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I’ve challenged myself with this question: why do we keep declaring defeat of Industrial Capitalism 1.0 instead of its victory of productivity; productivity that is completely off the charts? This is perhaps a better foundation for Capitalism++. The PAST was good and it work in that context; today, we are obliged to build for the NEXT 50, 100, 200 years, bringing to bear the best of our collective, quantitative, and intuitive forecasting capabilities. Perhaps the only problem we really have here is a failure to understand and embrace the SUCCESS of Industrial Capitalism in a way that allows it to take it’s rightful place in American history, while we move forward into possession of all the promises that it made from the very beginning. If we’re actually becoming so efficient as a society and economy that a 70% (and then 60%, 50%, etc) labor participation rate — with our robots and computers doing all the heavy lifting and repetitive information processing — can provide 110% of all required Goods and Services for the entire population, plus sustainable exportable surpluses; then why do we not Claim That Victory Now and move forward with http://usbig.net/ In part, perhaps we’ve been stuck in this loop because we keep looking to people who keep giving us the same roadmaps to 1921. Literally, you’ll find this in the interview, below. Without further ado, some excerpts from an interview with Columbia University Nobel Prize winner Edmund Phelps. During this sleepless late night interview by BBC’s Steve Evans, I scribbled some notes in the margins of this interview. Those scribbles are included below. They’re scribbles, okay? This is just thinking out loud, mostly unedited, with all the attention due any forgotten Dropped Packet. Here’s the thing about dropped packets: retransmission of the exact same data can re-establish and maintain continuity of the connection, right? :-) Steve Evans (Q): Is the current global downturn a permanent indictment of capitalism? Edmund Phelps (A): “It’s a tremendous black eye for capitalist economies As Presently Constructed.” Me: Implying what? No less than reconstruction in a “tremendously” different configuration. We’ve been calling that Capitalism++ for the past half year or so. Yet, Nobel Prize Winners have a definite interest to putting things back together in a way that helps reinforce validity of their awards. Q: So we don’t ask bigger questions about the role of regulation or how GREED operates within a capitalist system? No bigger toughts as there were in the 1930’s? A: “Oh, I’m always ready for a Big Thought, but my Big Thought is that we DESPERATELY NEED capitalism in order to create Interesting Work to be done for Ordinary People. Unless maybe we can go to war against Mars or something as an alternative; we’ve gotta have a healthy business sector; that’s ALWAYS been understood by our Great Leaders over the PAST 100 or 200 years.” Me: So, humans don’t need MEANINGFUL WORK, but “interesting,” and we Nobel Prize Winners know what is required to provide “intersting work” for your feeble, wandering, inept Ordinary Minds. Me: Further, we should therefore keep reconstructing the bygone PAST 200 YEAR; an Emerging Industrial Era’s Military Solution to human productivity. After all, where is your Nobel prize to prove your ideas have even the slightest merit in the eyes of the world’s most petrified academic status quo? Q: How did we get into that world then, where it was assumed that all would be for the better, the less that government did; where the Great Centers of Learning propounded what you now say is Completely Wrong? A: “It was probably and over reaction to The Gospel of The Left in the 1940’s and 50’s in which every problem was something for the government to solve and governments were excellent at solving all problems, and markets were of little use. That was an extremely harmful doctrine because it didn’t allow as much economic freedom for people as they might otherwise like to have but because it didn’t look to grass roots people to do innovation and then express their creativity and then develop their insights. So, economists began to reject that interventionist, big government doctrine, but they swung too far, they didn’t know where to stop. Note to self: Double check with mom-in-law and friends about real street level economic freedom in the 1940’s. Me: Always love a Definitive and Authoritative answer that start with “probably.” And right, “grass roots people” don’t ever intrinsically “do innovation.” Right. Okay. Oh, surely you KNEW it would be somehow blamed on The Left, right? Tossing in the pejorative Gospel for good measure. Q: These are supposed to be brainy people, these economists; I mean, you’re talking about the University of CHICAGO for goodness sakes. I mean, how did A view, which you say is false, so SWEEP the intellectual world? A: “Well, part of it was a hatred for what went before it. Another element is that economists admired tremendously the brilliant technical work that was going into the mathematical models that group up in the 1970’s. And these models had NO ROOM for regulation. These models described markets as SELF-REGULATING.” Me: Part of it? Maybe even a really big part of it, perhaps? Like maybe a 90% part of it was essentially an Emotional Hijacking in nifty math’s syntax? And rooted in hatred; always such a helpful, objective foundation for Domestic Policy. And how surprising! Math with NO ROOM for what we already found emotionally inconsistent with our own world views! How utterly unexpected and shocking. Or not. Me: Finally, ah yes, the ever-entangling allure of brilliant technical work. Where have we heard The Smartest Kids In the Room Syndrome before? Oh, yes, that little pre-global tremor we affectionately recall as Enron. Q: So finally, if we were Slaves to the Elegant Mathematics of the previous few decades, and a policy maker were to now say to you, okay, what are the Do’s and Don’ts as you try and work a sensible way FORWARD, what briefly would you say to them? A: “Well, I think we need to reconstruct economics on the principles that were first introduced by Frank Knight in 1921 and John Maynard Keynes in some of his writings as early as 1921 also. We have to recognize that the potential innovator faces uncertainty. Entreprenuers face difficulties about which they are uncertain in trying to develop a new, innovative idea. Managers, in evaluating a new thing, face uncertainty. Capitalism has done an Amazingly Good Job at bringing out the innovativeness of people in a great many countries; BUT there’s ALWAYS GOING TO BE A DOWNSIDE, there will always be some costs. Perhaps, the one that’s most INHERENT and the one that we will perhaps never get rid of, is CYCLICALITY. We’ll always have a tendency to Pin Our Hopes on Something and then find that we’re wrong; and then the economy will come to a shuddering stop and we’ll have a “scary” downturn. Me: Brilliant, so the way forward should be based upon cutting edge 1921 Economic Understanding. Yes, brilliant indeed. But then, I don’t have a Nobel Prize, so who the hell am I to question such obvious global expertise, right? Me: WHY is there ALWAYS going to be a downside? Because you have a Nobel Prize and use five syllable words? No, that’s not going to be good enough this time. And even if there is such an inevitable cyclicality, WHY does it have to always IMPACT the same people to the same degree of disempowerment and stripping away of individual liberties to CHOOSE one’s daily WORK endeavors? Short answer is: it DOESN’T have to be this way just because the high priests of 1955 proclaim it so. Me: “Scary” downturn is so obviously relative. Maybe it’s merely “scary” if you have to park the fourth car temporarily; but it’s Utterly Devastating, Time and Time Again to those in the Bottom 95% who provide the Entire Supply of Human Energy to operate this supposedly most marvelous machine. I don’t buy it. I don’t buy that we can’t do better. I know WAY too many smart people who have thought through a wide range of solutions, not least of all, a Basic Income that provides a permanent hedge against poverty. A2: “I like to think of a talented composer, a very productive composer. Is every day an up day for him? Of course not. There are going to be periods in which the composer is in a slump; in which he doesn’t have new ideas, in which even sometimes he may be despairing. But that doesn’t mean that the composer has not been highly productive over his life.” Me: Okay, so really there is nothing more at stake than your latest symphony, folks. Everything is just fine, so long as we follow the 1921 blueprint for building toward the 22nd century. Got that? Good. I’m glad we’re finally all on the same page. Steve Evans (Host): “No doubt then, governments are busily speed re-reading their Keynes.” Me: Perfect, that’s just the outcome I’d be hoping for. How about you? I’m feeling so comforted and confident now. SOURCE: BBC World Service, Business Daily, 10.12.2008 Addendum On Greed: http://news.bbc.co.uk/2/hi/business/7775056.stm Collaboration on Friendfeed: CapitalismPlusPlus