 As you will have noticed, this session has started very late, we're going to run for half an hour, so we've been given our allocated time, so that we can have a proper conversation, because this is an important subject. I'm Xanny Minton-Bettos from The Economist. With me is Guy Standing, and I've been thinking about how to introduce Guy. He is a research professor at SOAS, the School of Oriental and African Studies at the University of London. But he's also, I think, and forgive me, I think he's become the moral conscience, or one of the moral consciences of the WEF. I suspect 10 years ago we would not have been having this conversation here, but we are now. Guy has written, and we're going to start off, he's written three four books on the prokaryat, and the prokaryat has made him, and I'm perhaps only flattering him a little, I think into a sort of Latter-day Dirkheim, in that he has really given a vocabulary and a typology, which even if you don't agree with it, helps you to think about the sort of fairly tumultuous events we've been seeing. And so we're going to talk for the next 20 minutes or so, and then have some discussion with all of you on what the prokaryat is, what it means for understanding what's going on in the world. And just so that you know, Guy has, I think, at least two other appearances this week, where those things that we won't have covered this afternoon we will discuss then. But Guy, tell us what is the prokaryat, and how does this concept help us understand the world today? Well, first of all, knowing how many events take place here, I thank you all for coming, finding time for this session. I'm going to be very schematic. I have copies of the three books that relate to the subject, if anybody is still interested, but at the end of the session. And I've been working on this for, dare I say, at 30 years, many research projects. I was director of labour research at the ILO, and this theme has been playing through my work. And for a long time, most people on the left and right ignored it, but suddenly in the last few years it's taken off. And to be invited here is a strange experience in itself. And it's interesting that the prokaryat, which was published first in 2011, has now been translated into 19 languages and sold a phenomenal number of copies. And every single day I get emails and contacts from people around the world. People I don't know, never heard of, just saying, you're talking about me. And it's a very interesting experience because the second book, a prokaryat charter, which was a set of policies to address the prokaryat, in a sense comes from all those emails and all those contacts. Because people are saying, you know, what we need is X, what we need is Y, and you get that. So it's an interesting experience, and it starts with a reflection on Carl Polany's great book, The Great Transformation. Those of you who haven't read it will at least know it. He said basically industrial capitalism developed through a disimbedded phase dominated by financial capital in the 19th century pursuing laissez faire. And the insecurities and inequalities multiplied until there was a crisis when there was a rise of neo-fascism, fascism and other forms of extremism. And there was a threat of the annihilation of civilization. Until or if there is a re-imbedded phase with a new system of regulations, redistribution and social protection. That was his framework. Well, I've been arguing for years that we are now in the midst of a global transformation. The painful construction of a global market system in which the disimbedded phase, which started roughly in 1980, with the triumph of the Montpelerin society, Milton Friedman, Frederick Hayek and so on, which we now call neoliberalism, I should end the disimbedded phase where it wasn't just a liberalization of markets, but it was a conscious pursuit of the commodification of everything that could be commodified, privatization, and most importantly from minority, and that's given relatively little attention in public discourses, is the systematic dismantling of all institutions and mechanisms of social solidarity that stood against the market. And as in physics, a market system needs some forms of resistance, some sorts of representation, some sorts of mechanisms to remind people of the values of empathy, compassion and so on. And we've gone through this phase and now I don't need to tell any of us in this room we've reached the crisis point. And in that 2011 book on the page one I said unless the insecurities of the precariat are addressed very soon, we're going to see the emergence of a political monster. Now I'm not going to give any names who that might be, but I promise you an extraordinary number of people have written to me in the last couple of months saying that monster has arrived. So we'll leave it at that. Now to compress a complex story, what's happened is that with the liberalization of markets in the 1980s and 1990s, you had a new form of regulation. It's not a period of deregulation. And one key event was that the world's labour supply trebled. An extra two billion people became part of the global labour market, all of whom were habituated to expect to life and living standards of 150th of what anybody in the OECD countries would have expected as of now. Now since then we've had a huge downward pressure on real wages all over the OECD, stagnant real wages, and for the group I'm about to talk about declining real wages. And in that process we've also had a technological revolution, the Silicon Revolution, which has made the relocation of production and employment so much easier and the re-division of labour so much easier, the restructuring of firms so much easier, and blocked off traditional channels of mobility, rising mobility through corporations, through occupations, which have been restructured and subject to state regulation, and have been fragmented so you don't have the old guild traditions where people enter the profession and rose through the ranks. That's been subject to licensing and changes regulation so you don't have traditional channels of mobility and it's a very crucial part of the story. Now the latter part of the story that I'm going to be talking about on Thursday I think it is, is that the neoliberalism has morphed into what I call rentier capitalism. The returns to property have gone up dramatically particularly since trips came into force in 1995 so intellectual property and all the rental income associated with it has gone up astronomically. The stock of patents is now estimated by WIPO at something like $16 trillion. Phenomenal amount and it all goes to plutocratic corporations and plutocrats earning rental income. Very critical part because you've had the real wages falling, rental income going up and you had the breakdown of the 20th century income distribution system as such. So everywhere we see the share, you don't need Thomas Piketty to tell us, we know the share going up to capital has gone up, the share going to labour has gone down. But much more interesting than that fact within the share going to capital, the share going to the very top has gone up and within the share going to labour, which has been shrinking, the share going to the upper echelons of labour have been going up relative to the rest. So you have a double whammy sort of situation. Now there are a number of other factors which I discuss in the book but the class system that is emerging that Sandy has referred to which I've been working on conceptualising and gathering data from thousands of corporations and a huge number of surveys over the years is roughly as follows. Basically you have a plutocracy at the top, we all know that, we all know their names, many of us wish we didn't or at least some of them. They are the rentiers of the world, they're fast rentiers. Then you have an elite serving the plutocracy and plutocratic corporations, some of them represented at Davos obviously. We don't want to talk too much about them because somebody might throw something at me in the discourse. Then below that you have a shrinking celeriat. When I was at Cambridge doing labour economics, what I called a celeriat was expected to be the overwhelming norm by the end of the 20th century. Everybody having employment security, pensions, paid holidays, paid medical insurance, a trajectory of promotion etc. That's shrinking everywhere. The big thing that the celeriat worry about is they're worried about their children falling way down. The old proletariat is disappearing and the profitions that I discuss, I'm not going to discuss in the books with people who don't want employment security, they like the freedom of being freelancers or whatever. They're a particular group but I want to concentrate on the precariat. The precariat is the growing group in every part of the world. Underneath the precariat is what I call a lumpen precariat or an underclass. People out in the streets dying prematurely. The precariat is not an underclass. It's very important. People who think the precariat and journalists often do are standing talking about an underclass. No. Global capitalism wants the precariat. The precariat can be defined in three dimensions. First of all, it has what a Marxist would call distinctive relations of production. It's being habituated to accept a life of unstable labour, casualisation, the new thing of crowd labour etc. That's the least interesting aspect for me intellectually and politically. It also consists of millions of people who don't have a sense of occupational identity, an occupational narrative to give to their lives. They also have to do a hell of a lot of work for labour that isn't recognised in statistics or accumulated and is part of the status frustration they are experiencing. And it's the first emerging class in history whose level of education on average is higher than the level of labour they typically have to perform. Huge under-employment if you like. Those aspects refer to the first part and it leads to what I've called in the books the precaritised mind. If you are in the precariat you don't know what's the best thing to be doing with your time. Should I do a little bit more of this, a little bit more of that, a little bit more so you are suffering a sort of existential insecurity. Now the second aspect is that the precariat has to rely almost entirely on money wages. It doesn't get access to those non-wage benefits paid by corporations. It doesn't get access to rights-based state benefits either because means testing has spread and this puts people in the precariat into poverty traps. Every country we are suffering from huge poverty traps where if you go from low benefits which are being cut everywhere into the sort of low wage jobs they can get they are facing a marginal tax rate at 80%, 90% or whatever, something like that. On top of which they are suffering from what I call precarity traps not expecting to get those benefits straight away. They often have to wait and then they lose them for one reason or another so people in the precariat are on the edge of unsustainable debt. This is the big phenomenon and it's leading to such economic insecurity that the anger is rising and the last part is that people in the precariat are losing the rights of citizenship in many ways. I document that in the latter two books and the real meaning of being in the precariat is this. You're ultimately a supplicant and the original Latin term for the precariat was to obtain by prayer. You have to ask for favours and this is really humiliating, degrading and that's the reality of a huge number of people who are writing to me. Now the last part of the story and then I will stop is that at the moment it's a dangerous class because it is subdivided. Subdivided into the first group what I call atavists, people who've fallen out of working class communities and families and they're looking back. They don't have what their parents had or what their communities had but they don't have a lot of education so they listen to those monsters who are playing on the fears and they're voting for them. The second group I call the nostalgics, the migrants, the Roma, the minorities, the disabled who don't have a sense of a present home. And this group feels disenfranchised altogether and the third part of what I call progressives. These are the young, educated, they go to university, their parents and their teachers said go to university and you will have a future and they come out and they have no future except death. And this group is very angry too but is looking around for a politics of paradise and it doesn't see it at the moment. And that's why they don't turn out at elections. They don't turn out for the Hillary Clinton's or for the Remain campaign in Britain and they won't turn out for the old social democrats because they're not offering them a future. They're still harking backwards. So we have a terrible political crisis where the first part of the precariat is turning up and voting for these extremists. The third part is still looking for a new politics and that I'm trying to make the main subject of the latter two books. So that's the essential theme and I apologise if I've used up too much of the time. You've compressed three books into ten minutes so I think that's pretty impressive. So a very good summary and for anybody who has not read any of your books they'll know exactly what the very comprehensive framework that you've painted. I want to push back a little bit, both in terms of, I think one doesn't have to accept your description of what's happened in the last 30 years to find your topology interesting. So we're not going to have a debate about neoliberalism. We can leave that aside. But just in terms of the mapping this very interesting typology onto what's been going on in politics and I wonder how far it really gets you and I just want to give you a couple of examples. If you look at my own country, you know, the Brexit decision, actually this is not my phrase I wish it was but someone gave me a very telling phrase for what it was which it was an alliance between blue collars and red trousers. Because basically the blue collar workers who I think are the attivists to an extent that in your typology voted together with a lot of people who are not in the precariat at all who wanted to take back control who were, you know, the sort of quintessential Tory with the Nigel Farage's. So that's a political alliance which doesn't really work in your typology. And then the second example is because you say that the progressives who I think reading your books were the ones that you expected to push for change were remarkable by their absence. They didn't vote for Hillary Clinton, they didn't vote in sufficient numbers and they certainly didn't vote in sufficient numbers for Britain to stay in the European Union. So when you look at this typology, which to repeat is a very useful one, how do you translate that into what we've actually been seeing and the precariat is not behaving as a single unit or even necessarily as three separate bits? Well, I think looking at the data and talking to a lot of people, I think the typology does stand up with the Brexit. For young people in the precariat, that third part, I've been invited to talk at various universities, various places around Britain, particularly in Scotland and the north. They saw the Brexit vote as a choice between two negatives and they didn't like either. They didn't certainly like Nigel Farage or a lot of that, but they were offered an agenda of fear. If you do this, you will get worse. At the same time as you had a government that's been giving them austerity for the last six years, cutting their living standards, increasing their insecurities, why should I listen to them telling me what I should go for? Well, a lot of them basically stayed at home. Why get out of bed for either of those two options? Now, if you go to the United States, there's a huge amount of resentment about the Bill Clinton era, which was an era when there were possible, and he produced the Welfare Reform Act of 1996 of when he won and knows that act, it was a horrendously regressive piece of legislation. And I've had talks with Bob Reich, who was the Secretary of Labour at the time, and I said, well, it's all very well coming out now against inequality, but that did more to promote inequality, plus Larry Summers building up for the subprime crisis. So, the precariat in the United States weren't attracted to Clinton, either Clinton, and they certainly weren't attracted to Trump, but they too tended to stay at home. And I think we're going to see repeats of that position until we get a new type of progressive politics that comes out. And I think it's a responsibility of the people who come to somewhere like Davos to be encouraging that phase, because this is a real shock to the system. That's certainly true, and it's something that would be interesting to hear the audience's reaction, that even in the 24 hours or whatever that this event has been going seems to be much more seriously stated and heartfelt than usual. For years there have been conversations about we have to do something to help the losers from globalization and technical change, but it was basically pretty proforma stuff. And I think now there is a sense of, at the very least this is a massive wake up call, something has to be done. But then give us, and I know you've got another two sessions on this, but give us a preview of what, from your perspective, the elements of the right solution are. You know, some days I hate journalists. Why, because we ask questions. Because before we had this session, she said we won't discuss this today. It's okay. Then rise. She's the best of the kind. But tomorrow I'm going to be having a session on basic income. I passionately believe, and I've been arguing for 30 years, that a basic income as a right has to be part of the future. And we have to move to that. I believe confronting rentia capitalism means that we need a new income distribution system that's consistent with market capital. Don't get me wrong, that's consistent with, that will actually increase efficiency and increase the morality of the system. And that I believe a basic income is one of the essential ingredients of building a new income distribution system. All the arguments for that will discuss tomorrow. But I think at the same time, the immediate crisis is that rentia capitalism has got out of control. I was invited by sales, the dream force, sales force rather, to speak at the dream force thing, the chief executives. And at the end, Mark Benio said, he said basically what you're saying is the system is rigged. Which just happens to be a phrase that a certain monster uses a lot. But I said of course it's been rigged because it's been rigged in favour of intellectual property rights, which the economist has been fantastic on ever since 1851, it's had a good system. Are you suggesting the first eight years we were no good or 1853? You wrote an excellent article in 1851 which I quote, which is, she wasn't around at the time, but it was excellent showing why intellectual property rights were just wrong and were contrary to free markets. And the rentia system that has been built up by trips, by the 3000 plus trade and investment packs that are preserving those incomes, we have to unravel that. We have to see a rolling back of that. Because if we don't, more and more of the income will be taken off by the patent hoovers, the big corporations that have thousands of patents and the Foxcons in China that have got over 12,000 patents. And each one of those patents gives them a monopoly income flow of 20 years. What free market is that? So we have to see a new system that is built and I think that's an essential part. That's exactly what I hope you do, give a taste of it, not only so that everybody comes tomorrow and the next day to have a discussion about both basic income and this system, a better system rather than rentia capitalism today. But I also wanted for you to describe that so that the audience gets a sense of the scale of your ambition and the scale of radicalism because then the next obvious question is, if you look at the politics of the left today, and this is not going to come from the polish to the right almost certainly, it comes from the politics of the left, one other big thing that is happening is that the centre left and indeed the left in many places is collapsing. So how do we get from, in your world view, how do you get from where we are today to this kind of agenda, never mind being enacted, being a vibrant political force? Well, I think if you go back to Polanyi, you will see that it took, we don't want this to be repeated, it took almost 50 years for the counter transformation to take place against the excesses. I'm actually quite optimistic, I get invited to huge number of places where there are groups forming, precariat groups. I've been invited to speak about the precariat in over 400 places. That doesn't happen in 37 countries. And there is a huge energy out there. I really feel that there's a lot of energy and there's a lot of idealism in that energy. And it's interesting that it's not like the old proletariat. For the precariat, the primary enemy is not the corporate boss, it's the state. They want a reform of the state. And it's interesting because most of the insecurities come from the institutions of the state, not necessarily the government but the state. And I think that the energy out there can translate very quickly into new political movements. First of all, sorry, just to finish the point, first of all you've got to have a clearing of the decks of the old. Well that's what I was about to ask because does this have to be driven by a, I use the term somewhat lightly, a revolution by the proletariat, or can the established elites embrace enough of this kind of change to reach a more sustainable capitalism? Does it have to be them versus us or can the people here embrace enough of this radicalism that you actually have a sort of remaking of the social compact without something truly radical? I think it's going to be a bit of both. I don't think, I'm not advocating or believing in a revolutionary thing. I think it's an evolutionary process. I think what you're seeing, I hope what we're seeing is that the corporate liberal capitalists realise that it's overreached and these insecurities and inequalities are excessive. And they are going to roll back and encourage these new movements, new things, quietly give some funding base to some of these movements that are making sense. You know, we need structural change but you're not going to get structural change unless there's going to be a popular movement demanding those changes. And I think that it's going to be a bit of both. I think things like what I discussed in the book Sovereign Wealth Funds are going to have to be led by intellectuals who know the system. Do you see any politician embodying this? I mean we mentioned earlier, it's a little unfair of me to do that now on stage, but we mentioned Emmanuel Macron in France. Is that the kind of person who might be pushing this kind of agenda? I think as John Lies said, I think it's too early to tell, but he was speaking about the French Revolution being a success. I think he's come out so quickly, we must reserve judgement. If he forces a wedge between the far right and the far right, then from my perspective he's doing a good job. But I think we're seeing a number of young politicians coming through political movements which are more important than individuals and that energy and entrepreneurial thinking about alternatives I think is really exciting. You mentioned ten years ago, ten years ago it felt like a sterile debate. It was not interesting, but now you keep hearing of new initiatives like the rescuing of the commons which is a big subject in my third book. This sort of subject is suddenly becoming sexy and I think it's part of this re-energising, whether it's left, right, I don't know the old words that probably need replacing. But it's a sort of transformative agenda that's taking shape. It is taking shape. I think we have time for a few questions. Yes. Thank you very much. You pointed to this search for politics on behalf of the progressives and others. You've used the word politics, you used the word movement but not philosophy. I'm interested because the Marxism emerged in response to the first industrial revolution and here we are talking about the fourth industrial revolution. I wonder if the collapse of the left is going to continue until a new political and economic philosophy emerges and I'm curious if you are seeing any signs of such a thing coming, whether it's related to the commons or else wise because I feel like that's badly needed. If you have a look at the second book, the Precariat Charter, that's the core argument that the old social democrats in adopting third wayism of Blair and Clinton and the rest became utilitarians philosophically and majoritarians, if you wish, and that allows for the demonization and increased insecurities of the people near the bottom. As long as you appeal to the middle classes in some sense, that is your philosophical position. I think that's been discredited for all time by recent events and that the social democrats and the Labour parties are paying a heavy price and they deserve to pay a heavy price in my view, but philosophically you're having a resurgence of a sense of needing empathy and social solidarity, conviviality, all the classic enlightenment values are the things that I find Precariat groups and the philosophers and others are beginning to talk about much more fundamentally. And I think that's exciting. The second book is called The Precariat Charter and it was basically 29 policies that come from a philosophical position of anti-utilitarianism. I hope so. I hope so. I mean, because it must do. Gentleman here. My name's Calluia. I come from Denmark, which is generally considered a very equal country at least. But one question about the basic income. What makes you think that the Precariat would settle for a basic income and that this will not become a new battleground for it being raised year after year? Well, as a matter of fact, as you know, and I get a lot of limitations to Denmark, and the new party, the Precariat party is coming up. It's got 10% in the opinion polls growing, 20% in Copenhagen, and they've got basic income in their agenda. It's one of the countries where we could see a breakthrough. They're very much part of it. And you've seen in the last couple of years tremendous change in the trade union leadership in Denmark, the old trade unions leaders, the social democrat labourist views have all been swept aside by younger women leaders. And you're seeing that debate taking shape in Denmark in a quite interesting way. I can talk at length about how basic income is affordable, how basic income will do it. But just about the politics of it. The basic question is a political one. Won't this be the tool for evermore redistribution? Why would the Precariat be happy with just a basic income? Because I think it's going to be a base of equality. It's going to be a base of solidarity and affordability. And in a number of countries, I think, and I'm going to talk a bit about this tomorrow, it's got to be couched in a different way than what many conservatives with a small sea are couching it in, as a replacement for other forms of benefits. Because then it becomes tax you to pay for you, and then Mr Hardworker paying for Mr Lazy or something like that. It's got to be seen as a part of the new income distribution system where you say we are taxing the renties for the benefit of everybody in society to give you a base where you have control of your life in your mental state first and foremost. And I think that that will induce a much healthier discussion of a better system of equity and for freedom, for enhancing freedom. But it is something I will talk about tomorrow. One more question if there's one more. Yes. Hi, my name is Rajesh Chandy. I'm a professor at London Business School. Thank you for this fascinating conversation. I wanted to pick up on a strand from the earlier conversation. I just came out of a session with a group of CEOs talking about the need and importance of responsible business. Do you see in your, as you look around, any signs of hope where the challenges you point to can be solved through business, big business getting involved, and so what examples would you point to? Well, you're Indian, are you? Yes, from many years ago, yes. So, I mean, I want to take this opportunity to thank the Premji Foundation, YPRO, who've just given us extra funds in India because we've done pilots of basic income in India and the results, we've produced the results and we've provided basic income to thousands of people and monitored what happened. The Government of India is about to issue its economic report for 2017 when there's going to be a special chapter. Now, you can imagine, I feel, the corporations of India are actually playing a responsible role. Mr Premji talked to me here and his wife because his wife is fantastic and they basically said, look, we want to help with just some seed funding to get more pilots, more work done to see if this is a way for all. And I think that certain corporations in many countries can help with that. You know, okay, let's see. Let's see if we can help with pilots or with movements or with rethinking some of the things. And as it happens, I think in India, some of the corporations, I want to put my hand up and thank them. I'm afraid we have to stop there. Guy, thank you very much. I encourage you to read Guy's books because even if you don't disagree with everything and Guy knows that I don't, it's a really, really, at the very least extremely interesting way of thinking about the world. But there's some very, very interesting ideas and I predict confidently that you will be here in future years. And there will be, the case of India may be a case of the beginning of a broader trend to some of these things. So Guy, thank you very much. Thank you.