by Nathaniel Curnick

This is a transcript of a speech given at Sussex Polymath society.

Introduction

Where did this talk come from? I have three pieces of inspiration that channeled this talk. The first is Deirdre McCloskey who has written many, many books, but the ones of interest here are the Bourgeois series, that is Bourgeois Ethics, Bourgeois Dignity and Bourgeois Equality. In these books she looks at why most economic theories can not explain the modern world and what economic theory actually explains the modern world. The next source is one of my favourite economists of all time, Hans-Hermann Hoppe, a very brilliant and clear thinking Austrian economist (that is, the school). The work of interest here is Economic Science and the Austrian Method which is a defence of the Austrian school of economics. The final main piece is Atlas Shrugged by Ayn Rand, a beautifully written piece of fiction, but is dripping with Rand’s personal philosophy, and describes the ways in which we can get poor.

Incorrect Theories On Why We Became Rich

Now, some Marxists argue that we haven’t become rich, but this is a nonsense. You only need to look around the room, look at Amazon, supermarkets, coffee shops, roads and universities to see that the modern world is very very rich. I’m pretty average and I could afford to buy a Ruby Hot Chocolate from Costa recently. Very tasty. There’s another set of Marxists that do begrudgingly accept that we are rich, but we’ll get to those later. You can easily forgive Marx for thinking that we would never become rich, this was a one off, unique and unprecedented event!

200,000 years ago, homo sapien evolved in Africa, probably around East Africa. And back then, we lived on around $2 a day or less. Unfortunately most of the research on this puts it into American worthless coins rather than British worthless coins, so I’ll work in dollars, but it is the same story everywhere. And so it goes, for years and years small oscillations around $2. Then 10,000 years ago there was the agricultural revolution, and wealth increased massively – for a short time, then people breed because life is easier and then the income goes down. And so it goes, sometimes going up to $5 a day, and sometimes going down to $1 a day, but oscillating around $2 or $3 a day. In 1798 Parson Malthus figures out what has been happening, income goes up, population increases and then income goes down, and we can never escape the trap so to speak. We can never become rich. And then just two years later history falsifies him, and the income in Western nations goes like this, whoosh. Up to something like $90-$110 a day. Some parts of the US average people can live on $125 a day. So we’re talking about a 30-50 times increase in income over the last 220 years. What happened?

Capital accumulation? Adam Smith was big on this theory. We accumulate capital and that makes us rich. We have more stuff, more bricks piled on bricks, more roads, more TVs, more cars, more degrees. This can be called in a memey way the boomer consumerism. It just isn’t true. There are limits to this, the university can’t keep building new lecture theatres forever and expect the 10,000 lecture theatre to have the same value as the first. We see this in poor countries all the time. Foreign aid goes in and builds roads, farms, hospitals, schools, water supplies and all the rest of it, and boy are they gonna be rich because of that, but they never get rich. Chad, Ethiopia, Bangladesh, never get any richer no matter how much foreign fiat is pumped in. Ancient Egypt built huge pyramids and cities and palaces and boats, but income never went up. Ancient Mesopotamia built huge gardens and cities yet income never went up. Just accumulating stuff can not cause vast increases in wealth, as evidenced by the fact that we were accumulating stuff since 200,000 years ago and yet it only suddenly started to matter in 1800? I think not.

Savings? The Chicago school of economics states that savings is what drives the economy, and that high interest rates are necessary for growth. There is something important here, so park that idea for now. But did this cause mass growth? No. There has always been saving. A man sowing seed back into the ground while the children go hungry that night since it is the only way they will eat next year is saving, and yet no explosion in wealth.

Exploitation? Marxists will say that exploitation made us rich. Well, the half of Marxists that believe that we have become rich. They’re argument goes that bosses have stripped wealth away from the working class and the investment has created the wealth in the world, but at what cost? And at what inequality? Of course, this argument actually relies on the capital accumulation argument that we just discussed, and it doesn’t work. If half of this room enslaved the other half of the room, would we expect total income to increase by 30 times? Very unlikely that it would even double.

Imperialism? Imperialism, or the last stage of capitalism, as Lenin called it (he can be forgiven for being so short sighted), is often cited by Marxists as being the cause of wealth. The idea kind of goes back to the exploitation argument that you can extract wealth from someone poorer, invest it and everyone becomes rich. Now, historically the places rich Western nations were conquering tended to be much poorer places. These three people here could gang up and form a little empire over the homeless people in Brighton, and extract wealth from them. Let’s not make fun of homeless people too much, but you would end up with a lot of not very valuable stuff. Stealing from poor people isn’t a good way to get rich. King Leopold of Belgium had an Empire in Africa, and he did terrible, terrible things to the natives and forced them to extract rubber for him. The profits from this went to him, to his castles. How did this benefit the average Belgian citizen? It isn’t clear at all. Belgium was growing in wealth in line with other nations around it, some having empires and others not. There are even very very wealthy nations that have never had an empire, like Switzerland, and very wealthy nations that were once part of an empire, like Singapore.

All of these effects? Perhaps when you take all of these effects in combination the little bits add up? Not even close. Deirdre McCloskey in Bourgeois Dignity she does the maths on this, and it isn’t enough to explain this 30-50 times increase in wealth. That’s her conclusions, you’d really have to read the book for the full story.

Why We Became Rich

So, we are trying to find an explanation for this massive increase in wealth. So far we’ve looked at some common things cited as the causes of wealth, but have found them all unsatisfactory. Exploitation is not necessary for the increase in wealth, imperialism is Marxists non-entity. Savings and capital accumulation are necessary for wealth increases. However, they don’t even come close to the full story. As we say, they have always been around but the growth only started relatively recently. Nevertheless, when people aren’t able to accumulate wealth or the government slashes interest rates, the economy suffers. So, we have found some necessary causes, but we need the necessary and sufficient cause that allowed wealth to grow. The necessary was around forever, but this sufficient cause only came into being at a particular time, in a particular case. Now, the argument that we will make here is very simple, in fact it’s a simpleton’s argument. It’s innovation.

Innovation! The human ability to find creative solutions to problems is immense. Even as small as figuring out a new hairstyle is an innovation, not a world changing one, but an innovation. As we innovate, we develop technology that improves everyone’s lives. When some new method of production is developed, the price of that thing drops and people have more disposable income to grow the economy even more. It is not, as the Marxists say, companies exploiting people for bigger profits, both sides have something to gain by this innovation. Would you rather live in the modern world of industrialised agriculture and corporate supermarkets, or go back 1000 years and pick at frozen ground for scraps of mouldy grain? Containerisation is one of my favourite inventions ever. Standard sized shipping containers that can be stacked on boats. In this way, each industry doesn’t require its own specialists transport solution, instead they can all use the same method. This obviously vastly reduces the cost of transporting goods, but also increases the speed and efficiency, bringing goods from all over the world to your doorstep, and allowing you to send your goods to the rest of the world with ease.

Of course, there becomes a new question that we need to answer. If humans are naturally innovative, why did the mass innovation not start until 1800? And why in North West Europe? Well, that has a lot to do with hierarchy. Up until this time, most people lived in very stratified societies, with, and this is the important bit, very little social mobility. People couldn’t climb this ladder, and people couldn’t go down this ladder. Why was this? It was mainly because of different policies in different places. In India, they have this whole Hindu caste system, where some people are born as the legs of Shiva, and always remain the legs of Shiva, and those born the head of Shiva always remain the head of Shiva and so in. In the West it was mercantilism which was holding people back. The government had a policy of exporting everything but importing nothing with the idea of protecting producers and merchants. This was essentially a form of state subsidisation for businesses that already exist, making starting a new business virtually impossible, and also for an already existing one to collapse virtually impossible.

Adam Smith noted in 1776 in his Wealth of Nations that this old mercantilistic system was being eroded, and this allowed more social mobility, and it allowed, and gave reason, to the little guy to innovate. It was this liberation of the economy that created an environment that allowed for this mass innovation that lead to mass growth. Most of the heavy lifting was done in Britain, in fact, with the English Liberal Tradition. It is a unique view found originally only in England that peasants are masters of the government, and not the other way around. This has since spread to other areas that saw this mass growth like the Netherlands and Scandinavia, and then later to most of the European continent. This is why it was North West Europe specifically that sprung up first.

Who is John Galt? I want to dedicate a little time to Atlas Shrugged and how it approaches the innovators. John Galt is a just a regular man who invents a new type of car motor while working at a garage. The garage then changes ownership, and begins to run in a collectivist manner – by the terms “from each according to his ability, to each according to his needs”, and he refuses to work there. So, he runs away, and becomes a worker at a railway company. In reality, he’s a man on a mission, to bring the “motors of the world to a halt”. He travels around America convincing industrialists, inventors, businessmen and artists to go on strike. This is a strike totally unlike anything ever seen in history. Normally, strikes are workers striking against owners, but this is owners striking against the system. Inventors striking against those who would nationalise their idea. Businessmen striking against those who would limit their profits. These are the kinds of people we have already discussed – the middle class, the bourgeois. This is why Dagny, the main character so to speak, struggles to find enough good men to run her business. Galt’s secret strike can be felt all across the world. Dagny struggles to build her railway line because mine owners, steel plants, contactors, locomotive engineers just vanish from their job without a trace. Constantly she becomes frustrated that the work can not be completed, and the answer is always “it’s out of our control”. If the railway line isn’t built, then Wyatt Oil will struggle to get oil deliveries out of Colorado, which will impact the people who depend on oil. The book emphasises multiple times how these oil fields in Colorado is all America has left – the last economic centre. If it fails, so will the whole American economy. Galt tries to tell us something. The innovators have to be left to innovate. The businessmen have to be left to do business. The owners have to be left to own. If they are not, the knock on effects on the economy can be a disaster. And when there are no more businesses to tax, there is no more social good. Every person depends on every other person for success, wealth and happiness, and an attack on one – from the richest to the poorest, is an attack on all.

India is one of the most interesting economic stories of the modern age. Bollywood, can you believe, used to make films in the 50s and 60s used to make films where the heroes were government bureaucrats and police men. Then things started to change in the 70s where individuals were the heroes. More importantly was the 1991 Indian economic crisis, which started in 1985 with the massive debts the country was racking up. An inability to pay for imports and pay interest meant they were strikingly close to defaulting on their loans. After mortgaging off the nation’s gold reserves to England and Switzerland, the government collapsed and a new party took power. Then began the great liberalisation which is a policy they continue to this day. As the New York Times reported “India faces no soft options and will open the door to foreign investment, reduce red tape and streamline industrial policy”. The results have been nothing short of a miracle. India has seen a growth of 1100% since 1991, and is poised to become a country where most people live a first world life in the next three decades or so. Again, what we see is a continued commitment to economic freedom is a continue commitment to economic growth.

Role of Science

I want to turn some of my attention now to the role of science and scientists in this whole matter, giving my view on scientists, being a scientist myself. I’m currently doing a masters in physics, and have found some insights into this whole topic, and anticipate a common misconception regarding the whole talk. This misconception may be that innovation comes from scientists, which isn’t usually the case. Innovation tends to come from industrialists and businessmen. Most science is useless to humans in an economic improvement sense, and is pursued for the sake of knowledge, so they say. This isn’t to say that science isn’t useless or shouldn’t be advanced but rather to recognise that it isn’t science that caused this tremendous growth.

Now onto the motivations of scientists that I must highlight. Many people blindly trust scientists as neutral, unbiased, non-partisan and impartial researchers who expand the edges of human knowledge for the sake of expanding the edges of human knowledge. I can say first hand that this is not so. Jeff Hartnell, an experimental particle physicist here at Sussex, recently went to meet other NOvA collaborators in California, six months before the annual neutrino meeting. They needed to make sure that they have a certain set of results at a certain quality before that time, which introduces a different motive to the one we are meant to believe. Getting access to funding – which usually comes from the government – is super important to their existence and makes you wonder why most academics support government subsidisation. Does this mean we shouldn’t trust the results of NOvA? No, but whenever we encounter some science, we should always stop to consider the researchers, who funds them, their motivations and dig into the work itself, before coming to our own conclusions. Blind trust in anything is foolishness.

Two examples, one real life and one from fiction. In real life, for many years scientists found that smoking was very good for your health, and you might wonder how anyone could mess up so badly to find the exact opposite to be true than what really is. Then you find they were funded by tobacco companies, and it all slots into place. In \textit{Atlas Shrugged}, a national scientific institute says that Rearden metal is unsafe, despite the fact that it is lighter, stronger, and longer lasting than steel. When Dagny takes her data to them and asks to compare it to theirs, she finds that they have done no testing, but have said that Rearden metal is unsafe precisely because it is safe! Why? The materials department has never produced something so brilliant, and they worry government funding will dry up if the public doubt the institution.

Discussion of Capitalism

As you may have guessed, without me saying it, is that I am advocating for capitalism. However the word ‘capitalism’ has become a rather thorny issue and a misdefined term recently. Much like the word liberal is rather loaded, capitalism has a different meaning depending on whom you ask. Fred Foldvary in his article Capitalism Defined and Explained talks about the difficulties associated with nailing down exactly what it is we mean when we say capitalism. The term was first used by William Thackeray in his The Newcomes, a term to refer to people who own capital goods. In order to explain this, Foldvary does a better job than I ever could so I will quote a section from his Capitalism Defined and Explained, speaking now as Foldvary

Confusion sets in as adjectives apply the term to governmental systems and interventions, as in “state capitalism,” “crony capitalism,” “welfare capitalism,” “monopoly capitalism,” and “taxpayer-financed capitalism.” Thus “capitalism” is used to refer to current mixed economics (mixtures of markets and governmental intervention) and also to the concept of the pure free market. With the bad connotations as used by socialists, some advocates of reforms such as cooperatives and land-rent sharing then present their approach as an alternative to “capitalism”.

The term “capitalism” is inherently confusing, since economies have three inputs: land, labor, and capital goods, and there is no logical reason to emphasize capital, unless one is going beyond the definition by condemning an economy in which capital dominates labor.

The term “capital” is also ambiguous, as it can refer to any asset, including financial capital (funds or money) and capital goods (all goods which have been produced but not yet consumed). It would be clearer to use the term “marketism,” but that word has already been adopted to mean the advocacy of free markets. “Marketocracy” is used by a mutual fund and portfolio web site. The term “market-priceism” is not yet in use, and would be a clearer term than “capitalism.”

An alternative to market prices is communism, in which goods are shared in a community such as a family. Another alternative is state socialism, in which government plans and controls production and resources, as well as the distribution of goods. Most economies today are mixed, consisting of a market sector and governmental impositions that alter the outcomes.

Economic discourse would be clearer if we used more precise terms. Instead of using “capitalism” to mean economic freedom, use “free markets,” “pure markets,” “private enterprise,” and “laissez faire.” Instead of using “capitalism” or “crony capitalism” for the actual economy, use “mixed economy” or “interventionism.” Instead of using “capitalism” for the exploitation of labor, use “capital domination.” For an economic system in which inputs and products trade in markets, use “market-priceism.”

End quote.

So to summarise, when we say “capitalism” what is being referred to broadly speaking is some type of system whereby markets are dominant. Again, we must be crystal clear to avoid confusion what we refer to as “capitalism”. No country operates with a laissez-faire market system, that is an economy dominated by the market and the government has absolutely no economic input. This is typically what people who advocate for “capitalism” want. So looking at Lenin, who defined imperialism (which in itself is a confusing term) as the last stage of capitalism, “capitalists” would find this objectionable; the presence of government renders the terms incompatible. When we look to perhaps the most extreme “capitalist” of all time, Hans-Hermann Hoppe, we see his devotion to the abolition of the state, and the ending of all foreign wars and invasions. Indeed, we must understand the goals of these so-called “capitalists”.

So, one must ask from where does this confusion arise? I have my own thesis on this, which I would like to present now. The term “capitalist” originally referred to someone who owned capital goods, that is, a business owner in essence. As the government freed the economy in the 19th and 20th century, these “capitalists”, capital goods owners, were able to rapidly expand their business, and many formed into these larger corporations that have stocks publicly available for trading. Now, this system might make advocates for laissez-faire economies happy, but there was a devil in the detail. Now, some of these corporations, owned by “capitalists” had enough money to influence the government policy to benefit them. For example, minimum wage laws are funded by huge companies (that do not themselves pay this wage yet) for the purposes of driving out competition and innovation from smaller companies that might threaten them. There is constant manipulation of government policy, especially in America with the whole lobbying system, which is for the benefit of shareholders over the public. In this way these “capitalists” harmed the lower classes, and so an association stuck. We can see this a lot in Atlas Shrugged where James Taggart uses the government to “protect” traditional boundaries and employees in the rail business, but it is in fact a ruse to eliminate his competition in Colorado, so that he has sole access to transportation to the oil fields. If it wasn’t for Dagny pulling through and building the improved rail in the last minute, this law James brought in would collapse the oil companies and his own. Either way, it made many, many men much poorer than him unemployed. What did those men do that night, I wonder? Did they thank the existence of the government and its wise regulations?

We must remember that people advocating for these “free markets” have not been around very long at all, in fact, they came significantly after Marx. Marx was born in 1818, and most active around the 1850s. Carl Menger and Eugen Böhm von Bawerk, the founders of Austrian economics were born just after Marx’ most prolific works, and developed their ideas of a totally free market in response to him. These “capitalists” point to times when by one accident or another the state was highly limited or temporarily non-existent as a manifestation of their ideals, but again, the thought of a stateless society which self organises and has emergent economic properties is very new. Marx was specifically advocating against “capitalists”, that is capital goods owners, that are propped up by the state. Lobbying is impossible if there is nothing to lobby. This is why I say Marx was the greatest social scientist of the 19th century, but got everything wrong. The solution to the government problem is less government, not more. We see this in the USSR, China, and all places where communism and socialism was adopted, the system quickly became highly corrupt and designed for the benefit of government officials. Due to their then monopoly on violence, ordinary people had no way out.

Inequality

The primary objection raised against “capitalism” is that is creates inequality. I would like to propose that “equality” is not a coherent ethical program, as Deirdre McCloskey states. Are we all to be the same height? Are we all the be the same weight? Are we all to be the same intelligence? Pound nails into the head of the smart to create equality? Equality of what, exactly? Jordan Peterson has talked extensively about how hierarchies are very natural things. They come about from the natural processes of evolution, every person has a unique set of genes and life experiences that make them better at some things and worst at others. It is only natural, he says, that we do funnel more resources to those who keep the lights on. Here is a fundamental law: the square root of a population in any domain do half the work. So if you have 10 employees, 3 do half the work. Not bad. What happens if you have 100 employees? 10 people do all the work! A thousand employees? 31 people do half the work!! This is Price’s law, and it applies in almost any field. Number of goals scored, number of degrees, amount of money in savings, number of complaints. It’s the more fundamental form of the 80/20 rule. This has an immense consequence. This means that half of the creative ideas comes from a very very small section of the population. What this means, practically, is that half of the money ends up in the hands of the square root of the population. Now this may be a bad thing, depending on your perspective. The problem is, we don’t know how to combat it. If you move wealth back down, one of two things happens, it either very quickly moves back to the same distribution, maybe different people, but the same distribution, or the most creative people stop playing the game, which is why the USSR had the same model of car for 50 years. So, I think it is more sensible to turn to McCloskey here, who says, ignore inequality, and look instead to improving the life of the poorest in society. How do we do that? Liberalise the economy. Redistribution policies of government generally are not effectual. We’ve had a welfare state now for something like 50 years, but the distribution is the same, maybe even worst, and the poorest are less mobile than they used to be. They’re more trapped. Hoppe says the reason for this is for the elites to create a permanent welfare class which reliably vote for them. Labour have done this very clearly with council houses and the Conservatives with farmers. The real measure needs to be the absolute quality of life of the poorest, maximise that!

Have we been able to maximise the quality of life of the poorest? Well, maybe. Certainly the general poor in Britain today have much better lives than they would have 100 or 200 years ago, thanks to technology. The global poverty rate is plummeting very very rapidly. Extreme poverty could be almost extinct in 20 or 30 years. So, we are probably heading in the right direction, on poverty.

Let’s dig into the issue of inequality further. Price’s law follows everywhere. Half of the biomass of a forest is in the square root of the population’s largest trees, same thing for stars in a galaxy, stones on a beach, everywhere. It appears absolutely everywhere. Even early humans have this, you can look at burial sites from 15,000 years ago and find that some people are buried with gold, and a lot of it, when most have none. This follows the same law! So inequality is much much more fundamental than a feature of capitalism, it is something that pops up whenever there is any sort of surplus. So what can we do about this? Well, we could eliminate the surplus. That’s an option. What’s the consequence? Production drops a hair, it’s always oscillating, and some go without. That’s the problem. Maybe we could eliminate the material goods? Hunter-gather societies essentially had no “wealth” and were largely, materially, equal. But boy did they have inequality of health, friendship, mating opportunity, and those things are not trivial. Those are huge inequalities in of themselves.

Time Preference

Time preference is the extent to which people value current consumption over future consumption. In other words, a high time preference is one who wants instant gratification. Children are like this, maybe they want a lollipop right now. Often times it is better to wait, to plan and to save. Typically we need to use past savings to sustain us through a time of producing a better means of production. In the sense that, if we make some product, to make making that product better, we need to temporarily stop making that product. I use an example from Dan Mahoney’s Austrian Business Cycle Theory: A Brief Explanation, which you can find on the MisesInstitue website for free. Imagine we are stuck on an island, and are harvesting berries to live. Let’s say I am able to gather 12 berries a day. If my time preference is so high that I require all 12 berries a day, what I produce is what I consume, and this cycle will continue forever. However, if I lower my time preference to 10 berries a day, I am able to save 2 berries a day. Let’s say I do this for one week. I now have 14 berries in savings, and am able to start producing some more efficient means of production. I can spend three-quarters of a day on gathering berries, giving me 9 per day, one-quarter of a day on making my new harvesting tool and then one berry a day from savings to make up to 10 berries. If I am not able to complete the new harvesting tool in 14 days, then I will have to delay its production till I am able to make up the savings once more. Now, if my time preference was never low enough, that is, I was not willing to save, then this method of production would never be attained.

You can see how businesses do this sort of thing all the time, with R&D departments for example. Doing the maths, so to speak, is very important for businesses and regular people in their lives to make such financial decisions. If “actors” as I will refer to them, which could mean any individual or business, fails to correctly calculate their financial decisions, then they can end up in a bad situation. In general, lowering one’s time preference is a good way to help long term planning and sustainability.

The issue comes when government becomes involved. Government through central banks artificially set interest rates lower than they should be, essentially the same thing as printing money. This creates a large amount of artificial, illusionary currency in the world, making it appear as though there is sufficient capital and property to perform some action. This was largely the last Labour governments plan, to “stimulate” the economy through low interest rates and government spending. Of course, we all know how that paid off. Labour, as a party, have exceedingly high time preference. This is why David Cameron talked so much about his “long term economic plan”, he was hinting at his lower time preference. The issue comes, really, when businesses make some long term goals. Government is the same. In fact, it is easier to see from the perspective of government. So Tony Blair/Gordon Brown thought that they were able to stimulate the economy. Indeed, there was good economic growth, as measured by GDP. However, GDP is a very poor measure of economic growth, as it is very susceptible to government manipulation. This is why China builds empty cities then knocks them down the next year. So, the GDP of Britain is going up from investment from all this extra “capital”. However, this is a credit system based on nothing but trust. As soon as trust falters anywhere, say in the American housing market, the whole thing crumbles away. Why? That capital being used never existed. This is why governments over and over again make investments then plan to “pay off” the load with the taxes raised from increased economic growth. Sounds good. Doesn’t work.

Why is this system doomed to fail? Let us imagine our man on the island again. Let’s imagine that an evil demon convinces him that he has 14 berries in savings while in reality he does not. He might then go about making his new harvesting tool, and boast about the long term gains of such a device, how the island’s GDP is growing. Of course, when it comes time for him to eat, he starves to death. The end. Now, imagine what happens if the evil demon convinces him he has infinite berries in savings. No system of illusionary property is sustainable to the nth degree. Is it very, very susceptible to anything that might destabilise it, in 2008 it was the lack of trust in the housing market.

This time it is probably going to be coronavirus. I think that coronavirus is going to cause one of the worst financial crashes in living memory. The system that has been built by the boomers is essentially one where fake property is created to convince the Chinese to produce real property and hand it over. In reality, we are mugging China off so, so hard. But, what happens when China will not, or can not hand over that property? The effects would be catastrophic. Now, since large swathes of China is on lockdown, capital goods are unable to leave, and we can already see the emissions have dropped by one-quarter. What will happen is trust in credit will decline rapidly, and the fake property will be exposed. Most, if not all economic growth of the last twenty years or more could vanish in the blink of an eye. The effects this will have on quality of life, jobs, stability, income will be immense, to say the least.

What can we do to protect ourselves? Well, in reality, very little at this point. The spread of coronavirus is much, much faster than any institutional change that is: possible. While it will not directly kill many people, the damage will be great. Long term what we need to do is several steps: end central banks, allow private banks to set interest rates, return to the gold standard, break our addiction to debt. These four things would allow a restabilisation of our currency, the abolition of government vanity and vote grabbing policies and smashing the illusion of property. The would allow for a more robust economy with slower growth as measured by GDP, but with real growth.

Finale

As we draw to a close I would like to link back to the purpose of this society as one where we encourage interdisciplinary thinking. Hoppe in his Economic Science and the Austrian Method argues for the praxeological method used by Austrian economists. Deirdre McCloskey makes a very similar point in a short lecture she gives at the IEA, where she argues briefly for economics “with the humans left in”, “humanomics”. As I have demonstrated in today’s talk, it is necessary for us to understand more than just economics to understand “economics”. We need mathematics, history, evolutionary biology and evolutionary psychology. In a couple of weeks I believe I will be giving a talk at intersoc on why polymath is important to solve global issues. If you cage off yourself off, as an economist, to other areas of study, you will always have incorrect conclusions. Why? Modern economics typically sees the world as actors moving forward. The past is irrelevant. This isn’t how people work, they have many considerations beyond just moving forward. The past matters to many people, behaviour is not always purely logical and so on. There are means to understand these behaviours that extend beyond economics!

So far today I have given you a discourse on the ways in which modern economics can not explain the modern economy, rather ironically. We have explored how economic growth is created, what “capitalism” actually is, our problem of inequality, time preference, and how we can become poor. We finish with a very quick link back to the nature of this society as being one of interdisciplinary thought, and how economics requires support from other subject areas in order to make correct predictions. Thank you.