Everything You’ve Ever Wanted to Know about Capitalism (But Were Too Afraid to Ask)
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If you were a living in the thirty hundreds, you have thought that was IT for the rest of human history, you wouldn't even really had a conception go around, around in circles. And here we are now looking a powerful systems. But in terms of the inequality of power, we have much more leverage than we think we do because these systems rely on our votes, they rely on our labor, they rely on our participation. And if we all stop obeying that, that the galison brace .

Blakely is an english economics and politics commentator, columnist, journalist and author. She's about my age, scary. She's one of the clearest communicators about the pitfalls of modern capitalism. I discovered her things to interview in current affairs, and so much of her commentary felt fresh and distinct that I knew I needed to have her on this show. If I had to distill the thesis in her book, vulture capitalism, to one sentence, IT would be this.

Our surface level definition of capitalism, which usually involve something like competition or free markets in modern life, fundamentally misunderstands and underestimates the role of central planning from the state, and that misunderstanding means we are often unable to think clearly about a Better way forward. Okay, that might have been two sentences. I've been on a bit of an accidental deconstruction journey over the last few years as I have stumbled upon some of the things that Grace rates about in other books, or honestly observe them in my own life.

For in real life, I used to consider myself a staunch capitalist, but now that feels a little bit like admitting that the wall had once been fully pulled over my eyes and that I had internalized a lot of beliefs about the way the world must work that weren't necessarily true. Much of that discovery process has been documented on this very show. You have heard me grapple time and time again with this existence.

Al, question of, what does that mean to participate in a system when my very participation further in frenches the need for IT? I'm not really sure where I stand now. And the feedback on this has been familiar sly split, usually it's same words but with a very different tone.

It's either you're talking about socialism like come on, say more, or you're talking about socialism dragging ory. And isn't IT funny that something is dry as an economic system is essentially a four letter word in the U. S.

That i'll immediately get you laugh out of the room. It's funny that I feel almost nervous to use that word on the show, let alone invite an economist who identifies as a socialist for a conversation about capitalism. But from a Young age I was taught that this is a belief system that I shouldn't even discuss, entertain.

In theory, you'll often hear people call themselves anti capitalist today, but it's far less common for someone to come out and say they are a socialist, which is at least partially what being anti capitalists would imply, right? Of course, there is A A mooded history that we're onna get into today. But at the end of the day, I wanted to know what is that and more importantly, what is the result of that aversion?

What conversations are we just not having because we feel like we're not really allowed to have them. What if most of the talking points we associate with free markets and competition, or just that empty talking points, Grace, points to the popular ideological commitment to free markets as the highest good, also known as neoliberalism, that which says he wants to shrink the state and have small government so markets can run free, and clarifies that what that really reflects is a desire to, quote, do away with politics. The arena in which we find deliberation about justice and other common goods, contestation over values and purposes, struggles over power, pursuit of visions for the good of the whole. And quote.

So welcome back to the money with Katie show. I am kate gi toys, and today I issuing a display. I think these conversations can be a little exhAusting sometimes, because the more I learn about the way things work, the more demoralized I feel. And it's really tempting to crawl back into individual solutions land, throw on the rose color glasses and focus on my own little baLance sheet and ignore everything else. But despite that urged, there is something else that feels a little exciting about unpacking all of the half truths that undergo the way our society is organized.

And I think what you're gone to hear from Grace today isn't a message of exhaustion, but one of hope. It's my belief now that the Better understanding we have of how modern capitalism works, like the finer points of IT, and how the state serves to advance its interests, the more power we all stand again, the less global will be to politicians and CEO on either side of the political isle prompting to represent our interests.

The more likely we will be to recognize the power we possessed together, instead of differing that power to the already rich and the already powerful. After all, the government is not some fully autonomous layer separate from interesting on top of society. It's not possible for the state act as a neutral enforcement or of the rules of the game.

Instead, inevitably, as capitalism advances, every state is doomed to plan for dominantly in the interests of the best organized and the most powerful groups. And in capitalism, who is that? So let me unpack Graces court thesis before we get to our conversation.

One court tenant of what makes capitalism work is, theoretically, the presence of competition. I think about competition as the fundamental underlying force of capitalism. Logically, if you ask somebody, hey, what is capitalism about? They're probably to say something about competition.

But Grace points out that is, capitalist economies mature. IT becomes more and more expensive to compete with. In combs, powerful firms developed relationships with the state, which they can then exploit. We're gona talk about a couple prominent examples of that today. They can lobby policymakers to make IT harder for competition to enter the market.

They can get bail out when things go wrong and when market forces would otherwise kick them out of the competition and make IT harder for anti trust legislation to do that job. Since competition is the mechanism by which Prices are lowered in capitalism, when you see weakened competition, you generally see higher Prices, worse products and profits that are not channeled into increasing productive capacity because they don't have to. Instead, profits distributed to shareholders and executives, and things become increasingly financial zed, and therefore more unequal and more precarious.

Think two thousand eight, a consulting group created an index fund that only owned companies that spends the most on lobbying. And IT outperformed to the S M P five hundred by five percent per year. And I just know my free market enthusiasts in the audience are like rubbing their palms together and looking at a particular symbol as we speak.

A lot of what we're going to talk about today can be boiled down to that. My profits, our losses mean, and I think tesler is a powerful illustration of this idea. So tesla is rather famously only profitable because of government funding in the form of tax credits and rebates.

Tesler reported one point one billion dollars in net income. For cue, one of twenty, twenty four, four hundred and forty two million of that. One point one billion of net income came from federal carbon credits.

Three hundred and eighty six thousand teslas were sold in q one of which the vast majority were eligible for the seventy five hundred dollar federal E. V. Tax credit.

IT is in part public funding that has made elon musk a billionaire. This is classic. My profits, our losses. The public, the taxpayer who has footed the bill from the jump has not made a dime on tesla. All of those profits agreed to effectively one person, and of course, tesla shareholders.

This is precisely why IT is distance january to describe our currencies as a free market economy, fending off pesky interference from an inefficient state. Tesla would not exist were IT not for the largest of the federal government. Now, I am officially using part of this conversation with Grace, depressed around things that I still can't quite make sense of, as well as being up front about the parts of capitalism that I find myself having a really hard time parting with.

Because, who knows, maybe there are certain regions of economic theory in which we just aren't giving capitalism enough credit. I'm opened anything, baby. I hope you enjoy this wide ranging conversation with Grace lake right after a quick break.

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All right, we're starting with a little history lesson, the cold war Grace. Welcome to the jungle. Capitalism, as IT actually exists in reality. But your definition is a hybrid system between markets and planning.

And you point out that the theoretical concept of capitalism is this medco tic system of pure and arctic markets were in competition and free trade. Dictate winners and losers is a naive view of how IT works in real life. So how does IT actually work?

So a lot of capacity m defenders will try to portray this as a system which is based on kind of freedom and democracy. And so they say that the reason that we need to have a capitalist economy is that it's a very efficient way of producing and distributing resources because IT uses this a market mechanism, which basically means that nobody has to be in control of telling people what to produce or telling people what to buy, because the market equilibrate supply and demand allows lots of kind of individual producers to trade with each other.

And in doing so, IT creates these things, Prices that kind of facilitate the distribution of resources and the production of resources across society. That's contrasting with this idea of centralized planning, which is something that was practice ed in the U. S.

S. R, among other the places. And the idea is, in those country systems, the government decides who gets what tells everyone to do.

Acceptor, and i'll kind of ideology and mythology of capital alem is that you have the us, which is this nice free market system, on the one hand, and then you have the U. S. Is all, which is this orrible looral arian status system, on the other hand, and the U S S R uses planning in the U.

S. Uses markets. And that was, you know, they battled LED to underpin the cold war. But we still kind of have IT to this day in the sense that we have this idea in our heads of capital societies as market societies.

And what I show in my book is that actually, existing capital societies are based on this baLance between markets and planning. So we don't actually live in free market systems, and we don't have these kind of nice decentralized systems through which lots of small producers are kind of interacting with one another. And the government kind of stays out of the economy and said, we have these massive multination corporations.

And those corporations are able to plan themselves because they have so much power and then so much scale that allow them to do that. And then we have governments that you have a massive role to play in the economy, but they generally use that role to prop up the interests of those big businesses. So you have this kind of like oligarchic, centralized capitalist system where big businesses work with governments and also financial institutions, international organizations, to maintain their position at the top of maintain this kind of inherently unequal system.

I would love if you could tell me a little bit more about the role of the state in such an arrangement. Like what might we expect? Define what would you point to as like? See, this is a crucial example of the state's interference in the so called free market yet.

Well, the example that I like to use to illustrate this point of about both of the state's role in the economy, but also the kind of domination of the economy by massive corporations.

is the example of buying. I will say I feel badly because boeing often catch a strays on the show. But since the news recently broke that they're length of seventeen thousand people to cut costs, all allow IT so proceed.

Recently, one of the doors blew out its planes mid flight. It's been kind of be set by engineering failures, management failures. Leaders are being held in front of congress now. Workers are going on strike in the organization.

It's had a really chaotic few years, and that came on the back of the seventy seven max disasters that took place in two thousand and and twenty nine, when two boeing seventy seven max jets sell out the sky. And in the wake of these disasters, growing basic tries to plane. The pilot said that this was a the fault of the people flying the planes, but later investigations revealed that IT was a floor with the boy planes themselves.

And I write all about all of the kind of whistle blowing that took place in my book, but survived IT to say that boing's executives knew about the floors in this plane that caused IT basically to nose dive out of the sky. IT was effect to the a piece of software are that i'd been put in the plane to stop the plane from stalling caused to the nose to tilt down without really notifying the pilots and without allowing the pilots to rectify the issue. So the idea was that this system we put place, the pilots won't really be told about that.

They ouldn't have to be trained on there. This would just the an automatic thing that would be put through. So all of that was basically about saving money.

And indeed, the whole idea behind the design of the seven, seven max was that IT would should be delivered extremely quickly at a very, very low costs. The C. E.

O of being kind of issued workers with an automated thing. You have to deliver this thing really quickly and not really low cost. Now all of that kind of sounds like, oh, it's just you know a standard failure of corporate management, right? Is just the case of kind of of corporate read.

But there are a number of features of this market and bombing relationship with the state, which show why what happened with the boy had absolutely nothing to do with free markets and everything to do with the way that capitalists works outside of those markets. How so so person for most flooring exist as basically part of a dual police living from these two major companies that dominate and industry. So there is booming in this aba spotting in the U.

S. company. Abb is the the european company. And each of the various kind of states or exceptions that had cause of these companies said as their roles, those companies and to given lots of defense contracts and to january, I kind of keep them within their orbit.

So these companies are able to exact a huge amount of control over their industry because this is only two of them, and they're also always able to rely on supports from government. Now, in the case of doing, what this meant was that the farm was basically able to regulate itself for a quite long time. In the U.

S, the F, A, A, the federal aviation authority had been moved to a philosopher of self regulation, with the same color, ilo sope, that underpin how the banks were regulated in the run up to the financial crisis. So boeing was being regulated by a unit of the F A, A that SAT inside boeing and whose workers were being paid by boying. So all of that was being a overseen by the american state.

IT had tons and tons and still has tons and tons of defense contracts with various different parts of the U. S. State, is an international part of the military industrial complex.

In twenty eighteen, boing was the largest recipe of corporate welfare. That means IT got tons of tax breaks, tones of subsidies. The idea was the government was basically creating the conditions within which this organza could thrive because the U.

S. Government has become dependent upon this organization for equipment IT for, you know, all of the different kinds of contracts. So it's receiving basic corporate wealth from the government and bar in mind. You know, we sit, we hear so many arguments against wealth are for people made by people who call themselves free marketers. And yet there's this huge amount of money being funneled into the pockets of of executives, companies like buying.

So the government and this public company are interdependent. Why does this create a problem?

So, you know, there's the 新 biotic relationship between the government and these big monopolistic c CoOperations。 Allows them to work together. What's also interesting is that the whole idea behind the free market is that they're supposed to be a process, a kind of created destruction.

So when you screw up as a firm, the risk is on you. And that is what encourages you to kind of run a good firm that has low costs and is efficient and you know doesn't grow up, basically. But what happens in the case of most big businesses, most kind of monopolistic corporations, is that when they're under threat, the government basically says you're too big to fail.

I'm going to second and value out. And that's exactly what happened with the so at the same time as there all these cases that were going on, gates, the company, basically accusing IT of kind of negligence and IT eventually was charged with a criminal conspiracy to defraud the united states. Because I had kept all of these secrets about and the problems with these plains away from customers and regulators.

At the same time, during the coverage team pandemic, when the airline industry was suffering quite, boeing was able to take advantage of a math and amount of government support. So that was getting another bailout through the back door from the american government. This effectively meant that even though I had emerged that these boeing plans had basically been found to be unsafe or at a number of different cases, IT was still getting money fund into IT through the U.

S. government. I know that support has continued and the the U. S. Government has continued to basically fight for boings ongoing existence to ue to give IT contracts to make sure that this errors space company continues to exist because IT sees its interest as tight to the interests of bowing senior executives. And you see this in so many different sectors, you know, obviously resort in the banks in the wake of the financial crisis, where government stepped in to save those at the top from the consequences of their own decisions.

But we also see, and you know pharmaceutical and pharmacology and in retail and chemicals, all these really big sectors of the economy that are dominated by a small number of extremely powerful funds that you probably won't ever have often heard of because they are producing, you know, machines, technology equipment at sector that go into the running of the economy. These firms are not really Operating in a free market at all. They have so much powers, so much influence, they're able to basically set Prices, set conditions for workers, often set their own tax rates basically, and the government just lets them get away with IT. Because, again, capital isn't this free market system where the separation between what's going on in the state and what's going on in corporations, IT is, as you very write, you mention, as I say in the book, a system where both at the top basically work together across all the boundaries that divide them to protect their interests.

And I can imagine someone listening to this and being like a, well, then we just got to do capitalism, correct? Like we just got to actually do capitalism. then. Why is that not a thing? Tell me why the push back of like, oh, okay, well, for just doing state italy m with real capitalism, why does that work?

So two reasons. One of the hinges on the nature of of monopoly and corporate power under capitalism, and the second hinges on the relationship between the state and big business. So when IT comes to an oppose, these kind of emerge fairly naturally over the course of the development of capitalism. And if you think about that, there's a very obvious reason for that.

If you look at like an industry like error space, for example, it's not like a kind of lucky start up could come into that sector, raise the vast amounts of money that would be required to start an an enterprising that sex to get access to all the the technology, the political relationships that are required to develop contracts. IT is essentially an industry with massive barriers to entry y. And as capital and development and technology becomes more complex, those barriers to entry tend to increase, particularly in those sectors I was talking about that are dominated by those big and monopolistic CoOperations, the ones that produced all of the stuff that all of us, really me, to survive, and the kind of makes the global economy go around. So because you need more capital, law, technology, more power, basically to start a business, as technology becomes more advanced, you get this tendency towards monopoly. At the same time, you also get this tendency towards what i've writing about before, which is called financialization.

okay? So this is a system that as IT progresses in inevitably trends, tored, monopoly and financialization. Why is that now?

If you did want to start a big company that was gonna a threat to someone like boeing, you would need a lot of money. Where would you get that money from? You would potentially go to a bank. Maybe you would go to a bank for a load, or maybe you would ask for some assistance in raising money for IT from investors, right? And so that process of like the need to raise more, more money leads to this ever close the relationship between big financial institutions and big companies.

And what then happens as those companies grow is that they get these vast tools of money, these huge amounts of profits, and then they have support and help from those financial institutions to decide what to do with that money. And you know where to invest in, how to invest eta. Often that just literally doing things like investing in financial markets, buying land, acting like thanks themselves.

So this is all the place as well that comes to sea. We're not just talking about the emerging of corporations in the state were also talking about the merging of both of those with the interest of finance as well. And that's really, really important.

So that's the kind of tendency towards monopoly and financialization, and that is really not something that you could change by doing a different kind of capital alem. It's not like we could ever really live in a world where big plans would be manufactured by tones of tiny, little small enterprises. And that model of free market capitalism only really works when you have that much more rigorous ous competition.

So you know, that then raised the question, right OK. So how can we live in a world where we can produce things that are very sophisticated and require these leg organizations, but where they're still accountability? But my argument based, we need democratic .

corporations. Yeah, i'm struck that IT feels we've reached a bit of an impasse like some sectors need big firms, but corruption also seems inevitable. So is IT just Polly and I to suggest we could I don't I don't know, just like clean things up a little bit.

A lot of people say, what if we could just kind of clean up money in politics um if we could create this divide and make IT much more clean than we would have a real capital system because the state would be medical and businesses and business ouldn't be medal in the state.

What I call about in the book is that you can't see states, governments as just these kind of self contained institutions that can exist on their own without any input from the rest of society. Because what happens within our governments basically reflect who has the power in our society. If you think about times in the past where society has been more equal, it's been because workers, i've had more power.

There have been later, unions that been strong, so they have been able to make demands of, you know, in the U. S. State government and federal government and say, we want high taxes on big business.

We want to higher way is is that tress? So that's create a more equal society. But the society that we live in is one of which corporate power dominates and financial power dominates.

So in that kind of society, it's inevitable that those institutions with the power, with all the influence, and whether that is through direct lobbying, through they are kind of influence within sink tanks, media institutions, educational institutions or whatever, the baLance of power in a capital society, he's always gone to be in favor of those big corporate interests. And those big corporate interests are always gonna able to influence what happens within governments. You can try to insulate governments from that power, but you'll never gonna able to do that completely.

Which is why even in countries like the U. K, where you don't have as much money in politics as do in the U. S, politicians still consistently, constantly, even when IT doesn't benefit them personally, just make policy that isn't the interests of big business, of landlords, of big financial institutions, because the way that our society work means that everyone thinks that what's good for big business is good for the economy as a whole.

And that just just, you know, gona be inevitable in any kind of catalist economy because these are the people that controlled the stuff. You can't just try and get rid of monopoly through like antitrust reform, and you can try and separate the state from what's going on in the economy because that kind of the whole idea of a distinction between those two things is about a fallacy. And because of that, you can never get up your free market system other than maybe like a market that exists literally in your local town. That's like the only real example that you could ever find of, like a pie of free market system.

interesting. So then you mentioned like the merging of big business and financialization. I want to bring up another example of how this happens because you also write about ford in the aneth century and how ford recognized at some point, again, to this point, about financialization.

That is o is actually more profitable for us to become a bank to start extending credit than IT is to produce and cell cars like that hard work that's capital intensive. But like extending credit now that we have all this money is actually quite easy. But the problem is when things go wrong that the company does not IT doesn't bear responsibility on the downswing, as you would expect in a true free market, to your point, because they get they get build out.

And what's funny about finance is the this kind of downside risk just doesn't really exist. Basically, the thing that makes a bank a bank is the fact that IT has such a close relationship with the central bank of a particular government that as long as that government is credit worthy, that bank is always going to be bailed out.

So whether that you know the fact that its deposit is bailed out or whether it's the fact that the actual bank itself and the institution is bailed out, there are systems and mechanisms in place to make sure that a big bank will never go under you. That is in some ways, know that necessary to the functioning of the modern capitalist economy. If people were scared that banks go wonder, we could not have the level of lending, investment and therefore production and construction that we have in the economy today because, you know, people would be constantly kind of taking a little bit back out of everything that they were doing to set something aside for.

So the kind of integrity of our financial institutions is critical. And the functioning of modernism. And it's all base on the knowledge that everyone shares, that the government is never gonna a bank go under. And actually, at the level of the global economy, that means that it's not just that no government is going to let a bank go under.

It's that the american state is going to come to the rescue of its allies, as IT did after the two thousand and eight financial crisis, and pumped dollars into their economies to get their financial systems going again. So the whole global economy and global finance basically rests on the assumption that the american state will always swing in and come to the rescue whenever there's a crisis that threatens the integrity of global capital. M, basically and that's something that you know everyone would basically admit if you talk to even kind of mainstream economists, it's not something even that most free market is would say is a bad thing.

We'll say, yeah, it's something create what they call moral hasn't which basically means where you get my favorite example of this is when in the TV series friends joe gets health insurance and then gets speed to hit him repeatedly over the head with a bat where he's wearing a helmet because he has health insurance. He's taking loads of risks with his health because he's like i'm not onna have to pay for them anymore. This is the same thing with the .

financial system. Clearly he doesn't understand how health insurance in the U.

S. Workers because baby, yes, you for you still good.

be paying a lot. I still going to be paying a lot for IT will continue after a quick break.

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The idea is, yeah, if you are insulated and protected from risk as the financial system is, then you can do whatever you want.

And the government knew this in the right up to the financial crisis, uh, because I had been shown previously in the crisis that took place in the ninety eighties, when you'd also had these bailouts from the government, then you had this massive global international bailout that took place after two thousand and eight and something everyone was like, wow. okay. So after a man brothers, when we were like, oh my god, maybe the government actually won't step into, take the financial system.

And that was a complete another panic. So the gun was like, I think, actually know, you know, IT IT was interesting. The ideology behind that, because the governments at that time had really bought into this idea that their job was to promote free markets.

So the whole letting lemon brothers go and thing was like, will know the government can possibly step in to, say, the banking system. And then suddenly they realized the way that capital and actually work. Nothing do with free markets. And he said, rests on the fact that those at the top has to protect each other.

And when other people at the top, so even brothers go down, they thought, oh, shit, the government isn't onna a protecting anymore? The government doesn't have my back so that caused the system to break down, and IT meant the eventually helped IT come. And we ve seen that again during the the pandemic.

And that wasn't just a financial institutions. That was unbelievable sums of money pumped into the economy to benefit businesses of all kinds, astonishing levels of fraud, you know, in the U. S.

You had tons of money going to businesses that applied for loans. The owners of those businesses were sitting congress people, and then those businesses donated to the campaigns of those sitting congress people. So it's just like crazy levels of corruption. And again, it's about these people at the top kind of having each other's back and making sure that when the economy is in trouble, the people with the money, the people with the resources, the people with the wealth are always protected.

Yeah, a omi clients, two thousand seven books shock doctor discusses this idea of disaster capitalism in more detail. Like the wake atap ropes are exploded for profit and pretty predictably so so who ultimately bears the cost of those bailouts then? Can someone is right?

As you say, there's no downside for them even though they get all the upside during the boom times. Instead, who is forced to pay for the crises caused by the reckless greed of those at the top? IT is everyone else.

IT is people who are on low wages, people in insecure housing. In the U. K. For example, we have like a public health care system, the nh test, but successful governments have been taking money out of that, saying there's not enough money left to pay for your health care, but there's plenty of money for us, you know, distribute to big corporations and pump into the finance sector.

So again, you know, everything that happens within our economies, within a capital system, is shaped by these power dynamics. Like who has the power? Who has the power to say you have to do what I want or all shut the economy down today? It's the wealthy. But there half times in history where has been work is you been able to say I i'll shot the economy down if you didn't give me highwall es. And actually, the reason we got this shift to kind of what was called free market economics, but was actually about governments and big corporations working together very closely.

So something that I think happens when we have conversations like this one, because I I can imagine like ultra capitalist, ultra free markets person hearing that I like, yes, see, the state sucks at spending money, is spent so much money, is spending things on being bailout IT does things that I think regular people that, to your point, I mean, in my head always I think about when we talk about who bears the risk and who actually experiences the downside.

I just think about all the people who lost their homes in two thousand and eight. And in the aftermath of that, I mean, they didn't get multimillion dollar bonuses. They lost their home.

So someone is bearing the downside effects of these decisions in these risks being taken. But the thing is, we talk about how the state spends money to prop up power or to prop up capital, and then we feel angry about IT. And then that anger is in turn used to strengthen the very same politicians who claim to support free markets.

They go, yes, see, the state sucks. Look at the, we look at the day you don't want the state in charge of things because the state does a bad job. And that feels very, very important because I see this logic all the time.

It's disapproval of state spending ends up reinforcing the idea that all government is necessarily adapt, that public goods are always going to suck, that free markets are always the best way. But as we know, as we've establish, free markets are propped up by the power in money of the state of free market. You can get in a new, you know aircraft manufacturer out of a truly free market that doesn't work in the stage of capitalism that we're in.

And the difference is okay, but whose interests is that state being wheeled to serve you? And so neoliberal dogma says the purist of free markets, they're more efficient, they're more naturally equitable than the the corruption of state planning. Do you think that that's a fair representation of new liberalism? Like how else is this word we hear all the time, new liberal? How else is IT connected to inaccurate understanding of capitalism?

Yeah, really good question. I wanna come to your first point that about how this anger about government leads into new liberalism because this is kind of how we got here in the first place and it's kind of where I read the book really ah I mean, the new labels constructed their argument on the basis of saying the government, the state has gotten too big, spending too much money that is creating kind of undemocratic and inefficient outcomes in the economy.

So we need to shrink the state and create more space for the market. Now the argument in my book is that what has happened with the liberal time? So with all the changes in policy that we thought to see in the one thousand and eighty is that the state has not drunk.

IT has gotten bigger. IT has gotten bigger for some people. It's gotten more of other people. Real liberalism has not been associated with a smaller state. It's just it's associated with the state that does not do good things for working people.

There is a lot of good things for powerful people and that uses its really still quite immense power to crush the resistance that comes from generally the kind of marginalized if you try and fight back agates the state, the state is very big if you're a banker that needs to bail out, the state is very small if you are working mother who's just lost their home, right? So you this whole narrative about six state stay IT doesn't work the state size overall on prevent any measure in the U. S.

Hasn't changed. It's gotten bigger under near liberalism. So this was never about shrinking the state. What IT was about was changing. Who gets to make decisions in the state, who has control, right? And this is why I don't actually think that this markets verses states dichotomy is a good way to understand anything.

So this is what we have to kind of change the terms of the debate because, as you say, if we think all the government is really corrupt, it's just helping big businesses, then sometimes that needs into this idea of OK able, when we just need to drink the government even more and create more space in the market. But again, what you are seeing when you look at a capitalist economy is not governments on one side and businesses on the other. IT is a fusion of public and private power at the top and then everyone else cut out of decision making process of institutions and left a kind of sense of themselves yeah.

i'll note here that the lip service of democracy like, well, you get to vote, but generally you're really voting for one person every four years. You have to pick a side and then get on board with everything that side things and the people don't really have meaningful power beyond that. And this is an area where I think it's super clear that politics and the economy are inextricably connected .

so that that isn't stateless as markets. It's kind of oligarch VS democracy. And you can see this because you can say to, like any liberal, okay, great. You think the shrinking the size of the state is gonna cut, you know, corruption and boost efficiency.

But actually, if you look at the economy, and if you try and and separate what is going on in the economy from what's going on with the politics, even then you have massive multination CoOperations that have huge amounts of power and are able to control and dominate human beings in much the same way as the state does. We have this really like significant divide in our own heads between state power and corporate power, right? But at the end of the day, states are powerful because they can force you to do things multination.

CoOperations are also powerful because they can also forced you to do things, whether that is a worker, where your conditions, your wages, that very activities that you do at a daily basis are being set by a bunch of corporations at the top of that system, whether is as a consumer, because the goods that you face on the shells, that kind of innovation, emotions that you see, the technology that you see, the Prices that you face, those are decided by those big corporations, not by this desensitized market mechanism. Whether this is a citizen, because, again, no, these musical corporations are responsible. The last majority of take Greenhouse gas emissions.

They don't pay their taxes. They determine much of the society in which we live, and they have no democratic account liability. So if you say they were gona shrink the state and live in a world of corporate power instead, that again doesn't do anything to expand or deepen people's freedom.

You're just taking power away from one side of this alegre math and giving IT to someone on the other. And the real divide, I think we need to look at this in times of is not state vas markets. It's basically corporate and governmental power on the one hand, and then through democracy, on the other hand.

I see. So that sounds like the terms of the debate right now are what's wrong. The general premise on which we are hashing this out in popular conversation and discussion is flawed, ed, and we need a new premise. So what should we be asking instead?

So rather than saying how do we shift the baLance between the state in the market, the question we have to ask is, how do we bring democracy into everything we do? How do we make the economy democractic s how do we force firms to listen to that workers? How do we make government genuinely democratic? How do we bring people's voices in to every stage of the policy making process? How do we make finance democratic?

How do we make sure that communities are able to determine where the investment is going in that transport infrastructure or in that community their budgets? How can we make international economics more democratic? How can we ensure that is not just a few very powerful states determining who gets what at the level of the global economy?

All of these things just completely change the terms of the debate. And the example I like to use to contrast with the example of bowing is something called the lucus plan, which was tried in the U. K.

A long time ago. We're basically a bunch of workers came together within another arrow space company that was fAiling. And so we're going to take this firm over the state couldn't step in and save IT couldn't be nationalized.

The thun couldn't run IT because they weren't making enough profits. But the work is said we could take over this area space company and instead of producing weapons, will produce winter bines kidney dialogs machines, things that are useful for society. Why will we do that? Because we are not motivated by profit.

We want a job. We want a satisfying standard of living. We want to feel like we giving something to the world, that our lives are meaningful and have purpose.

We want to feel connected to our communities, and we want to have autonomy and freedom and a sense, the things that we're doing on a daily basis, all within our own control. And in on that basis, we can take this firm over and use IT to produce things that will actually be useful for society. And they developed this massive plan that was gonna athey.

Say we can change the, whether this from work Margarett thatcher, who was all kind of ronal ragan type bigger step in and shut that all down, because I was so threatening to the people at the talk, the idea that even the work is in one company could take that over and write themselves, because IT completely shatter the illusion upon which our societies are base, which is that the managers are that to control everyone. And the work is, is that to do, is that told because that too stupid to be able to organize things on themselves so they couldn't allow this experiment to work. They had to cut IT down and they did so successfully. But that contrast shows the real choice that we face. It's not between more market or more state, is between big corporations controlled by greedy executives who don't care about the wealth are of their work as all their consumers or democratic CoOperation that are governed by the people who work with them with input from consumers, from citizens, from governments and the exist to serve the public good.

It's funny because you and die, I guess, occupy such different levels of the conversation like I feel a year looking at IT from up here yeah and much of my work in the personal finance world is happening down here as a response to all of the conditions that you are describing. And so the solution that we offer in personal finance is like, okay, will U. S.

Individual need to play this game as well as U. K. N. And here's how you manage your individual financial life so that you can live a good life and see.

yeah.

something that jumped out of me in your book you wrote, in place of groups engaging in collective struggle, we find atomized individuals suddenly catechized into winners and losers based on how much they earn, what they own and what they do. Changing one's a lot in life requires using the resources that ones disposal to play the game, as well as one can through huddling and entrepreneurial ism.

I'm like guilty, not working with others to change the rules. The catch is, of course, that someone has to lose. And while its architects would forcefully deny IT, the game has been designed, planned to ensure that the same people lose over and over again.

So something that seems clear to me, and your observation, is that part of why this has maintained such an effective cultural hold on society again, IT comes back to narrative. It's because we have transformed from thinking of ourselves as collective others of public assets into thinking of ourselves as many capitalists who are charged with managing our own portfolios of assets and liabilities. Is another quote from you.

So I want to pose a hypothetical question to you. If everyone could do that well, like, let's say, everybody became a good little mini capitalist, we're all really good at managing our baLance sheet well. Okay, what we all be Better off. Is that even possible? Like is that possible for everyone to be a winner?

no. And if you think about IT, that's inherent to the way that capitalism works, because what are the things that you would need to be considered a winner? Let's say, IT is determined by what you do for a living in the things that you own.

You're consider a winner if you are in control of other people's work. I if you are A C E O and executive, someone who has started the company, someone who is at the top of this hierarchy. And what makes what puts you at the top of the hierarchy is the fact that there are people under you is the fact that you're directing people and telling them what to do.

So obviously, not everyone can be in that position. But even when we think about IT, just in times of resources, right? So you are a winner if you own loads of stuff, if you have a really fancy expensive car, right? Someone is always going to be making that fancy expensive car. And the person making the fancy expensive car is never going to be earning the same as the person buying the fancy expensive car.

If you just think about IT in very simple terms, right, let's say a really rich person feels really rich and happy if they can spend loads money paying a delivering driver to bring them, or I can breach driver to bring them food constantly so they never have to leave the house, right? Variability to do that is based on the fact that there is always going to be people who feel death for enough to take their two or three dollars to be able to bring them food. And the the lower that person's wages are.

The checker IT is for you to get new breeds, the rich you feel because you want to get more reread drivers because they are poor or and that you know, being paid lower wage, right? So your wealth is basically determined by how much of someone else's labor you can exploit IT. That's like an inherent part of the way that capital system work.

Some people are able to exploit the labour of others and get very rich from that. And other people just have to sell their labor because they have no other choice othe wise you know starvation. So there's there's an inhering inequality bate into the system and is an quality that comes from the very fact that there's this divide where some people owe everything and other people don't because if everyone I owned everything, we would be able to exploit each other. That wouldn't be able to say to deliver a driver going bringing my food because otherwise you will out on the street because we like, no, i've got a house, but enough to eat, i'll be fine. Capitalism is this system, as I said, that based on the ability of some people to dominate others yeah, and that means we will never live in a world where everyone gets to be happy and have all you know, the cake that they want and we're all .

equal IT seems like a system that that bad for most people would be pretty obvious and I don't know, easy to get rid of. So why has this narrative of IT being the best thing for the most people been able to persist, like, I guess, to quantitative, timely, kind of constitute what I mean by bad for most people? The top ten percent in the U.

S. Owns almost three times as much wealth as the bottom ninety percent combined. So when I say it's bad for more people than it's good for that kind of what I mean.

this really successful thing about capital systems has been the way that they have hidden that in Harry and inequality, the first, most obvious way is that most of the people whose labor were exploited don't live in the same countries as us. So if you know extremely poor, hyper exploit webers in china and you know africa, wherever. So we don't see IT.

We don't see the labor that goes into making our phone. We don't see the labor that goes into making our clothes. So it's easy to convince ourselves that actually that just kind of comes out where.

But the second thing is what you were talking about, individualism, because what you do, I imagine, can for you and for a lot of the people around you will be quite disappointing ing, right? Because you realize i'm trying to like play this game really effectively in this system that's rigged against me. And I feel so powerless because no matter what I do, nothing seems to get Better.

Like i'm doing a bit more saving. I've like done the credit transfer to get Better interest rates. I ve like done all these little tiny things to try and make my financial situation Better.

I've kind of really worked really hard and try to get a raise at work. And yet i'm still not at the top. I'm still not even in the middle. I'm like scraping just to survive.

That must mean the I A loser that i'm you know not clever, that i'm not working hard, that i'm not worth as much money as those at the top so you in turn lize that guilt, that fear, that shame. You say, if I don't get Better, i'm gonna lose my house. I'm going to lose my family.

I'm not going to have for, you know, pay for health care so you're terrified you're blame yourself and what does that make you do? What makes you fight even harder? Gates, all the people around you. And that's exactly the way that this system was designed because the only time in history where workers have been even close taking on the interest of those at the top was when they didn't think like that IT was when they saw is all of us against them. And if we come together and former union and demand higher wages and say you're gonna have less profit so that we can have higher wages, that will be a big set forward for us.

IT will mean that you know, rather than going home and realizing that we can't afford to put food on the table and then blaming ourselves and fighting with each other, we say, oh, all of us can't afford to put food on the table. There's something wrong with this system. Not there's something wrong with me, there's something wrong with the world. So it's very important for the maintenance of this economy that we don't learn, that we have these interest in common and that we can work together, we can fight for them.

It's so interesting the way I don't want to use the word self fulfill propac's. But that is to some degree, I think what you just described in so far as i'm working so hard and competing so hard and i'm not getting any closer to the top and therefore, I must work even harder and be even more competitive with the people around me because i'm not getting head yeah but that that's that's like you're just kind of borrowing deeper into the problem.

The individualist mindset is something that I think really fascinate me or IT has become an objective fascination for me, and you know, last couple of years, because I think that everything about the way our society and like the culture around us in our economy is structured puts us into that mindset. The other thing that I want to talk about now is you write about how orthodox models of the economy overlook often the existence of the prominence of lending and borrowing yeah, and that banks ability to create money out of thin air. You've kind of referenced this already the relationship between private banks, big banks and the, you know, the central bank means of these banks.

The financial sector of our economy possesses such an enormous amount of power over who receives what they need and who doesn't IT basically has the power to determine which business is succeed and which do not, because businesses need capital to Operate. And so you point out that this reality of the situation is not really well captured in most economic models that dictate how things you should work, like the, the, the rules are the science of economics that like this is kind of ignored. So how does this work in practice? And what would you say we misunderstand about the role of debt in our lives?

Really good question. And this, the kind of overlooking of the annamite s of finance, is something that is really important in kind of professional mainstream economics. So the models the economists spill, particularly before the financial crisis, just didn't account for the dynamics of death.

And there's a lot of complicated reasons why that's important. One of the most important has to do with how human beings behave under conditions of uncertainty, basically. And it's very hard to bring uncertainty into your models.

And finance is all about managing uncertainty. When a bank invest in a company or investor invest in a small company, ies say they're not just taking a risk that bending on something that the outcome of which is fundamentally uncertain. They just don't know what the future is gna look like.

It's not just that they're taking a kind of calculated risks to whether this particular business will grow or fail. They are engaging in a system that subject to fundamental uncertainty so that both the nature of the business will that succeed? Will that maybe it's a new technology? Will that technology be viable? You know they're also making about about the future of the economy.

Will there be a enough growth is to sustain this business in the future? All of these things are object to massive uncertainty. And what that means is the the decisions that they make are a lot to do with emotion, because emotion and intuition is how we kind of gage and make decisions in the context of uncertainty.

We don't have all the information, so we have to go on our instinct basically. And that is what leads to this kind of these big swings, because behavior and emotions tend to go in groups. They tend to go in cycles, right? So when everyone is feeling really optimistic and excited, suddenly you have this big financial boom that then drive these like really unpredictable dynamics in the rest of the economy.

And equally, whenever one's feeling pessimistic, the opposite happens. So you know these cycles that drive finance and drive investment are really, really importantly the penal source of bubbles that we seen in housing, the recently cypher currency, and they're not really very well accounted for the mainstream models of the economy. And that is pretty important, is important as a fact that explains why economists who are unable to predict financial crisis, for example, but is also important because the role of financial institutions play and managing uncertainty IT helps to create the future because if there's so many different options that anything could almost happen.

Not anything, but like a lot of the right things can happen. The bet that banks make helps to bring certain futures into being. So if I think i'm really confident about this new technology that come about, I know electric cars or whatever, and I may have all of my friends in finance about IT, and we all can make big beats IT on companies that are producing electric cause.

That then leads to the creation of more electric cause because these businesses are able to access to finance. And you see this today, you know, you must see IT all the time with small businesses, right? A small business has a really great idea. There's something that will change their community, make the world a Better place. But they can't access to finance because the banks are all saying we have to put all of our money in A I or like you know, this one particular thing at the subject of this trend at the moment. So money follows these trends and in turn, IT basically makes the predictions of the people who control the money come through and the predictions of the people that control the money are often kind of self serving, that are certainly not like in the interests of communities and even like economic growth and productivity of the time. So that role is really, really important, and it's kind of overlooked in a lot of capital economies.

You write about the role of central banks in our economy and how even these banks exist to protect capitals interests, which I think is interesting because we usually discuss the central bank as a totally independent entity. But you point out that if a country doesn't really to act corporate profits, they must then raise interest rates in order to combat inflation, which makes borrowing more expensive for everyone else.

But I wanted to impact that line of reasoning a little bit more because it's stuck out to me when I read IT. And I could imagine someone listening to that argument and going OK, but wait, how to massive on text profits increase inflation? Wouldn't higher taxes on those profits just be passed on to the and consumer in the form of higher Prices? And that would be similarly inflationary?

yes. So when we thinking about inflation, you've got to think about IT on like a macro level. So not just thinking about what's driving Price rises, let's say, like the rising Price of your food, for example, because you know, rising food Prices don't necessarily have to feed into an economy wide inflation.

If you know there are offsetting factors that are, you know say, food Prices rise, but fuel Prices for you have to look at what's going on in the aggregate, right? And what we're doing that what we're doing is we're comparing the demand for goods and services in the economy, and we are contrasting that with the total potential supply of those goods and services in an economy. So when we start seeing Price rises in a particular area, whether it's food or fuel, whatever IT tends to be because there's there's mismatch between supply and demand.

Lots of people are demanding food and fuel, obviously, because they needed to live and produce things. But for one reason or another, climate break down geopolitical conflict. Those things have become more scarce, which pushes up Prices.

And that then has an impact throughout the rest of the economy because, say, workers demand wages that are higher in order to buy more food. And you know, that leads to higher Prices throughout the rest of the economy because workers are being paid more. When we're thinking about what's happened over the cause of the pandemic, we need to look at the real mechanisms that have transformed a shock in a couple of different particular areas.

So areas like food and fuel, certain resources, logistics and transportation, for example, and what has allowed those shocks to reverberate throughout the rest of the economy? Now a lot of economists, the standard argument is to just say when inflation becomes embedded, it's generally because of workers, right? So workers have seen that Prices are rising, so they have gone to their bosses.

And theyve said, I won a hire wage. The boss then forced to pay them a higher wage. So then the sector that that those workers are working in, Prices rise in that sector.

Can you a prize, right? sea? And the argument is that that can then become mutually kind of reinforcing, because IT creates this up with spiral of Price expectations and Price rises. Those thoughts become embedded in .

lots of different right? right? I've yeah i've heard that argument before or i've i'm familiar with that line of reasoning.

yeah. The only is to is, is that it's not really true in this context. Is that because I mean, you know if you think about that logically, I don't know how many of your listeners will be part of a union or feel able to go to their boss and say, I want a wage increase to manage the impacts of rising crisis.

It's not that common for workers to feel powerful enough to really be able to say their bosses. It's on you as a company to deal with these inflationary pressures. What's actually happened. And we seen this when IT comes to the cost of living crisis, when IT comes to real wages. So work as wages measure against inflation, particularly when adjusted for purchasing power.

Those have fAllen in lots of places over the course of the cost of crisis and and the period that we've seen high inflation because workers have actually not been able to demand wage increases in line with inflation, they've had to take that hit. So when costs of reason, their wages have state the same and they they ve absorbed to that hit in the form of rising Prices, that's true of most workers. It's not true for those that very top of the economy, those with on higher incomes. They have been able to go to their boss and they give me a higher wage for station has gone right.

And the twenty twenty three cost of thriving index studied this because another common counter point here is that wages, when adJusting for inflation, have risen faster than inflation. So you think, okay, cool, like everyone should be Better off. Everyone should feel Better off. But when you segment the costs for a middle class family, before you look at food, health care, housing, transportation and I believe education, the turn of the century was the point at which median incomes were growing slower and becoming insufficient. We've kinds have spent on that trend, never since wage increases for the average worker have been efficient for a long time.

These kind of abstract economic ways of understanding, well, these abstract ways of understanding what's going on in the economy, they don't account for power or politics. They kind of reduced everything that's going on the economy.

They reduce all economic activity to a series of numbers that can be modeled by looking at a kind of representative agent treating firms as though their black boxes where you don't understand what goes on inside the firm. You just plug these numbers into your model and then you see what pops out. But what we know is that economics is political.

The question of who bears the costs of rising Prices is a political question, because IT depends on who has power, who gets what, who can demand what, and the cause of the course of this insatiable period workers haven't had very much power. And this is a trend that goes back for a long time. But corporations do have a lot of power, particularly the largest corporations.

We've seen a big increase in like monopoly power, for example, with A A small number of of extremely large corporations dominating most big sectors of the global economy, whether that you know tech or pharmacist s or finance or agricultural food, whatever. These are all dominated by some really, really big, powerful CoOperations. And what has happened actually in reality over the course of this inflation period is that it's been CoOperations that have actually been pushing up Prices and exaggerating the impact of inflation because they've used their market power to basic, the kind of actually collaborate include with one another to raise Prices more than they need to eventually.

What's been going on is a lot of business leaders, people who are setting Prices, have looked at this inflationary environment and they thought, well, our customers knows that there's a cost of the crisis and the Prices are rising. So now is a really good time to actually increase our Prices even more more than our costs are increasing because most consumer aren't gona question that and we don't have to worry about competition because they are mostly pretty uncompetitive sectors. These questions of power are really, really important when we're thinking about how the economy actually works, and that's how inflation has become embedded this time around.

IT hasn't been workers demanding higher wages. It's been CoOperations putting up Prices more than they need to. And this phenomenon has been called lots of things, sellers inflation, greed, flaw inflation. I I know why this german economy is about labor who's really good, and I encourage people to let cut up.

I've heard both of those arguments before， the the idea that is this wage Price spiral driven by workers. I've heard the great flag thing in the past as well. So if we were to take the great inflation thing and to flush IT out, I assume that that means maybe we have a selection of companies that we would say fall into this bucket of clear big corporations.

They are corporations that have a lot of power that are not really having to compete in their sector because there is a either a uh you know some I monopoly situation going on, monopoly and practice or like a duopoly going on. And so we are assuming that there are some tasted collaboration or collusion between them. We would probably expect that they would have record profits since the inflationary period began because if they're raising their Prices by more than their costs are increasing, then I think IT would follow logically that the their profits would be, you know, bigger than never. Is that what we're seeing? yes.

So if there is basically, yes, there is a lot of evidence, particularly in certain sectors of you know, record process, I mean, just have to look at the fossil fuel industry itself to see how those record profits and have been generated. You can also see finance, such as of tech. The issue is, is that particularly now there are lots of conservative trends running in lots of different direction.

So particularly for kind of highly financialization corporations where they're very implicated with financial market. So maybe they invest cash in financial market or maybe that performance is just incredibly closely tied to whats going on in those markets. There have been some serious up and downs, mostly driven by speculation, which have potentially dented that picture one way or another.

But certainly, if you look at that period over the course of kind of twenty, twenty one, twenty two, there are some really big performers that, that come out and have i've done really, really strongly when IT comes to profits. The other part was basically the government and central banks pumping tons and tons of money into the economy and giving many of these corporations of financial institutions massive bailout that have actually just went to a lot of them were just distributed straighter shareholder dividends as or you know, used to buy back their own chairs. So there are other factors that will always complicate this picture when IT comes to profits.

But there has been a lots of evidence just when you look at headline profits in some of the sectors where there's the most market power and be there's some empirical research that's been done by economists, including isabela labor, uh, looking at how this works and and showing some evidence for IT. And they're not just need to profit themselves. They've also looked at earnings calls with kind of senior executives from these big cool oration.

So you once every quarter, the leaders of CoOperation, we'll have to go to talk to shareholders and say this is what we're doing with the company and what they found by analyzing those calls is basically senior actives admitting that this was what they were doing. Obviously, they won't say we're hiking Prices because women up plays, but they were say, you know, there's an inflationary environment, so were been able to incase costs at etra. And so there's lots of evidence that this has actually been happening.

嗯， interesting that's funny that this kind of saying the quite a part out loud on the earnings skills um that is seem to be a trend, I think, in some of the conversations i've had recently about this topic is so like what you want to know what they're doing, just go listening in on what they're telling wall street because the life of this stuff gets dragged about pretty openly like we're going to lay off you know ten million dollars of headcount and that's going to increase profitability by X, Y, Z. And you know someone wrote in was like this is how I found out that my consulting firm was doing A Y off because I was listening to the earnings call and we didn't even know about IT yet.

That's a really good point because you have to think about who those winning schools of four, right? And not for the employees. That's a shareholders yeah and what are shareholder going to be looking for? They wanted see the leadership of the company basically doing everything to maximize ze that profits yeah so they're gonna be very blunt about what .

they are doing yeah. Well, on the tax thing to before we move on, I want to ask you specifically about the corporate tax issue because this is something that in the U. S. At least is is a popular topic that I think has maybe more consensus than the approach to capital gains taxes or personal income taxes, where people are really all over the board and some people our very anti taxation personal income.

But I find that you start to see moderately more consensus around the idea that corporations should be paying taxes on profits, though the kind of classic economic counterpoint to that is this idea that we kind of talked about, like they will pass that cost on to the end consumer. They're not just going to absorb the cost of attacks. It's just going to make things cost to more.

And so to your point about power and who has the power and who gets to decide who gets what in the current kind of regime or the current, do you think that, that counterpoint is actually presently true that the corporation would just pass on the taxes? Like what what would be the most reasonable or solution oriented approach here from a corporate tax standpoint? Is taxing them or something that would help? Or is the counter point valid?

So all of this really depends on these questions about competition. Now if we had truly competitive markets, a lot of these issues wouldn't be a problem because if corporations try to raise their Prices above what was necessary and combine would come in and undercut them. And so that's what a competitive market looks like.

That's what you know if you go to your local market, that's the kind of environment that you'll find. It's kind of cut through competition where you can't afford to high Prices because consumers at savy, they're got lots of options and now shop around for the best offers. The issue is that our economy, and this is basically what I write about in my book, has become so, so concentrated, so many of these markets or just subject of very little competition. And even when there is competition, there's very strong evidence that even if there's a number of firms in that sector, they are very frequently collude either actively or passively to keep Prices higher than they would othe wise would have because .

because that benefits all of them.

Exactly how are you gona do that in areas space and farming ticals in tch, you need so much money to be able to get into those sectors. Where would you go to get the money to compete with those embedded companies? A bank? There are not that many banks, and most of those banks are already funding one of the companies in the industry.

So why would they allow you to end winter that industry and disrupt IT, reducing profits overall? So this was like a really concentrated and kind of corrupt way to organize an economy, basically. And what that means is that if you want economic justice, you have to find ways of tackling that concentrated power.

Now on its own. Taxation will do that because, you're right, these companies just going to come together a bit well. Why should we pay these taxes? We do have to powerful, but that's why we need like a bunch of different policy solutions that can work together.

Yeah too. Decrease corporate power, increase competition. What we've been seeing with the antitrust movement at the moment in the us has been big on that front.

Something that you're clarifying for me right now is that often times, I think when we talk about wanting people to pay more in taxes, it's like tax becomes the short hand that is most accessible to us as regular civilians to basically express a desire for these groups to be less powerful. yes. So we look at billionaire, we look at CoOperations.

We say, why aren't they paying their taxes? It's not that the literal solution step one and done answer is just raise the tax rates. Is that the spirit of that commentary is we think that these groups should have less power. We think that these groups are too powerful.

And so the mechanisms by which we're going to strip them of that power and retaliation ate the economy in a way that that actually works for everybody might be, actually, we should be fighting for anti trust, not what will worry about the taxation later. The tax is right now, we're going na do anything. We have to do these other things first.

Yeah, I mean, that is a great way of putting IT. This is again a big part of the argument that I always make, which is the policy comes after power. So the kinds of policies that you get our reflection of the baLance of power in your society.

So in a society where fol cure companies are some of the biggest lobby, as you are not going to get action on climate breakdown, even though if those societies we are more likely to need greater action on climate breakout, you're not gonna IT because those big companies are basically, to a gradual less extent, controlling what legislation is is past and what people think about a lot of different issues. What you have to do, if you wanna get legislation on kind of breakdown, is to build a popular movement and build mechanisms of accountability that can outweigh, or at least start to chAllenge, the power of those fossil real companies. If you think about how they exercise their power, firstly, political donations, lobbying.

How can we outweigh that by making politicians? I like to say, we should make politicians as scared of the people voting for them as the ones giving them the money. We need to be organize enough so that they know that they can't just go away with anything. There's also things like there. You often now in the media funding, research funding, you know, influences people to to push their agenda.

So how can we think about outwent that through our campaigning and our organizing? Yeah, all of these things are requite a kind of shift the baLance so that we can then do the work of saying, right now, this policy is going to be implemented and it's gonna get through congress because we've done this groundwork of making sure we have this support that can contact support the first, which is a very big ask and it's really, really chAllenging. But it's also why grass roots campaigns are so important.

It's often easy to think about like you know like in the U S, you have like like the sun rise movement or you know like campaigns to the congress people that supports with the Green new deal. Those campaigns can kind of seen almost like really far away from the policy outcomes that we want to achieve because, you know, we're here and we've to go through all these steps, get to that. But there is so important because without those movements, basically the most powerful people in society, the ones with the most money, the most connections, those insurance, they can just use all of those resources to set the policy agenda themselves.

Before we brought in our scope here and go global with kind of like the effects of american capitalism beyond the united states, I wanna drill down a little bit on that idea of grassroots movements of coming together, because you write that, you know, you don't need to surrender your power to a state for protection or a market that is controlled by powerful CoOperation, that we don't have to give away our power to either of these institutions or groups or systems that we can work together to build the future that we want, and that we can achieve something that you call a truly democratically controlled society. And so i've been dying to ask you, do you see democracy and capitalism as fundamentally at odds with one another?

I do, because of the way I understand democracy. The way I understand democracy is where people have power and control over the most important decisions affect their lives, or looking at IT from the other direction, from the top down, whether there is real accountability for those in positions of political and economic power.

Now the issue is today, firstly, we don't have true political democracy because those mechanisms of accountability are completely broken either. They don't exist in the case of, for example, allegedly independent institutions like a central bank, which are separate from government, but actually just you. That doesn't mean the they are completely independent IT means that there's no democratic popular pressure that can be exercise or number.

There's lots of kind of pressure from basted interest that can be exercised on them. Or the fact that all of our electoral systems broken, yours is hours is too much money in politics is well. But there's also this big chAllenge of the fact that we don't have economic democracy.

So we have this like a limited form of democracy in the political realm and then zero democracy when IT comes to the manager of the economy. So basic, massive, powerful CoOperations that don't have any competition. Competition is supposed to be the democracy of the market, basically in that accountability, and we don't have that anymore.

And the way that we often in the past have struggled towards greater levels of economic democracy has been through the labor movement. So has been workers coming together and not just demanding higher ages, but demanding power for an influence within narrow organization. And that has, again, been crush. So all of these mechanisms for accountability, for those in the top, have been like cup one by one. It's harder than ever to vote out a congress person or an mp who has done something that you disagree with.

It's harder than ever to make your preferences known to your you know, local mechanical authority or in local government is extremely hard to exercise your voice within a corporation to kind of tell those at the top how using that CoOperation should be run what my fair wage would look like for you there no real mechanisms for yeah creating not just like accountant, to even just a basic communication between leaders, the powerful and everyone else. And IT is creating this two speed society where those are the top, think we can do what, literally, whatever we want, and get away with IT. And everyone else is just stop living in a world. But but those people .

have created for them. I often hear from people who write in, and i'd say that the responses are on a spectrum when we have conversations like this. One grain of this is the most depth conversation that we've ever had on this show that is looking directly at capitalism as a system and really trying to pull IT apart and understand IT in this way.

But most everybody will concede that there are problems IT just varies the extent to which people are willing to image, get imaginative and think bigger about the solution set. So that kind of ranges from, like things are mostly OK and we just have to make a couple of tweet or like, you know, think we just got to change a couple little things and then we're going to see a lot of improvement to the other end of the spectrum in which is like burn IT all down. The system itself is rotten. What I think you would say is that this is just the state that all capital societies will eventually drive toward, like this is the inevitable outcome of the system that we have because this is what all the incentives drive us to. Is that is that a fair representation?

Yeah, exactly. And it's kind of an vago that if you get a really advances producing lots of stuff and you have a complex state that managing production and managing financial institutions, it's gonna get really centralized. And that's why we need to start thinking differently about what accountability looks like and realizing that you can't just rely on the market. And because it's gonna be corrupted by politics, is going to be corrupted by monopoly. We need other ways of making sure that those with power user in everyone's interests, not just their own.

That's where I think the democracy, the true democracy, the wisdom of crowds, comes into IT. And so to zoom out a little bit and to go global, you take your discussion a step further than I have seen in other arguments of this kind. That was, I think, the first time that I had really given a little bit more thought to the connection between um U S.

Imperialism and capitalism are like the U S. Enforcing capitalism abroad in what you call peripheral societies, which you describe as being stuck in A U S induced cycle of dependence and kind of a myth making that happens around these types of communities around the world. And so I believe, if i'm remembering properly, you describe IT as, like we push the labor offshore, but then we reassure the profits to the us. And that this is what's creating the cycle of dependence. How does this work and why do these economies get stuck in this cycle?

yeah. So the way to think about this is to think about the timing of development and the geography of development. So if you think about the U. K, for example, that was kind of where industrial capitalism was born. So you had lots of big factories producing the stuff that was being produced that time, like commodities, machinery, fabric.

Is that trip and what time minor we're talking here.

We're in one hundred and hundred early days. Yeah not like a long time ago when that society, when that company society was developing, you had capitalists in the U. K.

Who are using the labor of british workers to produce goods that would then, you know, kind of lead to further industrializing. A lot of them were exported. A lot of them were used at home. But that was, the economic model was pretty nationalized. And what that meant was you had the development of this system, workers realizing, oh, we've got lots of power.

If we stop working, if we come together and say we're not gonna, you know, work for, you have to increase our wages, that we can basically put a stop to this entire system of production. And that meant that for a while, those workers were able to demand wagging increases that allowed them to kind of benefit much more from this system of production at the same time as this was based, based on colonialism. So workers got more money, bosses got lots of profits, and that was based on kind of extraction from the rest of the world in one way another.

But like you can see how, like the rights that we came to enjoy in social democratic countries that have made us rich, that gave us a middle class, that gave us a minimum wage, that gave us health care, those came from this different baLance of power between bosses and workers. When the conditions production meant that IT was a more national thing in the same sort of thing in the U. S.

right? There was a lot of expansion that took place in the U. S.

Economy, but IT was expansion outward towards the frontier, right? And so there was still the centres of production where workers, you know, chico, new york, where workers could band together and demand wage increases. So we hadn't had this that fully globalize system.

Yeah, what started to happen from really about like the sixties, the nineteen sixties onwards, IT really decided to happen in A A much bigger way. Would you had the end of formal colony ism? So that was where the U.

K. Was able to kind of command entire countries in france and other countries will have the senior source systems where they had formal control. Over parts of africa, parts of parts of asian eeta, we had the colonization.

But what also happened was that those capitalists in the rich world, in country's, like the U. S. In the U. K, started thinking, right? So we got all these workers here that are basically using their power to demand concessions from us.

If we just took the jobs that we have here and move them to somewhere where workers don't have any power, we could massively increase our profits. And there were lots of things that went into that. There was technological change. Logistics became like being much more easy to move things around the world became much more easy to manage a big enterprise, because you had revolutions in information technology, communications, etra.

But what all that meant was the, rather than having this kind of national economy, you have labour move to places where labour is cheap, so subsaharan africa, china is ETC, and then the buses still being located in those rich countries, and you start to see the move towards this globalized system of production. We're rather than having bosses, managers and workers all contained within one economy, you now have economies comprised almost entirely of bosses and managers, and then economies comprised almost entirely of workers. So we start to see this certification, this division of global production, whether people who own the resources and the people who manage a globalized production process live in the U.

S, in the U. K. And the people doing the work, actually producing these goods and commodities, live in very, very poor countries. Now, there was an interesting trade of here, and you've seen this in the transformation of our own economies as well. Whereas before you had bosses and workers and those workers had some rights and they were able to kind of make demands of bosses, there's been this shift towards you what we call don't like the rise of middle class, right? yeah.

And this really represented a kind of division of that group of workers where the ones with kind of slightly Better education, the ones with a little bit more power, they were given these kind of professional managerial jobs in finance and marketing and Operations in tech, where their job is in, where another to manage this globalized production process. And they get higher wages from doing that. So that's the creation of middle le clos.

It's actually just like the concentration of management finance Operations at the track in a few economies where there is this middle class. The rest of that working class ends up working in the service sector, providing basic services, healthcare, hospitality, cleaning, exception to the people at the top of that economy. And then everywhere else in the global economy is producing all the stuff that makes IT work. Now, the reason I got into this kind of long window explanation is because this is really important to understand that this model IT can't be replicated in other countries because this whole system is globalized.

It's not like we're gonna see. It's like there at the bottom of appear scheme. exactly. You gotten know when you're in the email at the bottom, there's no one else to .

recruit an extremely good, annoyed gy.

oh my god. So that the cycle like that, why you get stuck in the cycle of dependence, is that that once this gene is out of the bottle, once, once you ve already stratified the global economic order in that way, if you are at the bottom, you cannot pull yourself up by your bootstraps and do the same thing the successful people at the top did basically exactly.

okay. The only way that we would start to see a shift in this would be if the same sort of thing that happens in the us, in the U. K. With workers, started happening on the global level. I was gonna ask.

like, if all they're concentrated in that, could they all do the same thing?

Okay, exactly. The issue is, is that there is millions, if not billions, like a couple of billion of them, spread across different countries, living under ruthless authors, arian governments that ridgely crush strikes, and which are supported by the united states. Where are all the big like companies are headquarter, who don't want the workers in their supply chance to go on strike of the government, supports other governments that crush strikers and sends, you know, bones and everything that is required to make sure that those kinds of pro worker regions don't get into power. So this whole system is very, very strongly policed by those at the top, by those who benefit from IT, which which makes you so much harder to imagine the kind of math work are organizing that you did see and in our own economies a couple hundred .

years ago to reassure us back to the U. S. For a second.

Yeah.

I I noticed something when you were going through the solutions at the end of your book. And IT reminded me of an article that I read a couple months ago from someone that we had recently on the show. Hamilton, no, and who's an american for a journalist, and he basically was writing about, rather than giving people public money so that they can go out and buy privatized for profit versions of the things that they need, IT would actually be Better to decompose fy, the things that everyone needs and make them public goods.

And IT connects kind of nicely with this point that you made at the end of the book about um I surprised me actually because I think I think there's a lot of common progressive support for the idea of a universal basic income. And you kind of pointed to the universal basic income and you said that is not going to actually move us closer to this ideal that we're describing because it's kind of just furthering this idea of like we're going to hand up public money that you can buy these private goods that you need. And that's not this kind of just like a furtherance of or a continuation of um this states quote in a way. And I I just would love to hear more about how you got there and what you think about maybe where the u bi. Falls short or where you might caution us.

yeah. So I mean, I think the issue with this comes down to two things, things that i've mentioned a lot already, power and democracy. So how does A U. B, I, versus what I would call universal basic services, so instead of universe basic income, unius of basic services, so basically everything that you need to survive is provided, subsidized or free at the point of use.

So that means, you know, free health care, subsidized food for those who need a subsidized child care, very cheap housing costs at sea, so that, as you know, you are, the guest was saying the things that you need to survive our dea modified, you know, as a basic income. When you think about power, this is something that's being given out from those at the top to everyone else. And generally, it's done, as you saw in the pandemic, on the basis of the impact that will have on the economy.

So the arguments for other increases demand, the arguments against the other increases inflation, right? But the whole argument is based on what are these payments are gonna do for the economy. And what that means is, is basically about making sure that is enough demand to keep things going to boost growth, to boost corporate profits eeta. The actual fundamental reason for IT isn't really anything to do with supporting people on on low incomes.

I also think that that relationship that's created by basically just being given stuff by a government that you don't really trust is something very different as compared to organizing within the state and within politics to, for example, determine how your local budget is spent in your local community that requires you to get together with other people and make demands collectively, rather than just having this like individualized by isolating relationship between cars and inside. And yeah, the second the second thing is also democracy. So again, when you have just the state giving stuff outs again from this kind of position of inequality, there aren't those feedback mechanisms that I was talking about, as you know.

How are those people who are giving the money? How are they going to be held to account? Now obviously, we live in democracies. So there's that these elections, but for all the reasons that we've talked about, is not an ideal way of holding the powers to account.

Whether if you have something universal basic services we are talking about, as I said, like free house care, we're talking about uh, elderly care. We talking about child care for those who need that education, higher education included in that cheaper housing than what we have at the moment, all of these things, free or highly subsidies. So they are much cheaper than what you would have them at.

Now that is a really powerful mechanism to make people feel kind of much more powerful, basically because if you're not only threat of losing your health care in your home, when you lose your job and you're much to join union, but it's also a way of engaging people in democracy. Because what if that system wasn't just like the government giving you stuff, IT was participate in a community land trust that owns all the housing in your local area and all the land in your Gloria, and runs housing in a CoOperative way? What if it's like the healthcare system is run based on input from local communities, from doctors and nurses, from experts, you know? And we have this collaboration stakeholder base model of thinking, how do we spend money?

What are our priorities for our local community? All of these lot of things, you know, and you see this already happening, and things like the participatory budgeting movement, where communities come together and say, we want this amount money spent on healthcare, we want this amount money spent on infrastructure. And what you see is the groups that had a generally kind of marginalized and underreport, their voices come to the four in those, in those kind of discussions, because that the ones that have the most to gain, often so IT, can be really, really progressive. So basically those cute points, power and democracy. I think this model of like democratic universal public services is two period to the U.

B. I model. Yeah， that's a perfect segway. For the last thing that I wanted ask you today, Grace, because I am in what I would classify as a years long journey of reconstruction and discovery.

I honestly .

curiosity like, I think I can look around and see these issues, and I hear about them every single day. And I think that when we start talking about and trying to imagine a Better way, and in this concept of a reimagine system, where in the things that we all need, the things that are useful and important for human flourishing, are not something that you need to go out and compete with your fellow woman to get, but is something that we can actually kind of harness the collaborative and CoOperative power of humanity to come together and make IT Better for everybody.

There is this kind of overarching question that feels like that hangs over my head as I engage with these ideas, which is. Is there a role for private wealth ownership in that system? IT is so easy for me to imagine why publicly owned banks that offer low interest rates and function to serve the communities rather than wall street, which is trying to extract from these communities, is easy for me to imagine why d commodified housing and CoOperatively, collaboratively owned housing, food, health care, transportation, that these things would make society Better in more seamless and honestly, just less stressful.

But I think when I take that final step and go, okay, so how does that not not just how do we get there. But like is so difficult for me to imagine without imagine a world without private ownership of wealth. That's where things start to like break down for me and where my world that feels sub optimal. So like how do you think about private ownership in your conception of this? What i'm gonna all post capitalist world?

sure. I don't think we need to think of an end to private ownership. That's not the aim here. You know, it's not like nobody should be able to own a house, saw, have nice things. What I think we need to put an end to is the, firstly, the private ownership of the things that are required that everyone else to live. And then also, when we do have private wealth, the end to the idea that the sole purpose of that wells is to generate more wealth, right, which is the idea that we have at the moment. So, you know, you can have a good amount of money, and that will never be enough.

There will constantly be people advertising you to say, and you, you know this Better than anyone, right? How do you invest your weth? How do you like manage your money? How do you make sure that that money is being put to work to maximize its productivity as you yourself, i'll false, to maximize your own productivity as something that you you are a source of capital and you have to put that capital to work to generate returns.

What if that wasn't the aim? What if the aim was living in a good society? So you have some private well, and you want to a return on that private wealth, but you don't want to maxim impossible return on that private wealth if that means investing in a oyl company that's destroying the planet. Maybe instead you think i'm going to end this money to a local CoOperated enterprise that is profitable and distributes a small amount of money to shareholders, but keeps a lot of that and reinvested in the company, creates tes jobs locally and makes my community a Better place to live.

Maybe you think i'm going to lend that money to the local government and they're going to invest in social housing, which means that there's gonna rent coming in to that local government in return for that housing so that they can start paying back that, that there are lots of different ways of thinking about investment that have to do with collaboration and about thinking about what kind of world you wanna live in. And there isn't just thinking about how you solely use that money to create more and more and more money. And that's the issue that we have today rather than like us owning stuff IT. Is this mindset of just more, more, more.

There is a quote in your book when Ursula gin quote, we live in capitalism. Its power seems unescapable so that the divine right of kings, any human power, can be resisted. A N changed by human beings. Resistance in change often begin in art, and very often in our art. The art of our words tell .

me why you wanted .

to end the book with that quote because .

when you look at assistant like capaldi, and particularly the way I present in my book, which is that is so powerful, so big, so l encompassing, you think, how is anything ever onna change? And I think that quote is really nice in a lot ways, because IT shows that these are human systems that we've create ourselves.

But IT also points to the fact that systems that seemed much more cohesive and much more powerful and controlling have fAllen in the past, whether that's empires or whether it's the whole system of feudalism. M, right. If we think that we're controlled and dominated today by capital, which we are imagine wouldn't would have been like to be a pleasant living in a medieval economy, working the land.

You get up every day, you work the land. Some of the produce that you produce goes to the lord of the manner who lives in this massive house where you live in this kind of hovel. The inequality to power is so huge, you are literally tied to that land, or tied to the land donor.

You have this institution, the, which is just to buying everything, saying if you work hard and you'll have a reward of the next life, the government is basically just made up of lords, the own. You and you looked at this system as a peasant. In that time, you would have been like, this is going to go on forever.

And that's whatever was saying IT would go on forever, because that was the natural order of things. The kings were at the top, and then the priests and the lords, and then the way down volt with. And that's the natural hierarch of the world.

And things will always be that way. And yet IT crumbled remarkably quickly, and almost everywhere at similar sorts of times, because there was this class of people who came together and said, this system is not working for me. Now that class of people was actually the industrial alist, the capitalists who said, I need workers.

I don't want them all to be tied to the land working for the lords. I need them to work in my factories, so that you, we had the birth of liberalism. And liberalism in the original sense, which is like limited governments, free those adam smith, the kind of original political, economic thinkers, basically pushing this idea that we needed to break up the power of the lander wars.

Free people from that, you know, connection to the land, build up towns, had different ways of organizing government. These huge projects that based up ended an entire social order driven by this political organizing and also the development of the economic system. We're at this point now with the development of economic system is pushing us really clearly towards a different way of organising things.

You know, we cannot continue as we are on any level, whether you look at the sustainability of the economy, of the planet, of just, you know, human health inequality and the threat that is opposed to democracy. There are so many pressures that are pushing us towards adopting a different kind of system. But what he needs is that same organized, powerful group of people standing up and saying, we're gonna get to that next stage.

We're onna, push through and dissolve the social order set by step to around something new. And I think that, quote IT just shows that, you know, if you were a surf living in the thirteen hundreds, you would have thought that was IT for the rest of human history, wouldn't even really had a conception of human history beginning or ending. IT would just go round around the circles.

And here we are now looking at powerful systems. But in terms of the inequality of power, we have much more leverage than we think we do because these systems rely on our votes, they rely on our labor, they rely on our participation. And if we all stop at being, that's IT for capitalism.

Thank you so much Grace for spending like several hours with us at this point that was so fun. So in lightning. And I just really appreciate the clarity and precision and even though the level of kind of optimism and can do attitude that you bring to this problem because you right IT is very entrench and IT is very powerful, but it's not impossible.

So what do you think? Are you ready to revolutionize? I learned so much from her book and from this conversation, and I I hope that was similarly enlightening for you. IT feels especially relevant in the midst of a presidential election as we are all reflecting on the role of power in our lives.

So thank you for listening to this episode of the money with Kitty show. Will see back here in two weeks for a conversation with a financial therapist about what that means when your money anxiety actually increases as you earn more.

Our show is a production .

of morning brew and is produced by hand of the eyes and meat. Katya I, with our audio engineering and sound design from Victory death in memory, is our chief content officer and additional fact incomes from sky Wilson.