Capitalism and democracy: can a difficult marriage be patched up?

Here’s a great lecture by Martin Wolf who’s writing a book on capitalism and democracy. It’s well worth watching I think.

And, as is my custom, and despite Paul’s thinking that the result is so buggy it may not be worth it, below the fold I append the transcript as produced by Google Recorder (which is at least better than the Google YouTube transcript – which you can also get from YouTube – in arranging the transcript into paragraphs. On the other hand you can scroll through the YouTube transcript and click on words it got wrong to see what they are.).

NB: I just found this bit of classic transcription, which I’m leaving in. “Martin there’s a stack of additional quidditches” There is indeed.

So it’s an immense pleasure and honour to give this lecture or this this oration. I would. I would very much like to be with you on this occasion, but obviously that has been impossible so I’m giving it in this slightly strange way to which I suppose most of us have become very rapidly quite accustomed.

The the background for this is is pretty simple like most people of my generation. I was born immediately after the second world war child of refugees and I thought that we in the West lived in a completely stable political and economic system. Mistakes might be made but they were essentially policy mistakes not challenges to the system itself.

But it’s become obvious in recent years in the words of one of the greatest scholars of democracy. Larry diamond of Stanford that we are in what he calls a democratic recession and this democratic recession is not just in emerging and developing countries though that’s very very important but also in core countries of the democratic west and today is indication right now there is a serious debate we will see whether.

It turns out to be important or not whether the United States the world’s most important democracy can conduct what is regarded as a fair and legitimate election by its own people. And this is a situation which leads for me would have been unthinkable fifteen years ago. So it is with that.

In the background that I started writing and I’m now very near the end of a book which is called the crisis of democratic capitalism, which has been my attempt to work through what’s happening quite happening particularly focusing on. Our society to be Britain and America obviously the ones I know best and I most concerned with and to consider what the relationship between democracy and capitalism is.

Why there are these obvious stresses in this system and what we can do to solve the challenges this creates and that’s what this lecture is about so let me start with. A quotation from Aristotle in order to do this work for this very new approach new set of issues for me.

I went back to where I started in a way long before I became an economist I was a classicist at Oxford and this had a profound influence on me and I found I’ve gone back to the first people who thought really seriously about democracy the ancient Greeks particularly Plato and Aristotle.

I’ve got some wonderful quotes from Plato too, but I’m not going to give them but this is I think an incredibly useful and wonderful quote in in it. Aristotle says it is clear then that the best partnership in what he thought of as a democratic a constitutional democracy is the best translation is the one which operates through the middle people by which you mean middle classes and it’s also that those states in which the middle element is large and stronger in possible than the other two together the other two being the elite the Prutocracy the oligarchy and the poor or any attenuate stronger than either of them alone as every chance of having a well-run democratic constitution.

That’s the clearest statement. I’ve been able to find of the role of the middle classes the central role of the middle classes in democratic stability. And the the second quotation is also well known it’s from a book by honest Hemingway which somebody asks, Another person how they went bankrupt and the answer he gave which is very relevant to this lecture, you will see is two ways gradually then suddenly.

That’s very much my theme that over three or four decades in the democratic world in court democracies.

Things started to fall apart large proportions of the population began to feel the society was not working for them the economy was not working for them. This was hidden by at large people weren’t too aware of it and then came the financial crisis and the financial crisis was a transformative event politically economically and socially as I think Kobe 19 may be and that suddenly broke open politics and gave us for example the election of Donald Trump and the Brexit position.

So to, Raise gradually and then suddenly. So what I’m going to do in my lecture in the next 25 minutes is cover four themes. This is a tiny fraction inevitably very crude and simple of my book which is grown rather large but I hope at these will give you an overview of where I’m thinking about the challenges we confront and why they’re so important.

So the first. A point I’m going to discuss maybe the most important is the fragility of democratic capitalism what is democratic capitalism how does this political system democracy mesh with this economic system capitalism, do they go to get a naturally or are they in fundamental conflict and the answer that I will suggest is both.

Then I’m going to talk about the recession of democratic capitalism the evidence we have of what’s gone wrong, we’re very small part of of the evidence but some of it then I’m going to focus on what’s going wrong particularly in the high income democracies and particularly in these countries.

I’ve mentioned and why have so many people become so angry. And then I’m going to talk briefly about some of the elements of renewal. So and historically the sort of starting point and think about this democracy in the form that we have it now which is of course very different from that of the ancient Greeks it’s representative democracy a system that evolved in the Middle Ages particularly in Britain but the modern universal suffrage democracy which really dates back let’s say to the beginning of the last century give or take so really quite a recent political development as.

The you followed the rise of capitalism liberal capitalism came first and democracy followed why did that happen why did the rise of a capitalist economy a marketing driven economy generate this demand for and concession of democratic rights to the mass of the people ultimately all adults in in the 20th early late 19th and early 20th century.

And I think it was so very briefly for two sorts of reasons one was a set of ideas are the essential idea in capitalism is an essential idea is the moving from is you’re moving from a scribe to achieve status which is fundamentally egalitarian, you know, the words you move away from the idea that you’re defined by your birth by what your parents were particularly obviously patriarchal societies, your father was to the idea that you can become.

Whoever you can achieve whatever you can achieve and that’s a very powerful egalitarian idea. There is this underlying idea of capitalism the market economy that are people are entitled encouraged to engage freely in truck parts or in exchange which means of course that individual choices have inherent value this essential idea of capitalism is that people are allowed to choose free to choose symbols and freedoms famous phrase.

And the underlying idea of democratic citizenship that have individuals cooperating in collective decision-making where that’s necessary and there’s no doubt in my view that there are many many things we have to decide collectively and possibly even more than we used to now that the world has become so complicated and human beings have such a tremendous dramatic presence on the planet it again means that individual choices have that we value individuals in democracy and then there’s also history capitalism by its nature.

Means free labor the collapse of serfdom and slavery because both are antithetical to the idea of free labor slavery was essentially abolished in the 19th century. I think because of the march of capitalism some of our controversial view but seems to be obvious in meant greater prosperity, very important people began to be freed from sheer just the pressure of survival in the beginning to 19th century basically everywhere in the planet was on the borders of subsistence life expectancy was 30.

We meant mass education the rise of organized later labor in response to mass industrialization and the opportunity because of rising wealth for positive some politics all of this helped develop the pressure for and the willingness to concede democratic freedoms. And this is shown in this chart which is I can’t go into in depth but it brings out some of this reality the brown line shows the proportion it comes from a database called quality for the proportion of countries freak independent countries, which itself increased great yoga this time because of decolonization the proportion of countries that were effectively electable electoral democracies, not perfect ones.

And we can see back in 1870 that was 10% of all countries in fact in 1800, it was zero they were not according to this classification and by 1920 particularly after the first world war that had risen to 40 percent, of course a limited number of so many countries were empires then we had the interwar and war-time catastrophe the the first great democratic recession of the modern arrow and basically democracy disappeared it was then recovered after the second world war there was a long period of autocracy.

Ing democracy in the Soviet Union of Soviet empire and of course to the colonies of the empires which were then broken up and then a huge upsurge of democracy from 1975 onward which reached a peak in about 2006 and though I can’t this doesn’t database doesn’t go on it shows it’s stopped and I’m just under 60% of regimes and it’s now in decline.

And the interesting thing the other two law the other lines are showed the ratio world trade to GDP which is a measure of the openness of capitalism the dynamism of capitalism and it’s global integration and you can see though I won’t go into detail that actually periods when the world was becoming more open where periods when democracy was doing very well and periods when the world economy was but I mean closed more nationalistic more protectionist more collectivists in that sense for periods when democracy very badly, so the historically, To I go to this much more in my book there’s clearly a connection between the dynamism of global capitalism and the rise of democracy and I think it’s a two-way process.

I don’t think it’s one way at all, but there is a relationship here, it’s a complicated one. Yeah there have all course always been profound conflicts between democracy and capitalism and not the same sort of thing in very profound way capitalism bytes nature once released goes cross-borders. I have a wonderful quote in my book from calm marks who recognize this very very clearly the global character of the capitalist economy democracy, of course is inherently local it ties you to a political system and the idea of citizenship attached to a place to institutions which, Govern that place and to which you’re personally bound as a citizen it is based on a tie between a particular location and the people who live there democracies, of course the domain of voice in hashman’s famous expression and what capitalism is the domain of exit if you don’t like what’s going on in the democracy you have to come engaged in politics if you don’t like what’s happening in capitalism you can go and buy from somebody else or at least that’s the theory and in some most cases that’s true, so it’s competition.

Democracy rests on an inherently and principal egalitarian ideal one person one vote each person is at least in principal equal to the other in the democratic round was not the reality well capitalism rests on an indigalitarian ideal if you like that, you know, your influence upon the system so consumers depends on the resources you can bring to it what resources you have obtained and if democracy and this is very important or the market economy or both fail has happened in the interwar period it was.

Either was is giant democratic collapse in the interior period, then you’re likely to get demagogy plutocracy or autocracy and that’s happened before it happened in the Greek period and it’s happening in my view again, so. Get today so if capitalism and domocracy are a marriage it is obviously a difficult.

So now let me turn to the second section recession of democratic capitalism and capitalism seems to have one of these for the moment there’s a strong backlash from sort of the screen green movement at the moment, but basically this is sort of branch of Milanovich, very great export and inequalities and new new book is called niche books called capitalism alone capitalism has one it’s everyone has sort of running a market economy of some kind but the world is seeing a move away from democracy with the rise of popular.

Ityism anti-democratic populism. I’m not going to go further into what populism means. I don’t at the time but victim calls a liberal democracy a contradiction in terms pretty obviously and/or top proceed above all the world’s most important emerging economy and rising superpower as adopted what I’ve come to call in my book communist autocratic capitalism and many other countries and I don’t have the time to go through the list but they’re pretty obvious Brazil India turkey the Philippines.

Hungry Russia, but of course have have succumbed to demagogic autocratic capitalism and in my view that’s very much the sort of person that mr Trump would like to be if he weren’t living in america and nationally’s populism not autocratic has certainly one immense influencing called democracies no chip league the US and UK and this is a chart which comes from freedom house, which is the most interesting source of daily about to date information and maybe.

Talk about this democratic recession in detail we’re up around detail for at least a large 10-12 years and this they divide the world into free from their point of view partly free and not free you can see here the enormous expansion of the free reached basically a peak in the late 90s it then stabilized and is now in decline but the client is relatively small but it’s very clear and if they and the latest numbers would be further down the proportion of regimes that I clearly unambiguously free is very.

Low. They also actually rank countries by how democratic they are how deeply entrenched democratic institutions democratic values the democratic spirit is and you will be very pleased to see that in this list of important countries. Australia is just number two behind Canada, I hope to live with that but a highly democratic country with well-consolidated democracy and it is very disturbing that far and away them and they find it very distantly talk about it the most important democracy the most powerful democracy the one that Saved democracy in the 19th century from that clearing the 20th century from Mac great recession of the inter war years, the US is so low and going down so that’s pretty disturbing.

I think for our future. And the final thing they bring out and I’ve mentioned is already that I want to bring out is this tremendous shift in the balance of power, it’s not of course the the it’s true that if this is looking at nominal GDP won’t go into why I’ve used that this shows the shares of the US eurozone Japan and other advanced countries all of which are sort of the Western alliance relative the rest of the world and you can see if you go back to 94 and compare today, there’s been a dramatic decline in the economic weight of the Western democracies including here, of course.

When the Western quote obviously including and Australia and New Zealand the Pacific countries, but very big decline and and the offsite is pretty well entirely not entirely the rise of China which is now a superpower and continues to grow faster than any other country and has since it has this gigantic population is still relatively poor obviously tremendous potential and he’s reinforcing as you know better than I do it’s kind.

Of communist orthographic regime, which has a lot of influence to bear around the world so we have an external rival let me turn then to what’s going on in the high income democracies and penalty but section so advanced countries. I argue in my book and I just touch upon this.

I’ve been buffeted by some very profound changes. It particularly look there I don’t have the time to go into this huge debate about whether these are cultural or economic my own view is exclusively into related but economics has played a very big part for the recent. Aristotle already described two and a half thousand years ago and to focus for this purpose on the economics because I’ve only got five minutes to get through this section, so we’ve got the very important fact of the introduction Indian dear industrialization the end of the mass industrial era and with it the industrial working class.

Which was a central part of the emerging middle classes are pretty well all democratic states in the late 19th and 20th centuries reaching an apogee in the middle of the 20th century and with it organized labor the basis of the labor parties, so a moderate social democracy which stabilized in my view democracy in a very profound way we have very rapidly rising inequality, we have the the huge adjustments created by mass immigration in particular in countries which were not used to it in Europe.

Very important development slowing productivity growth so you’ve got right rising inequality will be much less important if underlying growth it continue but it didn’t underwrite productivity growth has slowed dramatically and then came the shock of the financial crisis and this perception after the financial crisis that capitalism was an important ways raped rigged for the benefit of the wealthy the rig for the benefit of the financiers and wreaked for the benefit of the new tech monopolies which were exciting enormous power and in the case of The.

Eventual sector collapsed and was saved by the state when many many millions tens of millions of orphaned people were not saved and this created tremendous rage in my view so let me just go through some of this this shows the shares of industry and civilian import employment ranked by the shares in the in in the sorry.

I have to go back. Ranked by the share in 1970 and you could see that back in 1970 pretty about half the labor force in many countries was employed in industry and it is now fallen dramatically it’s ongoing decline because this is the Arab area of the economy where productivity growth is very fast productivity growth is the main driver of this not imports from emerging countries, so that’s also mattered and you can see that with this the mass industrial labor forces that we had.

Ab diminished very very dramatically over time changing the path of work in a way very chromatically then I’m just looking at a measures of inequality in 2016 from the OECD. I think it’s not an accident that the US and UK of the consolidated democracies have exceptionally higher are inequality and I don’t want to make this very, you know, it’s not a simplistic relationship here.

I’m but I think that in the US and UK particularly inequality rose very dramatically the US throughout the period the UK in the eighties these stabilize the relative incomes quite dramatically and that I think had a long term social effect they’re not this is what has happened to productivity growth this is so this is average growth in output for our in each decay for the the biggest developed countries is basically the g7 plus Spain and, We have this miraculous 50s and 60s after the war everybody was getting richer this then got much worse in the 70s and 80s in the 90s there was a bit of an upsurge in the US mostly because of the tech change and the last 10 years the 2010s have been a catastrophe put up activity growth we’ve never recovered the productivity growth are before the financial crisis and I think that’s had a dramatic effect on the real incomes it really incomes a most people in Britain most people in Britain, for example are no higher now than they were before the financial.

And that’s not what people expected that’s not what people expected to happen, they’re very disappointed about this and then of course we had the financial crisis and this the effect of this has been quite dramatic so what I’ve done here for these countries. I’ve I’ve, Looked at the proportional the decline relative to the pre crisis trend of GDP per head as a how much is GDP per head below what you would have expected if you thought that the 1980 to 2007 train would continue and the interesting thing is the only country of these countries which is still on the trend line is Germany was actually quite a slow train but if you look at the UK Italy Spain GDP per head already in 2018.

Was more than 20 or 25 percent below train in the US it was 15 percent below trend so enormous losses generated in the in the financial crisis which had never been recovered that’s that’s very very clear. I’m so that leads me to my last section in the last three or four men for minutes, what can we do to to recreate a sense of citizenship restoring the idea that people?

Share one political system to which they’re deeply committed, they’re deeply committed to one another because that’s the basis of democracy and how do we do that while also reinvigorating our capitalist economies to give more inclusive growth to give people a wider sense of their sharing in the benefits that of course problem varies across countries some of them much more successfully than others but quite a few important countries notably include the US this doesn’t happen and so I’m going to talk about.

Two things renewing democracy and renewing capitalism and I’m going to be able to do no more than just give you headlines of what I think the issues are what we want to do renewing democracy. I basically discuss four things in my book the first is to strengthen the idea of citizenship without citizenship.

I’ve been arguing recent pieces a sense of citizenship the belief that it’s treasured and valued you can’t have a functioning democracy the the, Greeks knew this and we have to remember this and citizenship by its nature is exclusive, it’s not a universal. It is something tied to place and so I argue and a great length, it’s not something I would ever written twenty years ago before foolishly perhaps that people have to have a patriotic sense why because it’s only if they feel they share these bonds that they will regard the natural phenomenon in a democracy that you will lose sometimes to the other side the other side therefore must be regarded as legitimate the opposition must be legitimate for it to be legitimate, you must believe that you.

Should. Is something more important than what you device what divides you that’s values and of your ties to place that’s essentially what I mean by democratic patriotism, we need to renew government governance in a lot of countries governance is deteriorated dramatically in terms of competence in the way we do regulatory bodies in the relationship between the centre and the local and the global we have to think about how do we manage the relationship between the local a centre the core of democratic politics?

And the global and that’s a very big set of issues we need to renew accountability. I think in many countries. I think that’s much less true in Australia elections don’t work very well are voting systems are very good are parties have become shells. I believe quite passionate public funding and we need more more inclusion of people merit in politics.

I like the House of Lords idea and we need greater levels of. Citizen involvement and I discuss in my book ideas. I’ve stolen from Nicholas Gruen well in Australian economists about bringing together citizens assemblies are using the jury principle as it were selection by law more broadly in politics the give people of advice a voice and I actually propose having a house apartment which is selected by a lot one which would not from which the government would come but through which legislation would have to pass.

And finally we need to think about media where we have a tremendous crisis of media particularly with social media and have long discussion of this issue. I won’t have time to go through this now but I think we have a crisis at the media. Then finally renewing capitalism in doing this and this is sort of the end.

I penultimate slides over the minute over I went back to history as it were. I was interested in well what people did people think in the forties about what renewing capitalism meant? And I went back to one of the greatest speeches as it happens, which I hadn’t read for the 40 years which was FDR’s speech in January 1941 called the Fall Freedoms and it has this very important for freedoms aspect about the new world they wanted to create which is very inspiring of course and but he also has a domestic agenda and I thought the domestic agenda is pretty damn good, so I’m just a repeat it equality of opportunity, that’s a really big challenge in on highly unequal societies because people start off from such.

Different positions, we need to generate employment for everybody now some economies have done pretty well on that. But lots of economies in the Western world have not Spain is a very important example not generating the jobs we need and when we do unfortunately not of them are very insecure we need security through partly through the welfare state and partly in employment.

I think now that too much risk has been transferred to the work at the individual worker more risk than on the whole in the individual compare we have to think about how that might change he talks about ending special privileges for the few and I’ve written quite a few called.

Thems on recapitalism raunchy capitalism which I think is particularly important in monopolies the emergence of monopolies the power of the tech companies and also in some aspects of the financial business and we have to look at that very carefully and the other thing here is tax avoidance really quite shameful tax avoidance use of tax havens in a quite grotesque way in my in my view which I discussed in some columns of mine and then finally the crucial thing we need to rising widely shared and sustainable standard of living and that’s a tremendous challenge because growth has just sort of stopped.

And it’s not easy to see how we get back so the challenges here are immense, this is a world in profound up evil domestically and globally global capitalism in my view promoted democracy created it and but it has also got it round the world but it also promoted a huge shifting global power against democratic states and it promoted shocks inside high income countries, including of course, the great financial crisis the challenge we confront is to protect democracy from populism particularly destructive.

Populism and adjust to the rise of China while managing the global commons. I think these are some of the most difficult periods in the most difficult periods we’ve had since the interwar years and this requires us to renew democracy in capitalism at home and globally. It’s going to be a very very difficult challenge and so this is 25 minutes or so on the themes that I’ve been writing and thinking about and I’m getting towards the end of my book it’s been a tremendous challenge but it’s also been a bit disturbing to realize so much of what I thought was solid.

Absolutely stable guaranteed and wasn’t thank you very much for listening. Thank you Martin as I mentioned everyone here expected what a set of stimulating ideas and propositions things that have gotten people thinking as we’ve you’ve been speaking questions have been coming in and as we discussed before the event, you knew the people even submitted questions in advance of yours speaking and anticipation and sort of ideas you’re going to present but what we’d like to do now is to ask Mr.

Charles good who is as we know the person after whom our, Name. And Charles are switching on his camera right now. Charles we’d be honored if you would ask the first question this evening of. I’d like to ask a question on inequality. Inequality is usually thought of as a political issue.

My question is whether it to ask you whether it is a significant economic factor leading to lower consumption and therefore lower growth and if that is the case, how could it be addressed, thank you?

That’s that’s a very very interesting question. There. I think two dimensions of this one of which is very plausible and the other which I’m not sure. The most plausible and here I’m relying particularly on work which came out a year or two ago by two American economists out if Myan and Amir Sufi on.

Like we called broadly the savings gluck demand deficiency, why do we live in a world where real interest rates have been essentially zero for fifteen years twelve years and we’re incredibly low even before that this is a world which already was described by Ben Bernanke in the early 2000s this sort of one way thing of it’s chronically demand deficient.

And I think the and a recent book by a friends of mine Michael Peterson back climb explored this in detail internationally basically the argument is that large increases in inequality which occurred pretty well across the world. I China’s very much part of this have been associated as you’d expect with very large increases in exante savings.

There has been no comparable increase inexant investment except in China and the argument would be that one of the reasons for that is demand is a week demand is week demand isn’t growing properly there’s really no reason for private businesses to invest a lot particularly in capital intensive activities, so they don’t and that’s a private investment has been very weak for a long time savings are very high which means right demand is rather weak.

And has been rising so really interest rates get very ultra low and the only way we’ve been able to sustain demand which is what I argued in my book was ships and the strong is by developing creating credit policies and when the credit bubbles don’t work we have huge increases in public debt, which on the whole don’t go into growth promoting activities, so the rising equality is a core part of the global savings plot issue and that I think is absolutely clear.

I’m to me, that’s a completely obvious and and so I have a Quote. Wonderful quote from Marina Ackles in one of my columns who was governor of the Reserve Bank in the 30s and the Federal Reserve sorry who said of the course that we’re in Islam because the people who want to who want to buy your products don’t have any money pretty obvious then we got to give them money go and run deficits for God saying get them and of course the second world war will deliver that the other more interesting one to me is whether the enormous increase is in the, Inequality in the distribution of the gains from the corporate form within this is stupendous increases particularly in america but not only in america of executive pay has dean motified demotivated in significant measure the workers the middle managers the workers in these corporations and has made them very effective rent creation and rent transfer schemes but made them less dynamic that corporations that are so unequal in the, Distribution of gains just don’t work very well and they’re here, of course, we know this dependence increases in the relative pay of topic secretary’s physique ordinary workers, which is certainly not correlated with productivity, it’s absolutely clear now that’s a more hypothetical.

I’m not sure whether that’s true, but in the first thing that I talked about I’m pretty sure it’s true so I do actually think that inequality has gone too far and it has to be reversed.

Thank you I’m here to now go to questions that I already submitted Martin and as you know, the system here people vote questions up that they that they like and so I’m going to ask you out our top rating question which shouldn’t I suspect won’t surprise you when you hear it one of the things at least I as an Australian and proud of is the fact that we have compulsory voting in this country yeah which is of course distinguishes a number of other democracies you as you would well know so our question is simply asks, you know, do you think that the fact that we insist that if Everybody including in particular the middle class cast their vote in elections has something to do with the health of our democracy.

Well that’s a very easy thing to answer my answer is yes and I put it in my book. I think the fact that and I’ll just add one thing the fact that in the United States is it expected that not much more than half the population will elect in this will vote can this incredibly important presidential election.

Is it tremendous indictment of American democracy and there’s a lot more to do than that but I believe very strongly that is a patriotic duty to vote. Yeah. And the second most highly rated question takes us to a different area and that has to do with descriptions of democracy.

Gonna just read the question here from from Gary you think instead of the usual descriptions of democracy as either liberal social or even that instead we have arrived at a corporate democracy especially in the USA where companies have captured the political process outer than media lobbying donations employment of X politicians and in the process disenfranchised the middle class.

Yes, I call it put off proceed because it’s not just corporations. I think plutocracy is the way I have a description against the way the Roman Republic ended and that wasn’t a democracy of course very far from it but it was a remarkably successful republic blue top christie is usually historically not stated.

Tends to lead to autocracy because plutocrats start fighting about one another and that may not always happen that’s what happened as often happened not necessarily physically fighting but metaphorically fighting they give you bad government people then turn to a lot of autocrat and Plato’s view which is the most set in the republic is that autocrat often comes forward it’s beautiful to create projects so relevant as the defender of the people against the plutocrats, yes, okay, that’s it precisely, of course what we’re seeing with.

The folk popular some of somebody like Donald Trump I think that there were always very powerful plutocratic elements in the American constitution, but they were balanced by others over time particularly the last 40 years the enormous increase in resources available to the Plutocracy and the collapse in resources available to everybody else which is partly the disappearance of trades unions of.

Affected political institutions therefore everybody relies on the same funding stream, which is out of very very wealthy people are left and right, you know, the Democrats East that’s being too simple but tends to reinforce this. I would like if I may just finally conclude I’ve just participated in a debate promoted by the Chicago Booth School to celebrate commemorate mark the 50th of an anniversary of this very famous article by Milton Friedman arguing that the social.

To responsibility of corporations is to make profits and I was asked to I would very privileged to be one of the relatively small number of people to write essays for that and I wrote essays an essay which I was quite proud of and you can get very very easily on the site on specifically the question that was asked namely and the argument I made was exactly that in that argument Milton Friedman said corporations should play by the rules which we all agree, but the point I made is unfortunately corporations are making the rules.

They’re not playing by the rules, they’re making the rules and that destabilizes the democratic system and that’s exactly what the questioner is suggesting and I agree. Thank you we’ve moved to the topic of environmental dimensions of what we’ve been talking about and the question is of pointed to the fact that that really hasn’t gotten to mention yet so you know, strong relationship between capitalism particular growth and rising living standards wealth of middle-class stable democracy, well the question is of course as well whereabouts does the pending environmental collapse come in here and in particular is some unending or limitless economic growth environmentally sustainable.

I think well, first of all the answer to the latter question is I don’t know but probably not at some point. I’m the way I tend to approach these things you’d expect, you know different muscular professional is is this and I have got to discussion of this of course in my book that wasn’t the central part because I’m focusing on something else and there are lots of wonderful books on environmental challenges, but my basic view is.

Some people think we should re-engineer our entire political economic and value system overnight. I don’t think that’s a fee feasible goal we’ve had lots of experience with revolutions and they don’t work so what we have to do is define constraints define what won’t work things we can’t do and of which obviously climate is the most important but bio-diversity is another and with that define.

Economic activities and processes that have to stop. Okay things we don’t we can’t allow to happen and and and the most obvious of these is emissions, but there are no doubt there are others fishing over fishing or the rest of it use of land surface and so forth now once we define what has to be constrained we then have other problem of defining effective policies, there’s a very good discretion by the way of the climate policies required in the IMF’s latest world economica outlook.

I recommend it and we have to implement it and we have to implement. Ably so that means global governance remains central and one of the great challenges how we make that work and and then my view is if we if we implement those policies effectively then we will discover where the growth is still possible my own view is the literature very strongly supports the idea technological engineering business and economic literature on this that we can continue to grow the economy while meeting the climate constraints it’s not going to be very difficult to do and we often underest.

Imate a. Could be our innovating round these things if we decide we have to do so as we’ve done with clean air and so forth locally. So impose the constraints make them binding agree those constraints impose them and see whether we can still grow on some dimensions. There are two dimensions like in virtual interactions of this kind where we can grow a lot because it doesn’t take all that much energy and she requires some but not fast.

But finally, I did write a column on this which I won’t be able to go to in detail now, but basically, I Showed that if we stop growth. That doesn’t really solve our environmental questions because our system as it is now is consuming all these resources we have to uncouple our economic system on which we depend from its impact on the environment that’s clearly what we have to do whether we grow or not even the end of that we find we can’t grow at all then that’s what happens but I think it’s more like who if I we can grow but we just grow in very different ways.

That’s fine with we can grow in many different ways. So to find the problem and give It however that’s fantastically difficult and there that is obvious because of the policy and political constraints which you know a lot about in Australia to doing anything but that’s the problem the problem is we don’t want to do anything.

Martin there’s a stack of additional quidditches that would take us all over the place and it it’s wonderful what people have been so stimulated to engage by your comments. Thank you again for sharing with us and and I for one we’ll be looking forward to this book very much indeed to having the opportunity to read more about how you would develop the ideas you’ve shared with us this evening, but I need with apologies laid in general divers of you whose questions I didn’t get to we need to bring this evenings proceedings to a close and I’d like to hand back to Quran to close the proceedings for us.

Thank you. Again and Mark and thank you. Martin when you accepted the Gerald Lifetime achievement award for distinguished business journalism last year. You spoke at a very self-effacing way of your approach to your commentary as being one to seek to create clearly sound arguments on important issues. When listening to you this evening, I’m confident our audience would agree that does little justice to what it is that you do one.

You also spoke on medication of your values inherited from your parents both refugees from if there’s Europe and he said I believe in democracy and so in the obligations of a citizenship in individual liberty and so in the freedom of opinion and in the enlightenment and so in the primacy of truth Martin is the combination of these your professional values and your skill or clear and sound argument that is really treated us tonight.

Much on the occasion of this the 20-20 tiles, good orange. Since CFMs again to you Charles for your continued commitment to enabling the mountain business school to host. Mobile salt leaders like this and to convene a dialogue just as important as today both. Finally, I like to thank you our audience in the coming days you’re going to receive an email with the link to a survey and we would very much welcome your feedback on tonight’s event.

We’ll also then be notifying you of other events that may be of interest and we’ll hope to see you again in the coming weeks. And so, thank you and with that good evening.