A cautious and experimental approach to change capitalism | An interview with Geoffrey Hodgson

Geoffrey M. Hodgson is widely recognized as a leading figure in the field of modern institutional economics. He is the author of over 300 academic articles and 15 books in economics and the social sciences, including How Economics Forgot History (2001), Conceptualizing Capitalism (2015), and Wrong Turnings: how the Left got lost (2018). He has held permanent and visiting positions at several universities, both in the UK and abroad. Since September 2018 he is Professor in Management at Loughborough University London. He is editor-in-chief of the Journal of Institutional Economics and secretary of the World Interdisciplinary Network for Institutional Research (WINIR).

Image for post
Image for post

Hi Geoff, it is a great pleasure to have you here for a conversation. Let me start from one of your latest books, Conceptualizing Capitalism, in which, as the eloquent title suggests, you aim at providing a clear conceptualization of capitalism. In lay discussions, we often hear capitalism being depicted as the source of all evil in the modern world, without much discussion being reserved to what capitalism actually is. To begin the conversation with conceptual clarity, what is the definition of capitalism you elaborate upon in your book? And how can capitalism be identified historically?

Capitalism is a unique system and it’s important to realize its historical specificity. It is a market system that is dominated by finance. It has created more inequality, but on the other hand the average standard of living for many people globally has increased dramatically in the last 300 years, particularly after the Industrial Revolution, about 200 years ago. Capitalism has led to dramatic rise of wealth and in human longevity.

I uphold six key characteristics of capitalism. The first is a legal system with widespread individual rights and liberties to buy and sell property. There are undemocratic forms of capitalism as well as democratic forms of capitalism, but the basic economic liberty to own assets and to trade them is there by definition, and it is supported by some kind of legal system. A second characteristic is that markets and commodity exchange are widespread. Of course, it would be impossible to put everything up to sale, but much of our lives are engaged in contractual arrangements, typically money is paid for services and goods. The third characteristic is widespread private ownership. Of course, in every economy there is a public sector as well — it is a debatable matter how big the public sector should be — but without being normative here, we are simply defining capitalism a system with much private ownership of the means of production. There are firms producing goods and services in the pursuit of profit.

The fourth characteristic is the separation of production from home and the family, which was pointed out by Max Weber. The fifth characteristic is widespread wage labour and employment contracts. This is something that Marx emphasized. He saw capitalism as basically defined by the growth of wage labour, partly in agriculture but he gave more stress to industrial employment. And, finally, the sixth characteristic is a developed financial system. There have been limited financial systems for thousands of years, going at least back to Ancient Greece, but in modern capitalism there is the widespread issue of credit and the use of property as collateral. In other words, property is used as more than an asset in itself; it also becomes a means of borrowing — a means of access to money through banks which is then invested in enterprise. Banks create debt through debt contracts. They then sell debt on to others; there are markets for debt as well as for derivatives. The financial system is central to capitalism.

Marx stressed the fifth point, which is the employment relationship, and Schumpeter the sixth point, the financial system. If we include all six characteristics, then we have a definition that covers basically the last 300 years in North-West Europe, certainly in Britain and the Netherlands and few other places as well. And that’s generally seen as the origin of capitalism. This system has historically specific institutions that created some key conditions for the Industrial Revolution.

The contours of the discussion are getting clearer now, but I guess we are not seeing the full picture yet. As other authors do, in fact, you stress in your works the importance of recognizing the different varieties of capitalism. So, even if we define the system, we still need to take into account its variety. What’s the point here?

Capitalism became increasingly globalized in the latter decades of the 20th century, particularly after the collapse of the Soviet bloc and the opening up of China, but it has always been a global system. About 300 years ago, the Dutch and the British empires were crucial for capitalism, the French also were building empires for trade and other countries were doing the same. This international global network of trading arrangements has been there at the beginning of capitalism. But it has also created its internal variety within that global space, and the evidence shows that there is enduring difference between different national capitalisms, concerning the extent of the welfare state, the degree of inequality, levels of taxation, and a whole host of measures and indicators of human well-being, which vary enormously even between developed capitalisms. Then we also have the gap between the more developed capitalisms and the underdeveloped capitalisms, and that too is an important element of variety.

A question, then, is to what extent does globalised capitalism lead to convergence? Some evidence shows that there is some convergence going on, but it is relatively slow and there are also mechanisms creating further divergence. For example, as China becomes important as a global player, it is taking manufacturing business from other countries and is becoming a manufacturing centre, while other countries may specialize more in services, or in knowledge-intensive work. Moreover China has its own peculiar characteristics, and even though to some extent they will be ameliorated in their impact because of global considerations, it is naive to suggest that China will lose its historical traditions and its cultural features completely. China is entering the world stage as a major capitalist power — perhaps in a few decades it will be the major capitalist power — but it brings to that global assembly of nations a particular set of characteristics. This shows how variety is constantly renewed and created within global capitalism.

The variety of capitalism is important for policy issues as well, because it opens up the possibility within existing capitalism to improve things, to reduce inequality, to improve standards of living, to have a better welfare state. Alongside cases where things are worse or more unequal, some capitalisms may be regarded as taking a better policy route. If that route is possible and these countries can survive in a global capitalist system, then we have in front of us living laboratories to experiment with policy. So, variety of capitalism is important for the policy agenda too.

You just mentioned how this variety is also reflected in different levels of inequality among different national capitalisms. For instance, inequality levels in all Nordic countries are much lower than what we find in the US or the UK. However, in your writings, you point out how inside capitalism there is an intrinsic tendency to create inequality. Why is it so? What are the main drivers of this inequality stemming from the nature of the capitalistic system itself?

That’s a very important question, but before I answer it directly, I think you have to understand that a great deal of inequality in capitalism comes from previous eras. Studies show that much wealth inequality is created through inheritance; in other words people are rich because they inherited money through their families from the past, and this has been a position which has gone back to generations over hundreds of years. In Britain, for example, a lot of the inequality is due to the feudal era. Some rich families have been rich for hundreds of years. Capitalism, when it developed 300 years ago, already brought huge inequality and, as Thomas Piketty shows, that inequality changed subsequently through capitalism’s history. Perhaps the biggest change was the reduction in inequality in several major capitalist countries after the Second World War, particularly through the growth of redistributive public policies and welfare states. So, it is possible within capitalism to address this issue, at least to a degree.

Coming to your important question, what does capitalism do itself to create further inequality? It’s likely that unless capitalism is checked, there will be increasing cumulative divergence of wealth and income between the rich and the poor. The mechanisms by which further inequality occurs are crucial, and there are at least two. I previously emphasised the importance of wealth that can be used to obtain loans to generate further income. It is this capacity for unequally-distributed property to be used as a means to generate further income, by obtaining loans from banks using the property as collateral, and using them to invest and create more money, which is a cumulative driver of divergence within capitalism.

This opportunity to use assets as a creator of more wealth depends, first of all, on having wealth in the first place, which is already unequally distributed. During the Industrial Revolution a lot of entrepreneurs used land and other property to obtain loans to invest in enterprises to create more wealth. Wealth was already unequally distributed and there was an unequal distribution of possibilities to create further wealth on the basis of that. Piketty in his book on Capital in the 21st Century, focuses very much on this issue. He suggests that this is a crucial problem that must be addressed through policies like a wealth tax, without preventing the dynamism in the system that creates further wealth in the future. So, it is unequal distribution of collateralizable property that is crucial here.

A second factor, which is not peculiar to capitalism but is very important in capitalism, is unequal education. For example, in the US and UK there is a large section of the population which has access to inferior education or has little education at all. These people are discontented and they often vote for nationalist or populist solutions to problems. They reflect a deeper inequality in terms of qualifications, access to education, life skills and positive expectations about the future. Inequality in education becomes more important as capitalism becomes more complex. As capitalism becomes more a knowledge-intensive system, education and training in dealing with information and knowledge become even more vital. People who do not have these skills will be less and less able to obtain jobs. And as capitalism becomes globalized it provides cheaper labour elsewhere in the world.

Hence differential access to education and different levels of education have also become a cumulative self-propagating mechanism of inequality within capitalism. There are also other sources of inequality, but those for me are the two most important. What is significant is that neither of those problems can be addressed adequately through markets alone. They need some kind of interventionist policy and that in turn requires the political will to do something about it. Otherwise we will have increasingly dysfunctional political systems where the population is divided into the included and the excluded. The excluded may be attracted by simple, populist solutions, because of their growing discontent.

In relation to this second mechanism — the unequal distribution of education — is the inability to provide everybody with sufficient education and training one of the main challenges that capitalism is facing?

Different countries have different degrees of success in dealing with this problem. You mentioned the Nordic countries earlier, and their success is relatively high in the areas of education and training. Also, Germany has an education system that for decades has been tailored to not simply deal with the academic elite but also to prepare people for a world where high-skilled labour is required. It is a relatively inclusive arrangement, built on the understanding that the vast majority are not going to be academics in universities, and they need applied skills to develop their life chances both in the workplace and more generally. Anglo-American systems are less developed in this respect.

So far we have been touching upon some of the challenges and defects of capitalism. In your book, you also envision possible development paths through which we might change capitalism and go beyond it. In this respect, which institutions are likely to change in a more radical way? Or, to phrase it differently, how can this systemic transformation happen?

Well, this is a big question, and much debated both in the US and UK and also in Europe, with the rise of new socialist movements. In Britain we have the Labour Party under Jeremy Corbyn, and Bernie Sanders is promoting a socialist program in US within the Democratic Party. Many people now see socialism as an obvious response to the challenges of capitalism. But this kind of thinking is reckless. By the experiences of the 20th century, unless the failings of real socialism are addressed and corrected, it could potentially be disastrous.

I would propose a much more cautious and experimental approach. Why so? Large-scale economic systems are immensely complex, to the degree that no single person can fully understand all the workings or ramifications of the system. As individuals, groups and organizations, we engage with the system, we understand areas, sectors or zones of these operations, but no one — no individual, no group, no committee — can understand the whole system in its immense complexity. Partly for this reason, we need cautious experiments. Complex systems analysis tells us that we cannot readily predict results of individual plans or ventures; precisely because the system is complex and non-linear it is impossible to predict and plan precisely for the future. Socialism has an excessively optimistic vision concerning the possibility of prediction, and the possibility of rational relationship between plans, actions and outcomes. Instead, more cautious experimentation under the existing system is vital.

Considering the six characteristics of capitalism that I mentioned earlier, which kind of experimentation is possible? We need to experiment with the financial system. But to be honest I don’t see us getting rid of property and debt markets and financial markets generally in the near future. We need to experiment with new forms of banking, to provide credit unions for the people so that poor people can have credit, but that will not transform capitalism fundamentally, there would still be finance at its core.

What other areas could potentially be transformed? In the last 50 years there have been radical changes in the nature of employment contracts in some countries and companies. Employment contracts vary hugely in the degrees of authority and austerity involved. There are casual forms of labour, like what we call in Britain “zero-hours contracts”, where people are on call for an uncertain opportunity for a job. In contrast, in some skilled professions, work is much more autonomous and much less subject to authority than the norm in the 19th century. Many people, even at average management levels, are engaged with tasks where they are given considerable autonomy. They will receive some instructions but otherwise they are free to work their own way and use their skills and judgment to achieve the task. Any close detailed supervision would in fact be de-motivating and dysfunctional.

Authors like Shoshana Zuboff in her famous 1988 book In the Age of The Smart Machine: The Future of Work and Power, have shown that a transformation of knowledge-intensive work is under way within capitalism. Consequently, the old-fashioned employment contract, which is asymmetric and involves authority, may eventually be undermined. We may find new forms of engaging labour that allow for more autonomy. There may be greater scope for workers’ cooperatives, which have been tried with some success for a long time, but have never become dominant in the system. It is possible that worker cooperatives could grow inside capitalism, which might lead us to a different kind of system. But again, we need to experiment, we need to see what works, and in the meantime deal with the most severe problems that capitalism is presenting.

Yes, the most severe problems…which are?

They include inequality, instability, insecurity, differential access to education, and the over-commercialization of everyday life. In the political and economic spheres we need to restore a vibrant civil society in the soporific age of television and media, we need to find ways in which people can find security in their community, we need to deal with the sick and the old in a growingly ageing population, and we need to deal with the needs of the young, especially in terms of their development and their opportunities. All of these things should be on the policy agenda for any political system which cares for its people.

Another huge problem we are currently facing is natural degradation and the threats posed by climate change, coupled with the inability of our political, economic and social system to deal with it effectively and resolutely. Is there something inside capitalism that is pushing us to damage the natural environment for the sake of other priorities, like financial capital?

Capitalism, while it has a history of degrading and destroying the environment, is not the only system to do so. The socialist systems of the former Soviet bloc and also modern China destroyed and polluted their natural environments pretty rapidly over their period of existence. Thousands of years ago, when humans settled in Europe, they burned out forests and created space for agriculture. Hence capitalism is not unique in this respect. The question today is to what extent can you leave this problem to markets and individual entrepreneurs? Some people argue that if people were concerned about the environment, then they would buy more environmentally-friendly products, and this would help to sustain the environment. That can help but I don’t think that the market mechanism can deal with the deep problems and the deep threats involved in terms of climate change and environmental degradation. The urgency of the issue means that the market might be too slow to respond, if at all. So a coordinated decision-making is necessary and hence there is a crucial role for government.

In relation to this, proponents of natural capital approaches have been arguing about the importance of measuring and valuing the impacts and dependencies of natural capital, which is defined as “the stock of renewable and non-renewable resources that combine to yield a flow of benefits to the people” (Natural Capital Coalition, 2016). One line of reasoning is that, if we can quantify the impact on the environment of certain economic activities, then we can use this measure for a more comprehensive cost-benefit analysis of an economic project. What is your opinion about this approach and the proposed use of the concept natural capital?

I think that this approach is misconceived. First, it is all too common for people to describe something as capital; we have human capital, social capital and so on. I don’t think that these indiscriminate descriptions of phenomena as capital are useful. Capital is better defined as an element of property which can be used to borrow money. Hence social capital is not capital. Human capital is not capital unless people are slaves. A human being who is enslaved can be used by his owner to borrow money. Otherwise I think we degrade the concept of capital by spreading it liberally over everything, including social, natural, and human capital.

The second problem with the natural capital concept is that it puts natural resources into a calculus of money value alone. We can’t deal with the environment simply by appealing to cost-benefit analysis. If we were to deal with the environment in this way, then we are not actually treating the environment as something of intrinsic and separate value for all humankind, alongside our duty to preserve it for future generations. To reduce everything to cost-benefit analysis degrades the discourse. We have to pay a cost to deal with the problem of the environment and global warming, we should not have to show that the benefits exceed the costs for us to do something about it. We should do something about it even if it is costly for us. It is a moral obligation.

To deal with the problem of environmental degradation, Eckart Wintzen (1939–2008), an unconventional Dutch entrepreneur, proposed the introduction of a Value Extracted Tax. In a nutshell, this proposal is about a radical change in the fiscal system, shifting taxes away from labour to taxes on the extraction and use of natural resources. What’s your opinion about this?

I think it is a kind of thing well worth experimenting with. Taxes related to environmental assets and also more broadly to land and land property would be a useful way to obtain tax revenues through wealth taxes rather than income taxes. There should be more emphasis on wealth taxation and relatively less on income taxation, without of course abandoning the latter. A problem with income taxation is that the rich have many means to go around it, by tax avoidance measures such as trusts and corporations. We need to look at taxes that deal more directly with wealth inequality.

One hot topic in discussions about sustainability and the circular economy revolves around the necessity to change unsustainable consumption patterns. Is there something in capitalism that pushes us to over-consumption or that facilitates phenomena like the conspicuous consumption pointed out by Thorstein Veblen, where consumption is instrumental to achieve social status?

I think that Veblen’s argument expressed something deeper about the human condition. We see conspicuous consumption in earlier communities and even in social primates. Of course, capitalism exacerbates this and provides the means of making the consumption even grander and more conspicuous than in previous eras. Different cultures will have different outcomes in terms of what conspicuous consumption is. For example, the ostentatiousness of wealth is much less in Japan than in the US.

Veblen looked at the evolution of human nature, both in terms of genetic dispositions and specific cultural attributes. His evolutionary arguments sustain both pessimistic and optimistic conclusions. On the optimistic side we have in-built propensities, which vary from individual to individual, to take on board moral considerations. As many authors have discussed in an extensive recent literature, cooperation is among our genetic dispositions and part of all human cultures. More pessimistically, there are always going be people looking for status, being competitive, and being ostentatious about what they own or do. We have to encourage more sustainable patterns of consumption and more sustainable ways of living. We need to accentuate the positive, cooperative, moral side of our human nature over the greedy and selfish side.

Incidentally, that’s what I think is wrong with much of current politics. Politicians in the last few decades have been reluctant to appeal to our moral nature and to our common interests. Think of the great speeches of even someone as recent as J. F. Kennedy, who said “it is not what your country can do for you, is what you can do for your country”. It was an appeal to the common good of the nation. We heard such things from Churchill and Kennedy, but great speeches on these lines are sadly less frequent today. We need to revive that spirit amongst politicians. It is the responsibility of political, social and community leaders to reinstate that cooperative and moral discourse in human society.

You talked before about the complexity of the economic system and the consequent necessity for experimentation. You already mentioned wealth taxes, which other experiments do you think are worth trying? Let me point to a potential candidate: universal basic income.

The basic income idea is well worth experimenting with. It provides everyone with means of survival, and because of its universality (or near-universality in some cases) the administration costs of welfare are vastly reduced. Another advantage is that it provides people with the opportunity to develop themselves, to start businesses, and to become more educated, according to their own priorities. An argument against it is that you are giving money away universally, when some recipients will lay in bed all day, do nothing, smoke tobacco, drink alcohol, or take drugs. It also means giving money to the rich. So, why waste all that money?

In response, there are obligations under most social security systems to provide people with some basic subsistence. A universal basic income would actually save a lot of money that is spent on means testing and administering a discriminative welfare system. In response to the argument about giving money to the rich, who already have plenty, it would be necessary to change the tax regime. These changes would compensate for the basic income windfall by higher taxes, so that the rich are not better off as a result. Another problem is migration: if people move into a country which has a universal basic income scheme, are they immediately entitled to that basic income? Eventually that might be addressed by establishing basic incomes schemes in other countries. But that is difficult to achieve. Before it happens there would need to be some settlement criteria for basic income entitlements, but this would severely qualify its universality.

I would suggest that we should experiment with a relatively low basic income, combined with a reform of the tax system. Several countries have already moved in this direction. We need to learn from these experiments and build on them. I think it is an idea well worth promoting, particularly in an age where some people are displaced of the job ladder, and have difficulties in finding training for new skills. A basic income scheme could give them access to further education and possibilities for developing themselves and increasing their future income.

A second proposal, which comes from Thomas Paine and goes way back to 1797, is a wealth grant for everyone. Again, there would be some entitlement criteria based on national residence or citizenship. Paine’s idea was to give everyone when they reached the age of majority, which then was 21 and now in most countries is 18, tens of thousand of pounds as a grant. This money would be usable for supporting a study at the university, setting up a business and so on. Again, it has the same objection that people would squander on money. But one of the big advantages of Paine’s wealth grant proposal is that it is quid-pro-quo for inheritance tax; it is a way of recycling the money that you gain from the inheritance, by redistributing that to the younger people, when they obtain or approach the age of majority. That, as far as I am aware, has not been tried yet, but I think it might be worth experimenting with, perhaps initially at low levels. The UK Labour Government under Gordon Brown in 2007–2010 inaugurated a child-based grant scheme of few hundred pounds. This was combined with a saving scheme for younger children, encouraging them to accumulate money, so that when they became adults they would have the resources to address their educational or other needs. It is a shame that the scheme was scrapped.

The government under Gordon Brown was in charge when the global financial crisis hit in 2008. Well, now it is 10 years since the crisis; years in which we have assisted to worldwide economic depression and worsened social conditions. What has been the political aftermath of the crisis? Do you think that something has substantially changed after the crisis?

The evidence we have from history is that financial crises often lead to the development of populist politics, sometimes from the left, but more prominently from the right. Evidence also suggests that economic insecurity is a great driver of extremism and populism. In the US, the outcome has been the growth of economic nationalism with the alarming rise of Donald Trump. Trump’s rhetoric is also not conducive to human rights and to respect for the US constitution. This is all quite alarming.

In a different way, there has been a related development in Britain, with the quite extreme and unprecedented polarization of British politics between a form of nationalism that is completely reckless about Brexit and a populist socialism around Corbyn and the Labour Party, with the consequent evacuation of the centre ground of politics. In Europe there have been similar outcomes, both on the right and the left. I am deeply alarmed by this and it is going to be very difficult to undo the damage that has been done politically by the economic crisis and by subsequent misguided austerity policies. It will take decades to recover a more balanced form of politics.

The regret, of course, is that before the crash not enough was done to prepare for this possibility, there were over-optimistic notions of a crisis-free capitalism and over-optimistic beliefs in the self-regulating capacities of markets. But now we are where we are and the consequences indeed are very dangerous.

These points relate to your latest book Wrong Turnings: how the Left got lost, in which you argue about the inability of left-wing political parties to provide convincing solutions to the economic and social challenges we are currently facing. We see similar developments in Italy, where populist and nationalist parties, the 5 Stars Movement and Lega Nord, are in the government coalition, while the Democratic Party has been losing a great portion of its electorate. In the book, you talk about the need for a New Old Left. Which priorities and policies should this New Old Left put forward to counteract populist and nationalist sentiments around the world?

I think the central concern is human rights. My critique of many on the current Left is that they have forgotten about the achievements of the Enlightenment, particularly in the 18th century. What the Enlightenment thinkers taught us is the supremacy of human rights, including rights to be treated well, rights to habeas corpus, and rights to be involved in the polity. The best statement we have on this is the Universal Declaration of Human Rights by the United Nations, drafted after the Second World War and the horrors of fascism.

Many on the Left talk about human rights, but they ignore human rights abuses in so-called “left” regimes, such as the Soviet Union, Mao’s China and even in modern China, where there are major human rights abuses. There is no excuse for ignoring these things, even if these countries grow economically and people are better off. Human rights are central. We should not forget about them simply because a regime is managing to feed more people. It is important that people should be fed, but other human rights are also vital.

One important human right is a right to autonomy. This requires some measure of private property. Hence there is conflict between traditional socialism — which proposed the abolition of private property — and some human rights. My intention in Wrong Turnings is to argue for the restoration of the Enlightenment project and a full defence of human rights. In the book I also explain that democratic systems are important for dealing with many of the problems we find in modern capitalism. We are more likely to be able to deal with environmental problems if there is a democratic polity, where people can protest and can campaign for the protection of the environment. In a totalitarian system, this is much less possible. Amartya Sen showed that similar arguments apply to famines. When there is a free press and freedom of expression, then it is more likely that a famine, when occurs, will be reported. This could lead to campaigns to deal with it quickly. Information transmission is helped by an open press and freedom of expression. These are absent in many countries today. Consequently, democracy is also an important part of the Enlightenment project and it is crucial for the legitimation of the power held by governments.

But democracy is not a panacea. You mentioned the Five Stars Movement in Italy. In a similar way Corbyn’s Labour Party goes on about “democratic control”. They propose “nationalising the railways” and “giving people democratic control”. What does that mean? I use railways every week; does it mean that I have to go to a meeting to discuss what the fares should be? Am I an expert on running railways? Can I make a meaningful decision? These are just slogans. Similarly, what the Five Stars Movement is proposing in Italy is pure populism. Even if it were desirable, it would not be implementable; it cannot be done. You cannot have everybody discussing everything all the time. Even if you try to move in that direction, you’ll find that people do not have the information to make a judgment about it. Having referendums, votes and meetings on everything is unworkable populist nonsense.

We need to have a democratic system to legitimate a government to represent the people. Democracy is also important where we are well informed and we are intimately involved in things, as in our local communities. We need to experiment with extended workers’ participation in decision-making at work, where people are closely involved. But ultra-democracy proposed by the Five Stars Movement and the Corbynite Labour Party is impracticable. In fact, Corbyn has already broken his democratic promises. He declared that he was going to give party members control of Labour Party policy. A large majority of members of the Labour Party are against Brexit. Does Corbyn give members control over this issue? No.

This is a story of dictatorship all over the world. Lenin’s The State and Revolution was written four months before the Bolshevik insurrection in November 1917. Lenin promised an unprecedented democracy where everyone will be involved in decisions and have a say. But of course, within a few months, Bolshevik Russia was a dictatorship where opposition parties are banned, with a concentration of absolute power in the hands of Lenin and his party. Populist ultra-democracy is a dangerous sentiment.

You already mentioned the impracticality of this ultra-democracy, but let me clearly ask you the normative question: do you think it would be desirable to give people directly the full control in decisions regarding fundamental issues, such as immigration, climate change, and public finance?

As you said, it is impractical to do so. It comes back to the same point about the complexity of modern economic systems, and the dependence on knowledge that people have about their local circumstances and their particular expertise, which is not available generally in a system as a whole. Because of that dispersed knowledge and the dependence of meaningful decisions on expert knowledge, the ultra-democratic route is not viable. But I understand why people find it appealing; when there are governments that are dysfunctional, corrupt, serving their own interests, or remote and technocratic, people often react by calling for some kind of democratic involvement.

If there are democratic votes on immigration, gay marriage or death penalty, then it is possible that people will make a decision which would undermine to human rights. Democracy should not nullify human rights; human rights trump democracy. This problem of the rights of minorities, addressed by John Stuart Mill in the middle of the 19th century, is central. The majority cannot remove the rights of the minority, precisely because they are rights. Immigrants and religious or sexual minorities have rights too. A democratic vote should not be allowed to transcend these rights.

That’s a fundamental point, I believe. Now, I would like to shift the focus to a methodological question, which relates closely to the aim of Circular Conversations: to have an informed and critical discussion about the current socio-economic system and possible alternatives to it. As a youngster, I often find myself discussing with friends about what is wrong in this system and how we should change it. In this respect, which advice would you give to engaged individuals when thinking and discussing about socio-economic facts and alternatives?

I recollect my own youth, when I was a leftist and all my friends were leftists. This was in the late ’60s when left politics was on the upsurge. With the events of May ’68 in France it seemed that the revolution was happening, with barricades on the streets in major European cities. Looking back at those times, I think I made many mistakes. One was impatience and inadequate respect for opposing views. I should have been more tolerant of different views. We need to see the virtues in contrasting positions that we might dislike. It is important to see the positive aspects, even if the overall view might be wrong or mistaken.

Take for example Edmund Burke, the great British thinker who wrote a famous book against the French Revolution. For any young radical, it might be seen as a pro-monarchist diatribe, but I came to realize that Burke is actually a very interesting thinker. You might disagree with his view on the French Revolution, but he is pointing to issues that have modern relevance. Above all, he is stressing, as an Enlightenment thinker, the risks of decision-making in a highly complex world, and consequently the need to rely to some degree on tradition and experiment.

I lacked sufficient intellectual humility when I was younger. Becoming wiser doesn’t mean you don’t get upset about the state of the world. But we need to be more cautious in our expression of possible solutions. I find colleagues, even of my age, jumping too far to conclusions about what’s possible and viable. When I was younger I would have benefitted from more adequate presentations of different points of view. We should respect viewpoint diversity, including in different political positions, and try to understand the positive and negative in everyone’s point of view.

I hope that is not too preachy, I am just drawing from my own experience. We are in very difficult times, in a period in which there are major threats to our way of life, to democracy, to our planet and to the prosperity and well-being of future generations. We need to act, and we need to act wisely.

I fully agree with you and I believe that, given the number and complexity of the threats we are facing, we cannot allow decision-making to be based on ideology. This point well connects to my last questions, about Evotopia. In your works you introduce the term Evotopia to describe “a dynamic system in contrast with fixed utopias, such as the socialist system of collective property or individualistic free-market libertarianism”. How does this Evotopian economy look like? Which principles is it based upon?

The Evotopian idea combines the utopian notion of a better future with a more experimental approach. Great utopian thinkers as Robert Owen, Thomas More, and Charles Fourier in France, had fixed blueprints of how society should be ordered in collectivist ways. We can also find utopias in ultra-free-market libertarian project with a minimal state, and in anarchist market schemes. Evotopia distances itself from all these rigid utopias. There is a need for an experimental approach, because of the complexity of the system. Such an approach is adaptable through time, in response to new technologies, new events and new circumstances. We need scope within a system to create experiments with different and novel institutional forms. A completely collectivized economy does not provide much scope for experiments within it. A completely individualist, marketized economy, also limits the scope for experimentation with radically different institutions. I am making an argument for a mixed economy, where there is encouragement and capacity for experimentation. There is always a need for improvement, thus moving toward a better society. Structures that allow for experimentation are needed to achieve that goal.

Thank you very much Geoff, it has been an inspirational conversation. I am highly grateful for the ideas and knowledge you shared with us today, and for my unforgettable time as your student at the Erasmus Institute for Philosophy and Economics in Rotterdam. Now, time to work on building our Evotopia!

Interview by Emanuele Di Francesco

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store