 Good morning, what a beautiful morning. I've reached the stage in life where I feel like paying the moderator not to introduce me because it makes me sound so old. So I thank him for those remarks. When I was thinking what I should talk about this morning, I actually decided that as there is a working session afterwards on basic income, I would reserve most of my remarks on basic income to that session. And what I want to do now is present to you an economic contextual talk based on the books that just been mentioned in which the logic I believe leads one towards thinking quite differently about how a basic income could be introduced. We are today in the midst of the global transformation. Analogous to Karl Polanyi's great transformation, with which I'm sure you're all familiar. You will remember that the essential thesis of Polanyi was that the great transformation went through a disembedded phase in the 19th century, early part of the 20th century, which was dominated by laissez-faire, the pursuit of so-called free markets, and it was dominated by financial capital. And the process involved the dismantling of the old systems of regulation, redistribution, and social protection, because they were impediments to a market economy. And Polanyi's analysis is basically about how national market systems evolved. And he recognized the crisis point where when inequality is risen and risen and insecurities have multiplied, there's a threat in his words, a threat of the annihilation of civilization. That threat involves a shift to fascism, Bolshevism, authoritarianism, and could continue unless or until there's a re-embedding of the economic system in society with new systems of regulation, redistribution, and social protection. Of course, Polanyi was writing in 1943, his book was published in 1944, and in a sense the welfare states of the post-war era were his re-embedded phase. And it was based very much on laborism, that if you performed labor, or were married to someone performing labor, or were living off the proceeds of labor, you had citizenship rights. I call this a period of industrial citizenship. It's a very funny form of universalism, if you think about it, because only if you were linked to labor were you a privileged person. And labor throughout history means being in a position of subordination. To a boss. And the romanticization of jobs and labor in the post-war era has always struck me as very peculiar. So all forms of work that are not labor disappeared. So all the work that women did in caring and community work, and ecological work, and all the work of preservation and reproduction have no value in the neoclassical economics. They have no value because they have no exchange value. Now this is a very peculiar way of interpreting life, because it marginalizes a vast number of people. But that's the essence of what happened in the post-war era, and it was a period that went on until the late 1970s. And I was reflecting this morning that 71 years ago, last month, a group of renegade economists assembled in a small town near where I live, and they named their little society after that town. They called it the Mont Pelerin Society. There were 39 people there. They were all regarded as on the far right, irrelevant in the post-war era, and when I was a student, we only occasionally looked at some of their works out of curiosity. They weren't important. But suddenly, in the late 1970s, the Keynesian model that had predominated in the post-war era broke down. We had stagflation, we had a lot of strife, and the old model of the embedded welfare state capitalism suddenly went into intellectual and political decline globally. And suddenly, those 39 people became globally important figures. No less than eight of that 39 went on to receive Nobel Prizes in economics. And they were the gurus of Margaret Thatcher, Ronald Reagan, and a whole generation of politicians who ushered in the era which we now call neoliberalism, the Washington Consensus, and all of that that became the dominant hegemonic way of looking at the world. And you could see that this period in the 1980s onward was the disembedded era of the global transformation. Now the essence of that framework was that they believed in complete atomization of a market economy, individualization, liberalization of markets, the modification of everything that could be commodified, the privatization of everything that could be privatized, and the euphemism of deregulation. I always say that if anybody thinks that this period ushered in a period of deregulation of labor markets, they should be encouraged to take up gardening or sewage cleaning or something else because they don't know anything about economics. It was a period of profound re-regulation, but a re-regulation in favor of capital and against the interests of workers, everywhere in the world. So we had a euphemism that became something that I had to write about and research and get sacked for, labor market flexibility. You could never be flexible enough. You have to be more flexible because you have to be more competitive. Everybody had to be more competitive with everybody else. You could not be competitive enough. Now the model of neoliberalism has a very important core. And that core is the dismantling of all institutions and mechanisms of social solidarity. Why? Because they stand against the market. An institution or mechanism that protects you from market forces is something that has to go in their way of looking. So of course, anti-union, anti-collective bargaining, anti-welfare systems, the commodification of education must be preceded because the education system must become part of the human capital function. So we get a whole generation of mainly US educated economists, wonderfully calculating all rates of return and how we have to change education into preparation for the job market. It was a fundamental reorientation of the ideology of society. And of course, not surprisingly, we've seen a period of financialization. Financial capital became hegemonic. In 1975, finance equalled 100% of GDP in the United States. A lot. Today, it's worth over 350% of the national income of the United States. And in every country, a similar trend has been observed. My own country, Britain, it's gone from 100% to 300%. And this has accelerated the deindustrialization by forcing up the value of the currencies and accentuated what was already happening, a shift away from manufacturing and productive jobs. That's a separate story. But the financialization went with something politically incredibly profound. Because the financial institutions, which mainly were based in the United States, allied themselves with the big multinational corporations. And what they've done is created a new system. We are no longer in a neoliberal economics situation. It's beyond that. And what has happened is that mainly U.S. dominated multinationals, mainly U.S. dominated financial institutions, with the top being Goldman Sachs and J.P. Morgan, deliberately set out to create an international architecture of rentier capitalism. They created institutions and converted old institutions into the instruments of rent extraction, based on property. So that in this period, more and more of national income in every part of the world has been going to capital. But more interesting than that, Piketty's story has been going to rental forms of capital. The rentiers returned to physical property, returns to financial property, and most of all returns to intellectual property. And the triumph came not only with converting the Bretton Woods international financial agencies into being agents of creating property rights and more property rights over anything called market forces. But in 1994, they had their biggest triumph. Because 1994, the big multinationals, U.S. finance corporations and their administration succeeded in globalizing the U.S. property rights system. Through the passage of trips, there are lots of acronyms in this story. Trips is the trade-related aspects of intellectual property. And what trips did was, in a sense to say, every country that was a member of the WTO, that's every country in effect, had to agree to sign up to respect for the same intellectual property rights system. So if you take one statistic, and they've summarized the arguments in the book, The Corruption of Capitalism, I have some copies here if you're interested downstairs, but give you a couple of stylized facts. In 1994, fewer than one million patents were filed. Last year, more than three million patents were filed. What a patent does is it gives the owner of the patent a guaranteed monopoly income for at least 20 years. In the case of pharmaceuticals, it's 40 years. With the possibility that you can do deals to extend the patents for another period. So what they say when they say we have a free market economy is a lie. Because more and more of production is linked to intellectual property, which is a monopolistic pricing system that prevents competition, prevents any free market. And the same is with copyright. So copyright went from, in the last century was only a period of 14 years that you had, and maybe you could extend it for one other period. But it now gives guaranteed monopoly income flow to the owner of copyright for the whole of your life, plus 70 years. Or in the case of the United States in many forms of corporate copyright for 95 years. Again, if this is a free market, I'm a duck. There's some lovely ducks outside. But of course it isn't. The same with industrial designs. Industrial designs are a form of patent. They're a form of stopping people competing. Last year there were up to 7 million industrial designs, which gives corporate capital enormous power. And in the process, of course, the United States did something which was deliberate to increase the rental flow to U.S. corporations and to U.S. financial institutions. And Europe benefited in the trail, as did Japan and Korea. And it was expected that this was a rent-sucking process from the developing countries. It was a form of 21st century imperialism, if you want to, you know, use strong language. But they made one unfortunate miscalculation, unfortunate for them. They forgot about China. And China joined the WTO in 2001. And they're not stupid, these Chinese. They're not stupid. They've got a bit of brain power. And they started filing patents. And you're going to see a wonderfully stupid, aggressive, dangerous trade war led by that wonderful human being called Donald Trump. And he's going to be claiming more and more that the Chinese indulge in intellectual property thief. They're thieves taking American intellectual property. Well, first of all, that is hypocrisy. The United States only industrialized by deliberately stealing patents and copyrights from Europe. It refused to recognize intellectual property rights systems in Europe. It paid bribes to people who could went to the United States with some trade secrets. Paid them. So they're now accusing the Chinese. We have an English expression. It's the kettle calling the pot black. Right? Now, the system has turned against its originator. It's a classic dialectical process. Because by 2011, China overtook the United States in filing more patents. And since then, year after year, it's filing about a third of the world's patents. The United States, 22%, Europe down below 6%. So the system of rentier capitalism has become a struggle between two giants. Last year, I was looking at the figures from WIPO, the World Intellectual Property Organization, and the increase in patents for the year where there was a big increase, but 98% of the total increase came from China. So you have a system of rentier capitalism where you're going to have two big juggernauts extracting rent, dominating and fighting among themselves, and the rest of us will be keeping low because they'll be trade wars affecting us. That's a background context. Now, next part of the story is that in the pursuit of competitiveness in our corporations versus their corporations, country after country has been using subsidies to give to corporations and the rich people they want to encourage to come to your country or stay in your country and not go to another country. So we have a class-based migration policy. We have a class-based subsidy competitive process. So in my own country, I was doing some estimates. 100 billion pounds last year was paid out in corporate welfare, giving to corporations to encourage them to stay. And with Brexit, of course, it'll get much worse, but there we won't go into that. I want to keep this happy and relaxed, so don't upset me. But the process of subsidies has been part of a new plutopopulist macroeconomic policy. Because if you're in a globalized system, what you have is a competition between governments who want to lower the tax rates on corporations and the wealthy. So in the whole of the OECD area in the last 20 years, the average rate of corporation tax has been halved and going down and down and down. The average inheritance tax rates, down and down and down. Average wealth tax, down and down and down. So fiscal policy has become less redistributive than it used to be in the post-war era. So not only have you got cuts to the tax, you've got big subsidies. Now you don't have to have a PhD in economics to realize that those two tendencies are reducing the revenue that governments have to spend on other things, especially as you're giving tax reliefs and helping the process of tax avoidance. It's not an accidental thing that we're getting tax avoidance. The biggest 4,500 corporations have 3,782 subsidiaries in tax havens. And there's been no attempt to stop it. So it's a system that's developed. And this plutopopulist policy is you try and while you're cutting taxes here and we're just seeing what Trump's doing and giving out more subsidies, you have to throw some things to your modal voters. That's been happening. But of course when the financial crash came, the government said, look, we have debt. We have public debt. Well debt flows from reducing your revenue while your spending is the same or you're not reducing your spending as much as you're giving out in subsidies and so on. So it was another lie. It wasn't public debt caused by the citizens getting too much in welfare. It was this plutopopulist fiscal and monetary policy. And then we had, and this affects some country much more than Denmark, I appreciate, but don't think you're immune, a period of austerity. The argument being that look, public debt slows growth. We need to boost growth. Therefore we've got to reduce public debt. Therefore we're going to cut welfare spending, social services spending, and spending on the commons. And you've got to put up with it because we must balance the budget. Again, another lie. It was produced a paper by two United States financial experts, economists, prominent American economists. They produced a paper arguing that the international evidence showed that if national debt got to 90% of GDP, it would slow growth. Therefore we have to cut the public debt. It took a year and a half of that becoming the accepted conventional wisdom, guiding central bankers, guiding chancellors, ministers of finance. They all cited it, that finding. It turned out that they were wrong. They made mistakes with their statistics. They used incorrect data. And another study showed that this wasn't public debt that slowed growth. It was private debt. But if you cut public debt, you increase private debt. So one of the phenomena that we've seen in this period is a huge surge in private debt. And ironically, even though I am an admirer of much that happens in Denmark, we all know that household debt relative to income is extremely high in this country, making it a fragile country for the next crisis. I hope it won't come, but we have to think about it. Now in those circumstances where you're cutting public spending, what has happened in this period which hasn't been analyzed nearly enough is what I've called in the chapter in the corruption of capitalism book the plunder of the commons. The plunder of the commons. All the common amenities, the public facilities, the land, the access to water, to all our sources of livelihood, the informal networks of support that we get through the commons. For the neoclassical mind, those Montpelerin society people, none of the commons has any value, has no value. Because it has no exchange value, has no price. And if it has no price, it has no value. So that beautiful park outside, if you had a commercialized administration here, they should look very nicely at that lake and say, we could sell that. Has no value as that. We could sell it and make a profit and increase economic growth. So the commons has been sacrificed everywhere. I'm just completing a book on that so I'm extremely boring about this subject. But it's part of our welfare system. The welfare system is not just about your benefits and your entitlements that you get through a social security thing. It's also the informal networks that give us part of our income, our social income and our huger, if you like, facilitates huger. And this process of commodifying everything and privatizing everything. They look at every bit of the commons and say, haha, a potential source of profit. So that's part of the story. But I want to get to the end game quickly because I won't go through how they've used debt systematically. There's one thing I promise you that the financial institutions and governments representing their interests and the lobbyists, the one thing you can be certain of is they don't want to reduce private debt. Debt is their means to profit. They want us all to have debts. That's their way of gaining income. So while we have zero interest rates for the banks and the financial institutions, people down in the precariat are paying huge rates of interest. Now the real story, and I've taken up too much time on my background economic analysis, the real story is that all of these changes have ushered in a period in which you can say without much fear of being wrong that the income distribution system of the 20th century has broken down and will not come back. What that means is that not only is the share going to capital rising all over the world, most of all in China, but in the United States, in Europe and everywhere else, and going to rent here even more, but the share going to labor has been shrinking and within the shrinking share going to labor, a shrinking amount has gone towards the bottom. And this has gone with the breakdown of old rules of economics. Simple rules that I would have learnt in my first year as an undergraduate. It used to be that if productivity went up, incomes went up, average incomes. Now in country after country as productivity goes up, the jaws of the snake open. Incomes stagnate, never happened before. It used to be the case when profits went up, wages went up. In country after country the jaws of the snake have opened. It used to be the case when employment went up, wages went up. In many countries, not anymore, the jaws of the snake have opened. So basic rules of economics have broken down. And we have a system where a new globalized class structure has taken shape with a plutocracy which is dominating the globe and it now has its representative in the White House and many other places of able to use lobbying, fake news, all manipulative tactics to corrupt our democracy. An elite serving their interests and then a salariat shrinking. The salariat used to be the ideal end point for the welfare state people after the Second World War. It was predicted in the 60s that 99% of us by this time would all have long-term employment security, lovely pensions to look forward to, paid holidays, paid medical leave, paid this effective decommodification of labor. It's not happened. The salariat is shrinking and shrinking all over the world. The old proletariat that had been the forge for the welfare state system and collective bargaining and trade union strength is weakening everywhere, many of whom have dropped into the precariat. The precariat, as I've tried to explain in my books, is the new dangerous class. Some Marxists don't like now using the term class to describe the precariat and I've had many scars in my back from old Trotskyites who think I'm a class betrayer or something. But for me, the precariat is a class in the making and you can define the precariat in three dimensions. First, it has distinctive relations of production to use a Marxian term, makes them feel happier. In other words, they are being habituated to accept and internalize a life of unstable labor. I don't like the term precarious work for various reasons I'll come to if I have time. But essentially they're being told you must put up with a life of unstable labor. Now many commentators say, ah, standing defines the precariat by the fact that they are insecure labor. And however many times I say, no, there'll still be someone who leaves this room saying, ah, he's defining the precariat by unstable labor. Far more importantly than that is that if you're in the precariat you don't have an occupational narrative to give to your life, a sense of becoming something through your work, a sense of developing your competencies, a sense of status and identity and advancing in your own mind. You don't know where you're going to be. If you're in the precariat you have to do a hell of a lot of work for labor, work for the state, work to reproduce yourself, work that is not remunerated, is not recognized in our statistics, but you have to do it, because if you don't do it you'll pay a price, networking, retraining, dah, dah, dah, dah. So people in the precariat suffer from a precariatized mind. They don't know what is the best way to allocate their time optimally and they lose control of time, stress. They also are unique in historical terms, but even if they're relatively uneducated in the precariat it's a class that has a level of education on average higher than the level of labor they can expect to obtain. You won't get this sort of phenomenon in those wonderful neoclassical economic analysis. But these are the realities of class. In addition, the precariat has distinctive relations of distribution. If you look at the past, and I must look at my watch, if you look at the past you will find that all classes have multiple forms of income. I believe you can argue and show with data that the precariat is almost unique in having to rely almost entirely on money wages, money incomes. They don't get access to paid holidays, paid medical leave, the prospect of a good pension, social security coverage, state benefits by rights. They have to pay for means tested, behaviour tested, all of that stuff. They have to rely on wages and as it happens real wages have stagnated for the past 30 years. Average real wages in the United States are lower today than they were in 1980. In my own country the same, in France, in Germany similar. They've lagged behind and have fallen particularly for the precariat. So wages for some groups have gone up, were in the salariat, but if in the precariat they've gone down and they become more volatile. What does this mean in terms of welfare state thinking? Well the first point is that you don't build up entitlements through your way you are incorporated into the labour market and very critically the insecurity that you experience in the precariat is fundamentally one of uncertainty. Now any economist knows the difference between risk and uncertainty. Risk of unemployment for example, risk of being ill, risk of having an accident, risk of becoming pregnant or whatever you want to call it. You can calculate the actuarial probabilities and therefore build an insurance system. But what the precariat experience fundamentally is uncertainty and that has no probability that you can calculate. It can hit you at any time. And so people are increasingly subject to shocks, to hazards and to uncertainty and this diminishes their resilience, their fundamental capacity to retain a sense of entitlement in society. And that leads to the third dimension. The precariat has distinctive and unique relations to the state. Unlike the old proletariat and other classes as the state has developed their rights in the state have increased. Richard Titmus famously said, you know, the 17th century was the century of cultural rights, 18th century civil rights, 19th century political rights, 20th century social rights. There was an advance. The precariat is unique in experiencing a loss of rights of citizenship. They can't join organizations that enable them to retain their culture and reproduce their culture. They can't get access to civil rights through due process. Bureaucrats can make decisions, take things away. Employers can just dismiss them or whatever it is without having to worry. They're losing the capacity to be able to use the legal system to enforce rights that exist for them. They're losing social rights because welfare systems have gone from any sense of universalism to a means-tested behavior-tested system, whereby millions of people are plunged into huge poverty traps. If you only get benefit, if you're poor, first you have to prove you're poor. Then, of course, you have to prove that you're poor not because of your own fault. If you are in those circumstances and you eventually get a benefit, you then find that you're being told you have to take low-wage jobs. The low-wage jobs that the precariat can get happen to be casual and low-paid. I've looked up your figures in the Denmark. If you go from benefits into a low-wage job, you effectively have a marginal income tax rate of 85%. 85%. But don't think you're too privileged. It's the same everywhere else. It's the same in Germany. It's the same in Britain. I've got figures from those countries over 80%. What that means is going from benefits into a low-wage job, you only get an extra 20%. And you're meant to take it. I then put a following test to my students and say, look, but they were going into a short-term job, paying minimum wage or whatever. Three or four weeks later, they may be out of the job and have to start the whole process again of applying, satisfying the bureaucrats to get back with a benefit. A long period where they don't get any benefits, while they're satisfying the bloody questions that they get, you'd be a fool to take that job. Because you can calculate very easily that many will be lower incomes from taking a job than staying on those low benefits. That's the reality of the precariat. And then they have sanctions and punishments and etc. So you've got the end game where you have a huge growing precariat. And I've been asked not 50 but 400 places to talk to precariat groups around the world. They're very angry. They're very bitter. And I agree with them. I agree because our politicians are not taking any notice. I had the privilege of being invited to address the disruption council of your government. The Prime Minister was sitting here and it was in herning. Is that right? Herning. A day long retreat. And the disconnect was such that I said to the Prime Minister over a coffee, I said there must be two Denmarks. There must be two Denmarks. There's the Denmark that I hear you talking about and then there's the Denmark that I get from a lot of people who write to me and ask me to go and speak at the workers museum and various places where they tell me a totally different story. Must be two Denmarks. Can't be the same. But it's not bad here yet. It's much worse in many other countries but you cannot be an island. It's going to hit and it's growing. There is a large precariat in Denmark. Now their process is very interesting politically. I gather most people here are political scientists because in being a class in the making the precariat is actually consisting of three distinctive groups. The first group are what I call the attivists. They're the ones who look back to what their parents had or their communities had when industry was strong, when the proletariat ruled the state. They look backwards and they listen to too many stories of misrepresentation of some golden age in the past which it wasn't golden. Nowhere as far as I remember. But they look back and they say we haven't even got that. And these are the ones who don't have a lot of education and they listen to the neo-fascist populists on the far right. They are banner-holder of Donald Trump. We've just seen in Italy where we've seen the attivists voting for the Liga and partly for the movement to Cinque Stelle. We're seeing that attivistic group behind Brexit, behind many forms of racist ex-senophobia. The next group is what I call the nostalgics. These are the migrants, the minorities, the disabled who are feeling they don't have a home. They lack a present. The first group feels they've lost a past. The second group feels they don't have a home. Anywhere, here, there, anywhere else. Now this group everywhere is growing. They won't vote for neo-fascist populists, but they're politically disenfranchised. They don't have a vote. They don't have a feeling that they belong in the state. I'm a migrant. I know that how that feels, but I'm a fortunate one. There are millions and millions of people who are disenfranchising and they are marginalised. This is the nostalgics. And then there are the progressives. These are mainly young, predominantly women and educated who went to college and university like this beautiful place and they're promised by their parents and their teachers and their lecturers, get a good degree and you will have a future, a career. And they come out with debts, disillusion, and the majority look around and they don't have a future. It's a lie. And they know it's a lie. Now this group also won't vote for the neo-fascist populists, but they won't vote for the old social democrats either who are promising them yesterday. They won't vote for the establishments, but they're looking for a new progressive politics of paradise. They're looking for the enlightenment values. They're looking for a new way of organising society. They don't look back with wonderment at the old welfare state. Sorry, we have to be honest to ourselves. The achievements of the welfare states in the middle decades of the 20th century were fantastic, but it's not appropriate for this new system of fragmentation and the progressive part of the precarious want a life of work, a life of developing themselves through their work, a life of different forms of activity. They want to be an artist. They want to be creative. They want to be an entrepreneur. They want to be a portfolio of activities where they feel a sense of control. Now that type of life is not in the vision of the old social democrats. The old social democrats want everybody to be in full-time jobs reporting to a boss in the morning. Yes sir, yes sir, yes sir, I'll do a job. I'm sorry, but when I hear unions saying that hey mates, you've lost it, and they have lost it. But the precariat is not idle, they're not disruptive, they want to have a better future. And we have to design a new income distribution system for the 21st century. I won't mention beyond the words, a basic income has to be part of that system. We have to dismantle rentier capitalism, so the surplus, the capital is distributed as part of the commons. A commons in which every individual counts equally. Our commons is our commons. Fundamentally, as my book on basic income argues, the fundamental reason for arguing for a basic income is a matter of social justice. Not whether it's a more efficient or less efficient or better system of welfare. It's a matter of social justice and freedom. And the old welfare states, if we're honest, did not give much attention to freedom. Do your duty, your famous work line, do your labour. And if you don't do your labour, you're ungrateful, so I'm going to take away your benefits. It's a paternalistic directive. It had many good intentions, but it's passed itself by date, and we have to see a fundamental reform. I thank you very much for listening. I hope the perspective which is in my books, as I say, I've got some downstairs, is one that you can at least understand. But I think every new progressive era has been led by the demands and aspirations of the emerging mass class. Today it is the precarious. Thank you very much.