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Democracy.
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In the West, we make a colossal mistake
taking it for granted.
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We see democracy not as the most fragile
of flowers that it really is,
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but we see it as part
of our society's furniture.
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We tend to think of it
as any transient given.
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We mistakenly believe that capitalism
begets, inevitably, democracy --
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it doesn't.
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Singapore's Lee Kuan Yew and his
great imitators in Beijing
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have demonstrated
beyond reasonable doubt
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that it is perfectly possible to have
flourishing capitalism,
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spectacular growth,
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while politics remain democracy free.
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Indeed, democracy is receding
in our neck of the woods,
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here in Europe.
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Earlier this year while I was
representing Greece,
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the newly elected Greek government
in the Eurogroup as its Fincance Minister,
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I was told to know on certain terms,
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that our nation's democratic
process, our elections,
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could not be allowed to interfere
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with economic policies that were being
implemented in Greece.
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At that moment,
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I felt that there could be no greater
vindication of Lee Kuan Yew,
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or the Chinese Communist Party,
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indeed of some recalcitrant
friends of mine who kept telling me
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that democracy would be banned
if it ever threatened to change anything.
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Tonight, here, I want to present to you
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an economic case
for an authentic democracy.
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I want to ask you to join me
in believing, again,
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that Lee Kuan Yew,
The Chinese Communist Party,
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and indeed the Eurogroup,
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are wrong in believing that we
can dispense with democracy.
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That we need an authentic,
boisterous democracy,
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and without democracy,
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our societies will be nastier,
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our future bleak,
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and our great technologies wasted.
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Speaking of waste,
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allow me to point out
an interesting paradox
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that is threatening our
economies as we speak.
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I call it the twin peaks paradox.
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One peak you understand --
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you know it, you recognize it --
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is the mountain of debts
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that has been casting a shadow
over the United States,
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Europe,
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the whole world.
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We all recognize the mountain of debts.
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But few people discern its twin.
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A mountain of idle cash belonging to rich
savers and to corporations,
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too terrified to invest it
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into the productive activities
that can generate the incomes
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from which you can extinguish
the mountain of debts
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and which can produce all those things
that humanity desperately needs,
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like green energy.
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Now let me give you two numbers.
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Over the last three months,
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in the United States, in Britain
and the Euro zone,
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we have invested collectively,
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3.4 trillion dollars on all
the wealth-producing goods,
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things like industrial plants, machinery,
office blocks, schools, roads, railways,
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machinery, and so on and so forth ...
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3.4 trillion sounds like a lot of money
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until you compare it to the 5.1 trillion
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that has been slushing around in the same
countries, in our financial institutions,
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doing absolutely nothing
during the same period ...
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except inflating stock exchanges
and driving up house prices.
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So a mountain of debt
and a mountain of idle cash
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form twin peaks failing
to cancel each other out
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through the normal
operation of the markets.
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The result is stagnant wages,
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more than a quarter
of 25 to 54-year-olds --
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in America, in Japan and in Europe --
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out of work,
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and consequently,
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low aggregate demand,
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which in a never-ending cycle,
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reinforces the pessimism of the investors,
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who fearing low demand,
reproduce it by not investing.
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Exactly like Oedipus' father,
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who terrified by
the prophecy of the oracle
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that his son would grow up to kill him,
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unwittingly engineered the conditions
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that insured that Oedipus,
his son, would kill him.
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This is my quarrel with capitalism.
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It's gross wastefulness,
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all this idle cash,
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should be energized to improve lives,
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to develop human talents,
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and indeed to finance
all these technologies --
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green technologies --
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which are absolutely essential
for saving planet Earth.
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Am I right in believing
that democracy might be the answer?
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I believe so, but before we move on,
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what do we mean by democracy?
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Aristotle defined democracy
as the constitution
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in which the free and the poor,
being in the majority, control government.
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Now of course Athenian democracy
excluded too many --
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women, migrants and of course, the slaves.
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But it would be a mistake
to dismiss the significance
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of ancient athenian democracy
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on the basis of whom it excluded.
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What is more pertinent,
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and continues to be so about ancient
athenian democracy,
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was the inclusion of the working poor,
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who not only acquired
the right to free speech,
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but more importantly --
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crucially --
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they acquired the rights
to political judgements
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that were afforded equal weight
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in the decision-making
concerning matters of state.
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Now of course, Athenian
democracy didn't last long,
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like a candle that burns brightly,
it burned out quickly.
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And indeed, our liberal democracies today,
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do not have their roots in ancient Athens.
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They have their roots in the Magna Carta,
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in the 1688 Glorious Revolution,
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indeed in the American constitution.
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Whereas Athenian democracy was focusing
on the masterless citizen
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and empowering the working poor,
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our liberal democracies,
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founded on the Magna Carta tradition,
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which was, after all a charter for masters.
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And indeed liberal democracy
only surfaced when it was possible
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to separate fully the political sphere
from the economic sphere,
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so as to confine the democratic process
fully in the political sphere,
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leaving the economic sphere --
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the corporate world, if you want --
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as a democracy-free zone.
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Now in our democracies today,
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this separation of the economic
from the political sphere,
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the moment it started happening,
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it gave rise to an inexorable,
epic struggle between the two
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with the economic sphere
colonizing the political sphere,
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eating into its power.
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Have you wondered why politicians
are not what they used to be?
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It's not because their DNA
has degenerated --
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(Laugher)
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It is rather because one can be
in government today and not in power.
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Because power has migrated
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from the political to the economic
sphere, which is separate.
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Indeed --
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I spoke about my
quarrel with capitalism --
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If you think about it,
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it is a little bit like
a population of predators,
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that are so successful in decimating
the prey that they must feed on,
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that in the end, they starve.
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Similarly, the economic sphere
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has been colonizing and cannibalizing
the political sphere to such an extent
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that is is undermining itself,
causing economic crises.
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Corporate power is increasing,
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political goods are devaluing,
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inequality is rising,
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aggregate amount is falling,
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and CEO's of corporations are too scared
to invest the cash of their corporations.
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So the more capitalism succeeds in taking
the demos out of democracy,
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the taller the twin peaks
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and the greater the waste
of human resources,
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and humanity's wealth.
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Clearly, if this is right,
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we must reunite the political
and economic sheres
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and better do it with demos
being in control,
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like ancient Athens except
without the slaves,
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or the exclusion of women
and migrants.
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Now this is not an original idea,
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the marxist left had
that idea 100 years ago
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and it didn't go very well, did it?
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The lesson that we learned
from the Soviet debacle
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is that only by a miracle will the working
poor be re-empowered,
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as they were in ancient Athens,
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without creating new forms
of brutality and waste.
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But there is a solution.
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Eliminate the working poor.
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Capitalism's doing it
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by replacing low-wage workers
with automata, androids, robots.
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The problem is
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that as long as the economic and
the political spheres are separate,
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automation makes the twin peaks taller,
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the waste loftier,
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and the social conflicts deeper,
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including --
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soon, I believe --
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in places like China.
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So we need to reconfigure,
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we need to reunite the economic
and the political spheres,
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but we better do it by democratizing
the reunified sphere,
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lest you end up with
a surveillance-mad, hyper-autocracy
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that makes The Matrix, the movie,
look like a documentary.
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(Laughter)
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So the question is not whether
capitalism will survive
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the technological innovations
of this moment.
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The more interesting question is whether
capitalism will be succeeded
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by something resembling a Matrix dystopia,
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or something much closer
to a Star Trek-like society,
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where machines serve the humans
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and the humans expend their energies
exploring the universe
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and indulging in long debates
about the meaning of life
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in some ancient, Athenian-like,
high-tech _________
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I think we can afford to be optimistic.
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But what would it take --
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what would it look like --
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to have this Star Trek-like utopia,
instead of the Matrix-like dystopia?
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In practical terms,
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allow me to share, just briefly,
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a couple of examples.
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At the level of the Enterprise,
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imagine a capital market,
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where you earn capital as you work,
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and where your capital follows you
from one job to another,
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from one company to another,
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and the company --
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whichever one you happen
to work at at that time --
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is solely owned by those who happen
to work in it at that moment.
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Then, all income stems
from capital, from profits,
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and the very concept
of wage labor becomes obsolete.
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No more separation between those
who own but do not work in the company,
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and those who work
but do not own the company.
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No more tug-of-war
between capital and labor.
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No great gap between
investment and saving,
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Indeed, no towering twin peaks.
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At the level of a global
political economy,
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imagine for a moment,
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that our national currencies
have a free-floating exchange rate,
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with a universal, global,
digital currency,
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one that is issued by
the International Monetary Fund,
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the G-20,
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on behalf of all humanity.
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And imagine further,
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that all international trade
is denominated in this currency --
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let's call it "the cosmos" --
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in units of cosmos.