good morning and welcome to the festival of economics there are many of us today it's a very good sign my name is stefano and today today i'm here just to introduce professor mike chisney just a few words to talk about this event this is an eyelet event this is the institute for network thinking which is supported by many prizes and nobel prize winners or awards the ambition is that of contributing to the economic debate and this not just through policy papers or through specific suggestions of economic politics but also by rethinking and reviewing ideas starting from scratch starting from the grassroot debate the idea is to go back to the fundamentals because it is true that something went wrong on both sides of the atlantic inet has 120 young students so young men and women we have to rethink economics from the bottom and therefore we have to start from young people those of you who studied economics both in italy and in the states there is a tendency towards standardizing approaches this is particularly true in italy i went to the bocconi university and i can guarantee that that was the case so we have a guest professor mike chisney who has radical ideas and therefore faculty such as this one if you think about what happened back in the 68 to 1968 robert chisney will you have his cv in the program teaches at the illinois university a long list of publications including dollar accuracy which is the democracy of the dollar we'll learn why in my opinion being a journalist what's really interesting is that professor mcchensley has two main areas of interest media and democracy and their evolutions and they are intertwined today he is going to talk about the past capitalistic democracy how democracy is changing is evolving you know just a very brief introduction and we will then have an opportunity to start a debate with professor mcchesney well there is an ongoing debate of of your democracy which is not working the economists for example had a full report and even a front page on the issue giving a completely different point of view probably professor mcchisney does not agree with that point of view he says that it doesn't work because countries are have huge debts that have spent too much and therefore they can no longer work according to a new liberal new liberalist approach depending on the term you prefer so that's the right side point of view however there is a more neutral point of view very recently uh a the italian version of the latest stephen king's book was published he is an economist of a british bank and he says that we have to accept the idea that there is no longer growth we will never go back to the growth rates of the 90s however this will impair our own democracy which is based on on ideas that we can longer afford for example welfare state welfare state pension schemes so things will have to change so that's our european point of view we are living in this situation what's not working in democracy is that there is no longer growth we are undergoing a structural crisis and therefore people are disenchanted and this gives rise to populist movements and waves as recently seen during the european elections so that's our point of view there's the european swamp we're in but before tackling these issues and we will probably do it during the debate we will hear from professor mike chintzy who will give us his american point of view which is slightly different so you have to bear in mind that he is going to tell us about a completely different world and exactly for this reason uh it is very interesting democracy has been eroded by big financial powers by the big money determining the results of the polls there is this loss of trust in the average amer american voter we're seeing something similar in europe from a completely different background states have lost control they are in the hands of finance not because finance is paying for elections but because politics cannot keep up the pace of economic changes in the states the situation is slightly different and professor robert chensley is now going to tell us why the debate has been started in the united states both with occupy street movement and also um about with the debate of thomas piketty's book a french writer nobody wrote read that book when it was just in french but now the english version has been published and everybody's reading it he says that we're going back to a 90th century democratic inequalities what's very important is who you're married with not where you've studied so during the 20th century we thought that actually we were moving towards a broader and more broader working class so overcoming inequalities and that was the result of the two world world wars usually was make or level the playing field we all start from the same basis but then when wars were over inequalities actually started growing again because according to pkt capital grows faster than real economy and so the wealthier become wealthier and those who live in the real economy don't a huge debate is going on financial times the financial times disagrees with pkt people say that financial times is waging an ideological war federico rampini recently wrote an article on an italian paper on this issue so the debate is going on the relationship between inequalities democracy you know the one one percent of the population in the united states is counting less and less that's the main issue in the american debate and slightly from a slightly different perspective here in europe as well again we will talk about it during the debate after professor robert mcchisney keynote who's going to talk about how democracy is changing thank you very much for that introduction thank you all for being here i didn't understand that but it sounded like a great introduction it was a very interesting interest no one was laughing which is good um i want to thank everyone for being here i want to thank the organizers of ineff and the young scholars initiative for asking me to be involved i want to thank rob johnson who i think is personally responsible for my being here for including me in this we don't really have stuff like this in the united states it's long overdue we need more efforts to bring discussions of democracy the economy capitalism how they interact and how they affect the public into the broader public to have this discussion so it becomes a popular discussion and i'm delighted to be here to see it i want to thank kiara andreoli who has been unbelievably helpful in organizing the trip for myself and my family stefano for the introduction jay pocklington there's lots of people to thank but most important i want to thank the translator who has the thankless job of trying to slow me down as i speak to you for the next 45 minutes i've already offered her my condolences and i'll do i'll do my best to not go too fast but i do tend to get carried away in my talks uh in the last year i had two major books that i wrote i've been working on for a long time have come out one is on the political economy of the internet called digital disconnect and it deals a great length of number of issues including the collapse of commercial journalism in the united states and worldwide the second book was called dollar accuracy which i wrote with my friend john nichols which deals with the effects of big money in american elections and the complicity of commercial media in basically undermining the effectiveness of american elections to reflect popular participation and values in the governing process i'm not going to talk much about either of those books today on monday morning i'm giving a lecture on each of them just a block or two away from here i don't know some new building over there and uh but i so i will touch on them briefly but today basically i'm just going to make a handful of broad generalizations very broad that i think will provoke more questions than answers about how we might want to think about the political economy of our times and fairly sweeping broad breast strokes what i see is the crucial issues and i'm going to start with two points before i get into the heart of the talk one is a paradox or contradiction and the other is a trend both are empirically based but i think they're not fully appreciated and i think they need to be in the middle of everyone's thoughts as we proceed and we consider the relationship of capitalism to democracy which is sort of the center of all my work the first paradox is that the productivity in our economy has grown tremendously in the last 40 years but the standard of living has not grown phenomenally we have this extraordinary development in which we're producing much more per capita yet the quality of life per capita has not increased that much in some cases it's actually decreased so a steel worker in the united states today produces six times as much as a steel worker did in 1970. six times greater and in the economy as a whole usually at least twice as much as they did in 1970 but incomes real incomes have not doubled twice as much and certainly steel workers not making six times in real terms what they did in 1970. and this has really been a theme now since the 1970s and i think for younger people i'll put this in context when i was your age when i was studying economics in the early 1970s in an american university the assumption was as productivity in the economy increased incomes increased part of it went to business part of it went to workers everyone shared starting around the mid 1970s there was a split productivity continued to increase but incomes remained level and some instances fell down per capita this to me is a really important phenomenon and there's no sign of abating if anything it's going to increase in the coming years there's no reason to think it won't um and i think here is when this paradox becomes in marxist terms what they call a contradiction and you know what marx's uh supreme contradiction of capitalism was that the ultimately the problem with capitalism and probably the reason why marxism never goes away is that as capitalism increases the integration sophistication and socialization of the economies it increases the productive forces dramatically as unquestionably is taking place that comes into conflict with the private control over the economy the fact that the actual productive process is in the hands of very small number of people who only deploy to make profit and so you have a tension between what society can do and what it actually does and the barrier is the profit maximization of the few that dominate society now to marx that meant that's when capitalism has run its course and it's time to go to something beyond capitalism to socialism in his view and in his view 1848 was done he's seen enough of capitalism say it's time to put it in the rearview mirror a long time ago but marx wasn't the only one who felt this way jon stewart mill john maynard keynes many of the great economists understood capitalism as a historically specific period that had a historic function which was to increase the means of production the quality of production but at a certain point demille to keynes you get to the point where once the productive apparatus has been developed the weaknesses and drawbacks of a private capitalist economy would outweigh the benefits that it brought to a society and i'd like to submit to you that i think we're at that point right now i think we're at the point right now where the uh conflict between the great productive potential society and then having a social system based on dominance by profit by a handful of individuals from firms has come into great conflict and it underscores a lot of the problems we face today the second point i'd like to make is a trend and it's related to the first point and that is that we should understand that stagnation is the rule of order of the world economy especially the u.s economy today with no end in sight and what i mean by stagnation isn't that we're in a depression it doesn't mean that we're red lines and 1930s style depression everywhere what it means is that the rate of growth is much lower than it has been in better periods and that your your up swings tend not to be very strong and your downswings tend to be very severe and longer it tends to mean that you have declining or stagnant real incomes it means that there are less revenues and taxes there's an attack on social services and benefits and there's increased pressure to have government policies to make it more profitable for private investment so they will create jobs and hopefully solve the problem of stagnation so it is in the united states today we see massive efforts at privatizing and outsourcing government functions this is one of the great growths of profitable investment is seizing onto the federal government trough and getting into that uh for the for the growth we also see in the united states today and i know this is true in certain places in europe the worst labor market for young people in 80 years it's absolutely as a college professor i can tell you it's absolutely dreadful compared to just two decades ago and certainly four decades ago and it doesn't look like it's going to get any better there's nothing on the horizon that says this will change oh we're just in a speed bump here we've been in this now for quite some time there's no reason to think it's changing getting better if anything it could get worse an example of stagnation and the absurdity of our current predicament is that they're depending on what numbers you look at between 1.5 and billion excuse me in 156 1.5 trillion and two trillion dollars in idle cash that's being uninvested right now capital that's not being invested because they can't find uh lucrative investment outlets no place to spend it on one hand we have idle capital we just had for years now on the other hand we have millions and millions of unemployed and underemployed workers and that really doesn't compute that shouldn't happen in a market economy theoretically if you have unemployed capital unemployed workers they they marry each other and you create jobs and produce an output we're in stagnation they're not it's not happening they're stagnant it's not going anywhere it's not improving it's staying the same in the united states the situation has grown so severe we've seen a massive increase in what's called long-term unemployment which we haven't seen again for eight decades in which there's a serious number of our workers have been employed who haven't had work now for six months or longer and by all economic reasoning they're never coming back into the labor force they're they're gone for good these are workers oftentimes in their 40s and 50s these aren't workers during retirement so that's what stagnation looks like austerity is the automatic political response to stagnation for understandable reasons because you don't have much money so you have to cut back and the idea is by cutting back you can better marshal your resources but of course as paul krugman has put it well no one has ever used austerity to get out of a depression uh it's what it does is it encourages and enhances stagnation and depression so where does stagnation come from and i think this is an issue i've written about some of my other work with john bellamy foster the editor of monthly review and i'm not going to go into detail with it here but i would argue that stagnation is deeply rooted in capitalism it's not a fluke it's not something just accidentally happened because of bad management it's rooted in the nature of modern monopoly corporate driven capitalism i'd also argue that financialization was not the cause of our current crisis it certainly dispered it with the collapse of 2007 and 2008 but instead financialization and the growth of massive amounts of debt really began in earnest in the 70s and early 80s was at that time an effort of the system to respond to the stagnation tendencies then that gave the system life for two or three decades the massive growth of depth but then the solution became worse than the problem by the end of the last decade and left us in the situation we're in today so to conclude this sort of point and the point here that is essential i grew up in an era in which the assumption was capitalism would hit on all cylinders the era from the post-war years into the early 1970s and that was capitalism that would normally work and if it didn't work like that there was some explanation that you could do a policy to get you back to the what were considered the good old days of high growth rising income capitalism i think now increasingly we could see that that period is the anomaly that needs to be explained and the real pattern of recent the last 100 years is one of stagnation and the periods that aren't stagnation are the ones that need the explanation not vice versa so my concern in my research and what i'm going to talk about the rest of the talk today is the paradox of the relation these paradoxes and how they apply to the relationship of capitalism and democracy uh this has always been attention uh how you can have this marriage between a capitalist economy and a democratic political system and i'd argue that in the situation of stagnation and the moment we're in with the capitalist economy they're increasingly antagonistic and moral foes and ultimately something has to give we can't have both together at least as we currently know them democracy of course uh going back to the ancient greeks was always understood as the rule of the poor that's how aristotle defined it it meant people without property were the ones who governed their lives more recently abraham lincoln and his second most important speech after the gettysburg address his first state of the union address took the final third of his speech and this is just as the civil war has broken out in the united states to identify what he saw as the greatest threat to american democracy more so than slavery he said the greatest threat was that people who have not worked for a living will run the government that it will become the proper the governance will become the job of the wealthy and he said once that happens we'll lose our democracy uh he said the crucial thing to have another government of the democratic is the people who actually labor themselves have to be the governors that's the foundation of a democratic society well this vision of democracy lincoln's is the way aristotle defined it has generally been understood it's obviously threatened by capitalism as a political economy that deve modern capitalism because it's a system that's based very much on inequality there's really people who work and people who hire people who work who don't have to work and the people who don't have to work are that's where everyone wants to be you know that's the goal of life is i want to be one of the people that people work for me not one of the people who work for someone else and they have much more power economically and they tend to have much more power politically and that becomes a problem for democracy as we understand it the marriage of democracy and capitalism has always worked best when inequality in society is minimized and there are great moments of democracy and capitalism that we look at and there are generally periods in which the labor movement is very strong in which non-commercial institutions and values play a much larger role in which the power of capital is much less than it might be otherwise that notion of capitalist democracy which has existed to varying degrees in many countries including the united states is more or less dead today it barely exists and is increasingly not occurring anywhere in the world the growth of economic inequality underscores all of this the more inequality one has the more impossible it is to have effective democracy you can have some inequality but not rampant inequality and the growth of economic inequality in the united states and the world is the great economic story of the last 40 years it's what everyone documents we all understand it's not even a debatable point now it's it's grown by leaps and bounds and it's simultaneously a decrease in the ability of capitalism to exist alongside democracy i suspect you're all familiar with thomas piketty's recent book that's gone gotten a great deal of attention in the united states so i assume it's gotten attention over here since he's french that argues or demonstrates would be a better way to put it given the evidence he marshals that inequality not only comes naturally to capitalism is the natural result of capitalism but capitalism at its best produces inequality now it goes against the argument that when capitalism is working well it's a rising tide and everyone benefits instead piketty demonstrates that basically when capitalism is working well inequality increases that's the nature of capitalism money flows to the top when the system is hitting on all cylinders and that the exceptions those periods like the 1950s and 60s have to be explained then as the exceptions which he tries to do and does i think effectively the book rather than the rule the other point piketty makes that's especially relevant to our times today is that in stagnant times like the ones we're in now those with wealth increasingly become people who inherit money the percentage of wealth that comes from people who create new industries create fortunes decreases and are replaced by people who've inherited funds and it gets very much like the rentier capitalism prior to the first world war uh that was the dominant form then but that's not the only threat to democracy and here i'm going to talk primarily about the united states in the next section which is the area i know best and some of this will have overlaps to the italy and other countries some of it not as much in the united states today corruption and governance is now routinized it's endemic it's built into the system and when i talk about corruption and governance i don't mean people are paying people off under the table that's hardly ever takes place if someone goes with a briefcase of money and buys off a politician instead i mean that the whole system is built around the ability of those with money to get their way and those in political power exceed to that system and they benefit by it oftentimes by getting not just campaign contributions but very lavish employment after they leave office of serving those companies so in america for example in 1970 two percent of former members of congress when they'd retire would stay in washington to work as lobbyists for corporations today the figure is over 50 percent uh in fact the most recent figure i saw was 65 percent of retired members of congress stay in washington to work as lobbyists for powerful commercial interests and their salaries range from 500 000 to 2 million a year depending on the position so anyone in congress understands if they play their cards right they've got an extraordinarily lucrative position set up for life as a millionaire when they leave office that's the sort of corruption we have in america that's built into the system in a recent study that just it's actually not going to be published this fall but it's gotten a lot of attention in the united states by two of our leading political scientists marty gillens and benjamin page just came out that examined 1800 government policy decisions made in the last three decades 1800 and it determined in each of these crucial policy decisions the federal government made the interest of money always won whenever there was a conflict between a commercial interest and a popular interest where the pop people the massachusetts people wanted something and the commercial interests wanted something commercial interest always won no acceptance not a single one the only time people won victories is when there was some commercial interest that also won they could jump on the back and ride that commercial interest but on their own people have no influence they concluded over governance in the united states at the federal level in their study but i think it applies elsewhere they concluded the united states is no longer a democracy it's an oligarchy that's how the system works jimmy carter the former president last summer met with some visiting german dignitaries and it was an off the record meeting but someone had their iphone there so it became an on the record meeting and he conceded to the germans he said the united states is no longer a functional democracy he said we're off the grid we're no longer a democratic society and i think those who study the united states understand that and see that and it's where you go with the sort of a political economy you have it's the natural political economy that comports to a highly and egalitarian society with no labor movement and very weak popular participation in governance another factor that's crucial in the united states that's hard to exaggerate and i don't know if people who haven't been to the united states will necessarily comprehend but i guess you do i shouldn't be that say that is how how deeply hardwired into the us political economy militarism is coming out of world war ii policymakers in the united states were deathly concerned that the united states economy would lapse back into depression it's in the 1930s for example you know the depression hit in the early 1930s worldwide and in the united states and we were coming out of the depression in the second half of the 1930s and then president roosevelt in the united states decided to balance the budget because he'd run deficits before that he balanced the budget and in 1938 the economy fell sharply into another depression the unemployment rate dipped down from like i think it was 10 or 11 percent back down to 20 and it absolutely astounded everyone and demoralized the proponents of capitalism saying gosh we thought we were out of this now we're back nine years later we're back in deep water of a depression uh that didn't last long primarily because world war ii came along the military build up and the economy was totally put on a wharf time basis coming out of world war ii the united states government was concerned that if we demilitarize as we have after every other major war in american history and go to being a civilian economy as we had always been prior to the 1940s it would return us to depression status that there would not be sufficient demand there would not be sufficient opportunities for investment and that was one of the crucial factors that led to the maintenance of a permanent wartime economy that u.s has had now for 70 years and it's really is one of the uh crucial factors in the u.s political economy is it was the one form of government spending stimulus spending that the entire business community no one in the business community had any opposition to any other form of public spending health care education mass transit there'd be some popular or some corporate lobby would oppose military spending had no one who opposed it and as it developed it had a lot of corporate interest that strongly supported it so it became the sort of keynesian stimulus way to keep the us economy humming now there are other reasons for military spending also but that really underscored it uh one example of how that came to light was in argentina around 10 or 12 years ago now they had their huge economic collapse some of you might remember and our president then george w bush went to argentina and he was talking to the president of argentina and uh the president was complaining in argentina how they what they're they were this crisis they needed help from the united states and george w bush said to her ma'am up in america when we have uh slowed down the economy all we do is increase military spending uh sort of that's the proven macro economics of the united states and military spending really we spend in the united states now approximately if you factor in the debt a trillion dollars a year uh on the military so it's seven percent or so of our gdp it's more than all the rest of the countries the world combined it's deep wired into our political economy you could no more get rid of military spending in the united states and you get you might as well get rid of capitalism they're they're they're they go hand in hand much of the research and development in the united states today for example comes through military spending it's funded by the public and then turned over to corporate interests the vast majority of everything associated with the digital revolution the vast majority came through military budgets for r d that created it most of the things you've got in your hand there come directly from military pentagon spending and then turned over to commercial corporate interest that is uh a key part of the u.s political economy and this is important for our discussion because something that's been understood going back to the ancient greeks again but certainly in the modern era is that militarism is antithetical to democracy militarism and democracy do not work well together and the framers and founders of the united states the country i know best they had lots of weaknesses they were not necessarily as heroic as they're often presented in the united states but one thing they did understand because they were classical scholars and they'd studied the demise of uh greek and roman democracy one thing they did understand that militarism would kill the republic in the united states the self-government it was nothing short of an obsession for madison who wrote on it widely they tried to make it almost impossible to start a war in the united states it's hard to believe but actually if you look at our constitution and actually take it seriously it'd be virtually impossible to start the wars we're currently in uh they also didn't want to have a standing army they would oppose the idea of a professional military they wanted just a civilian military that would only be around for a war that would break up and madison wrote in one of his passages he wrote brilliantly about why militarism was antithetical to democracy having a standing military he said militarism invariably promotes empire an empire invariably means you're going to have corruption secrecy inequality and what he termed emoluments of the people meaning that you have to whip up popular hysteria to get people lathered up to be in a militaristic society it's not conducive to political participation democracy or open debate and we look at the united states today and the military structure is so strong it's really outside of political review one military uh advisor person put it that when they go to congress today they have to argue to get a budget reduced they have to actually lead a fight to lower their budget uh that's the they want to get rid of a program they have to battle someone to get rid of it it's not the fight to raise the budget that's never really a problem so if you put all this together and a huge military base that's outside of popular review outside of congressional control it's eerily independent huge amounts of inequality and corruption you get sort of an interesting cocktail and it's a cocktail that is toxic for democracy and i think it leads you to where the united states is today in many respects you see the sharp decline in what's called the rule of law the basis of a free society so some people in america bankers generals presidents are above the law and some people are below the law very poor people there's no sense of the rule of law it's greatly declining in the united states as we've understood it we see rampant illegal spying by the government and commercial interest and we see routinely done today by people in power actions that would have been not only illegal but cause for jail terms 20 or 30 years ago maybe even 10 years ago all this is what you would expect in a society with these forces at play well wait a second people say what about the internet won't the internet the digital revolution solve capitalism's problems won't energize democracy give people the resources they need to counter uh oligarchy and and have popular participation and ultimately control over the governing system and indeed that's the great hope right now that the technology will save our bacon so to speak will solve our problems and the hope for the internet and the digital revolution to solve capitalism's problems is not at all irrational in fact one of the great phenomenon that has spurred stages of growth in capitalism historically have been dramatic new technologies the steam engine most importantly about later the railroads and electricity and then much of the 20th century the automobile which drove a lot of investment created all sorts of jobs and ancillary industries and gave much higher rates of growth to capitalism that would have had otherwise and economists have said well maybe the digital revolution maybe the internet will provide the same sort of spur to growth as the automobiles the railroad create all sorts of new industries with lots of jobs and give us a new wave of economic growth and make capitalism work as i think bill gates wants to put it frictionless capitalism at the speed of sound or speed of light is he put it well the good news is that the technology part of the equation is right these new technologies are a little sort of extraordinary there's a new book that's just come out in the united states in the last few months excuse me by a couple of mit business professors eric brynjolson and andrew mcafee called the second machine age it's got it's getting a lot of attention in the united states which chronicles the the next wave of digital technologies that are going into manufacturing that are going into uh all sorts of economic production that are really i think they make a convincing case are increasing productivity to levels that really were unimaginable we're seeing a quantum leap here in the next gen decade that's coming and it's going to have tremendous effect and these are authors who are very excited about what this will do for capitalism they think it's going to really uh you know send it to places it's never been before and make the world a much better place but to their credit uh these business professors concede by any inclination all evidence points out that what these this new burst and digital revolution will do is increase inequality dramatically there's no way around it they concede it and we're going to be in a situation where we can produce much much much more but we don't have any workers to buy the products we won't have any demand to give incentive to produce the products in the first place in effect then we're back to where we started with this talk that supreme contradiction that paradox of capitalism the digital revolution is only making it worse our productive capacities are increa spectacularly higher our ability to consume what we produce under capitalism lower than ever and something's going to have to give now my area of work and my emphasis going on trade all this has always been the issue of journalism my understanding has been that if you have a credible news media system that's the foundation of a democratic infrastructure that allows people like us citizens in any country to understand the issues understand the debates participate effectively as citizens if you don't have some sort of news media system that does that you can't have a democracy no matter what else you have it really is a necessary foundation cornerstone part of the infrastructure of democracy now in the united states we've seen our commercial news media system has been in decline for some time commercialism and monopoly have not been the best way to run a news media system our professionalism that emerged to protect journalism from commercial pressures a century ago has had its own problems as well and i've been one of the leading critics of the u.s news media over the last 30 years along with a lot of other people and the hope was that the internet would solve that problem the hope was here comes the internet and suddenly people didn't have to be passive recipients of what commercial interests told them they could make their own news they could communicate outside of official circles they could become citizen journalists and that this would democratize everyone would become a publisher freedom of the press would belong to everyone well i think the jury is in on that one and that's not happening what we now know is that journalism requires uh resources it takes people who get paid who cover stuff or accountable for it it needs competitions you have multiple people covering the same story so someone misses it someone else will get it there'll be a spur to cover it it takes a lack of censorship so that you have you have institutions to protect you from government and corporate interference these are the necessary ingredients of a genuine journalism and the internet gives us none of that in fact one of the great ironies of the internet is that it's basically destroyed the basis of commercial journalism because it's taken advertising away from journalism altogether advertisers no longer have any incentive online to support journalism they can use networks to get lead their target audience directly without having to pay for any website that does journalism and as a result we're seeing the free fall collapse and disintegration of the resources to journalism united states there's probably 35 or 40 percent of the number of people doing journalism today in the united states per capita as there were 25 years ago new city after cities down to maybe a third of the number of working journalists it had 25 years ago the population is growing much of public life is no longer covered there are political races on election ballots now most of them get no press coverage whatsoever it's a major crisis and as we address the crisis of capitalism and democracy and look at the role of the internet this is really front and center it's one of the first things that has to be faced squarely and this is not simply an american problem it's a problem everywhere in the world if we don't have it what we will have is the news and information for those who own the country they'll get it the people who have large investments who need to know what's actually taking place in a country who needs to know what politicians are doing they'll have a means of getting the information they need but the rest of us we won't have that access we won't have the capacity to know what's going on we really will be in the dark basically there won't be institutions to serve our needs so in my view it comes down to this the choice really is stark are we going to be a society basically set up to satisfy the needs of a handful of billionaires or potential billionaires uh in firms or we society is set up basically to serve the needs of the people who live in the society i mean those that we start from one of those two positions increasingly you can't do both and i think the choice to me is clear we should be starting with an emphasis on what goods for the whole society the great massive people we should start with an emphasis on democracy and that's really where i come up with the concept of post-capitalist democracy post-capitalist democracy the emphasis is on we have to think rethinking how we can invigorate and in some cases reinvigorate democracy and societies and where those parts of capitalism interfere with democracy they have to be ended they have to be changed that doesn't mean we get rid of all business doesn't mean we get rid of markets by any stretch of the imagination but we change the relationship between business and markets to governance and we do it democratically we do it with popular involvement awareness liberties this is not a dictatorial move whatsoever uh and the irony of this is that it will require some sort of a radical political movement to do this and even people who really like capitalism a lot and think capitalism is the best fossil economic system if they want to make it capitalism with the human face if they want to make it a capitalism that serves people they benefit when there's a radical threat to capitalism that's the one time people in power will make concessions if they don't sense there's anything to worry about they'll never concede anything my vision of post-capitalist democracy is that there's an emphasis on creating democratic institutions practices and rights is inviolable it's a process rather than a cataclysmic revolution where you turn a button and everything changes overnight and what does it mean what are some tangible examples of what i mean by that well for starters inequality has to be directly attacked for starters that's just unacceptable to have the levels of inequality we have the united states of the world today there are any number of ways to do that one of the crucial ways to do that is to increase what's called the social wage certain rights and privileges everyone should have education health care pensions that shouldn't be subject to debate in society we have the resources to make that possible secondly we need to build the infrastructure of democracy we need to build the infrastructure democracy that means media like i've talked about having healthy media that draw people into life and make it possible to participate competitive independent uncensored well-funded generally non-profit media on one hand and it also means that we have to in the united states as a particular issue we have to really take education far more seriously in the united states today and i fear this will spread across the ocean to other countries there's a strong tendon now to commercialize education and to subject it to all sorts of uh profit driven mandates uh and i think it's the exact wrong way to go i think in a democratic infrastructure what we should do in a democracy is we should say the poorest person child in a society from the poorest family in the poorest neighborhood our goal should be to give them the same education as we give the children of the elite the same quality of education the tools that this person gets the same critical tools and education this person has the same resources not to have the sort of what's happened in the united states we have two very different sort of a police state testing regime for most people in montessori schools and hippie colleges for the rich and elites that's not an acceptable way what's good for the elites is good for everyone when it comes to education as john dewey put it and that should be our motto in a democratic society then it comes specifically to the economy there are certain things where we can see that the corporate control is antithetical to democracy it's inimical and the profits these companies make are at the expense of democracy they're oftentimes what economists call rents they're unearned and unnecessary they're based on monopoly power usually got some sort of relationship with the government so for example in the united states internet access through the companies like at t verizon uh cell phone access cable pay television this should all be this is in the united states it's a cartel a few companies have divvied up the market they're making extraordinary profits they do nothing of value they're purely parasites these this should be a public service this should not be privately run they serve no value whatsoever that would go a long way towards getting rid of the spying scandals that sort of runs through all these companies this is an ancillary uh benefit uh secondly and this is something that used to be the rule in america which will shock people there should be no one no private interest should make a profit from militarism or prisons no private company should be allowed to make money from militarism or prisons it used to be a scandal in the united states in world war in the civil war for example that people made profits during the war uh the morgan family made a huge profit during the civil war it was a scandal that they did so uh world war one scandal again when people got rich during the war when the united states entered the second world war franklin roosevelt said the day after pearl harbor he said i don't want to see a new millionaire made by this war that's my goal no new millionaire is created by the war effort no one gets rich by war well in america today that's the whole game i mean that's the whole point of the military budgets to get rich vast fortunes are being created we have enormous industries that have great incentive in continually expanding military spending and budgets and we have no great fortunes that benefit by not doing that so we see basically an unimpeded increase in militarism regardless of any geo-political interest and as the great sociologist see wright mills put it in the late 1950s and they asked him what's the what's going to be the cause of world war iii mill said uh preparing for world war iii will be the cause of world war iii and that should be our concern today if you build it it will eventually get used and we're seeing it used now in the spy scandal we're seeing it used now in drone warfare in ways that aren't really healthy for democratic free societies i think also we have to take the money out of those industries that externalize massive environmental damage those industries that threaten the survival of our species exhibit a energy companies oil companies that are making colossal profits by not having to pay for the cost of the environment that they're creating with their profit-making activity we have to take the profit out of human extinction isn't that insane that we're letting companies get rich doing something that gen by all accounts by every scientist who's credible threatens our very survival by the end of this century these companies take the profit out of it get energy in the hands of people are going to balance public concerns ecological concerns with concerns of finding solving energy issues that's what i mean by post-capitalist democracy in addition we have to strongly encourage especially at the local level in places like detroit michigan cleveland ohio i suspect the entire countries of spain and greece we have to encourage growth of cooperative enterprise and use local governments to encourage it with credit and funding to create new industries that wouldn't exist left purely to markets and start new ways of organizing the economy at the grassroots level and and experiment with different ways to do that in short this is where i think we have to go this is where i think our public debate needs to go this is where intellectual study needs to go to these issues and this is where our politics needs to go we've got a lot of work to do to get it done but i think the empirical objective nature of our existence points us increasingly in this direction and i'll leave you at this point a scholar if any of the scholars in this room or any of the young students in this room were studying an ancient society another one that we have no relationship to and you saw the problems in society similar do we have that looked very severe and we saw that we were not willing to address sort of the elephant in the room the people who benefit by the status quo in any way we would look at that society and say what was wrong with those people what was what were they why were they asleep with the switch why were they frankly insane why do they keep talking about other stuff why did they keep talking about second tier stuff second order stuff when it was obvious the problem was the nature of their system was creating all these problems well i think it's time we ask ourselves that question we look around here why are we avoiding the elephant in the room which is our basics economic system is incompatible not only with democracy but arguably human survival thank you very well as you've heard professor mcchesney has very radical ideas to be euphemistic about it there are many interesting points out of this presentation i shall sum up only some of them he's been talking about democracy for one hour without mentioning the term elections which means democracy is based on many other things we're not even debating here in europe because we just keep talking and debating about austerity if as if the quality of our democracy would depend on our public deficit whereas as professor mike ginskney has widely said there are many more other variables the most important ones being inequality the other approach is follow the money i mean we go where the money is and we take away money if we take away money from some sectors we can improve the quality of democracy and so far in europe without the debate that if you take away money from the state you can improve your economy this was the famous expensive austerity uh presented here the festival by mr lezina right we have enough time for some questions professor mcchesney has his headphones so you can ask them in italian as well professor mcchisnik can you hear me all right can you hear the translation can you please give me a sign if you hear the translation thank you can you help me with this gizmo to work one two three testing testing this is the english channel can you hear me one two three testing testing can you hear me can you hear the translation can you hear me one two three testing testing okay okay so you hear me now yeah thank you thank you um so from what i understood you're proposing as a solution to the democratic collapse of this time another exception a similar exception to what happened in keynesian times in which so you try to to reduce inequality and to boost democracy which is naturally oppressed by by capitalism so what i'm was wondering is that do you think this can work in the long run if the problem is as you pointed out at the beginning that it is a structural problem of capitalism as an economic system to rule out democracy and at its best it works when inequality is enlarged so do you so is this a temporary solution you're um suggesting or is it um before you mention that idea of post-capitalism but the suggestions you had seem to me um still inside the framework of a capitalist market as you said so i would that's my question thank you that's a great question you want to take a stack of them no we take just a couple of questions and then you answer it all um thank you for your very interesting uh presentation i was wondering if you can elaborate a bit uh on the first part of your lecture that is the great stagnation which is in your in your opinion opinion the reasons why this stagnation started and is it a long-term phenomenon or just a phase the last one well you've got i've got long answers to both those already here you want to keep stacking them up okay so okay uh let me start with the first one uh great question i see my point is in the question about the relationship of cat if you maintain capitalism won't even a post-capitalist democracy still have the same tensions built within it my argument is that it'd be post-capitalist in the sense that the dominance of the society would no longer be in the hands of private investors now there was you know i'm not opposed to business small business per se i started one i've been successful in business but i i am opposed to business dominating politics i am opposed to having a investment system that dominates whether we have jobs whether we have employment how employment goes entirely so i think by post-capitalism is genuinely post-capitalist there's a place for markets possibly business but the line share of the society will move past what we understand as capitalism today now some people call that socialism or verb a path to socialism i'm fine with that in the united states the term socialism means like about eight different things depending you talk to some people it's a one-party police state some people it's a muslim worker cooperatives to some people socialism is any government spending that's not for the military just that's socialism uh so it's a term that has so much meaning that it invites as many questions as it answers i'm interested in the concrete issue of democracy in the economy and expanding it and i'm trying to use a term that gets right at actually what i'm interested in doing rather than a term that talks about stuff i'm not interested in oh and that's for stagnation yeah i uh as in my economics come very much through the uh school of colecky steindl braun and sweezie which is sort of a combination of marxism and keynesian economics that evolved in the middle of the 20th century and i think steindl koleski braun sweesy gave the foundation of a very credible explanation for the nature of modern capitalism that corporate modern corporate capitalism as it develops in the advanced countries gets to the point where growth becomes very difficult for a variety of reasons one is corporate structure that oligopolistic markets press investment compared to competitive markets which is known in economic theory and part of it is maturation of industry so you just can't buy as much and part of it is that there's just not enough demand to purchase stuff so that investment slows down private investment slows down and that's the natural state and that keynes's argument in effect was to address that you have the state due investment and you increase private consumption ability increase private demand i think that with in generally i think that holds true i think that's a good explanation understand the u.s economy and that it used military spending um and then debt as massive uh levers to keep the economy from being entering stagnation and to grow at some point health eclipse now that's a very simplistic explanation for what takes a lot more time to explain but that's the that's the basic ground framework of my analysis okay very well we can accept a couple of more questions i'd like to thank you for this great great conference i would like to link your true academic focus on media and democracy so nowadays there are lots of people that speak about internet democracy internet freedom and everything but how can a real democracy can be based on internet on freedom on internet without that capitalism goes and conquered all the free space that we are searching to have for democracy that's a great question such a good question i wrote a book on it called digital disconnect that i'll talk about on monday uh i think you know the way i would answer it for us for this talk and the i alluded to it earlier is that you know one of the unexpected uh developments in the internet uh has been that it has not replaced the commercial old media journalism that it was supposed to replace it hasn't we haven't seen a new birth of journalism online uh that's replaced what's dying in the old media and this is an issue that's really concerned me all along it's one of the central areas of my research and i think that is a this is an example of post-capitalist democracy i think we have to recognize that journalism is basically a public good news media and a free society and if you leave it to the market you're not gonna get it and this is something that for americans especially they don't understand because they say of course we have free market media that's what we've always had in america but in fact for the last hundred years news media united states have been heavily subsidized by advertising but depending on the news medium 50 to 100 percent of the revenues that paid for popular journalism came from advertising advertisers have no interest in journalism whatsoever it's purely a commercial means to accomplish their marketing goals the best suited by using media news media to accomplish them especially local news media what's happened online with the internet is that it's eliminated advertising is a source of revenues for journalism or it's in the process of eliminating it because now when an advertiser wants to reach people online as they increasingly do instead of going to a newspaper website or a news website and saying i want to buy an ad on your website and hope my target audience will come and see the ad on your website like they used to hope for at the newspaper or television show instead they go to microsoft google yahoo or aol and they say i want to reach 3 million women 25 to 29 who might be buying it interested in buying a deodorant in the next week and that network will find those women wherever they are on the web immediately in real time whatever website they go to because they know we now know thanks to edward snowden they know everywhere you go they know who you are they know where you go and they'll find you they can find any demographic anywhere online at any time and place the ad so there's no money there to support journalism and that's why journalism is dead online there's just it used to be for example in america that a newspaper in 2003 when it sold ads online got a hundred percent of the revenue from the ads that it sold online like you used to get 100 of the revenues for the ads your paper might sell to an advertiser in print by 2010 that was down to 20 80 percent of the revenues that a newspaper got for its advertising went to the network only 20 went to the newspaper and now it's under 10 percent there's just not money in it the networks is where the getting the money of advertising journalism has been cut out now that the i don't want to get too long with here but such an important point you might ask the united states well how did you have journalism before advertising then we had the greatest press system in the world arguably in the 19th century before mass advertising how do we have that well the reason we had it is that we had massive government subsidies that supported journalism in the us in the first hundred years of our history primarily post office subsidies the post office distributed every newspaper in america until the 1830s and most of them through the 19th century and the post office basically charged with 120th of what it cost to send a letter it subsidized newspapers that made it possible for many to exist i think we need to understand that journalism popular journalism not for just elites but for the whole society is a public good it's going to require public policies and public money to create it and i spent a lot of time and you've read the article talking about how can we have policies that have public funding for competitive independent journalism that prohibit government censorship that's the public policy issue of our times in my opinion it's absolutely central and i think it's solvable i can talk about it more now or you can wait till monday in my lecture there it's up to you let me just say that actually in italy we're doing the opposite we are reduced reducing public funding to papers because there was an agreement that was that was a waste of money and my paper has demonstrated that it can actually sell journalism with no ads and we know public funding so maybe when you have small figures it works probably in the united states the situation is much more complicated however i think there is some hope it's five past twelve so i think we have 10 15 minutes to go so we can take a couple of more questions i think there are many questions about public investment and subsidiaries i'll talk italian i'll speak italian um i want to know how it works in the united states i'm talking about a public investment i know that obama through the american reconstitution net has created has placed a 750 billion dollars for recovery in italy we have a system of virtual aids i.e subsidiarity a sort of democratic subsidiarity which happens when a local authorities through a number of measures are no longer to help well we should have investments from the european bank central bank but actually we never get those investments that they get lost in between because projects have stringent rules and regulations i think this is an element of democracy in economics so i wanted to know how you do that in the united states how do you provide the local authorities with the need money they need for local investments we get another question before you answer on the issue about internet you answered the former question about the role with media but i would like to ask you if you have some example that you see around in the world maybe of initiative things happening on the internet maybe software that you uh believe interesting in order to pursue this new vision that you are suggesting so something that we i am a computer scientist can develop because internet is something that may be developed in very different ways there is the the main thread the mainstream but maybe there are resources that are interesting to try to do something different so which could be the suggestion that you give us you okay well thank you both for those great comments and questions uh let me talk real briefly then go into what uh the proposal i've been working on that i i think applies actually i've been dealing with people in croatia who've been working on this and other countries in europe too that are concerned about the collapse of journalism and wanting to create a healthy vibrant journalism in the digital world and the model i've stumbled upon and developed was actually this is i'm glad you're all sitting it was originally created by milton friedman uh milton friedman wrote an essay in 1955 in which he called for using school voucher vouchers to pay for public education he understood that education couldn't be supported by the marketplace he understood that that wouldn't work that there were externalities it was in the public interest that the public pay for education but he hated the idea of the government having any control over schools so he said take all the money the government presently spends on schools for kindergarten through high school and divide it up evenly for every school-aged kid and give that voucher to the parents that then go shop around for schools to pay private tuition to either for-profit or non-profit schools but not controlled by the government that was his vision of education now i think for education that has proven to be a total disaster uh for the first 20 years after freedom wrote that 30 years no one took them seriously they thought it was ridiculous in the last 20 years that idea of privatizing education creating different types of schools for different kids has become very popular in the united states and as i said i think it's been a failure but i do think it's a brilliant idea for journalism i think if you apply the same model to journalism online uh you about your system uh it can help us solve the problem and i'll give you a tangible what i mean example what i mean by that and this could be done in italy croatia any country in the world it could be that in a community it could be done in trentino it could be done at the provincial level but say the u.s government for example the country i know best give 200 uh the ability for every american over 18 to give 200 to any non-profit uh medium of its choice their choice so it could be right wing left wing fascist communist their choice the government has no control over it only thing is the group has to meet the irs nonprofit standards which all of them currently meet anyway so it's not really a debatable issue but the just the whole point is you get 200 to every american adult to give to any non-profit medium of their choice annually and the catch is the medium that takes this money from the these vouchers anything they get produced with that money automatically goes online for free it's not it enters the public domain anyone can use it including commercial companies it can't be it's not protected by copyright so you basically have a 30 billion dollar government expenditures that goes to pay for non-profit non-commercial journalism but the government doesn't control who gets it or what's done people control about how they spend their vouchers when we first worked on this with an economist named dean baker a few years ago we went around and this is the federal trade commission in the united states of the federal communications commission the united states each had commissions studying the collapse of commercial journalism and what should be done about it and i'd written a book with john nichols called the death and life of american journalism that proposed this at the end and we met with the heads of these two studies in washington in 2010 and both of them said before we even sat down that voucher idea that's the only way we're ever going to solve the problem that's it we've studied it the market is not working there's no other solution we're going to have credible mass independent uncensored competitive journalism that's the only thing that'll do it they both said that and they both said before we could you know we wanted to break out the champagne say yeah but before we could celebrate it but there's no way we could ever propose that because if we do we'll lose our jobs there's no political support for that and the reason for that was very simple we like to think everyone's in favor of a popular journalism and everyone wants an informed citizenry not true everyone doesn't want a popular journalism everyone doesn't want informed citizenry and as we were broaching that idea the tea party was going ballistic at that exact moment attacking me personally on the glenn beck show for wanting to take over all the media and turn it into a soviet pravda thing because of that proposal which you know the exact opposite of that because they just tested the idea of having a vibrant healthy news media they liked the news media dominated by the berlusconis and murdochs of the world that's a news media where their type of politics works really well and that's the moral of the story which is journalism while the the proposal is completely nonpartisan in the sense that it doesn't favor one viewpoint over another but it is partisan popular journalism is absolutely partisan it's partisan in favor of democracy and there are strong entrenched forces in our society that are scared to death of democracy because it knows in real democracy they're going to get the short end of the stick can i add something um in italy we see that subsidies to the media were never granted with a view of protecting the uh public good they were given to protected papers some papers particularly those who were writing in favor of the ruling parties for example or some corporates who were hidden forms of supporting policies they were not for the public good in italy i mean if you if you were to apply your approach to italy um we could do it but support and aids should be horizontally distributed decreasing the cost of journalism without supporting too much of that or that paper we have the issue of vat in italy for example so but actually in italy we are moving towards supporting uh pension schemes uh and this again will support some papers not the others so it is again in italy journalism is not seen and considered as a public beth you know but between uh pravda and the soviet uh capitalism and then the opposite there are in between uh areas which should support media and journalism in the right way and in a wise way i think we still have time for a couple of questions the thank the professor and i wouldn't i would say uh why the industries that produce some military tools don't change their production it's so different it's so difficult to change i'm not sure about that why don't military industries switch to more peaceful business well you know some of them probably do i think some of them take the applications from military and use them for civilian purposes for example satellite television sky tv rupert murdoch's operation directv in the united states that was all military created and the company that created it was hugh's uh aircraft and hughes aircraft created it for the military for air force purposes and then they started directv as a result of it so they oftentimes will take uh you know military applications that are developed and then use them in in civilian industries but i would say that you know military firms make so much money there's really a lot of good money to be made there and that and the trough never empties out apparently so there's always more money it's it's a very safe market when you control the politicians you can make sure they're going to keep filling it up again well initially we have a very interesting case our renzi government has just placed the managing director of the italian railway to manage film mechanics kanika is a state-owned company and he believes he should not focus on missiles and defense but rather on civilian business that they were actually selling they were selling uh their branches about infrastructures and trains but then we shall see what happens because we know that profit is made with missiles and war uh airplanes and not with the railways so hopefully this pacifistic alarm of our government won't end up into nothing but for sure it'll clash against business needs right we're time for the very last question last question i wanted to change a little focus if it's possible uh going into the democracy participation as he was telling you would like i didn't get it really well this point uh you want the people to go to the power only for like one session you want like popular participation in the government uh can you explain it a little more because i believe that with the complexity of the nowadays world it's quite impossible to like take people by statistic and and just make and government all the countries that's a fantastic question and uh we were talking about that for quite some time before this morning it's one of the central areas of my research is what i call depoliticization why are people not that interested in politics why are they disengaged and i think in one sense it's perfectly rational in the united states if you look at the study i just talked about by gillian's and page that all the decisions are made to benefit moneyed interests and the public has no rule no power whatsoever no effect on them then why would you waste your time getting involved in politics when you could follow soccer and movie stars and have fun with your family and you know do the rest of your life something you control so it's pretty perfectly rational to be de-politicized but it's self-defeating too because ultimately the problems we face what i talked about the first two problems of the economy and stagnation are political issues that require political solutions and they affect all of us deeply everything about our lives our mental health even so it's not a successful situation or tenable but also the most important thing i keep in mind and this is especially to the united states i can't i'm sure it's true to varying degrees elsewhere but the united states it's quite clear that the people atop our social structure strongly encourage depoliticization it's not an accident it's not a fluke it's not like people are innately don't care the best example of this most recently came in the 1960s and 70s we had a massive upsurge of interest in politics from young people from african americans from women latinos people who normally played no role in the political process got very engaged in politics in the 1960s and 1970s and this scared the pants off elites in the united states it's hard to exaggerate just how frightened it made elites that suddenly had young people and blacks and women and all these crazy people get interested in politics vietnam veterans and so they were issued a couple of reports they're really instructive about you you said the nucleus of the atom of how capitalist democracy works they said in the famous report from 1975 they said america has a crisis of democracy and the crisis of the democracy is there's too much democracy american democracy doesn't work unless most people are on the couch not paying attention not involved in politics american democracy works best when the the elites run everything and everyone else gets out of the way that's what it said and if you understand that they said that should be our goal we've got to get blacks away from politics young people away from politics then we get back get our world back again and so when young people or anyone thinks hey i'm cool i'm hip i'm not into politics you know i'm too smart for that i'm being realistic no you aren't you're just being played for a very last question but there is no last question so thank you very much professor machinstein since this is the time of kindle and amazon don't forget that you can buy his books even if they're in english because i can see that many of you understand english delerocracy and how the minimum detection complex is history in america digital disconnect how capitalism is turning the internet away from democracy these are his latest publications you can find them on kindle and amazon thank you very much professor mcchesney thank you very much to ironette and to the festival and the festival goes on you