Geoff Mulgan: Post-crash, investing in a better world

38,090 views ・ 2009-09-02

TED


Please double-click on the English subtitles below to play the video.

00:19
It's hard to believe that it's less than a year since the extraordinary moment
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when the finance, the credit, which drives our economies froze.
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A massive cardiac arrest.
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The effect, the payback, perhaps, for years of vampire predators like Bernie Madoff,
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whom we saw earlier.
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Abuse of steroids, binging and so on.
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And it's only a few months since governments
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injected enormous sums of money to try and keep the whole system afloat.
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And we're now in a very strange sort of twilight zone,
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where no one quite knows what's worked, or what doesn't.
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We don't have any very clear maps, any compass to guide us.
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We don't know which experts to believe anymore.
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What I'm going to try and do is to give some pointers
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to what I think is the landscape on the other side of the crisis,
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what things we should be looking out for
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and how we can actually use the crisis.
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There's a definition of leadership which says,
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"It's the ability to use the smallest possible crisis
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for the biggest possible effect."
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And I want to talk about how we ensure that this crisis,
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which is by no means small, really is used to the full.
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01:28
I want to start just by saying a bit about where I'm coming from.
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I've got a very confused background
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which perhaps makes me appropriate for confused times.
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I've got a Ph.D. in Telecoms, as you can see.
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I trained briefly as a Buddhist monk under this guy.
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I've been a civil servant,
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and I've been in charge of policy for this guy as well.
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But what I want to talk about begins when I was at this city, this university, as a student.
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And then as now, it was a beautiful place of balls and punts, beautiful people,
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many of whom took to heart Ronald Reagan's comment
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that, "even if they say hard work doesn't do you any harm,
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why risk it?"
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02:09
But when I was here,
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a lot of my fellow teenagers were in a very different situation,
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leaving school at a time then of rapidly growing youth unemployment,
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and essentially hitting a brick wall in terms of their opportunities.
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And I spent quite a lot of time with them rather than in punts.
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And they were people who were not short of wit, or grace or energy,
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but they had no hope, no jobs, no prospects.
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And when people aren't allowed to be useful,
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they soon think that they're useless.
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And although that was great for the music business at the time,
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it wasn't much good for anything else.
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And ever since then, I've wondered why it is that capitalism
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is so amazingly efficient at some things, but so inefficient at others,
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why it's so innovative in some ways and so un-innovative in others.
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02:57
Now, since that time,
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we've actually been through an extraordinary boom,
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the longest boom ever in the history of this country.
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Unprecedented wealth and prosperity,
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but that growth hasn't always delivered what we needed.
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H.L. Mencken once said that, "to every complex problem,
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there is a simple solution and it's wrong."
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But I'm not saying growth is wrong,
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but it's very striking that throughout the years of growth,
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many things didn't get better.
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Rates of depression carried on up, right across the Western world.
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If you look at America, the proportion of Americans
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with no one to talk to about important things
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went up from a tenth to a quarter.
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We commuted longer to work, but as you can see from this graph,
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the longer you commute the less happy you're likely to be.
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And it became ever clearer that economic growth
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doesn't automatically translate into social growth or human growth.
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We're now at another moment
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when another wave of teenagers are entering a cruel job market.
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There will be a million unemployed young people here
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by the end of the year,
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thousands losing their jobs everyday in America.
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We've got to do whatever we can to help them,
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but we've also got to ask, I think, a more profound question
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of whether we use this crisis to jump forward
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to a different kind of economy that's more suited to human needs,
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to a better balance of economy and society.
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And I think one of the lessons of history is that
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even the deepest crises can be moments of opportunity.
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They bring ideas from the margins into the mainstream.
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They often lead to the acceleration of much-needed reforms.
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And you saw that in the '30s,
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when the Great Depression paved the way
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for Bretton Woods, welfare states and so on.
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And I think you can see around us now,
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some of the green shoots of a very different kind of economy and capitalism
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which could grow.
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You can see it in daily life.
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When times are hard, people have to do things for themselves,
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and right across the world, Oxford, Omaha, Omsk,
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you can see an extraordinary explosion of urban farming,
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people taking over land, taking over roofs,
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turning barges into temporary farms.
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And I'm a very small part of this.
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I have 60,000 of these things in my garden.
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A few of these. This is Atilla the hen.
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And I'm a very small part of a very large movement,
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which for some people is about survival,
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but is also about values, about a different kind of economy,
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which isn't so much about consumption and credit,
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but about things which matter to us.
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And everywhere too, you can see a proliferation of time banks
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and parallel currencies,
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people using smart technologies to link up
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all the resources freed up by the market -- people, buildings, land --
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and linking them to whomever has got the most compelling needs.
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There's a similar story, I think, for governments.
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Ronald Reagan, again, said the two funniest sentences
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in the English language are,
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"I'm from the government. And I'm here to help."
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06:00
But I think last year when governments did step in,
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people were quite glad that they were there, that they did act.
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But now, a few months on,
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however good politicians are at swallowing frogs
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without pulling a face, as someone once put it,
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they can't hide their uncertainty.
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Because it's already clear
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how much of the enormous amount of money they put into the economy,
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really went into fixing the past, bailing out the banks, the car companies,
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not preparing us for the future.
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How much of the money is going into concrete and boosting consumption,
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not into solving the really profound problems we have to solve.
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And everywhere, as people think about the unprecedented sums
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which are being spent of our money and our children's money,
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now, in the depth of this crisis, they're asking:
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Surely, we should be using this with a longer-term vision
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to accelerate the shift to a green economy,
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to prepare for aging, to deal with some of the inequalities
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which scar countries like this and the United States
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rather than just giving the money to the incumbents?
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Surely, we should be giving the money to entrepreneurs, to civil society,
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for people able to create the new,
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not to the big, well-connected companies,
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big, clunky government programs.
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And, after all this, as the great Chinese sage Lao Tzu said,
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"Governing a great country is like cooking a small fish.
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Don't overdo it."
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And I think more and more people are also asking:
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Why boost consumption, rather than change what we consume?
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Like the mayor of São Paulo who's banned advertising billboards,
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or the many cities like San Francisco
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putting in infrastructures for electric cars.
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You can see a bit of the same thing happening in the business world.
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Some, I think some of the bankers
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who have appear to have learned nothing and forgotten nothing.
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But ask yourselves: What will be the biggest sectors of the economy
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in 10, 20, 30 years time? It won't be the ones lining up for handouts,
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like cars and aerospace and so on.
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The biggest sector, by far, will be health --
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already 18 percent of the American economy,
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predicted to grow to 30, even 40 percent by mid-century.
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Elder care, child care, already much bigger employers than cars.
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Education: six, seven, eight percent of the economy and growing.
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Environmental services, energy services, the myriad of green jobs,
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they're all pointing to a very different kind of economy
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which isn't just about products, but is using distributed networks,
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and it's founded above all on care, on relationships,
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on what people do to other people, often one to one,
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rather than simply selling them a product.
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And I think that what connects the challenge for civil society,
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the challenge for governments and the challenge for business now
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is, in a way, a very simple one, but quite a difficult one.
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We know our societies have to radically change.
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We know we can't go back to where we were before the crisis.
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But we also know it's only through experiment
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that we'll discover exactly how to run a low carbon city,
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how to care for a much older population,
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how to deal with drug addiction and so on.
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And here's the problem.
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In science, we do experiments systematically.
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Our societies now spend two, three, four percent of GDP
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to invest systematically in new discovery, in science, in technology,
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to fuel the pipeline of brilliant inventions
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which illuminate gatherings like this.
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It's not that our scientists are necessarily much smarter
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than they were a hundred years ago, maybe they are,
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but they have a hell of a lot more backing than they ever did.
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And what's striking though,
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is that in society there's almost nothing comparable,
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no comparable investment,
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no systematic experiment, in the things capitalism isn't very good at,
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like compassion, or empathy, or relationships or care.
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Now, I didn't really understand that until I met this guy
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who was then an 80-year-old, slightly shambolic man
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who lived on tomato soup and thought ironing was very overrated.
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He had helped shape Britain's post-war institutions,
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its welfare state, its economy,
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but had sort of reinvented himself as a social entrepreneur,
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became an inventor of many, many different organizations.
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Some famous ones like the Open University, which has 110,000 students,
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the University of the Third Age, which has nearly half a million older people
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teaching other older people,
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as well as strange things like DIY garages and language lines
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and schools for social entrepreneurs.
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And he ended his life selling companies to venture capitalists.
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He believed if you see a problem, you shouldn't tell someone to act,
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you should act on it yourself, and he lived long enough
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and saw enough of his ideas first scorned and then succeed
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that he said you should always take no as a question and not as an answer.
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And his life was a systematic experiment to find better social answers,
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not from a theory, but from experiment, and experiment involving the people
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with the best intelligence on social needs,
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which were usually the people living with those needs.
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And he believed we live with others, we share the world with others
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and therefore our innovation must be done with others too,
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not doing things at people, for them, and so on.
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Now, what he did didn't used to have a name,
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but I think it's rapidly becoming quite mainstream.
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It's what we do in the organization named after him
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where we try and invent, create, launch new ventures,
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whether it's schools, web companies, health organizations and so on.
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And we find ourselves part of a very rapidly growing global movement
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of institutions working on social innovation,
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using ideas from design or technology or community organizing
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to develop the germs of a future world, but through practice and through demonstration
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and not through theory.
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And they're spreading from Korea to Brazil to India to the USA
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and across Europe.
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And they've been given new momentum by the crisis, by the need for better answers
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to joblessness, community breakdown and so on.
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Some of the ideas are strange.
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These are complaints choirs.
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People come together to sing about the things that really bug them.
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(Laughter)
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Others are much more pragmatic: health coaches, learning mentors, job clubs.
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And some are quite structural, like social impact bonds
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where you raise money to invest in diverting teenagers from crime
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or helping old people keep out of hospital,
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and you get paid back according to how successful your projects are.
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Now, the idea that all of this represents,
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I think, is rapidly becoming a common sense
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and part of how we respond to the crisis,
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recognizing the need to invest in innovation for social progress
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as well as technological progress.
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There were big health innovation funds
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launched earlier this year in this country,
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as well as a public service innovation lab.
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Across northern Europe, many governments
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now have innovation laboratories within them.
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And just a few months ago, President Obama
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launched the Office of Social Innovation in the White House.
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And what people are beginning to ask is:
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Surely, just as we invest in R and D, two, three, four percent,
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of our GDP, of our economy,
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what if we put, let's say, one percent of public spending
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into social innovation, into elder care, new kinds of education,
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new ways of helping the disabled?
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Perhaps we'd achieve similar productivity gains in society
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to those we've had in the economy and in technology.
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And if, a generation or two ago, the big challenges
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were ones like getting a man on the moon,
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perhaps the challenges we need to set ourselves now
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are ones like eliminating child malnutrition, stopping trafficking,
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or one, I think closer to home for America or Europe,
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why don't we set ourselves the goal
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of achieving a billion extra years of life for today's citizens.
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Now those are all goals which could be achieved within a decade,
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but only with radical and systematic experiment,
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not just with technologies, but also with lifestyles and culture
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and policies and institutions too.
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Now, I want to end by saying a little bit about what I think this means for capitalism.
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I think what this is all about, this whole movement
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which is growing from the margins, remains quite small.
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Nothing like the resources of a CERN or a DARPA or an IBM or a Dupont.
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What it's telling us is that capitalism is going to become more social.
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It's already immersed in social networks.
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It will become more involved in social investment, and social care
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and in industries where the value comes from what you do with others,
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not just from what you sell to them,
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and from relationships as well as from consumption.
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But interestingly too, it implies a future where society learns a few tricks from capitalism
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about how you embed the DNA of restless continual innovation
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into society, trying things out and then growing and scaling the ones that work.
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Now, I think this future will be quite surprising to many people.
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In recent years, a lot of intelligent people thought that capitalism had basically won.
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History was over
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and society would inevitably have to take second place to economy.
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But I've been struck with a parallel in how people often talk about capitalism today
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and how they talked about the monarchy 200 years ago,
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just after the French Revolution and the restoration of the monarchy in France.
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Then, people said monarchy dominated everywhere
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because it was rooted in human nature.
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We were naturally deferential. We needed hierarchy.
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Just as today, the enthusiasts of unrestrained capitalism
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say it's rooted in human nature,
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only now it's individualism, inquisitiveness, and so on.
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Then monarchy had seen off its big challenger, mass democracy,
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which was seen as a well-intentioned but doomed experiment,
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just as capitalism has seen off socialism.
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Even Fidel Castro now says that the only thing worse
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than being exploited by multinational capitalism
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is not being exploited by multinational capitalism.
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16:03
And whereas then monarchies, palaces and forts dominated every city skyline
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and looked permanent and confident,
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today it's the gleaming towers of the banks which dominate every big city.
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I'm not suggesting the crowds are about to storm the barricades
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and string up every investment banker from the nearest lamppost,
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though that might be quite tempting.
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But I do think we're on the verge of a period when,
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just as happened to the monarchy and, interestingly, the military too,
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the central position of finance capital is going to come to an end,
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and it's going to steadily move to the sides, the margins of our society,
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transformed from being a master into a servant,
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a servant to the productive economy and of human needs.
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And as that happens,
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we will remember something very simple and obvious about capitalism,
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which is that, unlike what you read in economics textbooks,
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it's not a self-sufficient system.
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It depends on other systems,
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on ecology, on family, on community,
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and if these aren't replenished, capitalism suffers too.
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And our human nature isn't just selfish, it's also compassionate.
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It's not just competitive, it's also caring.
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Because of the depth of the crisis, I think we are at a moment of choice.
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The crisis is almost certainly deepening around us.
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It will be worse at the end of this year,
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quite possibly worse in a year's time than it is today.
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17:27
But this is one of those very rare moments
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when we have to choose whether we're just pedaling furiously
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to get back to where we were a year or two ago,
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17:36
and a very narrow idea of what the economy is for,
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or whether this is a moment to jump ahead, to reboot
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and to do some of the things we probably should have been doing anyway.
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Thank you.
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17:50
(Applause)
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