 We're going to talk about reversing the transformation, and basically in this talk, I will try to present the results of decades of research in 40 minutes. So I'll try for simplicity and clarity, but this may not be achievable. I have provided links to these slides, and within this slide, there are other links to more detailed explanations of some of the things that I will be talking about. So without further ado, let's begin. So there are always more than one way of looking at things. And in fact, I would like to say that there are 7 billion different perspectives on the world that we live in. Objectivity is the greatest myth that we have been educated to believe in, that there is a way to look at the world, which is free from all subjective biases. There are no objective points of view. And since that's the case, the next best thing is the ability to look at multiple perspectives on the world we live in. And so a paradigm is one framework for looking at the world, and it's very helpful for our self-liberation to be able to look at radically different perspectives from the one that we have. So I'm going to present a non-euroscentric view of the world in. So I'm going to talk about the great transformation, which took place from a traditional Christianity-based society to secular modern society. Economics was a branch of moral philosophy, and Adam Smith was a moral philosopher, and this morality was grounded in Christianity, and that was called the scholastic-astic school. The great transformation turned economics into objective science on par with physics, and with nothing to do with morality on the surface. The non-euroscentric view that I will describe will be easily understood by pre-modern Europeans, but would be almost incomprehensible to secular modern people. And that doesn't mean Europeans only, anyone who has received a Western education, and that's basically all educated people on the planet absorb a Eurocentric worldview. So we all know that the current state of planet is really very bad, and I just don't need to count the list of horrors that we are seeing all around. So one of the reasons for this is the myth of objectivity, the idea that there is a collection of facts which is true, and in fact I have access to this, and nobody else. So people who agree with me, they are also factual and rational, and anybody who doesn't agree just doesn't have access to the facts and is also irrational. So once he realized that there are no facts, there are only subjectivities, this kind of arrogance, epistemic arrogance, would not be possible. So I read a long time ago, and I tried to find this quote, but I couldn't, that our ability to learn the truth is limited by our courage. When I first read this, this struck me as very strange, because I also trained in the Western intellectual tradition. So I was taught to believe that truth depends on facts and logic, and not in the feelings of our hearts. But courage is very much a quality of the heart. So how can we understand this apparent paradox? When people trained in the binary logic of true, false, it's very hard to understand what courage has got to do with truth. We have been trained to believe in a model of knowledge whereby we learn something, and then we learn more and more and more, and ultimately become all knowledgeable, or as knowledgeable as we are going to get. But suppose this model is wrong. Suppose that, like Kuhn discovered, science precedes in revolutions. We have one framework, one idea, one paradigm about the world. Then we throw it away and we start all over again, when a completely new and different paradigm, like the shift from Ptolemaic to the heliocentric to the Copernican model. So this is actually how courage matters in the sense that personally, when I found that the frameworks that I had used to analyze the world I live in were wrong, because they had led me to be miserable. So I said that I have to abandon these and start rethinking how to live from scratch. And at that point, I had to say that if I abandon everything, then I know nothing. Everything that I have believed up till now has proven false. So that was when lyrics of Paul Simon, I have come to doubt. All that I once held was true. They became very significant. And so you see, I have come to doubt. All that I once held is true. So in the mainstream European intellectual tradition, and we are all part of this tradition, the essence of truth was lost. Now there are exceptions to this everywhere, even within the European tradition and in the East as well. The spirit of humanity shines through. And our intuitive and heartfelt connection to truth is the same for all of humanity. No differences between East and West there. So we're going to look for what was lost on the path to modernity. Unfortunately, this thing that was lost cannot be found under the light of reason and logic and facts, which is what knowledge is confined to. But so the key thing that matters is that the most important questions in life became meaningless. What does that mean? What is the meaning of life? Who am I? What are the hidden potentials within my soul? What should I be doing with this extremely short and precious life that I have been given? So in the Hitchhiker's Guide to the Galaxy, deep thought thing is about the ultimate question and comes up with the answer 42. So this is just a reflection of the tendency that we have been trained to believe that these deep questions are unimportant, are meaningless, and not worth wondering because they have no answers. So there are even deeper questions which arise. How did these questions become meaningless? It's not true that they were always treated as jokes. Rather, people paid very serious attention to them and they were major disputes. So we need to relearn what are important because we have been trained to believe that they are irrelevant and we have to learn to find the answers. And ultimately also, how does this relate to the great transformation? Well, one aspect of the great transformation was the loss of meaning of life. So where do we look for the answers? How did this happen? Well, this is an unexpected source for the problems we face today. Who would think that philosophy has anything to do with so? Actually, there were multiple wrong turns which took place in the western philosophical tradition. And I've discussed these at length elsewhere. And I won't take the time to discuss it here. But the story is a bit confused because there are three kinds of philosophy. There's high-brow philosophy in which the big questions continue to be discussed, but they are no longer the center stage of philosophy. And then there is middle-brow philosophy, which is philosopher's exchange to public. But what really matters is the folk philosophy, which is how the philosophy affects the common people. And the common people include students who are getting PhDs in economics because they are ignorant as philosophically as I was. So this folk philosophy is extremely important and highly neglected when I say that people have been misled by logical positivism. A philosopher, as I know, that philosophy has been dead for 50 years, nobody believes in it anymore. That may be true at high-brow and partly true at middle-brow, but in folk philosophy, positivism is very much alive and well. There's a very interesting article in Wikipedia which says that if you take any article at all in Wikipedia and you click on the first link and you keep doing that, ultimately you end up with the article which is classified as philosophy. So what this shows is that all human knowledge is founded on a philosophical basis. And so what I want to say about this, there are three things that I want to say in this slide. One is that all knowledge has philosophical foundations. Two is that very people are aware of this. And the third is that massive confusion is caused by failure to distinguish between the three levels of philosophy. So some of the critical errors which took place in the development of Western philosophy was dualism, the split between the mind and the body. Now we all know that I think, and by thinking I can affect the motion of my body, but philosophers deny this because they say, well, how can mind, thought, act on the body, everything must be subject to natural law. And this natural law leads to the idea of determinism, again, which is vastly in conflict with our personal experience. We all experience the reveal as a map, a part of our lives. But philosophers tell us that no, this is an illusion. And then this positivism that knowledge comes from facts and logic, science is built on facts and logic, and this is the only valid type of knowledge. And the real tragedy of this is the exclusion of the heart and souls, our emotion, and our spiritual experiences don't provide us with knowledge at all. So this exclusion of subjectivity has been a tremendous loss. So instead, you can gather all of this by confining attention to logical positivism, which sort of encapsulates all of the errors that I have been talking about. And we can summarize it as this, the world that we see consists of appearances, which are observed, which are observable. And then there is the hidden reality, which generates these appearances. So in economics, the paradigm, diplomatic example for this is the behavior of human beings. Economics, the critical issue is the, we see, we observe actions of human beings, but we don't know what's inside their hearts, what motivates them. So positivism tells us that ignore what's going on inside human beings. Just focus on what you can see, how they act. This is encapsulated in revealed preference theory. You can look at the choices, don't worry about what heart. And this is a big mistake. So the social sciences, we are used to thinking, believing that social sciences go back a long time. Economics goes back to Adam Smith. But this is not true. Modern economics and the social sciences were born in the early 20th century, on the 20th century, on the basis of a double mistake. One was a misunderstanding of what sciences that is captured by logical positivism. Logical positivism was actually an attempt to understand and explain what sciences, but it fails miserably at this. And then, since the misconception was born, again, the only valid type of knowledge is scientific knowledge. So the attempt was made to cast all of the humanities to study, restudy it via the scientific method. And this is what led to the name of social science. And so the idea that we can apply scientific method to the study of human societies, this has been a disaster. And this is the disaster that we are currently living through. So the modern economics was born in the 1930s with Lionel Rapp, Robbins in the scarcity definition. And Sam Wilson gave a definitive shape in his book. He's the founder of modern economics. And basically, the transition which was made was a shift. Economics was previously as contributes to human welfare. The idea of human welfare is an internal idea, which has to do with our hearts and souls. So this was discarded. And only the observable choices were taken into account. And that's where the scarcity definition came in. So before scarcity, we could distinguish between needs and wants. So we could distinguish between a hungry man looking for bread and a millionaire looking for a car. But after scarcity, both of these are just demands. And if the billionaire has the money to fulfill his demand, then it's efficient to fulfill that and leave a billion people hungry because they don't have the money. There are no moral judgments involved. This is just the way the system works. So what I would like to say is that this was a big mistake. Economics cannot be a branch of natural science. It has to be and it remains a branch of moral philosophy. But the only problem is that morality has been hidden within mathematics. So the issue is to find out how moral judgments are hidden within mathematics. So one of the important books which helps us in this regard is a philosophy that facts and values are inextricably entangled. I like this phraseology. So there's a book which I have pictured Economic Analysis by Hausman and McPherson, which explains how all of economics, morality, moral judgments permeate all of economics and policy. Single specific example of this is scarcity, the idea that the scarcity is foundation of modern economics. This idea is based on three normative judgments. One of them is the private property idea, that idea that what I have belongs exclusively to me and I have the right to do with it. What I please and I have no, the society has no rights over me in terms of how I use my property. All of these are moral ideas and there are, most societies don't accept these ideas. The second one I've already mentioned and wants its distinction, tastes are exogenous, this also leads to scarcity and then the strict discipline boundaries. So ignoring politics and psychology, again, this is important to, in order to make scarcity the central notion of economics. So, the point here being that morality is embedded in economics but it is hidden and it pretends to be objective but it's actually built on moral foundations which are toxic. So how did this come to be? Again, it's useful to make a brief excursion history. There were centuries of devastating religious wars between Protestants and Catholics and this led, this actually personally impacted the lives of the Enlightenment philosophers, some of whom were under threat of excommunication and all of them suffered from the religious wars in some way or the other. So basically they started, they started searching for a tolerant society philosophy and they rejected Christianity as a basis for building society which was very sound in the sense that that was their experience. And so, but having rejected Christianity, you're at a loss because all that you know has been rejected and so you have to start rebuilding knowledge from it. And so what happened was that they jumped on to the idea that science is the only producer of valid knowledge and we should only trust what we can see and touch and we should not trust our experience and our hearts because these testify to a greater reality. So our hearts deceive us. So that's why we have been trained to ignore our hearts and so believe models which just seem absurd to us. We have learned to believe in models which are absurd and so basically sinitism is the faith in the ability of science to answer all important questions. But of course, science cannot answer the questions about meaning of life. So the, what was the impact on modern economics? It led to an absurd theory of human behavior, the home economics who, who maximizes pleasure obtained from goods and services. Nobody does that in the, on the whole planet, whole planet. So the question is, how are we trained? How are we deceived into believing this? And of course, if you are doing social science, then the fundamental unit of behavior is the human being. And so, you know, if you have a terrible theory for behavior for human beings, then you will have a bad theory of society. And then the second problem is the absurd idea that economic laws are like the laws of physics. This again comes from the idea of social science. Economic laws to the extent there are any place with culture and society with social norms. And this is so easy to prove that it's really hardly a question. Nonetheless, the idea that economics of the science suggests that there are economic laws which can be fine, which are invariant to time and place, and same across all societies. So the laws for Bolivia and Brazil, Brazil, and the laws, economic laws in the Middle Ages are the same as the laws for modern society. It's just absurd. And again, the third absurd idea, which is on which modern economics is built, is the idea that economics can be studied in isolation from politics, from society, from geography. This is a deeply flawed methodology, which is the basis of modern economics. And I have written a paper about how it happened that we were able to put forth models which should just be laughed at instead of debated seriously. And this has to do with again, Kant tells us about the nuamina, which is the unobservable reality and the phenomena, which is what we can observe. And from what we observe, we try to deduce what is going on in the hidden reality. So that's our mental models of reality. Prior to Kant, it was thought that a good model tells us what's happening in the real world. So the standard for judgment for a good model is that it matches the hidden reality. But what Kant said was that this is an impossible task because you never know what is unobservable. So we should abandon this. Instead, what he said was that that is a hopeless project. So let's do something else. Instead of looking for a match between our mental models and the hidden reality, let's try to figure out how our mental models are created from the observable data and from the prior knowledge that we have. So this was basically the abandonment of the attempt to find out what is going on inside human beings. So if we talk in terms of methodology, there was a shift from surrogates to substitute models in the terminology of one of the philosophers of science. So a surrogate model is a substitute for reality. And it is judged by seeing how well it works as a substitute in the sense of how well it matches reality. But a substitute model is just ignores reality completely and presents us with an alternative. So Lucas says that anthropologists study real societies but we economists simply make up artificial societies which are populated by robots and we study these societies. The robots are omega and we make our deductions about the real world economics by studying a world which was filled with robots without any feelings. And we discuss what economic policy would be like. This is exactly what the economists do today. The models are models of a soulless and heartless world. And these are what he used to decide what economic policies we should follow. So this method all important models will have wildly inaccurate assumptions because there is no match for reality is no longer a relevant criteria. And the consequence of this is Bob Solo says that Lucas model is lunatic asylum class. He literally says that and engaging it with it means seriously instead I just laugh at it. But Solo criticizes Lucas's model but not the methodology which was used in producing models. So Solo himself produces a lot of crazy models but he thinks that they are reasonable and the ones that Lucas uses are not reasonable. But they are all crazy models. They have no match. They are all crazy models. They have no match to the real world and they don't even try to achieve this. So instead of trying to find the good models, some models are bad and some model good, we say that the whole methodology is bad and we need to go back. The idea came up some time ago that reality is so complex that no model can capture it. And so all models are false. This is true. Nonetheless, the effort to try to match reality and to simplify it is useful but this idea was abandoned. And so you can make literally just too much arbitrarily, arbitrarily. We can say that okay, there are gremlins behind the scenes and they do everything and they are not subject to laws. So economists came up with a protocol which was optimization and equilibrium. So any model which has optimization and equilibrium qualifies as a model and then they are judged on their match to something or the other. So within this methodology, there is no fix that is possible to economic theory at all. So the alternative is to go back to a qualitative and historical methodology. This was actually originated by Ibn Khaldun. And one of the greatest masters of this methodology is Pulani. This methodology has now been forgotten. So if you want to go back and I think that that's one of the things we need to when you say reversing the great transformation, one of the things involved in this is to change the methodology that we use for social science. Social science tells us how we should build society and it's completely rotten to the core. So we need to rebuild all of the social sciences from scratch and we need to rebuild it using a historical and qualitative methodology. But nobody knows how to do that anymore because this methodology has been lost and forgotten. So it's a useful place to start. And there are three principles that I've listed here. One is that theories are born as an attempt to understand history and then theories are used to generate policies, how to respond to that history. So they shape history on this how theories shape and are shaped by history. So basically the interaction between theories and history is necessary. You can't understand a theory outside its historical context. So when we study Keynesian economics, we can't understand what Keynesian economics is without studying the Great Depression, without studying the Great Depression because Keynesian economics was a response to the Great Depression. So modern methodology, textbooks teach Keynesian economics, but they don't mention the Great Depression. And so basically it's impossible, the task that is being done. A second principle is that economics is based on methodological individualism, but actually it is groups, communities, shared ideas, common visions, which change history. So we need to look at the group level, meso economics instead of microeconomics. And finally, we need to consider the process of social change unfolds in all dimensions simultaneously, political, economic, environmental, so we need to study them together. You can't study economics in isolation. So the goal of Polani, goal of Ibn Khaldun was to study the process of social change. Note how this is different from studying equilibrium. There are no equilibrium. Our society, if you just open your eyes from the textbook, the world is continuously changing. There are no equilibrium to be found. So the thing, studying equilibrium is studying a hopelessly useless concept. Instead, we should try to learn if there is any system, any patterns in the process of social change. So some of the things that Polani talks about, Polani talks about how we go about studying social change. He says that there's usually a trigger for social change, some exogenous event, like the Great Depression. Then people try to understand this change which is occurring in before their eyes and they develop theories to understand the change. So many different theories are developed by many different classes and these theories have multiple functions. They define goals for a particular class of people. They define identities. They create alliances. They build communities. They provide, the theories allow us to create a policy response. But there's also another important function of theories that they have to have a broad appeal because if you want to enact policy, so theories are also designed to appeal to a broad class, which means that they hide their class orientation. Like let's say fear is very beneficial to the wealthy because it says we can do whatever we want with that wealth. But it is presented as a policy which is fair to all because it says everybody can do whatever they like. And this doesn't, this seems to be fair, but it's actually very beneficial to the wealthy and very harmful to the people. So the theories have to make appeal to a broad class of people. So coming back to real-world economics, what Polanyi says about the great transformation is that the driver of the change was the industrial revolution. The invention of big, the invention of big machines is what he calls it. So once the big machines came into existence, then they led to excess production. Now the excess production is a problem because pre-modern society, people pride self-sufficiency. So if you are self-sufficient, you don't want to produce more. Why produce more than what you need? And you don't want to consume more than what you already have. So what you need to do is to create desire in consumers to have more. Also, you need to create money because if you sell a lot of useless stuff to people, so you create the stoken money which enables you to get stuff in the future. And of course, this money has to command social consensus to be useful. So a whole set of mechanisms has to be created to give value to money and to enable it to be used as a universal token of purchasing power. So there are three basic artificial commodities which Polanyi mentions. One of them is money, and the other two are money, and the other two are land and labor. So if we organize production, we have to use labor and we have to use land as factors of production. But these are not commodities in the sense that they are not produced by the market. They are given to us beforehand. And so this commodification caused the capitalism by commodifying land and labor by making human beings resources for sale on the market automatically creates the worship of gold. If you can use money to buy and sell human beings, then there is no doubt that money is the most important thing in the world. And that is what capitalism does. It teaches us to believe that money is the most important thing in life. Now, what is exactly the great transformation? How Polanyi defines it, there is lots of debate. There is lots of debate about it. But one simple idea is that in normal society, markets are part of society embedded within society. But after the great transformation, society became embedded within markets. So what does this mean? It's useful to understand this clearly. So suppose I need medicine to save the life of my child and I go and say, I don't have the money to buy this, but please give me this because I need to save the life of my child. So there's a social relationship between me and the shopkeeper. As human beings, we participate in the pain of the others. And so on the basis of human relationships, you should give me the medicine and the gratitude that I feel to him, I feel to him will be more valuable than any amount of money that I could give him. And everybody understands that. But there's a market relationship. He's a shopkeeper, I'm a customer, I don't have money. So if the market relationship is Trump's, the social relationship, then we have a market society. If the social relationship is stronger than the market relationship, then we have a traditional society. So one of the books Amartya Sen wrote long time ago showed that famines occur not because there is scarcity of food, but because people don't think society doesn't think that these people are entitled to it. That is, if we had students that as it is the collective responsibility of society to feed anyone who is hungry, this is part of Islamic law, for example, then famines would not occur because we don't, it doesn't matter how the person is hungry. It doesn't matter why he has no money to purchase. If there is someone hungry, then it is our collective responsibility to ensure that we get him food. So what happened as a result of the emergence of capitalism? I've already said that it's about worship of money and the commodification of land and labor. So it's very strange that the 40s, what Polania wrote was amazingly prescient. And actually the reason to go through this is to understand that these are the toxins which have been implanted in our brains by the education that we have received and reversing the great transformation involves self-analysis to how this poison affects our thought and actions and to liberate ourselves from these. One of these is the birth of the industrial revolution led to a greed that all human problems can be solved by material commodities, by wealth. So this is talks number one. The antidote or the correction is to look at the eastern paradox which shows that money does not buy happiness. Commodities don't bring us long-run pleasure. Long-run pleasure depends on social relationships, social relationships, and on character traits, not on amount of money and not on our consumption levels. So money doesn't buy happiness. The commodification of labor means that our educational systems are designed to produce human resources, not human beings. And how do you turn a human being into a human resource? You have to strip them of their relationship to their society, to environment, to their history, to all higher visions relating to how I strive for something which is bigger than myself. So all this has to turn us into a human resource. And the commodification of land leads to the environmental catastrophe that we are seeing because the land, the flora, the fauna, their value is reduced to what their market price is. So if we have a species of animals that we can't buy or sell or trade in the market, then it's worthless. It's worth zero. And basically this problem, this is the source, this mental attitude which has been created on us by living in a market society that the worth of something is what that's the source of the environmental catastrophe. So we have been trained to think of ourselves as inputs to the production process. And we have been trained to value ourselves in terms of our lives in the terms of money that we can make. We value ourselves in terms of our lives in terms of money that we can make. And these are all toxic ideas, deadly to our personal lives and to our long-term welfare. So now we come to the final section, which is what can we do about this? So because the great transformation was so great, so we'll need to make great efforts to undo it where the great transformation created a market society. We all live in this market society. Everything is valued in monetary terms and everything is for sale. So we have to understand that the central driver of new status in a capitalist society, money is the biggest marker of social status. So we all seek money not because money brings us happiness, but because money brings us social status. And that's what we are all hungry for. So we need to, if we want to stop valuing money, then we have to change our reference community, change our reference communities. We have to find friends who don't value money, value something else, value something, value higher goals. And we have to de-link our self-image from what society thinks of us and find healthier communities. Ponderers, what's the purpose of my life? What are the goals worth striving for? And in particular, it must reject the capitalist answer that the purpose of life is the pursuit of profit's pleasure and power. And the positivist answer is that this question itself is meaningless because there's no facts and logic which can be used to answer it. And the existentialist answer, which is what I started out when I first encountered these problems, my own experience is that this is also a deadly answer there. Existence precedes essence, which means that we build, create our own meaning. As individuals, we are not capable of creating meaning. We need to do, we need to look at the higher level. And so we adopt an attitude of epistemic humility. I cannot find the answer on my own, but large numbers of philosophers and religious traditions have grappled with these questions over centuries. So let's latch on to a tradition and study what it has to offer and lead, let our heart guide us the direction because logic and facts cannot. We have short lives and critical is that we can't, any individualism is a toxin. You can't achieve anything. You can't be anything on your own. You have to find communities and build communities too. And one of the things is for detoxification is to spend some time living close to nature. So I was recently in the USA and the Appalachian Trail, I saw lots of people with a backpack traveling from months. It seems like a crazy thing to do. I think it is a crazy thing to do, but it does accomplish something which is it shows you that you don't need to follow the capitalist way. You can live with a backpack and a pair of clothes and clothes to nature for a long time. And that's what we need to do. And this is my last slide. I recently joined Ahuat University, which Ahuat Foundation has given microfinance to a lot of people. And that is it gives interest free loans to people to allow them to build their lives. And it's done enormous amount of work. So they have recently launched this university, which will provide a free education to everyone in Pakistan who is eligible. And eligibility poverty is one of the criteria. But our goal will not be to give them a university education. One of the ways in which we will distinguish our goal is we will take students who are imbued with the desire to serve humanity. You don't want students who will be looking for degrees and careers to make names for themselves and to pursue their individual lives. You want students who are built with the desire to serve humanity and they will, we will teach them the agriculture they need to go back to their rural communities and serve and help to upgrade them. And we will give them real world skins as opposed to book, book knowledge, which has no value at all. And we will teach them to build communities and we will teach them about history and the real world economic society as opposed to the textbook theories of social sciences, which basically abstract from European historical experience and are completely irrelevant for Pakistan. This is who I guess I have one more slide. If you want to see more along these lines, there is a talk that I gave earlier in Helsinki on sustainable development and this has developed the ideas of how we can become the change that we want to see. So, as this picture shows, the task that is facing us so enormous, the fire that has been lit in this world by capitalism is so enormous. We as individuals are so tiny that it seems completely hopeless, futile to try. Why should we even make the effort? But each drop of rain contributes very little. Electively, the raindrops are enough to put out the fire. And so we have to shift from outcome orientation to process orientation, outcome orientation, looking at whether or not we can put out the fire. And process orientation is, am I part of the solution or am I part of the problem? So as long as we are doing what we are doing, what we can within our capabilities, that in itself is satisfying and perhaps the maximum as satisfying as it can be, as life can be. So process orientation is what we need to resolve this. I seem very tiny and powerless and helpless to change things. Okay, so that's the end of my talk and I'm going to stop sharing and we can have question answers. Thank you so much. Wow, there's a lot in there. I'm glad we had some extra links that we can all follow up. I hope we can perhaps share the slides later if that's okay. Oh, yeah, sure. I've given links to the slides themselves. Yeah, excellent. Thank you so much. If the slides are already online, perhaps I can post a link in the chat. Oh, yeah, I'll do that. Oh, wonderful. Thank you. Thank you. So we did have a little bit about Pellani in there, but I wonder if anybody has specific Pellani related questions that we could start with. Otherwise we could invite Jeff to contribute. Jeff, you're still with us? Oh, yep, I see you. Oh, thank you for the link. Excellent. No, that's not mine. Oh, that's Alice's. Quick. Oh, I see. Okay. All right. I was about to put it in, but if that direction, then that's fine. Anticipation, he says. Okay.