Paul Mason: First an intro­duc­tion from me about the ideas that drove me to write a book called Postcapitalism, and about the very rapid­ly chang­ing con­text for those ideas. So, we’ve had Brexit. And then with no par­tic­u­lar expla­na­tion from the gov­ern­ment, Hard Brexit. Then Trump. Coming next, far-right pres­i­dent of Austria. And then Marine Le Pen comes a fright­en­ing­ly close sec­ond in the French pres­i­den­tial elections.

There’s some very inter­est­ing and worth­while root cause analy­sis going on right now in the media which I’d urge you to read about why this is all hap­pen­ing. The rise of pop­ulism. Is it about eco­nom­ic fail­ure, or is it about the chal­lenged iden­ti­ty of white men? And these are very good ques­tions. But I stand by the asser­tion I made last year when the book came out that the root cause of both those phenomena—the eco­nom­ic fail­ure and frus­tra­tions of low wage peo­ple, and the fail­ing sto­ry of Western democracy—is ulti­mate­ly down to this:

That neolib­er­al­ism is bro­ken. The eco­nom­ic mod­el of the last thir­ty years. It worked for a bit, dragged the bot­tom two thirds of the world’s pop­u­la­tion up the income scale dra­mat­i­cal­ly, facil­i­tat­ed the tech rev­o­lu­tion. But it’s stopped work­ing. And in the ten min­utes I’ve got I want to just give the 101 expla­na­tion of why. A longer ver­sion is avail­able in my book and on many many oth­er, longer intro­duc­tions you can find on you YouTube and var­i­ous oth­er platforms.

So first issue, wages are stag­nat­ing. I hope you can see the gray line. This is US wages but it’s the same sto­ry rough­ly every­where. Productivity car­ries on until very recent­ly ris­ing, but wages are stag­nat­ing rel­a­tive to it. And that’s dif­fer­ent from what things looked like when (those of you who can remem­ber it) when the kind of Keynesian era was in full swing up to the 70s. So what you end up with as a result of that when wages stag­nate, you end up with this:

We’ve used debt to dri­ve con­sump­tion. So the com­bined gov­ern­ment, pri­vate, and cor­po­rate debt of the world as shown on this graph has mush­roomed to 300% of GDP. And if you look at this line here, this is the per­cent­age line. You read the right-hand axis, 300% of GDP. In 1990 it was 140% of GDP. Now if you’re into tril­lions, you read the left-hand scale. So you see, world debt and world GDP in tril­lions, we’re about the same until 1990. There’s world GDP, sixty-something tril­lions. And there is world debt, 180 trillion.

So…that’s not good. It can’t go on. And what hap­pens of course is because we keep get­ting boom and bust cycles and entire pen­sion sys­tems go into melt­down, banks have to be saved, wel­fare states have to, we are told, be wiped out or sig­nif­i­cant­ly dis­man­tled, what you then get is one more effect. And that is this:

Central banks, to keep the sys­tem afloat once it’s start­ed to go wrong, print mon­ey. Or they cut inter­est rates, loosen cred­it con­di­tions. In gen­er­al, the answer to fail­ure of growth and cri­sis is to sup­ply more mon­ey to the sys­tem. And those of you who under­stand the fair­ly rudi­men­ta­ry laws of sup­ply and demand can prob­a­bly under­stand this graph. If you increase the sup­ply of mon­ey rel­a­tive to the amount of eco­nom­ic activ­i­ty that mon­ey is there to rep­re­sent, what is going to hap­pen is that there’s an over­sup­ply of mon­ey. And what hap­pens to things that are over­sup­plied, their price falls. And there­fore what this is is the falling price of the safest bor­row­ing on Earth. And it’s fall­en rough­ly towards zero. This is gov­ern­ment debt.

And one of my friends in the bond mar­ket, you know, a very good main­stream kind of guy, said, ​“I went to col­lege, did an intern­ship you know twen­ty years ago, became a bond trad­er, because I want­ed peo­ple’s mon­ey to grow. Now I over­see the shrink­age of the world’s mon­ey, and I don’t like it.” In fact he said to me it does­n’t feel like capitalism.

Now, my expla­na­tion for why all this is hap­pen­ing is that cap­i­tal­ism is fail­ing to adapt in the way it did in its most suc­cess­ful peri­ods. In the 1900 to 1914 peri­od. In the post-war peri­od. Because it isn’t cre­at­ing what we call a high val­ue, high wage, high skill syn­the­sis. It’s not obvi­ous how you make a lot of mon­ey if you’re an ordi­nary per­son, through get­ting a job, get­ting high skills, par­tic­i­pat­ing in the most advanced sec­tor of the economy.

Why? Because infor­ma­tion tech­nol­o­gy I argue is dif­fer­ent. It’s a very dif­fer­ent kind of tech­nol­o­gy than all oth­er tech­nolo­gies, albeit that it is only machines. Software is a machine. Computers are machines. Silicon chips are machines with three bil­lion switch­es on them. Together in this room we have more switch­es than human­i­ty ever cre­at­ed in the whole his­to­ry of switches. 

So they’re just machines, but the scale of their effi­cien­cy has changed the game. And I argue that we’re cre­at­ing new dynam­ics in terms of price, work and orga­ni­za­tion. At the heart of the prob­lem is the infor­ma­tion effect on prices. Whether you use stan­dard eco­nom­ics or Marxist eco­nom­ics, if some­thing costs almost noth­ing to repro­duce or pro­duce, then under con­di­tions of free com­pe­ti­tion, its price is going to fall close to what its pro­duc­tion cost is. And if that’s zero, its price is going to fall pret­ty close to zero. Now, cap­i­tal­ism nev­er under­stood this. Mainstream eco­nom­ics does­n’t— Everything from main­stream eco­nom­ics is scarce. And if you sud­den­ly get a boost of non-scarcity, or what we call abun­dance, then things like this start happening:

This is just one exam­ple I could use. So, nev­er mind the dot­ted line. The white line is Moore’s Law. The white line is the spec­tac­u­lar tech­no­log­i­cal progress you have lived through. That’s the rate of com­put­er tech­nol­o­gy. And until 2007, the cost of sequenc­ing DNA rough­ly tracked it. And then, the infor­ma­tion effect kicks in. And so the cost of sequenc­ing an entire genome of DNA falls from $100 mil­lion to $0.001 mil­lion, or $1,000.

That’s the price effect on infor­ma­tion. If you thought your kids were going to have high-paid, high-value jobs in mass kind of fac­to­ries sequenc­ing DNA, they’re not. And we could start here and go the same scale again, and we’ll fol­low the same thing toward zero.

So there is a sur­vival mech­a­nism cap­i­tal­ism has against this zero mar­gin­al cost effect, which is to cre­ate mas­sive monop­o­lies which then cap­ture the val­ue and the net­work effects of shared infor­ma­tion. And as we’ll hear about, one of the key tac­tics in the last five years of those monop­o­lies has been to smash and grab their way into mar­kets that should real­ly be see­ing mas­sive price falls to the ben­e­fit of the con­sumer. I doubt whether this, the so-called uni­corns, the plat­forms, the multi-billion dol­lar com­pa­nies based on sim­ple algo­rithms, can sur­vive what’s going to happen. 

Now, the sec­ond dynam­ic is about work. Forty-seven per­cent of all jobs are now sus­cep­ti­ble to automa­tion in the next twen­ty years. And that’s real­ly before full arti­fi­cial intel­li­gence kicks in. And yet we don’t erad­i­cate low-paid, repet­i­tive jobs. We go on cre­at­ing them, because the sys­tem we’ve got—low-wage system—incentivizes their cre­ation. We cre­ate what the anthro­pol­o­gist David Graeber has called mil­lions of ​“bull­shit jobs.” Jobs that don’t need to exist. The word ​“car­wash,” instead of a machine—that’s what a car­wash was thir­ty years ago—is now five guys with rags. Because five guys with rags can under­cut the machine.

So pro­duc­tiv­i­ty is not ris­ing. It’s stag­nat­ing in many coun­tries. Because you can make the most vast pro­duc­tiv­i­ty gains like the one I just described there in DNA sequenc­ing, but then you just employ peo­ple— Walk around the streets of Brighton and see what peo­ple are employed doing. Graduates serv­ing coffee.

So final­ly, infor­ma­tion low­ers the bar­ri­ers to all kinds of orga­ni­za­tion­al inno­va­tion and allows the cre­ation of hor­i­zon­tal, rel­a­tive­ly non-managed busi­ness mod­els and the rise of open source. And today, one of the big themes of the peo­ple we’ve drawn togeth­er is not peo­ple who are doing this for ide­o­log­i­cal rea­sons. I mean, my book is an ide­o­log­i­cal inter­ven­tion into this which ends with a call for reg­u­lat­ing the econ­o­my to facil­i­tate these kind of busi­ness­es. But first of all we have to under­stand what those busi­ness­es are. 

That’s the basic the­sis of Postcapitalism, that it’s pos­si­ble. And I go around the world telling peo­ple who will lis­ten. Which some­times includes the Shadow Chancellor, the may­or of Barcelona, the Chancellor of Austria, that promis­ing peo­ple high val­ue jobs in the future if only we vote for X, Y, or Z par­ty is not enough to solve the prob­lem that we’re all now faced with. We have to redesign the sys­tem and begin reg­u­lat­ing in favor of inno­va­tion and busi­ness cre­ation along the lines of some of the ones that we’re going to hear from today.

I’m remind­ed that this space was the Prince Regent’s sta­ble. It was where he was being taught to ride. If you’re won­der­ing how he rode in a small space like this, it’s dou­ble the length, as you’ll see at lunchtime. It’s a big long hall. And while George IV, the future George IV was trot­ting around this very space, some­body prob­a­bly men­tioned to him fac­to­ries. There’s these things called fac­to­ries. And they were main­ly nes­tled in small places by rivers at the time, before steam comes in. And some­body says, ​“You know what, we like these. It’s going to cause a lot of dis­rup­tion but we’re gonna real­ly pro­mote these.” And George IV prob­a­bly said, ​“Yeah fine. Carry on. Pass the port, darling.”

I think we have to be a lit­tle bit less insou­ciant than that. We have to say look, there’s this new thing, the col­lab­o­ra­tive econ­o­my. And we have to reg­u­late in its favor as strong­ly as ear­ly 19^th cen­tu­ry gov­ern­ments reg­u­lat­ed in favor of cap­i­tal­ism itself. I call it post­cap­i­tal­ism. I envis­age a rel­a­tive­ly long tran­si­tion towards abun­dance in var­i­ous sec­tors. The end­point is free machines, lit­tle com­pul­so­ry work, a renew­able ener­gy sys­tem, and high cir­cu­lar­i­ty in the use of nat­ur­al resources.

The good news is that it’s pos­si­ble and some peo­ple are begin­ning to work out how to do it at scale. The bad news is a lot of peo­ple wed­ded to old busi­ness mod­els don’t get it. Many of you will work with them. And because we have a polit­i­cal and social elite who think this present sys­tem, the free mar­ket sys­tem based on high finance, high com­plex­i­ty, and low wages was the most per­fect pos­si­ble sys­tem ever to be imag­ined, we haven’t yet seen a big break in elite think­ing. And I think this has to come now, because as we’re all con­fronting, many peo­ple are just no longer will­ing to go on with the sys­tem as it is and they’re choos­ing reac­tionary outcomes. 

And so we have to basi­cal­ly face the fact that if we don’t grasp the oppor­tu­ni­ty at gov­ern­men­tal lev­el and intergov­ern­men­tal lev­el, and think about a new mod­el of the econ­o­my and soci­ety, what peo­ple are going to do is start vot­ing against— I said this a year ago when the book came out. Wrote it two years ago when I fin­ished the first draft. If you don’t go beyond the present mod­el, peo­ple will start to vote to break up glob­al­iza­tion. And I want to defend glob­al­iza­tion but change the model.

What we’re liv­ing through is a 500-year event. That could be very very dif­fi­cult to get your head around. Fifty years is a big num­ber for econ­o­mists. Five years is what they’re com­fort­able with. 

But this guy had men­tal tools to under­stand it. Francis Bacon, the founder of the sci­en­tif­ic method. This is what he wrote in 1620. That ​“gun­pow­der, print­ing and the com­pass have changed the whole face and state of things through­out the world.” It’s a crude form of tech­no­log­i­cal deter­min­ism. But he was right. 

To fin­ish, what hap­pens to busi­ness in this tran­si­tion? Well, I think that you have to start think­ing about the econ­o­my as a com­bi­na­tion of the mar­ket and the state (which is what eco­nom­ics is all about now), and the nonmar­ket. The non­mar­ket for eco­nom­ics is every­thing you do in your shed. It only mat­ters to them if you hap­pen to buy a Hornby train set, or an Airfix mod­el to make in your shed. This is leisure time. This is noneconomic.

But for post­cap­i­tal­ism and the post­cap­i­tal­ist the­o­ry, the non­mar­ket is equal­ly impor­tant. And what we’re look­ing for is a tran­si­tion in which we can mea­sure the inputs and out­puts of human­i­ty in these three buck­ets, and the only thing we can use to mea­sure it, I argue, is work. Work is the only thing that Wikipedia or an open source pro­gram­mer has in com­mon with tax­a­tion and mar­ket activ­i­ty. Because there’s no mon­ey involved in many of the busi­ness and activ­i­ties that go on here in the nonmarket.

The tran­si­tion path I think involves the embrace of automa­tion. If we dis­so­ci­ate work and incomes, because we’re going to have to, we’re going to have to try and find ways of giv­ing peo­ple incomes and there­fore as a tran­si­tion mea­sure I argue for the cit­i­zen’s basic income. I also think the state is going to have to begin pro­vid­ing cheap basic goods. Because a precariously-employed work­force can’t live— In fact, giv­ing them a 5% pay rise is not so hap­py for them as giv­ing them free trans­port, or free col­lege edu­ca­tion. Open source; we have to pro­mote it and pre­fer it. And we have to, as we’ll hear lat­er, attack and find alter­na­tives to rent-seeking busi­ness­es that sim­ply squat on top of the tech­no­log­i­cal advances we’re liv­ing through and extract extra mon­ey for them and not exploit their potential.

So that is my time up for my kind of vision of the future. It’s a quick run-through. And I hope we’ll be able to— There’s no Q&A. Louise has designed it so there’s no Q&A. But hope­ful­ly in the dis­cus­sions and over lunch, which is very struc­tured as well, you’ll be able to have a Q&A between bites of your falafel or what­ev­er it is.