University Place

I'm Samer Alatout, and I'm the director of the Robert F. & Jean H. Holtz Center for Science & Technology Studies at the University of Wisconsin Madison. Robert Holtz was an alumnus of the University of Wisconsin College of Engineering, and he wanted his bequest to the university to provide opportunities for discussion about the intersections between science, technology, and social life. Tonight's event of course does that. So tonight, we're welcoming, I'm very excited and very happy to welcome Professor Robert McChesney, who is the Gutgsell Endowed professor in the Department of Communication at the University of Illinois at Urbana-Champaign where his work concentrates on the history and political economy of communication, emphasizing the role media plays in democratic and capitalist societies. Professor McChesney has a long record of publication, an amazing one, that includes 27 books and hundreds of chapters and articles. In addition to the work he will be discussing tonight, he is the author of

Blowing the Roof Off the 21st Century

Media, Politics, and Post-Capitalist Democracy, and another book is

Dollarocracy

How the Money and Media Election Complex is Destroying America, which he co-authored with John Nichols. Most of us, of course, know him. His work has earned numerous accolades. In 2008, the Utne Reader has listed McChesney among their 50 visionaries who are changing the world. In 2001, Adbusters Magazine named him one of the Nine Pioneers of Mental Environmentalism. With John Nichols, he was awarded the US Newspaper Guild's 2010 Herbert Block Freedom Award, and in 2016, the known conservative commentator David Horowitz included Professor McChesney on his list of the, quote, 101 Most Dangerous Professors in America. (audience laughs and applauds) Unquote. (laughs)

His topic tonight is Digital Disconnect

How Capitalism is Turning the Internet Against Democracy. Please join me in welcoming Professor McChesney. (audience applauds) I'd like to thank the Robert Holtz Center for bringing me in here. I'd like to thank Samer and Lynn for doing the heavy lifting of getting the mic here and organizing the event in the room tonight. I'd like to thank you all for coming. Tonight's talk is gonna be an unusual one. It's gonna be half of the book that I wrote, Digital Disconnect, that the title of the talk is on, and the other half is going to be on a book I'm finishing, reading the page proofs literally this week, that I co-authored with John Nichols, which sort of takes the discussion to the next stage, and you'll hear about that. So half of this is old material I've talked about a bit before; half of it is new stuff no one's heard before. And so hopefully, the second half of the talk will hold together as well as the first half, for all our sakes. In doing so, you know, at the outset, I'm gonna be talking about some huge issues here. I'm gonna be making sweeping generalizations, wildly extravagant claims. I don't do this in my written work that much, at least most people hopefully don't think I do. I provide nuance and subtlety and deal with all the ambiguities that you're supposed to do. But this topic and this material I'm gonna be talking about tonight demands that we dispense with niceties of nuance and ambiguity when there are enormous truths staring us in the face, and I wanna deal with what I regard the enormous and crucial truths about the Internet and society today in the United States and going forward. One of the things that's striking about the Internet, having researched it now for 25 years at least and having lived through it and having lived in the pre-Internet era, and, really, the early digital communication era where it really didn't have a huge role in most people's lives, is I could see how much it's transformed not only our economy, our politics, our culture, but our everyday lives. And so when I talk to my students at the University of Illinois, or even when I talk to my daughters, and I try to explain what it was like when I was at college in the '70s, they can't understand how anything got done. "How did you know when to meet someone?" (audience laughs) You know. "How did you know where to go?" I mean, they literally look at me dumbfounded. And I have to confess, we're so far down this road. I can't explain how. (audience laughs) Somehow, it worked. I'm not sure, but I agree it sounds pretty weird. How did you know what to do? And I think that's a sign of just what a sweeping revolution we're in the midst of, and we're still in the beginning phase of it, very much so, and I'll talk about the next phase in the second half of this talk. You know, there have been three great definitional communication revolutions in the human experience, and I use the term experience because one of them is prehistory. The first one, of course, is the development of language or speech, which distinguishes human beings, Homo sapiens, from all the other hominids that evolved, all the chimpanzees, to the best we can tell. And the best we can tell is probably as good an explanation as we have any why we're the only ones who've made it and all the others basically bit the dust. We're the last hominid standing. And so speech and language was a big deal. It created us as a species. As Aristotle said, we're the talking animal. So that was a big... That had a lot of affect on humanity and human development. The second great development in communication revolution, if you will, was writing and the alphabet, which came a few thousand years ago over time, but it really changed everything. I mean, it made it possible for human societies, after they had agriculture, to expand much more outward, to build the great empires of Egypt and Greece and Rome, China and India. Writing was mandatory for that. And it also opened up possibilities for rational thought, science that were unthinkable without the ability to write. So it's not an entirely coincidence that just a few centuries after the first phonetic alphabet, we see ancient classical Athens emerge. Fully a society that is right there at the transition from an oral society in Socrates to a writing society. You can see the excitement there as these two conflicting systems of communication come into play. And then the third great communication revolution is the printing press in the 15th century, which made possible universal literacy, made possible things like the scientific revolution, democracy, advanced industrial economies. Again, all three of these are big deals. All three of these really changed the course of human development, changed our species, fundamentally. And I think now the great question is will the digital revolution be number four? Is it in that league? And I think the evidence is increasingly coming in that it may well be, although we're still very early in the process in some respects. Time is moving a lot faster nowadays than it did 70,000 BC, so we might not have to wait a whole long time to have the answer to that question. And if it is the fourth one, consider what the changes brought by the first three were and understand those are the sort of changes we're about to have. We are just at the surface of the changes in our lives and our societies going forward. Now... In the last 25 years, as the Internet has really developed, especially in the last 20 years, say, or 15 years, there has been a huge literature of people writing books trying to make sense of it. What does this mean? A lot of it's been what I would call celebrants, people who are very excited about it, talk about all the amazing things you can do with technology. And then there are the people who are the skeptics, and these are the people who say, "Come on, you're exaggerating." Or they're saying for all the good things it's doing, it's doing all sorts of bad things too, damaging the quality of our lives. And that's sort of been the range of debate. And most of these books, or not actually most, many of them are interesting. Some of them are fascinating to read. I've read a lot of them. But very few of them really age very well, and they're mostly cocktail party books. They're sort of chit-chat. They're not really serious books about understanding the world to change it. There are very few books that have tried to grab this massive entity and make sense of it. So, I volunteered to do that. (audience laughs) That's sort of what I did in Digital Disconnect and what I'm doing in the new book, which is called "People Get Ready." And what I tried to do when looking at the Internet was to approach the issue rather than as the technology is sort of standing outside society riding roughshod over creating a new world in its image, try to link it to the political economy of advanced capitalism in the United States and the world, the motor forces driving much of this, and then look at the great social questions of our era. Fundamentally, how does the emergence of digital communication affect the way capitalism works and more importantly, the way capitalism and democracy interact, the nature of that relationship. And this is really the central issue, I believe, for social scientists of our times. Now, this tension between capitalism and democracy, they have a harmonious relationship at times, and they have very tense relationship at times. They are two very different traditions, distinct traditions, one going back thousands of years, one going back 200 years. And this great tension really plays itself out under basic-- They're set up for different purposes. Capitalism is a system that's basically a dynamic economic system based on the never ending and incessant pursuit of maximum private profit. That's the heart and soul of a capitalist system by a relatively small number of wealthy people and businesses. Democracy is a system of governance predicated on political equality and dedicated to self-government. At times, again, these work together, but they often conflict. And I'm sort of interested in the conflicts because I'd like to get rid of them, or I'd like democracy to be more successful. So, what are the areas where democracy and capitalism had problems historically throughout the 20th century and earlier, really, from the beginning? Well, let's go through a few of the basics, and what I'm about to say is not controversial. Most of what I'm about to say is in elementary political science texts. If you read Thomas Jefferson, most of this is in his work. This is pretty standard. This is what you need to make democracy work, and this is what undermines it. First, and most importantly, is inequality. Inequality is cancer for self-government, for obvious... Democracy is based on political equality. If you have huge economic inequality, it's very difficult to make it work. Aristotle called democracy the rule of the poor. He said it was when those without property governed, that was where the power lay. And for that reason, you can understand why people with property were never too excited about democracy. (audience laughs) For most of us... Until quite recently, until the public relations industry came along. (audience laughs) If you look at the founding of this country, what's striking is we know how the framers of the US Constitution, they were slave owners and they were far from perfect beings, but when you actually go back, as I've done for this last book, and read Jefferson and Madison to get their take on inequality, they were both pretty pointed that it was imperative for a democratic government to equalize property ownership or this whole republic thing can't work, that the existing proper... Excuse me. The existing property relations in the United States in their era was inappropriate for a republican or democratic style of government. And so this is really hardwired into democratic theory. Another factor that is antithetical to democracy is economic monopoly. You have private monopolies that dominate the economy. They're going to tend to dominate the politics too. It's pretty much unavoidable. And pretty much all democratic theory gets that, going back to Jefferson again who wrote extensively on this issue. Lincoln, it was one of Lincoln's pet causes when he wrote about democracy. And then, third, another factor, and this again goes back to the beginning, the toss salad to democracy, is militarism. It is impossible to exaggerate just how obsessed the people who started the United States were, not only Jefferson and Madison, but President General George Washington and Alexander Hamilton. They were all obsessed with the idea that we couldn't have a standing military, that militarism was the worst thing for self-government in a free society. And that's why they wrote the Constitution to make sure we wouldn't have what they called a continual warfare society. Some parts of the Constitution haven't held up as well. That, unfortunately, is one of them. But it held up fairly well for much of our history, until the 1940s. Now, unfortunately for us, militarism is hardwired into modern capitalism. The Pentagon is as important to capitalism as Wall Street and Madison Avenue. I mean, it is a trillion dollar grab bag of corporate profits that is there. So that's a real tension in our political economy for democracy. And then all of those combined lead to the growth of corruption and undermining the rule of law, the principle that no one's above the law and no one's below it. 40 years ago, you would say that with a straight face. Nowadays, it sounds like a punchline to say that everyone is covered by the law the same in the United States. We all know that's not true. No one even pretends otherwise. There are also certain things that are necessary to make democracy work, to empower people to be effective participants, even if they don't have great wealth. And this is what is called democratic infrastructure. Just like an economy needs an infrastructure, it needs bridges and roads and sewers and transportation for economic activity to take place, democracy has an infrastructure it needs too. Its infrastructure is media systems so people know what's going on, education systems so people are educated, election structures that make it easy to participate effectively. These are the institutions and resources that enable citizens to participate in and enjoy their freedoms and use their freedoms safely. Now, generally, the democratic infrastructure is not a wildly popular thing with people at the upper end of the economic ladder, those who are wealthiest, because they don't wanna pay for schools for other people's kids with their taxes. Their kids are going to private schools usually anyway. But they just wanna pay for their own kids' schools. They're not as excited about educating everyone else. So that's sort of the lay of the land. Those are the problems between capitalism and democracy. Then the question is, well, how does the Internet affect these issues? Which all go back to the beginning of capitalism, really. They've existed time immemorial in effect. Well, for the celebrants, going back to the early 1990s, the Internet was the solution to all these problems. Internet was gonna lick all these problems for us. It would basically empower people. It would give them the tools they need to govern the society. They could make an end run around the crappy news media, get the information they needed. It would make capitalism much more competitive. Those big dinosaur corporations could no longer force you to buy their crap but excessive products. You just go online and find a better deal. It would make it much more efficient, and it would basically be an extraordinary tool of democracy, egalitarian society. We'd all live happily ever after. And I've got bookshelves of books making this argument in the 1990s. There's still some people making variants of it today. I think they live in caves. I don't know what country they're living in, not the one I've been living in, but people give them contracts to write those books. There are also the skeptics, as I've said. And the skeptics, much of their work I really enjoy. They basically discount all these claims. They sort of look at the evidence oftentimes. And they also point out the problems of the digital world, and those problems we are somewhat familiar with. They include, among other things, the decline of conversation, interpersonal relations, concern about the quality of human happiness, whether people are actually happier now than they were 20, 30, 40, 50 years ago. But the problem with the skeptics and their sort of take on these issues, even though they don't buy what the celebrants are selling, the problem they've got is that they don't offer an alternative. They're like the original skeptics in ancient Greece. They make a criticism but then they go back to the bar and order another drink. And I think the idea is to make the criticism and say how do we understand it and how do we change it to make the world a better place? Not a lot of people want to go in that direction, and that's the direction I think we desperately need to go. So, that's my introduction. God, that was a long introduction. Heavens.

We have 'til 10

00? No, I'm kidding, just a joke. (audience laughs) So, basically, in Digital Disconnect and in my work since then, I address has the Internet reformed capitalism and made it more conducive to democracy? And, obviously, I think you've got a hint where I'm going with this. The short answer is no. But at the same time, I acknowledge the potential of the technology. I'm not an anti-technologist My work is not an anti-technology rant. I'm not trying to get rid of the technology. But I'm trying to change the way it's structured and organized and used, and I think that's what we as a society have to do, and I think that will become more clear as I get into some of these issues. For one, the first place to start is, why do we have the Internet? Where did it come from? What is this magical technology? Who created it? And one of the things that most Americans are unaware, many people in the world are unaware of, is that Bill Gates didn't invent the Internet. I know the joke used to be, yeah, Al Gore did. (audience laughs) For younger people, you might not get the joke. But Al Gore actually gets more credit than Bill Gates because Al Gore was on the relevant House and Senate committee that sent appropriations that actually did create the Internet. So he didn't invent it, but he had played a much more active role than Bill Gates did, or any private concern did. Because one of the striking things about the Internet is that it's purely a public sector creation. They tried to pawn it off a couple of times to AT&T and to private companies that studied it and said, "No, thanks. "We can't make any money in this thing. "You keep it." The Pentagon bankrolled it. It was Pentagon research that came up with... Most of the stuff, gadgets you have today comes out of Pentagon research, from the mouse in your computer to GPS, the whole works. It's all out of Pentagon spending. You paid for it. You paid for the R&D for that, and you're now paying a company to use it. But that's how that came. So the Internet is a public sector creation. If anything, it's a testament to socialism because there was no money in it for decades. But the interesting story then is what happened, and I chronicle this in the book. In the 1990s, you see the Internet go from being a place that is not only non-commercial, it's anti-commercial. There's strict prohibitions in anything remotely commercial on the Internet as late as 1991 or 1992, and those who are old-timers like me in the audience remember that. You get flamed if you try to sell your bicycle. I want to sell my bicycle and you get 800 people send me profanity. No, this is for citizens. This is for free society. This wasn't for commercial huckstering. The rest of our society just shake people down for money. This is one place we can go and be citizens and equals and treat each other decently. That was, believe it or not, that was what it was about. But it changed overnight during the 1990s. How did it do so? What happened? Well, there was a series of policy decisions made in which there was virtually no publicity, no public involvement whatsoever, that basically commercialized the Internet and made it what it is today and changed it fundamentally, as you'll see, from what it initially was set up to be, fundamental changes. And it can be changed again. It can be. We have the power to do that. It's a policy political question for how we develop it. So what happened in the 1990s? Well, corrupt policymaking was the heart of everything. And there's a really good example of how corrupt the policymaking is. I suspect every one of you has one of these devices. Some of you probably have it grafted onto your hand. And one of the things that's striking is that ISPs in cell phone, Internet service provision in cell phones is this mandatory industry to survive in our society. And if you're not connected, you might as well be living in New Guinea. You're just not there. You can't even... You're just out of... You're not there. And what's interesting is, remember in the 1990s, there was a lot of talk about an information highway, that there would be a government-created way that everyone would access this, they're the same, so everyone would have access to this, and it would be, this was Al Gore's term before he became vice president, it would be a free service like the interstate highway system, so you'd have ISP service. They'd buy the wires or rent them from the telecom companies, and we'd have this universal Internet. Well, that was a good idea for Senator Al Gore. It didn't look as good when he became Vice President Al Gore, and the big money started saying, "Hey, we can actually make some bread on this thing." And that's when you saw the huge wave of deregulation that culminated in the 1996 Telecom Act, which loosened the ownership restrictions on telecom companies. And back in the mid-1990s, people were complaining because there were only 15 to 20 telecom companies delivering telephone, long distance, cable, satellite. They said, "We need competition." And so all the big companies, led by AT&T, said, "Yes, let's get rid of all the ownership limits "and let people really compete, "and we'll have great competition." And like these companies want competition? I mean, who fell off the turnip truck that AT&T's gonna pass a law so it can have more competition with it for market share? Of course not. The exact opposite happened. They changed the law. They got rid of the ownership restrictions, and we've seen a spectacular consolidation of the entirety of telecommunication down to four or five companies. Two companies, AT&T and Verizon, have 70% of the market. And it's not even an oligopoly. It's not like the auto industry or the beer industry where two or three companies are competing, or Coke and Pepsi. It's a cartel. Basically, they've divided up the market. They aren't really competing. They've divvied up the market between them. The cable people, the ISPs, the cell phones, there's four or five of them that really dominate, and they aren't competing with each other. They just stopped that. As a result of that, in the United States, we pay far more for a cell phone service than people in almost any other country. Any of you who have been to Europe, you know. You say, "Geez, what's happening? "How come you're paying 1/10 what I do in America for this and it's much better?" Well, it's because here, our policy is made corruptly by the lobbyists for these handful of companies, and they created a system where they get really rich. They get what economists call rents, monopoly rents, by gouging the public because they own the politicians, and we have this terrible system as a result. And their profits are monopoly profits. Now, no rational world would create this system. If you were starting the Internet, you'd say, hey, let's create a bunch of monopoly industries that do nothing but charge us a ton of money and give us crappy service. That's a really smart way to have Internet service provision in cell phones. No country would do that. But we didn't have a debate about how to structure it. We just basically allowed it to evolve behind closed doors by these extraordinarily powerful companies. Now, so that's one of the problems we face right now. That's a real barrier to democracy because there are lots of people still who can't afford to have Internet access. It's just absurd. It should be free. It should be ubiquitous. It should not even be subject to debate. Or the cost should be so low it should be something that it's virtually impossible that someone would be boxed out of the market. But instead, it's become an enormous cash cow for people who not only overcharge us, they don't do anything to invest to build up the network so they're competitive with networks around the world. That's, though, not all of the problem. There's really a series of issues and what's happened with capitalism that are quite threatening to democracy that have developed in the digital world. One of the things that's taken place in the last 20 years is that our economy has been overturned. If you look at the list of the largest, most valuable companies in the American economy in 1985 or 1990 or even 1995, you'll see a couple of computer companies, like IBM, and some loosely related ones, maybe like General Electric, but not much else, a few. If you go to that list today, what do you find? The three most valuable companies in American capitalism, the top three are all digital monopolies, all relatively new companies. Five of the top eight most valuable companies and 12 of the 32 most valuable companies in the economy are digital powerhouses You know their names. Google, I guess now it's Alphabet. You know, Microsoft, Apple, Amazon, Facebook. Who else do we have? Cisco, and of course AT&T and Verizon, they get in on the ride too. But most of them are what we call monopolies in economic terms. That doesn't mean they sell all of the service in a market, but they sell a sufficient amount that they control how much competition they have. If they really want to rub someone out, they've got the ability to. It's usually not in their interest to rub everyone out. Even John D. Rockefeller, at the height of the standard oil empire, the monopoly, the greatest monopoly in the history of the industrial world until now, never had more than 80% or 85% of the market share. It wasn't worth to him to lower his price. It would hurt his profits to try to get the whole 100%, so he just picked the most profitable point to operate. That's what monopolies do. That's what these guys do. When you go down that list of most valuable companies, what's striking is there are very few computer giants, digital giants below the top 32. There's not a middle class. There's not lots of any small entrepreneurs, midsize companies. It's basically the giants have everything. They dominate it like no other industry has ever dominated capitalism before. Even at the height of the auto industry it can't hold a candle to what's going on with American capitalism today in terms of the power and wealth at the top of these digital monopolies. And this is sort of a problem for democracy. This sort of concentrated economic power violates any known theory of democracy, not just for the power these individual companies have, and they are unassailable when they have a political interest in Washington, especially when they're united, but also they promote inequality. All the research shows that when we have these huge companies owned by a few people, they're gonna make a lot more money than everyone else, and it encourages and enhances the inequality that's gotten so much attention. The other two ways that democracy has been compromised by the Internet, one I've alluded to already but it's worth returning to, in the 1990s, part of the promise of the Internet was that you would be, you know, you could be anonymous. You controlled your experience. You could pick who knew who you were and who didn't. No one could monitor what you did. That was the power of it. That's why people loved the darn thing. There's that great cartoon in the New Yorker with the dogs at the computer, and in the Internet, no one knows you're a dog. Well now they all know it's a dog. Those days are long gone because what happened is by the middle of the late 1990s, a marriage of Madison Avenue and corporate America on one hand and the Pentagon and the National Security Agency on the other hand, both said, you know, this Internet thing where we don't know where people are, bad for the NSA and the police, really bad for people who wanna do advertising because they can't really know who to sell what to. And so they changed the way, the protocol of the Internet, and instead of having complete control over your experience, you have no control really. I mean, whatever you have can be circumvented. And everywhere you go is known. Someone can find it out. It's not a secret. Two years ago when I wrote this book, it was fairly controversial to say that. Then thanks to Edward Snowden, now I don't even have to give any more evidence. Everyone gets that. Everyone sees that experience when they go online. But surveillance, this sort of marriage between large corporations, advertisers, and the Pentagon, which is what it is, to do unaccountable surveillance, if you go down the list of great free societies, that's usually not one of the components they have. The people know, spying, you don't know about it, and they're unaccountable. That's usually what... You associate that with Stasi or something like that. It's a different type of society. And then the one that I've talked about the most and written widely on with John Nichols and on my own is that the Internet has basically ended journalism as we know it. It's ended the commercial model of journalism. And what I mean by that is that for the last 125 years, the commercial model of journalism in the United States was advertising supported. The vast majority of the revenues that paid for journalists and reporters and newsrooms came from advertising. Newspapers, it was 60% to 80%, broadcast 100% for a long time. Well, you can just erase that money. It's not there anymore. Because today, in the digital world, advertisers don't buy ads on websites. They buy ads in ad networks to reach a target demographic. And the news media might hit some of that target demographic, but they're only getting pennies, not even pennies on the dollar. It's 1/100, tenths of pennies on the dollar. And that's why the smart capitalists are basically getting out of the industry altogether. They're selling and jumping ship. And you buy a newspaper today for the political power it gets you. Jeff Bezos took $250 million out of his spare change drawer to buy the Washington Post a couple of years ago. He would have had to pay $5 billion if he bought it 10 years earlier. The Washington Post has no capitalist value, but it has great political value. So we're going to a sort of era now where you buy the newspapers or you buy ads in newspapers to shape the content, not for profit reasons, immediate profit reasons certainly for long run. As a result of this, journalism is in free fall collapse. We have probably 35%, 40% of the number of working journalists today per capita that we had 25 years ago. Anyone who knows the state capital here, it's true of every state capital in the country where there used to be 10, 20, 25 working journalists covering politics, there's one or two, if you're lucky. Some states have no working journalists covering their state capital full-time. They just sort of send an intern over there, get a press release every now and then. We're in a journalism-free zone. And I don't consider talking heads on cable television gossiping about their lame predictions about stupid polls journalism. So if you erase that, we're in a definite journalism-free zone on television. So this is a real problem that's brought on by capitalism that can't make money doing it so we don't get it. Now that's not to romanticize what had been journalism under advertising. I've been a critic of the great flaws of journalism, but at least you had journalism to criticize. At least you had something there. So this is a dire straits for democracy. This is why we need popular movements to create a democratic infrastructure, to use digital communication to enhance democracy to better, to address these digital monopolies, this corruption, this surveillance. These are the great issues that I conclude the book Digital Disconnect, talking about how we can do that and how all the research shows that most Americans are in line with that. They think that's a good idea. It's our dysfunctional political system that prevents that from happening. Now, everything I've just talked about is small potatoes. It's really minor stuff compared to what I'm about to talk about. And the stuff I'm about to talk about is the new stuff. And I'll give you a story to put it in context. About three months ago, in Germany, the CEO of one of the largest industrial corporations in the world was at a private event with $1,000-a-bottle wine for people there of elites in Germany, and he gave the keynote address. And there were people in the audience listening, including one person who is a good friend of mine who was there. That's how I know about this, and it's been corroborated. And after his speech, they had a question and answer period with the audience, and a person in the audience said, you know, we keep hearing about automation and robots and how they're gonna affect employment. Is there anything to this? And the CEO gave an answer that was jaw-dropping. He said that his company, which is one of the largest companies in the world, already had a fully automated factory, that they had the technology in hand to completely automate all their factories in the world and that it was economically smart to do so. And he said the only thing holding them back at this point, the reason they had not proceeded to full automation, was that if we did that, and I've got the quote here, it's translated but, "If we did that," he said, "the middle class in Germany would burn." Basically, so many people would lose their jobs that it would cause a crisis, a social crisis of extraordinary magnitude in Germany. Now, the audience was astounded that he said this because the implication was real clear. This is coming very soon. We can put our finger in this dike for a while, but it's gonna change very soon. This is on the horizon. Now, what he said there that got their attention would not have surprised an audience of computer scientists or engineers who work in these areas, not at all. I've had a chance to read a lot of this literature, going back to three, four, five years now, and there was an extraordinary article published just this summer, right around the same time this CEO gave this talk in Germany, by the program director on robotic research from the Pentagon's Defense Advanced Research Projects Agency, DARPA. This is the group, basically, that did all the funding that led to the Internet. It bankrolled most of the R&D for the digital world, and they've had a huge project in robotics for the last decade. And this is the guy who oversaw it. And he wrote an article where he's talking about what's coming, what they're able to do, how it's way ahead of anything people knew about just a few years ago. They're solving problems at an exponentially fast rate, and it's going to have immediate impact. But what he said that was interesting, he said to find the right comparison for how this will affect humanity, forget the printing press, forget just being able to speak, he said you've got to go back to the Cambrian explosion to get a sense of what's about to hit humanity. Now I don't know if anyone in here knows what the Cambrian explosion is. I had to Google it. Oh, I guess that's a trade name. I had to Alphabet it. And the Cambrian explosion refers to a period 540 million years ago. It was a period in which, in a relatively short period, 10 or 20 million years, we went from very simple life to very complex life. So it wasn't like we had a gradual progress from three billion years ago to today in the evolution of life. But rather, it's like this, then you have this explosion and you're suddenly at a much higher level of complex life. And it was during the Cambrian explosion that led to what would be the dinosaurs and all that stuff coming down the road and us way down the road, but also things like vision, the ability of the animals to see, living things to see, that came during this period. And he said that's what's happening to the world, not just humanity. We're about to enter a Cambrian explosion. This is the guy who's on top of all the research for DARPA, hardly known for being... And he wasn't writing this to raise money for his, you know, IPO for himself or anything. This was in a scholarly article. And I think that sort of gets your attention when a guy like that says this is how you should understand what we're about to get. Last year, then Google CEO Eric Schmidt was at Davos in Switzerland talking about this in the keynote address. And he said that the stuff he was working on at Google and that these other computer firms are working on were in the process of pretty much gonna eliminate most white collar employment, not just the factory jobs but white collar employment. It was so sophisticated. And Schmidt said that for the next two to three decades, the single most dominant political issue in the world was going to be automation and the huge unemployment that was coming. That was Schmidt's words. Now, traditionally, the way economists have dealt with this threat of automation, which they've never really... They'd say let's see it first before we get worried about it. They said, "Well, you know, "the way you prevent all these companies "from buying robots no matter how inexpensive they get "is you have lower wages." And if workers are willing to work for less, then the companies won't have incentive to get new technology in robots. Well, this explosion, this Cambrian explosion, is so profound, the power of this technology is so profound for what you have to pay for it, that even the prospect of lower wages can't compete with it. And what better example of this than China. There's a company in China many of you probably have heard called Foxconn. They probably made this and most of the unit gadgets in this room. They've got 1.2 million workers. It's the biggest manufacturing company in the world. I think it's $135 billion in annual revenue. They've got labor practices right out of a Charles Dickens novel. I mean, this is the place you might remember five or six years ago they had the... came out that a bunch of their workers commit suicide because their jobs were so horrible. They were killing themselves rather than go to work. So they had to hire a PR firm after that. And Foxconn, so this is a company that made its name by exploiting labor, took all those Midwestern factory jobs and said, "Okay, we can take... "We've got labor for you. We'll handle this." Foxconn is basically one of the largest purchasers of robots in the world. They've already got a factory themselves that's completely robot, automated, where they never turn the lights on. They never have to turn the lights on, that's what they said. And the CEO of Foxconn said within a decade or two, we will be completely automated too. It's just we have to be able to compete with what's coming. We can't compete with heavily exploited, inexpensive labor, even though there's still hundreds of millions of Chinese people in the countryside ready to come to the cities to work. They're not even in the workforce yet. That's what Foxconn's planning. So, pretty interesting developments here. Now, this is not a new thing. It's not like automation is just happening right now and you've never heard the term before. In fact, in doing the research for my book, I recalled that when I was very young in the 1960s, there was a lot of talk about automation, and people even older than I am will remember it well. In the early first half of the 1960s, it was a major news story in the United States. There were presidential commissions on it. There were hearings in Congress. UNESCO did studies of it. President Kennedy and President Johnson both gave speeches on this subject. Because as soon as computers came along in the 1940s, instantly, people got it that eventually, they were gonna be able to do the work humans did. It was almost instant. Norbert Wiener, the great cybernetics pioneer who really led the way in digital communication at MIT, understood instantly. He said, "When you have machines competing with labor, "the only way labor will ever be able to survive is to be slave labor." That's what his quote was. This is the guy who started cybernetics at MIT. And they understood that it made perfect sense for businesses to wanna get rid of labor, lower costs, and produce more. It's rational business behavior. And this could be disastrous for the economy, and certainly for the people who were getting eliminated from work. Now, it didn't really happen in the 1960s. We didn't have automation that created massive unemployment but quite the contrary. By the end of the decade, we had the lowest unemployment rate probably in American history, or at least modern American history, thanks to the Vietnam War. I mean, it was like 3%. I mean, jobs were falling out of trees and hitting you in the head. And if we look at that period now, we can see that the technology they were so concerned about is laughably primitive. I mean, it's like one of those 1950 science fiction movies. I mean, how could people actually think this sort of technology was going to be a threat to take away jobs? And it wasn't that much of a threat. But now it is a threat. Now we're at a whole different level by orders of magnitude. That's what is coming, and it's taking place very quickly. Now, there's one other problem, though, with what's happening here, and a lot of other problems. But one of them is that US capitalism right now, the way our economy works, is not especially well positioned for this to take place. I mean, no economy is well positioned to lose a lot of jobs, but we've already been through a 40-year process in which we've seen a huge growth of people dropping out of the labor market because they can't find work, stagnant wages, unemployment growing so that now the normal accepted levels of unemployment, underemployment, are much higher than they were 40 years ago. These were big problems already, and now we're gonna add this to the mix? We've got a problem here. This is a very, very fundamental problem. You think inequality has been a problem until now? You ain't seen nothing yet, unless you make significant changes. This is really quite something. So, it also is a real fundamental problem for a capitalist economy. Capitalist economies to work, you need people to buy stuff and then people who... companies invest in factories or businesses and hire people to produce the stuff people are buying. Well, if there aren't people making incomes, they don't buy stuff, and then firms have no reason to invest since they can't sell anything. That's already a problem in our economy. We've got $2 trillion in liquid capital companies own they're not investing because they can't do good investments. They can't find a way to make money. They're sitting on... That's why interest rates are virtually nothing. They're giving capital away. So, we add this into the mix, it's an absolute nightmare. Capitalism simply, to be blunt, doesn't compute in this situation. It's having trouble computing now, but it doesn't compute in this situation. In fact, our current economy could well look like a golden age compared to what may be coming 10 or 20 years down the road, unless something changes. And that's, of course, what will have to happen. It's sort of a supreme irony here that we have now the technology so that not that many people have to work and we can produce a lot. We have the technology so we can address the vexing environmental problems with probably far less of a cost than we were going to probably have to end up paying, if we were going to ever address them. We have the technology so that we can have a much higher standard of living. The output for workers is radically higher than it was six, seven times, depending on the industry, than it was 50 years ago. Yet our standard of living for most people is lower. There's endless calls for cutbacks and stagnation at the same time, this enormous paradox, and it's only understood by understanding the problems built into the way capitalism works. This is a radical argument. It certainly is an argument Marx made. It was the center of his critique of capitalism. But not just Marx. If you look at the great economists of the 19th and 20th century, John Stuart Mill, Thorstein Veblen, most importantly John Maynard Keynes, they all said the same thing. They said, look, capitalism is gonna develop the technological capacity, but at a certain point in time, it won't work with the way capitalism is set up to make profits. It's gonna outdo itself, and then we're gonna have to get past it. And these were people who were champions of capitalism in their time, at least a couple of them, Mill and Keynes. Keynes, in his most famous essay on this subject, he wrote an essay, The Depths of the Great Depression in 1930, an essay to his grandchildren, he called it. And he said in a hundred years from now, there probably won't be much need for any labor. We'll be able to produce everything that society will need, and this was before computers. This is a hundred-- This guy nailed it. Hundred years from now, we're gonna be in... We'll solve, what he said, the economic problem, the economic problem which has obsessed all species, including humanity, for their entire history, getting enough to survive, solving the material requirements of life. So we will have solved that for the first time ever. And he said it's gonna put humanity in a very different space, a very interesting space. And it will probably create more than a little onus as people try to figure out what to do, but it will ultimately lead to a much better place. That was his argument. It's a brilliant essay. It's online. It's only like seven pages. It's well worth reading. But my point simply is that our greatest economic thinkers understood this was a tension built within capitalism, that it was just a matter of time 'til it would basically hit its expiration date. And I would argue that this looks to be the time that capitalism as we know it has hit its expiration date. Now the immediate place this tension is gonna play out, I think this is fairly obvious, is in the political realm. It's gonna be a hot political issue, maybe not in terms of automation, maybe not in terms of technology, but in terms of the economic effects of stagnation, declining incomes, and inequality, if they grow even greater than they are now, which is almost certain, barring some changes. And here we have another problem. Capitalism has been stagnating for a while, it's had very slow growth relative to a generation or two ago, but political democracy has hardly been experiencing a golden age in the United States. Quite the contrary. There has been two studies that came out, or three studies that came out in the last five years by some of our leading political scientists at Princeton and University of Virginia, University of California at Stanford, independent studies, and they all reached the exact same conclusion, pretty much, that the people of this country have no effect over policies of the government. If you wanna know how decisions are made, you just have to see what the wealthiest individuals who are affected want, and they get what they want. Even when the vast majority of people want something and wealthy people don't want it, the vast majority of people never win, ever. That's what the research shows. This sort of research led former President Jimmy Carter two years ago in a private meeting with some visitors from Germany, when they asked him the lay of the land in the United States, to say the United States is no longer a democracy. It's no longer a democracy. And I think there's a lot of truth to that. Now, I think part of the reason it's no longer a democracy is most people don't participate. We have the lowest voter participation rate in the world by a wide margin compared to our peer countries. But I think that's gonna change. I think there is going to be a lot more interest in politics. I think that's the moment we're getting into because people-- It's not an optional thing. It's not like gee, I think I might get interested in it because I'd rather do that than go hunt for butterflies. It's a matter of survival. It's a matter of literally the survival. People are gonna be involved. It's starting now. It's going to increase. And it's gonna be a very important period of our lives, and it's really gonna be definitional for much of this century and beyond. Now, there are two historical periods that I write about and research in this book that are relevant to what we're about to go through. What we're in now is stagnation and unemployment and what we're looking forward to in the next few years. The first one is the 1930s because then, as you may know, there was widespread mass unemployment in the world, like similar to what we're talking about now, across the industrial world. And there we saw something new that emerged, fascism. This was an extraordinary idea, fascism, mass movements to end democracy, a mass movement to get rid of democracy. It was a really quite extraordinary phenomenon. And it became very successful. And what fascism was able to do, it went into societies that had massive unemployment, like Germany, at 15, 20, 25% unemployment, where all the existing mainstream parties had been unable to solve anything with their conventional policies, and it said the problem is democracy. These guys don't have their act together. Trust us, we can take care of everything. And what they did and how they got business support is that they used the government to stimulate the economy, but almost all the money went to militarism. And so it didn't threaten business in any way and it led to war worldwide very quickly as a result. Fascist movements, clearly, are probably the most shameful developments in human history, certainly of modern human history. They played every case on racism, bigotry, chauvinism of one kind or another. That's their stock and trade because they can't talk about what actually matters in people's lives because that's not what they're about. And what's interesting about this is we're gonna see these again. We're seeing them already in countries now, like Greece, that have significant permanent unemployment and the mainstream has collapsed. We're seeing the return of fascist movements, even in countries like Greece where fascism was completely repudiated politically after the dictatorship of the late '60s and even in the 1940s. So, it's coming back. It's growing. And if what I'm talking about continues, we should expect to see a lot more of it. People are desperate for solutions, and it offers a way out of the problem. But what we learned from that is not to fear fascism. What we learned is that there were a lot of people in the United States and worldwide who studied the emergence of fascism around the world, Germany, Italy, Japan, Hungary, and they said, why did it rise, and what can we do to make sure it never happens again? What does a democratic society do to prevent fascism? And this was a very important issue to, of all people, President Franklin Roosevelt of the United States, who was the Supreme Allied Commander, or at least the head of the war effort in the United States when we entered the war. And Roosevelt gave two very famous speeches on this and talked about it otherwise, but in the State of the Union addresses he gave, and he argued that the way to prevent fascism from ever returning, including in the United States, and he was very pointed about this, was that it was imperative that business monopolies be eliminated, that you cannot have concentrated economic power, that every person would be... You would end militarism, that the war and militarism was a spawning ground of fascist mentality. You have to invigorate democratic institutions, like education, and you had to guarantee a minimal standard of living for every person. That meant everyone should have guaranteed healthcare, guaranteed employment, right to belong to a labor union. FDR went so far in 1944 to say this should be in the Constitution. That's how important this is. He called it the Second Bill of Rights. He said this should be the next slat in the Constitution guaranteeing these rights to all Americans. He said if we do this, we'll never have fascism. This will prevent fascism. Fascism only occurs in countries where the system is discredited, where it's corrupt, it's ineffectual. Those are words I think would be wise for us to pay very careful attention to today. I think there's a lot of wisdom there. The second place where we need to look if we want to understand how to deal with our problem is the 1960s. The 1960s was a period, of course, of the first automation hysteria and where people took it seriously as an issue. It was the first time, to my knowledge, in human history, and unfortunately almost the only time, in which people actually thought seriously about what it would mean to live in a post-scarcity world where the economic problem is solved, what it would mean when we could give everyone the basic requirements of a decent life that could accommodate them, what could human life be like then, what could we possibly achieve. And many of you have probably heard of LBJ's Great Society, President Johnson, which he launched with great fanfare in Ann Arbor in 1965. Well, I read the speech. It's worth reading. He's basically talking about a world in which the great wealth that the society is generating and the technology it's generating can provide for everyone and take care of all our needs. and that we need to think morally and creatively about what's the point of life. It's really a rather existential and poignant message. And the great optimism in the speech, that we can build the greatest cities and people can develop their faculties and their talents, everyone. And if you go back and look at the '60s, there were a lot of people who were raising issues like that. The new left talked about that. The Paris uprising, the French uprising in May 1968, their slogans all said, "All power to the imagination. "Be realistic. Demand the impossible," invoking the idea that we can do something that transcends what's ever been done before and think that way. The whole hippie movement, which has been trivialized, ridiculed, marginalized, or co-opted by Madison Avenue and Hollywood into a bunch of irrelevant goofballs or cool people who got laid a lot, but however you wanna slice the hippie movement, it actually had a lot of interesting stuff going there. It was a profound critique of sort of, of a post-scarcity society, and it deserves to be taken seriously for that reason because that's the first time any society has actually come to terms with what could we do. What would a society look like if we could actually have the ability, without using much human labor, to provide a quality of life for most people? And I think they came up with some interesting ideas. Now, the problem, of course, was that by the end of the 1960s and early 1970s, that sort of approach to human life was not, was very threatening to business. And in the 1970s, we saw an extraordinary counterrevolution in America led by the business community to sort of change our politics to make them very pro-business, to make the needs of business be the preeminent needs in determining what's done politically in society, and giving us the era we still live in to this day, the world we inhabit today. And we've sort of purged the memory of the 1960s. We've purged the memory of Franklin Delano Roosevelt and what he was and the whole antifascist movements and what they stood for. Well, we've got to resurrect those histories because they're the relevant histories, if we want a way out of where we are now in a creative way, in a positive way, in a humane way, that's the history we need to incorporate. Now, to conclude the talk, and it's a big picture talk, right? We're talking about the future of our species and all that sort of stuff. Where better to go than Mr. Big Picture himself, Stephen Hawking, Big Bang guy. And I don't know if any of you saw this, but just a few weeks ago, Stephen Hawking did an Ask Me Anything Reddit interview. Did some of you see that? And someone asked him specifically about this issue, and he apparently has been following it pretty closely. Actually, most scientists are following this pretty closely. And his comment was basically about technology. He said, "The outcome of how this is gonna happen "will depend entirely on how things are distributed. "Everyone can enjoy a life of luxurious leisure "if the machine-produced wealth is shared, "or most people can end up miserably poor "if the machine-owners successfully lobby "against wealth redistribution. "So far, the trend seems to be toward the second option, "with technology driving ever-increasing inequality." Now, I thought I was the prince of darkness. You know, that's what I'm usually called. I give my talks, people are usually like looking for window ledges to jump off of. (audience laughs) Hawking is here to challenge me for the title there. But I think Hawking makes the proper point, and that's really the dilemma we face as a people, as a society going forward. Is this economy gonna work for us or for them? Are we gonna build an economy that fosters the good life for all of us, a democracy, or is it gonna be their economy and we're just sort of extras that we don't get in the way; if we do, we get locked up? That's more or less the world we're looking at. Now, despite the fact that seems grim, I'm actually a great optimist. I'm actually very hopeful for where we're gonna go in the future of this country. I'm confident democracy will triumph because I think the vast majority of people want it, benefit by it, and are being penalized heavily by the type of society we currently have and the one that's looking at us down the road. But I have no illusions. We've got our work cut out for us. Thank you. (audience applauds)