An honest look at price, innovation and who powers the economy
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0:01 - 0:03Value creation.
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0:03 - 0:04Wealth creation.
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0:04 - 0:06These are really powerful words.
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0:06 - 0:08Maybe you think of finance,
you think of innovation, -
0:08 - 0:10you think of creativity.
-
0:10 - 0:12But who are the value creators?
-
0:12 - 0:16If we use that word, we must be implying
that some people aren't creating value. -
0:16 - 0:18Who are they?
-
0:18 - 0:19The couch potatoes?
-
0:19 - 0:21The value extractors?
-
0:21 - 0:23The value destroyers?
-
0:23 - 0:27To answer this question, we actually
have to have a proper theory of value. -
0:27 - 0:30And I'm here as an economist
to break it to you -
0:30 - 0:33that we've kind of lost our way
on this question. -
0:33 - 0:35Now, don't look so surprised.
-
0:35 - 0:38What I mean by that is,
we've stopped contesting it. -
0:38 - 0:41We've stopped actually asking
really tough questions -
0:41 - 0:45about what is the difference between
value creation and value extraction, -
0:45 - 0:47productive and unproductive activities.
-
0:47 - 0:49Now, let me just give you
some context here. -
0:49 - 0:532009 was just about
a year and a half after -
0:53 - 0:55one of the biggest
financial crises of our time, -
0:55 - 0:59second only to the 1929 Great Depression,
-
0:59 - 1:02and the CEO of Goldman Sachs said
-
1:02 - 1:06Goldman Sachs workers are the most
productive in the world. -
1:06 - 1:08Productivity and productiveness,
for an economist, -
1:08 - 1:10actually has a lot to do with value.
-
1:10 - 1:11You're producing stuff,
-
1:11 - 1:13you're producing it
dynamically and efficiently. -
1:14 - 1:17You're also producing things
that the world needs, wants and buys. -
1:17 - 1:20Now, how this could have been said
just one year after the crisis, -
1:20 - 1:23which actually had this bank
as well as many other banks -- -
1:23 - 1:26I'm just kind of picking
on Goldman Sachs here -- -
1:26 - 1:29at the center of the crisis, because
they had actually produced -
1:29 - 1:34some pretty problematic financial products
mainly but not only related to mortgages, -
1:34 - 1:37which saw many thousands of people
actually lose their homes. -
1:37 - 1:40In 2010, in just one month, September,
-
1:40 - 1:46120,000 people lost their homes
through the foreclosures of that crisis. -
1:46 - 1:49Between 2007 and 2010,
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1:49 - 1:528.8 million people lost their jobs.
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1:52 - 1:56The bank also had to then
be bailed out by the US taxpayer -
1:56 - 1:59for the sum of 10 billion dollars.
-
1:59 - 2:03We didn't hear the taxpayers bragging
that they were value creators, -
2:03 - 2:04but obviously, having bailed out
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2:04 - 2:07one of the biggest value-creating
productive companies, -
2:07 - 2:08perhaps they should have.
-
2:08 - 2:11What I want to do next
is kind of ask ourselves -
2:12 - 2:13how we lost our way,
-
2:13 - 2:15how it could be, actually,
-
2:15 - 2:17that a statement like that
could almost go unnoticed, -
2:17 - 2:21because it wasn't an after-dinner joke;
it was said very seriously. -
2:21 - 2:26So what I want to do is bring you back
300 years in economic thinking, -
2:26 - 2:28when, actually, the term was contested.
-
2:28 - 2:31It doesn't mean that
they were right or wrong, -
2:31 - 2:34but you couldn't just call yourself
a value creator, a wealth creator. -
2:34 - 2:37There was a lot of debate
within the economics profession. -
2:37 - 2:40And what I want to argue is,
we've kind of lost our way, -
2:40 - 2:43and that has actually allowed this term,
"wealth creation" and "value," -
2:43 - 2:45to become quite weak and lazy
-
2:45 - 2:47and also easily captured.
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2:48 - 2:50OK? So let's start --
I hate to break it to you -- -
2:50 - 2:52300 years ago.
-
2:52 - 2:54Now, what was interesting 300 years ago
-
2:54 - 2:58is the society was still
an agricultural type of society. -
2:58 - 3:01So it's not surprising
that the economists of the time, -
3:01 - 3:03who were called the Physiocrats,
-
3:03 - 3:06actually put the center
of their attention to farm labor. -
3:06 - 3:08When they said, "Where
does value come from?" -
3:08 - 3:10they looked at farming.
-
3:10 - 3:13And they produced what I think was
probably the world's first spreadsheet, -
3:13 - 3:15called the "Tableau Economique,"
-
3:15 - 3:19and this was done by François Quesnay,
one of the leaders of this movement. -
3:19 - 3:21And it was very interesting,
-
3:21 - 3:24because they didn't just say,
"Farming is the source of value." -
3:24 - 3:27They then really worried about
what was happening to that value -
3:27 - 3:28when it was produced.
-
3:28 - 3:30What the Tableau Economique does --
-
3:30 - 3:32and I've tried to make it
a bit simpler here for you -- -
3:32 - 3:35is it broke down the classes
in society into three. -
3:35 - 3:38The farmers, creating value,
were called the "productive class." -
3:38 - 3:41Then others who were just
moving some of this value around -
3:41 - 3:43but it was useful, it was necessary,
-
3:43 - 3:44these were the merchants;
-
3:44 - 3:45they were called the "proprietors."
-
3:46 - 3:49And then there was another class
that was simply charging the farmers a fee -
3:49 - 3:51for an existing asset, the land,
-
3:51 - 3:54and they called them the "sterile class."
-
3:54 - 3:58Now, this is a really heavy-hitting word
if you think what it means: -
3:58 - 4:02that if too much of the resources
are going to the landlords, -
4:02 - 4:06you're actually putting the reproduction
potential of the system at risk. -
4:06 - 4:10And so all these little arrows there
were their way of simulating -- -
4:10 - 4:13again, spreadsheets and simulators,
these guys were really using big data -- -
4:13 - 4:17they were simulating what would
actually happen under different scenarios -
4:17 - 4:20if the wealth actually wasn't
reinvested back into production -
4:20 - 4:22to make that land more productive
-
4:22 - 4:25and was actually being
siphoned out in different ways, -
4:25 - 4:27or even if the proprietors
were getting too much. -
4:28 - 4:30And what later happened in the 1800s,
-
4:30 - 4:32and this was no longer
the Agricultural Revolution -
4:32 - 4:34but the Industrial Revolution,
-
4:34 - 4:35is that the classical economists,
-
4:35 - 4:39and these were Adam Smith, David Ricardo,
Karl Marx, the revolutionary, -
4:39 - 4:42also asked the question "What is value?"
-
4:42 - 4:45But it's not surprising that
because they were actually living -
4:45 - 4:48through an industrial era
with the rise of machines and factories, -
4:48 - 4:50they said it was industrial labor.
-
4:50 - 4:53So they had a labor theory of value.
-
4:53 - 4:55But again, their focus was reproduction,
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4:55 - 4:58this real worry of what was happening
to the value that was created -
4:58 - 5:00if it was getting siphoned out.
-
5:00 - 5:02And in "The Wealth of Nations,"
-
5:02 - 5:05Adam Smith had this really great example
of the pin factory where he said -
5:05 - 5:08if you only have one person
making every bit of the pin, -
5:08 - 5:11at most you can make one pin a day.
-
5:11 - 5:15But if you actually invest in factory
production and the division of labor, -
5:15 - 5:16new thinking --
-
5:16 - 5:19today, we would use the word
"organizational innovation" -- -
5:19 - 5:21then you could increase the productivity
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5:21 - 5:23and the growth and the wealth of nations.
-
5:23 - 5:25So he showed that 10 specialized workers
-
5:25 - 5:28who had been invested in,
in their human capital, -
5:28 - 5:31could produce 4,800 pins a day,
-
5:31 - 5:34as opposed to just one
by an unspecialized worker. -
5:34 - 5:36And he and his fellow classical economists
-
5:36 - 5:40also broke down activities
into productive and unproductive ones. -
5:40 - 5:41(Laughter)
-
5:41 - 5:43And the unproductive ones weren't --
-
5:43 - 5:46I think you're laughing because
most of you are on that list, aren't you? -
5:46 - 5:48(Laughter)
-
5:48 - 5:50Lawyers! I think he was right
about the lawyers. -
5:50 - 5:54Definitely not the professors,
the letters of all kind people. -
5:54 - 5:58So lawyers, professors,
shopkeepers, musicians. -
5:58 - 5:59He obviously hated the opera.
-
5:59 - 6:02He must have seen
the worst performance of his life -
6:02 - 6:03the night before writing this book.
-
6:03 - 6:05There's at least
three professions up there -
6:05 - 6:07that have to do with the opera.
-
6:07 - 6:10But this wasn't an exercise
of saying, "Don't do these things." -
6:10 - 6:12It was just, "What's going to happen
-
6:12 - 6:15if we actually end up allowing
some parts of the economy to get too large -
6:15 - 6:18without really thinking about
how to increase the productivity -
6:18 - 6:22of the source of the value
that they thought was key, -
6:22 - 6:23which was industrial labor.
-
6:23 - 6:27And again, don't ask yourself
is this right or is this wrong, -
6:27 - 6:28it was just very contested.
-
6:28 - 6:29By making these lists,
-
6:29 - 6:33it actually forced them also
to ask interesting questions. -
6:33 - 6:36And their focus,
as the focus of the Physiocrats, -
6:36 - 6:40was, in fact, on these objective
conditions of production. -
6:40 - 6:42They also looked, for example,
at the class struggle. -
6:42 - 6:44Their understanding of wages
-
6:44 - 6:47had to do with the objective,
if you want, power relationships, -
6:47 - 6:50the bargaining power of capital and labor.
-
6:50 - 6:54But again, factories, machines,
division of labor, -
6:54 - 6:56agricultural land
and what was happening to it. -
6:56 - 6:59So the big revolution
that then happened -- -
6:59 - 7:02and this, by the way, is not often
taught in economics classes -- -
7:02 - 7:05the big revolution that happened
with the current system -
7:05 - 7:07of economic thinking that we have,
-
7:07 - 7:09which is called "neoclassical economics,"
-
7:09 - 7:12was that the logic completely changed.
-
7:12 - 7:13It changed in two ways.
-
7:13 - 7:18It changed from this focus on
objective conditions to subjective ones. -
7:18 - 7:19Let me explain what I mean by that.
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7:19 - 7:22Objective, in the way I just said.
-
7:22 - 7:24Subjective, in the sense that
all the attention went to -
7:24 - 7:27how individuals of different sorts
make their decisions. -
7:28 - 7:32OK, so workers are maximizing
their choices of leisure versus work. -
7:32 - 7:35Consumers are maximizing
their so-called utility, -
7:35 - 7:37which is a proxy for happiness,
-
7:37 - 7:40and firms are maximizing their profits.
-
7:40 - 7:43And the idea behind this was that
then we can aggregate this up, -
7:43 - 7:45and we see what that turns into,
-
7:45 - 7:47which are these nice, fancy
supply-and-demand curves -
7:47 - 7:50which produce a price,
-
7:50 - 7:51an equilibrium price.
-
7:51 - 7:53It's an equilibrium price,
because we also added to it -
7:54 - 7:56a lot of Newtonian physics equations
-
7:56 - 8:00where centers of gravity are very much
part of the organizing principle. -
8:00 - 8:03But the second point here is that
that equilibrium price, or prices, -
8:03 - 8:05reveal value.
-
8:05 - 8:08So the revolution here is a change
from objective to subjective, -
8:08 - 8:12but also the logic is no longer
one of what is value, -
8:12 - 8:14how is it being determined,
-
8:14 - 8:16what is the reproductive
potential of the economy, -
8:16 - 8:18which then leads to a theory of price
-
8:18 - 8:20but rather the reverse:
-
8:20 - 8:22a theory of price and exchange
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8:22 - 8:23which reveals value.
-
8:23 - 8:25Now, this is a huge change.
-
8:25 - 8:29And it's not just an academic exercise,
as fascinating as that might be. -
8:29 - 8:31It affects how we measure growth.
-
8:31 - 8:35It affects how we steer economies
to produce more of some activities, -
8:35 - 8:36less of others,
-
8:36 - 8:39how we also remunerate
some activities more than others. -
8:39 - 8:41And it also just kind of makes you think,
-
8:41 - 8:45you know, are you happy to get out of bed
if you're a value creator or not, -
8:45 - 8:48and how is the price system itself
if you aren't determining that? -
8:49 - 8:53I mentioned it affects
how we think about output. -
8:53 - 8:55If we only include, for example, in GDP,
-
8:55 - 8:57those activities that have prices,
-
8:57 - 8:59all sorts of really weird things happen.
-
8:59 - 9:02Feminist economists
and environmental economists -
9:02 - 9:04have actually written
about this quite a bit. -
9:04 - 9:05Let me give you some examples.
-
9:05 - 9:11If you marry your babysitter,
GDP will go down, so do not do it. -
9:11 - 9:12Do not be tempted to do this, OK?
-
9:13 - 9:16Because an activity that perhaps was
before being paid for is still being done -
9:16 - 9:17but is no longer paid.
-
9:18 - 9:19(Laughter)
-
9:19 - 9:20If you pollute, GDP goes up.
-
9:20 - 9:23Still don't do it, but if you do it,
you'll help the economy. -
9:23 - 9:26Why? Because we have to actually
pay someone to clean it. -
9:26 - 9:29Now, what's also really interesting
is what happened to finance -
9:29 - 9:31in the financial sector in GDP.
-
9:32 - 9:34This also, by the way, is something
I'm always surprised -
9:34 - 9:36that many economists don't know.
-
9:36 - 9:37Up until 1970,
-
9:37 - 9:41most of the financial sector
was not even included in GDP. -
9:41 - 9:44It was kind of indirectly,
perhaps not knowingly, -
9:44 - 9:46still being seen through the eyes
of the Physiocrats -
9:46 - 9:50as just kind of moving stuff around,
not actually producing anything new. -
9:50 - 9:54So only those activities
that had an explicit price were included. -
9:54 - 9:58For example, if you went to get
a mortgage, you were charged a fee. -
9:58 - 10:01That went into GDP and the national
income and product accounting. -
10:01 - 10:04But, for example,
net interest payments didn't, -
10:04 - 10:08the difference between
what banks were earning in interest -
10:08 - 10:11if they gave you a loan and what
they were paying out for a deposit. -
10:11 - 10:12That wasn't being included.
-
10:12 - 10:16And so the people doing the accounting
started to look at some data, -
10:16 - 10:18which started to show
that the size of finance -
10:18 - 10:20and these net interest payments
-
10:20 - 10:22were actually growing substantially.
-
10:22 - 10:24And they called this
the "banking problem." -
10:24 - 10:27These were some people working
inside, actually, the United Nations -
10:27 - 10:30in a group called the Systems
of National [Accounts], SNA. -
10:30 - 10:32They called it the "banking problem,"
-
10:32 - 10:35like, "Oh my God, this thing is huge,
and we're not even including it." -
10:35 - 10:38So instead of stopping and actually
making that Tableau Economique -
10:38 - 10:41or asking some of these
fundamental questions -
10:41 - 10:44that also the classicals were asking
about what is actually happening, -
10:44 - 10:48the division of labor between different
types of activities in the economy, -
10:48 - 10:50they simply gave these
net interest payments a name. -
10:50 - 10:53So the commercial banks, they called this
"financial intermediation." -
10:53 - 10:55That went into the NIPA accounts.
-
10:55 - 10:59And the investment banks
were called the "risk-taking activities," -
10:59 - 11:00and that went in.
-
11:00 - 11:02In case I haven't explained this properly,
-
11:02 - 11:04that red line is showing how much quicker
-
11:04 - 11:07financial intermediation
as a whole was growing -
11:07 - 11:10compared to the rest of the economy,
the blue line, industry. -
11:11 - 11:13And so this was quite extraordinary,
-
11:13 - 11:15because what actually happened,
and what we know today, -
11:15 - 11:18and there's different people
writing about this, -
11:18 - 11:20this data here
is from the Bank of England, -
11:20 - 11:22is that lots of what finance
was actually doing -
11:22 - 11:24from the 1970s and '80s on
-
11:24 - 11:27was basically financing itself:
-
11:27 - 11:29finance financing finance.
-
11:29 - 11:32And what I mean by that is finance,
insurance and real estate. -
11:32 - 11:34In fact, in the UK,
-
11:34 - 11:37something like between
10 and 20 percent of finance -
11:37 - 11:39finds its way into
the real economy, into industry, -
11:39 - 11:42say, into the energy sector,
into pharmaceuticals, -
11:42 - 11:44into the IT sector,
-
11:44 - 11:48but most of it goes back
into that acronym, FIRE: -
11:48 - 11:50finance, insurance and real estate.
-
11:50 - 11:52It's very conveniently called FIRE.
-
11:52 - 11:56Now, this is interesting because, in fact,
-
11:56 - 11:59it's not to say that finance
is good or bad, -
11:59 - 12:00but the degree to which,
-
12:00 - 12:02by just having to give it a name,
-
12:02 - 12:05because it actually had an income
that was being generated, -
12:05 - 12:08as opposed to pausing and asking,
"What is it actually doing?" -- -
12:08 - 12:10that was a missed opportunity.
-
12:10 - 12:14Similarly, in the real economy,
in industry itself, what was happening? -
12:15 - 12:21And this real focus on prices
and also share prices -
12:21 - 12:24has created a huge problem
of reinvestment, -
12:24 - 12:28again, this real attention that both
the Physiocrats and the classicals had -
12:28 - 12:31to the degree to which the value
that was being generated in the economy -
12:31 - 12:34was in fact being reinvested back in.
-
12:34 - 12:38And so what we have today is
an ultrafinancialized industrial sector -
12:38 - 12:41where, increasingly, a share
of the profits and the net income -
12:41 - 12:44are not actually going
back into production, -
12:44 - 12:48into human capital training,
into research and development -
12:48 - 12:52but just being siphoned out
in terms of buying back your own shares, -
12:52 - 12:55which boosts stock options,
which is, in fact, the way -
12:55 - 12:57that many executives are getting paid.
-
12:57 - 12:59And, you know, some
share buybacks is absolutely fine, -
12:59 - 13:01but this system
is completely out of whack. -
13:01 - 13:03These numbers that I'm showing you here
-
13:03 - 13:07show that in the last 10 years,
466 of the S and P 500 companies -
13:07 - 13:11have spent over four trillion
on just buying back their shares. -
13:11 - 13:15And what you see then if you aggregate
this up at the macroeconomic level, -
13:15 - 13:17so if we look at aggregate
business investment, -
13:17 - 13:19which is a percentage of GDP,
-
13:19 - 13:23you also see this falling level
of business investment. -
13:23 - 13:24And this is a problem.
-
13:24 - 13:29This, by the way, is a huge problem
for skills and job creation. -
13:29 - 13:31You might have heard there's lots
of attention these days -
13:31 - 13:33to, "Are the robots taking our jobs?"
-
13:33 - 13:36Well, mechanization has
for centuries, actually, taken jobs, -
13:36 - 13:40but as long as profits were being
reinvested back into production, -
13:40 - 13:42then it didn't matter: new jobs appeared.
-
13:42 - 13:45But this lack of reinvestment
is, in fact, very dangerous. -
13:45 - 13:50Similarly, in the pharmaceutical industry,
for example, how prices are set, -
13:50 - 13:53it's quite interesting how it doesn't look
at these objective conditions -
13:53 - 13:57of the collective way in which value
is created in the economy. -
13:57 - 14:00So in the sector where you have
lots of different actors -- -
14:00 - 14:04public, private, of course, but also
third-sector organizations -- -
14:04 - 14:05creating value,
-
14:05 - 14:07the way we actually measure
value in this sector -
14:07 - 14:10is through the price system itself.
-
14:10 - 14:11Prices reveal value.
-
14:11 - 14:12So when, recently,
-
14:12 - 14:17the price of an antibiotic
went up by 400 percent overnight, -
14:17 - 14:19and the CEO was asked,
"How can you do this? -
14:19 - 14:21People actually need that antibiotic.
-
14:21 - 14:22That's unfair."
-
14:22 - 14:24He said, "Well, we have a moral imperative
-
14:24 - 14:27to allow prices to go
what the market will bear," -
14:27 - 14:30completely dismissing the fact
that in the US, for example, -
14:30 - 14:34the National Institutes of Health
spent over 30 billion a year -
14:34 - 14:37on the medical research
that actually leads to these drugs. -
14:37 - 14:40So, again, a lack of attention
to those objective conditions -
14:40 - 14:43and just allowing the price system
itself to reveal the value. -
14:43 - 14:46Now, this is not just
an academic exercise, -
14:46 - 14:47as interesting as it may be.
-
14:48 - 14:51All this really matters
[for] how we measure output, -
14:51 - 14:53to how we steer the economy,
-
14:53 - 14:55to whether you feel
that you're productive, -
14:55 - 14:58to which sectors we end up
helping, supporting -
14:58 - 15:02and also making people feel
proud to be part of. -
15:02 - 15:04In fact, going back to that quote,
-
15:04 - 15:06it's not surprising that Blankfein
could say that. -
15:06 - 15:07He was right.
-
15:07 - 15:10In the way that we actually measure
production, productivity -
15:10 - 15:11and value in the economy,
-
15:11 - 15:14of course Goldman Sachs workers
are the most productive. -
15:14 - 15:16They are in fact earning the most.
-
15:16 - 15:18The price of their labor
is revealing their value. -
15:18 - 15:21But this becomes tautological, of course.
-
15:21 - 15:23And so there's a real need to rethink.
-
15:24 - 15:26We need to rethink
how we're measuring output, -
15:26 - 15:28and in fact there's some
amazing experiments worldwide. -
15:28 - 15:33In New Zealand, for example, they now have
a gross national happiness indicator. -
15:33 - 15:37In Bhutan, also, they're thinking
about happiness and well-being indicators. -
15:37 - 15:41But the problem is that we can't
just be adding things in. -
15:41 - 15:42We do have to pause,
-
15:42 - 15:44and I think this should be
a moment for pause, -
15:44 - 15:46given that we see so little
has actually changed -
15:46 - 15:48since the financial crisis,
-
15:48 - 15:51to make sure that
we are not also confusing -
15:51 - 15:53value extraction with value creation,
-
15:53 - 15:56so looking at what's included,
not just adding more, -
15:56 - 16:00to make sure that we're not, for example,
confusing rents with profits. -
16:00 - 16:03Rents for the classicals
was about unearned income. -
16:03 - 16:06Today, rents, when they're
talked about in economics, -
16:06 - 16:09is just an imperfection
towards a competitive price -
16:09 - 16:13that could be competed away
if you take away some asymmetries. -
16:13 - 16:18Second, we of course can steer
activities into what the classicals called -
16:18 - 16:19the "production boundary."
-
16:19 - 16:21This should not be an us-versus-them,
-
16:21 - 16:24big, bad finance versus
good, other sectors. -
16:24 - 16:25We could reform finance.
-
16:25 - 16:29There was a real lost opportunity
in some ways after the crisis. -
16:29 - 16:31We could have had
the financial transaction tax, -
16:31 - 16:35which would have rewarded
long-termism over short-termism, -
16:35 - 16:37but we didn't decide to do that globally.
-
16:37 - 16:39We can. We can change our minds.
-
16:39 - 16:41We can also set up
new types of institutions. -
16:41 - 16:45There's different types of, for example,
public financial institutions worldwide -
16:45 - 16:49that are actually providing that patient,
long-term, committed finance -
16:49 - 16:53that helps small firms grow, that help
infrastructure and innovation happen. -
16:53 - 16:55But this shouldn't just be about output.
-
16:55 - 16:57This shouldn't just be about
the rate of output. -
16:58 - 16:59We should also as a society pause
-
16:59 - 17:02and ask: What value are we even creating?
-
17:02 - 17:06And I just want to end with the fact
that this week we are celebrating -
17:06 - 17:09the 50th anniversary of the Moon landing.
-
17:09 - 17:11This required the public sector,
the private sector, -
17:11 - 17:14to invest and innovate
in all sorts of ways, -
17:14 - 17:16not just around aeronautics.
-
17:16 - 17:20It included investment in areas
like nutrition and materials. -
17:20 - 17:24There were lots of actual mistakes
that were done along the way. -
17:24 - 17:27In fact, what government did was it used
its full power of procurement, -
17:27 - 17:30for example, to fuel
those bottom-up solutions, -
17:30 - 17:32of which some failed.
-
17:32 - 17:35But are failures part of value creation?
-
17:35 - 17:36Or are they just mistakes?
-
17:36 - 17:40Or how do we actually also
nurture the experimentation, -
17:40 - 17:42the trial and error and error and error?
-
17:42 - 17:45Bell Labs, which was
the R and D laboratory of AT and T, -
17:45 - 17:49actually came from an era
where government was quite courageous. -
17:49 - 17:54It actually asked AT and T that
in order to maintain its monopoly status, -
17:54 - 17:58it had to reinvest its profits
back into the real economy, -
17:58 - 17:59innovation
-
17:59 - 18:01and innovation beyond telecoms.
-
18:01 - 18:03That was the history,
the early history of Bell Labs. -
18:03 - 18:07So how we can get these new conditions
around reinvestment -
18:07 - 18:10to collectively invest
in new types of value -
18:10 - 18:13directed at some of the biggest
challenges of our time, -
18:13 - 18:14like climate change?
-
18:14 - 18:16This is a key question.
-
18:16 - 18:18But we should also ask ourselves,
-
18:18 - 18:22had there been a net
present value calculation -
18:22 - 18:24or a cost-benefit analysis done
-
18:24 - 18:28about whether or not to even try
to go to the Moon and back again -
18:28 - 18:29in a generation,
-
18:29 - 18:32we probably wouldn't have started.
-
18:32 - 18:34So thank God,
-
18:34 - 18:36because I'm an economist,
and I can tell you, -
18:36 - 18:38value is not just price.
-
18:38 - 18:39Thank you.
-
18:39 - 18:41(Applause)
- Title:
- An honest look at price, innovation and who powers the economy
- Speaker:
- Mariana Mazzucato
- Description:
-
Where does wealth come from, who creates it and what destroys it? In this deep dive into global economics, Mariana Mazzucato explains how we lost sight of what value means and why we need to rethink our current financial systems -- so capitalism can be steered toward a bold, innovative and sustainable future that works for all of us.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 18:55
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Hong Phat
English original (version 7) wrong timeline, please fix it.