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  • I am a capitalist,

  • and after a 30-year career in capitalism

  • spanning three dozen companies,

  • generating tens of billions of dollars in market value,

  • I'm not just in the top one percent, I'm in the top .01 percent of all earners.

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

  • because rich capitalists like me have never been richer.

  • So the question is, how do we do it?

  • How do we manage to grab

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

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

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

  • Are we taller, better looking?

  • Sadly, no.

  • It all comes down to just one thing:

  • economics.

  • Because, here's the dirty secret.

  • There was a time in which the economics profession

  • worked in the public interest,

  • but in the neoliberal era,

  • today,

  • they work only for big corporations

  • and billionaires,

  • and that is creating a little bit of a problem.

  • We could choose to enact economic policies

  • that raise taxes on the rich,

  • regulate powerful corporations or raise wages for workers.

  • We have done it before.

  • But neoliberal economists would warn

  • that all of these policies would be a terrible mistake,

  • because raising taxes always kills economic growth,

  • and any form of government regulation

  • is inefficient,

  • and raising wages always kills jobs.

  • Well, as a consequence of that thinking,

  • over the last 30 years, in the USA alone,

  • the top one percent has grown 21 trillion dollars richer

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

  • a pattern of widening inequality that has largely repeated itself

  • across the world.

  • And yet, as middle class families struggle to get by

  • on wages that have not budged in about 40 years,

  • neoliberal economists continue to warn that the only reasonable response

  • to the painful dislocations of austerity and globalization

  • is even more austerity and globalization.

  • So, what is a society to do?

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

  • We need a new economics.

  • So, economics has been described as the dismal science,

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

  • it isn't a science at all,

  • in spite of all of the dazzling mathematics.

  • In fact, a growing number of academics and practitioners

  • have concluded that neoliberal economic theory is dangerously wrong

  • and that today's growing crises of rising inequality

  • and growing political instability

  • are the direct result of decades of bad economic theory.

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

  • it's backwards,

  • because it turns out

  • it isn't capital that creates economic growth,

  • it's people;

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

  • it's reciprocity;

  • and it isn't competition that produces our prosperity,

  • it's cooperation.

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

  • can never sustain the high levels of social cooperation

  • necessary to enable a modern society to thrive.

  • So where did we go wrong?

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

  • that the fundamental assumptions that undergird neoliberal economic theory

  • are just objectively false,

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

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

  • So, neoliberal economic assumption number one is

  • that the market is an efficient equilibrium system,

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

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

  • So for example, in Seattle, where I live,

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

  • the neoliberals freaked out over their precious equilibrium.

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

  • "businesses will purchase less of it.

  • Thousands of low-wage workers will lose their jobs.

  • The restaurants will close."

  • Except ...

  • they didn't.

  • The unemployment rate fell dramatically.

  • The restaurant business in Seattle boomed.

  • Why?

  • Because there is no equilibrium.

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

  • because, for instance,

  • when restaurant owners are suddenly required to pay restaurant workers enough

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

  • it doesn't shrink the restaurant business,

  • it grows it, obviously.

  • (Applause)

  • Thank you.

  • The second assumption is

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

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

  • and I earn 50 million dollars a year,

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

  • Now,

  • it will not surprise you to learn

  • that this is a very comforting assumption

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

  • but paying your workers poverty wages.

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

  • this is nonsense.

  • People are not paid what they are worth.

  • They are paid what they have the power to negotiate,

  • and wages' falling share of GDP

  • is not because workers have become less productive

  • but because employers have become more powerful.

  • And --

  • (Applause)

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

  • doesn't exist,

  • neoliberal economic theory became essentially

  • a protection racket for the rich.

  • The third assumption, and by far the most pernicious,

  • is a behavioral model

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

  • which basically means that we are all perfectly selfish,

  • perfectly rational and relentlessly self-maximizing.

  • But just ask yourselves,

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

  • when you did something nice for somebody else,

  • all you were doing was maximizing your own utility?

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

  • they're just promoting their narrow self-interest?

  • If you think that's nuts,

  • contrary to any reasonable moral intuition,

  • that's because it is

  • and, according to the latest science,

  • not true.

  • But it is this behavioral model

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

  • and it is as morally corrosive

  • as it is scientifically wrong

  • because, if we accept at face value

  • that humans are fundamentally selfish,

  • and then we look around the world

  • at all of the unambiguous prosperity in it,

  • then it follows logically,

  • then it must be true by definition,

  • that billions of individual acts of selfishness

  • magically transubstantiate into prosperity and the common good.

  • If we humans are merely selfish maximizers,

  • then selfishness is the cause of our prosperity.

  • Under this economic logic,

  • greed is good,

  • widening inequality is efficient,

  • and the only purpose of the corporation

  • can be to enrich shareholders,

  • because to do otherwise would be to slow economic growth

  • and harm the economy overall.

  • And it is this gospel of selfishness

  • which forms the ideological cornerstone of neoliberal economics,

  • a way of thinking which has produced economic policies

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

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

  • But,

  • if instead

  • we accept the latest empirical research,

  • real science, which correctly describes human beings

  • as highly cooperative,

  • reciprocal

  • and intuitively moral creatures,

  • then it follows logically

  • that it must be cooperation

  • and not selfishness

  • that is the cause of our prosperity,

  • and it isn't our self-interest

  • but rather our inherent reciprocity

  • that is humanity's economic superpower.

  • So at the heart of this new economics

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

  • and, unlike the old economics,

  • this is a story that is virtuous

  • and also has the virtue of being true.

  • Now,

  • I want to emphasize that this new economics

  • is not something I have personally imagined or invented.

  • Its theories and models are being developed and refined

  • in universities around the world

  • building on some of the best new research in economics,

  • complexity theory, evolutionary theory,

  • psychology, anthropology and other disciplines.

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

  • or even a commonly agreed upon name,

  • in broad strokes

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

  • So, market capitalism is an evolutionary system

  • in which prosperity emerges

  • through a positive feedback loop

  • between increasing amounts of innovation and increasing amounts of consumer demand.

  • Innovation is the process by which we solve human problems,

  • consumer demand is the mechanism through which the market selects

  • for useful innovations,

  • and as we solve more problems, we become more prosperous.

  • But as we become more prosperous,

  • our problems and solutions

  • become more complex,

  • and this increasing technical complexity

  • requires ever higher levels of social and economic cooperation

  • in order to produce the more highly specialized products

  • that define a modern economy.

  • Now, the old economics is correct, of course,

  • that competition plays a crucial role in how markets work,

  • but what it fails to see

  • is that it is largely a competition between highly cooperative groups --

  • competition between firms, competition between networks of firms,

  • competition between nations --

  • and anyone who has ever run a successful business knows

  • that building a cooperative team by including the talents of everyone

  • is almost always a better strategy than just a bunch of selfish jerks.

  • So how do we leave neoliberalism behind

  • and build a more sustainable, more prosperous

  • and more equitable society?

  • The new economics suggests just five rules of thumb.

  • First is that successful economies are not jungles, they're gardens,

  • which is to say that markets,

  • like gardens, must be tended,

  • that the market is the greatest social technology ever invented

  • for solving human problems,

  • but unconstrained by social norms or democratic regulation,

  • markets inevitably create more problems than they solve.

  • Climate change,

  • the great financial crisis of 2008

  • are two easy examples.

  • The second rule is

  • that inclusion creates economic growth.

  • So the neoliberal idea

  • that inclusion is this fancy luxury

  • to be afforded if and when we have growth is both wrong and backwards.

  • The economy is people.

  • Including more people in more ways

  • is what causes economic growth in market economies.

  • The third principle

  • is the purpose of the corporation is not merely to enrich shareholders.

  • The greatest grift in contemporary economic life

  • is the neoliberal idea that the only purpose of the corporation

  • and the only responsibility of executives

  • is to enrich themselves and shareholders.

  • The new economics must and can insist

  • that the purpose of the corporation

  • is to improve the welfare of all stakeholders:

  • customers, workers,

  • community and shareholders alike.

  • Rule four:

  • greed is not good.

  • Being rapacious doesn't make you a capitalist,

  • it makes you a sociopath.

  • (Laughter)

  • (Applause)

  • And in an economy as dependent upon cooperation at scale as ours,

  • sociopathy is as bad for business as it is for society.

  • And fifth and finally,

  • unlike the