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Annotated captions of RSA Animate - Crises of Capitalism in English

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RSAnimate

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www.theRSA.org

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The Crises of Capitalism, 26 April 2010

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Is it time to look beyond Capitalism towards a new social order

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that would allow us to live within a system

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that could be responsible, just and humane?

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.

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Ok, so we've been through this crisis

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and there are all sorts of explanatory formats out there.

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And it's interesting to look at the different genres.

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One genre is that, it's all about human frailty.

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I mean, Alan Greenspan took refuge in the fact "it's human nature",

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he said, "you can't do anything about that."

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But there's a whole world of explanations

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that kinda say it's the predatory instincts

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It's the instinct for mastery.

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The delusions of investors.

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And the greed and all the rest of it.

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So, there's a whole range of discussion of that.

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And of course, the more we learn about the daily practices on Wall Street

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we kind of figure there's a great deal of truth in all of that.

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The second genre is that there's institutional failures.

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That, you know, regulators were asleep at the switch.

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The shadow banking system innovated outside of their purview.

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Etc etc etc.

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And, therefore, institutions have to be reconfigured.

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And it has to be a global effort, by the G-20, something of that kind.

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So, we look at the institutional level and say

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that has failed and that has to be reconfigured.

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The third genre is to say, everybody was obsessed with a false theory.

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They read too much Hayek

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and believed in the efficiency of markets.

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And it's time we actually got back to something like Keynes.

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Or we took seriously Hyman Minski's

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theory about the inherent instability of financial activities.

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The next genre is that it has cultural origins.

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Now we don't hear that much in the United States

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but if you were in Germany and France

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there are many people there who would kind of say it's an Anglo-Saxon disease.

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And, and it has nothing to do with us.

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And I happened to be in Brazil when it was going on, and

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Lula was kind of saying, well, first off he was saying

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"Oh, thank God the United States is being disciplined by the equivalent of the IMF

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We've been through it 8 times in the last 25 years

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and now it's their turn. Fantastic!", said Lula,

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and all the other Latin Americans I knew, until it hit them, which it does.

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And then they kind of changed their tune a little bit.

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So, there's a way of which it became cultural.

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And, you can see that by the way in which this whole Greek thing is being handled.

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The way the German press is saying, "Well, it's the Greek character

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It's defects in the Greek character".

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And there's a whole lot of rather nasty stuff going on around that.

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But actually, there are some cultural features which have led into it.

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For instance, the US fascination with

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home ownership,

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which is supposedly a deep cultural value.

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So 67, 68% of US households are home owners.

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It's only 22% in Switzerland.

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Of course its a cultural value in the United States

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that's being supported by the mortgage interest tax deduction,

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which is a huge subsidy.

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It's being promoted since the 1930s, very explicitly in the 1930s.

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It was built up because the theory was

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that debt incumbent home owners don't go on strike.

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And then there's a kind of notion that it's a failure of policy

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in that policy has actually intervened.

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And there's a funny kind of alliance emerging between the Glenn Beck wing

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for Fox News and the World Bank,

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both of whom says the problem is too much regulation

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of the wrong sort.

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So there are all these ways, and all of them have a certain truth.

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And skilled writers will take one or other of those perspectives and

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build a story and actually write a very plausible kind of story about this.

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And I thought to myself,

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"Well, what kind of plausible story can I write, which is none of the above?"

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Which is one of the things I always think to myself, and it's not hard to do

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particularly when you're coming from a Marxist perspective because, you know

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there aren't many people who try to do this analysis from a Marxist perspective.

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And I was really clued into this by this thing that happened

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at the London School of Economics about a year and a half ago when

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Her Majesty, the Queen, asked the economists

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"How come you guys didn't see this thing coming?"

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She didn't say it exactly that way, but you know, it's the sentiment.

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And, they got very upset. And she actually called the Governor of the Bank of England.

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And said, "How come you didn't see it coming?"

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And then the British Academy put forward this

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got together all these economists and they came up with this fabulous letter

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to Her Majesty.

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And, it was actually astonishing. It said

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"Well, you know, many dedicated people, intelligent, smart, spent their lives

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working on aspects of this thing, very, very seriously

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But the one thing we missed was systemic risk."

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And you say, "What?!"

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[Laughter]

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And they went on to talk about the politics of denial and all the rest of it.

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So I thought, well you know, systemic risk, you know

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I can translate it into the Marxian thing.

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You're talking about the internal contradictions of capital accumulation.

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And maybe I should write a thing about the

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internal contradictions of capital accumulation and

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try to figure out the role of crisis in the whole history of Capitalism.

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And what's specific and special about the crisis, this time around.

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And there are two ways which I thought I would do that,

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One was to look at what's happened since the 1970s to now.

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And, the thesis there is that in many ways

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the form of this current crisis is dictated very much

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by the way we came out of the last one.

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That the problem back in the 1970s was

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excessive power of labour in relationship to capital.

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That, therefore, the way out of the crisis last time

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was to discipline labour.

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And we know how that was done.

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It was done by off-shoring.

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It was done by, you know, Thatcher and Reagan.

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And it was done by neo-liberal doctrine;

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it was done in all kinds of different ways.

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But by 1985 or 86, the labour question had essentially

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been solved for capital. It had access to all the world's labour supplies.

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Nobody in this particular instance, has cited

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greedy unions as the root of the crisis.

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Nobody, in this instance, is saying,

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"It has something to do with the excessive power of labour."

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If anything, it's the excessive power of capital.

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And in particular, the excessive power of finance capital

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which is the root of the problem.

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Now, how did that happen?

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Well, we've been, since the 1970s, in a phase, of what we call "wage repression".

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That wages have remained stagnant

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The share of wages in national income

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right throughout the OECD countries has steadily fallen.

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It's even steadily fallen in China, of all places.

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So that, there's less and less being paid out in wages.

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Well, wages turn out to be also the money

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which buys goods.

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So if you diminish wages, then

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you got a problem with where's your demand going to come from.

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And the answer was, "Well, get out your credit cards.

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We'll give everybody credit cards."

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So we'll overcome, if you like, the problem of effective demand

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by actually pumping up the credit economy.

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And American households and British households

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all roughly tripled their debt over the last 20, 30 years.

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And a vast amount of that debt, of course, has been within the housing market.

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And out of this comes a theory which is very, very important

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that Capitalism never solves its crisis problems.

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It moves them around geographically.

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And what we're seeing right now is a geographical movement of that.

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Everybody says, "Well, okay, everything is

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beginning to recover in the United States"

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And then Greece goes bang, and everybody goes,

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"What about the PIIGS?", you know.

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And it's interesting, you had a finance crisis

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in the financial system.

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You sort of half-solve that

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but at the expense of a sovereign debt crisis.

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Actually, if you look at the accumulation process of capital

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you see a number of limits and a number of barriers

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and there's a wonderful language that Marx uses in the "Grundrisse".

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where he talks about the way in which Capital cannot abide

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a limit.

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It has to turn it into a barrier

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which it then circumvents or transcends.

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And then when you look at the accumulation process

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you look at where the barriers and limits might lie.

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And the simple way to look at it is

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to say, "Look, the typical circulation process

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of accumulation goes like this.

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You start with some money.

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You go into the market and buy labour, power

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and means of production.

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Then you put them to work

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with a given technology and organisational form

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and you create a commodity.

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Which you then sell for the original money plus a profit.

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Now, you then take part of the profit

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and you re-capitalise it into an expansion

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for very interesting reasons.

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Now, there are two things about this

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One is that there're a number of barrier points in here.

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How is the money got together

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in the right place

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at the right time

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in the right volume?

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And that takes financial ingenuity.

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So the whole history of capitalism has been about financial innovation.

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And financial innovation

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has the effect of, also, empowering the financiers.

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And the excessive power of the financiers, can sometimes...

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They do get greedy, no question about it.

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And if you look at financial profits in the United States

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They were soaring after 1990; they were going up like this.

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Profits in manufacturing were coming down like this.

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And you can see the imbalance in this country

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I think the way in which this country has sided with The City of London

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against British manufacturing since the 1950s onwards

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has had very serious implications for the economy of this country.

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You've actually screwed Industry in order to keep, you know, financiers happy.

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Any sensible person right now would join an anti-capitalist organisation.

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And, you have to.

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Because otherwise, we're going to have this continuation.

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And notice it's a continuation of all sorts of negative aspects.

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For instance, the racking up of wealth.

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You would have thought the crisis would have stopped that.

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Actually more billionaires emerged in India last year than ever.

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They doubled last year.

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The wealth of the rich in this country has accelerated.

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Just last year, what happened was that leading hedge fund owners

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got personal remunerations of $3 billion each,

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in one year.

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Now, I thought it was obscene and insane

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a few years ago, when they got $250 million.

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But they're now hauling in $3 billion.

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Now that's not the world I want to live in,

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and if you want to live in it, be my guest.

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I don't see us debating and discussing this.

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I don't have the solutions; I think I know what the nature of the problem is.

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And unless we're prepared to have a very broad based discussion

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that gets away from, you know,

cosmic.synergy 10:20
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the normal kind of pablum you get in a political campaign.

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And you know, "Everything's going to be okay here next year if you vote for me".

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Well, it's crap!

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You should know it's crap.

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And, say it is.

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And we have a duty, it seems to me

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those of us who are academics and seriously involved in the world

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to actually change our mode of thinking.

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Cognitive media

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www.cognitivemedia.co.uk