WEBVTT

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I am a capitalist,

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and after a 30-year career in capitalism

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spanning three dozen companies

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generating tens of billions
of dollars in market value,

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I'm not just in the top one percent,
I'm in the top 0.1 percent of all earners.

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Today, I have come to share
the secrets of our success,

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because rich capitalists like me
have never been richer.

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So the question is, how do we do it?

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How do we manage to grab

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an ever-increasing share
of the economic pie every year?

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Is it that rich people are smarter
than we were 30 years ago?

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Is it that we're working harder
than we once did?

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Are we taller, better looking?

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Sadly, no.

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It all comes down to just one thing:

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economics.

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Because, here's the dirty secret.

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There was a time in which
the economics profession

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worked in the public interest for everyone

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but in the neoliberal era,

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today,

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they work only for big corporations

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and billionaires,

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and that is creating
a little bit of a problem.

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We could choose to enact economic policies

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that raise taxes on the rich,

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regulate powerful corporations,
or raise wages for workers.

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We have done it before.

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But neoliberal economists would warn

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that all of these policies
would be a terrible mistake,

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because raising taxes
always kills economic growth,

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and and any form of government regulation

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is inefficient,

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and raising wages always kills jobs.

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Well, as a consequence of that thinking,

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over the last 30 years, in the USA alone,

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the top one percent has grown
21 trillion dollars richer

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while the bottom 50 percent
have grown 900 billion dollars poorer,

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a pattern of widening inequality
that has largely repeated itself

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across the world.

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And yet, as middle class families
struggle to get by

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on wages that have not budged
in about 40 years,

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neoliberal economists continue to warn
that the only reasonable response

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to the painful dislocations
of austerity and globalization

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is even more austerity and globalization.

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So, what is a society to do?

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Well, it's super-clear to me
what we need to do.

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We need a new economics.

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So, economics has been described
as the dismal science,

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and for good reason, because
as much as it is taught today,

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it isn't a science at all, in spite of
all of the dazzling mathematics.

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In fact, a growing number
of academics and practitioners

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have concluded that neoliberal
economic theory is dangerously wrong

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and that today's growing crises
of rising inequality

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and growing political instability

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are the direct result of decades
of bad economic theory.

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What we now know is that the economics
that made me so rich isn't just wrong,

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it's backwards,

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because it turns out

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it isn't capital that creates
economic growth,

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it's people;

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and it isn't self-interest
that promotes the public good,

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it's reciprocity;

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and it isn't competition
that produces our prosperity,

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it's cooperation.

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What we can now see is that an economics
that is neither just nor inclusive

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can never sustain the high levels
of social cooperation

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necessary to enable
a modern society to thrive.

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So where did we go wrong?

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Well, it turns out
that it's become painfully obvious

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that the fundamental assumptions
that undergird neoliberal economic theory

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are just objectively false,

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and so today first I want to take you
through some of those mistaken assumptions

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and then after describe where the science
suggests prosperity actually comes from.

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So neoliberal assumption number one is

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that the market is an efficient
equilibrium system,

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which basically means that if one thing
in the economy, like wages, goes up,

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another thing in the economy,
like jobs, must go down.

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So for example, in Seattle, where I live,

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when in 2014 we passed our nation's
first 15 dollar minimum wage,

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the neoliberals freaked out
over their precious equilibrium.

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"If you raise the price
of labor," they warned,

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"business will purchase less of it.

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Thousands of low-wage workers
will lose their jobs.

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The restaurants will close."

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Except, they didn't.

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The unemployment rate fell dramatically.

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The restaurant business in Seattle boomed.

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Why?

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Because there is no equilibrium.

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Because raising wages
doesn't kill jobs, it creates them,

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because, for instance,

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when restaurant owners are suddenly
required to pay restaurant workers enough

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so that now even they can afford
to eat in restaurants,

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it doesn't shrink the restaurant business,

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it grows it, obviously.

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(Applause)

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Thank you.

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The second assumption is

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that the price of something
is always equal to its value,

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which basically means that
if you earn 50,000 dollars a year

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and I earn 50 million dollars a year,

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that's because I produce
a thousand times as much value as you.

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Now, it will not surprise you to learn

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that this is a very comforting assumption

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if you're a CEO paying yourself
50 million dollars a year

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but paying your workers poverty wages.

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But please, take it from somebody
who has run dozens of businesses:

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this is nonsense.

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People are not paid what they are worth.

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They are paid what they have
the power to negotiate,

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and wages' falling share of GDP

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is not because workers
have become less productive

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but because employers
have become more powerful.

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(Applause)

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And by pretending that the giant imbalance
in power between capital and labor

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doesn't exist,

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neoliberal economic theory
became essentially

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a protection racket for the rich.

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The third assumption,
and by far the most pernicious,

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is a behavioral model

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that describes human beings
as something called "homo economicus,"

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which basically means that
we are all perfectly selfish,

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perfectly rational,
and relentlessly self-maximizing.

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But just ask yourself,

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is it plausible that every single time
for your entire life,

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when you did something
nice for somebody else,

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all you were doing was maximizing
your own utility?

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Is it plausible that when a soldier jumps
on a grenade to defend fellow soldiers,

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they're just promoting
their narrow self-interest?

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If you think that's nuts,

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contrary to any reasonable
moral intuition,

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that's because it is,

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and according to the latest science,

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not true.

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But it is this behavioral model

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which is at the cold, cruel heart
of neoliberal economics,

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and it is as morally corrosive

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as it is scientifically wrong,

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because if we accept at face value

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that humans are fundamentally selfish

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and then we look around the world

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at all of the unambiguous
prosperity in it,

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then it follows logically,

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then it must be true by definition,

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that billions of individual
acts of selfishness

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magically transubstantiate
into prosperity and the common good.

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If we humans are merely
selfish maximizers,

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then selfishness is the cause
of our prosperity.

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Under this economic logic,

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greed is good,

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widening inequality is efficient,

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and the only purpose of the corporation

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can be to enrich shareholders,

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because to do otherwise would be
to slow economic growth

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and harm the economy overall.

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And it is this gospel of selfishness

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which forms the ideological cornerstone
of neoliberal economics,

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a way of thinking which has
produced economic policies

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which have enabled me and my rich buddies
in the top one percent

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to grab virtually all of the benefits
of growth over the last 40 years.

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But, if instead

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we accept the latest empirical research,

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real science, which correctly
describes human beings

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as highly cooperative,

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reciprocal,

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and intuitively moral creatures,

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then it follows logically

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that it must be cooperation

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and not selfishness

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that is the cause of our prosperity,
and it isn't our self-interest

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but rather our inherent reciprocity

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that is humanity's economic superpower.

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So at the heart of this new economics

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is a story about ourselves that grants us
permission to be our best selves,

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and, unlike the old economics,

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this is a story that is virtuous

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and also has the virtue of being true.

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Now, I want to emphasize
that this new economics

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is not something I have personally
imagined or invented.

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Its theories and models
are being developed and refined

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in universities around the world

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building on some of the best
new research in economics,

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complexity theory, evolutionary theory,

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psychology, anthropology,
and other disciplines.

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And although this new economics
does not yet have its own textbook

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or even a commonly agreed upon name,

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in broad strokes

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its explanation of where prosperity
comes from goes something like this.