- What will the economy of the future look like? To answer that we must first consider the current trajectory and the ways in which modern capitalism operates, who it benefits, and if it is sustainable.
- In this video, historians, economists, and authors discuss income and wealth inequality, how the American economy grew into the machine that it is today, the pillars of capitalism and how the concept has changed over time, and ways in which the status quo can, and maybe even should, change.
- “It’s not that hierarchy is bad,” says John Fullerton, founder of Capital Institute, “it’s that hierarchy where the top extracts from below is definitely bad and unsustainable.” He says that the modern capitalist system works this way, and that it perpetuates the cycle of growing inequality.
ANAND GIRIDHARADAS: Wealthy corporations and people love to ask the question: What can I do? What should we do? What can we start? What program could we launch? I would say to the billionaire change agents and corporate social responsibility departments of our country: Ask not what you can do for your country. Ask what you've already done to your country.
TIMOTHY SNYDER: The United States is a country which is among the least equal in the world. According to Credit Suisse, which is a Swiss bank and not some kind of crazy left-wing organization, we are second in the world in wealth inequality after the Russian Federation. In the United States since the 1980s, basically 90 percent of the American population has seen no improvement in either wealth or income. Almost all of the improvement in wealth and income has been in the top ten percent and most of that's been in the top one percent and most of that has been in the top 0.1 percent and most of that has been in the top 0.01 percent, which means that not only are people not moving forward objectively, but the way they experience the world—and this is very powerful—is that other people are on top.
JOHN FULLERTON: Living systems have what are called healthy hierarchies—so it's not that hierarchy is bad. It's that hierarchy where the top extracts from below is definitely bad and unsustainable. So, take the lion in the forest or in the jungle. The lion is at the top of the food chain, but the lion sits around sleeping most of the day rather than eating and killing all day. And the lion, therefore, serves a very healthy hierarchical purpose in the food chain keeping the herd, keeping the balance between smaller animals and larger animals. But when the king of the jungle decides to extract as much as possible for its own benefit, you have a very unhealthy system. And unfortunately, that pretty well describes how the modern capitalist system works, where there are benefits of scale; the bigger get bigger, they get more powerful, they get more political influence. But their intention is to maximize shareholder value because that's what we do. So, the cycle of growing inequality is sort of locked into the system design.
GIRIDHARADAS: Before you want to start something of your own—a little private, unaccountable venture—do an audit. What do you pay people? Do you pay people enough? Do you use subcontractors to avoid responsibility for those workers? Do you pay benefits? When do your benefits kick in? What do you lobby for in Washington? Do you lobby for things that make everybody have a better life in America, or do you lobby against social policies that would cost you something? What's your tax avoidance situation? Do you happen to be this earnest company that wants to change the world? I mean, is this company paying its full measure of taxes? Does it use tax havens? Does it do the double Dutch with an Irish sandwich tax maneuver? Does it send money to the Cayman Islands and then back and do all this complex routing?
ALISSA QUART: Now to be middle class, you might not be able to have a summer holiday. You might not be able to own your home. You certainly wouldn't have two cars. What interests me is also we had this idea of the middle class as a solid thing and now it's a shaky thing. We also had this idea in the middle of the twentieth century of it as a humdrum, boring thing that we wanted to escape, kind of like Revolutionary Road, Richard Yates. And now it's like everyone just wants to get into it, into the dream, the American Dream of the middle class that's now so unstable. One of the things that happened was unions weakened. It used to be that 30 percent of employees were in unions in the '60s and now it's seven percent in the private sector. And that's a pretty huge drop off. And at the same time, you're seeing a lot of the workforce become gig-ified or turn into freelance contingent, et cetera. Not stable, not with healthcare, not with a promise of security and long-term employment. There are other reasons why the middle class has been under siege. One is the concentration of wealth. You see the rise of the one percent, the rise of the wealthiest. Since 1997, the income of the top one percent has grown 20 times the rest of us. They're an ownership class so they tend to own many of the corporations that are, say, creating the Uber economy or hiring people to drive part time or the companies which employ people at hours which mean that they can't take care of their children—hours in the middle of the night or odd hours in the early morning.
SNYDER: One of the fundamental problems with our American, right-wing politics of inevitability is that it generates income and wealth inequality and it explains away income and wealth inequality. And so, you get this cycle where, objectively, people are less and less well off and subjectively we keep telling ourselves this is somehow okay because in the grand scheme of things this is somehow necessary. Individuals and families no longer think 'I've got a bright future.' They no longer believe—and this is something Mr. Trump got right even if he has no solution and he's making things worse on purpose—they no longer believe in the American Dream. And they're correct not to do so. If you were born in 1940, your chances of doing better than your parents were about 90 percent. If you were born in 1980 your chances are about one in two and it keeps going down. So, wealth inequality means the lack of social advance, means a totally different horizon—it means that you see life in a completely different way. You stop thinking time is an arrow which is moving forward to something better and you start thinking hmm, maybe the good old days were better. Maybe we have to make America great again and you get caught in these nostalgic loops. You start thinking it can't be my fault that I'm not doing better, so whose fault is it? And then the clever politicians instead of providing policy for you provide enemies for you. They provide language for you with which you can explain why you're not doing so well. They blame the other, whether it's the Chinese or the Muslims or the Jews or the Blacks or the immigrants and that allows you to think okay, time is a cycle, things used to be better but other people have come and they've taken things away from me. That's how the politics of inevitability becomes the politics of eternity. Wealth inequality, income inequality, is one of the major channels by which that happens.
GIRIDHARADAS: If you're telling me that there are companies that do none of this stuff, that pay people well, that don't dump externalities into the economy, that don't cause social problems. If there are such companies that exist, yeah, then once you've taken care of all that, great, doing some projects to help people is great. But I haven't found very many such companies and more often than not when companies do a lot of CSR it's because they understand that they're not on the right side of justice in their day operations, so they want to do virtue as a side hustle. And the problem is a lot of these companies tend to create harm in billions and then do good in the millions. And you don't need to be a mathematician to know that we're the losers from that bargain. And you look at the B Corp movement, there's a lot of companies that actually have an interest in trying to invent a new kind of company that is not predatory. There is, in the B Corp movement, a certification process for those companies now. The challenges of them is that it's a great thing but it's fundamentally voluntary and what this does is it means that if you're an already good, virtuous company you may be motivated to get into this club. But if you're Exxon or Pepsi you're not going to be in this club. One of the things I'd like to see is how can we actually use the power of public policy to get more companies to sign up to simply not dump harm, social harm, into our society whether that takes the form of toxic sludge or obese children or workers with unpredictable hours and income.
QUART: You know the job numbers may look like they're up but, first of all, they often speak to how many jobs people are having, multiple jobs, which is not a great state of affairs for a lot of people. People now have more jobs. Each person has more jobs than they did in 2016, like individuals. It's up by two percent or something like that, so it's substantial. You can be looking at these job announcements and you could be thinking: What's wrong with me? Why can't I figure it out? Why can't I get that second or third gig? But the point is why should we have to have all these side hustles? Why should we have to have second acts when we're 42?
ERIC WEINSTEIN: Traditionally, technology has moved us from low-value occupations into higher value occupations. So, while we always decry the loss of jobs, we usually create new jobs which are more fulfilling and less taxing and therefore those who have cried wolf when they've seen technology laying waste to the previous occupations, those people have usually just been wrong. But the problem with software is that software spends most of its time in loops. Almost all code can be broken into two kinds of code: Code that runs once and never repeats and code that loops over and over and over. Unfortunately, what jobs are is usually some form of a loop where somebody goes to work and does some version of whatever it is they've been trained to do every day. Now, the danger of that is that what we didn't realize is that our technical training for occupations maneuvers the entire population into the crosshairs of software. It's not just a question in this case of being moved from lower value repetitive behaviors into higher ones, but the problem is that all repetitive behaviors are in the crosshairs of software. So, I think it's really important to understand that where we are is that we may need a hybrid model in the future which is paradoxically more capitalistic than our capitalism of today and perhaps even more socialistic than our communism of yesteryear because so many souls will require respect and hope and freedom and choice who may not be able to defend themselves in the market as our machines and our software gets better and better. And this is one of the reasons why something like universal basic income comes out of a place fiercely capitalistic like Silicon Valley, because despite the fact that many view the technologists as mercenary megalomaniacs—in fact, these are the folks who are closest to seeing the destruction that their work may visit upon the population and I don't know I think of any 9-, 10- or 11-figure individual at the moment that I'm familiar with who isn't worrying about what we're going to do to take care of those who may not be able to meet their expectations with training and jobs as in previous models, whether it's truck and car driving as one of the largest employers of working-age men threatened by self-driving vehicles or any of the other examples. For example, computers that are capable of writing sports stories from the scores alone. So, in all of these cases, I think the technology is actually forcing those who are most familiar with it to become most compassionate and whether or not we are going to leaven our capitalism with some communism or start from some sort of socialist ideal and realize that if we don't find a way to grow our pie very aggressively with the tiny number of individuals who are capable of taking over operations of great complexity, I think that we are going to have some kind of a hybrid system. I wish I could tell you what it was going to look like, but the fact is nobody knows.
WENDELL PIERCE: We have gotten away from the idea of true capitalism. Now we have people who claim to be capitalists saying: I want to restrict our resources. That we have a finite amount of resources, so I've got to make sure only my kids get opportunities at school, and we're only going to have access to capital, that my tax rates are going to be here at the expense of other folks. And that's actually not true capitalism. We grew as a country when people said hey, listen, it's important that everyone has access to a good education. It's something of great importance because that means the more people that are educated, the more ideas, the more growth we're going to have and that's what capitalism is based on. And I go back to art, music. It's what jazz is all about. It's an American aesthetic. It's freedom within form. Yes, there's confinement and restriction and technical proficiency, but the idea of the jazz solo as improvisation is a finite amount of notes with an infinite amount of combinations. And so that's what capitalism is. There's ultimately an infinite amount of possibilities with this finite group of people. But the more people that are in the mix, the more ideas are going to come about which produces growth.
YANIS VAROUFAKIS: Brute power, determining in the spoils. Civilization was all about moving away from a situation where brute strength and power determined the quality of life of the members of our species. That was the theory. To a very large extent, we moved in that direction and this is something we should be very proud of. But we're very, very far away from having created social relations between us—a legal framework, a way of organizing economic life—that takes power out of the equation of civilization. Economic surplus is essential for humanity to develop. If we don't have an economic surplus, we cannot grow, not just physically but also spiritually. We cannot create new literature, we cannot create new film, we cannot create new theater. We need to have a surplus in order to be able to invest it in all those activities that make human life richer. But the question is who controls the surplus? And, of course, in societies that are very asymmetrical in terms of who owns the means of production, whether we are talking about slave-owning societies where there's a few slave owners, or feudalism, or capitalism where you've got 0.1 percent owning most of the productive abilities or machinery and factors of production in society. They can, in order to preserve their property rights over those means of production, they use debt, they use political power, and they use the monopoly position that their property rights afford them in order to skew the whole process of creativity of production in a manner that, for instance, in the end, in the case of the media world we have 50 channels of rubbish to watch from. We have industries that are dedicated to producing things that we neither need nor want, destroying the planet in the process. We have billions of people working like headless chickens, driving themselves into depression and going home and crying themselves to sleep at night if they have a job, or consuming antidepressants and becoming obese and seeing shrinks if they don't have a job. In the end, we have a joyless economy. Even those who are extremely powerful, in theory, the haves of the world, are increasingly feeling insecure. They have to live in gated communities because they fear all the have-nots out there that envy their wealth. In the end, we have developed fantastic means of escaping need and escaping want which we are not putting to good use because, in the end, we are developing new forms of depravity and deprivation and universalized depression, psychological depression, which is incongruent with our fantastic advances at the technological level.
GIRIDHARADAS: I think what is undeniable in this country is that for 30 or 40 years many people on the left and right have felt that things were not going right, that the country wasn't working for them, that it felt rigged to them, that it felt impossible to secure the life that they were promised by this country and to give their children something better than they had. And all that while there was a lot of richsplaining to those people by the American elite that 'No, no, no. Things are great. Trade is good. Trade's great. It'll be perfect. It's going to lift everybody up. Globalization, perfect. It's great. Look, there's a couple of bumps but no worries. And the aggregate all will be well.' I mean, as though anybody lives in the aggregate. 'Tech. Don't worry. Don't worry about the fact that everything got automated and your jobs all went to Taiwan. Don't worry about it. We'll be better off on the whole.' And there was just a lot of this kind of richsplaining. I grew up and I remember studying this stuff in college when I took economics classes. I went to the University of Michigan. I was sitting in Michigan in Econ 101 and I remember getting this lecture on how all this stuff was for the good and we would be better off. And right around us, all around us in Michigan in 1999 the state was falling apart. These long tectonic shifts were basically like—work was disappearing and trade was not benefitting most people and globalization was not a walk in the park and aggregate effects were not really of any comfort to anybody. And how was it possible at the University of Michigan in 1999 with all of that evidence all around us that we could sit in an intellectual cocoon and explain to ourselves that rising tides lift all boats, essentially.
There is a way in which American elites, and this is not just a couple of greedy hedge fund billionaires, the American intelligentsia also has been complicit in a false story. Rich people and wealthy corporations spent a generation waging a war on government, defunding government, allowing social problems to fester and allowing their own profits to soar. And then with government weakened, social problems multiplying and their own pockets full, they reinvent themselves as the new replacement of government which is instead of trickle-down economics we now have trickle-down change. Let them make their fortune and then they'll just throw some social change down from the mountain. Well, we have to decide in America if that's the kind of change we want. But what I do know is if you project that kind of change backwards throughout time, we wouldn't have created most of the change that we all take for granted today. There would, frankly, have been no New Deal. There would be no modern American economy if we had depending on the powerful to throw down scraps. Many of the most important things in American life had to be taken from the powerful and given to the many. It's time that we reclaim that heritage again.