One Big Beautiful Econ Con?

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Ladies and gentlemen, welcome to the weekly show podcast.

My name is Jon Stewart, and I am the host of the weekly show podcast.

It is Wednesday, July 16th.

We're probably going to air Thursday, July 17th.

And there's, I don't even know what to say about the speed by which, if it's the summer, man,

isn't the world just supposed to fucking kick back and go tubing or something?

and it's flying fast furious from wherever we go we've even got the senate accomplishing things that they approved a rescissions package i don't know they npr how what what bad timing as npr is struggling for their funding for elmo

to lose his fucking mind

and just go off on everything elmo's been feeling on all these years this is what happens when you infantilize

uh a person for the 30 years.

They just develop these very strange thoughts and things, but not great timing in terms of making the case

for his funding.

But Elmo has apologized.

That was my favorite.

My favorite part of the Elmo thing was the Sesame Street apology.

Elmo famously kind of went off on

fuck the Jews and Trump's a child fucker and a variety of comments that,

you know, generally you don't hear on Elmo's show.

You know, his show's a lot of Mr.

Noodle

getting angry at a rock,

that sort of, that sort of thing.

So to hear him go off like that.

But my favorite thing is Sesame Street had to put an apology out saying that the statements that were expressed on Elmo's, I don't know if it was Instagram or his ex-account or whatever socials Elmo's on.

I don't know what socials he's on, his hinge.

I don't know if Elmo is dating, but

they had to say that those sentiments do not reflect.

They do not reflect the sentiments

of Sassa Street.

And by the way, if you've been to the street, they are right.

It's relatively orderly.

I mean, things happen, obviously, new people get introduced.

They have to learn how to deal with death or food shortages, that sort of thing, but

division, numbers.

But generally, they don't have to deal with like full-on

kind of Nazi shit.

So,

but I take them at their word.

Sesame Street, you are forgiven.

I, I,

and, and, and well done.

Meanwhile, the world continues to utterly spin out of control.

Uh,

Israel's, I think, apparently bombing Damascus today, because why not?

It's uh, it's like they, they do that in the same way that like when you take a summer vacation, you think to yourself, you know, I really want to see Croatia.

So I think they're just, that was just on their

bucket list of Mideast capitals to bomb.

Continuing

their ongoing bingo card of cratering.

Today, we're going to talk about the economy.

I really want to get into, you know, I've been thinking so much about this tax and spending bill and its priorities and why they are the way that they are and why we accept those priorities as though those are the kinds of economic priorities that ensure our collective prosperity.

And so we have two really just expert economists that are going to talk about that.

And we're going to, we'll step back, talk a little bit of a historical perspective, but I want to get into them now.

And hopefully

Elmo will hear this and

find a way to calm and stabilize himself.

All right, so let's get into it.

We are delighted today to have as our guests.

This is as erudite a panel as I can pull off, ladies and gentlemen.

You've listened to the show.

We do very well with the guests.

Generally, I play the part of Dunderhead Jones, but we have ourselves a panel today, ladies and gentlemen.

Clara Matei, Professor of Economics at the University of Tulsa, Executive Director of Free, the Forum for Real Economic Emancipation, author of The Capital Order, and James Robinson, university professor at the Harris School for Public Policy and the Department of Political Science at the University of Chicago.

Yeah, I tried to get in there, but apparently there's like a test that you have to take to get in.

But James Robinson, Nobel Prize awardee in 2024 for economic sciences.

Welcome to both of you.

And so pleased that you can join us today.

I would like to start if we could.

I want to step back for a moment.

We'll get into the tax and spending bill that we've got and the priorities that the

United States budget is going to be pursuing.

But I want to step back for a moment to ask the question:

I think in this country, we have the idea that we live in a free market economy, that it's, you know, the mythology is it's an Adam Smith, laissez-faire, invisible hand.

If government just gets out of the way, and it does, the market takes care of itself.

So if I could, I just want you to address

the realities of whether or not we live in a centrally planned or a free market.

Where are we at on the capitalism-socialism continuum?

Clara, I'll start with you.

Thank you so much, John, for having me on.

Please.

It's a real pleasure.

So

the free market is a myth

in the approach I take to economics in the sense that there is nothing spontaneous or natural that pops up out of like the essence of who we are.

This is how we just tend to think of the market because it's the way in which we tend then to accept the market.

But really the market, as I show, has to be constantly protected by the state in order to secure what is at the foundation of it, which is not just about exchange, it's really about people having no alternative but to sell their capacity to work for a wage.

So the labor market is the foundation of what we usually call market.

But this labor market entails a certain coercion, a certain constraint, a limit of possibilities, the sense that people have really no alternative but to go work for a wage and usually a very low one.

And so in this way, the state has to protect this so-called market, which is not at all a world of freedom, but I would say a world of unfreedom because it presupposes this ultimate coercion that we can call exploitation.

James?

Yes, thank you for having me on.

I mean, I

my perspective, I suppose, is a bit different.

I think there's lots of imperfections in the market.

I would say what you've got in the United States is something like a mixed economy, that you have government, the government does lots of important things, it does significant things.

You have imperfections in the market, you have monopolies, you have barriers to entry.

But there is competition.

You know, there is competition.

There is, you know, you like Tesla cars, you buy a Tesla car.

That's bad for General Motors.

It's bad for Toyota.

You know,

so I, you know, I think competition and choice, it's imperfect, but it is there.

I guess the question then becomes, in the so, what generally my position on this has always been that when the government intervenes on behalf of corporate interest,

that is seen as a natural extension of capitalism, that subsidizing a corporation or corporate tax cut or creating a zero interest window at the Fed, those are all interventions on behalf of corporations.

But if the government intervenes on behalf of workers

or individuals, whether it be so-called entitlements or whether it be setting wage standards or those things, that's considered antithetical.

It's still government intervention, but it's somehow anti-capitalist.

And so that's kind of where I want to start

in our discussion.

Why do you think that that is?

Why are those interventions different?

Clara?

Well, I think you really point, John, to

your finger to the essence of it all, which is we live in a capitalist economy that by definition works according to two pillars: wage labor and private command over investment.

So, what the governments are meant to do.

Would that be considered capital and labor?

Is that sort of what we're talking about?

Okay, exactly, exactly.

Capital and labor, right?

The fact that people go work for a wage and others instead command investment in the sense that decide for all of us how to invest and where according to the logic of profit.

So, this by definition requires the governments to kind of maintain these pillars alive for the system to be able to accumulate as it should, right?

The capital accumulation, which is economic growth, we tend to call it economic growth because it sounds less political, it sounds more kind of neutral.

But actually, economic growth presupposes these pillars, which means that the natural doing of the government is very interventionist, but only in a way that protects the two pillars, which means you can't give too much rights to workers because they might decide not to go work for a wage, while you should always incentivize private investment and subsidize and de-risk because we kind of all depend on the decisions.

Makers and takers.

Yes.

If government steps in on behalf of makers, that's acceptable because that has virtue.

But if you step in on behalf of labor or, you know, able-bodied non-labor, the takers, that would be moral hazard and those kinds of things.

James, do you think that's a fair

sort of as we're setting our tent posts for the discussion?

I mean, I think it's right that that's the direction that American capitalism has evolved in.

You know, but you know, it's not true historically.

If you went back to the 1930s and thought about the New Deal or the Wagner Act or the Roosevelt government, there was plenty of intervention trying to strengthen unions and strengthen collective bargaining.

I think it's just really the way things have gone here since Ronald Reagan and that whole kind of embrace of this anti-statist model of capitalism.

So I don't think it's inevitable.

Look at Scandinavia.

You know, they have capitalism in Sweden, but they have a very different attitude towards collective bargaining and labor.

But, James, also, you know, you bring up a really interesting point because when we talk about Scandinavian countries or social democracies in America, there is a patina of disdain.

There is always that, you know, go live in Denmark.

You know, there's a sense that that is not the proper use

of government and capital.

I'm talking about the sort of the

vibe from American capitalists.

And if I may,

ultimately, what's important to note is that even during the Keynesian period,

the governments had very Keynesian period being the 30s when they were still.

The Keynesian period being the 30s and the immediate post-Second World War.

So the moment in which supposedly the state was doing what James is saying, which is more kind of pro-labor policies, we need to remind ourselves that, and I'm studying this period at the moment, there are clear political limits to what the state can do because exactly if the state gives too much to people it risks

curtailing that market dependence that secures wage labor so again those pillars of course there's ways in which you can try to like be less pro-capital only and try to secure a more of a sense of

of of of neutrality and global interest but at the same time those pillars need to be maintained and i'm i was invited actually in sweden and iceland to talk about austerity because we don't talk about it.

But in those countries too, in the supposed Scandinavian countries, they're affected by the same type of policies that we've been affected in in the United States.

So we tend to idealize those countries as being like a fair version of capitalism.

If you hear what they have to say, I was actually invited by the unions themselves there.

They have a very different understanding of what's happening to them.

What is their understanding then, Claire?

Would they look at it as it's still not fair enough to workers?

What is their position?

Well, they feel the constant constant attack of social rights being taken away from them and they understand for example deflation so the increase of interest rate that we saw um in the last years affected those countries as well and the whole conversation was about how there should be more wage moderation in order to allow for price stability so this whole thing about wages having to kind of be decreased in favor of price stability this is a typically capitalist compromise that they can't escape so this brings us to our discussion i think we've sort of framed it out, which is this, because I think, Clara, you put it very well, that ultimately the stimulus that generally comes under attack is stimulus that occurs on the demand side as being too generous, whether it be SNAP benefits or Medicare or Medicaid.

You know, James, you brought up the New Deal and intervening there.

Well, that was in a global economic depression.

And in some ways,

might have staved off a larger socialist or communist revolution in this country.

So, James,

why do you think it is that when we're faced with this idea of fiscal responsibility,

the thing we turn to generally first

is

those that have the least.

What is it about that politically that makes that the first target as opposed to offshore profits that aren't brought back to the United States?

Well, because they're the least powerful and they're the least organized.

Wait, it's that simple?

They're just science, is it?

Son of a bitch.

That's simply it.

Like, they're the easiest to go after.

I think so.

Yeah.

So is there, you're somebody, James, who I think your work is very much on evidence-based economic economic theory and using that evidence to design healthier economies, right?

What

is that the healthiest option?

Is there a different design other than austerity that we can think about

for

central government intervention?

Because we know they intervene.

We've already established they intervene.

What's a healthier intervention than just austerity?

Or is that the best move?

You know, I think there's just lots of complicated trade-offs there.

I think, you know, if you think about the history of economics, you know, economics arose in the late 18th century to sort of try to understand sort of what the heck was going on, you know, with the Industrial Revolution and Adam Smith and all of that.

And economics has always gone backwards and forwards between sort of trying to justify this as the best possible thing and struggling to think of alternatives and what might alternatives look like, like, you know, and, you know, but a very limited, you could say a very limited number of alternatives have really been experimented with.

You know, you could think of communism or Cuba or whatever it is, but obviously that's a very specific sort of alternative.

And I think economists are just very bad at thinking about alternatives.

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Claire,

you're nodding your head vigorously on economist because it does seem like

we are stuck in this idea of it's either capitalism or it's socialism or it's communism.

And there's no sense that, in the words of Spinal Tap, you can turn the dial.

You can turn it to 11.

What are the, Claire, does that ring true to you?

Well, absolutely.

I think it is very true that the economic profession, the mainstream economic profession, has avoided even problematizing capitalism.

If you open a textbook in economics, you don't even read the word capitalism.

So you can't even understand the specificities of our system.

You just talk about markets, again, as something that just happened to exist for human beings to go along with.

So I think this is the issue: is that if we don't problematize what's specific about our system, that we end up not really having any possibility of really comparing with other possibilities.

And I think the main thing here is to understand that if we do take it that our system is based on coercion, we as human beings can do better in terms of finding out a way in which we could run production distribution actually more democratically.

In my work, I really show how austerity, and I think we should define it at a certain point,

austerity is ultimately all about de-democratizing the economic space.

And again, this is not something that is because there's bad people in government.

It would be too easy to say, oh, it's just because it's evil people or corrupt or irrational.

It's because.

I see you've watched my show.

It's because there's certain tendencies.

Again, I think this is what is important about like more systemic analysis that tells you there's certain tendencies and that are kind of congenial to the system.

And this is why ultimately, I would say austerity isn't the DNA of capitalism.

Then, there's, depending on the moment, labor might have a little bit more power to strike against it.

But the reality is that we have certain clear coercive mechanisms.

And so, I think we could do better than this.

But the point is that it's very dangerous to explore alternatives.

As I show in my own book, when alternatives do emerge, this is something that needs to be actually, they need to be bugged down and killed very quickly because they are terrifying for the establishment, those who ultimately

and we need to remember that in this country, just one data point out of many, the

top 0, 1% owns five times what the bottom 50% of the United States American owns.

Three people own more than 150 million American.

This is what capitalism looks like at this stage.

And clearly, you need to protect it very well because it's very unjust for the majority.

So, James, that's so

that's what we're talking about.

We're talking about a system that is, you know, look, you mentioned the 30s.

That is the last time, or maybe even prior to that, more the Gilded Age, when we, we sort of lived in that laissez-faire era of, you know, robber barons.

And I think the determination there was that society is not stable at that point, that there is

how do economists get out of that

perspective of focusing on supply and demand and pull back to a more macro of what is a stabler version?

What is a more stable version of a progressive capitalism look like?

Yeah, I mean, but they don't, economists never really think about that, actually, because economists don't see.

Wouldn't that be the whole game?

No, no, but you wouldn't, you know, you can't believe it.

Like, economists just see the economy as being this sort of free-floating thing.

They don't see it as being embedded in politics and society.

You know, they see it as separate from politics.

Yes.

Is it separate?

No, absolutely not.

But that's the way economists think about it.

If you picked up an economics textbook, the word politics never appears in it.

It's completely unconnected to the political and social system, which is obviously ludicrous, but that's how it is.

So very few economics, you'd have to talk to political scientists if you wanted to think more about the topic that you're interested in, which was

how the political system kind of responded to the crisis of capitalism in the 1930s by trying to ameliorate, you know, some of the costs and reduce some of the inequalities.

And, you know, and that ushered in a period after the Second World War of terrific prosperity with falling inequality, rising living standards across the board.

And, you know, that unraveled in the 1970s, in some sense, that consensus unraveled.

And then we launched off in this other direction.

Why did the consensus in the separate?

So

we'll take a step back in history here.

I think I understand

why

intervening on behalf of workers arose.

I think if you think about World War I, and Claire, you've written about this.

You know,

when people saw that in a time of crisis, the government took over a lot of the so-called laissez-faire functionings of capitalism, whether it was for making armaments or food or all that, they saw, oh, wait a second, our government does have the ability to step in and change the dynamics.

This isn't a fait de compli.

We can actually change this.

I see, is that where that

where workers started to look at demanding more, Clara, or a fairer system?

Yes, I would say that before the First World War, austerity was kind of taken for granted because there was a sense by austerity meaning like poor people.

That's fine.

Should I define it very quickly, please?

Yeah, sure.

So,

I think, again, there is a mainstream way of understanding austerity, which is all about how the state is stepping back and kind of there is a cut in public expenditures and an increase in taxes.

So, this is the definition.

I would say this definition is already kind of blinding us from what really matters.

Going back to the theme, John, that you're bringing up today, which is the state never really steps back.

What happens is that the state just decides to shift resources from some, the majority, to the few.

And the same for taxation.

It's not about just taxing people more, it's about who you're taxing more.

And what you find out is that austerity is about regressive taxation, which means that capital is taxed structurally less than labor.

And this is, of course, the current policies have just escalated this tendency.

That's right.

And what is meant by that is sort of if you've got a capital gain or if you want to,

you know, put machinery on your taxes and get those removed from your taxes or things like that, or capital gains taxes or carried interest taxes, that those are eased, but poor people still face point of sale taxes that are very regressive.

And so they pay a higher percentage.

Is that sort of generally what we're definitely

sale taxes are very regressive because everyone pays them alike, but it gets worse.

You know, the income brackets have majorly shrunk so that the very wealthy pay less and less of their income in taxes, tax income in taxes, but really also it's about detaxing

corporate profits,

capital gains, dividends, interest.

So people who make their living off of capital are detaxed, not to think about inheritance tax that basically doesn't exist in this country.

overly taxed.

And labor is overtaxed.

So that in the United States, a lot of people are poor because they're overly taxed.

So this is taxation.

Then, in terms of how the state spends, what we see today is exactly what austerity is about.

You take away from social expenditures, right?

And the big, beautiful bill is all about this.

like

2 million people are going to go hungry because they're going to lose access to food stamps.

And there's over 70 million people who will lose their health coverage.

These cuts in these domains,

education, healthcare, public transport, don't mean that those money, this money is not spent elsewhere.

And guess where it is spent?

I'm going to go with bombs.

I'm going to go with bombs.

Exactly.

Bombs.

Military industrial complex.

It was bombs.

Son of a bitch.

I mean, we're at $1 trillion a year.

That is an insane amount.

And another $150 billion to create a whole new enforcement.

Exactly.

So Border Patrol.

Yes.

Right.

James, let me ask you this.

Because, so,

how would an economist then, who is looking at the evidence, how do we justify that?

Is it purely based on, well, that's a stronger growth model?

What's the justification?

Could I put this in a little bit of perspective?

Please, since, you know,

what I mostly study is poor countries.

You know, I've been working in Colombia for 33 years.

I work in Nigeria.

I work in Democratic Republic of Congo.

And I think like, I'm not.

denying anything that Clara says, but I think if you think about the big picture, you know, the United States has actually been better at solving those sort of problems than Nigeria or Colombia or any poor country in the world has been.

Of course.

Any country in the world has elites that want to rig the game in their favor.

And boy, have they been more successful in Colombia than they have in the United States.

I think that's the picture.

And in fact,

There are all these problems.

I agree.

But if you look at the last hundred, 150 years, yeah, you have to fight.

You have to fight for your rights.

You have to fight for wages.

You have to fight to get the government to pay attention to you.

But that fight has been much more successful for ordinary people in the United States than it has in Colombia.

James, do you think that's because, you know, if we look at the political systems, you know,

that the places that you're talking about were in some respects on the receiving end of these extractive economic policies?

You know, you're talking about places that don't have the benefit of the kind of civic society that grew up because they were on the receiving end of our,

whether it be mercantilism or colonialism or those kinds of things.

I don't want to get into, you know, this idea that like, you know, we drained everybody to our benefit, but to some extent,

doesn't that explain a little bit of

why those countries have been more volatile in their economic

yes, absolutely.

I mean, they've been organized, they've been organized for the benefit of of the elites you know i think united states united states i mean we were the beneficiaries of a lot of that organization is my point well i think the colombians had more to do with it honestly

right so so did that type of system empower those corrupt elites is i guess my point Yes, absolutely.

Yes, it's reproduced hideous levels of inequality and social exclusion, you know, and of a sort that you don't see in the United States, you know, thankfully.

But, you know, of course, you know, I'm not denying any of these problems that you're talking about.

No, no, no, I understand.

So, James, it actually brings up a great point, which is, you know,

maybe the United States then, as an avatar of what a more successful system could look like.

So, let's say we look at Nigeria and Colombia and those things, and it's much more volatile, and the elites are more corrupt.

But that certainly doesn't excuse the United States creating a system, as you said, since Reagan, that increased our inequality to the extent that it did.

So what can we, let's look at it as a system that's functioning better than others, what is it that we could do within the

way that we balance capital and labor?

What could we do differently that would help save us from turning into those other places?

Well, I think that's about politics.

You know, it's about defining a kind of agenda, a practical agenda of axing,

extreme levels of wealth inequality.

And I think looking at the history and showing you can combine a much more equal society with very rapid rates of economic growth, with successful capitalism, with innovation.

That's exactly what happened in the post-war period.

And so why did that fall apart, Clara?

I don't think this ever happened.

We have a very different reading of reality here, I think.

The point is that

I really do think we need to understand what what are some key features of our economic system, which is capitalism.

And we can't just reverse it all.

Yes, everywhere.

It's global capitalism.

And we can't reduce it again all to, oh, there are elites who are corrupt.

That is not how it operates.

And it's really important to notice that the global south has been structurally dependent on the global north.

So that really you would not have development without the active creation of poverty.

So again, this is also a very different reading of development.

And I know James has a different reading.

Dependency theory tells you that the global south is poor because the global north is rich.

So the fact that the global south is hit stronger by austerity, the IMF has been imposing austerity measures in the global south for much longer than the neoliberal period.

So this is for me very important.

We should stop just thinking that the problem is neoliberalism.

Neoliberalism is an escalation of certain key features of our system that we need to understand.

And I'm sorry, the United States is a very terrible, dehumanizing model that nobody should follow.

Half of the American homeless people work.

Okay.

People are homeless because they can't afford a house because their wages are too low or their work is too precarious.

We have

one out of six children in dire poverty in the United States.

And these numbers keep going up, by the way.

Okay.

The fact that actually under the Biden administration, the child credits have been taken away.

This actually doubled the number of children in poverty.

In New York, the richest city in the world, we have one out of eight children in public education that experience homelessness.

This is not a healthy society.

This is a society that has issues, and we need to understand its long history.

I'm actually working on the golden age.

It was not as golden as people like to depict it.

It's easy to say, look, our system is eternally flexible.

We can have humane capitalism.

But if we really want to be honest historically this is a lie and this is why we need to figure out the real reason why austerity operates and it's not just trump it's trump is ultimately the very obvious face of the violence of our economy that we need right now to take courageously because with the genocide happening with the climate collapse with future generations having no future we have no time to keep excusing our system as possible of renovation it really needs to have more courageous.

And last thing I want to say is in Tulsa, for example, we are trying to do something different with Free, the Forum for Real Economic Emancipation.

The idea is to bring people back in the picture in thinking about the economy.

I agree, mainstream economics is all about excluding people from economic topics so that we feel we're too stupid to even

to even care because we can't understand.

This is already part of the problem.

We need to participate in realizing that economics in the real sense is not neoclassical economics.

That's an excuse.

It's all about actually connecting the theory with the social struggles.

And this is what we're trying to do in Tulsa and we hope we can do this elsewhere as well.

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I find what Clara is saying very compelling.

You know, it's very difficult for me to look at the inequalities that she just sketched out, which is, you know, the problem in this country is not the able-bodied young men.

that don't work but somehow have access to health insurance as the reason why you know our country is falling apart it's this idea that you can work your ass off and still need food support look we've got a food bank here locally you cannot believe the business that it is doing in the richest country in the world so my position is always america doesn't have a wealth growth production problem

It has a distribution problem that the people who create that wealth

do not benefit commensurately in the way that

they should.

It's not about entitlement.

It's about investment and distribution.

James, does that resonate with you at all?

Yeah, I mean, you know, I could, you know, I think this argument about why poor countries are poor, why Colombia poor is completely misconceived.

And it's nothing to do with the International Monetary Fund or the United States or the United Fruit Company.

Let me talk about what you're saying.

I agree.

There is a distributional problem.

I mean, why is that?

You know, I think if you thought about the history of the United States, there's such a history of kind of marginalization.

If you think about the way black people were treated, discriminated against, kept on the side, wages were pressed, politically excluded until the 1960s.

But there's also this just this kind of culture in the United States, you know, of kind of self-reliance.

I mean, I would say it goes back into the 19th century.

There's actually a lot of evidence on this about linking the kind of regional cultures within the United States towards attitudes towards redistribution.

And there's just this idea that you have to make it on your own in the United States and you don't want handouts and things like that.

And

that creates all sorts of problems.

So I agree with you that there is a distributional problem.

And it is an idea that somehow, if you are poor, that is a function of vice.

And then if you are rich,

it is a function of virtue.

But I think to Clara's point that I wanted to get to is that,

is it byness does our system require

a permanent underclass is that baked into what we're doing and and how could we you know when you talk about distribution as someone who studies the mechanisms how can we alleviate that forget about let's let's remove politics from it So we're sort of, we're going to operate in a space where it's not about what we can get through a Republican Congress, because

I think if we stick to that, we're never going to think about anything.

So thinking about it on a more idealized plane,

what would you say if we have a distribution problem,

what are the mechanisms that we might choose that could help alleviate that issue?

I mean, I think that's about labor market institutions.

It's about strengthening trade unions and the bargaining power of workers.

And I think, you know, if you look at countries that have successfully developed with much more equal distribution of resources,

that's the key to that.

But why is it on like, I always wonder why it's on, so

let's take corporate boards for an example.

And I'm talking about larger corporations, obviously, not the small businesses or consumer spending or anything like that.

When you look at how corporate boards distribute profit, They do buybacks, they do profit sharing, they find ways to carve up whatever that profit is so that everybody gets a slice of that pie.

Workers can only benefit through wages.

Every now and again, they'll get shares in a company or they'll get certain things.

Why is it that

for workers, it's required that it's incumbent upon themselves to create a movement to then go into the why, why isn't it the status quo that they sit on those boards and that they share in the same way that somebody who's on the board would share or somebody who's a stockholder.

Why do we have stockholder and shareholder capitalism, but not, why aren't the workers included in that?

Do you know?

That's the way the law is organized.

You know, that's the way corporate law is organized.

If you incorporate, you know, you start a business, you know, like that's about the legal system in some sense.

And you could say, well, where did the legal system come from?

Well, the legal system was written by economic elites or people who could influence policymakers.

So that can be changed and

it wouldn't be disastrous.

Claire is about to jump out of her library.

So

she's about to pull hair and books off and do that.

Claire, do you want to answer that?

I just want to say that the legal system is not separable from the political economy we're discussing, right?

And so I think this is really the difference in method here is that I'm trying to say that actually capitalism is

an animal that has all of these elements to it-the political, the legal-they're part of the economic.

And to understand the economic, you can't separate, right?

So, this separation is already for me very ideological because it tends to say, Okay, so the problem is not the economy, it's the problem is the law, the problem is this other thing.

Well, the point is that you know, the laws

are appropriate, of course.

And historically, you know, how did capitalism come into being with the enclosure of the commons, right?

And the enclosure in the commons is all about taking away subsistence means of people and transforming land into a commodity that then was appropriated by the elite, right?

So in the way without the law, this first step that you're talking about, which is the fact that very few control the means of production and actually get to make decisions about how something is produced and how it's distributed,

this requires a certain legal backing, right?

There would be no capitalism without a specific law.

Again, the law comes from the state.

And we go back to the point of saying the state is constantly intervening to protect the market.

So, also, one other point is, of course, that that's what we mean by exploitation: the fact that exploitation is not just about having a very low wage.

You are exploited also when you don't have a say on what you are working for.

Software engineers, right now, working for Microsoft and Google, and knowing that what they're doing is going to basically boost the AI that is killing the Palestinians and ludicrous profits.

We know Francisco Albaneza just released a very powerful report about all of the corporate gains off of what is happening right now in Gaza.

Well, this Microsoft engineer has very little choice, but either to fire himself or to get fired, because if he goes to work, that's what he's going to have to work to lose.

This is what he has to work for, right?

But I think if you were to, I mean, if you were to look at,

and I absolutely, you know, understand where you're going there, but if you were to to look at what people work on

and everybody had to look at the downstream effects of what they work on and whether or not it would be destructive or not,

very few people would work.

So much of what, I mean, anybody that makes anything would find themselves downstream of progress or human thing.

Yes.

I think, you know, while I definitely appreciate all the aspects that you're saying, my question is, you know, the system that maybe you might be advocating for, and I don't want to put words in your mouth, but I haven't seen the success of purely socialist where workers have, you know, is there a system where you can protect private property and individual rights,

but still create an engine of progress that brings people

the more modern types of conveniences, or is that pie in the sky?

But

I get uncomfortable when I start getting into

so

there's nothing within the system that can be salvaged other than a worker's utopia which I like I have not seen work ever anywhere

well I think it's also interesting to note that capitalism is very young so it's only 0.1 percent no this is really important it's just a boy it's really it's only 0.1 percent of the time humans as homo sapiens has been on earth that we are under but the other systems have been feudal systems and empire like there have been multiplicity but also a lot of for example native native horizontal relations right so it's not necessarily that you need to organize production vertically and this doesn't mean by the way again I think we use the word socialism and everyone gets scared because of course it's it's used especially in the United States as something that is considered taboo even to talk about but we can even use we need we can get creative about how we want to talk about it but the point is that we need democracy in the workplace and cooperatives for example um are this a democratic space and it's not easy of course because actually to organize production democratically requires a lot of work sure and i don't know that they have the scale or the the the ease i i understand it but i haven't and james maybe you can speak to because i think uh you know while I probably lean towards Clara in a lot of these spaces,

going back to like cooperatives feels like at scale with the amount of people we have in this world and the way that people

human behavior feels like it's

artisanal and not practical.

But James, I'll ask you that.

Yeah, I mean, I think a bit of utopianism is a good thing.

You know, I think in the United States, you know, you need ideas, you need creativity, you need to figure out how to create a kind of coalition, a political coalition to put the society on a different track.

But I do think, you know, as you say, John, that if you look at these experiences of successful economic development, you know, look at what's happened in South Korea in the last 50 years.

You know, South Korea went from a poor to an incredibly interesting, exciting, and I don't just mean economically, I mean culturally, I mean K-pop, Yangan style, you know, you name it.

You know, and what was that?

You know, it was capitalism, basically.

It was Hyundai, it was Daiwo, it was Samsung, it was just an amazing amount of innovation and creativity.

You know, what took tens of millions of Chinese people out of poverty since 1978?

The Communist Party giving up trying to control every little bit of people's lives and just allowing people to do their thing, you know.

And so, could I imagine another world?

And should we?

Yes, absolutely, we should.

But I think like economists would be sort of practical in the way I'm suggesting and say, okay, let's just look at these places.

All right, so let's try and so this maybe

coalesces this for me.

And I'm I'm going to throw this out there, and you guys can both yell at me about this.

The way I view it is capitalism is the operating system that we have chosen to create innovation and progress in this country.

But inevitably, it is a destructive operating system that it is almost by definition, as Clara said, exploitative.

So

what I'm saying is I think Clara is far more creative and innovative in the way that she's thinking about we can reorganize this in a very different way through a more cooperative, democratic, worker-based system.

I guess I still look at it,

and maybe this is again, it's sclerotic thinking, but

I look at as government's job is to ameliorate and mitigate the natural tendencies of capital as destructive.

How can government

channel the good things of innovation and production while mitigating the disastrous effects of the poverty that it creates, the inequality that it creates, and all those other things?

So, that's...

Does that resonate at all with you, Clara, and James?

And I'll ask Clara first and then James.

Yeah, I mean, we are in an economy in which half of the world population is in poverty.

So it's very important to understand this is not exactly.

I'm talking more about

the United States.

I'm not talking about.

And in the United States, we have 11% of the population in poverty.

So again, it's not a success story.

So we do need to think creatively.

I absolutely think so.

And two points is that I think the issue here is also that it's not just about private investment.

It's also that private investment follows the logic of profit.

And again, it's not just about individuals, it's that everyone is all even the businesses are stuck in what political economy calls real competition in the sense that if they don't exploit more, they don't survive and they get eaten up by bigger fishes.

Right.

They're just chasing growth.

Exactly.

But I'm asking, so what is a government role when you talk about 11% in poverty, which for us is actually probably better than I thought it was, to be perfectly honest.

But so what does a government,

what does a distribution system and a government look like that is helping to mitigate those issues without creating more poverty?

Right, exactly.

Because the thing I just wanted to say was that this progress that you talked about is ultimately the result of this technological innovation that needs to happen because otherwise people get kicked out of the game.

So that's also important to keep in mind.

It's not like the progress is not the goal in itself.

The goal is profit.

Progress is the outcome of competition, if we want to call it progress.

So going to your question, I do think that governments

don't operate as technocratic kind of

do-gooders.

We need to pressure from below.

And this is the whole conversation also that we're having with the

free form for real economic emancipation: to say the only way in which governments will change how they operate, not through austerity, right?

Because we're just saying how governments are ultimately

imposing austerity.

I remember your first words in this conversation were all about how it's normal to think that anything in favor of labor is considered bad.

Anything that is ultimately about de-risking subsidizing private shareholders, that's just the norm.

So this is the norm.

So austerity is the norm.

So how do we do not austerity under capitalism?

I would say it's a tricky.

political balance because again, I think the tendency for the system is to go there exactly because you need to increase market dependence.

And this is a very important point that I did not make is that how do you keep people under conditions of wage labor?

You have to increase market dependence,

which means that in order to survive, you have to buy your own health insurance, buy your food, pay your rent, so that people become more precarious and more vulnerable.

So in this case, what happens?

If the only thing I think the only possibility here is for people to actually gain an awareness of how the system operates, to stop just, you know, blaming the one person in government and realize that it's a bigger issue, There's a bigger tendency under the system and thus, in a way, cultivate their critical consciousness.

What we're trying to do with free, and by the way, what we have is also available online, so anyone can follow.

If this consciousness is cultivated, this is when we can start putting pressure on our governments.

Governments will not act without the pressure.

So you can start pressuring at the local level to increase access to basically what breaches the market dependence.

This is what I think is important is that the only way in which workers will gain back some power is if they're able able to create spaces in which they can breach market dependence and have more sustainable.

So basically anti-austerity operations is what can create more democratic space.

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James, you talked about that a little bit.

You know, what Clara is talking about is sort of if people feel like the floor is stronger, they have more autonomy.

Oddly enough, it's almost, you know, when you think about the libertarian perspective, which is we should do what's the most for individual freedom, it seems to me,

in some ways, that's compatible with a more libertarian view, which is if you build a stronger floor,

people have more liberty.

In other words, you don't have to stay in a job because that's your health care.

You don't have to stay in a job because

it's the only, it's a company town and you've got to do the thing.

Is a stronger floor part of more liberty, James?

Well, liberty is a kind of complicated word.

Always.

I try not to use the word liberty because in the United States, if you use the word liberty, people think you're a kind of conservative nut.

I've come to in England, they wouldn't think that.

But, you know, I mean, I think the image that you lay out, John, is exactly the right one.

You know, a famous account of the rise of the modern state is that the modern state kind of exactly arose because of capitalism.

You know, capitalism freed people from social structures, it freed people from kinship, it set people loose, you know, and that was fantastic at some level, you know, for innovation and individualism and all sorts of things, but it created all these massive consequences, these negative consequences, poverty, you know,

which we don't reckon with for some reason.

And it was the government had to come to make that stable.

You know, this is the vision of kind of Karl Polanyi's book, Great Transformation.

So I think you said that, and I I think that's that's sort of right.

But it's an endless battle.

You know, it's an endless battle to keep that on track, you know, because

everyone wants to kind of shade a bit.

You know, everyone wants to play the game a bit in their favor and stack the rules a bit in their favor and get the government not really doing that because, yeah, that keeps wages low or it allows us to kind of make more profits.

So

I think that's a that's so that's that's a never-ending struggle, that, you know, that kind of dialectical contest in some sense, you know, between people to get the state, to control capitalism.

But, you know, I guess my view of capitalism is different from Clara's, though, because I think you may disagree with Elon Musk and Peter Thiel's vision of progress.

You know, I certainly do.

I believe humanity should still have a role.

But they definitely have one, you know, like I think if you think about

one person,

what was it that drove him to take over this whole doge?

No, he was not trying to make money.

He actually lost enormous amounts of money he was doing it because he's a libertarian you know because he's ideologically driven to kind of oppose anything the government does i think right and it's such a strange i guess that gets back to kind of the original contradiction and everything that we talk about is you have these folks who are anti-collectivist but collectivism formed for a reason that together people were able to overcome the adversities of a dangerous natural world or other things.

There's a reason why this all happened.

But somehow, once we came together, that instinct of strength through a stronger floor and through keeping us all together has now been viewed as a weakness, which I find fascinating.

Like, it's such a strange turn of events.

And I would love to understand a little bit,

maybe, James, you could do this.

What are the tools that economists have

that can help

the political and the legal?

Because I think this gets us to how we change it.

You know, Clara talked about this of people rising up, but they need the tools to be able to do that.

My fear is these systems only change in catastrophe.

or cataclysm.

What are the tools that maybe we can look to from economists that can help provide us the ability to prosecute a better case for a fairer economy, James?

Well,

I think economists

have to think more about

the negative consequences

for society

and for the stability of society of organizing the economy.

in this way.

I mean, as I say, I was saying earlier, the problem with mainstream economics is it completely completely ignores sort of society and politics.

So it doesn't think about

what's the feedback onto politics of having this enormous increase in income and wealth inequality.

That feeds back onto politics.

It feeds back onto tens of millions of dollars being thrown into political contests.

And so, of course, but that's not a feedback that an economist would think about.

Economists do think about inequality and they're very interested in studying inequality, but you have to see the whole picture.

And why is it that economists don't see the whole picture?

I don't know.

I've spent my entire career struggling with that.

I still don't really, it's something kind of baked into the way economists are sort of taught to think about the world.

You know, I'm sure Clara would say she has a kind of conspiracy theory about this.

No, it's not conspiracy.

I think it is more complicated.

It's more complicated.

It's more complicated than that.

I don't think academics.

I mean, I also think that economists play a role in society.

It's not about conspiracy.

It's about realizing that all knowledge is embedded and that people like us,

we create knowledge, but we're very privileged as professors with tenure.

And we tend to not see a lot of the time what are the difficulties that people actually

are living through.

This is why I think economics needs to not just be based in academia and the high ivory towers.

We need to bring back economics so that it becomes more humane.

We need the experience of the lived experience of the social struggles of people.

And this is what we're trying to do at at free.

We can't renounce economics.

We need just a different type of economics that raises awareness.

And honestly, in my own historical work and my book, The Capital Order, this is all I've been doing is looking at the origins of neoclassical economics, mainstream economics, to understand how it came into being in the moment in which people were saying, you know, value comes from us.

We are producing the values.

It's not the entrepreneur, it's the worker.

And guess what?

Neoclassical economics tells you the opposite.

The workers don't count.

They're just, you know,

who counts as the entrepreneur.

So, of course, the lens through which we look at the world is very political.

And economics is very political because it gives us a lens that structurally disempowers.

I think we do need a more empowering lens.

And we also do need to be able to look at capitalism and understand its problems.

I think this is the only way we will have imagination that is actually will be able to bring us to the confront.

the challenges of our future.

I think many economists are studying the world.

Many economists are doing field work in Latin America, in Africa, in India.

What am I doing in Rwanda?

I'm trying to understand the logic of society of the economics of polity in Rwanda.

I think many economists are doing that already, to be honest with you.

Is it possible, and again, this is to, because I think, you know,

while you guys might disagree on certain aspects of it, is it possible too that economics is just one other commodity that can be utilized by the elites

to promote the outcomes that they're looking for politically.

In other words, it's just one more tool that can in some ways be exploited.

I think to James's point, I think you're right.

There's a lot of really

interested, fascinating economists who are out there in the communities, but ultimately, how that knowledge is applied in societies, it can be perverted.

You know, any knowledge can.

And I think getting back to what Clara is talking about, you know,

your history of

sort of how the workers' consciousness of the 20s coming off of World War I and how Mussolini and even in England with the trade unions, how they used their resentments,

right,

to actually work against those folks is fascinating to me.

And that I think speaks to what James is saying, which is there's a lot of people doing this great work, but without the political mechanism to not pervert that, how do we prevent that?

Yes.

And we need to understand that any knowledge has a method.

And again, this method is not neutral because there's different ways in which you can do economics.

And again, you can do it in the mainstream way, or you can do it as we're trying to do at free in other places.

And I think this is the whole point: economics is just a field that we need to then,

I think,

build with lenses that also can help have future imagination.

And I do think, though, that this imagination is not up to the academic, it's up to actual experiments on the ground.

In many places in the United States, people try to operate through solidarity economies, through ways in which, again, you do try to breach market dependence.

And this is the beginning.

But we don't have, you know, we can't see the future now as academics, but we can definitely help build something different.

And I think this is the only thing that keeps me not depressed about the dehumanization of this world.

So what Clara is talking about is a more disruptive model, you know, using, you know, more vision.

James, in your model, which may, you know,

want a little bit more structure, how do you see uh your work being utilized?

How would you like it to be utilized?

And what would you like to see as the sort of optimistic outlook for that?

No, I mean, I agree with, you know, I agree that ideas are very powerful in this debate.

You know, that's why I was saying, you know, we need new ideas.

We need to be able to kind of reimagine our social system.

And, you know, think about the influence of Milton Friedman.

You know, I think Milton Friedman pushed this very simplistic model of like what market economies were about.

And that was an enormous powerful tool in the hands of Mrs.

Thatcher or Ronald Reagan.

Right.

That was the beginning of it.

The austerity.

So those ideas are powerful.

I mean, I, you know, I studied Africa or whatever, you know, and the way Africans organize their economy is completely different, you know, historically and in many ways today than the way people organize.

You know, I'm somewhat reluctant to start talking about it, you know, since we're talking about the kind of Western world.

No, but it's interesting, James, to look at it from that perspective, because if they're more nascent, you have an ability to build something that maybe is the system we're talking about.

Yeah.

Well, I think there's many things.

You know, one of the reasons, you know, I study the rest of the world is I think there's many, I mean, I agree, there's lots of problems.

There's no society as perfect.

There's always, you know, lots of lots of problems.

You didn't have to go very far from my office in the University of Chicago to see that, you know.

So

I think one can always learn from other societies, the way they experimented, the way they tried different things.

I agree, you know, like socialism didn't work out very well.

So what?

You know, it was hijacked by whoever, by Stalin, by Fidel Castro.

So what?

You know, you know, so

let's think about alternatives and let's learn from the world.

And I agree with that impulse.

That's exactly, I agree with that.

You know, let's dream.

I mean, I'm not sure I'm the person to tell you about that, you know, because I'm just a British empiricist.

You know, British people, you know, have a particular mindset.

I think French people, maybe Italians, much better at this.

But the empiricism is the point:

being able to take empiricism and not have it be perverted and to apply it in these areas.

You know, we talked about Friedman earlier and all that.

And I'll end with maybe this: and

about the value of sort of

how these empiricists work.

Alan Greenspan, famously the Fed chairman from, you know, for so long, was on my program, The Daily Show.

This was post the 2008 financial crisis.

And so this is, as we talk about, one of the popes of economic vision, you know, studied at the foot of.

Friedman and all those guys.

And I asked him what went wrong.

And he said to me, I guess at the end of the day, we made a mistake in thinking the banks could regulate themselves.

Oops.

So that's kind of the point.

But I listen,

I love both of your perspectives.

I find it really interesting.

I think it's the question of our times, which is to

stand back and reimagine

systems that can be in healthier balance.

And so I really appreciate you guys.

You've put so many

wonderful ideas out to think about.

So I really appreciate you both being here.

Clara Mate, Professor of Economics, University of Tulsa, the executive director of FREE, the Forum for Real Economic Emancipation, author of The Capital Order.

It's a great book.

James Robertson, University Professor at the Harris School for Public Policy and the Department of Political Science at the University of Chicago Nobel Prize Awardee in 2024, and

out and about right now in Africa, checking out economic systems on the ground.

I so appreciate you both taking the time to be with us.

Thank you again.

My pleasure.

Thank you.

Thank you so much.

It was a pleasure.

Economist fight

on our show?

Never.

You were a really good referee.

I was, I didn't even know that was going to go down.

No, you're never expecting.

But what does it say about us that like our economy episodes are the most fury?

You know?

It is the most.

It gets in there.

Can I say this, though, that I so appreciated?

The lack of condescension and smug eye rolling from both economists was such a refreshing for me.

Like whenever I'm talking to economists, I always feel like it's like, you know that

you get a fortune cookie and you read in bed after every fortune cookie.

That's the game.

With economists, I think the game is after everything they say, you just add, you asshole.

Like, because it's like, no, demand goes up when you, when money policy is less restrictive, you asshole.

And they love to say, that's econ 101.

Right.

Zing.

None of that from these guys.

Just flat out fucking economic passion.

You know what I really appreciated, though?

I appreciated the reminder that economics isn't a science.

And I really liked the point that we were touching on with Clara about, you know, austerity is a choice and it is a tool.

And all I could think about was the big, beautiful bill, which we also touched on, and how the healthcare provisions, the taking away of Medicaid doesn't happen until after the midterms.

That is a choice.

That is a tool.

It's exactly right.

Austerity isn't inevitable.

It's a choice that serves specific interests.

And I think the one thing that they would definitely agree on is that nothing about the way that people interpret the economy is neutral.

And nothing about the medicine that they prescribe to the economy is neutral.

And it's not just because of politics.

It's because in the field itself, it requires the cherry-picking of certain data.

Right.

I thought it was interesting, too, when they talked about you cannot remove the legal system and the political system from economics.

But so often the field narrows its focus to do that.

And I think to your point, Lauren, that the idea that the things that people might be upset about won't kick in until after it won't matter to them for the elections.

But I think also the broader thing of we get so wrapped up in like, oh, there might be some cuts to Medicaid and things like that without stepping back and realizing, right, relying on

work or subsidies to get health insurance is fucked in the first place.

Absolutely.

That these are the things.

And this is not

the way the system has to be designed.

This is the way we've designed it.

And something else that stood out to me is just that it's so unfortunate that World War I and COVID are the moments that people realize that the government can actually work for them.

These lights are absolute

miserable.

Well, even when he said after World War II, we had that more demand and we had great prosperity, but then, you know, there was a little bit of stagflation in the 70s.

And so Reagan and Thatcher came in and said, kick people off of me.

People get a little too comfortable.

We should be fine here.

That'll be fine.

I guess also the other thing I was thinking about was just how the Big Beautiful bill came about in in order to address the deficit, but actually increases it and will just raise the debt ceiling as the solution, which is addressing the deficit.

And it's what?

If you do, you know what, Jillian, that's a good point.

If you trash the economy, I guess that could deficit would go up more slowly.

Fantastic.

Brittany, what do we got?

What do the listeners want to know this week?

First up, John, do you think that Skydance would get rid of the Daily Show after the merger goes through?

Skydance, the company that's coming in?

Boy,

that's a good question.

Unfortunately, we haven't heard anything from them.

They haven't called me and said, like, don't get too comfortable in that office, Stuart.

But let me tell you something.

I've been kicked out of shittier establishments than that.

We'll land on our feet.

No, I honestly don't know.

I mean, I think.

I'd like to believe that like without the daily show, I don't know Comedy Central is kind of like musak at this point without I think we're the only sort of

in like life that exists on a current basis other than like South Park

the only thing on there I'd like to think we we bring enough value to the property like if they're looking at it as

as purely a real estate transaction I think we bring a lot of value but that may not be their consideration I don't know they may sell the whole fucking place for parts.

I just don't know.

And

we'll deal with it when we do.

But

I'm so happy and proud of everybody that works over there.

Like

they want to do that, knock themselves out.

As Jay Leno would say about Doritos, go ahead, crunch all you want.

We'll make more.

So we'll figure that out when the time comes.

And hell yeah.

All right.

Where we have to do it.

But like I say, that is without i have no knowledge you know we've all got a surmisal about like who actually is owning it and what his ideology is but ideology may not play a part i don't i just don't know

one could hope one could hope yes what else we got uh trump now claims the epstein files were actually written by obama biden and oh that makes total sense yeah that's yeah is this the biggest cover-up in american history or just another two-stage

i I don't fucking know.

The whole thing is so abjectly ridiculous.

Look, it's you, you've

we talked about in the Daily Show last night, Occam's razor.

Like the dude, like there's not that many people who are on video dancing with Jeffrey Epstein and with his arm around him and on the plane as the president of the United States.

So the idea that, you know, I understand what he's doing.

He's, he's doing the whole like, it's just like Hunter's laptop.

And you're like, okay.

Yeah.

The lady doth protest too much i mean the whole thing is

insane and the idea that he's like why are we still talking about that anyway about the 2020 election that was stolen you know all right

um

listen man and rosie o'donnell and rosie o'donnell and then alan dershowitz suddenly all over tv going i know everybody on the list i'm not i was there everybody's on the list i was there but i'm not allowed to tell anybody.

I'm under confidentiality.

And you're like, what were you, Epstein's lawyer?

Like, what, what do you mean, confidentiality?

And you got this other, I'm sure Yelene Maxwell's in jail going like, so what am I in jail for again?

Yeah.

Like, what, what?

This is like, it's the opposite of a nothing burger, but I just don't understand why they can't, or just like fucking prosecute the people that are, that are prosecutable and let's be done with this.

It's a great conspiracy, huh?

Man, man, man, man.

But hell of a, once again, hell of a week.

How do they get in touch with us, Brittany?

Twitter, we are weekly show pod.

Instagram, threads, TikTok, Blue Sky, we are weekly show podcast.

And you can like, subscribe, and comment on our YouTube channel, The Weekly Show with Jon Stewart.

There you go.

Nicely done.

Guys, thank you guys so much.

Excellent, as always.

Lead producer Lauren Walker, producer Brittany Mimedovic, video editor and engineer Rob Vitolo, who saved the show today.

I just want to point out that people don't understand video editing, sound editing, audio editor and engineer Nicole Boys.

I was on, we had a guy calling in from Africa.

We had someone calling in from, I don't know where.

Tulsa.

She was in Tulsa.

And yet I was the one

who, like,

every time I talked, it just went.

Rob fixed it up, pressed a couple of buttons, had me throw the computer out the window and then pull it back into the window

and all fixed up.

Researcher and associate producer Jillian Spear, as always, executive producers, Chris McShane and Katie Gray.

We will see you guys next week.

Enjoy uh, this beautiful July thunderstorm.

All right, bye.

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