The Crisis of Global Capitalism: ten years on

well good evening it's my privilege tonight to introduce John Gray a writer of exceptional originality John is the amortus professor of European thought at the London School of Economics and the author of more than a dozen books including Harris's black mass Grey's Anatomy and the best-selling Straw Dogs false dawn was published in 1998 and is now this year published with a new forward John doesn't know this but I remember start on my own research from my book on China back at the end of 1998 in Hong Kong and John's book was one of the first if not the first one I read when I was trained to understand globalization the conventional wisdom then was that globalization was ever onward and upward with barely a cloud in the sky notwithstanding the Asian financial crisis of course John has never been a disciple of conventional wisdom in intellectual thought the herd mentality overwhelmingly applies including most certainly in academia John is not one of the herd he is a fiercely and consistently independent thinker that requires not only great intellectual self-confidence but also great courage I greatly admire John for this this lecture is part of the Ralph Miliband series on the future of global capitalism and the title of John's lecture is the crisis of global capitalism ten years on as a taster of the mortals to come let me quote from the new forward to false dawn which you'll be able to get some copies of at the end outside in a number of respects the u.s. now resembles an emerging country more than the advanced economy it was some decades ago its industrial base is largely gone sold off or offshored and its public infrastructure is in visible disrepair because of the severity of the real estate collapse parts of its housing stock are being abandoned and once thriving neighborhoods are now slums but is in politics even more than in the economy that the chaotic conditions of some emerging economies most clearly prevail the bailout of the banks that began in the Bush era and that has continued and expanded under the Obama administration is a prime example of the crony capitalism against which the u.s. ceaselessly railed in emerging markets I would like to introduce John Gray well thank you very much for that generous very generous introduction my title tonight the topic is ten years on global capitalism ten years on from when the book was published but I I just say something before I talk directly to that decade-long perspective I go back two years to 2007 when the visible part of the collapse began in the United States and at that time it was only a crisis or a collapse in some American financial institutions but it was clear I think to lots of people that not only to me that it would have global implications and that would affect real economies but maybe one aspect of the impact of real economies and real politics wasn't so clear at the time but it was one that I felt it was important to highlight back in late 2007 when I started making these remarks and perhaps I can put the concern that I had two years ago in the context of a question in the form of a question which is something like this what happens after a financial crisis when in many parts of the world in the real economies of many different countries there is a sudden increase of insecurity in the working population a sudden increase in our employment sudden collapses of businesses and not in other words a sudden and negative transformation in many people's circumstances what happens when that occurs and the reasons for its occurrence are rather obscure they're difficult to work out I don't think professional economists for the most part or even and I know some of them self even participants in financial markets such as hedge fund operators I don't think they even they fully understand the account the economic situation or the kind of bizarre increase of in derivative products and the development of a kind of highly leveraged cyber economy largely debt based that preceded the car the crash what happens when you have a sudden financial crisis with deep long reverberations in the real economy which greatly increase insecurity and anxiety and even distress and suffering in people's lives well historically what always happens is that people turn on one another that's to say they target other human beings in the society who they blame for the crisis and normally they target long familiar minority groups so two years ago and ever since then in fact I made myself further unpopular and got an even more enhanced reputation for profound misanthropy cynicism and pessimism what I said that the one thing I was completely confident of was that all the old poisons of politics ethnic nationalism anti-semitism hatred of immigrants internal and external minorities would come back with a vengeance now two years later I find myself one day before the leader of the National Front is about to appear on a frontline BBC television program as a result of what I view regard as a fundamentally mistaken decision by the BBC but putting that on one side is the fact that this is only symptomatic of a development which even two years ago would have been regarded as wildly implausible apocalyptically gloomy that a party of this kind would garner millions of votes in some contexts of European elections more votes than the major parties or some of the major parties and that it would in a sense have integrated its views into the national conversation so this happened up to two years and we're still in a situation in which many of the impacts of the financial crisis on the real economy in terms of unemployment terms of their impact in places like the Baltic states and Eastern Europe through the banking system and through various structural weaknesses have a long way to go things are going to get a lot worse before they get any better and in the meantime although this is not the 30s it's not a rerun of the 30s in many ways we don't have a Nazi state in control of German industry we have neo Nazism but part of Nazi state we don't have Stalinism we have a highly intelligent leader in the white house so I'll come back to the difficulties some of them I think intractable that he faces and perhaps some of the errors he's already made it's not the 30s and we also have new powers in the world which were subjugated colonial II in the 1930s China as an industrialized power a very important one so is India Brazil is emerged now in the 30s it was dormant so Anik many respects a different situation than we were in the 30s but one respect it's the same namely that sudden increases in insecurity against the background of a crisis that it's hard to understand produce hatred produce the politics of persecution the politics of scapegoating and this is happening again and I think it will continue to have an N I to be frank with you I think it'll get significantly worse but to go back 10 years 10 years ago as Martinus pointed out if one said that the globalization process as it then was would end in tears that there was nothing inevitable about its advancing on the contrary the were deep imbalances and problems within it which more or less guaranteed actually that it would be short short-term welcome predict the future no one can I think it was Woody Allen rather profound thinker on these matters he said predicting is always difficult especially when it concerns the future but one can predict the future neither but one could know I think just as one can now know that Afghanistan's not going to become Belgium or Switzerland or Canada that poor country is going to go through it's gone through great sufferings but it's not going to do wrong in those certain things just as in 1989 1990 91 one could know or even in 1985 when the Gorbachev experiment got underway one could know although very few people seems seem to have realized it that the former Soviet Union the Soviet Union then the forms of you was not going to become a western-style market economy was not going to happen 40 percent of it was military industrial rustbelt there was environmental devastation on a colossal level scale was not going to happen and yet and out this is one of the recurring themes are over the last 20 years there was a profound entrenched period of illusion almost entirely in the West not in the Soviet Union or the former Soviet Union itself which said that within only a few years a thousand days three years five years this collapsed Imperial semi imperial semi-authoritarian semi totalitarian system would become a West Markham it was impossible from the word go someone could know that but one couldn't know the exact pattern of events well ten years ago equally I couldn't know the exact pattern of events but I believe then that there were several reasons why the globalization project is time would come unstuck and probably quite quickly not in 30 years or 60 years or 150 years but in a decade or two or I wasn't I couldn't possibly know how in what weight would and I just mentioned a few of them that were in the first edition of fall stone which has been reprinted unchanged but with as Martin mentioned a new section updating and making some of the comments I'm making tonight and some others important thing to realize is that globalization could always mean at least two things one of them an historical process that no one controls which is essentially the process of worldwide industrialization that's the way I like to think of globalization I think it's a deeper way of thinking a more useful way of thinking than the common economic way of thinking and then there's the economic way thing which is to think of globalization as at a specific economic regime at the global level one characterized by relatively free trade and relatively free capital movements and it's that kind of conception which you get in most writing about globalization and so people say and I think this is true than the terms of this debate that there was a period of globalization from the late 1870s up to the first world war and then we've had another now from the end of the Cold War to the present time so if you think of globalization of that way it's a particular economic regime and I think it makes sense than to say that globalization comes and goes it can break down it can collapse it did collapse after the first war for example when you had Nazism installments of in Europe and Russia meijin fascism protectionism and so forth and of course the reasons it collapses if one thinks of globalization of these terms are to do with geopolitics they're to do with the power that backs up the globalization project or the economic regime of the time so the first war was I think essentially a death blow to European global hegemony all the major European empires except the British Empire collapsed the Ottomans the Romanovs the Hapsburgs and the British one letting it on for a few more decades and then succumbed I'm glad that it's a come but it's a comes after the second second war and when was thinking of globalization as an economic regime while always has to ask the PAP ask the question what is the condition what are the prospects what's the capacity for the hegemonic power which is maintaining it to continue maintaining it and even in the 1990s even in 98 when I began to write these when I wrote the book when I published the book was mainly written in 96 to 98 published in 98 spring 1998 I believed that the foundations of American power were rather weak and that the interpretation of the end of the Cold War which was being put about about time the triumphalist and hubristic interpretation by Fukuyama who I knew at the time and had several supremely unprofitable and unproductive public dialogues with I believe that the the interpretation then which was that with the disappearance essentially of the Soviet Union the world had moved from a kind of bipolar to a unipolar system I thought that was a complete mistake wrote nodded at the time for a variety of reasons which ranged from reasons of economics and geopolitics and even military strategy two reasons to do with the history of ideas and the history of ideas reasons I just mentioned briefly because that might be important is that people interpret it of course to a certain extent this was true on a certain respective is true the interpret of the collapse the former Soviet Union as a triumph for the West well in certain ways it was because it meant that a pretty clapped out and discredited an illegitimate economic system one for which even the non clitoris that mainly benefited from it were not willing to fight had gone and the only systems that remained in the world were varieties of capitalism war of states and transition with a few exceptions like North Korea and Cuba and Brazil strongest transition to yet and different hybrid as it has in China so in that sense it was a triumph for the West but another respect of course it was a defeat for the West because what had collapsed in the force of youn was a Western ideology prototypically west Liddy ology namely Marxism a version of Marxism with some Russian traits but not as it's commonly believed a fundamental distortion of Marxism and what I thought from 89 onwards was that what would come out especially when aggravated by Western mistakes which there were countless in dealing with the former Soviet Union what would emerge in the end would not be westernized Russia it would be a hybrid Russia balanced precariously between east and west and Russia as a Russia had often been in the past that's what I thought would happen and I was particularly skeptical of the kind of confection of Western neoliberalism which was imposed on Russia and which some extent in the Yeltsin period serious attempts were made to implement I thought that would be disastrous I thought it would produce a strongly anti west and Russia and to some extent I think that's that's what that has happened just as again as the footnote here Martin below this I think as well as I do is that there's always been in the last 5 or 10 years of a great admiration in Western financial circles for China and I share some of this admiration but the irony of course is that China is admired because for the last 20 years it's heroically despised and rejected all Western advice that's the root of the admiration it has in the West it consistently rejected and are a very wealth or ignored on a very well founded basis any advice or instruction from the West and it's to that I think that it owes a large part of its success that's why it's admired in the West in the Russian case a more complex case because Russians many Russians have been divided someone wanted to be different from the West someone wanted to be Weston who's always been a debate in Russia I think it was seen and it was mixed up with his use of corruption and of nominal tourist expropriation and many other complex fashions there was an initial disaster promoted I think very largely from the West but at the time there was a mood of tremendous triumphalist hubris not everyone shared this mood apart from me I mean for example one person not a very popular person perhaps nowadays but looking back it looks like a Titan George Bush Senior the father of George W boos at the time said I thought those who was so strikingly wise that no one would even hear it he said this is not a time for triumph this is not a moment for congratulation this is all going to be very very difficult and he was absolutely right but no one listened to him he was a very I think in that respect a very prudent and if his his approach had been adopted namely an approach of pragmatism and humility from the West not a not an approach based on reckless deregulation reckless exportation of a market model that didn't exist in where any Western country and hasn't existed ever really and wasn't certainly wasn't viable in Russia his approach had been adopted then things may be good gone better but didn't happen and couldn't happen perhaps because of the atmosphere of hubris and triumphalism which it was expressed in a number of ways so let's go forward a bit from ninety eight towards the very end of the 90s and things started to happen towards the end of their of course towards the end of nights we had Russia defaulting on its sovereign debt to some extent and that hadn't that has an impact on Western financial institutions via a hedge fund long-term capital management which had been founded by two Nobel Prize winners we developed a theory of option pricing of options and although this might seem a kind of side issue because what we tend in the middle of this crisis to focus on is issues of greed and morality and of course they're important but I actually think that hubris political hubris ideological hubris the hubris which came from the end of the Cold War and the seeming victory of the West and the end of the Cold War there was also intellectual hubris purely intellectual who Burris there was the idea that economists by developing complex mathematical techniques had tamed uncertainty and turned it into risk those of you who've done economics will know that the distinctive risk and uncertainty is common one made me a long time but that goes back to a Chicago thinker Frank Knight risk is when you can assign probabilities to events uncertainties when you can't it's a very useful distinction the trouble is most of the time when you're thinking about economics you don't know what a watch risk and what's uncertainty and one of the problems is that when you're talking about probabilities you have to have a list of events to which you attach probabilities and you can often miss out on the list the events that are the most formative actually of the world you're going to live in so if the basis of the list of probabilities only State goes back five or ten years which I think was the case with long-term capital management then you'll miss out the possibility of a major power defaulting on its debt and if you're extremely highly leveraged which that institution was you might suffer from it and to be one of the factors which contributed to its demise so already by the end of the 90s there were there was that event and there was the East Asian economic crisis which had happened already cracks were showing but there was so to speak in the periphery of the global economic regime there were the edges of it they were in Russia transition state as it was called there are an East Asia and the response was basically to Hector these are the powers for not taking their medicine for not deregulating enough if you're in this situation the reason is you haven't really deregulated of you haven't really followed the medicine enough blah blah blah but and of course looking back if you ask yourself rather question at the moment which countries are doing more or less well other other countries that took their medicine either because they wanted to or they were too poor to resist too weak to resist although the countries that resisted ignored it I think answers clear so a number of things have disappeared in over the last 10 years the fabled Washington Consensus where is that now taken very seriously by economists by people running financial institutions that was promoted through the International Monetary Fund and through the World Bank to some extent as well the idea being that the secret had been discovered for steady continuous uninterrupted growth you had a variety of conditions in place now none of these were actually in place in the u.s. none of them were balanced budgets weren't in place there was always a bad setback to some degree of protectionism and also there was a kind of reckless Keynesianism if you like going back to the Reagan period and there was a radical deregulation under the banking involving the repeal of certain banking acts in the 1930 which were put in by Rendell in the 1930s and responsibilities depression in the Clinton years so the roots of the present crisis go back a long way I think all the way back to the end of the Cold War but certainly they're definitely not restricted to the Bush administration they go back a lot further than that and a slightly ominous sign is that many of the people involved in those deregulations of banking in the financial institutions whereby and this is the point which the governor of the Bank of England mentioned only yesterday important point where the so to speak casino operations of banks were divided to some extent in the United States under the glass-steagall Act from there more retail everyday functions that was swept away so that banks became hedge funds or central aspects of banking activity became hedge fund activity and in fact hedge funds themselves had very little role in this crisis it was the transformation of institutions that had not been hedge funds into hedge funds without anybody realized because they didn't change their names if you went along to the Royal Bank of Scotland it didn't say radical radical gambling strategies on the door it did lots of she went if you borrowed money from Northern Rock when you went in it didn't say derivative derivatives Inc it still had Northern Rock where it was so it wasn't clear what had actually happened what had happened is that many of the institutions had changed their parrot or nature and I think in a very luminously intelligent speech I think that governs banking is right that the idea that we can just muddle muddle through with essentially unaltered banking structures propped up at enormous public expense is an illusion but there is a problem and now I get back to the main strand of my argument with what the governor of the Bank of England movin King then recommended which is as far as I understand these matters at caliber a quite good recommendation may be that we somehow it can be done in several different ways and there's a lot of technical stuff which I don't pretend to understand but now that the ask that that these different activities of banks be somehow separated again which might involve breaking up existing banking structures so that the retail angle of angles of it are walled off from the highly speculative hedge fund or casino operations one of the problems about doing it is that it's not clear that any one country can do it by itself in particular it's not clear that Britain can do it when we're although a hugely important financial player a relatively small country this gets us back as it were to to globalization which is that although the globalization has understood as a single economic regime was the creation of state power American state power and is now I think fracturing and fragmenting before eyes as American state power retreats in the although that's the case it gradually grew too big even for American state power even at its height to control and it's not really clear now how any kind of order can be superimposed on it it's not clear how that can happen because the situation we're in now I think geopolitically is like that at the end of the 19th century or before the First World War but with one or two crucial differences that's to say we now have a world of several great powers America India China Japan Russia Europe doesn't count them afraid because although it's a very pleasant place to live and has a very high level of prosperity it hasn't shown any capacity to act as a real actor in the global on the global stage but we're in a position of those who have several great powers including two powers which were subjugated explicitly or otherwise at the end of the 19th century namely China and India America is only one of these in military terms it's still vastly superior to any other but the question is how long it can maintain this against the background of fairly profound economic problems and here I mean make again a brief comment I I'm a great admirer of Obama as a person and even as a politician but he has a Gorbachev like aspect by which I mean he's come to power against a background of problems which are mostly intractable mostly insoluble of course nowadays we've we live in a time when intellectually the very notion of decline is discredited Seavey's if you say powers declines even the moment you can identify titania turn around and stop a declining so we've had that in the 17th century who had never been given a book on the decline and fall other or never they said well they were just or the could opine but the terror just too stupid to stop it in time they should have noticed they were declining and stopped it and reversed it but actually some of the reasons for American Cline are built into globalization in its deep set the deep sense of globalization the one that went on from 1914 up to the late 90s despite fascism despite world war despite communism is worldwide industrialization and the impact of worldwide industrialization is to disperse economic initiative and power into other parts of the world so it actually a part of the logic of globalization that it undermines the power of the hegemonic power of the that is promoting the globalization that's part of the logic of it so one could know from the start quite apart from any errors made by American administration quite apart from the disastrous error of the Iraq war it should be hugely costly apart from anything ever and quite apart from the further error which is unfolding in Afghanistan and I it's a different case Afghanistan because the roots were in the intervention resigning could be justified back in 2001 but it's drifted into a situation which I think one can be pretty confident is not retrievable at this point one can be pretty confident that it's not retrievable but it's going to cost an awful lot of money an awful lot of blood and an awful lot of anguish all around before that is accepted but quite apart from these big errors the inherent logic of globalization as worldwide industrialization is that a disperses power to new new countries new economies new states and so even if it hadn't been the case even if there haven't been in Iraq even if there hadn't been 9/11 even if there hadn't been Afghanistan there would have been a long-term tendency for the u.s. to decline as a result of the globalization which it promoted and so the pit so in other words the kind of slightly subtle point but I'll make it because I it's important it's often thought it was thought in the 90s and even it took quite recently that as well only one so to speak global framework was compatible with worldwide industrialization and the global framework was something like a global free market now we never actually had a global free market some countries like China retained their control of the commanding heights the follow me the prudence of that has been demonstrated and Western countries were protection so we never really had a global free market and the reason for that is not that people were hypocritical cynical or with oh they were the reason it's impossible the reason it's impossible because if you really were to habit then all the factors of production would have to move freely you'd have to have a global worldwide free movement of labor for example a version of which didn't exist by the way before 1914 of course it were much different world than many people were to afford to travel but most in Europe for example you could travel anywhere except the Ottoman Empire and the Romanov Empire Russia and Turkey without a passport and the reason for there was there was no welfare state in most of those countries are not much to speak of trade unions a weak and democracy was fairly weak in many of them not weak in the sense of peak threatened but not fully developed women didn't have the vote and lots of people didn't alcohol actually now we're in a situation where there isn't free movement of human beings and there won't be and many of the other dimensions of global free market was similarly unachievable but the idea was that something like a global free market would eventually come about something like a free global free market will come back because deregulated liberal capitalism was the only system compatible with modernity that was the kind of philosophical if you like belief which animated thinkers a wide range of thinkers not only Americans in the 90s a basically one economic system and one economic system alone was compatible with modern conditions as we now live in them and I argued then either it's an illusion and one of the things I want to put you as I'm coming now to the next part of what I want to say it I don't want to talk too long because I want to want them to be plenty of time for question answer one things and wanted to is that now that this system is I think fragmenting and crumbling it will not be replaced by another universal system of some different kind not to say many critics of globalization say that didn't work the nail system they're liberal systems collapsed they're right about that of course but they then go to what we need is a different system another global system global social democracy a global green settlement of some kind none of those things are going to happen and the reason is rather simple basically it's that the differences between the worlds different economies the differences between of interests of values of histories and of current goals between the different powers in the world are too great and I think it's also the reason for that is that some of the problems which are being faced now are again rather intractable and difficult problems and the attempt to the belief that they're fully soluble can only produce deep disillusionment the belief that Obama can prevent American unemployment even with the figures being somewhat fuzzy going over 10% or 12% the belief that that he can prevent whole states going bankrupt as California more or less half has the belief that he can somehow alter the position of the baby boomers who found their lifetime plans for savings so forth and retirement gone up in smoke before them the belief that he can do any of these things I think is ill-founded America's position has changed just two fundamentally two radically it's no longer in a position to borrow unlimited in a limited way even though for the time being it's racking up enormous amounts of debt so one can anticipate really rather painful disillusionment with all of its unpredictable political implications and in different contexts different societies will face a similar issues people will turn to state turn to governments for protection and find that governments can only protect them to a certain degree or not at all and then one has the problems that I mentioned earlier other I promise you at some point I'll try and come up with something optimistic but so where are we now where are we in the position that we find ourselves now well as I mentioned earlier I don't think the the real economy effect the impact of the financial crisis has yet fed to fully there's much higher unemployment some of it affecting graduates and also we're moving into a period where many countries are going to slash public spending state spending many contexts we're going to find a situation in which taxes go up but also public spending is actually reduced which is almost unprecedented I really have to go back I think to the 1930 into the 70s and I lived through the 70s they were pretty rough in some ways in Britain even then one didn't have massive real cuts but if you look at countries like Ireland not just Iceland which is a special case in some ways but Ireland seeing actual cuts and incomes actual cuts and public services and these I think would happen whichever government wins the next election in Great Britain or weathers and pom it'll happen anyway because the essential situation is of massive unsustainable debt and one of the problems as I've said it and I keep going back to this it's that one of the problems is it was assumed and here we get back to the intellectual hubris that I was talking about that if only one could free up markets globally they would somehow be self-stabilizing self-stabilizing that if there was any problem in them it would work it to come out in the wash as it were I think one of the relevances of Keynes here there's been something a revival of Keynes but I think it's sort of intellectually that deeper revival because it's not really based on a close reading of Keynes I mean number of interesting studies come out one by two American Accord animal spirits where he says what Keynes would have said if you could bring King Keynes back from the grave but back from his deathbed by the way his last recorded words were I wish I'd drunk more champagne so if you could bring him back and give him a glass of champagne and ask what what you would say they say he would say well you forgot the economists of the 90s forgot animal spirits well there was behavioral economics behavioral finance I don't think they actually forgot animal spirits means moods emotions the ways in which boom-bust emotions various types of emotions get caught up with market movements and make them self reinforcing to the point at which they then collapse and out of that of course is a feature of markets which Keynes understood not only as an economist but as a speculator he was an active speculator for his college he made them an awful lot of money and lost an awful lot he died at the right time he put after he'd made them an awful lot so they were all terribly grateful if he died when he was lost of a lot it might be different but he understood markets better probably than most economists he supremely gifted man and supremely cultivated man but the essence of his critique of Orthodox theories of the time was not actually to do with animal spirits with with with moved away moods get reinforced admire that I wasn't there was part of it wasn't the essence of it the essence of it in my view goes back to his work as a probability theorist he also wrote a book called and treated some trouble with probability basically tried to set out a theory of rational degrees of belief or degrees of rational belief at the end of it or after it he said I failed you read what he says in the in in the in the general theory says when we ask about the future price of copper or the interest rates for a few years from now or whether it's going to be European war it's not that we can assign probabilities it we simply don't know we simply don't know that's a very important thing because from that fact one can sort of conclude that there will always be instability in markets there will always be crashes as the couple of the Bank of England said yesterday banks will always fail and therefore you need to have an interest a set of institutions based on that fact the fact that we can't know the future we can know that certain things that have said there are not going to happen post-communist Russia becoming Sweden or Afghanistan becoming Switzerland or something like that but we can't know enough to predict in advance when things are going to happen or the full range of events all we can know for sure and I think we can know this for sure is that there will be further crises that's history as normal now again I'm sort of sometimes criticized as taking apocalyptic view of events again rather odd in a way because of apocalyptic use but the end of history what I'm saying is that history doesn't end crisis it unnormal they're normal in capitalism and normal in banking and normal in history that's normal so what one needs are institutions and policies robust enough to deal with them and I think for a time after the Second World War which was a very wrenching experience I'm not old enough to have been in it but I've talked to people who were I was a very in the 30s were extremely wrenching in many ways from that set of terrible experiences which was followed by triumph Nazism was destroyed a great achievement came a set of institutions which were based on the clear recognition that large-scale economic fluctuations and depressions were politically and humanly extremely dangerous and costly and that's an important very profound important insight so you shouldn't base policies in welfare or regulation or anywhere else on the assumption that you've moved into the period of the long boom and if you remember the long boom capital L capital B the Great Moderation Capital G capital M all versions of the end of history capital e capital H all nonsense from beginning to end dangerous nonsense from beginning to end because what it meant was that to the extent they were taken seriously and they were they were taken seriously for example after the fall of the Berlin Wall I know for a fact that a number of recommendations had their foreign policy programs acts because no need for a foreign policy no dangers no risks no problems get rid of it well if you can do a little bit more about history as George Bush Senior did having be in the Second World War and quite a knowledgeable man you would say well yes one set of problems have been resolved but a big state like the former Soviet Union melting away all kinds of conflicts which have been repressed while frozen will reemerge a new conflict will emerge that I even weren't there before I will have to cope with them and some of them will be extremely intractable that's what you would expect but as I say although George Bush Senior took that feud not have not very many people did so you need to build in to your basic institutions and even to some extent your mindset the idea that booms don't go on forever crises are normal since they happen we should be prepared for them but during the year 90s and we really right up to 2007 that was considered a kind of hoot ray attitude that was considered a view which went against the enormous success that had been achieved the work critics they were economists a few or long said it's built on shallow foundations to which death or imbalances between China and America their various problems but the prevailing climate the prevailing intellectual climate was one which discounted any large crisis if you said a large crisis is possible or even likely you marginalized yourself to a very considerable extent because it's because no one what did he hear that it was lots of people are making money from the fact from the family from the institutions of policies that existed at the time but beyond that and I think it's a go by it's not just greed it was intellectual hubris the idea that we've solved a problem the problem of devising market institutions that are self-regulating self-stabilizing which only light-touch regulation which are not going to go mad or even we've solved that problem which is defeated everyone else and because that was against back in a profound ignorance most of us didn't be in the studio I was going but also even involved I mean I thought I knew a Noah major hedge fund operator who after the crisis told went back to the mark and said I'd never heard of these special-purpose vehicles I didn't know what they were I work boy and nor did anyone else he said except a few of the people who devised them so essentially operating in an environment that no one understood but which they believed on the basis of a kind of series of theories mathematical theories which claim to have tamed risk to the point that it was so tamed uncertainty to the point that I wasn't uncertain anymore but now calculable risk have turned the deep uncertainty of the human future into calculable risk they believed that it would all work out and it didn't so where will we go now I've now got less than 10 minutes to go and I'll just make a few brief remarks bearing in mind the cautionary observations of Woody Allen about where I think things might go next I've already made one or two remarks I don't think there is going to be I hope there's more global cooperation especially on environmental issues and that interacts with one that connects with one point I'm going to make straight away if you like part of the attempt of governments throughout the world to refloat the economy was undoubtedly necessary I don't think there was any real alternative to bailing out maybe it was done in the wrong way maybe it was done maybe maybe in Britain in America it contained various errors of policy but there was a major crisis probably within days or hours some people even say a breakdown in global instance international global financial institution something had to be done so I think policy staved off catastrophe that was a success you've got to give credit where credit is due but refloating the world's economies by restarting growth of the sort that existed before the crisis I don't think is going to work why not well first of all that was debt sustained growth it was largely based on it's going to be jolly difficult to run up debts at a higher level to get us back to that debt for announced growth you can electronically print more money and that's happening and I think it's necessary by the way I'm not one of those who say that it's it's unnecessary or mistake as far as I understand it it's essential but I'd be done but of course it runs the risk of inflation later down the road now we're in a semi deflationary environment it's hard to imagine but a year from now two years from now three years from now might be in a different world might have inflation back and I think the idea that planners policymakers even with the best of intentions even extremely intelligent ones which sometimes have can really say well what we go for is I think probably 2.7 percent inflation that's what will they may not going to happen because these these changes occur when human expectations change suddenly and people stop trusting the policy and then you have a collapse that can also happen currency markets I'm not confidently predicting a crisis of the dollar but I thought and certainly think it's entirely possible to tally possible but there's another reason why I'm perhaps a more fundamental reason connected with globalization as worldwide industrialization why I don't think which is restarting growth on the previous pattern it's going to work for very long if it can be done at all maybe it can be done for a few years but the reason is before the crisis we had very high prices for energy and National Reserve natural resources for commodities very high prices now they were partly speculatively driven that of course is true but we're hearing increasingly from a variety of sources that the theories of some people about Peak Oil doesn't mean there's no oil left in the world plenty of oil left in the world but actually easily extracted conventional oil they already have peaked in terms of reserves that's a serie the maximum extraction may have already rate of extraction may have already occurred the idea that the world can return to a path of rapid growth without seeing a revival of commodity prices and energy prices I think is a stick that will happen partly again probably specular to be driven but essentially over time demand driven because in all of this worldwide industrialization is going on in China and India announcer and I don't attack it I don't criticize that not one of those who say they shouldn't do what we did I'm not saying they should do I'm not seeing emerging how you should do what we did I'm not saying that either whatever they do should be their decision in their choices whichever way it goes but I think worldwide industrialization is a very very powerful tendency connected with all kinds of human aspirations and geopolitical changes and it's not going to be stopped by Western preaching Western hectoring or any political decisions if it stopped it will be by environmental crisis by a planetary backlash coming through climate change and so I think one of the features which one can anticipate in the next ten years and certainly the next twenty years but probably even the next ten years because some kind of growth will be continued or we begun for a while at least in some important countries I pretty convinced of this is that the prices of natural resources will go back up the price of energy will go back up cluding oil especially orbitals of natural gas etc they will go back up there will be increased difficulties many parts that were concerning water and as climate change begins to bite there'll be issues connected with arable land and coastal inundation and so forth so one can anticipate an intensification of resource scarcity with geopolitical ramifications I mean such things like wealthy States buying up arable land in poor States it's already happening and I think it will continue to happen so I don't think as it were resuming the path of growth that existed before is really feasible not at least for very long or not with serious problems coming up on the horizon and it's there I think that we actually now we should really be thinking about that not blithely assuming that what we've got to do is get the Machine get the car back on the road which is essentially what all politicians are doing I mean they're first and many policy makers their first de perak t'v is to get economic growth of the sort that faltered in 2008 2009 going again and one can understand why not just politically but because one of the things which is very important to avoid if it can be avoided is mass unemployment really massive employer would be catastrophic partly for the reasons I mentioned right at the start because I'm sure it would provoke a policy of poisonous politics again I'm sure it would provoke all kinds of new so again I'm not attacking politicians they're not idiots they're not all they're not criminals actually most of them in the many part are not even cynics they really believe in much of what they're doing but looking forward to the next phase of this process of the collapse of the existing model regime of globalization against a background of continuing industrialization continuing globalization in the sense of worldwide industrialization seems to me that the next steps will be ones in which which combine the next phase will be one in which combines a revival of world I don't mean tomorrow or next week I don't know when it'll happen it could be years but I'm pretty sure it's the next phase because look first of all worldwide in this relation continuing in China and elsewhere and in India and secondly demand for therefore demand for minerals raw materials natural resources water oil energy all the things that feed into energy would continue to rise and these are finite resources and human population is also rising pretty quickly two billion more people in the next 20 years so against that background one can only anticipate much higher prices and that combined with the monetary expansion of the last year or so and probably continuing on even expand even increased monetary expansion if the present expansion doesn't prove to be adequate in January generating the growth that's required could be recipe for a period of fairly rapid inflation but also and more significantly maybe conflict between countries between States between states so I think that's what we should be thinking about now that I mean I don't sort of have that many answers of somebody you know I can't whip out of my pops this is what we should do the whole point is I think we have to be flexible and pragmatic and not look to some brand new system to replace the one that's collapsed because there isn't a single size that fits all and we're not in a situation where one part of the world can dictate to the rest we're in a situation where there can be international cooperation and discussion and agreement but within limits because there are deep differences of interests of historical development conflicts of a geopolitical kind as well as less rational human conflicts in the world which are not going to go away so there isn't going to be some new system instead I think what I would like to recommend is greater clarity greater realism greater clarity create a pragmatism greater flexibility in dealing with events as they as they as like as they come up so this is bigger upheaval the only one of the few predictions I would make reasonable reasonable high degree of confidence is that justice today we're in a different world than the world we were in ten years ago and the book was first published ten years from now we'll be in a different world again I don't believe these pressures or conflicts or instabilities or imbalances or problems I've talked about all the sorts of problems that take enormous ly a long time to work out the incremental theory of history works in only a few countries in most country's the history of the last century was a history of revolution if you're a European living in most European countries not even to speak of Asian countries you were 70 or 80 now how many regimes would you have lived under 2 3 4 5 quite possible to 80 years old so the history is really the 20th century see real people who think they're realists and pragmatists that kind of gruff sensible chaps they're mostly men so well you know things take a long time and they go rather slowly and didn't reach by inch it's not the way history actually worked in the 20th century not that's not what happened when the Soviet Union suddenly melted down it's not what happened in China when there was long periods of civil war foreign invasion sino-japanese war mostly the history of the 20th century was a history of revolutionary upheaval and I think that this is similar now we're in similar circumstances now changes partly because of the internet part of global communications further reasons happened quite quickly so 10 years from now I think we'll be in a completely different world but it won't be the end of the world let me go back to where I started back in the 80s there was a phrase which used to go around a bit in Eastern Europe as communism was come to an end and everyone was looking forward to it some thought it would never happened and I thought it would happen but one one of the sayings that I heard there was that was very good say I say it's still very useful don't put too many of your hopes in the end of the world it never happens it just goes on thank you very much thank you very much for that John that was extremely interesting if I could start the set the ball rolling by asking a question which is let's ignore Woody Allen a bit more and if I can press you of it on the last part of your lecture which is I thoughts about the future yeah can you sorry if I can press you a bit more on your thoughts about the future I mean now when there's a discussion about sort of what's happening it's extremely short term and extremely narrowly conceived yeah is the are we are we getting out of the global financial crisis that that's the way it's perceived now what you're clearly saying is something much more profound than that that the global financial crisis both marks the end of something and also the beginning of something now if you were looking historically you know you talked about 1870 to 1914 as a period in some senses or 1929 to the outbreak of the Second World War in another sense or what you were talking about the long boom at the end from the late 40s to around about 1973 or the neoliberal period and so on now casting you're casting your mind forwards what sort of period and how do you think we'll see this period of whatever it's going to be 10 years 20 years it could be quite a long period of fundamental instability how would you see that in more conceptual terms I'd call it a fairly long period of disorderly globalization that's to say globalization in the sense of worldwide industrialization new technologies of communications because it's in part a technologically driven process will continue won't stop technologies will continue to get more efficient quicker and cheaper many of them the new communications technologies but against a background also maybe of the in puts the natural resource inputs oil scarce minerals and others getting more expensive actually what I expect I know this sounds rather vapor there's a fairly long period of disorderly globalization and the reason it partly be disorderly is and you heard about this in your book on China Martin is that because one of the changes which is taking place now the emergence of China or and the tilting of economic power from west to east not only from America but also from Western Europe and Japan as an old as a non-western but early industrialized country to new rapidly industrialized countries in these that's not a change which happens even every few decades it's a change which happens every few centuries a big change at least over a hundred years two hundred and fifty years I mean some people say that actually Europe only a man Britain only emerged as economic drivers as it were in the in the 18th century so they're not may not be centuries but might not be many centuries but it covers it it's a huge gigantic change so it's it's virgin territory that were in in that respect there's been long periods of economic growth in India and China also in the past but they haven't been in the global context that they're now in and they're not against a background of global communications of the kind that we have which will continue so I expect a long period of disorderly globalization and if you ask me again this might sound rather modest or even downbeat you so what's the main thing that we should aim for one myth is just avoiding major conflict avoiding major call is very important and that could happen it probably happened a ways that no one we included could can anticipate advance but there are some contexts for example the if it's true I'm not a scientist so I don't know and maybe they don't know but if it's true that the Antarctic will be open for shipping and exploitation exploration in ten years time I'll tell you what I anticipate I dissipate quite a lot of conflict over who controls it will it be military conflict I hope not but there'll be conflict all right and at some of the countries that seem like good guys might look different Canada Denmark all these wonderful social democratic camp they want there they want their peace as well as Russia around and other countries which have never been in that part of the world before so I think actually a major thing to start think about how to avoid conflicts like that there are other different kind of areas maybe more obvious I mean one thing which people mainly economist always say is they say the relationship between China and America in terms of them being joined at the hip economically kind of tacit deal in terms of America keeping its markets open in return for large amounts of Chinese purchases of bonds that will remain stable over coming years most of them say that because the reasons why they say it because if there was a sudden attempt to get out of the dollar trap dollar would crash and the remaining assets would be worth less so it'd be self-defeating we all know that but if the policies of the American policies are basically involve running up more and more debt if a policy of benign neglect towards the dollar where'd leave lead to a loss and confidence in the dollar at all where to start sliding anyway if the only way the levels of debt that have been run up in the US for example is ultimately by what we're writing them off by inflation why should and will subsequent Chinese governments which will be internally divided factionalized they're not monolithic any more than any other the Communist Party is not monolithic can we confidently predict that they will not try and get out of the dollar trap even maybe make a mistake can we confidently bring I think on the contrary it's it's it's more likely than not that something like that will happen over the next 10 15 20 years and that would be a huge change and yet if you talk to most people that it's completely impossible why is it impossible because it's against the rational self the players involved well there's one thing I've learned through observing politics is that believing in rational self-interest as a guide to what's going to happen is slightly less reasonable than believing in the Virgin Mary people develop rational self-interest only when every other alternatives been fully exhausted and often not even then so you know things happen there are in the undeterred that your mistakes are made policies are factionalized messages don't get through and also there are there is the non-rational undertow of politics the national myths and traumas of different countries which feed into the decisions that are taken or not taken so that's an area where I think that could be a major I mean a major change that's less predictable though than the one I mean the one I mentioned first was the the revival of environmental conscience only two years ago since everybody was talking about peak oil then a financial crisis deflation demand collapsed for a while it was a no peak oil well the geology of the earth didn't change in those few months nor did most of the economic factors and extra extraction factors changed so that poses a real challenge and I think there we need to be thinking technologically we need to be thinking about new technologies cleaner technologies we 2x exert all of our technological virtuosity I mean not because technology can get us out of there are lots of things technology can't do lots of things it can't normally repair destroyed biosphere you might be able to bring Tigers back by using their DNA but you probably won't be able to bring back their habitat once it's been destroyed by climate change and technology certainly can't make human beings more reasonable but technology will be part of the way we negotiate the resource and climate change problems which are undoubtedly going to be faced now technology will be a very important factor so I think we need to be thinking about these these now so that's I mean in the next 20 years that's more or less what are they that these two of the things I would focus on as well as I know this is a very unpleasant thought the likelihood in a number of countries many countries perhaps with different degrees of severity and threat but a reversion to far-right politics which I started from I think that could happen I don't mean we're going I said about Nazism in the way it existed in the 30s but I can't believe that high levels of insecurity and threat and puzzlement and Battlement and the failure of politicians to solve problems which not always because they're corrupt to a weak but because the problems aren't fully soluble I can't believe that situation won't energize far-right movements thank you John actually we already have their aversion to far-right budget we've already got it in Italy in Italy right whose invention is to ask a question right we've got a my god I'm going to take three at a time but so that's great hit them that's good yeah right the Bittner behind behind first because you've had your hand up to the beginning thank you very much for a very interesting talk you started off could you give your names by the way before Mike Joffe from Imperial College thank you started off very lucid Lee's explaining how the the current state of at least some kind of economic theory was at the root of the hubris that you talked about could you comment please on what you see the prospects for economics and the state of the economics profession particularly not not so much to to get us back to the kind of growth that we had before which you've given your views about but also understanding the processes of growth enough to be able to manage the future ecological crisis thank you the gentleman in front i mean you sort of mentioned that you placed an awful lot of emphasis on the kind of return of far-right politics and and the idea of conflict I mean first of all I mean it's striking actually let's not forget that the BMP number of people voting for the BMP actually fell during the yeah okay so in elections actually the share of their vote which has more complex questions to do with them collapse of faith in the political class also what's been striking about this recession generally a particularly for us of Western Europe has been the lack of conflict there's been in young a distinct lack of you know Industrial Disputes people happily accepted their collaboration in terms of accepting wage cuts and so on I mean what makes you so convinced why why is this the obsession that we were suddenly going to turn on each other when that hasn't happened yet which has been historically very unique about this crisis sure I answer though so what one more well at the back yet I just wanted to ask you I think on the first question you said that the idea of a global economic system does not does not exist anymore it's fragmenting whereas the other idea of globalization which is a worldwide industrialization it's a nice way to put it but if you are in a business school anywhere on the planet right now seems like the former idea still exists and the intellectual loyalty is to maddening levels still so within academia and also particularly in the developing world if you go to India because it's perceived that the crisis didn't affect India that much which is primarily true but the crisis was more in the Western world the belief in the free market and free trade still exists you know to same level so I just want to get your Bueller should I answer those yep well or a number it here which are all good questions are and are to some extent related for example the question about I guess the economics profession and the persistence of the earlier views of the of the earlier models of globalization despite the shock that occurred in the a couple of years are connected now I'm not the economist read a lot of economy economics and studied it quite a bit but I'm not an economist but I'm not terribly optimistic that there'll be any fundamental change in in economics in the next few years and this for a number of reasons because part of the prestige of economics in the last 20 or 30 years has been that it claimed a kind kind of status of a science which means that a state can domesticate uncertainty turn it into risk could be highly quantitative develop mathematical models and so on whereas what I actually think is it you know it needs to link up with things around science like history like the study of culture like the study of religion and nationalism all which are very important in economic life in which partly explained economic growth actually I think to some extent there they feed into periods of rapid economic growth and if you go back to the great classical economists Scottish economist Marx and up to Keynes they were all sort of speak soaked in the history in history and in the history of economic thought and that's less true now I think there are not many people even in the economics profession study of the history of economic thought not you know what not as much as they used to anyway in fact although I'm strongly critical of Marx I often find the most refreshing conversations are with ex Marxists because at least they studied history of economic thought you know it didn't start when they began preparing their Vida so I'm not terribly optimistic and this could connects with ideas Kane said this didn't he he had this wonderful phrase he said practical men with not practical men and women now they turn around then they hear voices from the past gibbering the ideas of a previous period or outlast the point at which they're useful we can be in actually a radically different world than the world in which those ideas were developed and actually carry on using the ideas because there's intellectual capital this investment of intellectual capital there is institutions are organized or the reproduction of certain ideas and the propagation of certain ideas that can go on for a long time and that's one of the reasons I think it's um it's it's actually difficult to navigate the world in which we're in now if you had believed certain of the models which were around in the last 20 or 30 years and actually what has happened in China couldn't have happened if he said you've got to have something like a western-style legal system to have sustained economic growth for 10 or 20 years so what about this the biggest industrialization on the quickest in human history how did that happen I've yet by the way to get a answer to my question if you really need a Western legal sister one secretly there hidden nobody knows about or is there some other set of explanations I think there's some other set of explanations and this connect up with something which is rather important I mentioned briefly which is the cultural limitations of Western social science I'm not a relativist I don't think there's no such thing as human nature I don't think all values are culturally I think there are such things as there is such a thing is a human anthropology there are even universal human values of some kinds humans flourish and fail to flourish in certain context independently look at their culture whichever culture you're in you don't I don't think people I think a culture which is immemorial ehad torture isn't one in which people who are tortured don't mind it in which people who are raped don't mind it I don't think any of that but our deep I think cultural distortions in West and social science which should be corrected but I think it will take a long time so that I think answers two of the questions at least at least briefly why has there been so little conflict up till now it's a reasonable question well because actually comparatively little has happened up till now unemployment hasn't risen catastrophic Lee although in America in some parts of Italy is rising pretty quickly and has risen pretty quickly but most people have a feeling of pervasive insecurity or more greater insecurity later there hasn't been a large-scale dislocation yet but I think it's fairly I mean even people who think as some economists do that over the next year or two will come out of the problems we now expect significantly higher unemployment and you know in places like Ukraine or Latvia the post-communist countries it could be quite significantly higher substantially higher and if that's this in other words we're just at the start of the period where maybe not just at the start we've only had the very first phase of the period in which the financial crisis has fed into the real economy and there's been a big effort which has partly worked to prevent it having catastrophic effects quantitative easing electronic managing money creation and bailing out of the banks and so on but despite that there is going to be higher unemployment so if I mean if I'm wrong and if let's say the trajectory of growth recovers in the next year or two if unemployment stops growing and tails off then there won't be I agree with you there won't be but if in important cases this doesn't happen and one of the reasons I think this is I sort of find hard to see you know a really massive increase in spending in the US and remember although China has managed to maintain growth better than other countries it's still heavily dependent on exports so it's not decoupled it isn't decoupled so they can still be these global effects and if they if they work out the way I suspect they they might then I think the politics of the poisonous politics will we'll have more of a future but I agree with you so far one could say it's been less than one is on a sphere and I also agree with you that of course the vote of the BNP was down I think that's a encouraging fact but the other what you also said actually isn't is is also important which is that the reason they've made the advances they have in the places they have is disillusionment with the mainstream parties and so that this is it's a situation which i think is not terribly stable and I don't think it's one we can afford to be complacent complacent about yeah the Financial Services Authority in the Bank of England seemed to be increasingly looking to the Bank for International Settlements namely the biz hosted FSB Financial Stability Board to take on a role as global regulator and global enforcer given your prediction of a breakdown of cooperation among nations is it safe to say that you don't believe any organization will be permitted to take on such a global role and there was who else had the handle yep hi my name is Mary Ellen Pompeo I must MSC student of gender development globalization and I was curious to know how you think the system that you foresee that is flexible and fragmented would affect global inequalities I'm one last question oh sorry yep Heidi Amelia plated from the Metropolitan University Thank You professor gray for your elephants but you really confused me very much was an enlightening me and I have a very brief question that you mentioned rich countries are buying arable lands from the poor countries what will be the political social and economic complication of that and a can you link it that with the second version of your definition of globalization the particular global economic regime thank you what very last question right at the back hi magical tea from an alumnus of the LSE I wonder professor gray whether I can just be devil's advocate for a second whether we are at risk of throwing the baby out with the bath with the bathwater in other words the title of your lecture is the crisis of global capitalism and a major tenant in your discussion is what is the financial crisis and there is an argument that one could make to say that this crisis actually whilst it has had a white sometimes bilateral sometimes through transnational institutions and sometimes if the transnational institutions don't suit the great powers they but they will bypass the institutions and make deals with each other so there'll be a background of continuing cooperation there isn't going to be all-out war between the powers lots of cooperation would be a kind of shifting strategic balances between different countries and I think one feature of the situation is it might be harder for poor countries even than it's been and for small countries especially because the the big players will be the ones that count they'll make deals with each other and they also make they'll also make deals through transnational institutions which may change and be reformed and have new members and bring emerging countries or countries that have emerged rapidly a China into an India into greater positions of authority and so on but it won't be a sort of new system it'll be a highly labile circumstance not a complete chaos but of continuous negotiation and geopolitical game playing and geopolitical game playing about energy about access to sea routes about access to arable land for example pipeline politics and so forth I'd be very very important and of course when you have several players it's not easy to work out I'm not a tremendous believer in game theory but just teach you something it can be quite unstable so that's what I think and that service I don't envisage any huge diminution globally of inequality although of course it's true that economic growth in China although it's associated with high levels of any inequality in China and globally of course reduces inequality in important respects so that's that's important I think a really interesting question is what happens to inequalities in advanced countries not just of income but also of opportunity and mobility because at least in Britain we have certainly no more social mobility than we had 20 or 30 years ago maybe less and how will this work out if we have a period as and most people I think most economists even would agree that this is likely a period a long period maybe a decade of very very stringent public spending on education for example how will that impact on inequality in the society how will that work I think that they are very important issues now as we're finally I mean is this all a storm in a teacup a global teacup but a big teacup but a teacup is it simply a failure in the financial markets particularly in two countries triggered by certain intellectual mistakes and failures of oversight well I guess it's possible but of course it has large implications because I think one thing which is important not to forget is that globalization as a global free model it was a project promoted by a superpower was an American project above all American project and the setback in American powers be really rather fundamental now I've often been a critic of American policy and I still AM in certain respects but I'm not one who says that this event is all good it's not all good because actually as I just said a moment ago if you have five or six different countries competing with each other China India Japan China Russia China Europe America not to speak of Iran and middle level countries and so on it's potentially a more to what pluralistic world and in that sense it's good it's also it can be quite unstable but it's the one we've got when we moved into there isn't going to be a situation in which there is a single hegemonic power the situation that the US had or seem to have in the post-cold war period is not going to be inherited by any other power China is not going to replace them India is not going no one's going to replace it what the Americans were then so it is a different world again as it more like I think the end of the 19th century it has some although there are different players now obviously as I've mentioned on several occasions it's more like that than any we've seen in the last few in the last few decades so even if it started I mean you might say even if it started only as a pet herbaceous in financial markets arising from mistaken theories of risk management and failures of oversight it has law it accentuates or promotes large-scale geopolitical changes in the world and I think they're underway now and can't be can't really be stopped and it's not really questionable what I think or what I want or what I want to promote they're out in the world these changes they're actually taking place I will continue I think to take to take place regardless of what we want because they're bound up with this deeper sense of globalization as worldwide industrialization and in looking ahead a few decades as far as that's possible I think the really most serious problems I would want to I would I think I've come up are in a way they're bound up with these geopolitical issues with the really questions of the extent to which worldwide industrialization can be made consistent with environmental stability because worldwide and just elation not going to be reversed by any political decisions or any green movements or any lectures that anyone wants to give to emerging countries so on it's immensely powerful movement because partly because it's been beneficial in many contexts people live longer have better standards of living you don't want to go back I won't go back why should they but they don't want to anyway to go back to the life they had before but it's coming up against quite quite rapidly in many parts of the world against environmental limitations flood drought heavy levels of pollution and of course significant process is not just risks but actual ongoing observable processes not only in computer models but actually in the real world of environmental damage and an instability and that's the really big one I think we should be be thinking about because how do we adapt to a circumstance in which the levels of development which have been achieved by the affluent minority in the world can't be achieved elsewhere or even sustained in the affluent societies for long I mean that's the really big question and I don't think most I mean there are economists who began to think about it and so but in general economics things works with price not scarcity just guess it's a function of price I don't think that acceptance often often the case obviously but when you reach when you reach points of finer to dueño smore to get a barrel of oil out then the code takes more energy to get the barrel of oil than the energy you get but anywhere near that yes but we are in a situation in which I think we will see prices going up and it's not obvious what the alternatives everyone assumes there are alternatives actually to including the Greens they assume that there are alternatives which can be made operable pretty quickly I doubt that actually myself that especially the quickly I doubt that okay so I think we're in for great difficulties and at that point that's the point when globalization in its deepest sense will come into into question but humans are fairly resilient animals were other rather inventive so it'll be plenty of opportunity for problem solving I think in the next 20 years we're certainly not going to be remember what the second part of Francis Fukuyama's boob was it was about the last man or let's say the last person is the last person the person who felt was took it from Nietzsche whose being created all over the world is someone faced with the existential horror of permanent boredom now I can definitely promise you you won't suffer that evil cute

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Keywords: LSE, London School of Economics, Public, Lecture, Event, Seminar, Professor, John Gray

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Length: 88min 30sec (5310 seconds)

Published: Fri Dec 17 2010