1 00:00:00,080 --> 00:00:12,480 Speaker 1: Welcome to zero. I am Akshatrati this week rethinking economics. 2 00:00:16,680 --> 00:00:19,720 Speaker 1: As I've watched world events unfold this past year, I've 3 00:00:19,760 --> 00:00:24,120 Speaker 1: been surprised by the many seemingly economically irrational moves at 4 00:00:24,160 --> 00:00:28,240 Speaker 1: governments and investors around the world are making. The prime 5 00:00:28,280 --> 00:00:31,320 Speaker 1: examples are coming from the US with President Donald Trump's 6 00:00:31,320 --> 00:00:34,960 Speaker 1: trade war or attacks on clean energy, but there are 7 00:00:35,240 --> 00:00:41,280 Speaker 1: many others. The incredible valuation of AI companies, Argentina's extreme austerity, 8 00:00:41,880 --> 00:00:46,159 Speaker 1: inclusion of defense companies in ESG funds, the European Unions 9 00:00:46,200 --> 00:00:49,280 Speaker 1: promised to buy seven hundred and fifty billion dollars of 10 00:00:49,360 --> 00:00:53,680 Speaker 1: liquefied natural gas. The list is long. Each of these 11 00:00:53,720 --> 00:00:56,960 Speaker 1: can be explained in different ways. Perhaps it was for 12 00:00:57,000 --> 00:01:01,160 Speaker 1: a political win, or it was an ideological choice, or 13 00:01:01,280 --> 00:01:04,759 Speaker 1: short term thinking, or investments made because of a fear 14 00:01:04,880 --> 00:01:08,520 Speaker 1: of missing out, or some combination. 15 00:01:08,120 --> 00:01:09,040 Speaker 2: Of those excuses. 16 00:01:10,160 --> 00:01:14,080 Speaker 1: But what if the main reason for these irrationalities is 17 00:01:14,360 --> 00:01:18,560 Speaker 1: much deeper. That's what Abbi Inns thinks. She's an associate 18 00:01:18,600 --> 00:01:21,680 Speaker 1: professor of political economy at the London School of Economics, 19 00:01:22,120 --> 00:01:24,480 Speaker 1: and she came to that conclusion while writing her book 20 00:01:24,880 --> 00:01:29,399 Speaker 1: Late Soviet Britain as unlikely as it might seem. Her 21 00:01:29,400 --> 00:01:32,920 Speaker 1: central thesis is that the UK and other capitalist economies 22 00:01:33,280 --> 00:01:38,360 Speaker 1: are behaving like the ineffective, centrally planned Soviet economy. She 23 00:01:38,560 --> 00:01:41,600 Speaker 1: argues that the market driven economic system that was supposed 24 00:01:41,600 --> 00:01:45,440 Speaker 1: to be the antidote to socialism can never deliver on 25 00:01:45,480 --> 00:01:48,960 Speaker 1: its utopian promises. Ever since I finished reading the book 26 00:01:49,000 --> 00:01:51,480 Speaker 1: earlier this summer, I've not been able to stop thinking 27 00:01:51,480 --> 00:01:54,480 Speaker 1: about it. Though the title refers to the problems in 28 00:01:54,480 --> 00:01:58,400 Speaker 1: the UK, the conclusions that Abbi draws are much more 29 00:01:58,400 --> 00:02:02,640 Speaker 1: widely applicable, and she arrives at them after studying more 30 00:02:02,680 --> 00:02:06,280 Speaker 1: than a century of academic work done in economics. The 31 00:02:06,320 --> 00:02:08,760 Speaker 1: book isn't a light read, but I think it is 32 00:02:08,840 --> 00:02:11,679 Speaker 1: a necessary read for anyone trying to make sense of 33 00:02:11,720 --> 00:02:14,640 Speaker 1: the world we find ourselves in. So I wanted to 34 00:02:14,680 --> 00:02:16,760 Speaker 1: ask Abby to lay out the case she makes in 35 00:02:16,800 --> 00:02:20,680 Speaker 1: her book and explain why governments and corporations aren't taking 36 00:02:20,680 --> 00:02:24,480 Speaker 1: the climate threat as seriously as economists think they should. 37 00:02:27,840 --> 00:02:28,760 Speaker 1: Welcome to the show. 38 00:02:28,639 --> 00:02:31,079 Speaker 3: Abby, thank you very much, thanks for asking me. 39 00:02:31,160 --> 00:02:34,240 Speaker 1: So this is a climate podcast, but folks who work 40 00:02:34,320 --> 00:02:38,280 Speaker 1: on the climate challenge will fully recognize that we live 41 00:02:38,280 --> 00:02:43,359 Speaker 1: in a complex highly connected and interdependent world, and in 42 00:02:43,360 --> 00:02:47,960 Speaker 1: that sense, any climate solution will involve not just change 43 00:02:47,960 --> 00:02:52,359 Speaker 1: in technology, but also changes to how government works, finance society. 44 00:02:53,200 --> 00:02:57,800 Speaker 1: And your book is focused mainly on government, but on 45 00:02:57,840 --> 00:03:02,639 Speaker 1: the economy as a whole, has an intriguing title Late 46 00:03:02,919 --> 00:03:07,880 Speaker 1: Soviet Britain. Before we explore the nuances of the work 47 00:03:07,880 --> 00:03:09,920 Speaker 1: that you've done and the research that led you to 48 00:03:09,919 --> 00:03:13,119 Speaker 1: write the book, could you just tell us how you 49 00:03:13,200 --> 00:03:15,200 Speaker 1: started to work on the book at all and what 50 00:03:15,280 --> 00:03:18,880 Speaker 1: did you conclude after working on it for many years. 51 00:03:18,639 --> 00:03:21,520 Speaker 3: Six and a half years, which was quite a lot 52 00:03:21,560 --> 00:03:23,160 Speaker 3: longer than I thought it was going to take when 53 00:03:23,200 --> 00:03:27,560 Speaker 3: I started it. So the reason it's ended up with 54 00:03:27,639 --> 00:03:32,600 Speaker 3: this very counterintuitive title is that when I started working 55 00:03:32,680 --> 00:03:35,520 Speaker 3: on it, which was after Brexit, what I wanted to 56 00:03:35,560 --> 00:03:40,080 Speaker 3: write about was state failure, and so I thought, well, 57 00:03:40,200 --> 00:03:43,720 Speaker 3: I'll begin by looking at the really obvious sort of 58 00:03:43,760 --> 00:03:46,320 Speaker 3: aspects of that. So I thought I'd start with public 59 00:03:46,320 --> 00:03:50,400 Speaker 3: sector outsourcing. So the more I looked into that, looking 60 00:03:50,480 --> 00:03:55,840 Speaker 3: into these contracting failures and enterprise failures, rising costs, declining 61 00:03:56,040 --> 00:03:58,880 Speaker 3: service quality and so on, I started to get this 62 00:03:59,000 --> 00:04:02,920 Speaker 3: very uncap any feeling that it was very familiar, familiar 63 00:04:03,000 --> 00:04:06,120 Speaker 3: to me as someone with a research background in the 64 00:04:06,160 --> 00:04:10,320 Speaker 3: old Soviet space. I thought, well, this is very strange. 65 00:04:10,640 --> 00:04:14,360 Speaker 3: Meant to be the opposites, right, The neo classical economics 66 00:04:14,400 --> 00:04:17,599 Speaker 3: behind neliberalism was meant to be the as it were, 67 00:04:17,640 --> 00:04:23,120 Speaker 3: the scientific economics that was the antidote really to the 68 00:04:23,200 --> 00:04:26,320 Speaker 3: kind of central planning, bureaucracy and rigidity that we knew 69 00:04:26,320 --> 00:04:31,640 Speaker 3: about from the Soviet experience. And then I realized that 70 00:04:32,120 --> 00:04:34,800 Speaker 3: what they held in common was that they were exact 71 00:04:34,800 --> 00:04:35,600 Speaker 3: mirror images. 72 00:04:36,080 --> 00:04:38,279 Speaker 1: So there are beliney of examples, and we'll come to them. 73 00:04:38,839 --> 00:04:42,279 Speaker 1: One that shocked me as somebody coming to this country 74 00:04:42,320 --> 00:04:47,080 Speaker 1: as an immigrant and then learning that the country that 75 00:04:47,240 --> 00:04:52,479 Speaker 1: built the modern sewage system now spilled sewage in UK 76 00:04:52,680 --> 00:04:56,720 Speaker 1: rivers and seas was an interesting experience. But we can 77 00:04:56,760 --> 00:04:59,800 Speaker 1: come to that failure a little later. There is an 78 00:04:59,800 --> 00:05:04,200 Speaker 1: hour respect of our discussion which is focused on politics separately, 79 00:05:04,560 --> 00:05:09,240 Speaker 1: economics separately. They are usually not put together. But your 80 00:05:09,800 --> 00:05:14,120 Speaker 1: area of study is political economy. And you got to 81 00:05:14,480 --> 00:05:17,640 Speaker 1: the conclusions in the book, which you should briefly mention 82 00:05:18,440 --> 00:05:20,720 Speaker 1: through a circuituous route going all the way back to 83 00:05:20,760 --> 00:05:21,920 Speaker 1: the philosophy of science. 84 00:05:22,279 --> 00:05:23,440 Speaker 2: Why was that necessary. 85 00:05:23,520 --> 00:05:30,400 Speaker 3: So what I became really interested in was how two ideologies, 86 00:05:31,080 --> 00:05:36,400 Speaker 3: so neoliberalism in the West and Soviet economics in the East, 87 00:05:36,800 --> 00:05:41,800 Speaker 3: how they could be rooted in such different metaphysics as 88 00:05:41,800 --> 00:05:45,839 Speaker 3: it were, so Soviet economics being rooted in sort of 89 00:05:45,880 --> 00:05:48,839 Speaker 3: Marxists sociology, which was meant to be dynamic and about 90 00:05:48,920 --> 00:05:54,240 Speaker 3: moving classes and dynamic social systems, and the mathematical economics 91 00:05:54,279 --> 00:05:58,279 Speaker 3: known as neoclassical economics, which sits behind most neoliberal policy, 92 00:05:58,360 --> 00:06:01,400 Speaker 3: which is very much more abstract. It exists in a 93 00:06:01,440 --> 00:06:05,719 Speaker 3: world of logical argument from assumption using either mathematics or 94 00:06:05,920 --> 00:06:11,200 Speaker 3: formal logical argument, and modeling and forecasting. It's an attempt 95 00:06:11,240 --> 00:06:14,960 Speaker 3: to build a kind of predictive analytical science. The idea 96 00:06:15,120 --> 00:06:17,359 Speaker 3: being that you could cut out all this sort of 97 00:06:17,360 --> 00:06:21,320 Speaker 3: empirical noise and get to, as it were, the universal 98 00:06:21,440 --> 00:06:25,240 Speaker 3: truths of the economic world. That's the aspiration, and I 99 00:06:25,240 --> 00:06:29,360 Speaker 3: thought to understand this, to understand how they nevertheless end 100 00:06:29,440 --> 00:06:35,320 Speaker 3: up converging on the same state craft of quantification, output planning, 101 00:06:35,480 --> 00:06:39,680 Speaker 3: target setting, measurement, forecasting. All of this, I'm going to 102 00:06:39,760 --> 00:06:42,359 Speaker 3: have to go back to the philosophy of science to 103 00:06:42,480 --> 00:06:46,320 Speaker 3: figure out how they converge, and the point of convergence 104 00:06:46,680 --> 00:06:52,240 Speaker 3: is that when Stalin moves away from long term determinism 105 00:06:52,440 --> 00:06:54,279 Speaker 3: to the idea that you can have a top down, 106 00:06:54,720 --> 00:07:00,279 Speaker 3: almost completely encompassing, central planning system, you suddenly arrive even 107 00:07:00,320 --> 00:07:05,640 Speaker 3: a world of attempting to create a perfect coordinating system, 108 00:07:05,760 --> 00:07:10,560 Speaker 3: a perfect alecative mechanism using planning, and that is the 109 00:07:10,680 --> 00:07:14,880 Speaker 3: exact mirror image of the aspiration behind neoclassical economics. 110 00:07:15,080 --> 00:07:18,360 Speaker 1: How exactly though, because you are still in the Soviet 111 00:07:18,400 --> 00:07:23,720 Speaker 1: system trying to centrally plan for a state that is authoritarian. 112 00:07:24,040 --> 00:07:24,480 Speaker 3: That's right. 113 00:07:25,000 --> 00:07:28,080 Speaker 1: For socialist outcomes, that's right. And on the other hand, 114 00:07:28,360 --> 00:07:30,760 Speaker 1: the system we live in here in the West now, 115 00:07:31,480 --> 00:07:33,560 Speaker 1: which has been in place for a while but has 116 00:07:33,600 --> 00:07:38,320 Speaker 1: been going towards a particular direction, is market oriented democracies 117 00:07:38,320 --> 00:07:42,600 Speaker 1: where people are choosing these leaders, and the leaders are saying, 118 00:07:42,640 --> 00:07:46,080 Speaker 1: we are going to create offers and options for all 119 00:07:46,120 --> 00:07:49,240 Speaker 1: of you in this competitive space that would allow you 120 00:07:49,280 --> 00:07:52,240 Speaker 1: to make the best rational choices you are. They seem opposite, 121 00:07:52,520 --> 00:07:53,440 Speaker 1: and they are opposite. 122 00:07:53,440 --> 00:07:56,160 Speaker 3: That's absolutely right. So the book is a kind of 123 00:07:56,240 --> 00:08:00,400 Speaker 3: dark historical joke in a way, because the argument is 124 00:08:00,600 --> 00:08:04,160 Speaker 3: absolutely not It would be absurd to argue that neoliberalism 125 00:08:04,240 --> 00:08:10,040 Speaker 3: emerged in anything remotely like sort of totalitarian, oppressive, coercive systems, 126 00:08:10,480 --> 00:08:14,880 Speaker 3: whereas the particularly from the Stolenist era onwards, of course, 127 00:08:14,920 --> 00:08:20,440 Speaker 3: that system is a totalizing regime, very explicitly, so it's 128 00:08:20,520 --> 00:08:25,280 Speaker 3: extremely violent, it's extremely coercive throughout that period. But the 129 00:08:25,280 --> 00:08:27,760 Speaker 3: point I want to make in the book is that 130 00:08:27,800 --> 00:08:35,199 Speaker 3: despite being absolute opposite regimes in political form, the way 131 00:08:35,360 --> 00:08:38,480 Speaker 3: they think about the economy, the fact that they think 132 00:08:38,520 --> 00:08:46,240 Speaker 3: about the economy in deterministic machine forms of reasoning means 133 00:08:46,480 --> 00:08:50,839 Speaker 3: ironically that they converge on the same forms of statecraft 134 00:08:50,880 --> 00:08:57,920 Speaker 3: and reasoning about the economy, which is quantification, target setting, calculation, 135 00:08:58,360 --> 00:09:00,719 Speaker 3: risk calculation, the idea that we don't live in a 136 00:09:01,440 --> 00:09:04,200 Speaker 3: uncertain world, but we live in a computable world. And 137 00:09:04,280 --> 00:09:08,800 Speaker 3: also that if you create systems according to this, as 138 00:09:08,840 --> 00:09:14,120 Speaker 3: it were, the science, then enterprises businesses will only behave 139 00:09:14,200 --> 00:09:18,480 Speaker 3: in a rational, socially productive manner. And the irony of 140 00:09:18,520 --> 00:09:22,920 Speaker 3: all of this is that what hyperneoliberal states like the 141 00:09:23,000 --> 00:09:27,240 Speaker 3: UK and the US produce is Soviet state failures in 142 00:09:27,440 --> 00:09:28,480 Speaker 3: capitalist form. 143 00:09:28,960 --> 00:09:33,400 Speaker 1: Late Soviet Britain tells me Soviet Union had problems, especially 144 00:09:33,480 --> 00:09:36,880 Speaker 1: in its late years, because then it went into collapse. 145 00:09:37,440 --> 00:09:40,040 Speaker 1: And if you are after six and a half years, 146 00:09:40,040 --> 00:09:43,440 Speaker 1: concluding this is where Britain is now, you are saying 147 00:09:43,520 --> 00:09:47,280 Speaker 1: we are heading towards collapse. But sure the country has problems, 148 00:09:47,960 --> 00:09:50,480 Speaker 1: but it's also democracy and as far as I know, 149 00:09:51,400 --> 00:09:53,120 Speaker 1: collapse isn't coming. 150 00:09:53,240 --> 00:09:57,600 Speaker 3: I certainly hope collapse isn't coming. Faith in democracy is 151 00:09:57,760 --> 00:10:01,200 Speaker 3: extremely weak at this point. I think it's fair to 152 00:10:01,200 --> 00:10:03,400 Speaker 3: say it's weaker than it has been than at any 153 00:10:03,440 --> 00:10:08,280 Speaker 3: point since the creation of universal suffrage in the UK. 154 00:10:07,880 --> 00:10:11,199 Speaker 3: And it's an important question as to why that is. 155 00:10:12,200 --> 00:10:14,840 Speaker 3: And the argument I make in the book is that 156 00:10:16,200 --> 00:10:21,079 Speaker 3: what has really changed significantly is that the mainstream parties 157 00:10:21,200 --> 00:10:23,920 Speaker 3: in Britain over the last forty five years have all 158 00:10:24,040 --> 00:10:30,760 Speaker 3: more or less adhered to a single economic blueprint. There 159 00:10:30,760 --> 00:10:34,600 Speaker 3: are important differences between labor and the conservatives on that, 160 00:10:34,679 --> 00:10:39,559 Speaker 3: but probably the most important distinction within it is between 161 00:10:40,360 --> 00:10:44,439 Speaker 3: so called Camp one and Camp two, or a first 162 00:10:44,440 --> 00:10:47,920 Speaker 3: burst world or second best world neoclassical economists. And let 163 00:10:47,920 --> 00:10:51,240 Speaker 3: me explain what I mean by that. So, if you're 164 00:10:51,240 --> 00:10:55,080 Speaker 3: in the first best world, those positions tend to assume 165 00:10:55,280 --> 00:10:58,880 Speaker 3: that the more the state withdrawals, the more the market 166 00:10:59,000 --> 00:11:04,600 Speaker 3: is a perfect active mechanism, that individuals within market systems 167 00:11:04,600 --> 00:11:10,040 Speaker 3: are basically rational, that we can navigate our way round 168 00:11:10,559 --> 00:11:15,719 Speaker 3: highly competitive markets, and that this is the supremely efficient 169 00:11:16,000 --> 00:11:20,360 Speaker 3: system of allocation in the world. And historically now that's 170 00:11:20,559 --> 00:11:24,880 Speaker 3: as it were, the radical free market position. Over time, 171 00:11:24,960 --> 00:11:27,640 Speaker 3: it's become an increasingly dogmatic position. 172 00:11:28,000 --> 00:11:31,400 Speaker 1: And that's also from the political perspective. Margaret Thatcher here 173 00:11:31,400 --> 00:11:34,120 Speaker 1: in the UK and Ronald Reagan in the US in 174 00:11:34,160 --> 00:11:38,480 Speaker 1: the nineteen eighties absolutely trying to bring what is labeled 175 00:11:38,480 --> 00:11:42,360 Speaker 1: as neoliberal economics to the political sphere. 176 00:11:42,400 --> 00:11:46,760 Speaker 3: That's right, they're the radicals in neoclassical economics, but the 177 00:11:46,800 --> 00:11:51,200 Speaker 3: mainstream position is not really. The most mainstream economists who 178 00:11:51,400 --> 00:11:55,560 Speaker 3: work in companies and government, treasury and so on, tend 179 00:11:55,559 --> 00:11:59,720 Speaker 3: to be so called second best world economists, and they 180 00:11:59,880 --> 00:12:03,480 Speaker 3: are are more skeptical of the idealized image or even 181 00:12:03,480 --> 00:12:08,320 Speaker 3: the possibility of perfectly efficient markets, perfectly rational individuals. However, 182 00:12:09,000 --> 00:12:12,280 Speaker 3: they maintain the basic methodology, which is the idea that 183 00:12:12,520 --> 00:12:16,600 Speaker 3: using mathematic or modeling and argument from assumption that might 184 00:12:16,640 --> 00:12:19,920 Speaker 3: be formal prose argument or it may actually use mathematics. 185 00:12:20,080 --> 00:12:25,400 Speaker 3: Their assumption is that that methodology is incredibly useful for 186 00:12:25,480 --> 00:12:28,640 Speaker 3: figuring out how markets fail. So what they're interested in 187 00:12:29,520 --> 00:12:33,160 Speaker 3: is using the ideal types, as it were, the perfect markets, 188 00:12:33,200 --> 00:12:37,360 Speaker 3: the perfectly informed individual as a heuristic device as a benchmark, 189 00:12:37,640 --> 00:12:41,559 Speaker 3: so that you can then develop theory of why markets 190 00:12:41,559 --> 00:12:42,000 Speaker 3: will fail. 191 00:12:42,040 --> 00:12:44,400 Speaker 1: In practice, the Tacher era, you get a ton of 192 00:12:44,440 --> 00:12:47,920 Speaker 1: privatization because that's the goal of that station out of 193 00:12:47,960 --> 00:12:51,280 Speaker 1: the way, right, and the water companies are privatized, and 194 00:12:51,480 --> 00:12:53,720 Speaker 1: you know, we know what happened to the sewage problem. 195 00:12:53,800 --> 00:12:58,120 Speaker 1: As a result, railways are privatized. Utilities parts of them 196 00:12:58,240 --> 00:13:02,680 Speaker 1: start to get privatized, the power utilities. Then come the 197 00:13:02,760 --> 00:13:06,480 Speaker 1: labor years and they realize not all of that privatization 198 00:13:06,760 --> 00:13:09,720 Speaker 1: was good, or there are things that the economy hasn't 199 00:13:09,760 --> 00:13:14,000 Speaker 1: been considering, like greenhouse gases. You know, labor in the 200 00:13:14,080 --> 00:13:17,559 Speaker 1: later years puts a price on carbon on coals specifically 201 00:13:18,000 --> 00:13:23,120 Speaker 1: to try and include what later on economists Nicholas turn 202 00:13:23,360 --> 00:13:26,640 Speaker 1: labels the greatest market failure, which is taking greenhouse gas 203 00:13:26,640 --> 00:13:30,640 Speaker 1: emissions outside the economic system, clearly when it has an 204 00:13:30,640 --> 00:13:32,960 Speaker 1: impact on the economic system. So they try and fix 205 00:13:33,000 --> 00:13:35,520 Speaker 1: these market failures. But what you're saying is they're still 206 00:13:35,800 --> 00:13:41,920 Speaker 1: trying to get back to this perfect world of perfect 207 00:13:42,000 --> 00:13:48,120 Speaker 1: rational people operating in a perfect market, and that would 208 00:13:48,120 --> 00:13:51,600 Speaker 1: be better for everybody. So there's really not that much 209 00:13:51,679 --> 00:13:55,920 Speaker 1: difference between the political economy of labor and conservatives over 210 00:13:55,920 --> 00:13:58,400 Speaker 1: the last forty five to fifty years. 211 00:13:58,679 --> 00:14:03,080 Speaker 3: That's very nicely set out. That's exactly right. And the 212 00:14:03,120 --> 00:14:07,160 Speaker 3: point I want to make is that labor and social 213 00:14:07,160 --> 00:14:09,200 Speaker 3: democratic parties more generally. This is true of the New 214 00:14:09,200 --> 00:14:13,080 Speaker 3: Democrats in the US, it's true social democratic parties really 215 00:14:13,160 --> 00:14:16,320 Speaker 3: across Europe and beyond found it very appealing the idea 216 00:14:16,320 --> 00:14:18,680 Speaker 3: that you could have this kind of technical science of 217 00:14:18,720 --> 00:14:20,480 Speaker 3: how you would improve markets, that you would get the 218 00:14:20,520 --> 00:14:24,480 Speaker 3: best of markets and states, that you would use the 219 00:14:24,640 --> 00:14:28,680 Speaker 3: state only in these efficient ways of mending market failures. 220 00:14:28,720 --> 00:14:31,320 Speaker 3: But the point I make in the book is that 221 00:14:31,320 --> 00:14:35,000 Speaker 3: that's a confusion of something that is logically valid with 222 00:14:35,160 --> 00:14:37,840 Speaker 3: something that you can actually reproduce in the social world, 223 00:14:37,880 --> 00:14:43,440 Speaker 3: because the fallacy is that by mending a market failure, 224 00:14:43,520 --> 00:14:48,920 Speaker 3: you're taking society closer towards the efficiency horizon of a 225 00:14:49,360 --> 00:14:53,640 Speaker 3: perfectly complete market or a perfect system of allocation. And 226 00:14:53,680 --> 00:14:55,320 Speaker 3: the point I make in the book is that's the 227 00:14:55,360 --> 00:14:59,560 Speaker 3: Soviet fallacy too. It's the high modernist fallacy that we 228 00:14:59,600 --> 00:15:04,640 Speaker 3: live in a computable world and perfect efficiency is humanly possible. 229 00:15:04,720 --> 00:15:06,600 Speaker 1: If we get all the information, we'll make the right 230 00:15:06,640 --> 00:15:10,080 Speaker 1: decisions as a result. So talk me through a failure 231 00:15:10,160 --> 00:15:14,720 Speaker 1: that may explain it. The water utilities here have been privatized. 232 00:15:15,120 --> 00:15:18,160 Speaker 1: They have been pretty profitable for the shareholders who then 233 00:15:18,200 --> 00:15:22,080 Speaker 1: took on the ownership of these utilities. Add the cost 234 00:15:22,240 --> 00:15:25,760 Speaker 1: clearly of service to people because we have sewage in 235 00:15:25,800 --> 00:15:28,640 Speaker 1: freshwaters and we have a ton of leaks of fresh 236 00:15:28,720 --> 00:15:31,720 Speaker 1: water into the pipe system which has been been fixed. 237 00:15:32,680 --> 00:15:38,200 Speaker 1: How exactly to camp one Camp two thinking lead to 238 00:15:38,280 --> 00:15:40,960 Speaker 1: a corporation a public good that has to be a 239 00:15:41,000 --> 00:15:43,960 Speaker 1: regulated monopoly if it has to be privately owned or 240 00:15:44,200 --> 00:15:46,840 Speaker 1: just a state owned company, because you can never have 241 00:15:46,960 --> 00:15:48,320 Speaker 1: competition there happen. 242 00:15:49,160 --> 00:15:54,480 Speaker 3: So the sort of idealized version is that markets are 243 00:15:54,520 --> 00:15:59,560 Speaker 3: always functionally and morally superior to the state because instead 244 00:15:59,640 --> 00:16:02,160 Speaker 3: of having the fear being that you would have this 245 00:16:02,240 --> 00:16:06,240 Speaker 3: kind of monopoly state that would set prices for a 246 00:16:06,320 --> 00:16:09,840 Speaker 3: nationalized water system that it would probably overinvest, that it 247 00:16:09,880 --> 00:16:13,160 Speaker 3: would be this kind of misallocation of resources that a 248 00:16:13,360 --> 00:16:18,120 Speaker 3: market system of supply and demand would somehow resolve in 249 00:16:18,160 --> 00:16:22,520 Speaker 3: a more efficient way, so the assumption being that market 250 00:16:22,520 --> 00:16:27,320 Speaker 3: provision will somehow be more alecatively efficient. The trouble with 251 00:16:27,440 --> 00:16:30,800 Speaker 3: things like water and natural resources like that is that 252 00:16:30,840 --> 00:16:34,720 Speaker 3: they are natural monopolies in terms of provision and supply 253 00:16:34,920 --> 00:16:36,720 Speaker 3: and the networks that go with it, and so on 254 00:16:36,720 --> 00:16:42,080 Speaker 3: and so forth. But the issue was also that the 255 00:16:42,160 --> 00:16:47,600 Speaker 3: assumption is that firms of all sizes are as it 256 00:16:47,600 --> 00:16:52,600 Speaker 3: were productive stewards of the real economy, so that even 257 00:16:52,600 --> 00:16:56,880 Speaker 3: if you had a monopoly firm, the discipline of its 258 00:16:56,920 --> 00:17:01,160 Speaker 3: wider participation in markets would lead it to invest in 259 00:17:01,200 --> 00:17:04,480 Speaker 3: a rational way for the long term. This isn't something 260 00:17:04,520 --> 00:17:09,000 Speaker 3: that's very easy to describe within neoclassical modeling. So the 261 00:17:09,080 --> 00:17:12,480 Speaker 3: short termism of shareholders and the idea that they don't, 262 00:17:13,640 --> 00:17:17,840 Speaker 3: as it were, think in universal welfare improving terms when 263 00:17:17,840 --> 00:17:20,879 Speaker 3: they think about returns is something that seems to have 264 00:17:20,920 --> 00:17:23,400 Speaker 3: been missed. But it's been a fairly fatal mistake for us. 265 00:17:23,480 --> 00:17:27,960 Speaker 1: So it's a government failure here. What could the government 266 00:17:28,000 --> 00:17:30,879 Speaker 1: have done differently to actually make it work? 267 00:17:31,240 --> 00:17:33,440 Speaker 3: So this brings us to the second best world right 268 00:17:33,560 --> 00:17:39,199 Speaker 3: where these kind of contractual failures or regulatory failures. The 269 00:17:39,240 --> 00:17:41,920 Speaker 3: assumption is that there must be something in the incentive 270 00:17:41,920 --> 00:17:46,840 Speaker 3: framework that is inadequate, so you correct the incentive framework. 271 00:17:47,640 --> 00:17:50,600 Speaker 3: And that's logical, that makes perfect intuitive sense. So you 272 00:17:50,680 --> 00:17:54,800 Speaker 3: try and do that. You create targets, or you create 273 00:17:54,880 --> 00:17:59,520 Speaker 3: certain incentives or even disincentives, so you have the threat 274 00:17:59,520 --> 00:18:03,359 Speaker 3: of five means for example, or you demand more information. 275 00:18:03,560 --> 00:18:05,159 Speaker 3: There are all kinds of things you can do to 276 00:18:05,240 --> 00:18:08,879 Speaker 3: try and sort of correct the framework. What neoclassical models 277 00:18:08,920 --> 00:18:12,159 Speaker 3: of that cannot begin to describe, though, is the power 278 00:18:12,200 --> 00:18:17,280 Speaker 3: relationship between a monopoly provider and a government who will 279 00:18:17,320 --> 00:18:23,159 Speaker 3: be held ultimately legally, fiscally and politically liable for the 280 00:18:23,240 --> 00:18:27,199 Speaker 3: non delivery of that service. So what we see in 281 00:18:27,359 --> 00:18:32,080 Speaker 3: real historical time is that the British government tries to 282 00:18:32,119 --> 00:18:37,080 Speaker 3: exert a fine and the regulator makes kind of rude 283 00:18:37,080 --> 00:18:39,840 Speaker 3: noises to the company, and the company says, well, we 284 00:18:40,680 --> 00:18:44,440 Speaker 3: realize we've miscalculated in some way and we would pay 285 00:18:44,440 --> 00:18:47,960 Speaker 3: the fine, but that would rebound on higher bills or 286 00:18:48,119 --> 00:18:53,040 Speaker 3: it will restrict our capacity to invest. And it's the 287 00:18:53,119 --> 00:18:55,800 Speaker 3: investment famine that's been so damaging over time to the 288 00:18:55,880 --> 00:18:58,560 Speaker 3: nature of the fundamental assets like the non building of 289 00:18:58,600 --> 00:19:01,520 Speaker 3: reservoirs in the UK case. So government tends to retreat 290 00:19:02,400 --> 00:19:06,680 Speaker 3: because it is caught between a rock and a hard place. 291 00:19:07,000 --> 00:19:10,159 Speaker 1: But is there something that you see or something that 292 00:19:10,200 --> 00:19:12,160 Speaker 1: you can see in history in the late Soviet Union 293 00:19:12,440 --> 00:19:14,560 Speaker 1: that you are seeing in today's Britain. 294 00:19:15,000 --> 00:19:22,000 Speaker 3: Yeah. I think there are concentrated corporate interests as they 295 00:19:22,000 --> 00:19:24,680 Speaker 3: were in the old enterprise planning system of the Soviet Union, 296 00:19:24,720 --> 00:19:26,919 Speaker 3: that kind of military industrial complex if you like, of 297 00:19:26,960 --> 00:19:30,720 Speaker 3: the Soviet system. But I guess the British system would 298 00:19:30,760 --> 00:19:34,600 Speaker 3: be a mix of, as it were, the least socially 299 00:19:35,440 --> 00:19:42,080 Speaker 3: constructive corporate, financial and fossil fuel interests who are absolutely reactionary, 300 00:19:42,880 --> 00:19:48,399 Speaker 3: who would rather dig in politically, even if it means 301 00:19:48,800 --> 00:19:52,879 Speaker 3: the overthrow British democracy. That like corporate interests and fossil 302 00:19:52,880 --> 00:19:57,080 Speaker 3: fuel interests supporting Trump in the US, they would rather 303 00:19:57,240 --> 00:20:02,840 Speaker 3: back an authoritarian to sustain their economic and financial privileges. 304 00:20:03,640 --> 00:20:10,040 Speaker 3: Then admit that those privileges have occurred at the exclusion 305 00:20:10,160 --> 00:20:15,480 Speaker 3: of social cohesion and a sustainable form of economic development, 306 00:20:15,840 --> 00:20:19,919 Speaker 3: and it's time that they were readjusted and changed and 307 00:20:20,040 --> 00:20:21,360 Speaker 3: effectively broken up. 308 00:20:21,680 --> 00:20:26,120 Speaker 1: It leads to frustration among the public and a desire 309 00:20:26,160 --> 00:20:29,560 Speaker 1: for a solution, and the rise of populism. There is 310 00:20:29,680 --> 00:20:32,720 Speaker 1: Farage in the UK, Trump in the US, Maloney in Italy, 311 00:20:32,880 --> 00:20:37,719 Speaker 1: More in India, Aduan in Turkey. Why is it that 312 00:20:37,760 --> 00:20:41,720 Speaker 1: their message lands so well? Why is it right wing 313 00:20:41,760 --> 00:20:45,960 Speaker 1: populace and not so much lefting populist who get their 314 00:20:45,960 --> 00:20:48,679 Speaker 1: message out? Why isn't there like a climate populist. 315 00:20:49,080 --> 00:20:53,399 Speaker 3: Well, there's again a slightly horrifying analogy with the Soviet system. 316 00:20:53,560 --> 00:20:56,119 Speaker 3: In the Soviet system, you had decades of trying to 317 00:20:56,160 --> 00:21:00,240 Speaker 3: mobilize people according to Marxist Leninist economic promises right that 318 00:21:00,359 --> 00:21:04,080 Speaker 3: in the Soviet space, economies would become more and more wealthy, 319 00:21:04,200 --> 00:21:09,320 Speaker 3: more and more and more fraternal, and ultimately the state 320 00:21:09,359 --> 00:21:12,439 Speaker 3: would wither away and lead to communism, which was like 321 00:21:12,520 --> 00:21:17,760 Speaker 3: an Edenic condition of a spontaneously for eternal and equal 322 00:21:17,840 --> 00:21:22,280 Speaker 3: and fair and just and happy society. Right, The thatch 323 00:21:22,359 --> 00:21:25,680 Speaker 3: right promise is never that extreme, but it is a 324 00:21:25,720 --> 00:21:29,600 Speaker 3: promise of the Reagan and the Thatcher revolutions that by 325 00:21:30,600 --> 00:21:34,439 Speaker 3: removing the states, not completely, but by rolling back the 326 00:21:34,480 --> 00:21:38,920 Speaker 3: post war state, by rolling back social democratic values, that 327 00:21:39,000 --> 00:21:44,000 Speaker 3: all boats would rise on a rising tide continuously and 328 00:21:44,119 --> 00:21:47,719 Speaker 3: so we had decades of great economic optimism, but then 329 00:21:47,720 --> 00:21:51,200 Speaker 3: you get the global financial crisis, which is pretty cataclysmic 330 00:21:51,240 --> 00:21:54,080 Speaker 3: in terms of the legitimacy and credibility of this system. 331 00:21:54,880 --> 00:21:59,920 Speaker 3: And that creates a pretty fundamental problem for neoliberal political 332 00:21:59,840 --> 00:22:03,560 Speaker 3: parties after the global financial crisis, which is, how do 333 00:22:03,640 --> 00:22:08,439 Speaker 3: you continue to legitimize a materialist utopia in non economic terms? 334 00:22:08,760 --> 00:22:11,280 Speaker 3: So you do what the Soviets did, and what the 335 00:22:11,320 --> 00:22:14,240 Speaker 3: Soviets did in the nineteen eighties was increasingly moved to 336 00:22:14,400 --> 00:22:20,159 Speaker 3: nationalist forms of mobilization and racism, so ethnic mobilizations, ethno 337 00:22:20,240 --> 00:22:25,240 Speaker 3: nationalist mobilizations, and that's what you're also seeing on the 338 00:22:26,119 --> 00:22:29,879 Speaker 3: neoliberal right. It's what happened to the Republican Party in 339 00:22:29,920 --> 00:22:33,159 Speaker 3: the US, it's what happened to the Conservative Party. And 340 00:22:33,760 --> 00:22:36,719 Speaker 3: I think part of the appeal of ethno nationalist and 341 00:22:36,800 --> 00:22:41,760 Speaker 3: racist politics for political parties that don't want to change 342 00:22:41,760 --> 00:22:48,359 Speaker 3: the economic paradigm fundamentally is you can make huge expansive promises. 343 00:22:48,720 --> 00:22:53,359 Speaker 3: You can, as it were, create combat tasks that replace 344 00:22:53,440 --> 00:22:57,439 Speaker 3: the old economic combat tasks. You can create enemies foreign 345 00:22:57,440 --> 00:23:00,959 Speaker 3: and domestic. You can mobilize people, you can divide your societies. 346 00:23:01,000 --> 00:23:04,040 Speaker 3: It's a wedge issue. And you can do all of 347 00:23:04,040 --> 00:23:07,800 Speaker 3: this without making a lot of economic promises except that 348 00:23:08,080 --> 00:23:12,560 Speaker 3: things will get better because instead of dealing in an 349 00:23:12,600 --> 00:23:15,920 Speaker 3: honest way about the failures of the economic paradigm of 350 00:23:15,960 --> 00:23:19,639 Speaker 3: the last forty five years, it's how much easier to 351 00:23:19,720 --> 00:23:27,040 Speaker 3: blame it on immigrants or excessive immigration, to resurrect great 352 00:23:27,040 --> 00:23:29,600 Speaker 3: task historic injustices like the. 353 00:23:29,760 --> 00:23:31,359 Speaker 1: Or net zero by twenty fifty. 354 00:23:31,800 --> 00:23:34,639 Speaker 3: This is fascinating to me that net zero instead of 355 00:23:34,680 --> 00:23:37,919 Speaker 3: taking the science seriously as natural science, but because it 356 00:23:37,960 --> 00:23:41,560 Speaker 3: had become infected by socialism, right, that socialism had killed 357 00:23:41,600 --> 00:23:45,239 Speaker 3: the entrepreneurial spirit of the West. That's the argument, and 358 00:23:45,320 --> 00:23:48,119 Speaker 3: the net zero a socialism argument is a kind of 359 00:23:48,200 --> 00:23:53,680 Speaker 3: recalibrated version of that. So it's not that there's an objective, 360 00:23:54,280 --> 00:23:58,960 Speaker 3: empirically verifiable reason to be pretty critical about our current 361 00:23:59,040 --> 00:24:03,440 Speaker 3: economic status. So no, it's a socialist conspiracy. So zero 362 00:24:04,359 --> 00:24:08,800 Speaker 3: is particulated by right wing interests who wish to preserve 363 00:24:08,920 --> 00:24:12,240 Speaker 3: the privileges that they've gained, particularly obviously sort of carbon 364 00:24:12,400 --> 00:24:16,520 Speaker 3: fossil fuel interests wish to maintain subsidy and privilege and 365 00:24:16,560 --> 00:24:21,000 Speaker 3: so on. To reconstitute that argument that this isn't you 366 00:24:21,119 --> 00:24:24,760 Speaker 3: know this science is this is just socialism under a cloak. 367 00:24:30,280 --> 00:24:32,680 Speaker 1: Join us after the break for more of my conversation 368 00:24:32,960 --> 00:24:37,320 Speaker 1: with Professor Abby Innes, author of Late Soviet Britain. Thank 369 00:24:37,359 --> 00:24:39,920 Speaker 1: you to everyone who has written a review of Zero recently. 370 00:24:40,280 --> 00:24:43,960 Speaker 1: We appreciate all of them and please keep them coming. Recently, 371 00:24:44,000 --> 00:24:48,840 Speaker 1: Sheila wrote Zero's crystal clear reporting presented with reflection and serenity, 372 00:24:49,280 --> 00:24:52,040 Speaker 1: must be the best climate crisis information available. 373 00:24:52,480 --> 00:25:04,639 Speaker 2: Thank you, Sheila. 374 00:25:06,040 --> 00:25:08,679 Speaker 1: In the Climate Circles, one diagnosis of the problem that 375 00:25:08,720 --> 00:25:13,160 Speaker 1: has gained traction recently is that governments, whether left or right, 376 00:25:13,560 --> 00:25:19,719 Speaker 1: have made it harder to build things. Infrastructure everywhere is creaking. Yeah, 377 00:25:19,800 --> 00:25:23,159 Speaker 1: it's private companies sometimes that are actually responsible for that infrastructure, 378 00:25:23,200 --> 00:25:26,639 Speaker 1: like the sewage system here, but it's really governments and 379 00:25:26,680 --> 00:25:33,320 Speaker 1: their overburdened regulation that has made it obstructionist rather than 380 00:25:34,000 --> 00:25:37,600 Speaker 1: rules that came from the right place. At one point, 381 00:25:38,400 --> 00:25:42,879 Speaker 1: this is broadly called the abundance agenda, taken off in 382 00:25:42,920 --> 00:25:45,960 Speaker 1: the US a lot, and the solution is, if only 383 00:25:46,040 --> 00:25:48,960 Speaker 1: there were fewer regulations in place, we will all have 384 00:25:49,080 --> 00:25:53,360 Speaker 1: clean energy, healthy world that we all want to live in. 385 00:25:53,960 --> 00:25:56,879 Speaker 1: And the left could actually deliver on the promises that 386 00:25:56,920 --> 00:26:00,760 Speaker 1: the left has made for decades. Now make it concrete. 387 00:26:00,800 --> 00:26:04,560 Speaker 1: From a climate perspective, it's the idea that even though 388 00:26:04,920 --> 00:26:08,960 Speaker 1: Joe Biden signed what was the US's biggest climate bill, 389 00:26:09,400 --> 00:26:12,199 Speaker 1: the Inflation Reduction Act, in twenty twenty two, by the 390 00:26:12,240 --> 00:26:15,600 Speaker 1: time the twenty twenty four election rolls around, very little 391 00:26:15,600 --> 00:26:18,720 Speaker 1: has been built, not much of the money has been spent. 392 00:26:19,040 --> 00:26:23,720 Speaker 1: People haven't seen the benefits. So no wonder Trump gets elected. 393 00:26:24,080 --> 00:26:26,840 Speaker 1: Do you think that diagnosis of the malays is right? 394 00:26:26,920 --> 00:26:29,280 Speaker 3: It's a great question. I think I'd adjust it slightly, 395 00:26:29,320 --> 00:26:34,399 Speaker 3: which is, we have to ask where the regulatory brittleness 396 00:26:34,480 --> 00:26:38,280 Speaker 3: and complexity came from. And again it's one of the 397 00:26:38,400 --> 00:26:43,720 Speaker 3: points of Soviet analogy. So what Soviets and neoliberals both 398 00:26:43,800 --> 00:26:47,240 Speaker 3: do is try and set up their idealized system of coordination, 399 00:26:47,920 --> 00:26:51,240 Speaker 3: whether it's the state and command planning in the Soviet 400 00:26:51,280 --> 00:26:55,840 Speaker 3: system where it's via increasing market power. But what happens 401 00:26:55,880 --> 00:26:59,400 Speaker 3: next in both systems is that the promises of theory 402 00:26:59,480 --> 00:27:01,960 Speaker 3: don't play in practice. So what do you do? What 403 00:27:03,560 --> 00:27:06,000 Speaker 3: mechanisms do you have to try and improve the situation 404 00:27:06,119 --> 00:27:09,280 Speaker 3: where you have the state and second best world Neoclassical 405 00:27:09,280 --> 00:27:12,480 Speaker 3: economics says, what you need to do is regulate them 406 00:27:12,720 --> 00:27:18,080 Speaker 3: in the forms that would allow them to, as it were, 407 00:27:18,440 --> 00:27:21,640 Speaker 3: conform more to market theory. So that's what we do. 408 00:27:22,000 --> 00:27:25,240 Speaker 3: And it's also what the Soviets did in their original 409 00:27:25,240 --> 00:27:27,520 Speaker 3: central planning system, which is when things don't work the 410 00:27:27,520 --> 00:27:30,199 Speaker 3: way you're supposed to, what you try and do is 411 00:27:30,280 --> 00:27:35,800 Speaker 3: build this exo skeleton of more targets, more metrics, more 412 00:27:35,840 --> 00:27:39,800 Speaker 3: output planning. And the irony in the UK case is 413 00:27:39,840 --> 00:27:43,280 Speaker 3: we have, after forty five years of marketization, we have 414 00:27:43,359 --> 00:27:47,359 Speaker 3: a state that is more centralized, more bureaucratic, more rigid, 415 00:27:47,480 --> 00:27:50,399 Speaker 3: and more expensive than it has ever been historically. 416 00:27:50,520 --> 00:27:54,600 Speaker 1: It has more people working for it, the government spends more. 417 00:27:54,800 --> 00:27:57,119 Speaker 1: That's when toucher to power. 418 00:27:57,200 --> 00:27:57,680 Speaker 3: That's right. 419 00:27:57,800 --> 00:28:00,119 Speaker 1: This is true not just in the UK, but so 420 00:28:00,119 --> 00:28:03,560 Speaker 1: in the US, where Reagan promise there will be small government, 421 00:28:03,920 --> 00:28:07,720 Speaker 1: government is bigger today and spends way more now, and 422 00:28:07,840 --> 00:28:12,679 Speaker 1: apart from the one term of Clinton when deficit actually fell, 423 00:28:13,160 --> 00:28:16,680 Speaker 1: it has been rising all throughout. So but the answer 424 00:28:16,800 --> 00:28:20,320 Speaker 1: of the abandonce agenda that you just need few regulations, 425 00:28:20,640 --> 00:28:21,640 Speaker 1: you don't think that's right. 426 00:28:21,760 --> 00:28:24,080 Speaker 3: So a simple a kind of unit, you know, one 427 00:28:24,080 --> 00:28:26,400 Speaker 3: dimensional solution like deregulate. 428 00:28:27,080 --> 00:28:27,720 Speaker 1: It's just. 429 00:28:29,240 --> 00:28:32,520 Speaker 3: Given where we are. I think you just get yet 430 00:28:32,560 --> 00:28:35,880 Speaker 3: another wave of unanticipated and mostly negative consequences. 431 00:28:36,160 --> 00:28:38,600 Speaker 1: There was a simplistic idea in a way that was 432 00:28:38,680 --> 00:28:42,320 Speaker 1: running camp on Camp two saying we can create a 433 00:28:42,320 --> 00:28:45,280 Speaker 1: perfect market economy showing the size of the government, and 434 00:28:45,320 --> 00:28:48,640 Speaker 1: then everybody will be happy. That's not worked out. So 435 00:28:48,720 --> 00:28:51,080 Speaker 1: now some people are coming in and saying, well, what 436 00:28:51,120 --> 00:28:53,200 Speaker 1: we need is we've just got too many regulations. Cut 437 00:28:53,240 --> 00:28:56,000 Speaker 1: those regulations, we will have a solution. But you're saying, 438 00:28:56,040 --> 00:28:59,760 Speaker 1: simplistic thinking is what got us here, It cannot get 439 00:28:59,840 --> 00:29:03,280 Speaker 1: us out of the substituation. That's right, What should we 440 00:29:03,360 --> 00:29:03,800 Speaker 1: be doing? 441 00:29:04,280 --> 00:29:08,600 Speaker 3: I think what's incredibly important, and I suppose what I 442 00:29:08,720 --> 00:29:11,000 Speaker 3: was aspiring to do in the book is come up 443 00:29:11,040 --> 00:29:14,640 Speaker 3: with a diagnosis of how we got here. That isn't 444 00:29:14,680 --> 00:29:17,520 Speaker 3: about sort of as it were, good people and bad people. 445 00:29:18,160 --> 00:29:20,760 Speaker 3: It's a lot more complicated than that. You have to 446 00:29:20,800 --> 00:29:25,840 Speaker 3: make a philosophical reckoning. And the philosophical reckoning is do 447 00:29:25,880 --> 00:29:28,239 Speaker 3: we think we live in a computable world or do 448 00:29:28,280 --> 00:29:33,440 Speaker 3: we think we live in a world of inescapable uncertainty. 449 00:29:33,520 --> 00:29:37,080 Speaker 3: Do we think the human economy is more like a watch, 450 00:29:37,480 --> 00:29:40,240 Speaker 3: or do we think it's more like a garden. What 451 00:29:40,480 --> 00:29:45,520 Speaker 3: sets the natural science is apart, however, is that outside 452 00:29:45,560 --> 00:29:50,160 Speaker 3: the social world it's easier to It has proved easier 453 00:29:50,720 --> 00:29:55,800 Speaker 3: to isolate generative mechanisms in certain systems. So having discovered 454 00:29:55,840 --> 00:30:00,600 Speaker 3: things like thermodynamics or gravity, or the ways certain chemical 455 00:30:00,640 --> 00:30:04,440 Speaker 3: compounds combined, we have actually discovered natural laws that are 456 00:30:04,480 --> 00:30:08,240 Speaker 3: remarkably robust and that give us a basis further theorizing. 457 00:30:09,320 --> 00:30:12,760 Speaker 3: What makes that much more difficult in the social world 458 00:30:14,000 --> 00:30:18,200 Speaker 3: is that there's far greater contingency. Those natural laws don't 459 00:30:18,280 --> 00:30:22,880 Speaker 3: exist because the agents in the social world are themselves imaginative. 460 00:30:23,480 --> 00:30:28,040 Speaker 3: We're always in the social sciences trying to interpret a 461 00:30:28,080 --> 00:30:31,960 Speaker 3: world of people who are themselves constantly reinterpreting the world 462 00:30:32,280 --> 00:30:35,360 Speaker 3: and how they should behave in it. And that level 463 00:30:35,400 --> 00:30:39,120 Speaker 3: of contingency, that level of complexity, and the fact that 464 00:30:39,560 --> 00:30:44,200 Speaker 3: the world is always becoming something else socially means that 465 00:30:44,640 --> 00:30:47,200 Speaker 3: we need to make, as it were, a far more 466 00:30:47,280 --> 00:30:51,400 Speaker 3: radical shift than simply a shift in one form of 467 00:30:51,640 --> 00:30:56,360 Speaker 3: regulation or deregulation. We need to comprehend the fact that 468 00:30:57,240 --> 00:30:59,560 Speaker 3: we don't live in a computable world. And once you 469 00:30:59,760 --> 00:31:05,040 Speaker 3: dec side that once you recognize that, it radically, I think, 470 00:31:05,560 --> 00:31:10,240 Speaker 3: changes the way you think about the economy and the 471 00:31:10,400 --> 00:31:16,080 Speaker 3: repertoire of potential systems and methodologies that you might use 472 00:31:16,120 --> 00:31:16,440 Speaker 3: within it. 473 00:31:16,760 --> 00:31:20,880 Speaker 1: Are there economies in the world that aren't falling for 474 00:31:21,040 --> 00:31:23,880 Speaker 1: this problem as the UK and the US have done. 475 00:31:23,960 --> 00:31:25,560 Speaker 3: I think you're beginning to see a lot of really 476 00:31:25,600 --> 00:31:30,680 Speaker 3: interesting experimentation. So when it comes to circular economy ideas, 477 00:31:30,720 --> 00:31:35,560 Speaker 3: for example, in those countries you know, Sweden, Holland come 478 00:31:35,600 --> 00:31:37,840 Speaker 3: to mind, and you look at Copenhagen or even Barcelona 479 00:31:37,960 --> 00:31:42,280 Speaker 3: or Amsterdam where you still have significant sort of planning 480 00:31:42,320 --> 00:31:46,600 Speaker 3: capacity within those local city authorities that they're trying to 481 00:31:46,640 --> 00:31:52,440 Speaker 3: move quite far in that circular economic infrastructural design, but 482 00:31:52,520 --> 00:31:55,840 Speaker 3: of course for already built cities that can be quite difficult. 483 00:31:56,680 --> 00:31:58,480 Speaker 3: I mean, I think the fact is you're seeing lots 484 00:31:58,480 --> 00:32:03,000 Speaker 3: of experimentation, but it's eclectic as it were. So if 485 00:32:03,000 --> 00:32:05,920 Speaker 3: you took the idea of public banks, someone like Thomas 486 00:32:05,960 --> 00:32:09,040 Speaker 3: Mahoir has written a wonderful book on public banks and 487 00:32:09,240 --> 00:32:11,440 Speaker 3: is part of a big project with the Canadian government 488 00:32:11,480 --> 00:32:15,800 Speaker 3: looking at this. Public banks are much bigger players globally 489 00:32:16,160 --> 00:32:20,880 Speaker 3: than normal financial journalism tends to credit, and I think 490 00:32:20,920 --> 00:32:23,880 Speaker 3: there's a lot of potential in public banks to mix 491 00:32:24,040 --> 00:32:28,920 Speaker 3: concessionary and non concessionary lending to encourage innovation at the 492 00:32:29,240 --> 00:32:31,280 Speaker 3: not just the firm level, but the techological level and 493 00:32:31,320 --> 00:32:34,920 Speaker 3: the local authority level. Germany has created i think, something 494 00:32:35,000 --> 00:32:37,960 Speaker 3: like ten new public banks in the last decade. So 495 00:32:38,480 --> 00:32:42,360 Speaker 3: I think you are seeing countries understanding that short term 496 00:32:42,360 --> 00:32:46,440 Speaker 3: financial horizons are just far too short, and what kind 497 00:32:46,480 --> 00:32:51,120 Speaker 3: of financial organizations would extend those horizons, and public banks, 498 00:32:51,680 --> 00:32:54,440 Speaker 3: public regional development banks is obviously a way to go, 499 00:32:54,680 --> 00:32:58,320 Speaker 3: and lots of countries globally have experimented that very productively, 500 00:32:58,360 --> 00:32:58,720 Speaker 3: I think. 501 00:32:59,120 --> 00:33:02,040 Speaker 1: So. I wrote a book called Climate Capitalism, which, if 502 00:33:02,080 --> 00:33:06,840 Speaker 1: you only diagnosed on its title, yes, from a lefty perspective, 503 00:33:06,920 --> 00:33:10,400 Speaker 1: that is a paradox capitalism and climate change. While their 504 00:33:10,440 --> 00:33:13,360 Speaker 1: opposites capitalism caused climate change. So how can it ever 505 00:33:13,560 --> 00:33:16,360 Speaker 1: solve it? Yes, if it took it from your analysis, 506 00:33:16,360 --> 00:33:18,960 Speaker 1: it may fall in Camp two category for most people, 507 00:33:19,000 --> 00:33:22,400 Speaker 1: which is to say you're tweaking capitalism to be climate oriented. 508 00:33:22,960 --> 00:33:25,480 Speaker 1: But in fact, when I wrote the book as a journalist, 509 00:33:25,520 --> 00:33:27,920 Speaker 1: my goal was to try and find examples around the 510 00:33:27,960 --> 00:33:31,200 Speaker 1: world where climate solutions were scaling. Yes, they happened to 511 00:33:31,280 --> 00:33:34,959 Speaker 1: be in capitalist economies, but the roots they were taking 512 00:33:35,080 --> 00:33:39,360 Speaker 1: to get to those solutions were radically different. The Chinese 513 00:33:39,360 --> 00:33:43,960 Speaker 1: system is the state led capitalist economy where they allow 514 00:33:44,240 --> 00:33:48,680 Speaker 1: for planning for five year plans, but they also allow 515 00:33:48,760 --> 00:33:52,400 Speaker 1: for hyper competition to reach those goals that the state 516 00:33:52,440 --> 00:33:55,320 Speaker 1: has set. And that's what I found refreshing about your book, 517 00:33:55,360 --> 00:33:59,600 Speaker 1: which is that you're not as many people who critique 518 00:33:59,600 --> 00:34:04,440 Speaker 1: capitalis just dump the idea markets can never work. There useless. 519 00:34:04,640 --> 00:34:07,719 Speaker 1: They've caused this problem. So think about something else and 520 00:34:07,760 --> 00:34:09,680 Speaker 1: we can talk about what there's something else that they 521 00:34:09,680 --> 00:34:13,799 Speaker 1: suggest which currently doesn't operate at any scale anywhere. But 522 00:34:14,120 --> 00:34:17,280 Speaker 1: you acknowledge that there are parts of capitalism that are useful, 523 00:34:17,600 --> 00:34:22,399 Speaker 1: that market economies or marketization of certain things can be useful. Sure, 524 00:34:22,480 --> 00:34:25,920 Speaker 1: the machine model of the entire economy isn't right. 525 00:34:25,800 --> 00:34:30,120 Speaker 3: And it dilutes us. It gives us a sort of 526 00:34:30,160 --> 00:34:34,240 Speaker 3: baseline assumption that firms will always tend to be productive 527 00:34:34,239 --> 00:34:37,680 Speaker 3: students of the real economy, and that assumption that comes 528 00:34:37,719 --> 00:34:42,520 Speaker 3: out of the machine modeling of neoclassical economics is demonstrably false. Right, 529 00:34:42,600 --> 00:34:47,600 Speaker 3: sometimes they are, but if you basically, do not restrain 530 00:34:48,440 --> 00:34:53,440 Speaker 3: firms and drive them through regulation but also culture towards 531 00:34:53,920 --> 00:34:59,239 Speaker 3: valuable social purposes. They can become incredibly negative actors within 532 00:34:59,280 --> 00:35:02,960 Speaker 3: the social world. So by being utopian about them, what 533 00:35:03,000 --> 00:35:08,000 Speaker 3: we've actually done is, as it were, forgotten decades of 534 00:35:08,040 --> 00:35:10,480 Speaker 3: what we had learned in the pre and post war 535 00:35:10,560 --> 00:35:14,920 Speaker 3: period about how socially beneficial firms could be if they 536 00:35:14,920 --> 00:35:18,640 Speaker 3: were driven primarily by social purpose, but profit was a 537 00:35:18,640 --> 00:35:20,000 Speaker 3: secondary priority. 538 00:35:20,200 --> 00:35:23,800 Speaker 1: But if the market economy does have utility, these economic 539 00:35:23,840 --> 00:35:26,920 Speaker 1: models do have utility, what are they? Where are they 540 00:35:27,000 --> 00:35:27,760 Speaker 1: still useful? 541 00:35:28,080 --> 00:35:30,760 Speaker 3: Again, If we think that we live in a garden 542 00:35:30,880 --> 00:35:32,960 Speaker 3: rather than a watch, I'm going to keep coming back 543 00:35:33,000 --> 00:35:34,960 Speaker 3: to that analogy. If we think we live in an 544 00:35:35,080 --> 00:35:40,719 Speaker 3: uncertain world, then we should stop thinking in terms of 545 00:35:40,880 --> 00:35:46,719 Speaker 3: efficiency and optimality in a presumptively completable machine, because those 546 00:35:46,760 --> 00:35:50,279 Speaker 3: things are delusions. They are kind of god delusion, and 547 00:35:50,320 --> 00:35:53,759 Speaker 3: we should think much more about, well, what are the 548 00:35:53,800 --> 00:35:56,840 Speaker 3: coordinating mechanisms that we have that would allow us to 549 00:35:56,880 --> 00:36:05,400 Speaker 3: be continuously adaptive, continuously resilient, continuously able to scan the 550 00:36:05,400 --> 00:36:12,239 Speaker 3: horizon with the greatest number of alternative perspectives that we 551 00:36:12,360 --> 00:36:16,439 Speaker 3: can muster. What's a kind of anti fragile economy under 552 00:36:16,440 --> 00:36:19,919 Speaker 3: conditions of ecological collapse. And my answer to that would 553 00:36:20,000 --> 00:36:24,520 Speaker 3: be the most pluralistic range of systems that you have. 554 00:36:24,600 --> 00:36:30,080 Speaker 3: So that's everything. That's markets, that's firms, but firms much 555 00:36:30,120 --> 00:36:34,000 Speaker 3: more driven by social purpose than profit. That's the state, 556 00:36:34,239 --> 00:36:38,880 Speaker 3: but it's also well lots of different social forms, forms 557 00:36:38,920 --> 00:36:44,120 Speaker 3: of cooperation, forms of coordination that are trust based rather 558 00:36:44,200 --> 00:36:47,120 Speaker 3: than contract and price based. 559 00:36:47,680 --> 00:36:51,000 Speaker 1: So there is a warning in your book where when 560 00:36:51,080 --> 00:36:54,640 Speaker 1: you diagnose all these problems, there is clearly temptation to 561 00:36:54,719 --> 00:36:59,879 Speaker 1: try and break it about create a revolution of some sort, 562 00:37:00,000 --> 00:37:02,600 Speaker 1: which is what happens when you know, in the Soviet Union, 563 00:37:03,040 --> 00:37:06,680 Speaker 1: when the social contract was so deeply broken that you 564 00:37:06,760 --> 00:37:11,040 Speaker 1: had a revolution and then so we broke apart. But 565 00:37:11,160 --> 00:37:14,480 Speaker 1: you want against revolutions because they don't end up creating 566 00:37:15,200 --> 00:37:19,359 Speaker 1: the kind of solution that the revolutionaries are hoping for. 567 00:37:20,040 --> 00:37:23,920 Speaker 3: I'm against revolution if we're talking whole social system revolutions. 568 00:37:24,600 --> 00:37:27,200 Speaker 3: None of us can know what the correct system is 569 00:37:27,800 --> 00:37:32,120 Speaker 3: because we're not God. And it is the ultimate virtue 570 00:37:32,120 --> 00:37:36,720 Speaker 3: of liberal democracies that they are adaptive systems. They allow 571 00:37:36,880 --> 00:37:41,440 Speaker 3: for learning from your previous mistakes, but they're only adaptive 572 00:37:41,560 --> 00:37:46,719 Speaker 3: if political parties themselves don't get attached to utopian economic orthodoxies, 573 00:37:46,760 --> 00:37:50,799 Speaker 3: which then stop them from learning. The other reason that 574 00:37:50,920 --> 00:37:54,600 Speaker 3: I'm against revolutions is revolutions tend to have revolutionary leaders. 575 00:37:54,640 --> 00:37:57,920 Speaker 3: I mean, they tend to be deeply undemocratic, and I'm 576 00:37:57,960 --> 00:38:01,480 Speaker 3: a democrat. I think the guy who runs a firm 577 00:38:01,760 --> 00:38:06,440 Speaker 3: or a grocery, or the woman running those things, we 578 00:38:06,640 --> 00:38:11,280 Speaker 3: all have a great deal of knowledge about our own condition. 579 00:38:11,360 --> 00:38:14,160 Speaker 3: In fact, we have more knowledge about our own condition 580 00:38:14,239 --> 00:38:18,920 Speaker 3: than anyone else. And the most adaptive, resilient, and knowledgeable 581 00:38:19,000 --> 00:38:22,440 Speaker 3: system is going to be one that operates in a 582 00:38:22,520 --> 00:38:26,320 Speaker 3: kind of analytical pluralism in lots of different organizational forms, 583 00:38:27,440 --> 00:38:30,080 Speaker 3: so that all of our knowledge is relevant. That's the 584 00:38:30,080 --> 00:38:34,000 Speaker 3: most deeply democratic system. And it seems to me inconceivable 585 00:38:34,160 --> 00:38:38,400 Speaker 3: that we are going to reach a form of society 586 00:38:38,440 --> 00:38:42,720 Speaker 3: and economics that is compatible with the biosphere. If we're 587 00:38:42,840 --> 00:38:50,320 Speaker 3: trying to impose machine systems or machine thinking or monocultural 588 00:38:50,560 --> 00:38:56,520 Speaker 3: ideas on to something as beautiful and elaborate and constantly 589 00:38:56,560 --> 00:39:03,040 Speaker 3: evolving and nonlinear and dynamic as the natural world, so 590 00:39:03,760 --> 00:39:06,880 Speaker 3: we need to think in terms of how do we 591 00:39:07,080 --> 00:39:10,400 Speaker 3: emulate that world in the way we organize ourselves. Democracy 592 00:39:10,440 --> 00:39:12,919 Speaker 3: is a pretty good start. Part of what you're talking 593 00:39:12,920 --> 00:39:16,160 Speaker 3: about is kind of fatalism, and I think a lot 594 00:39:16,160 --> 00:39:22,080 Speaker 3: of the fatalism in among economic actors, corporate actors, you know, regulators, 595 00:39:22,160 --> 00:39:25,400 Speaker 3: financial actors. Even is the idea that there's sort of 596 00:39:25,440 --> 00:39:27,840 Speaker 3: cogs in a machine and they can't change the nature 597 00:39:27,840 --> 00:39:31,560 Speaker 3: of that machine, and we can change it every day. 598 00:39:31,600 --> 00:39:34,160 Speaker 3: Every day is different. But we need as soon as 599 00:39:34,200 --> 00:39:36,720 Speaker 3: we understand that we can change it, that we break 600 00:39:36,800 --> 00:39:39,480 Speaker 3: non natural economic laws, when we change our minds, when 601 00:39:39,520 --> 00:39:42,840 Speaker 3: we do things differently, it opens the game in a 602 00:39:42,840 --> 00:39:43,719 Speaker 3: completely different way. 603 00:39:43,800 --> 00:39:46,000 Speaker 1: And the whole reading of your book is to me 604 00:39:46,800 --> 00:39:51,520 Speaker 1: empowering because it says we don't have the answer, which 605 00:39:51,560 --> 00:39:54,799 Speaker 1: is a temptation that so many people have to fall for. 606 00:39:55,120 --> 00:39:56,040 Speaker 3: Yeah, isn't it great? 607 00:39:56,560 --> 00:40:01,960 Speaker 1: There is intellectually humility in realizing their deep problems, that 608 00:40:02,000 --> 00:40:05,359 Speaker 1: we have small solutions, and that all those solutions can 609 00:40:05,400 --> 00:40:08,760 Speaker 1: be started to work on simultaneously, and it's not starting 610 00:40:08,760 --> 00:40:12,160 Speaker 1: from zero. Some form of these exist in different parts 611 00:40:12,200 --> 00:40:16,000 Speaker 1: of the economy around the world, and that they all 612 00:40:16,120 --> 00:40:20,880 Speaker 1: can start to add up if we reframe the problem 613 00:40:20,920 --> 00:40:25,120 Speaker 1: at the top, which needs to be addressed, but we 614 00:40:25,200 --> 00:40:28,600 Speaker 1: don't need the top to go away before we can 615 00:40:28,640 --> 00:40:29,960 Speaker 1: start to work on those solutions. 616 00:40:29,960 --> 00:40:32,800 Speaker 3: That's exactly wonderful. I'm so happy that that's the conclusion 617 00:40:32,800 --> 00:40:34,200 Speaker 3: that you drove from the book, because it is the 618 00:40:34,239 --> 00:40:38,440 Speaker 3: one I reached. And also I want to point out 619 00:40:38,520 --> 00:40:41,400 Speaker 3: that even in the most dramatic social revolutions of the 620 00:40:41,400 --> 00:40:44,680 Speaker 3: modern era, right even in the Soviet Revolution and in 621 00:40:45,120 --> 00:40:48,520 Speaker 3: the collapse of communism and in the thatch Right revolutions, 622 00:40:49,080 --> 00:40:51,200 Speaker 3: we think about them as revolutions, but from one day 623 00:40:51,239 --> 00:40:54,560 Speaker 3: to the next they were incremental. Right, Real people in 624 00:40:54,600 --> 00:40:57,560 Speaker 3: the real world, from one day to the next are 625 00:40:57,680 --> 00:41:03,320 Speaker 3: solving the problem they have on their desk with incomplete information, 626 00:41:03,800 --> 00:41:08,480 Speaker 3: even if they think they're Soviet revolutionaries. And that's one 627 00:41:08,520 --> 00:41:11,479 Speaker 3: of the main reasons those revolutions tend to go hey 628 00:41:11,480 --> 00:41:14,799 Speaker 3: wire from day two more or less. That is the 629 00:41:14,880 --> 00:41:19,440 Speaker 3: human condition. The human condition is we are all attempting 630 00:41:19,600 --> 00:41:22,200 Speaker 3: to solve the problems right in front of us with 631 00:41:22,360 --> 00:41:23,480 Speaker 3: incomplete information. 632 00:41:23,800 --> 00:41:26,399 Speaker 1: It is true, and even on just objective metrics which 633 00:41:26,440 --> 00:41:28,839 Speaker 1: we can take. You know, we live longer lives than 634 00:41:28,840 --> 00:41:31,200 Speaker 1: we ever have done. We have better medicine than we 635 00:41:31,280 --> 00:41:36,240 Speaker 1: have ever done, we have technologies now that can start 636 00:41:36,280 --> 00:41:40,279 Speaker 1: to address the climate problem at prices that you know, 637 00:41:40,320 --> 00:41:42,760 Speaker 1: we would be jealous of if we knew in advance 638 00:41:42,800 --> 00:41:46,239 Speaker 1: that that could be reached. And so clearly there are 639 00:41:46,360 --> 00:41:48,760 Speaker 1: tools as well available to try and solve the problem. 640 00:41:48,920 --> 00:41:53,120 Speaker 1: So thank you for laying out the problems so clearly 641 00:41:53,200 --> 00:41:57,240 Speaker 1: and for creating space for everybody to work on solutions. 642 00:41:57,440 --> 00:41:59,680 Speaker 3: Thank you so much, it was a privilege to be asked. 643 00:42:04,239 --> 00:42:06,719 Speaker 1: And thank you for listening to zero. And now for 644 00:42:06,760 --> 00:42:19,880 Speaker 1: the sound of the week, that's the sound of sumo. 645 00:42:20,520 --> 00:42:22,960 Speaker 1: This week, London's been a buzz with the news of 646 00:42:23,000 --> 00:42:26,239 Speaker 1: the sumo wrestling at the Royal Albert Hall, only the 647 00:42:26,280 --> 00:42:29,600 Speaker 1: second time a sumo tournament has ever taken place outside 648 00:42:29,600 --> 00:42:32,759 Speaker 1: of Japan. Share this episode with a friend or with 649 00:42:32,840 --> 00:42:35,399 Speaker 1: someone who has witnessed the fall of the Berlin Wall. 650 00:42:36,040 --> 00:42:38,239 Speaker 2: This episode was produced by Oscar boyd Our. 651 00:42:38,239 --> 00:42:42,680 Speaker 1: Theme music is composed by Wonderly Special Thanks to Eleanor Harrison, Tngate, 652 00:42:42,800 --> 00:42:47,680 Speaker 1: Samersadi Moses Andam Laura Milan and Sharon chen I, am Akshadharati. 653 00:42:47,960 --> 00:42:48,640 Speaker 2: Back soon