 Okay, it's four, I suggest we start my mission on Tyrol and it's a great honor to be introducing Darren S. Mowglough today. Thanks to all of you for being here. I'm sure you'll enjoy the next hour and a half quite a lot. Darren S. Mowglough is one of arguably the most influential economist, outstanding economist of his generation, and also an extraordinary public intellectual. Darren completed his PhD at the LSE in 1993 and then he moved on to MIT where he stayed for 25 years and he built his career there over the course of those 25 years. There he has advertised 75 PhD students, probably more by now, but 75, not bad. He has been awarded the Best Advisor Award of the Graduate Economic Association at MIT four times in the last six years. He has published 120, 130 peer-reviewed articles to date. He has written four books, you probably all have read, Why Nation Fills, where he has engaged politicians, policy makers, social scientists. It was the best seller and it has had a tremendous influence and impact on the debate. You probably also have read his book on economic growth, which now is almost 10 years old, but it has become the standard, very quickly the standard course, a class for growth economics. But that's not the motivation for the platform price, the motivation is, of course, is tremendous contribution how he changed the course of several fields of economics. Darren is an outstanding mathematical theorist, an outstanding applied economist, an outstanding empiricist. By the way, because of Darren, we have to change the rules for the 2019 price, Jean-Jacques Lafon price, in order to be eligible candidates researcher, we'll have to fail an augmented intelligent test. Darren is a kind of cyborg match with an extraordinarily wonderful human being, but you understand we'll have to restore the level of playing field before other Darren's appear. Darren warned the clock middle in 2005, right? There was this comment by the American Economic Association that his work is always motivated by real world questions that arise when facts are difficult to reconcile with existing theory. So what I'm going to do, and you want to listen to Darren, not to me, but I want to make him blush a little bit before he starts. Darren started his career actually making, as a labor economist, by large, and one of his most famous contributions is actually the widening of the skill premium. So the fact that in the last 40 years, the difference between the wage of the skilled and the unskilled has widened, which is kind of a surprise to economists, or was a surprise to economists because of what happened in the US in particular is that there was an increase in the number of students in universities, lots of people invested in skills, so a simple supply and demand analysis will tell you that the skill premium should have been reduced instead of increasing, and it has increased. And his idea, Darren's idea, to explain that was directed technical change. So the idea is that as skilled labor expands, we have more and more skilled labor, then there are some complementary innovations which are going to be produced because it's more worth producing innovation that complement skills, and this in turn actually increases the value of skills. And this feedback loop actually may dominate a simple supply called demand phenomenon, and it shows that actually supply can create its own demand and explains the fact that was not explained prior to that. Actually yesterday, Darren gave a very good seminar, an excellent seminar, where he also used directed technological change. This time, you're showing that this change together with demography can explain why the robots actually make a dent in Germany and South Korea more than in the US, actually they're much more prevalent, and also R&D is actually much more prevalent in those countries, in robots is much more prevalent in those countries as well. Darren has made a lot of contributions to labor economics. For example, with Steve Piszka, he has this explanation of why firms invest in general training, which is kind of surprising because workers are not slaves, they can move around, so general training can be exported to the next employer, and the conventional wisdom in economics is that actually the firms will invest only in specific skills, but then it shows how frictions, asymmetric information actually, can encourage firms to invest in general skills. Second area of research, I mean I'm not going to go through all those areas because otherwise you won't hear Darren, but economics of growth, as you know, growth theory is about trying to explain why some countries are richer than others, why growth rates can be persistent, and so on. And Darren's theme in that area is that there is a key neglected driver of growth, which is the quality of political institutions. So Darren's contribution was agreed to emphasize the role of political institution in growth. In particular, with his course, Simon Johnson, especially Jim Robinson, he looked at data and growth over centuries, and he just noted first, he just noted first that those countries that were rich in 1500, for example, were pretty rarely rich later on to death, and he noticed that there was a connection with the quality of governance. Now, the evidence on which they base their studies is basically the experience of former colonies. So the idea is that there are colonies where the settlers wanted to stay because there were few illnesses and they will invest actually their lives there, and they will invest in institutions, whereas the others were basically extracting resources and basically grabbing the money and going away. But the thing is that those governments have long lasting effects, and there is hysteresis, and they have had an impact over centuries. So the area which is a bit connected to the previous area is this work on political economy, and today we actually have work on political economy, looking at political institutions and the impact on the prosperity of nations. But he asked questions like, why is that the elite extends the franchise to the poor, for example, what happens in a couple of times in the 19th century in England? And the story they gave in the document is really that there is a threat of revolution, and actually it coincided with the peak of the Kuznetz curve, which is the inequality curve, and basically you have to commit actually to redistribution. But then they asked lots of other questions, why is redistribution often inefficient, and so on and so forth. Now in the last several years, Darwin has worked on many things, robots, for example, is a current research topic, one of the many research topics of Darwin, and something which is very dear to our hearts here in Toulouse. But he also has worked on networks, and so he has kind of been between computer science and economics, but with a lot of economics in it. So for example, one of his papers surprised everyone by showing that actually idiosyncratic shocks could have aggregate effects. So you know the standard conventional wisdom is that idiosyncratic shocks can have effects down the line, you know, to the customers for example. But by and large they wash out and there is no aggregate effect. And he showed that actually there can be effects and they don't always average out over the network. Now let me just conclude, again you are here to listen to Darwin. Darwin's contribution have led to, unsurprisingly, to a great number of outside accolades. So I already mentioned Clark Middle, which at the time was given every other year, and it's obviously a very prestigious reward. He was elected a fellow of the American Academy of Arts and Sciences, the National Academy of Sciences, the Economic Society, Economic Society, the European Economic Association, the Society for Labour Economics, and probably 200 other societies. He has won the George Eccles Award for Excellence in Writing for Why Nation Fail, unsurprisingly. He has received honorary doctorates from the University of Huttracht, Bosporus University's native Turkey, Darwin is Turkish, and the University of Essence. He was awarded the Distinguished Science Award from the Turkish Science Association. He was the youngest ever recipient of the Nemer's Prize, you know, the Northwestern Prize in Economics in 2012. So he was the youngest recipient and he did it again with the BBBA Prize, the Frontiers of Knowledge Award in Economics, Finance and Management. The BBBA Prize, just like the Nemer's Prize, is a professional lead indicator of the Nobel Prize. I won't say no more. In summary, Darwin is truly extraordinary. His work is an inspiration to the worldwide community of economics and certainly to my own work. The TSCIST community is very honored to welcome in to deliver the 2018 Jean-Jacques Lafont Lecture. Darwin will once again take us with a looking glass and deliver a presentation entitled The Narrow Corridor to Liberty, the Red Queen. We're re-awaiting for the Red Queen to see what she's going to do and the struggle of state versus society. Thanks so much, Darwin. It's a great honor to be here, but Jean did not give me advance warning that he was going to embarrass me. So thank you, Jean. That was too kind and, you know, when you give an introduction like that, I'm bound to disappoint. But it's a great honor to be here. I've given two talks already during the last day and today and I will repeat what I said at the beginning of each one of these, that it's a great honor to be here and it's a great honor to be here to receive a prize named for Jean-Jacques Lafont, who was a leader pioneer and have the introduction by Jean. So what? It's like the double whammy. So I'm going to talk about actually what is the provisional title of a new book that James Robinson and I are writing about. And it's a little different than a lot of the focus that we've had so far because it's first of all not about economics directly, but hopefully I will try to convince you that it's indirectly about economics. Instead, as the title suggests, it's about liberty. And of course, liberty means many things. We're going to take a specific definition. So the Princeton political philosopher Philip Pettit, as a number of other people generally associated with the theory of republicanism or civic republicanism, define dominance as people being subject to the will, arbitrary will of another person, group, or organization. So live at the mercy of another having to live in a manner that leaves you vulnerable to some ill that the other is in a position arbitrarily to impose. That could be because of, and often is, because of threat of violence, but it could also be because of social norms and economic relations. And we're going to define liberty as lack of dominance, in particular lack of threat of violence and actual violence, but more the general inclusive notion of dominance. And what we would like to do, and I would like to do today, is try to understand how liberty comes about. And in fact, we're going to argue that it's not a very easy process, but it has nevertheless happened to some imperfect degree throughout human history during certain episodes. So we would like to understand that, and this is a theory of how that liberty comes about and why often it fails to do. But I think the best way of understanding that is to start in the many ways in which liberty does not come about. So this is a picture of Raqqa in Syria. It's in ruins, and there are no people around because they're all afraid, or they all fled. Over a million people fled from this part of Syria, and this is Mosul in Iraq, and it has also suffered a similar fate in the hands of Islamic State. And it is a sharp illustration of complete lack of liberty because people are completely afraid in all of their daily activities from what they say, what they eat, how they listen to music or not. But the way that this has come about is also informative about the problems of liberty in general. So these are the helmets that the Iraqi army left behind as they were fleeing in front of Islamic State. So the rise of Islamic State is inexorably, inevitably linked to the collapse of state institutions. And in fact one of the ways that many philosophers going back to the ancient Greeks, but perhaps most identifiably going back to Thomas Hobbes, have argued that anything that avoids constant threat of violence and constant occurrence of violence has to start with some sort of state institutions. What Thomas Hobbes called the Leviathan, with analogy to the sea monster, but a tame sea monster I guess, and we'll see about that. But if you want to ask about this sort of violence, threat of violence, complete annihilation of liberty, and we're wondering where the largest refugee camps of people who have been subject to the complete infringement of their liberty, don't look at Lebanon, Turkey, or anywhere like that, or Germany, it's actually in Cox's Bazaar in Bangladesh. So there are about a million refugees in Cox's Bazaar in Bangladesh over the boundary from Myanmar, and these are Rohingya Muslims from Myanmar fleeing to go across to Bangladesh. And the thing that's important to know about this is that these refugees and the high number of them that died and were forced to flee weren't because of absence of state institutions. On the contrary, the international community, human rights watch, and lots of other organizations have done a wonderful job in completely documenting beyond reasonable doubt that this was planned, executed, coordinated by the Myanmar state and the army in particular. So you have, in fact, the other side that perhaps Habs was too soft on, that when you have the power of the state institutions, there is constant possibility and probability that those, that power can be used as the source of violence, as a threat of violence and source of dominance in myriad ways that we'll talk about a little bit. But in fact, the situation is even more complicated because it doesn't need to be violence. It's even in the absence of overt violence, lack of freedom, and various ways of dominance are quite common. So, in fact, what you see here is another way in which powerful states are going to be able to limit violence. If you look at China, for example, except in parts of Tibet and the Xinjin province, you don't see a lot of violence going on, although there are versions of labor camps still around. But a lot of people's freedoms are constricted because of the ability of the state institutions to actually monitor and encourage certain activities and discourage, very strongly discourage certain activities, strengthened by the ability of the state to monitor, and perhaps being strengthened by the use of the internet and AI. And one of those, for example, is already being implemented in China is the social credit system where individual behavior is going to affect your overall social credit, therefore impact how you get certain goods, public services, or ability to access tools. So what you see here, in fact, is that dominance is not just linked to violence. It may be very far from violence because the threat of violence of the equilibrium path, as economists would call it, is there. So the ability of the state to actually threaten, credibly, that it can imprison people, can even kill people, then translates into a much greater ability of the state together with its capability to monitor activities. But even that understates the importance of the state, sorry, the importance of dominance. So this is a family in India that is from the Dalit or the untouchables community. So this husband and wife that were part of a BBC newspaper, which BBC study, which you can go and read, are hundreds of thousands of Dalits or untouchables who are called manual scavengers. So their job is to clean toilets. So the men clean liquid toilets, septic tanks, they carry huge weights of excrement on their back and take it and dump it somewhere else, and women carry the dry to clean the dry toilets. They're untouchables because the high caste or other caste in India are not allowed to touch them or are encouraged to touch them. And this is not a state sanction system. In fact, not quite enthusiastically but somewhat systematically the Indian state has tried to reduce the role of caste hierarchy, but it continues very strongly. And the people from the untouchables say that they feel completely compelled to play this role of manual scavengers, and if they don't, the whole norms and pressures of society turns on them. And this is not just in their occupations that is completely demeaning, not one of them that were interviewed by the BBC said they liked this profession, but in all of their lives their children are not allowed to touch. They sit separately still in many parts of India from people from the high caste and many of them are beaten or subject to other sanctions in school because they have touched the food or the bags of other high caste children. So these are all different aspects of the lack of liberty that we suffer. But all of these, of course, perhaps in a somewhat simpler form, are not new. They are very familiar in history. So one of the first written records that we have are the Sumerian tablets for about 4,000 years ago, and they tell the story of King of Uruk on the banks of Euphrates. And Gilgamesh, this king, first is introduced in these tablets as somebody who is doing a great job, very powerful, and the city of Uruk is a nice place. See how its ramparts gleam like copper in the sun. Climb the stone staircase and nothing equals the size of beauty. And by all accounts it's also flourishing with trade and lots of other good things. But there is a catch, and it's a very familiar catch, not so unlike what the Myanmar state is capable of doing, and it's what we're going to call despotism. The despotism is the ability of state institutions to act in a way that creates dominance because they're not accountable. And in particular the Sumerian tablets continue. Who is like Gilgamesh? Who else can say, I alone rule supreme among mankind? He trumples its citizens like a viable, he's king, he does whatever he wants, takes the son from his father, crushes him, takes the girl from her mother, no one dares oppose him. So the key here is really his unrestrained power and the people of Gilgamesh, sorry the people of Uruk feel that Gilgamesh actually is not good for them despite all of these gleaning stone staircases and everything. So they call out to Anu, one of their gods, to save them from Gilgamesh. Who wants all of these gleaming ramparts if you have to put up with dominance? And Anu comes up with the first solution to the problem of controlling despotism, which is checks and balances. So he creates a double for Gilgamesh, Enkidu, his second self, a man who equals his strength and courage, a man who equals his stormy heart, and Enkidu descends upon Gilgamesh as he's about to take some other man's bride for himself and fights Gilgamesh, they fight to a draw, Bill Gilgamesh retreats, and that's the first successful control of despotism that we have in record. Unfortunately, this doppelganger solution, though many Americans believe in their own checks and balances, I'm not one of them, is not practical and I think in history it's actually quite rare. When you look at its roots, it's actually not really checks and balances. And the problem with this is that, in fact, who will control Enkidu? Once Enkidu becomes powerful enough, why stop just controlling Gilgamesh? And all that fighting, that's not good, but even worse, and in fact, even though they don't comment on it, the Sumerian tablets tell the story, Enkidu and Gilgamesh survive, and then they gang up together and they go and beat up lots of other people in the remaining Sumerian tablets. So these checks and balances is not going to work very well. So what will work? What will work is something else. So what we're going to call shackling the Leviathan. And these shackles are not going to be checks and balances, not something you write in the Constitution saying the Supreme Court and Congress is going to protect the people, but it's really that you actually need citizens, and by citizens here and society here, by I mean the non-elites, not the Bill Gates, not Warren Buffett, not the head of the IRS, not the leaders of the parties, but regular people need to be the ones to actually shackle and restrain, at least off the equilibrium path, at least if it misbehaves significantly, they need to control the ruler and state institutions. And what we're going to argue, what we argue is that this not only creates ways of shackling the Leviathan, it actually qualitatively changes the nature of how society works, both politically and socially, but I'll also point out economically. And in particular, what it starts doing is that society, because it's not subject to despotism, starts having the ability to control the power of states' institutions for certain things that you could not have dreamed of before. And so this is a picture of people protesting in Germany before Merkel opened the borders to refugees. What's important here is that people here are not protesting in the streets because they're saying, leave us alone. This is not about a libertarian paradise, we don't want the state. So one solution you might say, well, perhaps if there is a despotism of the state, all you want is to be left alone. But no, what these people are protesting about is that they are asking the government to play an additional role, they're asking the government to take an action. And that's what you do when you protest about the government wanting the government to provide additional services or protect the environment. So this is about people trying to direct, not just necessarily restrain, direct the power, the capacity of the state. And it's a process. You know, we didn't start here and I'm going to talk about the process. But part of the process, and that's perhaps the most surprising part of it, is that once this interaction between state and society starts, it not only restricts the state, not only it makes sure that the Gilgamesh problem doesn't happen, but it also has the capacity to break down the cage of norms that we saw with the untouchable. Meaning the sources of lack of liberty or dominance that come from society itself or different layers of society. So as the state started becoming developed and under the control to some degree of the people, then additional demands, and often additional demands not just related about what society was doing, but about state-state-society relations started. So here, for example, when people in the United States and in the UK and in other parts started having the vote, women were excluded. But then the next stage in that process was asking demanding and obtaining the rights to vote. So this is 19th century Americans campaigning for the votes for women. But it doesn't stop there. Women were not suddenly liberated because they had the right to vote. So that was again a process, and here you see another one of it, which is women burning their bras because this is now breaking the cage of norms, creating a different layer of equality, which is again a work in progress with the Me Too movement or perhaps other things that are going on imperfectly. So if I were to extremely simplify this and put it in some sort of model, this is in its very simple form, one attempt to it. So on the horizontal axis, I have the power of society. So these are the norms and ability of society to organize, in particular, organize in the way of collective action. This is not about liberty. It could be about liberty or against liberty. So the caste system does involve these very strong norms, and it stamps out liberty. On the other hand, there are other aspects of the norms that I will talk about, will perhaps potentially contribute to liberty. On the other hand, you have the power of the state, the capacity of the state, which is undoubtedly, and we emphasize this, multi-dimensional, the judicial capacity, the capacity to provide public goods, but the military capacity, the capacity to regulate the economy. But when we have a lot of this power and not much of it, that's where we're going to have the despotic Leviathan. When we have the power of society very strong, but not much of the power, the capacity of the state, I will argue and try to illustrate why, we're going to have general absence of the Leviathan. And that will sometimes correspond to what the things that you saw in Raqqa and Musul, sometimes it will correspond to things like the cage of norms, where the norms are strong and rule, but they really restrict the liberty of many groups, especially disadvantaged groups. But in between, squeeze between these two areas, there is this little narrow area generated by these two blades of a scissor, and that's what we call the narrow corridor. And the narrow corridor is where these two opposing forces are somewhat balanced. And in their balance, they're creating a process where over time, both the state and society is becoming more powerful, but in a way, we will argue that creates more room for liberty, not guaranteed. And there is no guarantee that you will always stay here, so you may spin out of it. And I'll talk about that briefly at the end. But it is very crucially a process. And we'll argue that that process is almost always inside this narrow corridor. And the narrowness emphasizes that it's a precarious balance. And the fact that it's a process emphasizes that it's a very slow thing, and you're not going to get liberty or anything approaching liberty immediately, and it will be step after step. And those steps are going to involve a race between state and society. Race in the sense that as we are approaching, as we are moving here, the state is becoming more powerful for a variety of reasons. The economy is becoming more complex. The state is taking on more responsibilities. The reach of the state is increasing with its bureaucrats, civil servants, policemen, judges. And at the same time, society has to become stronger itself in order to keep up with it. So that's the Red Queen, the reference to Lewis Carroll's Red Queen analogy, where Lewis Carroll says, in this land, it takes all the running you can do just to stay in your place. So it's like that. If you want to stay in the corridor, it takes all the running you can do. That all the running you can do here means that both society and the state have continuously to upgrade them. And if that upgrading doesn't work, either the state becomes too strong, or society and its norms become too strong, that will really take you out of the corridor, and the Red Queen dynamics will not get realized. But we'll see that there are actually very powerful aspects of these Red Queen dynamics, or that's what I will argue. So with this, what I want to do is make two conceptual points, and then I'll go through one historical episode in detail to sort of cement these ideas. So the one conceptual point is, well, if this corridor is such a great thing, why doesn't everybody, why don't all societies move into it? Well, from here you might see the argument immediately. Sure, it's perhaps great to be in the corridor, but will Xi Jinping really want to be in the corridor? I mean, he has supreme power, the Communist Party has supreme power in China. Why would you want to reduce that and get into this messy process of state society dynamics? So I think it's easy perhaps to understand, and in fact there's a little bit more detail, there's a little bit more finesse to it, in particular about how under the despotic Leviathan society itself dynamically weakens, so as you can see this sort of curves back, but I'm not going to get into that today. But perhaps it's more surprising why societies here, you know, why people in Musul, for example, wouldn't want to be in the corridor, of course people in Musul would, but in general, for most of human existence, people lived here. You know, if you count the number of polities that have existed in human past, probably there are 100 times or perhaps a thousand times more small-scale societies that must have existed, and they were all here without real state institutions. So why is it that that's been the common thing? Why doesn't everybody cry, create these state institutions and try to control them? I think that's interesting in and of itself, but it's also, I think, very crucial to understand because it highlights the difficulties of being in the corridor and entering the corridor. So that we call fear of the slippery slope. So what the problem in many of these societies is that there are a complex set of norms, and these norms are typically geared towards protecting the continuation of those societies and in particular against the existence of political hierarchy. And that's because of two reasons. One, because the cage of norms that I've shown is actually not something that's very easy to break, but even more importantly perhaps, and that's what I'm going to talk about for five minutes now, is that people are actually quite afraid of political hierarchy. So if you want to move here, what you have to do is you have to create some political hierarchy because you cannot have any type of thing that looks like a state or even proto-state without political hierarchy. States are first and foremost about resolving conflicts. So what state institutions do and what was completely absent of course in places like many stateless societies that, well, some of them anyway, not completely absent, I'll talk about that, but in places like Muslims that there were no institutions that said, no, you cannot chop people's hands off or you cannot threaten people in whatever way you want. So you need these ability of some institutions to be able to tell people what to do and what not to do. You are right, you're not right, you're not able to do that, but that means political hierarchy. But political hierarchy is a double-edged sword. The Leviathan, as we have already seen with the Myanmar example and the Gilgamesh example, is two-faced. It has another face, which is the scary face that everybody is going to be despotically repressed by. So the fear of those sorts of dynamics is one of the reasons why it's very hard to move into this corridor. When you move into the corridor, you're also creating political hierarchy. That's very well actually illustrated by many, many, many studies that go in detail and ethnographically analyze how small scale or surviving small scale societies are and some of them from archaeological records and other records about ancient ones. But one we know quite a bit about is the Tiv. So a husband and wife team of anthropologists, the Bohannons, went and lived for over a decade with the Tiv, who are in this part of sub-Saharan Africa in Southeast Nigeria. Tiv land is a large area. It's a very well-established civilization and it's a stateless civilization, or it was at the time of the 1950s. They have some hierarchy, but a very limited hierarchy, sort of relying on village elders or notables. That's again a very common pattern. But any other type of political hierarchy did not emerge. Why didn't emerge? Well, what was one of the questions that Bohannons actually addressed in their several studies. And it turns out that just like in many other societies, stateless societies, the Tiv had developed a variety of norms for limiting political hierarchy. In fact, nipping any kind of political hierarchy in the bud. So some of those were sharing norms, but even more importantly in the case of the Tiv as some other sub-Saharan African societies, a huge bundle of witchcraft related norms. Now when you look at them first, they look like crazy, who believes in witchcraft. But in detail, it turns out that these witchcraft norms were much more functional than just stupid. And in particular, what the witchcraft norms did is that they were a way of keeping in check people who were amassing too much political power. So in particular, if you look at the Tiv language, it turns out that the word for power, sav, is the same as the word for nefarious activities. So witches. So anybody who was getting more powerful, politically powerful, economically powerful, was viewed as being engaged in nefarious witchcraft activities. And in particular, you become more powerful by drinking the blood of other people as a witch or warlock. And throughout the history of the Tiv, as was communicated to the Bohannons by the oral historians of the people, is that throughout the history, there were periodic episodes in which men who had acquired too much power were whittled down by means of witchcraft accusations. And this person was one of regular series of movements to which Tiv political action with its distrust of power gives rise to that critical political institutions, the one based on the lineage system and principle of egalitarianism. But egalitarianism here is not economic egalitarianism. Economic egalitarianism is a corollary of political egalitarianism. For that, what they're doing, and this is the key word that I would like to emphasize, distrust of power. So this deep, re-routed distrust of power is what you see commonly in many, many societies. Why is that important? Well, it's important to understand the Tiv and other things. It's important to understand why you can not easily get into this corridor. But I will argue, it's also very important to understand what is the power of a society and how it needs to be organized inside the corridor. And one example of that is from the ancient Greece from Athenians. So Athenians arguably were one of the first civilizations to form something resembling the shackled Leviathan. And starting with the reforms of Solon in the 5th century BC, you have this exact Red Queen phenomenon of, at the same time, the state getting stronger and societies control over the state getting stronger. Actually, we remember that many of us know about the democratic institutions of the Athenians, but actually what the state got to do in Athens is equally amazing. They had printed money, coinage system, a road system, tax system, an orphan system, a primitive form of social security, and a highly complex set of regulations for the economy. But throughout, this was all powered by an institutionalized form of the same distrust of power that you see so nakedly among the Tiv. So one of the first things that Solon did was to pass something called the hubris law, which made it a capital offense to act hubristically towards anybody, including a slave or a woman, meaning acting hubrously, putting down and boss them around. About 80 years later, Kleistines, who continued most significantly and gave form to the version of the Athenian institutions that we recognize today, passed another important law, which is called the ostracism law. And the ostracism law was about ostracism. So according to this law, every year the parliament, the equivalent of the parliament, the council, would vote whether there would be an ostracism or not. If there was an ostracism, then every Athenian citizen would write the name of a person on a piece of broken shard, or ostracon, and that's where the known ostracism comes from, and whose ever name was written most often would be exiled ostracized from the city. And then this was a way of controlling people who were getting too big for their britches. So this is, for example, a remaining shard from the ostracism of Temestiklis. So Temestiklis was probably the closest thing that Athenians have to a hero. He saved Athenians twice, especially against the Persians, but to some degree also against the Spartans. He built the navy, he led the navy, but he was getting too big for his britches, so he was ostracized and had to leave Athens for 15 years. So this is the same thrust, distrust, sorry, distrust of power that you see among the Tiv, but it takes a very different form. And that is the difference between being inside the corridor and being outside the corridor. Here you don't have institutions. So the only way that you can deal with your distrust of power is just by nip any political hierarchy in the bud before it gets started. We have many examples of similar norms being completely trampled and cut into pieces as soon as a powerful leader emerges. Because once you have a powerful leader that has amassed enough power, the norms that say anybody who has got enough power is at which become completely useless. Or the lineage system, the clan system, those are not good ways of organizing collective action. So in other words you have an uninstitutionalized power of society, and that's limited. And that's why you have to remain here. But inside here what happens is that the power of society becomes institutionalized. Actually the hubris law by all accounts is not something that Solon invented. There were already norms that the Athenians were developing during the Dark Ages after the collapse of the Bronze Empires that were trying to discourage the elites from acting hubristically. So what Solon did is he took these laws and he consolidated them, he codified them. So he institutionalized them so that they can be applied more effectively. And Christinus continued that process and and introduced a way of legally imposed the stress of power and institutionalizing around it with the parliamentary institutions and other participatory institutions of the Athenians. Now why is this Red Queen very important? Well it's very important because by this institutionalization it's really bringing a much greater capacity of the state. So in other words actually and contrary to what is often viewed as the sort of almost an axiomatic claim in political science, for example identified with the work among others of people like Samuel Huntington, is that you create capacity by having one group, one individual, one charismatic leaders become so powerful that he crushes or she crushes everybody else, often he. But in fact the Red Queen says no, the greater power is contested power and that's because you can actually penetrate society much more deeply because you have the cooperation of society. Society can give you much longer leash because your power is not despotic, needs to be consulted, can be accounted accountable and as a result that will enable greater expansion of the power of the state. So going back to this graph it is not a coincidence that this arrow here goes to somewhere in the middle of this axis whereas this arrow is going up. So perhaps one of the more sort of surprising conceptual points which we also argue historically and empirically is the case is that contested power in general becomes greater power. So but to make sense of more of these things but also to ask the obvious question since many of the things that I'm talking about are really very much in line with a few cases that we know from Europe like the UK, France, Scandinavia, perhaps US. So the question is why Europe? Can we understand A anything about this process a little bit more deeply by looking at that historical process? Second can we try to shed some light on whether there is something exceptional about Europe or if it is what is it? And third really dig a little bit deeper into the key claim that I'm making which is that this balance is crucial. So there is a balance of power that's at the root of the Red Queen effect and imbalance is always costly for the evolution of liberty. So I will argue that in fact there was something slightly fortuitous about Europe but it's not any of the things that the historical literature historians and some political scientists have emphasized. It's not geography, it's not Greek or Roman culture. Greece was important, it was wonderful but it had disappeared long before. It's not Christianity, it's not Roman institutions. But it is a particular balance and that balance was created by a very unusual confluence of factors and this unusual confluence of factors was that there were very strong and somewhat advanced state institutions under the Roman Empire but the western Roman Empire collapsed. So you had the blueprints of advanced institutions but not their power to stamp out alternatives and they met the Germanic tribal institutions and norms especially and here I'm in France who better to talk about than the Franks, the institutions of the Franks and the institutions of the Franks were also not unusual in history but a little bit different than perhaps the modal tribal war band institutions and what was different about them is assemblies. So most tribal institutions, most tribal war bands like the Mongols or the Turkic tribes don't have very strong state institutions. They are mobile and there is an egalitarian element to the war band that's quite common but many of them were based on a clan system and a lineage system and the lineage system was the way that the political institutions worked. It turns out that the Franks and many of the Germanic war bands didn't have that but they had something else, assemblies. So they had assemblies as a way of real decision making power and approval and decisions from assemblies was necessary for many important decisions and we know this not for certainty because the information we have about the Franks and the Germanic tribes are very rare but we have a couple of key references. None of them completely trustable. One of them is Tacitus who may have been lying on some aspects. The other one was Julius Caesar who was certainly lying on many aspects but there's no reason for them to lie on this. So this is how Tacitus describes over matters of minor importance the chiefs debate and the chiefs here are not really chiefs the way, they're not very powerful chiefs. On major affairs the whole community. The assembly is competent to hear criminal charges and they make important decisions. Now this is 100 years before BC but we know quite a bit more about the Merovingian and Carolingian institutions and it turns out that these same things survive. So this is from a text by Hinkmar of Reims who was writing for Karlaman II about how he should govern his realm. And the first advice gives is that you're not sovereign to decide what you want. You have to respect the assemblies and he describes the two types of assemblies and two general assemblies which are very, very similar to what Tacitus describes. One for the elite, the other one for general things and you need to have their support. So it was these assemblies that survived and were crucial both to Merovingians and Carolingians, especially Merovingians. But they were put together with the other blade which were the Roman institutions. So in particular during the time of Clovis who was as much of a brute as you have seen anybody who was as bloodthirsty but he was constrained in his ability and continuously you see Clovis call these assemblies and try to manipulate and work with the assemblies while at the same time he's trying to build on the remaining blueprints of the Roman law, Roman administration and Christianity as a way of hierarchical organization of the Merovingian realm. So this is most visible, I'm not most visible, but one place is visible and I really like this example is laws. So remember how the laws that Solon started and this is actually true of both the laws that he did on hubris but also other aspects including homicide, he wasn't actually coming up with new laws, he wasn't saying this is the right way to do it, I'm going to impose it. If you look at how laws are approached say in the Ottoman Empire and Russia and China, they are laws that are imposed from above on society to regulate how society functions. That's not how Clovis, however much of a brute he was, went about things. So his Salik law which became the constitution of the Merovingians actually is not presented as this is Clovis's law, this is presented as four wise men brought these laws and they are bringing these laws to constrain me so this is how he was presenting his laws. Of course he was trying to manipulate the law and he did become a very powerful monarch but the way that laws had to come in a way that were consistent with the existing norms and that's a very common feature and this you see actually in a place where you see these institutions and the interaction of the two blaze, the state institutions and sort of assemblies take shape and that's in England, so in Britain. So Germanic assemblies were actually taken to Britain by the Anglo-Saxons and Jews between the 5th and the 8th centuries and the features that were taken were actually very very similar again to what Stasitus describes. So the old Saxons have no king but only a number of satraps when at time of war these satraps take power and then they leave things to the assemblies and in particular these assemblies were called Witans and Witans were everywhere on the British Isles, you see them everywhere and they're making lots of local decisions and they're making lots of important national decisions. So in particular during the first period in which you have King Alfred and his followers, they are continuously being affirmed by the Witans as the king. So no king comes to power during this period as pretty much as far as I know until the normal invasion that is not explicitly approved by the Witans. Now after the normal invasion things become more complicated but actually the Witans maintain their power. So the Magna Carta for example as everybody is aware was one codification of these. There was nothing new, it was reaffirming things that were already part of the Witans and actually it's sort of perhaps a coincidence perhaps not the Magna Carta was signed in Raminmeid. Raminmeid means the mead, the meadow of the Witans. So it was most, most likely and I think that's what some of the other evidence shows also, it's the place that there was a previous Witans so it was reaffirming these things. And this is actually quite important because if you actually think about these dynamics and these processes it creates a very different impression of state building in England. So the classic story very much influenced by this political science vision of powerful monarchs imposed things is like state building is something that Henry the 7th and Henry the 8th dreamed of and they were able to reign in the barrens. Actually if you look at the details it's, that story is at best incomplete. So a lot of it is that there was a local building up in the process. So this is for example described in work by historian Stephen Hinke so from the Wiltshire, village of Wiltshire, Swallowfield in Wiltshire. And you see this, this is at the end of the 16th century, you see people getting together completely out of the, not directed by the state, people they're getting together, they're forming their own laws and they're calling on the state to come in and perform some of the functions. And the interesting thing is that these sort of what English historians later started calling the middling sort of persons are the ones that are doing this. So this is very democratic bottom up institutions and how do we know that these are the middling sort of people? Well we have tax record from this period. And none of the people who are signing this Wiltshire document are among the tax payers. So they're not rich enough to be tax payers but they are politically organizing from bottom up and you see they're doing the policing judicial functions, public service provision, etc. And then the same thing happens in the 18th century. So why am I saying this is not about just Greco-Roman or Christianity or not about just Germanic tribes? Well we don't see these happening when the balance is not there. In Iceland for example the Germanic institutions go there from Scandinavia but there is no trace of Roman institutions. So as a result you start with things like the Wittan, things like the Assemblies but soon they degenerate into continuous feuds because there is no state institutions to form them. Byzantium of course is a continuation of the Western Roman Empire in every sense or perhaps even a perfection of it but there is no bottom up participatory institutions, no assemblies and Byzantium remains a perfect example of despotic institutions. Now in this light why is China's history different? Well China's history what you see, what you don't see of course is a very complex history but especially after the fall between the 8th and 4th centuries there is the spring and autumn period there are some bottom up institutions and some things that may be assemblies but they completely disappear after the rise of the Qin state and this person Shang Yang or Lord Shang is the founder of the legalism philosophy sort of best captures that. So his principle which has influenced in conjunction with Confucianism the state craft of China when the people are weak the state is strong hence the state possesses the way and strives to weaken the people. So this is very much the government you need to weaken society so that it doesn't put you into the corridor, it doesn't create these constraints. So this of course bringing it to economic growth there is economic growth in China for example during the Tang Song period or more recently but it is a very different type of economic growth and I'll come back to that in the last 5 minutes or so. But the cage of norms is different too so in India for example you don't have these strong state institutions but you don't have these assemblies either you have a different way of organizing society and this is caste hierarchy plays a crucial role and it is this what we call the cage of norms the stifling effect of caste that prevents both the emergence of liberty or continuation of dominance and it also emerges the political dynamic so it's a different way that you see the norms locking in their existence and not moving you into the corridor. The last 3 points I want to make the first one is that once you have a perspective like this a natural question to ask is what makes for strong states? What makes it most likely that that sort of state capacity that I describe will develop? Many ideas have been proposed threat of war, certain geographies, some kind of economic activities, some kind of cultures, charismatic leadership the problem is that with all of them when you turn to the historical examples you see as many counter-examples as examples so one of the very famous ones due to Tilly is summarized by Tilly's statement states made war and war made the state is that it's probably the modal explanation in political science that you need the war to explain states so many political scientists have suggested the reason why states are dysfunctional in sub-Saharan Africa or Latin America is they haven't had enough wars but for every example that you find for this you go and you look at tens of examples where wars weaken the state, collapse them or push them in a different direction well that's not surprising if this is your perspective any effect of changes in external environment is going to be conditional meaning that it will depend on where you are so Switzerland is a great example Switzerland starts very loose no confederation, actually feuding is a major problem but then the threat of war especially in invasion from the Holy Roman Empire and other military threats force the Swiss to form a confederation and slowly centralize power and then you have things that look like the Red Queen Dynamics but Prussia is actually very different Prussia is part of the Holy Roman Empire starts with assembly but then Frederick William is convinced that the state needs to be strengthened and the way to do the, in order to fight war so it's really the Tilly mechanism but the way he does that he completely kills all of the parliaments of Brandenburg and then Prussia and then it becomes an extremely despotic path of conscription forced labor huge rates of taxation in order to finance the army so as a result the same change here puts you onto this path the same change takes you out of this path so what matters if everything is conditional we won't be able to make any predictions and there is some truth to that but there is one thing that matters and what matters may be factors that determine how narrow or how wide the corridor is so imagine the left and the right picture in the left picture you have a very narrow corridor so it's very hard to move into it and once you move into it it's very hard to move out here you have a very broad corridor so it's going to be easier to move into it so one of the ways in which we can think about is that structural factors that not just move you around but actually determine the width or the narrowness of the corridor matter so one that we argue a lot in the book is coercion so if you look at production relations throughout humanity they are based very much on labour coercion labour is coerced there are free labour is the exception not the norm but that starts changing sometime around 300 years ago in some parts of the world and more slowly in other parts and it is the end of labour coercion that starts broadening the corridor because the use for despotic power changes and the organization of society changes the last thing I want to talk about briefly is staying in the corridor there is no guarantee that you will stay in the corridor and countries destroying their own institutions are plenty and perhaps today we are in the midst of another another episode that may be foretelling some such events so it's particularly important to think about what destroys the corridor how you may leave it and how you may ensure that you stay in it so balance is particularly important because as the figures I have shown so far illustrate you can leave the corridor either because one side of the balance gets broken or the other side but in some sense it's normal to worry about the despotic power of the state more and let me talk about that for the remaining 2 or 3 minutes and actually one obvious concern about this is that if you are worried about going into the despotic leviathan's orbit you should really make sure that the state doesn't become too strong and this is actually without I don't think Hayek came up with our theory but actually his thinking is very similar so Hayek really worried about the state becoming too strong and if you look at the details of what he writes there is a lot of the same sort of concerns of the state becoming too strong is going to generate dynamic so the beverage report by actually Hayek's friend and the director of the LSC beverage was the trigger so in 1942 in the middle of the war the beverage report came up with a template for a social welfare state amazing template and it was completely uplifting to Brits many people became re-energized this is James Griffith who became the labor secretary after the war in one of the darkest hours of the war in the end of 1942 the beverage report fell like mana from heaven but Hayek disagreed he thought the beverage report was a terrible idea and it was the beginning of the state becoming too powerful and in the preface to his American edition this means among other things that even a strong political liberty, assembly society's organization collective action I would say is no safeguard that the dangerous side that new institutions and policies will gradually undermine and destroy the spirit so perhaps this suggests that you know we should keep the state in check and not let the state to do more roles but I would argue that's not the right perspective and the reason why I think Hayek was mistaken is because he did not foresee the red queen effect the state expanded in Britain, in France, in Germany after the war in Sweden and Norway, in Sweden especially before the war but in none of these cases you did translate into despotism it didn't translate into despotism because the red queen effect meant that if the right conditions are there and the mobilization of society is not held back society responds to it so the Swedish case is particularly important interesting here because at the end of the Great Depression the way that the states became strong is precisely by society's organization changing so it was led by the Workers' Party, the Social Democratic Party and they did something quite revolutionary and they started engineering a new coalition with the farmers, the agrarian party which was until then biometrically opposed to the workers in terms of interest and organization and later on they brought into the business community as a way of grounding the expansion, the phenomenal expansion over the next three decades of the state and its taxation ability so therefore I think it's as important to think about the red queen effect meaning not that we have to hold back the state but when the state expands it has to be accompanied by a commensurate mobilization or institutionalization of additional checks on the state so it's not to say that the state shouldn't deal with the terrorist threat but it means that if the state needs to take more responsibility to deal with the terrorist threat and it means perhaps that they will have to read some emails that needs to be done under a new architecture where those actions can be closely monitored by society so for that reason it seems like we are all very worried about the NSA doing that but Swedes and Norwegians don't seem to be as worried because perhaps there is a belief correct or incorrect but I think mostly correct that they can control their state so the Swedish security services and reads more emails and the Norwegian state knows more about the citizens that American one does but we're not as worried because that's about existence of ways of controlling it and the last thing I want to point out is that there is one lesson for public finance here too and I want to end with that and then the way that we think about public finance is that we always find the most efficient way of taxing things and this has led to two very well deserved Nobel prizes by Peter Diamond and James Merleys don't distort productive efficiency just tax and redistribute in no prediction in economics that's as wrong if you look at every redistributive system that has lasted they distort everything so the Swedish system social democracy in general was about pushing prices distorting prices fixing the pre-tax income distribution not just letting productive efficiency and then use a lot of taxes why would that make sense well this perspective suggests there might be a reason so if the problem is ask the state to play an additional role take on more responsibility while at the same time monitor it that becomes harder and harder when you're getting the state to play a bigger role so the red queen effect will help you if the state is expanding at the margin but if you suddenly ask the state to do 10 times as much that's going to be much harder so that means that you have to actually change things in such a way that you can achieve the economic resource allocations without just relying on the state so in other words there is an additional constraint that the red queen effect needs to be operational enough so that means that often time having ways in which more decentralized ways of redistributing resources for example through high wages might be more sustainable than just asking the state to do all of that so therefore this is speculative but this way of looking at things the dynamics of state society relations may be very much married with the dynamic of redistribution and dynamic of public policy I will conclude there thank you thank you very much Darren for this absolutely fascinating lecture we have about 15-20 minutes for questions so please feel free to ask questions actually I will be happy to ask for the first question while you prepare you have to prepare there was one arrow which was ridiculously missing in the previous slide in which you could move from transition from one yeah that one transition you know that the way the arrow back from a despotic government into the narrow corridor I'm wondering if you will be even more pessimistic in the future because we see a number of states you have mentioned them already which develop a lot of surveillance through AI facial recognition and so on so that means that basically the assemblies you are talking about not only they are discouraged but they are being monitored all the time you know and 10 miles square or the upspring will be much harder to organize in the future than it is now than that have been in the past so what's your I mean it's always hard to predict the future you might want to try and what is your view on what's going to happen how can you exit the despotic government region it's a great question and actually you foresaw something I skipped what can you do we didn't call you that but I said it briefly I said there is more complexity to this arrow turning back and the reason why we think this arrow turns back is exactly that once you have what is the basic characteristic of a despotic state it's not accountable once you have the despotic state then the despotic state does naturally and intends to weaken society and many ways of weakening society you prevent the organization of society that will precisely contest power and you also monitor activity and that's always a race between what society can do and what you can do and I think new technologies have a double-edged sword role there so I don't think that there is a necessity that new technologies are going to make that harder but I agree with you that so far in fact that has been the case so in particular when the internet WikiLeaks and Twitter were first introduced people thought these were going to be democratizing they were going to lead to more open forums and more organization journalism keep people accountable speak power to the truth but in fact what we have seen is that resources matter a lot and the governments that control the resources can use technology internet censorship or increasingly now AI and that is going to perhaps contribute to this process of weakening society at the end of at the expense of the state because it can monitor society but I think what what we don't know is what other ways in which societies can find in order to to sort of be able to organize in places where society is already weak that's going to be harder but in other places where where there is already some mobilization there are potential controls face recognition and AI cannot be stopped by VPN but a lot of internet censorship can be stopped by VPN so there are ways but I agree with you I mean there are some people like Yuval Noel Harari who wrote recently just a couple of weeks ago an article in the Atlantic saying that AI will bring tyranny I think that's going too far but certainly the last few years suggest that's more likely than AI will bring freedom so let's hear the voice of the assembly let me build on the question raised by Zhang actually I had exactly the same kind of question in mind whether the new IT technology makes this corridor narrow or wider I think that's another way to interpret Zhang's question and second related question is in the history we we have always have had this competition between Dispartic Leviathan and Shackled Leviathan and so I would like to ask how just by developing Zhang's question I mean how do you see the competition between the two really affected by the new technology for instance, Prussia by getting out of this corridor became very very strong and Japan to be inspired by the development Japan sent the delegation to Prussia not to other countries excellent questions the first one very much like Zhang asked it's an excellent question and I completely agree with the way that you formulated the way to ask it is exactly does the AI make the corridor narrower and stronger and does it also rob the power of society with AI you monitor the descent so you immediately weaken society's ability to mobilize the second one is super interesting when I gave talks about why nations fail people rightly asked what about the international dimension and I always said that's super interesting that should be the next book but then I never wrote the next book because I think that's a little bit less in my comfort zone I definitely think should be the next book for both this sort of way of thinking about liberty and for other institutional dimensions and the international dimension is very very important and what we are seeing is that in a globalized world it's becoming more important if Russia can influence elections in Europe or in the US or threat of war effects for trade those are going to really have fundamental effects but I think a systematic analysis remains in the future and unfortunately that's not part of what we have done yet but it's a great question who is next hello I see a parallel in your you're striking a balance between power of the state and power of society and I see some parallel between the discussion of more centralized states versus more decentralized states more unitary states versus federalism and I wonder I would like to know what your thoughts are on the construction of European Union and the challenges that it may face in this framework of more centralization versus more decentralization thank you yeah I think that's a great question and it does intersect with the previous question of the international dimension and it's not part of the book but I've thought a little bit about it but I would need to think more of the cuff the way I would say the way that I always try to think about the European Union although that may not be exactly the most important thing but I always thought of the European Union as trying to reorganize institutions to solve supranational problems that were going to be hard to solve with just national institutions but then the problem for the European Union also as a corollary of that is that it did not have the organization of accountability and shackles that came from the supranational they were still at the national and the local and that incongruence that conflict I think is something that cannot be avoided and it has periodically reasserted itself as most recently I think that's exactly part of what the Brexit crisis was about but it also says that if indeed this is the right way to think about it or a right way to think about it creating different ways of mobilization at the supranational level is important but I don't think anybody knows how to do that I think it was Tiponil one of the Senates saying that all politics is local national so now how do you go to the supranational level perfect thank you thank you very much that's a great question first of all yes absolutely in this picture society seems unified but I think it's not and that's what I was trying to talk about with the cage of norms that society often has a way of caging some of its parts at the expense of others law castes women minorities people who are younger for example tribal clan based institutions and also other fault lines so you know for instance if you look at the 18th century the time of the articles of confederation and the forming of the U.S. Constitution you know it is a struggle between centralizing power, centralizing tendencies as for example Hamilton, Madison, George Washington signified and the resistance from it but the resistance was all about one part of society the white southerners continuing to enslave the blacks so the tensions within society are very important and in some sense a lot of organization of society depends on some of these so I think inequality features into this picture in a multiple ways so one of them and this is what is very similar to my emphasis on labor coercion so potential for inequality creates much greater reason for those who are powerful enough to use their power despotically so if you means that if you are the economic elite or the political elite but you are forced not to use your economic means or attempted to use repression that's one of the mechanisms why labor coercion makes the corridor narrower but also inequality I think changes within society dynamics so and this is where the phase diagram becomes not as useful because now you have to go to three dimensions but I cannot but my discussion extremely brief albeit about this caste system was that the caste system is not just a direct impediment to liberty but it also makes the society completely disorganized disorganized in a way that because between caste competition and animosity is so strong society to take shape together and constrain the state becomes harder so inequality I think will have a similar effect to that that it will actually make the collective action problem all the more harder how do you view the rise of populism in the US and in some of the European countries in your framework can it also be looked upon as the power of society against the state in some way yeah I think that's one of the more challenging things and the way that we try to discuss that actually is is one of the hardest parts for me for us to write in the book was this possibility of leaving out of the corridor for example with example of the Weimar Republic so you know the Weimar Republic at the end is an example of the very messy workings of what democratic institutions would be in the corridor and it collapsed and it collapsed to make way for one of the most despotic repressive regimes in the world but if you look at how it collapsed it didn't collapse simply because it didn't collapse simply because you know von Hindenberg said I want to end democracy it also collapsed because there was a bottom up movement coming from the Nazis that was very dissatisfied with certain aspects of the economic conditions of social conditions that was not accepting of certain parts of the Weimar democracy that started undermining the working of it so this is the sense in which I was trying to say is that it's really this balance that's important that the being in the corridor can be undermined by both actions that comes from parts of society and from state institutions or elites and I think that dynamic is very hard and it's not unique so you see many examples of throughout history that things that look like in the corridor they become undermined because society itself becomes dissatisfied with it and that I think is one frame for thinking about populism yes, maybe one question about your last slide about taxation and redistribution if I understood correctly you said that one reason why we don't observe recommendations from optimal taxation textbooks that is let productive efficiency happen and then redistribute is that it would make the state too strong but I was wondering why how do we measure that it's strong it's not clear to me that what we have in other countries with distorted taxes with many regulations is actually some evidence that the state is less strong so I wondered first conceptually how do we measure in practice how powerful the state is especially when we talk about economics and second related question is what matters really is power of the state assuming that we define it or maybe also the perception of it and the one reason is that when we have these multiple regulations and multiple instruments the perception by the citizens and by society is maybe different I think those are great questions and I think there is no single way of measuring the power of the state because it is multi-dimensional but one good measure of its economic power is taxes over GDP and I think that illustrates the point that I was trying to make in that context think of Sweden taxes over GDP are like 50% so imagine that wages in Sweden were at the same level as in the US throughout the last 30 years and you wanted to achieve exactly the same income distribution then taxes over GDP would probably have to be 75% so that would be just much much harder to control if the state is taking $3 out of every 4 then it's going to become much much harder to control because its responsibilities are much greater it's not impossible perhaps but then the the red queen needs to be on overdrive and that's I think is part of the problem and I think that the same is true when you think of other dimensions of the state so it's not just that but it's also you know when the power of the state when it comes to snooping if you say you know it should be have unlimited power then controlling it will be all the more harder so you know finding ways so that we can achieve whatever objective we want so that without the state doing too much while at the same time the state changing its capacity and its responsibilities in line with the exigencies and the conditions that we face I think that's the dynamic process that I don't have a blueprint for but I think is important. Okay last question Thank you very much for this very interesting talk although this is a bit painful for us Chinese to admit the deficiency in our system but I do have one question that you mentioned about the development that you saw in China in the past years but you say this is a very different kind of development can you please elaborate on that and one more question is that do you think there is a restriction or limits to this narrow corridor for example population wise so if the states has to have enough responsibility to control such a big population would that be inefficient to have this kind of narrow corridor Thank you very much. Those are two great questions let me take the second one first because it's simpler I don't know about population I think population is very complicated but climate certainly so that there is no guarantee that everything so I was trying to emphasize everything in the narrow corridor is messy it's messy because it involves this dynamic race one pulling in another direction and that's not always the best way to deal with problems and especially for complex problems like climate you know you have Sweden and Germany well Sweden doing a much better job Germany doing a somewhat better job and then the US doing a terrible job so I think there is a variety of that balance working out and I think those constraints are very important in terms of despotic growth I think what I have in mind is that if you look at certainly the growth in so far as I understand during the Tang Song period or growth in the early years based on township village enterprises early phases of industrialization it's very much growth under the control of the state meaning that the state allocation of resources is rather important and it's at the intensive margin you're building capital during the Tang Song period you're building the infrastructure you're investing in industry and the key thing and this is where the part that I didn't bring it back because I run out of time the other aspect of liberty of course is economic liberty and economic liberty is much more about a decentralized process so why do we like that decentralized process well I think it remains to be investigated partly as we move into the new age but the historical evidence is that that decentralized economic liberty is rather important for innovation so and in fact this is quite telling in the Chinese context because the Chinese leadership is quite aware of that the Achilles heel of the Chinese system is innovation and that's why you have the whole sort of economic emphasis over the last decade but certainly 5-6 years is innovation so the question is with new technologies with new emphasis and a very different despotic system in China than in other places because most of the despotic systems that we are used to are also either hereditary or they go in the family China has a meritocratic despotic system so combining these things can you resolve the problem of innovation needing economic liberty and economic decentralization so I think the Chinese Communist Party believes and I've solved some not the highest but some other people in that their belief is you can redirect innovation in the way that you want just by good planning and then the question about the limits of despotic growth is really about that can you do that or can you not so on behalf of the city of Toulouse and the Toulouse Graphic Economics I would like to thank you so much for this exciting lecture but for all you have done for us in the last two days and I think Darren merits a big big round of applause