Subscribe and Listen on: Apple Podcasts | Spotify | Stitcher | Google Podcasts | YouTube
Transcript
Rob Johnson:
I’m here today with Albert Wenger. He’s a partner at Union Square Ventures here in New York City. I’m excited to talk about his new book, The World After Capital. We come to this meeting at a time when the world is both excited by the possibility of technology and terrified of the disruptiveness of technology. And I think he can help us sort ourselves out. Albert, thanks for joining me here today.
Albert Wenger:
Pleasure to be here.
Rob Johnson:
What inspired you to write this book? You’ve been a practitioner and a visionary. I have followed your blog. But all of a sudden, you went to the book.
Albert Wenger:
Yeah.
Rob Johnson:
What’s going on?
Albert Wenger:
Well, as a VC, I sort of feel like I have this front row seat to innovation, to kind of what’s coming down the pike. And even before becoming a VC, I, as a both undergrad and graduate student, had studied computer science and economics, and eventually came to realize, wow, computers are going to have a much, much bigger impact on the world than most people tend to believe, way bigger. And I was seeing it in the kind of things we were investing in. I was seeing it in what was happening in the world. And I was starting to give these talks, and I was sort of trying to get at this idea that somehow this is a big shift. It’s a big transition.
And I remember I was walking down, I think, Market Street in San Francisco, and it kind of snapped for me because I had this insight that this is as profound a transition as when we went from the Forager Age to the Agrarian Age and then from the Agrarian Age to the Industrial Age. And that really is what the book is about. The book is about, why is digital technology so disruptive? Why is it causing such a transition? And then how should we be thinking about this transition into a new age, which, in the book, I call the Knowledge Age?
Rob Johnson:
Understanding not only the technology as the possibility for efficiency or whatever but understanding it in its context with a sustainable society is a very important dimension.
Albert Wenger:
I think that’s absolutely crucial, right, because if we think about what happened in the transition from the Agrarian Age to the Industrial Age, it took us quite a while to find something that works, right? I mean, in the early Industrial Age, people lived in squalor in the cities, working conditions were terrible, there was child labor, and so forth. It took quite a while. And really, we had sort of a Golden Age of, at least in the US and several other sort of developed countries post-World War II, we’re seeing a massive rise again and kind of sort of people being depressed, people taking drugs. Even suicide is climbing significantly. And a lot of this is related to this transition and the shift that we’re in. And I think one of the key points is that politicians have been treating this shift as if it were some increment on the Industrial Age.
And people are like, “Yeah, you keep saying that. You keep saying that retraining, which you mentioned, or something else is going to work. But all I see from where I sit is, the elites and the cities are getting wealthier, and where I am, it’s sort of devastation and opioids.” And so I think because we’ve been unwilling to acknowledge that we need to invent a new age, we’ve been caught up in incrementalism. And that incrementalism has opened the door for people like Trump because Trump sort of says, “Well, look, what they’re telling you is not working. I’m going to take you into the future,” the future in this case being actually an imagined past. It’s a return to the past. So he doesn’t actually have a forward facing agenda. But this rise of populism that we’re seeing in many parts of the world is, again, the same transition that’s happening.
And so in the book, I make this point that, why are these transitions happening? It’s because some fundamental shift in technology. So the Forager to Agrarian transition was the invention of agriculture. And-
Rob Johnson:
So from hunter-gatherer to-
Albert Wenger:
Exactly.
Rob Johnson:
… systematic agriculture.
Albert Wenger:
And that was roughly 10,000 years ago. And as a result, we changed everything, right? We went from being migratory to being sedentary. We went from very flat tribal societies to extremely hierarchical agrarian societies. We went from basically being promiscuous to being monogamous-ish. And we went from having these animistic religions, where every animal, every tree had a spirit in it, to the theistic religions. And then only a couple 100 years ago, we had the enlightenment. And with the enlightenment, we had all sorts of scientific breakthroughs, chemistry and electricity and mining and so forth. And that, again, brought us this huge change.
It shifted us from living in the countryside to living in the city, from living in large extended family to living in nuclear family and no family, from having lots of comments to basically private property being everywhere, from kind of a great chain of being theology, where religion sort of says, “Look, you’re a farmer, and I’m going to tell you how to be the best possible farmer, but you’ll never be a noble person because you weren’t born as one.” We went from that to the Protestant work ethic, which is, you work harder, you make more money, and wealth is good, and maybe even [inaudible 00:05:59] is good. And so we had these two huge transitions. And this sort of insight that I had when I was walking down the street in San Francisco was, the reason what happens is when you make a big technological leap is you shift the binding constraint.
So when you are hunter-gatherer society, your binding constraint is food. How much food can you find? Once you invent agriculture, you’re binding constraint is land, arable land. How much arable land do you have? And once you have industry, it shifts to capital. Who can build machines and railroads and infrastructure? And the reason the book is called The World After Capital is because I basically say, “Look, we have sufficient capital,” and I have a definition of sufficient that we can talk about in a second. But what the scarcity now is attention. What is it that we, as humans, are paying attention to? It’s this huge crisis of attention effectively. And that’s sort of the central idea of the book.
Rob Johnson:
Interesting. Now I’ve seen some, which you might call smoke signals of concern, like the movie The Social Dilemma, and various about how this is affecting the human brain. Somebody gave me a book this weekend. It was about, what was it called, Something about personal mythology. They said you used to have the church, the gods, the parables, and everybody thought of those as the myths, kind of the Joseph Campbell catalog. But now there’s so much hitting you all the time that in your own psychology, what becomes your myth is almost a personal thing rather than a collective thing that we all adhere to, like Easter Sunday or Moses or something like that.
Albert Wenger:
And I think that breakdown is related to this technological shift also, not just in the fact that we have social media and so forth, which we can come back to in a second, but also because when we went into the Industrial Age, we made the narrative of purpose. One about, your purpose is to find a job, do well in the job and then also consume and maybe donate a little to the community, right? And that was sort of held out as purpose for people.
But as it’s getting harder and harder for many people to find meaningful jobs, jobs that are interesting, jobs that pay a living wage, that narrative has broken down. And we have not substituted any kind of new narrative of purpose. And so, yes, when you have this breakdown of an existing purpose, like the automotive workers when their plants were shut down or coal miners when the mines shut down, when you have that breakdown, when you don’t have an alternative narrative, and then you have this infinity of opinions online where you can read anything and everything, that’s a perfect storm for a huge crisis of mental health, for a huge crisis of purpose, for a huge crisis of democracy.
Rob Johnson:
Yes. Experts are now on the out and out there. It used to be a professor at NYU or Oxford or University of South Carolina or something, and there was an aura about that. And now people say, “Experts, oh, they’re just bag men for power.” People like Richard Edelman, who does a lot of work for the World Economic Forum has shown that confidence in expertise, confidence in academic leaders or Nobel Laureates are all plummeting.
Albert Wenger:
Yeah. The Edelman trust survey shows the lowest levels of trust that we’ve had in a long time. Martin Gurri has a good book about this called The Revolt of the Masses. And in my book, what I attempt to do is to sort of say there is a narrative that we can provide people with. And there is a new source of purposes, a way of thinking about purpose in an age that’s post the Industrial Age. And I call it the Knowledge Age because I think basically we need to substitute. We have this, what I call the job loop, and the job loop is, you have a job, you make some money, you spend the money on goods and services that other people produce who also have a job. And that loop was very successful for us.
But the loop that we need to really be spending time on this, this sort of knowledge loop. And the knowledge loop is where you create a piece of knowledge. Knowledge, by the way, I use very broadly in the book, including art, music, etc. And you share that, somebody else can basically consume that piece of knowledge, and they can then create a new piece of knowledge on the basis of that. And that knowledge loop, of course, has been at work for a long time, but we really need to accelerate it now because we have these big unsolved problems like the climate crisis and infectious disease. And so one place to find purpose is in the knowledge loop or in basically supporting things that are non-economic. So a lot of the things that I think we’ve lost sight of are non-economic things, taking care of your friends, taking care of your family, taking care of animals, the environment, things that are not economically incentivized.
And a big goal of what I write about in the book is, how can we sort of shrink the economic sphere much like we shrunk the agricultural sphere. It’s not like when we went from the Agrarian Age to the Industrial Age. It’s not like agriculture disappeared. It’s just that it went from consuming 80-plus percent of human attention to sub-5% in a developed country today. And I think we need to do the same with the economic sector. We need to go from the sector where everything is based on prices, where everything is explicitly incentivized that now occupies the vast bulk of people’s lives. And we need to shrink that down to make room for all these non-economic things because a lot of stuff that we need to work on can’t have prices, right? So I don’t know whether you saw Don’t Look Up.
Rob Johnson:
Oh, sure. Right. David Sirota, the co-writer with Adam McKay, is one of my best friends.
Albert Wenger:
Oh, fantastic. We don’t have enough people today looking out for big objects from space. Why? Because there’s no price mechanism to incentivize that. Society, as a whole, has to decide. This is an important thing. And there can’t be a price for it because these events happen every few million years. There’s no market for it. And so in the book I write that there’s lots and lots of things that don’t have prices and can’t have prices. And so the goal of this transition, in my mind, the goal of the power of digital technology in the way we should be using digital technology is to shrink the economic sector and let the non-economic sector grow.
Rob Johnson:
And how do you see the arts in that realm? Is that part of the non-economic sector?
Albert Wenger:
Oh, absolutely. Absolutely. And I think with the internet, we have seen a flourishing of the arts in a really marvelous way, right, because, let’s say, you write a song. In the pre-internet world, you kind of had to find a label to put out your song and get it on the radio and so forth. Today, you just put it on your SoundCloud or your website or wherever, YouTube, and millions of people can hear it. And so I think we have, in fact, blown the door wide open on arts. I think we have a huge explosion of beautiful, new graphical art being generated.
And I do think that’s something we’re already seeing. We just need to create a society where more people find, “That’s how all I need to do and I can live.” We’re still attached to the idea, no, no, no, no, if you want to live, you have to have a job. It’s the only way you get to live. You have to have a job. You have to pay for yourself. Otherwise, you don’t get to live. But we have all this automation, and we can make more automation. So why should we be attached to this idea that everybody needs to have a job?
Rob Johnson:
And you can connect to large scales of people, what I might call audience, because of this technology. So instead of playing in a bar for 12 people sitting at the counter, maybe 2,000 or more can be watching.
Albert Wenger:
And it doesn’t preclude you from playing in the bar.
Rob Johnson:
That’s right. That’s right.
Albert Wenger:
I mean, these are-
Rob Johnson:
You can do both simultaneously.
Albert Wenger:
… complimentary. Yes, exactly. Exactly.
Rob Johnson:
There’s a danger here, which is, in the middle of a transition, in the disruption when the fear is rampant, a counter reaction could, which Michael stomped out the potential, and turn us away from something that could ultimately be a much better life.
Albert Wenger:
Oh, absolutely. But I think the step one is, politicians, leaders of all parts of society need to first accept that we are in the middle of a transition that is as profound as these prior transitions. And so it means we have to change everything. That means we have to change how we think about the education system, how the healthcare system works. In the book, I talk about what I call three freedoms. I talk about economic freedom, informational freedom, and psychological freedom. So economic freedom is some form of universal basic income. Just give people enough money. So if you don’t want to work, you don’t have to work. If you want to just do art all day, play the guitar, fine, totally fine.
Informational freedom is about who controls computation. Is it controlled by a few large corporations in the government, or is computation accessible to anybody and everybody? And psychological freedom is about, how do we let go of all these things that culture has now told us for several hundreds of years of where your worth comes from, where your value comes from? And how do we live in a world where I can access anybody else’s information all the time? How do I create the psychological freedom that I don’t constantly react by saying, “Oh, this person is awful, and this is terrible,” and I’m in this constant state of agitation? So those are the three freedoms I talk about in the book. And to me, they compliment each other, and they are necessary to handle this transition.
Well, I mean, if you look at the prior transitions, the prior transitions were absolutely awful. When we went from the Hunter-gatherer Age to the Agrarian Age, the hunter-gatherer society is basically wiped out. The agrarian societies basically wiped our the hunter-gatherer society.
Rob Johnson:
[inaudible 00:16:06].
Albert Wenger:
And then how did we get from the Agrarian Age to the Industrial Age? Well, we got there basically through a series of bloody revolutions and the two world wars. I mean, we talked previously about [inaudible 00:16:18] earlier and capital in the 21st century where he documents how the old power, which was land-based capital, wasn’t really removed until the end of World War II, when industrial capital became the new power. A lot of people believe that the sort of hunter-gatherer age was sort of this incredibly violent age and that people didn’t live very well.
But actually, what we know is that hunter-gatherers worked only a few hours a day and lived pretty happy lives. And things really went sideways on us when we went to agrarian societies because we were bad at agriculture at first. So we didn’t produce enough output. So people starved. We lived close to animals, so we introduced all these diseases from the animals. And so actually, that transition was a very bad transition, not just for the hunter-gatherers, whom we wiped out for the most part, it was also bad transition for the agrarians. And some people interpret the story of the fall from Eden as going from this sort of hunter-gatherer life to now having to till the soil and live by this of your work. That’s one possible interpretation.
My personal preferred interpretation is that once we started creating knowledge, knowledge started creating new problems for us. So we created the knowledge of agriculture, and that created problems like infectious diseases for us and starvation. And so we needed to figure out how to store things. We needed to figure out how to refrigerate things. And then more recently, we invented fossil fuels and how to burn them to make power into electricity and transportation. And that’s created the climate crisis. So I tend to think of the fruit of knowledge and eating from the forbidden tree of the fruit of knowledge as getting on this treadmill of, we invent something, and the thing that we’ve invented has these consequences that we now need to live with and deal with. So a big part of the thinking in the book is, how do we free up more human attention, get it out of that job loop, and get it into the knowledge loop so we can work on these big problems and also big opportunities, frankly?
It’s not just about problems. It’s also opportunities. We’ve made huge breakthroughs in decoding the genome and understanding how cells work. We’re making huge material science breakthroughs. We’re making breakthroughs in building rockets. So there’s also all this upside. I agree with you though that if there isn’t a narrative that describes a future, that makes sense, not just technological sense, but also societal sense, if we leave this vacuum, then people like Trump will come in with a very crude narrative. And it will resonate with people because we haven’t given them an alternative. And you asked me in the beginning why I wrote the book. That’s really the thrust of the book is to start to create a narrative that people can be excited about.
Rob Johnson:
There’s another dimension to this that economists often worry about. They had this old, what I’ll call, metaphor called the Treaty of West failure, the nation state. And they were installing a government that governed those things. In the world of globalism with the technology, nanosecond transfer of money or other things, many people are scared that with those efficiencies, powerful can escape governance. And how do I say, people are very much more vulnerable and at risk. And it felt to me like in the beginning of globalization, say, when I was in college and people like [inaudible 00:20:01], I can remember the book, Global Reach, and various people at Harvard MIT were talking about, there was so much enthusiasm for globalization. And now it almost feels like, as you say, the Trumpians have picked up, and it’s a haunted house.
Albert Wenger:
Yeah, no, there’s definitely a backlash against it. And I think one can easily understand why, right? I mean, we’ve taken a lot of manufacturing and shifted it from the US to other places. And people have lost jobs, we talked about this earlier. And we had told people, “Your job, that’s kind of your purpose.” And so absolutely, it’s really easy to understand why people are discontent with globalization. However, I would say with the technological progress we’re making, that’s no longer the sort of question, right, because Nike today can make a shoe without a human touching it, from beginning to end. So it doesn’t matter what the price of labor is. It’s just a bunch of machines churning out shoes. And so while I think there are good arguments to be made why globalization was maybe not handled always in the smartest of ways, I think sort of undoing that and thinking that when you reassure manufacturing, you’re going to create a lot of manufacturing jobs, I think, is equally wrong. So if we reassure manufacturing, it’s going to get reassured in a very, very, very low labor [inaudible 00:21:19]-
Rob Johnson:
I was going to say, you just put the robots on a different continent in a simple [inaudible 00:21:24] way. We’ve gone through a pandemic, a tremendous distress in crisis. I saw some interesting upsides. I have two little daughters. And so my daughters, at the start of the pandemic, were in second and fifth grade. My second grader became, what you might call, virtuous, a virtuoso in the realm of using a laptop computer and transferring things, stuff I didn’t learn how to do till I went to college. So I think at some level, what you might call the silver lining of the stress of homeschooling and so forth allowed some of these children to get on the pathway to that world that you’re envisioning.
Albert Wenger:
So we homeschooled our children all the way through high school.
Rob Johnson:
Really?
Albert Wenger:
We now have two graduating college seniors, one at Wesley and one at UPEN. And we have a sophomore at Cornell. So we embraced homeschooling long before it became popular and in part because the education system we have today is strictly an industrial system. We created it and scaled it. We treat children by manufacturing date and that-
Rob Johnson:
So Ken Robinson talks about this in great detail.
Albert Wenger:
Yes. Exactly. Yes. And so, because I believe we’re past Industrial Age, that’s the whole point of the book, I wasn’t going to suggest that our kids go through an Industrial Age system. And so we had those beautiful setup. They spend a couple hours a day with tutors in the rest of the day. They could kind of do whatever they felt like. And sometimes that was making a movie, sometimes that was cooking, sometimes that was learning how to make fashion. There was very sort of wide variety of interests, but the interests are what propelled the curiosity. So much of the school system is about stamping out curiosity. And to the extent that we want this knowledge loop to work, we want more rather than less curiosity.
Rob Johnson:
Yeah. My older of those two young daughters, who’s now almost 13, in seventh grade, said, “Dad, being in remote school for a year, I’m not sure how much I think going to school is a good thing anymore.” And she started looking online and found a Stanford Online High School and said, “I may want to apply to that.” And I said, “Well, what are you going to do with your time?” She said, “Paint, draw, and play the piano. And maybe you’ll let me borrow your guitar.” And so she was right in that space.
Albert Wenger:
And so I do think the pandemic accelerated certain things that were already happening. So homeschooling was growing, and it’s grown much more as a result of some microschools, just alternatives to the existing school system. Remote work, was already a trend, has grown tremendously. In our portfolio, we have 125 active portfolio companies. A third roughly are entirely remote now. They don’t have an office anymore. So that’s a trend that got accelerated. But I also think, coming back to something you said earlier, the crisis also showed how fragmented society is today. I mean, at every step along the way, is there a virus? Is there not a virus? Did it come from China, from a lab? Does it matter? Should we mask? Should we not mask? I mean, every single thing became super polarized. Everything became a reason for people to yell at each other as opposed to trying to work with each other.
And that is the result of this sort of social media landscape that we find ourselves in, which we haven’t learned how to be good citizens. And nobody’s taught us how to be good citizens in that world of this sort of multi, just anybody gets to say whatever they want at any time. Now, I think that’s a good world ultimately. I just think we need to figure out to live in it. And that’s going to take us some time. And again, that requires some level of creation. You said it earlier. You need to have some level of creation, some level of values that you all subscribe to, something that you sort of say, “That all makes us want to sort of be together first,” and then we can disagree about certain things. That’s fine. But we need this base layer where we sort of say, “Here’s some level of solidarity,” and I love the quote that you have coming in, right, which talks about that it’s not just for ourselves, not just for our family, but for all of us.
And so that’s really a big part of the sort of book, is to sort of say, how can we create this narrative? How can we, in a way, bring back some form of humanism, some form of sort of talking about human solidarity amongst ourselves as the first and foremost thing before we get into whatever our differences on any policy on any particular issue might be? But right now, we don’t have that because it used to be provided by religion, not being provided by religion anymore. Purpose used to be provided by work, for many people, not being provided by work anymore. So we have these things that have broken down the Edelman service shows trust has broken down massively. So we badly, badly need to reinvest in this base layer of what is it that when we get to together makes us see each other as humans, as wanting to work with each other, not against each other?
Rob Johnson:
Healthcare with the pandemic and all the technology, are you seeing an evolution of healthcare and healthcare systems in a way that’s hopeful?
Albert Wenger:
Yeah. I mean, we’ve made a number of investments in digital health. And I think as a first step, just giving people more and better access to information is really, really important. So for instance, we’re investors in a company called Clue that makes an app for women where women can track their cycle and can really sort of empower women to understand their reproductive situation. That’s easily accessible. Anybody with a smartphone can just download that app, right? You don’t need to go to a doctor. You don’t need a prescription. You just go get the app. We’ve made an investment in a company called Nurx, that if you want birth control, for example, you used to have to go to a doctor and get a prescription in many states. With Nurx, you just do it over text. Text back and forth with the doctor, get a birth control prescription.
So I do think broadening access is something that’s happening through digital technology. But we still are very much in this problem where we have created a setup in healthcare where so much is about making profits off drugs, making profits for healthcare systems. And I think when you’re trying to provide this kind of service, you need structures that allow not just profit optimization but also saying, we need to serve the community, whether that’s by mandate or because we simply embrace that as who we are. Doesn’t matter where, how it comes about, but it needs to be there. And I think we’ve lost sight of that. I mean, I think a lot of that dissent into sort of the maniacal focus on profit starts around the Milton Friedman, a company sold responsibilities as-
Rob Johnson:
[inaudible 00:28:26] to earn the profit. Yeah.
Albert Wenger:
[inaudible 00:28:29]. And so we need to come back from that. And again, the basic idea here is, if we create more room for non-economic activity… So non-economic activity includes a lot of basic research, right, and a lot of health is actually still very poorly understood. Try to read up on nutrition and see how incredibly poorly nutrition is understood. By the way, you earlier said, we have this lack of trust into academics. Well, one reason we have this lack of trust in academics is because, for example, if you look at nutrition, the whole thing about carbohydrates versus fats, that came out of a Harvard study that was paid for by the carbohydrate industry. And so it’s no wonder why people don’t trust things because when you sort of peel back the cover, all of a sudden, “Wait. We’ve been told this thing is bad when in fact this other thing is bad, largely because of a study done by some prestigious academics who are paid off by the sugar industry?”
Rob Johnson:
Yeah. There’s a book, Lady Colin Campbell I believe had been at Cleveland Clinic and Cornell, called The China Study. And it was about the transformation of people from agriculture to the coastline industries and how their diet changed in the onset of things like Alzheimer’s disease and heart disease and so forth. And when Campbell created that book, he came back, and he was invited to be on boards of many health charities. He took so much heat from industry people, who, he then, I think his second or third edition of the book, wrote a final chapter about the political economy of inhabiting foundations to stop them from recommending healthy things to preserve the profits. And it was really, really hard reading. I mean, my father was a physician, and I was like, “Wow, I can’t believe how tense this has become.” And then I look at my friends, Democratic party friends, Republican party friends, concerned about physical discipline. And I showed them World Health Organization, United States ranking 38th, OECD numbers on the cost of healthcare per capita-
Albert Wenger:
Are way up, sure.
Rob Johnson:
… we are double the OECD average. And I believe all but one OECD country ranks above us in performance. So I said, “If you guys are budget hawks, why don’t you go after that?” Whether it’s pharmaceutical insurance or whether there are many dimensions to the cost, but why aren’t we creating with all of our technological wizardry and so forth, in innovativeness and the way we talk about our society’s vitality, why aren’t we producing twice as good for half the price instead of 38th best for twice the price?
Albert Wenger:
And one of the arguments I make is because we’re caught up in this job loop thinking and because we’re caught up in those thinking of, the way to do things is through market prices. And I’m a VC. I love markets. I love-
Rob Johnson:
Well, they’re a valuable tool.
Albert Wenger:
Yeah. But there are lots of things that they can solve. And we have gotten to this point of sort of market maximalism, where we’re like, “Oh, well, the way to solve this is by privatizing it, and the way to solve this is…” And in fact, at the same time, we’ve allowed many markets to become highly concentrated. I have a chapter on why concentration is being driven further by digital technology. Digital technology drives concentration massively because of basically what happens when you have data,, and then you have a little more data and you have a little more data. And you see this in Google and Facebook, but you will also see it in manufacturing, you will also see it in CPG. And you’ve seen it. You’ve seen it in financial services. So we’re sort of this strange combination where we have this market maximalism where we believe we can solve everything from markets.
At the same time, we have very poorly functioning markets [inaudible 00:32:27] highly concentrated with lots of market power. And then we wonder why we have bad outcomes. So in my mind, we just need to really kind of hit the reset button in a big way and make this big transition where we let more and more people opt out of that system. Once we let people opt out of that system, interesting things will happen. As long as we keep people trapped in this job loop, if you are working for a pharmaceutical company, if that’s how you make your living, and that’s how you pay for your house, for your children’s education, and so forth, of course you’re going to push this drug even if you know that it’s the wrong thing, even if you know that it makes people addicted, because iit’s hard to get off that thing once you’re inside of it.
Rob Johnson:
Yeah. I once attended a lecture at the Union Theological Seminary, and the individual, the speaker that night gave a talk about why we’ve deified markets. And he said, because looking at it, he’s a theologian at face value. It’s a tool. It’s an instrument as a means to our end. But he talked about how, at the end of the futile period, he was talking about Scotland and Adam Smith going from the theory of moral sentiments to wealth of nations, and he said, “They realized that using moral and ethical discourse as a civil servant made you look like you were affiliated with the corrupt futile lords because the church had been co-opted. So you went to this antiseptic scientific value of free discourse, which carried on.” And then when the communist nations, Russia and China, adopted this central planning on scientific basis, a lot of people didn’t want to use that antiseptic language anymore. And so they deified the market, and the market became the thing that solved all our problems.
Albert Wenger:
And I think it’s fair to say, and I say it in the book, I think it’s fair to say that markets actually worked incredibly well for the creation of capital. So the capital in the title of the book is not financial capital, it’s physical capital. We don’t drive around and go bars, you need cars. You don’t cloth yourself in dollar bills, you need clothing. So markets actually were incredibly good at giving us a lot of capital. It’s the question now, what do we point all those resources at? And this is the moment where we need to recognize that there are these vast swaths of problems and opportunities that cannot be addressed by the market system. In effect, one way of saying it, I say it in the book, is that it’s because markets have been so successful that the problems that are kind of left over are the problems that markets and especially markets of the variety that we have today cannot and will not solve.
And so this goes back to the same idea that when we went from the Agrarian Age to the Industrial Age, we shrunk the agricultural sector relative to human activity. And now we need to do the same with the economic sector, with the one where everything is explicitly incentivized through an income, through profit, through stock options. We need to shrink that relative to human activity and really let the human activity that’s based solely on, “I’m doing this because I want to do it, because I want help my friend, because I want to spend time with my daughter, my parents, because I want to take care of animals,” whatever the case may be, to really create room for that. And we have the technology because of digital technology. Because of automation, we have the ability to do this.
Well, we have to create a society where this becomes possible and desirable for people where you don’t look at somebody and say, “Well, that person’s a bum. They just play the guitar all day. They don’t have a job,” where you go, “Oh, well, it’s beautiful that they can play the guitar. I kind of like that song.” That mindset shift is dramatic, and it requires us to change everything exactly the same way we changed everything in those two big [inaudible 00:36:15].
Rob Johnson:
[inaudible 00:36:15]. Yeah.
Albert Wenger: And we just don’t seem to have the will or the desire to embrace this. Instead, we’re just clawing on as hard as we can to the Industrial Age, which is no longer working.
