WEBVTT Kind: captions; language: en-us NOTE Treffsikkerhet: 80% (HØY) 00:00:01.299 --> 00:00:09.300 hey everyone so welcome to my kitchen and in this first lecture in economic anthropology I am including 00:00:09.300 --> 00:00:17.299 myself up here in the corner there because just to show you that I'm a real person, and not just 00:00:17.299 --> 00:00:19.400 someone talking. NOTE Treffsikkerhet: 81% (HØY) 00:00:21.300 --> 00:00:32.600 My name is Ståle Wig and I am a postdoc here at the SAI at the department for social anthropology 00:00:32.600 --> 00:00:44.349 anthropology and I'll be lecturing this course we have a bunch of big topics ahead of us. In order 00:00:44.349 --> 00:00:51.500 not to make myself too self-conscious speaking kind of into a mirror I'm going to turn myself off so 00:00:51.500 --> 00:00:52.000 It was just to NOTE Treffsikkerhet: 85% (HØY) 00:00:52.000 --> 00:01:02.800 Prove that I'm real and let's get going. I remember actually I studied this course myself SOSANT 00:01:02.800 --> 00:01:13.400 1300 I think it was 10 years ago and I really enjoyed it and I remember also at one point one of 00:01:13.400 --> 00:01:19.200 those anecdotes that you remember from your study days that I said to a friend of mine who was 00:01:19.200 --> 00:01:21.950 studying history it was actually my cousin NOTE Treffsikkerhet: 85% (HØY) 00:01:21.950 --> 00:01:31.700 or he still is my cousin and he's still into history. I mentioned this to him that I like this new 00:01:31.700 --> 00:01:36.800 course that I was taking economic anthropology and we were having lunch and he responded: anthropology 00:01:36.800 --> 00:01:44.300 what the hell does that have to do with economy? and that comment always kind of stuck with 00:01:44.300 --> 00:01:48.900 me it was as if he was saying you know in not so many words NOTE Treffsikkerhet: 80% (HØY) 00:01:48.900 --> 00:01:57.050 you're kind of out of your league here or is this really your turf anthropologists and I wasn't 00:01:57.050 --> 00:02:04.100 really able to give him a good answer back then I had read these great pieces of research done by 00:02:04.100 --> 00:02:11.300 anthropologists about things like the Kula trade about cows in Lesotho about entrepreneurship 00:02:11.300 --> 00:02:17.900 among Darfur in Sudan you know I had a sense that these things had something to tell us about 00:02:17.900 --> 00:02:18.649 what we here NOTE Treffsikkerhet: 77% (HØY) 00:02:18.649 --> 00:02:26.050 the West usually think of as economic life, but I wasn't quite sure what that connection actually was. 00:02:26.050 --> 00:02:33.400 In this course you will do as I did back then read about the Kula you'll read about gift 00:02:33.400 --> 00:02:40.800 exchange and enterpreneurship among Darfur in Sudan and a number of other fascinating pieces 00:02:40.800 --> 00:02:46.100 of ethnographic research but straight off from this first lecture we're going to try to draw the 00:02:46.100 --> 00:02:48.750 connections between these things the stuff NOTE Treffsikkerhet: 83% (HØY) 00:02:48.750 --> 00:02:56.250 anthropologists classically have studied and what people like my cousin people outside this course 00:02:56.250 --> 00:03:06.900 usually think of when they think about quote-unquote "the economy". All right so one of the things I 00:03:06.900 --> 00:03:18.100 want to teach you is to try to stop in your tracks of thinking whenever you read 00:03:18.100 --> 00:03:18.649 something NOTE Treffsikkerhet: 80% (HØY) 00:03:18.649 --> 00:03:27.100 or engage with a piece of information and think what are the background assumptions that go into 00:03:27.100 --> 00:03:38.300 the phenomena a piece of music or film or political speech or whatever what is this stuff that 00:03:38.300 --> 00:03:41.200 goes without saying that is not mentioned? NOTE Treffsikkerhet: 87% (HØY) 00:03:41.200 --> 00:03:48.100 but it's still kind of the foundation upon which that thing realize so we're going to talk a lot 00:03:48.100 --> 00:03:55.700 about these things background assumptions in this course. And just to get started there's of 00:03:55.700 --> 00:03:59.400 course a background assumption behind this very course NOTE Treffsikkerhet: 88% (HØY) 00:03:59.400 --> 00:04:04.400 and you may have guessed it is NOTE Treffsikkerhet: 79% (HØY) 00:04:04.400 --> 00:04:14.900 obviously that anthropology have something interesting to say and to do with economy but more 00:04:14.900 --> 00:04:18.000 importantly that it matters NOTE Treffsikkerhet: 87% (HØY) 00:04:18.000 --> 00:04:28.850 is the conviction that it matters how we think the economy functions, it matters what we think about 00:04:28.850 --> 00:04:37.000 what drives economic activity, it matters how we think a market functions what a market is, it matters 00:04:37.000 --> 00:04:40.700 what we think drives the market NOTE Treffsikkerhet: 89% (HØY) 00:04:40.900 --> 00:04:47.100 and it matters because the prevalent way of answering these questions about thinking about these 00:04:47.100 --> 00:04:52.950 things and market economic behavior motivation NOTE Treffsikkerhet: 72% (MEDIUM) 00:04:52.950 --> 00:05:01.000 Leads politics and leaves politicians to make choices that determine the life chances and influence 00:05:01.000 --> 00:05:05.700 the lives of basically everyone on this planet NOTE Treffsikkerhet: 91% (HØY) 00:05:07.100 --> 00:05:15.700 and it matters this course even more so perhaps because the models that guide this these political 00:05:15.700 --> 00:05:27.400 actions are in interesting ways in tension what we are going to read about and understand and 00:05:27.400 --> 00:05:30.700 discuss. In some NOTE Treffsikkerhet: 91% (HØY) 00:05:30.700 --> 00:05:41.299 ways they could be wrong the the governing models for how we organize for how 00:05:41.299 --> 00:05:48.600 decisions are made in politics. Perhaps people live life and make economic decisions in ways that are 00:05:48.600 --> 00:06:00.000 different or in contradiction with what conventional models assume. This is something to explore. In 00:06:00.000 --> 00:06:00.650 this course NOTE Treffsikkerhet: 70% (MEDIUM) 00:06:00.650 --> 00:06:11.950 We will try to push you to take a stance on those big questions but also address a number of 00:06:11.950 --> 00:06:21.100 concrete questions that you'll have an idea about as you as you exit this course from hopefully. Is 00:06:21.100 --> 00:06:28.500 there such a thing as a free market? what is the basis of the economic order? come from 00:06:28.500 --> 00:06:30.650 People's Natural NOTE Treffsikkerhet: 72% (MEDIUM) 00:06:30.650 --> 00:06:38.900 Propensity to barter and exchange? are we all kind of wheelers and dealers or is it something else that 00:06:38.900 --> 00:06:41.450 is the basis of our economic order? NOTE Treffsikkerhet: 91% (HØY) 00:06:41.450 --> 00:06:50.200 why does it suck every time someone that you've given a gift tries to pay you back very 00:06:50.200 --> 00:06:58.850 quickly? for example if I take one of you out for a coffee and we discuss something and when we're 00:06:58.850 --> 00:07:04.400 done with that coffee you VIPPs me 30 kroner NOTE Treffsikkerhet: 91% (HØY) 00:07:04.400 --> 00:07:14.200 that would make me feel a bit bad. Why do those things suck? what is it about gifts that make them NOTE Treffsikkerhet: 90% (HØY) 00:07:14.200 --> 00:07:20.800 mean certain things in social relationship? and what's the difference between a gift and a 00:07:20.800 --> 00:07:25.900 commodity how should we think about this distinction as an anthropologist. That's another topic we're 00:07:25.900 --> 00:07:28.400 going to talk about a whole deal. NOTE Treffsikkerhet: 91% (HØY) 00:07:28.400 --> 00:07:35.750 Are we becoming more egotistical with the spread of the market how can we understand that question? NOTE Treffsikkerhet: 91% (HØY) 00:07:35.750 --> 00:07:42.250 it's one of those folk kind of conceptions that that seem to rhyme a little bit with our NOTE Treffsikkerhet: 91% (HØY) 00:07:42.250 --> 00:07:45.250 with our preconceptions but maybe NOTE Treffsikkerhet: 68% (MEDIUM) 00:07:45.250 --> 00:07:54.400 Are not quite right and is there a problem with just giving poor people money instead of asking them 00:07:54.400 --> 00:07:57.600 to labor for a salary NOTE Treffsikkerhet: 77% (HØY) 00:07:58.500 --> 00:08:10.100 those are the kinds of provocative questions. This list is not exclusive, there is 00:08:10.100 --> 00:08:16.600 much more that we're going to discuss, but this is just kind of a flavor of some of the things that 00:08:16.600 --> 00:08:21.100 we are going to touch upon. NOTE Treffsikkerhet: 91% (HØY) 00:08:21.900 --> 00:08:35.700 So let's begin I think with this thing that my cousin was assuming namely that there is something 00:08:35.700 --> 00:08:43.799 out there called the economy and it doesn't look very much like the stuff that anthropologists like 00:08:43.799 --> 00:08:50.300 to study namely rituals, social relationships NOTE Treffsikkerhet: 91% (HØY) 00:08:50.400 --> 00:09:01.150 gift exchanges, faraway places on small Islands. No the economy is more the more neutral thing it is 00:09:01.150 --> 00:09:10.900 it is a universal thing and if we concretize this conception a little bit we can say that the 00:09:10.900 --> 00:09:20.350 standard view of the economy or the economic is NOTE Treffsikkerhet: 80% (HØY) 00:09:20.350 --> 00:09:25.150 is a ruling account which is largely NOTE Treffsikkerhet: 89% (HØY) 00:09:25.150 --> 00:09:34.800 what we can call the neoliberal world view so think of the neoliberal model of the economy as a 00:09:34.800 --> 00:09:42.800 Counterpoint again to what we will we will be reading in this course I want you to consider a 00:09:42.800 --> 00:09:47.250 neoliberal model of the economy as a sort of a baseline NOTE Treffsikkerhet: 91% (HØY) 00:09:47.250 --> 00:09:52.400 something rather simple from which things will get more complicated. NOTE Treffsikkerhet: 91% (HØY) 00:09:52.400 --> 00:10:00.900 In other words make sense in a different way, so we have today this text by Milton and Rose 00:10:00.900 --> 00:10:09.100 Friedman and I want you to consider that as a key text in relation to which many of the other texts 00:10:09.100 --> 00:10:16.700 on the syllabus will make sense. So that's just two words about where we're going so what is 00:10:16.700 --> 00:10:22.000 neoliberalism? It's a slightly hard word to say and it's one NOTE Treffsikkerhet: 87% (HØY) 00:10:22.000 --> 00:10:31.100 that's being slung around very easily these days so let's get our facts straight where to begin to 00:10:31.100 --> 00:10:40.500 answer this question. Well in formal politics which is somewhere to start neoliberalism is largely 00:10:40.500 --> 00:10:49.400 associated with two figures who came to power around the same time. NOTE Treffsikkerhet: 89% (HØY) 00:10:52.200 --> 00:11:03.300 Ronald Reagan in the United States and Margaret Thatcher in the UK, both coming to power in the late 00:11:03.300 --> 00:11:15.100 70s early 80s and in very much agreement about particular view of economic order that has been 00:11:15.100 --> 00:11:19.700 incredibly influential so let's start there. NOTE Treffsikkerhet: 78% (HØY) 00:11:19.700 --> 00:11:29.700 This is Ronald Reagan quoted in 1981 "we who live in free market societies believe 00:11:29.700 --> 00:11:36.500 that growth, prosperity, and ultimately human fulfillment are created from the bottom up not the 00:11:36.500 --> 00:11:44.000 government down. Government is not the solution to our problem, government is the problem." NOTE Treffsikkerhet: 91% (HØY) 00:11:46.400 --> 00:11:55.900 Thatcher looking back at her years in power in 2006 said free enterprise enlarges the power of 00:11:55.900 --> 00:12:03.400 the people we understood that a system of free enterprise business in other words has a universal 00:12:03.400 --> 00:12:10.900 truth at its heart to create a genuine Market in a state you have to take the state out of the 00:12:10.900 --> 00:12:12.600 market. NOTE Treffsikkerhet: 91% (HØY) 00:12:13.300 --> 00:12:24.000 OK, so these two figures came into power in around the same time and they set out to smash the 00:12:24.000 --> 00:12:32.750 ruling economic order based on this notion of the free market that the market grows out of 00:12:32.750 --> 00:12:43.150 people's natural propensities to behave as people always do and from that you have benign effects of NOTE Treffsikkerhet: 81% (HØY) 00:12:43.150 --> 00:12:50.200 improving society for the majority, and that the state needs to stay out of the market that is the 00:12:50.200 --> 00:12:52.800 role of the state. NOTE Treffsikkerhet: 91% (HØY) 00:12:53.900 --> 00:13:01.700 Again these are as we mentioned a part of our job is to get at the implicit assumptions when people 00:13:01.700 --> 00:13:09.700 are talking when people are behaving in certain economic and social setups so the implicit 00:13:09.700 --> 00:13:12.349 assumptions in these quotes are NOTE Treffsikkerhet: 86% (HØY) 00:13:12.349 --> 00:13:20.050 that first of all that there is such a thing as as a free market or free market societies 00:13:20.050 --> 00:13:26.800 that markets occur naturally or organically from the bottom up as Reagan put it. NOTE Treffsikkerhet: 81% (HØY) 00:13:27.800 --> 00:13:32.500 They lead to growth prosperity and human fulfillment. NOTE Treffsikkerhet: 91% (HØY) 00:13:33.000 --> 00:13:41.550 As you see here to create a genuine market you need the state to stay out of the operation. 00:13:41.550 --> 00:13:47.100 Governments can get in the way of the of the operation of the market the market is something outside 00:13:47.100 --> 00:13:55.400 government. Therefore the legitimate role of government is basically to enforce law and order NOTE Treffsikkerhet: 91% (HØY) 00:13:56.300 --> 00:14:06.500 and this is kind of the political face of neoliberalism what we have here Reagan Thatcher in the 00:14:06.500 --> 00:14:19.300 the 1980s and in a sense this is a political economic thinking that NOTE Treffsikkerhet: 91% (HØY) 00:14:19.400 --> 00:14:31.700 re-awakens a line of thinking that has been developed from the eighteen hundreds namely classical 00:14:31.700 --> 00:14:44.250 economic liberalism. It develops in the 1800s most famously by the hands of the philosopher and 00:14:44.250 --> 00:14:48.500 first Economist of the world as economists like to say NOTE Treffsikkerhet: 86% (HØY) 00:14:48.500 --> 00:14:50.300 Adam Smith NOTE Treffsikkerhet: 90% (HØY) 00:14:50.600 --> 00:15:00.550 and we're going to return to Adam Smith in more detail in a short while but just to situate 00:15:00.550 --> 00:15:12.400 neoliberalism historically very concretely. It is The Reawakening of classical economic liberalism 00:15:12.400 --> 00:15:20.350 that was developed in the 1800s and return to political influence in the late 1970s after NOTE Treffsikkerhet: 91% (HØY) 00:15:20.350 --> 00:15:24.500 a period of a different NOTE Treffsikkerhet: 70% (MEDIUM) 00:15:24.600 --> 00:15:40.200 model for economic life and economic policies which were known as Keynesianism and that is the 00:15:40.200 --> 00:15:46.100 view that the state should play an active role in regulating the market that 00:15:46.100 --> 00:15:51.150 there is no such thing as market that functions without the state NOTE Treffsikkerhet: 91% (HØY) 00:15:51.150 --> 00:16:00.100 so leave that aside but the point being neoliberalism return to political influence in the late 00:16:00.100 --> 00:16:07.900 1970s after having become marginal and the revival and renewing of this classical economic 00:16:07.900 --> 00:16:16.900 liberalism by Adam Smith which we will delve into very shortly is referred to as neoliberalism. Neo 00:16:16.900 --> 00:16:22.200 being new liberalism being the stuff that Adam Smith came up with basically. NOTE Treffsikkerhet: 81% (HØY) 00:16:22.800 --> 00:16:33.050 Since these two people came to power neoliberalism has been the 00:16:33.050 --> 00:16:40.050 political Orthodoxy across the political Spectrum first in the US and the UK and then globally 00:16:40.050 --> 00:16:50.000 for nearly 40 years and in a sense it is still very much with us. Obama says in 2011 the free market 00:16:50.000 --> 00:16:51.150 is the greatest NOTE Treffsikkerhet: 59% (MEDIUM) 00:16:51.150 --> 00:16:57.100 force for economic progress in human history it's led to prosperity and a standard of living 00:16:57.100 --> 00:17:00.200 unmatched by the rest of the world. NOTE Treffsikkerhet: 88% (HØY) 00:17:01.200 --> 00:17:11.900 Blair the UK prime minister looks back at his time in office saying what I represented was liberal 00:17:11.900 --> 00:17:21.200 economic practices in other words his was a new liberal neoliberal economic Policy. Which 00:17:21.200 --> 00:17:26.700 meant market reforms in welfare and public services. I profoundly disagree with the state of so called 00:17:26.700 --> 00:17:29.350 Keynesian response to the economic crisis the NOTE Treffsikkerhet: 86% (HØY) 00:17:29.350 --> 00:17:37.700 market did not fail one part of the sector did and the economic crisis here being 2008, the massive 00:17:38.400 --> 00:17:48.400 economic crisis of 2008. One part of the sector failed says Blair however such practice should not 00:17:48.400 --> 00:17:54.800 define or represent the whole banking sector let alone the whole financial sector let alone the market. NOTE Treffsikkerhet: 81% (HØY) 00:17:54.800 --> 00:18:10.850 Even though it is been and remains remarkably solid and influential political an economic 00:18:10.850 --> 00:18:19.200 ideology and model for thinking of the world about the world and for organizing it, neoliberalism has 00:18:19.200 --> 00:18:24.500 increasingly been challenged as a consensus from NOTE Treffsikkerhet: 91% (HØY) 00:18:24.500 --> 00:18:34.500 left and here represented by people like Senator Bernie Sanders or the contender for the UK prime 00:18:34.500 --> 00:18:45.600 minister post which he visibly lost Corbin in the center here, or from the right in a twisted 00:18:45.600 --> 00:18:54.500 kind of way from someone like Donald Trump. However, the point to take home here is that NOTE Treffsikkerhet: 89% (HØY) 00:18:54.500 --> 00:19:00.900 neoliberalism still remains a political ideology that has shaped the world for over the past 40 00:19:00.900 --> 00:19:11.900 years. What is it and what does it say? again this is a word that is thrown about and we 00:19:11.900 --> 00:19:21.300 as economic anthropologists should have a cool assessment of what this actually contains. What 00:19:21.300 --> 00:19:25.050 does it look like this animal? neoliberal animal? NOTE Treffsikkerhet: 90% (HØY) 00:19:25.050 --> 00:19:35.700 what are its characteristics? what are what is the foundation upon which this consensus rests? NOTE Treffsikkerhet: 91% (HØY) 00:19:36.800 --> 00:19:47.200 well we have here text by Milton and Rose Friedman which is called "free to choose" and that is a good 00:19:47.200 --> 00:19:58.600 place to start answering this question as any. They are one of the especially Milton Friedman is one 00:19:58.600 --> 00:20:03.400 of the most influential social sciences I think we can say in history, he won the Nobel Prize for 00:20:03.400 --> 00:20:07.400 economics in 1976 note the year NOTE Treffsikkerhet: 88% (HØY) 00:20:07.400 --> 00:20:17.200 just before Reagan and Thatcher came to power. And he was one of the so-called Chicago economists who 00:20:17.200 --> 00:20:23.600 continue to advocate free market economics during these years after the second world war where the 00:20:23.600 --> 00:20:33.900 state was seen to have a legitimate role to play in the economy to a greater extent in the 00:20:33.900 --> 00:20:37.400 era of the 1960s and 70s Friedman was one of NOTE Treffsikkerhet: 80% (HØY) 00:20:37.400 --> 00:20:45.950 the people who stuck to his free-market guns throughout those years and his book "free to choose" NOTE Treffsikkerhet: 91% (HØY) 00:20:45.950 --> 00:20:54.949 was actually part of a TV series that he produced with his wife Rose Friedman that was immensely 00:20:54.949 --> 00:21:02.700 influential in shaping the neoliberal revolution that came right after it and from where these 00:21:02.700 --> 00:21:04.600 politicians NOTE Treffsikkerhet: 91% (HØY) 00:21:05.700 --> 00:21:16.500 borrowed in order to create the policies that have shaped the world ever since. NOTE Treffsikkerhet: 80% (HØY) 00:21:17.100 --> 00:21:20.950 so here's Friedman NOTE Treffsikkerhet: 91% (HØY) 00:21:20.950 --> 00:21:30.200 Here's Friedman saying "The free market system distribute the fruits of economic progress among all people. That's the 00:21:30.200 --> 00:21:34.800 secret of the enormous Improvement in the conditions of the working person over the past two 00:21:34.800 --> 00:21:44.000 centuries, underlying most arguments against the free market is a lack of belief in freedom itself." so 00:21:44.000 --> 00:21:51.600 you can see that the idea of freedom and the concept of freedom plays a crucial role in the NOTE Treffsikkerhet: 88% (HØY) 00:21:51.600 --> 00:22:03.800 consensus of neoliberalism and we will return to this word again and again throughout this course 00:22:03.800 --> 00:22:12.750 the free market, freedom, voluntary note just for now that these are crucial NOTE Treffsikkerhet: 88% (HØY) 00:22:12.750 --> 00:22:18.400 building blocks for this economic world. NOTE Treffsikkerhet: 84% (HØY) 00:22:18.700 --> 00:22:26.800 and free to choose that the text that you have for this week is a passionate defense of free markets 00:22:26.800 --> 00:22:35.250 at a time when the Friedman's felt that they were under attack from people who believed that the 00:22:35.250 --> 00:22:46.000 state should intervene in order to shape society, and their basic argument is an economical 00:22:46.000 --> 00:22:48.800 liberal argument it is that markets are NOTE Treffsikkerhet: 91% (HØY) 00:22:48.800 --> 00:22:55.000 the natural outcome of voluntary exchanges between individuals and you'll see again this word 00:22:55.000 --> 00:23:04.400 voluntary cropping up in the text that we are reading for this week. If the state, government, or society 00:23:04.400 --> 00:23:10.900 steps aside and let's the market emerge out of this national voluntary exchanges then the end result 00:23:10.900 --> 00:23:18.449 will be the widest and greatest prosperity. Government attempts to fix market or NOTE Treffsikkerhet: 79% (HØY) 00:23:18.449 --> 00:23:25.000 social problems are likely to fail and can interfere with the more efficient mechanism of markets 00:23:25.000 --> 00:23:36.700 and this is you know basically the social scientific for the theoretical foundations that underpin 00:23:36.700 --> 00:23:46.900 the quotes from the politicians from Reagan to Thatcher from Obama to Blair that have shaped 00:23:46.900 --> 00:23:48.650 the last 40-50 years NOTE Treffsikkerhet: 87% (HØY) 00:23:48.650 --> 00:23:54.050 to a great extent in this world. NOTE Treffsikkerhet: 84% (HØY) 00:23:54.050 --> 00:24:09.200 These are the theoretical foundations of a wide consensus in politics, not unchallenged but 00:24:09.200 --> 00:24:23.100 an important key consensus in modern politics, and in the sense these assumptions that 00:24:23.100 --> 00:24:23.699 underpin NOTE Treffsikkerhet: 85% (HØY) 00:24:23.699 --> 00:24:32.700 Friedman and Friedman's text is all the same assumptions that underpin the discipline of 00:24:32.700 --> 00:24:41.500 Economics. Friedman's argument and you'll notice this when you read it starts from the 00:24:41.500 --> 00:24:50.600 assumptions about individual small scale human interactions, so the model is based it distracts and 00:24:50.600 --> 00:24:53.750 moves from the NOTE Treffsikkerhet: 84% (HØY) 00:24:53.750 --> 00:25:03.400 the building block which is an individual trading with another individual, and I'm drawing your 00:25:03.400 --> 00:25:09.700 attention to this in order for you to also remember it when we move to other models and other ways 00:25:09.700 --> 00:25:17.100 of thinking of economic action that do not start with individuals but start with things like history 00:25:17.100 --> 00:25:23.699 or context or large social structures. NOTE Treffsikkerhet: 87% (HØY) 00:25:23.699 --> 00:25:31.000 Secondly we assume that a natural tendency to enter into economic exchanges NOTE Treffsikkerhet: 66% (MEDIUM) 00:25:31.000 --> 00:25:39.300 based upon an individual's desire to maximize their gains. NOTE Treffsikkerhet: 75% (MEDIUM) 00:25:40.200 --> 00:25:49.300 This is where the model of human decision-making comes in, homoeconomicus. We have humans with a 00:25:49.300 --> 00:25:55.250 natural tendency to enter into economic exchanges based on our self-interest. NOTE Treffsikkerhet: 84% (HØY) 00:25:55.250 --> 00:26:02.200 This is a very common assumption in economic theory going back centuries and also 00:26:02.200 --> 00:26:13.900 very popular kind of model for how we should think about humans outside classrooms and seminar 00:26:13.900 --> 00:26:21.500 rooms and in popular and political discussion and we're going to pick apart some of these 00:26:21.500 --> 00:26:25.250 assumptions as the course progresses NOTE Treffsikkerhet: 79% (HØY) 00:26:25.250 --> 00:26:34.100 because what I want you to do is to read the Friedman text as a baseline as 00:26:34.100 --> 00:26:41.000 something against which we compare and see somethings 00:26:41.000 --> 00:26:54.550 obviously hunted to something that I think holds true and in other areas glaringly NOTE Treffsikkerhet: 84% (HØY) 00:26:54.550 --> 00:27:04.850 ignorant to stuff that you all right you'll read about and for very interesting reasons, in any case NOTE Treffsikkerhet: 87% (HØY) 00:27:04.850 --> 00:27:12.500 read this text as a baseline as a source of comparison as we go forward. NOTE Treffsikkerhet: 86% (HØY) 00:27:12.500 --> 00:27:21.700 and to go a little bit into what he is saying and where Friedman is coming from here is of course to 00:27:21.700 --> 00:27:31.500 go back to Adam Smith as I mentioned earlier. Adam Smith is the founder of classical economic 00:27:31.500 --> 00:27:42.750 liberalism and what Milton Friedman does is to bring him back and to raise him up as NOTE Treffsikkerhet: 91% (HØY) 00:27:42.750 --> 00:27:51.300 as the the important figure that he thinks he is, and to build an economic system that is based on 00:27:51.300 --> 00:27:59.800 his ideas. He says that "Adam Smith's Flash of Genius was his recognition that prices that 00:27:59.800 --> 00:28:06.400 emerge from voluntary transactions again make a note of this word between buyers and sellers for 00:28:06.400 --> 00:28:12.350 sort in a free market could coordinate the activity of millions of people each seeking NOTE Treffsikkerhet: 89% (HØY) 00:28:12.350 --> 00:28:19.200 in his own interest in such a way as to make everyone better off." It was a startling idea then and it 00:28:19.200 --> 00:28:26.600 remains one today, but economic order can emerge as the unintended consequence of the actions of many 00:28:26.600 --> 00:28:34.400 people each seeking his own interest it's a long quote but it's nothing compared to the quote we're 00:28:34.400 --> 00:28:41.800 going to get from Smith coming up but it is a very important one on page 14 to 15. NOTE Treffsikkerhet: 85% (HØY) 00:28:42.600 --> 00:28:56.900 and where this comes from this idea that people seeking their self-interests can benefit us all 00:28:56.900 --> 00:29:07.200 where it comes from is actually a text itself by Adam Smith in the 1800s and this is the mother of all 00:29:07.200 --> 00:29:12.350 quotes here but I think if we pick it apart and spend NOTE Treffsikkerhet: 91% (HØY) 00:29:12.350 --> 00:29:22.100 a bit of time going into it I think we'll have use for it going forward in this course okay so 00:29:22.100 --> 00:29:29.850 that's why we're spending a little bit of time on going deep into the foundations of neoliberalism 00:29:29.850 --> 00:29:38.250 against which or in comparison to which we will make sense of the other text on this 00:29:38.250 --> 00:29:42.400 syllabus. so Smith says in his book The Wealth of Nations NOTE Treffsikkerhet: 87% (HØY) 00:29:42.400 --> 00:29:51.000 That this division of labor from which so many advantages are derived this let's say 00:29:52.200 --> 00:30:03.800 division of labor that he proposes which is a free market view, this division of labor is not 00:30:03.800 --> 00:30:09.300 originally the effect of any human wisdom which foresees and intends that General opulence to which 00:30:09.300 --> 00:30:12.350 it gives occasion it is the necessary though NOTE Treffsikkerhet: 91% (HØY) 00:30:12.350 --> 00:30:18.800 very slow and gradual consequence of a certain propensity that is tendency NOTE Treffsikkerhet: 91% (HØY) 00:30:18.800 --> 00:30:27.200 in human nature which has in view no such extensive utility the propensity to truck barter and 00:30:27.200 --> 00:30:40.800 exchange one thing for another is common to all men. So the the basis of his theory about how the 00:30:40.800 --> 00:30:47.600 free market creates better effects for everyone by everyone pursuing their self-interest NOTE Treffsikkerhet: 85% (HØY) 00:30:47.600 --> 00:30:56.700 is here. That people have a natural tendency to truck barter and exchange and what the hell does 00:30:56.700 --> 00:31:03.000 truck mean I'm not really sure but I've heard that it's just a word that he threw in there in 00:31:03.000 --> 00:31:11.000 order for for him to have three. The important point is barter and exchange so to barter things 00:31:11.000 --> 00:31:17.800 exchange to give each other things and exchange things is NOTE Treffsikkerhet: 82% (HØY) 00:31:17.800 --> 00:31:26.300 common to all men and is to be found in no other race of animals which seems to know either this NOTE Treffsikkerhet: 89% (HØY) 00:31:26.300 --> 00:31:34.200 neither this nor any other species of contracts, whoever offers to another and this is a now comes 00:31:34.200 --> 00:31:43.800 the even more famous part we're moving towards whoever offers to another a bargain of any kind 00:31:43.800 --> 00:31:51.000 proposes to do this give me that which I want and you should have this which you want, 00:31:51.000 --> 00:31:56.400 this is where the economy comes from it's a natural NOTE Treffsikkerhet: 90% (HØY) 00:31:56.400 --> 00:32:04.200 state of affairs where people have this tendency in ourselves to exchange and to act as if in a 00:32:04.200 --> 00:32:16.700 supermarket and from that comes good things. Give me that which I want and you shall have that which 00:32:16.700 --> 00:32:22.900 you want is the meaning of every such offer and it is in this manner that we obtain from one another 00:32:22.900 --> 00:32:26.600 the far greater part of those good offices which we stand in need of NOTE Treffsikkerhet: 84% (HØY) 00:32:26.600 --> 00:32:32.500 of it is not from the benevolence and this is the famous part of the quote it is not from the 00:32:32.500 --> 00:32:38.900 benevolence of the butcher the Brewer or the baker that we expect our dinner but from their regard 00:32:38.900 --> 00:32:43.500 to their own self interest NOTE Treffsikkerhet: 87% (HØY) 00:32:44.200 --> 00:32:51.800 we address ourselves not to their humanity but their self love and never talk to them of our own 00:32:51.800 --> 00:33:02.700 Necessities but of their advantages. The reason for why you get nice coffee in Starbucks on 00:33:02.700 --> 00:33:10.700 your way to the next lecture if there was such a thing these days it's not because the people working 00:33:10.700 --> 00:33:12.100 there NOTE Treffsikkerhet: 67% (MEDIUM) 00:33:13.300 --> 00:33:17.050 have moral NOTE Treffsikkerhet: 83% (HØY) 00:33:17.050 --> 00:33:27.600 commitment to you and to your taste for hot coffee, it is from their regard to their own interest 00:33:27.600 --> 00:33:31.300 their self-interest, they're NOTE Treffsikkerhet: 83% (HØY) 00:33:31.800 --> 00:33:41.300 concerned for making a salary or for having some kind of an advantage in the market. NOTE Treffsikkerhet: 84% (HØY) 00:33:42.900 --> 00:33:56.000 I think this is a very powerful theory which has obvious elements of truth to it and we'll come 00:33:56.000 --> 00:34:06.100 back to that but there are also some core assumptions in this quote and in these texts that are 00:34:06.100 --> 00:34:08.250 wrong NOTE Treffsikkerhet: 80% (HØY) 00:34:08.250 --> 00:34:16.900 we'll move towards that in a bit but let's stay with what they're saying for a bit more so again 00:34:16.900 --> 00:34:24.300 Smith in another book The Wealth of Nations comes with the other famous or the perhaps the most 00:34:24.300 --> 00:34:35.900 famous metaphor of his which is the idea of the invisible hand. This is a very important idea 00:34:35.900 --> 00:34:37.750 because not NOTE Treffsikkerhet: 91% (HØY) 00:34:37.750 --> 00:34:47.400 because I'm some philosopher Economist in the eighteen hundreds said so but because it has an 00:34:47.400 --> 00:34:59.800 incredible influence on politics and the economy as it is imagined by powerful people today so in 00:34:59.800 --> 00:35:05.350 the name of dissecting you know the economic order of today NOTE Treffsikkerhet: 91% (HØY) 00:35:05.350 --> 00:35:19.900 let's go in to what Smith actually said and he speaks here about imagine person who neither intends 00:35:19.900 --> 00:35:26.500 to promote the public interest nor knows how much he is promoting it by directing that industry in 00:35:26.500 --> 00:35:28.550 such a manner as to produce NOTE Treffsikkerhet: 89% (HØY) 00:35:28.550 --> 00:35:37.350 maybe of the greatest value he intends only his own gain and he is in this as in many other cases 00:35:37.350 --> 00:35:48.100 led by an invisible hand to promote an end which has no part in his intentions a side effect a 00:35:48.100 --> 00:35:56.400 positive side effect an unintended consequence, nor is it always the worst for the society that it 00:35:56.400 --> 00:35:58.800 was not part of it by pursuing NOTE Treffsikkerhet: 79% (HØY) 00:35:58.800 --> 00:36:04.400 his own interest you frequently promotes that above the society to more effectually than when he 00:36:04.400 --> 00:36:13.300 really intends to promote it so he produces the merchant a greater effect or better effect for 00:36:13.300 --> 00:36:24.700 society when he really serves his own interest and actually when he intends to make coffee in 00:36:24.700 --> 00:36:28.750 order to just for you to have a nice coffee NOTE Treffsikkerhet: 76% (HØY) 00:36:28.750 --> 00:36:41.100 or where the economic action is driven by moral concerns for someone else than yourself it 00:36:41.100 --> 00:36:50.600 Does not have a greater positive effect on society as when we look out for our own self-interest. I 00:36:50.600 --> 00:36:56.500 have never known much good done by those who are affected to trade for the public good it is an 00:36:56.500 --> 00:36:58.750 affection indeed not for the very common NOTE Treffsikkerhet: 89% (HØY) 00:36:58.750 --> 00:37:03.550 among merchants and very few words needs to be employed in situating NOTE Treffsikkerhet: 85% (HØY) 00:37:03.550 --> 00:37:05.950 them from it. NOTE Treffsikkerhet: 85% (HØY) 00:37:05.950 --> 00:37:13.400 All right so just to extract yourself from these quotes a little bit and summarize NOTE Treffsikkerhet: 79% (HØY) 00:37:13.600 --> 00:37:27.700 key assumptions that go into the neoliberal consensus based on texts that like the Wealth of 00:37:27.700 --> 00:37:37.400 Nations or the theory of moral sentiments which is another book by Adam Smith based on thinkers in 00:37:37.400 --> 00:37:44.200 the eighteen hundreds then revives in through thinkers and NOTE Treffsikkerhet: 91% (HØY) 00:37:44.200 --> 00:37:55.149 and writers, researchers like Milton Friedman in the late 70s these assumptions are that markets 00:37:55.149 --> 00:38:06.500 emerged at the organic expression of voluntary exchanges, the market grows out indeed of people's 00:38:06.500 --> 00:38:14.100 propensity to trade without any one telling them to do so when the state leans back NOTE Treffsikkerhet: 80% (HØY) 00:38:14.100 --> 00:38:22.800 Regulators lean back no State involved people's propensity to trade and get together and exchange 00:38:22.800 --> 00:38:34.899 things sell cups of coffee get money make different products exchange for something else when these 00:38:34.899 --> 00:38:44.500 activities are left to themselves the effects are that services and benefits and goods NOTE Treffsikkerhet: 90% (HØY) 00:38:45.500 --> 00:38:54.700 extend to everyone that we have a better an unintended consequence which is a better Society for 00:38:54.700 --> 00:38:55.750 everyone. NOTE Treffsikkerhet: 91% (HØY) 00:38:55.750 --> 00:39:01.000 this is why the state needs to stay away, NOTE Treffsikkerhet: 91% (HØY) 00:39:01.000 --> 00:39:09.500 and this was indeed what Thatcher and Reagan argued NOTE Treffsikkerhet: 83% (HØY) 00:39:09.500 --> 00:39:16.400 and were very successful in implementing in the United States and the UK and lots of countries 00:39:16.400 --> 00:39:27.300 in the other parts of the north emulated these politics and that those are still with us very much 00:39:27.300 --> 00:39:33.300 so and so that is why it becomes very important to understand where it comes from 00:39:33.300 --> 00:39:40.600 and what kind of thing these NOTE Treffsikkerhet: 89% (HØY) 00:39:41.100 --> 00:39:45.250 policies tend to overlook NOTE Treffsikkerhet: 91% (HØY) 00:39:45.250 --> 00:39:57.300 or to stand in contradiction with and this process of questioning the the consensus the economic 00:39:57.300 --> 00:40:04.100 consensus of our day is something that we're going to do a lot of in this course and we're going 00:40:04.100 --> 00:40:12.000 to take the first step and the next video with the help of David Harvey