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Democracy.
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In the West,
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we make a colossal mistake
taking it for granted.
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We see democracy
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not as the most fragile
of flowers that it really is,
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but we see it as part
of our society's furniture.
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We tend to think of it
as any transient given.
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We mistakenly believe that capitalism
begets inevitably, democracy.
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It doesn't.
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Singapore's Lee Kuan Yew
and his great imitators in Beijing
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have demonstrated
beyond reasonable doubt
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that it is perfectly possible
to have flourishing capitalism,
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spectacular growth,
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while politics remain democracy free.
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Indeed, democracy is receding
in our neck of the woods.
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Here in Europe.
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Earlier this year while I was
representing Greece --
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the newly elected Greek government --
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in the Eurogroup as its Finance Minister,
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I was told in certain terms
that our nation's democratic process --
-
our elections --
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could not be allowed to interfere
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with economic policies that were being
implemented in Greece.
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At that moment,
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I felt that there could be no greater
vindication of Lee Kuan Yew,
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of the Chinese Communist Party,
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indeed of some recalcitrant
friends of mine who kept telling me
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that democracy would be banned
if it ever threatened to change anything.
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Tonight, here, I want to present to you
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an economic case
for an authentic democracy.
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I want to ask you to join me
in believing again
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that Lee Kuan Yew ...
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the Chinese Communist Party,
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and indeed the Eurogroup,
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are wrong in believing that we
can dispense with democracy.
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That we need an authentic,
boisterous democracy,
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and without democracy,
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our societies will be nastier,
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our future bleak,
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and our great, new technologies wasted.
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Speaking of waste,
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allow me to point out
an interesting paradox
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that is threatening our
economies as we speak.
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I call it the twin peaks paradox.
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One peak you understand --
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you know it, you recognize it --
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is the mountain of debts
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that has been casting a long shadow
over the United States,
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Europe,
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the whole world.
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We all recognize the mountain of debts.
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But few people discern its twin.
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A mountain of idle cash
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belonging to rich savers
and to corporations,
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too terrified to invest it
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into the productive activities
that can generate the incomes
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from which you can extinguish
the mountain of debts
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and which can produce all those things
that humanity desperately needs,
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like green energy.
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Now let me give you two numbers.
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Over the last three months,
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in the United States, in Britain
and in the Eurozone,
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we have invested, collectively
3.4 trillion dollars
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on all the wealth-producing goods.
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Things like industrial plants, machinery,
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office blocks, schools,
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roads, railways, machinery,
and so on and so forth ...
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3.4 trillion sounds like a lot of money
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until you compare it to the 5.1 trillion
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that has been slushing around
in the same countries,
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in our financial institutions,
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doing absolutely nothing
during the same period ...
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except inflating stock exchanges
and driving up house prices.
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So a mountain of debt
and a mountain of idle cash
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form twin peaks failing
to cancel each other out
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through the normal
operation of the markets.
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The result is stagnant wages,
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more than a quarter of 25 to 54-year-olds
in America, in Japan and in Europe
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out of work.
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And consequently, low aggregate demand,
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which in a never-ending cycle,
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reinforces the pessimism of the investors,
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who fearing low demand,
reproduce it by not investing.
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Exactly like Oedipus' father,
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who terrified by
the prophecy of the oracle
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that his son would grow up to kill him,
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unwittingly engineered the conditions
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that insured that Oedipus,
his son, would kill him.
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This is my quarrel with capitalism.
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Its gross wastefulness,
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all this idle cash,
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should be energized to improve lives,
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to develop human talents,
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and indeed to finance
all these technologies --
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green technologies --
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which are absolutely essential
for saving planet Earth.
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Am I right in believing
that democracy might be the answer?
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I believe so,
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but before we move on,
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what do we mean by democracy?
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Aristotle defined democracy
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as the constitution in which
the free and the poor,
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being in the majority,
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control government.
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Now of course Athenian democracy
excluded too many.
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Women, migrants and of course, the slaves.
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But it would be a mistake
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to dismiss the significance
of ancient Athenian democracy
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on the basis of whom it excluded.
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What was more pertinent,
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and continues to be so
about ancient Athenian democracy,
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was the inclusion of the working poor,
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who not only acquired
the right to free speech,
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but more importantly --
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crucially --
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they acquired the rights
to political judgements
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that were afforded equal weight
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in the decision-making
concerning matters of state.
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Now of course, Athenian
democracy didn't last long.
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Like a candle that burns brightly,
it burned out quickly.
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And indeed,
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our liberal democracies today
do not have their roots in ancient Athens.
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They have their roots in the Magna Carta,
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in the 1688 Glorious Revolution,
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indeed in the American constitution.
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Whereas Athenian democracy
was focusing on the masterless citizen
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and empowering the working poor,
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our liberal democracies are founded
on the Magna Carta tradition,
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which was, after all
a charter for masters.
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And indeed, liberal democracy
only surfaced when it was possible
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to separate fully the political sphere
from the economic sphere,
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so as to confine the democratic process
fully in the political sphere,
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leaving the economic sphere --
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the corporate world, if you want --
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as a democracy-free zone.
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Now in our democracies today,
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this separation of the economic
from the political sphere,
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the moment it started happening,
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it gave rise to an inexorable,
epic struggle between the two,
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with the economic sphere
colonizing the political sphere,
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eating into its power.
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Have you wondered why politicians
are not what they used to be?
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It's not because their DNA
has degenerated --
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(Laughter)
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It is rather because one can be
in government today and not in power.
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Because power has migrated
from the political to the economic sphere,
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which is separate.
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Indeed --
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I spoke about my
quarrel with capitalism --
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If you think about it,
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it is a little bit like
a population of predators,
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that are so successful in decimating
the prey that they must feed on,
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that in the end they starve.
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Similarly,
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the economic sphere has been colonizing
and cannibalizing the political sphere
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to such an extent that it is
undermining itself,
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causing economic crisis.
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Corporate power is increasing,
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political goods are devaluing,
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inequality is rising,
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aggregate amount is falling,
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and CEO's of corporations are too scared
to invest the cash of their corporations.
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So the more capitalism succeeds in taking
the demos out of democracy,
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the taller the twin peaks
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and the greater the waste
of human resources,
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and humanity's wealth.
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Clearly, if this is right,
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we must reunite the political
and economic spheres
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and better do it with a demos
being in control,
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like in ancient Athens
except without the slaves
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or the exclusion
of women and migrants.
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Now this is not an original idea.
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The Marxist left had
that idea 100 years ago
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and it didn't go very well, did it?
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The lesson that we learned
from the Soviet debacle
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is that only by a miracle
will the working poor be re-empowered,
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as they were in ancient Athens,
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without creating new forms
of brutality and waste.
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But there is a solution.
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Eliminate the working poor.
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Capitalism's doing it
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by replacing low-wage workers
with automata, androids, robots.
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The problem is
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that as long as the economic and
the political spheres are separate,
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automation makes the twin peaks taller,
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the waste loftier,
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and the social conflicts deeper,
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including --
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soon, I believe --
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in places like China.
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So we need to reconfigure,
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we need to reunite the economic
and the political spheres,
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but we'd better do it
by democratizing the reunified sphere,
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lest you end up with
a surveillance-mad, hyper-autocracy
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that makes The Matrix, the movie,
look like a documentary.
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(Laughter)
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So the question is not whether
capitalism will survive
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the technological innovations
of this moment.
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The more interesting question
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is whether capitalism will be succeeded
by something resembling a Matrix dystopia
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or something much closer
to a Star Trek-like society,
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where machines serve the humans
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and the humans expend their energies
exploring the universe
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and indulging in long debates
about the meaning of life
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in some ancient, Athenian-like,
high tech Agora.
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I think we can afford to be optimistic.
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But what would it take --
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what would it look like --
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to have this Star Trek-like utopia,
instead of the Matrix-like dystopia?
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In practical terms,
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allow me to share just briefly,
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a couple of examples.
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At the level of the enterprise,
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imagine a capital market,
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where you earn capital as you work,
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and where your capital follows you
from one job to another,
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from one company to another,
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and the company --
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whichever one you happen
to work at at that time --
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is solely owned by those who happen
to work in it at that moment.
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Then all income stems
from capital, from profits,
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and the very concept
of wage labor becomes obsolete.
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No more separation between those
who own but do not work in the company,
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and those who work
but do not own the company.
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No more tug-of-war
between capital and labor.
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No great gap between
investment and saving.
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Indeed, no towering twin peaks.
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At the level of a global
political economy,
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imagine for a moment
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that our national currencies
have a free-floating exchange rate,
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with a universal, global,
digital currency.
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One that is issued by
the International Monetary Fund,
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the G-20,
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on behalf of all humanity.
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And imagine further,
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that all international trade
is denominated in this currency --
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let's call it "the cosmos" --
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in units of cosmos,
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with every government agreeing
to be paying into a common fund
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a sum of cosmos units proportional
to the country's trade deficit,
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or indeed to a country's trade surplus.
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And imagine that that fund is utilized
to invest in green technologies,
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especially in parts of the world
where investment funding is scarce.
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This is not a new idea.
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It's what, effectively,
John Maynard Keyes proposed
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in 1944 at the Bretton Woods Conference.
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The problem is
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that back then, they didn't have
the technology to implement it.
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Now we do.
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Especially in the context of a reunified
political economic sphere.
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The world that I am describing to you
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is simultaneously libertarian,
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in that it prioritizes
empowered individuals,
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Marxist,
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since it will have [confined?]
through the [dusting?] of history
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the division between capital and labor,
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and Keynesian ...
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global Keynesian.
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But above all else,
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it is a world in which
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we will be able to imagine
an authentic democracy.
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Will such a world dawn?
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Or shall we descend
into a Matrix-like dystopia?
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The answer lies in the political choice
that we shall be making collectively.
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It is our choice,
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and we'd better make it democratically.
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Thank you.
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(Applause)
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Bruno Giussani: Yanis ...
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It was you who described yourself
in your bios as a libertarian Marxist ...
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what is the relevance
of Marx's analysis today?
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YV: Well if there was any relevance
in what I just said then Marx is relevant.
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Because the whole point of reunifying
the political and economic is --
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if we don't do it,
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then technological innovation
is going to create
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such a massive fall in aggregate.
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What Larry Summers
refers to as secular stagnation.
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With this crisis migrating
from one part of the world,
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as it is now,
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that it will destabilize
not only our democracies,
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but even the [emerging?] world that is not
that keen on liberal democracy.
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So if this analysis holds water,
then Marx is absolutely relevant.
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But so is [Hagen?] --
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that's why I'm a libertarian Marxist,
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and so is Keynes,
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so that's why I'm totally confused.
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(Laughter)
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BG: Indeed, and possibly we are too, now.
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(Laughter)
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(Applause)
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YV: If you are not confused,
you are not thinking, okay?
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BG: That's a very, very Greek
philosopher kind of thing to say --
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YV: That's more Einstein, actually --
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BG: During your talk you mentioned
Singapore and China,
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and yesterday night at the speaker dinner,
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you expressed a pretty strong opinion
about how the West looks at China.
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Would you like to share that?
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YV: Well there's a great
degree of hypocrisy.
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In our liberal democracies we have
a semblance of democracy.
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It's because we have confined,
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as I was saying in my talk,
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democracy to the political sphere,
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while leaving the one sphere
where all the action is --
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the economic sphere --
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a completely democracy-free zone.
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In a sense,
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if I am allowed to be provocative ...
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China today is closer to Britain
in the 19th century,
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because remember,
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we tend to associate
liberalism with democracy --
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that's a mistake, historically.
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Liberalism -- liberal --
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it's like John Stuart Mill.
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John Stuart Mill was particularly
skeptical about the democratic process.
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So what you are seeing now in China
is a very similar process
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to the one that we had in Britain
during the Industrial Revolution,
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especially the transition
from the first to the second.
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And to be castigating China
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for doing that which the West did
in the 19th century,
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smacks of hypocrisy.
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BG: I am sure that many people here
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are wondering about your experience
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as the Finance Minister of Greece
earlier this year --
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YV: I knew this was coming --
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BG: Yes --
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(Laughter)
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BG: Six months after,
-
how do you look back
at the first half of the year?
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YV: Extremely exciting
from a personal point of view
-
and very disappointing,
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because we had an opportunity
to reboot the Eurozone.
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Not just Greece, the Eurozone.
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To move away from the complacency
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and the constant denial
that there was a massive --
-
and there is a massive --
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architectural fault line
going through the Eurozone,
-
which is threatening, massively,
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the whole of the European Union process.
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We had the opportunity
on the basis of the Greek program --
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which by the way,
-
was the first program
to manifest that denial --
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to put it right.
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And unfortunately,
-
the powers that be in the Eurozone,
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in the Eurogroup,
-
chose to maintain denial.
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But you know what happens.
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This is the experience
of the Soviet Union.
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When you try to keep alive
-
an economic system
that architecturally cannot survive,
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through political will
and through authoritarianism,
-
you may succeed in prolonging it,
-
but when change happens
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it happens very abruptly
and catastrophically.
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BG: What kind of change
are you foreseeing?
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YV: Well there's no doubt
-
that if we don't change
the architecture of the Eurozone,
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the Eurozone has no future.
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BG: Did you make any mistakes
when you were Finance Minister?
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YV: Every day.
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(Laughter)
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Anybody who looks back --
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(Applause)
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No but seriously.
-
If there's any Minister of Finance,
-
or of anything else for that matter,
-
who tells you after six months in a job,
-
especially in such a stressful situation,
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that they made no mistake,
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[they're dangerous people],
-
of course I made mistakes.
-
The greatest mistake
-
was to sign the application
for the extension of a loan agreement
-
in the end of February.
-
I was imagining
-
that there was a genuine interest
on the side of the creditors
-
to find common ground.
-
And there wasn't.
-
They were simply interested
in crushing our government,
-
just because they did not want
-
to have to deal with
the architectural fault lines
-
that were running through the Eurozone.
-
And because they didn't want to admit
-
that for five years they were implementing
a catastrophic problem in Greece.
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We lost one-third of our Nominal GDP.
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This is worse than the Great Depression.
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And no one has come clean
-
from the tribe of lenders
that has been imposing this policy
-
to say, "this was a colossal mistake."
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BG: Despite all this,
-
and despite the aggressiveness
of the discussion,
-
you seem to remaining
quite pro-European.
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YV: Absolutely.
-
Look, my criticism of the European
Union and the Eurozone
-
comes from a person
who lives and breathes Europe.
-
My greatest fear is that
the Eurozone will not survive.
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Because if it doesn't,
-
the centrifugal forces
that would be unleashed
-
would be [demonic],
-
and they would destroy the European Union.
-
And that would be catastrophic
not just for Europe
-
but for the whole global economy.
-
We are probably the largest
economy in the world.
-
And if we allow ourselves
-
to fall into a [route?]
of the post-modern 1930's,
-
which seems to me to be what we are doing,
-
then that will be detrimental
-
to the future of Europeans
and non-Europeans alike.
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BG: We definitely hope
you are wrong on that point.
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Yanis, thank you for coming to TED.
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YV: Thank you
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(Applause)