fundamentally by France at
the Treaty of Versa they paid a large
part of that with just basically
printing the notes and you Ed this crazy
period of hyperinflation so
hyperinflation almost always occurs when
there's a massive destruction of
physical resources and the monetary
Authority tries to paper literally over
it and then you get hyperinflation
that's total social breakdown so a
moderate level of
inflation inspires the means of exchange
usage of money but undermines the store
of value usage of money and and that
dilemma is why we have this antagonistic
attitude towards inflation yeah I mean
you're describing as ATT
tension
but it's nevertheless is like money is a
store value and a means of exchange and
I don't you know to push back it's not
necessarily that there's a tension it's
just that depending on the Dynamics of
this uh be beautiful economic system of
ours it's used as one more than the
other if there's inflation you're using
it more more for the uh means of
exchange this deflation using more for
store value but that doesn't I don't see
that a tension that's just a uh how much
you use it for those different like but
the B ends up saying that overall the
level of effective Commerce a bit of
inflation is a good thing because that's
depreciating the money slightly and
encourage its use yeah but so the
argument
that uh some Bitcoin folks use or gold
standard folks yeah the
yeah again hle is not an argument uh
that having an inflation of zero is
actually achieving that
balance yeah right so like the yeah but
they're actually in favor of negative
they wanted to appreciate rapidly you
there's adly negative
inflation you know value of the value of
the money Rising relative to Commodities
that's what they want that's the hle
philosophy well that's more of like an
investment I don't know that yeah that's
more of investment philosophy than the
fundamental principles of why they
believe in in cryptocurrency in the
enforc scarcity a model the the concern
there is that when you print money the
public policy is detached from the
actual um from value yeah well you I
mean this is this is where again it
matters to get money creation right
because the government's Not the Only
Money Creator banks are as well private
Banks and
and if we obsess too much about limiting
government money creation what we end up
getting if there is money creation going
on it's private Banks doing it and you
get an increase in private debt and
fundamentally private debt and its
collapse uh collapse of credit when it
stops growing that's the fundamental
cause of financial
crisis so yeah but the question is
what's what's the the cause for the the
collapse of the uh well I think this is
like the Austrian thinking leaves out
the debt deflation and that's like I
think one of the most important papers
ever written was by Irving Fisher called
the debt deflation theory of great
depressions Fisher was somebody who
accepted the neoclassical Vision he
wrote the pre um efficiency Market
hypothesis efficienc Market hypothesis
he had a his his his own PhD called the
theory of Interest mhm and in that he
argued effectively for supply and demand
analysis of the of the um Financial
system and he argued for equilibrium he
said when you're working with a a like
commodity market then the sale and the
uh the transaction and and the exchange
occur at the same point in time when
you're working with the financial market
then the exchange occurs through time so
he he said he assumed that debts are
repaid all debts are repaid and he
assumed that equilibrium Through Time
was an essential part of his assumption
this is and then the Great Depression
comes
along and he has become a major
shareholder in Rank Xerox because he
invented the Rolodex MH he's a tinkerer
and so he had taken out shares on margin
and he was worth about 100 million in
modern terms when the Great Depression
hit and 90% of that was share market
valuation he'd taken out margin debt
just like everybody else and with margin
debt you could put down $100,000 and buy
a million dollar worth of
shares so you got this huge leverage
into debt now that when the financial
crisis hit the level of margin debt in
America had risen from half a percent of
GDP in 1920 to 133% of GDP in 1929 it
then fell to zero again that's why the
stock market crashed in 29 was so
devastating that scale of of margin
lending and every was being wiped out
they were selling r Roes for 20 quid you
know that you literally have photograph
showing people doing that because a
margin call comes in you've got to
liquidate everything okay so he said the
danger is is is of a debt deflation is
what we have to avoid okay and that
means you don't want too much private
debt to accumulate and you don't want
falling prices because the falling
prices will amplify the impact of being
insolvent to begin with and that's what
we saw in the Great Depression it's
partially what we saw in 20 2007 but we
didn't have anything like the level of
of margin debt margin debt was reduced
from 90% to 50% ratio after the Great
Depression um so there were limits on
how bad it was in
2007 but the danger is still that the
period of deflation amplifies your debts
okay and he's I call it fish's Paradox
he didn't write those terms himself but
he wrote a line saying the more debtors
pay the more they owe okay and this is
because you're liquidating to try to
meet your own debts when you liquidate
the price level Falls you will end up
having a lower level of monetary debt
but a higher level of debt when you
deflate it using the price level so the
biggest danger in capitalism is a debt
deflation far more dangerous than
inflation and the cause of debt
deflation is too much lending too much
Bank lending too much private money
creation and if you take a look at the
1920s Calvin Co
explained the boom of the 1920s on his
Surplus he said my government running a
surplus of 1% of GDP pretty much from
1922 through to 1930 is the foundation
of our stability it should be continued
what he didn't look at was that over
that same time period on average
Americans were borrowing 5% of GDP per
year from the private
Banks so you had a housing bubble at the
beginning of the 1920s which Richard
vague covers beautifully in the uh brief
history of Doom and then you had this
huge rise in margin debt as well
gigantic increase in margin debt so all
this borrowed money was being spent into
the economy and this is where credit
becomes part of aggregate demand and
it's both not just for goods and
services it's also for shares and houses
and so on so a huge valuation effect but
then when the margin debt turned around
when people would not take out margin
debt anymore the demand for margin debt
disappeared and then it was you know
what we call badly a positive feedback
loop it's actually an amplifying
feedback loop right and that caused to
collapse so what elements of that do you
see today that we need to fix and how do
we fix it we have to regard the level of
private debt as a target of Economic
Policy just as much as the rate of
inflation or the rate of unemployment
how do what what is the moderate amount
of private debt that's good I would say
something of the anywhere between 30 and
70% of
GDP what is it currently uh in America
record it's
170% nice of GDP of GDP oh that's nice
I've got we after we talk but I can show
you the the data in this and
it's it is just this huge increase in
private debt yeah that cause first of
all caused the boom but then financing
the credit
causes ultimately causes the slump and
so if we remove the rate level at which
debt can reach and we stop speculative
lending and Bas have lending for both
innovation in investment and essential
consumption items we won't have the
slump on the other side we can we can
get rid of financial instability We
Can't Stop Financial Cycles but we can
stop Financial breakdown and so we
should really be focusing on the
instability and getting that under
control by the way as you point to your
laptop uh my laptops I have a lot of of
not how many computers do I have but a
lot of them but my little surface
whatever the heck this thing is is
getting definite size Envy cuz laptop
you said is 18 something 18.4 in 18.4
in um you know I don't think I've ever
seen one that big and I'll give the
internet that one all right uh that's
for the graphics so it's a gaming laptop
it's basically desktop it probably
weighs like 40 pounds you have to eight
kilos eight8 kilos you working ID oh wow
okay yeah okay 8 kilos uh that's you
know you're you SE power supply for it
over there somewhere the power supply Bo
is about twice as much as your laptop
yeah and it you have to power it on with
a crank pretty close to like pull is it
gas powered or is it coal or well it's a
nuclear power station inside a nuclear
diamond in the back there okay so um let
me before I forget just let me ask you
about we've we've covered brilliantly
the the the Nuance disagreements you
have and the wisdom you've drawn from KL
Marx but there is also uh like you
mentioned in popular discourse
um a kind of a distorted use of
different terms and one of them is
Marxism yeah today is there something
you could just speak to
about you know
increased use of that word and is it
misused does it concern you that there's
a lot of actually young people that say
they're sort of proudly
Marxist uh are they misusing the term
they are definitely misusing the term if
they don't understand and the use value
exchange value dialectic I went through
earlier uh so so if I and they don't if
I could just pause the idea of socialism
and Marxism is used in sort of popular
lingo yeah it's
basically you know um a lot of people
have a disproportionately hard life why
can't we help them out why can't we be
kind to our fellow man kind of that's
that's
a short embodiment of an idea as opposed
to some super complicated uh elaborate
model of the economy and politics and
all that kind ofu I mean we could do
that by using the insights that come out
of modern monetary Theory which I've
confirmed just using my simple Minsky
models and that is that to use the term
us a feature not a bug a government
running a deficit is a feature of a well
functioning mixed Fe fat credit economy
not a bug the government should normally
run a deficit because that's how the
government creates money now because we'
had this Obsession from mainstream
economists of running a surplus which is
what caused the Great Depression Calvin
cooler is doing it for eight years
because of that Obsession we've cut back
on Social Services we've cut back on
health we've cut back on education we've
cut back on infrastructure now all that
stuff predominantly affects the poor
because the rich can afford to buy it
themselves so if we had son which
realized the government should run a
deficit it's a feature not a bug of a
fat money system and that's where alon's
made one mistake recently okay by not
going back to Fun First principles that
deficit enables you to provide enough of
a decent standard of living for those
who don't come out on top in the the
capitalist game MH and with that you
wouldn't have The Angst of the young
people now we still have the
climate parameters within which we have
to survive but a decent level of
government funding would mean the ANS
that you get where people say I want to
be a Marxist and they've got a what I
call a cardboard cutout version of Marx
in their minds that wouldn't be
happening so it's it's potential to have
a a a good Society where the government
runs a deficit that finances the the
needs of the poor where the rich get
enough to you know indulge and take care
of
themselves and you you don't get this
breakdown if if you if you try to cause
the government running a surplus then
the burden of that is borne by the poor
middle class and poor and that will L to
the yst we now
saying beautiful that was uh that was a
beautiful Whirlwind exploration of all
of economics and economics history let
me ask you what you tweeted I think yeah
uh we are the opposite of ants
individually intelligent collectively
stupid we need to develop systems
Thinking Fast to counter our
limitations
um that's really interesting do you do
you really believe we're individually
intelligent and collectively stupid I do
can you elaborate on I mean some of that
is just cheeky tweets but it was it's
cheeky tweet I've had in my mind for a
long time it just is one that actually
went moderately viral not enough but
moderately viral for me um but
nevertheless what if you could analyze
it as if it's some deep profound
statement you made in a book well the
reason is that we are like incredibly
individually intelligent things like
these devices we're playing with now
that's the creation of individual Minds
creative individual mind and a
collective labor over centuries that led
to this level of technology and that has
to be respected it's in incredible stuff
uh but at the same time I think what
humans are if you want to distinguish
humans from other species on the planet
we don't weave webs okay uh we don't
make bird calls what we do is we share
beliefs yeah okay now you don't think
that's Al that's a you don't think
that's a catalyst for intelligence yeah
it is a catalyst but what it means is uh
we can delude ourselves as much as we
can inform ourselves so because we share
beliefs we can do things in a collective
way and if we believe that you know we
can if we take the incantations of the
witch doctors and we and we happen to
have a couple of Spears and and things
we can go and attack the local uh H
tribe of uh of of lines and drive them
out and we become the dominant species
so it worked at the stage where we were
in competition with other species on the
planet now that we're the dominant
species then our beliefs get in the way
so you agree with uh with Einstein who
said uh the only there are only two
things that are infinite the universe
and human stupidity and he wasn't sure
about the universe and he wasn't sure
about the right that's right he wasn't
sure about the
universe uh yeah so you think that the
collective I mean there's an Infinity to
the destructive and the the stupid the
inhumane that's possible when we humans
get together but it feels like there's
more trajectories there's more
possibility for creation there are I
think that's why we have to I say if we
if we were built around the idea that
our role as a species is to maintain and
extend life on the planet and and if not
find it elsewhere then seed it elsewhere
yeah then that is a vision which makes
us creative and confines the worst
elements of our capacities to share
beliefs so I that's what what I My Hope
Is that we'll reach that stage but I
think we've overshot it so badly that my
real fear is we'll end up blaming
technology for the type of world we find
ourselves living in in the next 20 to 50
years so you think technology is is
going to be one of the part of the
solution part of the solution yeah but
it's but if we go through and blame it
which is quite possible yeah we'll blame
the technology rather than blaming too
much of the technology and the too much
comes down to what economists have told
us that can just continue consuming
infinitely on a finite planet and
Kenneth balding said that beautifully
said the if somebody believes that you
can have exponential growth on a finite
Planet they were either mad or they were
an
economist so you're uh you made a long
journey for which I'm deeply honored
from from um Sydney this distant Place
Antiquities there's myth you've got to
go there one day you'd enjoy it I will
I'm afraid if if I go there I will stay
forever so no it's a bit too there's
more Vitality back in this economy so
you'd come back okay maybe you know I'm
not a fan of the economy or money or any
of that
nature calls me let me uh so I'm I'm
honored that you make that trip you've
also said that while you're here in
Austin you're going to
um go to um this American
Factory uh that makes cars here in
Austin and also visit Starbase y
so let me ask you
about expanding out into the universe is
that something that that excites you you
mentioned about the economics of it do
you think um does what what do you think
Marx would think about this like what
economically speaking what what is this
is it a good thing I think it's a vital
we can have capitalism in outter space
far more successfully then we can have
it on the planet because we don't face
when we dump the waste ends up in the
Sun not a problem okay
um so it it means the potential we we
don't undermine our own productive
capacity if we're doing it in outer
space so the destructive element of
waste is has a lesser impact in our L
yeah I mean who cares we throw a bit of
our on back into the sun again it take a
fair bit of it to turn it into a what
would be the next stage it be a red
giant um and we have to get away because
there's a red giant at some stage it'll
it the sun will head out past the orbit
of Mars I think certainly past the orbit
of Earth so to have longevity of of of
not just human life the life that
evolved on this planet we have to be
able to take it off Planet ultimately so
if you think in the really long term
then it's our responsibility we're going
to maintain life is to get is to
establish life off the
planet what do you think about robots
and AI as part of the expanding out into
the oh yeah you have to I mean you
that's that ends labor you can't you
know you can't go for your dly joint
can't be from here to the asteroid built
and back again for dinner with your
family uh so we production would be
entirely mechanized there'd be have to
be a handful of people who service the
machines but so it's about production
and automation what
about elements of Consciousness that
make humans so special what about that
persisting within the machine that I
mean I'm still the skeptic about us ever
being able to create a machine which is
truly conscious if I can throw my it's
only two cents with really piss off KL
Marx by the way if we create machines
that are conscious exactly this is
actually part of the there's two good
logical arguments against the labor
theory of value one of what it becomes
machines become intelligent and the
other was that if the declining rate of
profit applies in socialism it'll
applies a rate of accumulation sorry in
capitalism it applies a rate of
socialism as well a guy called khed made
that argument so his argument was just
unsound but yeah intelligent machines
would completely screw marks up you know
yeah um but do you do you not like that
world where machines have not only
intelligence Consciousness a soul and I
you know I know that's one of your
interests one of your potential
Endeavors and I the kurts will idea that
there's some Singularity we're
approaching as we just get increasing
processing power it's not processing
power it's
imagination and I think whatever the
heck that means huh whatever the heck
that means yeah I mean you you would
have had imaginative insights your
papers on uh like in in in motor in
automating motoring between the hyper
intelligent machine or the machine human
interface where the standards can be
lower for the machine and higher for the
human okay that's an Insight you would
have had at some point and then you've
worked it further so I've had insights
like that as well and I have no idea
where they come from they just hit me in
the head and I Sprite them down and and
they they solve the problem that I
didn't even know my mind was working on
okay so how can we get a machine to do
that and
I do not know the answer but one thing I
think is a potential is I think think we
have to create AI that has
feelings AI that wants to survive
because if you think how our
intelligence evolved it's on this planet
in a struggle between predator and prey
and intelligent became a survival
technique I find the idea is of Ernest
Becker with denial of death really
powerful which is that
humans will not only have emotions and
are trying to survive they're able
to
ponder out in the distant future their
mortality yes and that is a driving
force for even greater creation that
animals are able to do more more uh more
primitive
animals and so there is some element
where I agree with you I think for AI
systems to have something like
Consciousness they have to fear their
mortality exactly and I think that's if
you do it then you don't you you can't
produce an AI whose Behavior you can
control I mean when you have kids yeah
you can't control their
behavior you you know that's the that's
the tradeoff you give life to an
anarchist like one of my favorite
instances in my family life is a one of
my f my one of my I like all my nieces
and and nephews but one's got a real
Quirk to her and I was standing over her
cot when she was literally like about 6
months old and she was gurgling away to
herself and her father uh wagged his
finger said stop making that noise and
this little six-month-old kid
goes and I said boy you're going to have
issues with that one mate yeah and
Anarchist was born yeah and so you can't
control this life you give birth to and
that's the threat of AI terrifying and
exciting it is and I think we should
take that risk at some stage but I think
to do it we've got to actually let
artificial intelligence involve in this
environment in which it fears its own
death yeah yeah I think there's a lot of
beauty there but it's there's also a lot
of fear a lot of Destruction that's
possible so you have to be extremely
careful but that's kind of The Cutting
Edge of which we often operate as a
Humanity uh let me ask you for advice
can you give advice to young people in
high school and
college uh maybe they're interested in
economics maybe they uh have other
career ideas what advice would you give
them about a career they can have that
they can be proud of or a life they can
be proud of mainly in a career I say
don't do an economics
degree okay I say there there's a
there's a little book Eon
Comics econ Comics taking the con out of
Economics um so they should start with
that
and then say screw it to an economics
degree yeah because what what you learn
is an obsolete technology learning
economics C University is like learning
to make
astronomy okay Earth Centric equilibrium
um you know e Cycles being added to make
your models fit the data so it's not
that economics is not a discipline worth
deeply studying it's that the university
education around economics so bad is bad
yeah so I'd say learn System Dynamics do
a course in System Dynamics which you
can apply in any field and then apply
what you learn out of System Dynamics to
the issues of economics if that's what
interests you so get a sort of Base
engineering education a base engineering
education uh that is far better than
doing an economics degree in terms of
life I my life is pretty chaotic in many
many ways my friend friends and family
will tell me that every opportunity uh
but the thing is I I once had a this
I'll tell you an example of it a really
funny incident that occurred to me
because I L this student Revolt at
Sydney University as I mentioned when I
was 20 years old this is great and then
in my like about 28 or so I went to a
restaurant one night and I found a bunch
of guys all guys who' done accounting at
the University but also been part of the
student Revolt so they hadn't seen me
for about a decade and they said what
they've been doing Steve and I talked
about what I'd done so I'd been a school
teacher for a while I then worked in
overseas aid uh I was doing computer
programming at the time and forgotten
what else I was doing at that point so I
explained it to all of them and they
were at a bucks night one of them having
a wedding you know coming up the next
week and uh one of them said I wish I'd
done that and there was silence around
the table it was obviously silent
agreement and I looked at them and said
hang on guys look at the downside of my
life you know like like you've all
you're getting married I don't have a
girlfriend right now um you've all got
secure jobs I'm unemployed okay uh don't
you own a house I haven't got a car
you know look at the downside of my life
and the bler was the Kingpin of that
group they're very Innovative bunch of
guys in the student Revolt so you said
Steve we would still all rather have
done what you have done and they did
accounting because it was
safe always get a job as they were bored
shitless would did you have a sense that
the chaos you're always jumping into was
dangerous or was it just a pull pull of
it that I I simply couldn't not do it
yeah it was part of me that I I couldn't
swallow this economic stuff once I was
exposed to why it was so wrong then I
was on a on a crusade to make it right
and that's been part of my nature all
through my life I don't know why so it
wasn't that I made a choice to do it is
that I couldn't be true to myself
without doing it and I find a lot of
people get caught in alive where they're
doing it because it works for some
Financial or other reason but they're
not being true to themselves and as as
messy as my life as much shit I've got
myself caught up in and there's a lot of
that in my personal and financial life
right now which is a pain in the ass um
I would rather have had that nature than
not you would rather take the pain in
the ass not yep y um let me ask a dark
question
M what's the darkest place you've ever
gone to in your mind so in all that
roller coaster of Life have there been
periods where it's been really I've been
I've had to cope with depression in the
last 5 years since I started read
reading neoc classical Economist on
climate change okay sorry come back to
that one so the that's where my wife's
going to come into this story so I was
reading Richard toll a paper from 2009
called the economics of climate change
Journal of economic perspectives I think
and I read this section where he says
that one of the ways they tried to uh
calibrate what climate change was do is
they assumed that the relation ship
between GDP and temperature over space
would apply over time as
well yes and I read that and thought
that is so fucking stupid because all
it's saying is that if there's a 10
degree temperature difference between
New York and Florida and a 20%
difference in income then a 10 degree
increase in temperature will cause GDP
by Fall by 20% it is so insanely stupid
so when when that read that line I just
did this I just you know I was in shock
at how stupid it was my wife who's thae
and brings in treats for me all day
walks into the room and says and she
speaks in a staccato English and says to
me why why are you like this and I said
I'm just doing this work on climate
change and she interrupts me says oh why
you do that stuff um nobody's interested
in climate change you can't do anything
to change it if we die we
die and that perfect Buddhist grounding
you know and I thought well I can't
argue with again yeah you know so that
sort of stopped me on the depression but
that's the darkest point when I looked
at it and I thought that this arrogance
this stupidity
this humbug and the economists meant
that we were potentially jeopardizing
the lives of billions of people and
Christ knows how many other life forms
and having that knowledge is the most
depressing experience of my
life that ideas simple model
combined with arrogance yeah can lead to
the potential destruction of human
civilization that was a very heavy and
then your wife came in with broke me out
of it nature uh nature wins in the end
yeah and that's sort of accept the flow
of life you should you really enjoy that
book the Earth of odds because it's got
that same beautiful sense to it Life
Will Survive whatever we do I mean they
talk about the people I was actually
talking with a good M of an ex geologist
and he's now a professor of economics
and he said as a geologist he really
hated people talking about the anthropos
scene Epoch and I said well it's not it
shouldn't be the anthropos scine epoch
it'll be the anthropos scine event
because an Epoch is millions of years
and a huge period of of life on the
planet and we might be snuffed out in
10,000 years of human civilization and
that's not much slower than the meteors
wiping out the dinosaur that dinosaurs
lasted for a long time after that event
so we're we're like we just be a layer
in the in the in the surface of the
planet with plastics and strange metals
like that at some point so we're just an
life will abide Life Will Survive us but
there's so much life we're going to take
down with us in this whole period And
there's so many of our own lives we're
going to terminate for no good
reason I'm looking at this uh Richard
tall character I'll have to look at some
of his papers it does look like boy is
the oversimplifying and do a lot of
people oh my God chck is's one on the an
on how good it'll be to lose amok that
said I'm going to um approach all of
these topics with humility and I would
like to have some conversations if
people can recommend um my default
position is always with a scientist but
even above that my default position is
with those who are humble versus those
who are arrogant yeah this this idea
that because you're a quote unquote
expert you deserve to have arrogance is
a silly idea to me again going to the
the broader view of life on Earth Yep
nature nature is the only one that gets
to be arrogant and it doesn't need it it
chooses not
to so um let me ask you about
love what role does Love play in this
whole thing what did did KL Marx have a
model for that Carl Marx was madly in
love with Jenny Von West tent
uh and wrote love poetry to her long
before he wrote D Capital uh and he was
infatuated with her he ended up also
impregnating his um his housekeeper so
there's a Carl there's a son of KL Marx
who was the son of the um housekeeper
not the Jenny there are numerous
daughters so so he was a uh he had a
complicated view of love oh yeah um
there's a dialectic on love there he had
an IDE idealistic view with with Jenny
and like he was rejected because he
wasn't uh not by Jenny she was madly in
love with him as well so it was a real
passionate love affair from the very
outset uh but then of course you have
children lots of them die there's a huge
amount of tragedy in his life as well he
and Jenny were forced out of
uh Chelsea by a chera epidemic my vision
for London back in the 1850s and 60s was
was Kolkata in the in the 1970s that's
really what life was like so there's a
lot of hardship in life as well and he
was always poor um so you know only Les
kept him alive financially uh he applied
for one job outside of um of um um he
never got a academic job he was pushed
out of prusser as a newspaper author but
he also um uh he applied for a job as a
Clark in the British Railway system was
turned down because they couldn't read
his
handwriting
so that's I think i' similar there so um
so yeah there's a lot of love and
passion but in general what do you think
is the role of Love In The Human
Condition it's vital it's um I mean that
that feeling of passionate um desire and
respect for somebody else and there's
perverted forms of love as well so I'll
leave that out but somebody having a
really a deep bond which goes beyond uh
just sexual attraction like I've had
that four or five times in my life life
with different women at different times
and I've stuffed up the most important
one very early on um and but that
feeling is incredible and uh you you
couldn't have life worth living without
that so it's an essential part of who we
are but what we have to do is to
transfer it not just to the rest of our
species but to all the species and
that's I think what's what's vital and
how do we maintain that over Generations
and I think that that that idea that we
can actually hang on to that General
sense of respect and not lose it again
because the amount of life we terminated
on this planet uh the the warlike side
of humanity that is too much of a
defining feature of our species it's the
opposite of love it's hate but it's
pleasure and inflicting pain on others
when you see people killing others in a
warlike environment they're enjoying
themselves okay uh it's rarely sometimes
it's self-defense but there's when you
when talk spoken to people who've been
involved in combat and been involved in
riots and said when you see somebody
riding bashing people up they're
enjoying themselves it's not anger
they're feeling is pleasure yeah there's
a dark aspect of human nature dark but
there's also the
capacity to uh to rise above that and I
think like I put us on a spectrum
between chimpanzees at one extreme and
bonobos at the other we're too close to
the chimpanzees you know and bonovas are
just having fun having lots of sex every
time they do anything they fuck first
and do the work later and then fuck
afterwards to celebrate you know fuck
first ask questions later it's like that
Scent of a Woman one of my favorite
films where alucino gives advice to a
cat he says when in doubt
fuck it's good life advice for a cat
especially um we mentioned that death
seems to be maybe fundamental to uh
creating a conscious AI I do you think
about your own death do you um are you
afraid of it um I'm afraid of going
through it um I'm the other side huh
you're not afraid of being on the other
side I don't think there is another side
I mean I'm I'm agnostic and I'm atheist
when pressed and agnostic the one thing
that I think I can understand why
religion exists is that the whole thing
that something exists is itself a
dilemma you you have to take on faith
that reality exists whether it's
simulation or actual real ity it exists
and that itself can't be explained in
any scientific manner I mean you can
talk about antiprotons and protons and
the sun being zero and so on but why did
it even happen in the first place so
there's part you simply have to take on
faith yeah um so there was darkness
before we don't know and there's
Darkness after yeah and I don't know if
they're going to be alive on the other
side of that Darkness I think
individually know but the the way you
can live on is by what you do to human
consciousness how do you hope people
remember you
um as someone who managed to integrate
um economics with an appreciation for
life well I have to say uh as a bit of a
callback you're one deadly
bastard it's a huge honor that you would
come down and talk to me you're a
brilliant person you're a hilarious
person the humility shines through the
Brilliance shines through thank you so
much well thank you spending this time
you you do the same for Humanity I mean
when you when I saw that email from you
my eyes popped out on my head okay well
you should hold your judgment I got to
show you the Sex Dungeon I have you you
waiting for an invitation I'll send my
wife over awesome can't wait all right I
okay M thanks for listening to this
conversation with Steve Keane to support
this podcast please check out our
sponsors in the description and now let
me leave you with some words from KL
Marx to be radical is to grasp things at
their
root thank you for listening and hope to
see you next time