Between 1870 and 2010 an unprecedented explosion of material wealth transformed the globe, but that wave of prosperity failed to create a fully functioning and equal society. How did we manage to create an economic pie large enough for everyone to share, but then fumble dividing that pie up equally? Brad DeLong explores this question in his new book, Slouching Towards Utopia, which looks at the economic history of the twentieth century and why it matters today.
J. Bradford DeLong is an economic historian and a professor of economics at the University of California, Berkeley. He was a deputy assistant secretary of the U.S. Treasury during the Clinton administration. He writes a widely read economics blog, now at braddelong.substack.com
Twitter: @delong
Slouching Towards Utopia https://www.basicbooks.com/titles/j-bradford-delong/slouching-towards-utopia/9780465019595
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
David Goldstein:
Market capitalism has proven to be the most consequential problem solving social technology ever invented.
Brad DeLong:
Before 1870, humanity had no chance of baking a sufficiently large economic pie.
Nick Hanauer:
We have created enough abundance for everyone to live a dignified and stable life, but we still manage to mostly screw it all up.
Speaker 4:
From the home offices of Civic Ventures in Downtown Seattle, this is Pitchfork Economics with Nick Hanauer, the best place to get the truth about who gets what and why.
Nick Hanauer:
I’m Nick Hanauer, Founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, Senior Fellow at Civic Ventures.
Nick Hanauer:
Goldie, today we get to talk to a really interesting person, the economic historian, Brad DeLong, about his new book, Slouching Toward Utopia. It tells basically the economic story of society from the years 1870 to 2010, which he calls the most consequential years of all humanity centuries. And he’s almost certainly correct and it’s a fascinating tale of economic evolution in the way in which, in particular markets, affected society in super profound ways.
David Goldstein:
Right. And I think what’s interesting, Nick, is that it addresses attention that you and I have talked about and have written about and are in the process of writing about. And that is the fact, and I think this gets to the title of the book, the fact that market capitalism has proven to be the most consequential problem solving social technology ever invented, that it has lifted billions of people out of poverty and into the developed world that compared to just, as he says, 1870 is the demarcation line that he uses, we live in what folks then would’ve thought of as this utopian vision. Just the things we have, the material wealth that we have, the comfort that we have, the freedom that we have that was not available to the wealthiest people.
Nick Hanauer:
The inconceivable, right?
David Goldstein:
And at the same time, when you look at the 20th century, it is a century of horror in terms of war and genocide and the fact that in the process of creating all this material wealth, market capitalism has created just vast inequality, both between nations and within them. And it is that contradiction that I think is at the heart of his book. And we often lose sight of it when we see the horrors that exist in the world today. The wars, the famines, the coming climate catastrophe. It’s easy to lose sight of. At the same time, how much better off we are collectively, even if it’s not evenly distributed.
Nick Hanauer:
Yeah, absolutely. But the book does pose a really interesting question, which is given that we have created enough abundance on planet earth for everyone to live a dignified, secure, and stable life, which would’ve been again, 200 years ago, inconceivable we’re almost, by the way, with eight times as many people, which would also have been inconceivable, but we still managed with all that abundance to mostly screw it all up. But anyway, let’s talk to Brad.
Brad DeLong:
I am Brad DeLong, an Economics Professor at the University of California who does economic history. I was a Deputy Assistant Secretary of the Treasury in the Clinton Administration. I have been too online people say, since 1995. And I have been fortunate enough to write a book Slouching Towards Utopia, The Economic History of the Long 20th Century. That was an instant New York Times bestseller and has now sold about 40,000 copies worldwide, for which I am eternally grateful.
David Goldstein:
45,002 after me and Nick.
Nick Hanauer:
Yeah. So Brad, why don’t you give us, how should we pull it, an abstract of your long and complex new book?
Brad DeLong:
Well, I guess, let me start with the claim that it really was 1870 that was the hinge of history, that before 1870, humanity had no chance of baking a sufficiently large economic pie for everyone to potentially have enough or even close to enough. But that starting in 1870, humanity really got the engine of technological growth in gear in a way that it hadn’t before. That since 1870, we seen more technological change in a single year than we saw in 50 years back before 1500 in terms of how rapidly our technologies are making us, fortunately, better at doing things.
And so the prospect of being able to bake a sufficiently large economic pie so that you could have enough by any previous century’s definition for everyone, rapidly came into view. And so people began figuring out how should we try to move governance away from being simply some elite of thugs with spears running a fourth and fraud domination game on the rest of humanity so they could have enough. How could we actually organize society so that we could equitably distribute our forthcoming immense wealth and use it wisely and well, so people felt safe and secure and were healthy and happy.
But somehow over the long 20th century, it has all gone wrong that the, call it the mode of production, forces of production hardware has been, as part of this enormous process of unruffling technological change, the mode of production hardware has been completely revised and replaced every generation. And so we’ve had to write new relations of production and cultural and sociopolitical software for human society to run on top of the changing ways that we actually work and live and we have to do this on the fly. And we have not been able to do this terribly successfully, that it is safe to say that when 2010 came around and the long 20th century came to an end, that we really had achieved the wealth beyond the dreams of Avaris of previous centuries. We had much more than enough to give what every previous century would’ve thought of as enough to everyone. And yet the problems of slicing and tasting this immensely large economic pie, equitably distributing it and properly utilizing it, those continue to flummox us more or less completely.
Nick Hanauer:
Yeah. What were the forces that changed in 1870 that made such a consequential difference?
Brad DeLong:
Well, I have a list of up to 40 things, I asked my undergraduates to write down on their midterm of all the things that changed between the start of the Bronze Age and -3000 and 1870. You’re actually writing things down for accounting to the industrial research laboratory. And all, or at least most of these things were necessary, were needed, and they all were changes in how we thought about nature and science and the institutions we do it and the market economy and your coinage and all other such things, but nothing, not even the steam engine and not even the idea that we should be replacing the fingers of weavers with machine. Not even that was enough to do it until after 1870.
Writing in the early 1870s. You have British polymath, John Stewart Mills still saying that all the mechanical inventions to date have night lightened the toil of a single human being, but only enabled a larger population to live the same life of drudgery and imprisonment. But come 1870, we get three big things happening. We get the industrial research labs as we now know them, we get modern corporations as we know them, and we get the global market economy. And those are enough to push society into a much higher gear of technological innovation and progress. One we manage to maintain for 150 years after 1870. And that those things made all the difference.
Nick Hanauer:
So it was the invention of the corporation, the invention essentially of industrial invention.
Brad DeLong:
Yes. Yeah. You got to rationalize and routinize, you got to rationalize and routinize a process that before required that someone have an individual lightning bolt of genius and then frantically go around and try to figure out how to actually use this ingenious insight to make it useful somehow.
David Goldstein:
Yeah, yeah. You quote Tesla criticizing Edison’s process. Tesla really seems to represent more the modern corporate research lab than Edison, who was just basically throwing everything at the wall to see what worked.
Brad DeLong:
But it’s only because Tesla was enmeshed in the right social network. Put him on his own, and imagine Elon Musk without the charm and social intelligence then you get Nikola Tesla.
David Goldstein:
No-
Brad DeLong:
Except-
David Goldstein:
No, that’s giving much-
Brad DeLong:
Nikola Tesla-
David Goldstein:
Too much credit ’cause Tesla was just an unusual engineering genius. And Musk is not that.
Brad DeLong:
Musk is a smart guy with a very good eye for a solvable problem, but Tesla knew how to make electrons get up and dance in a way that nobody could understand until a decade later, after seeing all of his things work and wondering just how the hell is it possible that this works?
Nick Hanauer:
Yeah. So your book’s named Slouching Toward Utopia. What I’d love you to do is first tell us what you mean by a utopia. I recognize that you’re not being as literal as the word may imply, and tell us a little bit about why we struggle to have it. So what is a utopia and why do we struggle to have it?
Brad DeLong:
Well, at the simplest level, someone back say in 1600, someone like Tommaso Di Campanella who wrote this first utopian book, City of the Sun, or Francis Bacon who wrote the second utopian book, The New Atlantis, would say that a utopia here and now is something that is not on a distant island, which we hear about only through traveler’s tales, which is what Sir Thomas Moore’s coinage of the word utopia is about. That the utopia is not a past golden age we have lost, and utopia is not some future theological transformation of the world when all the veils of flesh fall away and we confront ourselves as the spirits of light that we really are. That a utopia is a place where, as Francis Bacon wrote, where we have engaged in science and technology to push it forward to the enlarging of human and human empire, that people will have enough power over nature and enough ability to organize themselves cooperatively, that we will no longer be greatly constrained in what we wish to do by what material necessity compels us to do.
At the simplest level, it’s that we will have a world where I’m unlike the world before 1870, where the overwhelming bulk of the people don’t spend two or three hours a day really wishing they could eat more calories now, but unable to do so because they have no money and are greatly worried about where their 2000 calories plus essential nutrients are going to come from next year, next month, even next week. What we do when we actually get to a society of abundance and what kind of abundance is good for us? How we properly slice the economic pie and then how we taste it, how we use our powers to command nature, to manipulate nature, and to organize ourselves in order to accomplish processes that make us feel safe and secure and lead us to be happy and healthy.
Those are questions that the Sir Francis Bacons or the Tomasso Di Campanellas, or even later on the Edward Bellamys say, writing what was perhaps the third or the fourth bestselling book in the United States in the late 1800s after the Bible, after Uncle Tom’s Cabin, after Ben-Hur, it was his very bad, utopian novel looking backward.
They all thought the problems of slicing and tasting the pie were much less than the problem of baking a sufficiently large economic pie. And yet lo and behold, we have baked what every previous century would say is a sufficiently large economic pie, and yet we do not feel as if we are in or even close to a society that is a utopia.
David Goldstein:
As a professor of economics, can I ask you, is our economics up to the task of addressing this issue of slicing and dicing and distributing?
Brad DeLong:
You’re pretty good at figuring out what distribution is. We’re rather worse at figuring out what a good utilization would be.
David Goldstein:
Elaborate on that please.
Brad DeLong:
Well, especially here at Berkeley, we have an awful lot of people who are tracking the global distribution of wealth and the distribution of wealth within countries quite well, as well as you can possibly track it, especially considering the number of people with lots of wealth who would rather not have the extent of their wealth known or genuinely known. We have a handle on how we’re doing a bad job at distributing what is in some sense the project of our common social division of labor in which we’re all useful, but none of us is really especially essential. And so it’s not clear why some of us have so much larger shares than others, but the problems of properly using the wealth, they’re things that are beyond the scope of economics where we have very, very little to say.
Nick Hanauer:
So a couple of clarifying questions. This is such a fascinating conversation. Surely it is true… Well, certainly we do not have utopias everywhere. Surely it is true that to a certain extent in some countries in the world, people are living a relatively utopian existence.
Brad DeLong:
It would be nice to have a jet copter out and back on top of the hot tub. So if I wanted to go down and visit my first cousin Phil in his beachfront house in Malibu, I could just get there in an hour on the spur of the moment rather than have to schlep off the SFO and take the whole mishegoss of getting to Malibu now is inconveniently long and it would be nice if it were much, much… But other than that, it looks pretty good from where I see it.
David Goldstein:
So your world, Nick, is a little more utopian than Brad’s world.
Nick Hanauer:
It is. But the life that Goldie, you and Brad live right, is certainly utopian by any reasonable standard. You earn good livings doing extraordinarily interesting consequential work. But would you say that if everyone on planet Earth lived the life that you and Goldie live, would that be a utopia?
Brad DeLong:
No, because there still would be killer robots flying over Ukraine looking to kill people. There still would be some people, there still be some people who would say that the way to persuade the Ukrainians that they are an ethnicity among Russians rather than independent nation, that the way to convince them of this is not to send poets to read the works of Pushkin aloud in pound squares of Ukraine and say, “Don’t you want to be part of this wonderful civilization”, is not to send touring companies of the Bolshoi Ballet to tour Ukraine and dance Swan Lake. Are you for unification with Russia or not? It’s just we blow things up first, we ask questions second.
We’d have an awful lot of people who would be very upset because other people who are moochers and slackers have things that they shouldn’t. George W. Bush, the second one, started this program of let’s get the phone companies and the business of giving away free cell phones to people so that we, the government, can save money and communicate with them through the internet and thus save a bunch of money. And yes, they’ll also have the phones and that’ll be good for them as well. And lo and behold, come 2010, all of a sudden, this is an Obama phone program and a huge number of people are tremendously insulted at the idea and think the world is a very non-utopian because these people are getting phones for nothing.
And that number of people who are very insulted and angry at this includes Mitt Romney, who is a good man, a wonderful manager, perhaps my 53rd favorite senator of the hundred senators there. But after his defeat in the 2012 election, you got this rant about how Obama won because he gave all these undeserving people free stuff and they voted for him and they aren’t going to learn the life lessons they need to learn to be productive and happy because they’ve learned that they can vote for Obama and he will give them free stuff and that’s no way that they should live a life. And this is a bad thing about the world.
Nick Hanauer:
Okay. But now we’re talking about human nature, right?
Brad DeLong:
Well, this may well be the problem as Dick Easterlin of USC like to say that the history of modern economic growth is not the triumph of humanity over material need, but rather the triumph of perceived material needs over humanity.
Nick Hanauer:
Correct. But isn’t it true that some of the economic ideas that we accepted, broadly the Orthodox economic thinking, what we generalize is neoliberalism, it has held us back over the last 40 or 50 years.
Brad DeLong:
Could definitely say so. Yes.
Nick Hanauer:
Yeah, so in the news news for example, frankly to the wonder and delight of many of us, there are provisions within the new legislation the Biden Administration has passed, the CHIPS Act for example, that provisions which, among other things, require things like childcare for the workers in the factories being built with those workers tax dollars. And there is this chorus of complaint coming from economists like Jason Furman and so on and so forth, suggesting that these provisions will harm the economy.
David Goldstein:
Because they’re inefficient.
Nick Hanauer:
That they’re bad for the very workers-
Brad DeLong:
No, that industrial policy should somehow be directed only at incentivizing capital.
Nick Hanauer:
That’s right.
Brad DeLong:
Yeah. That all the first order benefits of conducting an industrial policy should go to capital that is in the right place at the right time. And none of this to labor, which the response is Gene Sperling in 1992, late 1992, that the purpose of the Clinton Administration’s policies will be to create an economy that produces good jobs at good wages.
Nick Hanauer:
Correct.
Brad DeLong:
And mandating childcare so that we get actually a bureaucratic infrastructure up to provided and can take advantage of economies of scale and scope is certainly part of the Sperling good jobs and good wages vision.
Nick Hanauer:
But Jason Furman is reflecting pretty accurately the academic economic orthodoxy. Is he not? He is channeling-
Brad DeLong:
One way to say it is that there has been long a strand of economics that holds the purpose of economics is to maximize production. And that issues of distribution and wealth holding and property and income are the business of politics or maybe of political economy, which is a separate thing and which is non-scientific, but a matter of values while economics is a social science where your values do not enter into it, and we’re just in the business of maximizing production. And then there’s usually also an appeal to, as Jón Steinsson, [inaudible 00:23:05] professor here was saying on Monday to the First Welfare Theorem that a properly designed market will maximize the sensible social welfare function. A properly designed map will maximize a social welfare function because it will make every single possible win-win arrangement within people, between people. It will manage to fulfill all of those.
So it’ll leave no wealth on the table, that anything you can do to increase wealth, it will. The problem with the first welfare function is that if you then ask, well, what is the distribution of income that accompanies that wealth maximizing results, will you find that for what society is the social welfare function that you’re maximizing, you’ll find, well, it’s one in which your weight in society is more or less proportional to your will. So that as [inaudible 00:24:02] used to put it in 1942, the market economy of Bengal was maximizing the value of production. But because there were a bunch of workers who had no income and no assets, and hence no ability to register their demands on the market at all, 2 million people starved to death, and they starved to death because given the turmoil caused by World War II, there was no productive work they could do.
And so the fact that they did not have jobs, did not reduce production and carrying the food to them would’ve disrupted other, would’ve taken rail space away from other things that were productive. If you have no income, no wealth, the market economy literally does not care whether you live or die. And if you have only a small income or a small amount of wealth, the market economy cares only very little about whether you live or die. And so the second strand of economics has always been to say, wait a minute, you can’t separate out issues of production from issues of distribution this way. You have to look at the whole thing as a package and aim, say not for maximizing total production or maximizing average income, but for maximizing something like the geometric mean of income, or maximizing something like the average of the log of people’s incomes.
And if you do the first, if you’re a maximizing income person, you reach one set of conclusions because your values are already implicitly baked into the cake, even with your initial declaration that we’re not going to talk about values, we’re only going to be talk about maximizing production. That in itself is a move. And I don’t know why Jason is out there, because Jason is a guy who cares a lot about the distribution of wealth and income in his full normal persona.
Nick Hanauer:
I find it all puzzling because I don’t know Jason well, but I have spent some time with him. And by the way, I don’t mean to pick on Jason, it just-
Brad DeLong:
Why not? Jason can take it. Why not? Jason can take it.
Nick Hanauer:
But he’s a good dude and a representative of this way of thinking.
Brad DeLong:
Yes, yes, yes.
Nick Hanauer:
But the thing is that what seems to me is that he is so constrained by this orthodoxy that it leads him to believe things that make no sense. For example, the principle of marginal product, this is something that he accepts as true, that people are paid what they are worth, what they produce in the economy. And the problem with that view is that if you take that seriously, you effectively cannot increase people’s wages through policy. So for example, the $15 minimum wage thing that we cooked up in Seattle is an abomination within that framework.
Brad DeLong:
Because it creates dead weight, it creates dead weight losses.
Nick Hanauer:
That’s right. Because the economy is a Pareto optimal equilibrium, and if you mess with it, you harm welfare for everybody, blah, blah, blah. Right? So it makes it effectively impossible to help people.
Brad DeLong:
It does. Well, it focuses on one particular set of dead weight losses rather than another. I think the way to put it is that we have an idea of what the distribution of wealth should be, and the greatest of all dead weight losses are produced by the big deviations of the actual distribution of income and wealth from the distribution of income and wealth that corresponds to what people deserve plus what inequalities are needed to incentivize people to work in the proper jobs. That you have inequality that arises from those two things, but then there’s a whole bunch in addition. And that whole bunch in addition is by far the greatest market failure of all that we haven’t given social power to the right people, to the right extent. But there is worries that the money will not be terribly well spent if we take our eye off the ball.
And there also worries that the programs will be attacked and will diminish our ability to do useful things in the future to the extent that they’re not seen as massively success. For example, the Obama Energy Industrial Policy things of 2009 to 2012 were as best as I can tell, enormously successful. And yet if you go to the average person on the street, A, they haven’t heard of them. B, if they have heard of them, all they’ve heard about is [inaudible 00:28:48] from Fox News. And this all, you make a bunch of investments and some of them won’t turn out so good. It’s completely foreign to people who’ve been scared out of their wits by Fox News, something about the same, that I am a pessimist about handing huge amounts of money to Intel in an attempt for Intel to undo what a decade of management by financiers did to its Community of Engineering Practice and Advance.
I don’t think they’re going to be able to catch up with PSMC or Samsung, maybe Samsung, but even then I doubt it. But I do think giving Intel a huge, huge metric, F-ton of money, what it will do is it’ll keep the pressure, keep a fire lit under Samsung and TSMC, so they will charge a lot less for the chips they will make over the next 15 years than they would otherwise do so. And so it will be of enormous net benefit to the American economy to make this investment and to provide them with this threat, even though I don’t think Pat Gelsinger will be terribly happy with the state of Intel in 15 years.
Nick Hanauer:
So what’s the answer? Tell us about the glorious future.
David Goldstein:
If there is one.
Brad DeLong:
Yeah, it really should be a glorious future. There are now 8 billion of us, and we are each collectively all very smart. We are each individually quite smart. The fact that any of us can be a janitor while Google has just completely dismantled its 300 person, “Let’s build robot janitors to work inside of Google project”, has just completely dismantled it as a total waste of time and money. While it’s something that any one of us can learn to do in less than a month, and it indicates that if we can put ourselves into the right place in the social distribution of labor, and if we can aggregate our thinking. We are a truly mighty and powerful anthology intelligence because there are now 8 billion of us rather than the 1 billion or so of 1820. And because we can communicate much faster and are much better educated, we should be able to think much, much, much greater thoughts.
And so actively achieving a world in which we are not only and short of material necessity, but also able to distribute our wealth properly or not improperly and use it wisely, that should be within our graphs, and it should be more within our graphs in the future as we get richer. And yet, we are 30 years later in starting to deal with the fact that our carbon dioxide emissions are cooking the planet. We got within one vote of essentially doing what we did last year, but doing it 30 years before with kind of Al Gore in 1993 and one consequence is the monsoon was 400 miles off last year, which was not a happy thing. And indeed, my ancestors three centuries ago would indeed spend two or three hours a day thinking how much they wanted additional calories right now, but couldn’t have any because they were too poor.
My ancestors 300 years were not my five nine and a half, but were five six because they’ve been stunted in childhood. I’m five foot nine and a half, but I also spend three hours a day thinking about how desperately I want more calories right now, and yet my weight hangs up there at 262 pounds, even with that precisely, because the food system offers me too many tasty things, too easy, I haven’t figured out how to manage that. And my body has now figured out, “Okay. Hey, you have a sedentary life except for walking the dogs. Having extra weight really isn’t a problem for doing your stuff. And there might be a famine, there always might be a famine in which those extra 50 pounds will really, really be valuable. I’m going to keep those 50 pounds on no matter how hard you try to get me to take them off.”
Nick Hanauer:
There you go. We have this benevolent dictator question that we often ask people like you, and if you were a benevolent dictator, politics aside, what would you do? What policy would you enact? What economics would you impose to drag the world towards the vision of the future that you prefer?
Brad DeLong:
I think on the world scope, the first thing I’d do is Michael Kremer say that medical research and development, especially pharmaceuticals, should be through prizes after which everything is open sourced. Vaccines, practices, techniques and so forth, that the requirement that everything medical cover its cost, is tremendously destructive, disruptive, and harmful. While instead, things should be paid out of general tax revenues and once an idea is invented, it should be given away and used worldwide. Otherwise, the state of California made a reasonable decision in the 1970s that it shouldn’t be giving away education, especially at a place like Berkeley for free on the grounds that Berkeley students were going to be relatively rich and why were we taxing the fishermen and the farm workers in order to give them a free high quality education. And that was a reasonable thing to do.
That was a mistake that led to a lot of people who ought to have been getting a higher education, not getting one, and it led to the growth of a poisonous and ineffective for-profit college industry. Second thing would be to say, I would go back to Clark Care’s idea that as much education and apprenticeship as you want, the state will pay for, on the grounds that better trained, better educated people are better citizens and also are more productive. And that our big problem is not that people stay in school too long because it’s fun to party on Friday night, but rather that people don’t learn enough because there is now so much to learn. And if we could once again make education free, I think very quickly we’d find we had a much, much more productive citizenry and would find our rate of economic growth back to higher levels than we’ve seen since 2007.
Nick Hanauer:
Yeah, converting education from a private good to a public good again.
Brad DeLong:
Yeah.
Nick Hanauer:
One final question, sir. Why do you do this work?
Brad DeLong:
I think so far, at least, the answer is gradient descent.
Nick Hanauer:
Don’t know what that means.
Brad DeLong:
Lool around and what seems to be a thing that would be most fun to do for the next half hour. I’ve been following that since 1978 and so far it maybe it’s led me wrong, but not so far. It seems to be fun to do. And it also, I think, helps teaching people and discovering things and teaching people makes me feel very good about myself and I’m not quite sure where this psychology comes from.
Nick Hanauer:
Well, this has been fascinating and fantastic and neither of us are done with your new book, but we are grinding through.
Brad DeLong:
Okay. Thank you. Thank you. And tell me what you think I get wrong with it, in it, please.
Nick Hanauer:
Yeah. Well we have a book coming out quite soon that attempts to solve many of these challenges and we’ll be very interested in sharing it with you and getting your feedback.
Brad DeLong:
All right. Please send it.
Nick Hanauer:
I will.
David Goldstein:
Oh, Nick, what an incredibly broad conversation.
Nick Hanauer:
Yes.
David Goldstein:
I come out of it with a lot of regrets because there’s a lot of things I wish I had the time to ask him, a lot of topics I wanted to get into and we didn’t have a chance.
Nick Hanauer:
If you’re going to do a podcast with Brad on a subject this broad, you need about five hours of podcasts to cover it.
David Goldstein:
Yeah. The question I didn’t get into with him that I really would’ve, and maybe may you have some thoughts on this, Nick, is that he draws this demarcation line at 1870 and that clearly we are now, I think we are now in a post scarcity world and by 1870, at least the industrialized countries, we’re in a post malthusian world. But the bulk of our economics today, our economic orthodoxy has its roots in a 19th century that either predates this 1870 demarcation or the theory happens in the decades that follow. But they were not aware that they had passed this demarcation point. They were still living either in what they believed to be a Malthusian world or they were living in a world of extreme scarcity and did not see that they were slouching towards utopia. And it strikes me that much of modern economics is insufficient because it comes from a world that no longer exists.
Nick Hanauer:
And the other thing that we didn’t get a chance to really press on is the degree to which the economics profession has held us back a utopia. And of course, this is the point of the podcast and what we discuss all the time is it is economic orthodoxy, which has described basically treats rising inequality as a feature, not a bug. And that believes that the only thing that matters for economic policy is corporate profits. And that the only way you can be sure that capital is being efficiently allocated is if you let capitalists decide what to do with it. All of those ideas are a product of the minds of economists and are in many ways hindering the planet’s pursuit of what Brad would call a utopia, where everybody has enough and everybody leads a reasonable life.
David Goldstein:
And for the economist, be clear, we’re not implying bad intent. I mean, you brought up Jason Furman, he intends the best, but let’s be clear, he deserves to be criticized, not just because of his public comments on the Biden Administration’s administration of the CHIPS Act, but this is a guy that is teaching introductory economics courses at Harvard. He’s teaching principles of economics, ECON 10. He’s using the textbook that uses the minimum wages, an example of the supply demand curve and how when you increase wages, it decreases jobs. He is teaching the next generation of economists. He is part of perpetuating the orthodoxy that has proven incapable of addressing issues of rising and radical inequality, that has proven incapable of addressing the climate crisis. Something scientists were pretty confident they saw coming 30, 40 years ago. And we had to dither because there was no economic solution to this outside of the market according to orthodoxy. So yeah, economists like Jason Furman should be taken to task.
Nick Hanauer:
Yeah, no, for sure. And anyway, what a fascinating guy. Really interesting book, well-written and fun to read.
David Goldstein:
Yeah, and it’s a great history. Just steps through the 20th century, the Soviet Union, the rise of fascism, the Great Depression, the things that led up to it, the countries that did it right, the countries that did it wrong. And it’s a fascinating worthwhile read. You can buy it wherever you want. Your local independent bookstore would be a great place. It’s Slouching Towards Utopia. And of course, as always, there will be a link in the show notes.
Speaker 4:
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