The LOCUST and the BEE The LOCUST and the BEE PREDATORS AND CREATORS IN CAPITALISM’S FUTURE Geoff Mulgan PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2013 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu Jacket photographs: Desert locust: (Schistocerca gregaria), laboratories in Department of Zoology, University of Cambridge, UK, 2009 Bee: © irin-k Courtesy of Shutterstock All Rights Reserved Second printing, and first paperback printing with a new afterword by the author, 2015 Paperback ISBN 978-0-691-16574-5 The Library of Congress has cataloged the cloth edition of this book as follows Mulgan, Geoff The locust and the bee : predators and creators in capitalism’s future / Geoff Mulgan p cm Includes bibliographical references and index ISBN 978-0-691-14696-6 (hardcover : alk paper) Capitalism—History Economic history Economics—Philosophy I Title HB501.M837 2013 330.12'2—dc23 2012024145 British Library Cataloging-in-Publication Data is available This book has been composed in Adobe Caslon Pro Printed on acid-free paper ∞ Printed in the United States of America 10 Contents CHAPTER After Capitalism CHAPTER Barren and Pregnant Crises 17 CHAPTER The Essence of Capitalism 28 CHAPTER To Take or to Make 52 The Roles of Creators and Predators CHAPTER Capitalism’s Critics 79 CHAPTER Anticapitalist Utopias and Neotopias 104 CHAPTER The Nature of Change 116 How One System Becomes Another CHAPTER Creative and Predatory Technology 145 CHAPTER The Rise of Economies Based on Relationships and Maintenance 172 CHAPTER 10 Capitalism’s Generative Ideas 198 CHAPTER 11 New Accommodations 230 or How Societies (Occasionally) Jump CHAPTER 12 Outgrowing Capitalism 280 Afterword to Paperback Edition 289 Notes 297 Acknowledgments 329 Index 331 The LOCUST and the BEE Chapter After Capitalism the question of what might come after capitalism appeared to have been permanently parked, deemed about as sensible as asking what would come after electricity or after science Capitalism looked unchallenged Global markets had pulled China and India into their orbit The medievalist fringes of Islam and the ragged armies that surround global summits jostled to be capitalism’s last, enfeebled, challenger Multinational companies were said to command empires greater than most nationstates, and in some accounts had won the a liation of the masses through brands, with Coke, Nike, and Google displacing the red ag and the raised st Religious institutions were being transformed into highly pro table enterprises, marketing a ood of multimedia products to the faithful Communist leaders were mutating into investors and entrepreneurs in the booming cities of Shanghai and Shenzen Nature was being privatized, whether the DNA of rare insects or the rain forests of South America, and mining was advancing from the land to the oceans, and then to space That China had doubled its GDP in ten years, a task that took the United States more than forty years to accomplish in the twentieth century, and Britain more than fty years in the nineteenth, suggested a global economy undergoing dramatic acceleration, and a system so superior to its competitors that all argument was closed There remained no shortage of dissatis ed and skeptical opponents But the serious dissidents and critics were marginalized Fidel Castro, embargoed on his island, was growing old, sick, and irrelevant, Ayatollahs in Qom in Iran had tried and failed to export their alternative in the 1980s and were now losing the battle for the hearts and minds of their young people, who were secretly partying in the suburbs of Teheran The counterculture that had challenged capitalism in the late 1960s, o ering love, peace, and authenticity, had been largely co-opted into a business ethic of open shirts and jeans, carefully allied with ruthless attention to the bottom line It seemed that the war was over, and that capitalism had won Yet the lesson of capitalism itself is that nothing is permanent: “all that is solid melts into air,” as Karl Marx had put it Within capitalism there are as many forces dynamically undermining it as there are forces carrying it forward Creative destruction is its nature, not an unfortunate side e ect We cannot easily predict what capitalism will become But we cannot sensibly pretend that it will continue forever For most of the 170 years that the term capitalism has been in use, it has been accompanied by furious debate about what it might evolve into Utopians o ered elaborate descriptions of what a future society might look like, without money or pro t Theorists showed how capitalism was just a phase in humanity’s evolution—like feudalism, a necessary staging post but not one you would want to be stuck in ONLY A FEW YEARS AGO That debate went largely silent after 1989 If part of the reason was capitalism’s apparent triumph, the other was a failure of theory The year 1989 marked a victory for economics over sociology and for the claims of the market as a vehicle for human progress.1 Yet although the intellectual tools of economics are good at explaining how non-market economies might become capitalist, and even better at explaining how change happens within markets through the rise and fall of businesses, sectors, and technologies, they o er little guidance as to how a capitalist market economy itself might evolve into something different My aim in this book is to provide tools for thinking about capitalism as a system in motion, rather than one which, in its fundamentals, has come to a stop I began writing it at the high point of market euphoria in 2007, and continued through the crisis that began the next year and still shows few signs of coming to an end My main message is simple Capitalism at its best rewards creators, makers, and providers: the people and rms that create valuable things for others, like imaginative technologies and good food, cars and healthcare which, at their best, delight and satisfy Its moral claim is to provide an alternative to the predatory, locust-like tendencies of states and feudal rulers It rewards the people who work hard and innovate, the human equivalents of industrious bees, and by doing so makes everyone better o , more than any other economic system in human history But capitalism also rewards takers and predators, the people and rms who extract value from others without contributing much in return Predation is part of the everyday life of capitalism, in sectors as mainstream as pharmaceuticals, software, and oil, where people’s money, their data, their time, and their attention are routinely taken in fundamentally asymmetrical exchanges It’s commonplace in the behavior of slum landlords and loan sharks, in pornography, and prostitution Beyond the boundaries of the law, organized-crime syndicates extort hard-earned money and fuel addiction to drugs Within the law, a large proportion of nancial activity exploits asymmetries to capture rather than create value, and over the last twenty years that proportion rose, as capitalism shifted the balance of returns away from production and innovation and toward speculation These problems aren’t new The historian George Unwin attributed the failure to turn the dynamic invention and entrepreneurship of sixteenth-and seventeenth-century England into an industrial revolution to “the feverish delusions of speculation and the sel sh greed of monopoly” that overshadowed honest enterprise and sucked resources away from new technologies and manufacturing.2 Adam Smith was acutely aware of capitalism’s dual character, and wrote extensively about the temptations to collusion and exploitation that can be found in markets Two centuries later, some of the sharpest thinking in modern economics has grappled with the complexities of “economic rent” and predatory behavior, and why these seem to be ampli ed in economies based much more on information and knowledge.3 Political scientists also have shown the ubiquity of predatory behavior, and have shown that the tension between productivity and predation explains much about the uneasy politics that has always surrounded capitalism, and why the liberal dream of markets left to govern themselves turned out to be a chimera.4 Yet much writing about the economy, and capitalism, is either ignorant or oblivious of these tensions The critics of capitalism are blind to its creativity, while its complacent advocates resist any suggestion that the system might sometimes reward predation, or that the creation of value for some might destroy it for others All over the world, the dramatically widening asymmetries of power, wealth, and reward that have accompanied the shift to economies based on information and knowledge have left societies richer but also stretched and uncomfortable Capitalism has never been as creative as it is now But it has also never been as predatory The result is a landscape in which politics and economics face radically di erent challenges to those they faced at the high point of the industrial era, challenges that they nd hard to acknowledge, let alone to solve No one legislated capitalism No one planned it Even the word was invented by its critics and not by its advocates The capitalism described by Adam Smith has only a tenuous connection to the capitalism of today Yet capitalism is for all that a common property, part of the world’s commons, like literature, science, or the great religions It is a system with extraordinary power, and we should all be interested in where it is heading As the English poet Matthew Arnold said of freedom: it is a very good horse to ride, but you have to ride it somewhere Modernity has spread many things around the world: the rationality of science; the predictable rule of law; and the messy, but generally robust, forms of democracy Yet none of these is as controversial or as contested as capitalism, the other system that spread in tandem with them.5 Capitalism has run into repeated crises of pro tability But it has also run into periodic crises of meaning Amidst every capitalist economy there are anti-capitalist movements, activists, and even political parties, in a way that there are no longer anti-democratic movements, activists, and parties There are hundreds of millions of skeptics and cynics, who look with distaste on the bland reassurances of corporate advertising, dissidents in their heads even if not on the streets For all its achievements in raising living standards, capitalism has, quite literally, failed to make enough sense, not just for the losers, but often for the winners too For all its success in satisfying what some Africans call the “lesser hunger,” the hunger for things, it has failed to satisfy the “greater hunger,” the hunger for meaning The many crises of pro tability that have punctuated capitalism’s short history led to compromises and adaptations, mainly with governments, and the crises of meaning too have led capitalism to compromise with its critics to survive Again and again capitalism has had to be remade, its energies channeled, tempered, and constrained in new ways, whether by the creation of welfare states and public health systems, or by laws that ban the sale of everything from drugs to body parts, unsafe foods to public o ces Sometimes it has tried to adopt its critics’ ideas as its own, for example, presenting the corporation as a religion, or as a place where hierarchies are overturned and bureaucracy is rejected It has presented itself as a force for equity, for saving the environment, and even for solving the world’s social problems Always the challenge has been to make it work, not just in a narrow economic sense, but also cognitively, as a system that has meaning for the people within it There are many possible futures for capitalism Predation could become more aggressive with new monopolies around energy, natural resources, or intellectual property backed up by state power and helped by the shift of capitalism’s center of gravity to the east Capitalism could deepen, turning anything from genes and tunes to the ocean oor into property With ubiquitous data and networks every fact, however private, could become a commodity in a world where the real and the virtual merge But my interest lies in exploring possibilities that align capitalism more closely with life, that help it to enhance, to enrich, and to enliven, and to overcome its de ciencies of meaning and sense As I show, capitalism has thrived in part because of the radical ambiguity of its de ning ideas that o er immense rewards to predators but also o er the chance for everyone to be a creator, a maker, and a provider Latent within it, I suggest, are radically di erent ways of thinking about growth, value, and entrepreneurship, as well as love and friendship Through the course of the book I therefore set out some of the tools with which we can think and act to bring these to fruition Methodologically that involves shifting between di erent scales—from the micro to the macro and back again The method mirrors what I take to be the pattern of social and economic change, a constant iteration between the speci c and the general, as well as between the bottom and the top of societies, the lived world of individuals, organizations, and the world of aggregates Crises speed up this to and fro Institutions and nations respond to crises at rst with urgent attention to the symptoms they see before their eyes: the businesses going bankrupt, the workers losing their jobs, or the homeowners being dispossessed Some never get around to dealing with the causes, which, as I show, often have their roots in overreach by predators and free riders seeking to capture value that they don’t create, whether in the form of rising technology stocks, land prices, or cheap debt But some make the most of crises to heal themselves, dealing with otherwise ignored ailments Indeed, one of the de nitions of leadership is the ability to use the smallest crisis to the greatest e ect, and our hope must be that new accommodations will grow out of the current crisis and address some of its fundamental causes Yet with much of the developed world facing the prospect of a long period of low growth and stagnant incomes for much of the population, few if any political parties can o er dent accounts of where prosperity, the good life, and good jobs will come from This failure risks worsening an already toxic level of political mistrust and opening the way toward lurches to populist authoritarianism, and a search for scape goats rather than answers The need for political and economic creativity is as pressing as it has ever been No one can predict the precise forms new accommodations will take, whether at a global, national, or local scale But it is possible to sketch the elements they might draw on, and I hope that any reader will by the end of the book have a sense of other possible worlds that are within reach, and of how much our views of what wealth is, how wealth is created, and how wealth should be used, may be transformed Christianity, anti-materialism in, 85 Christensen, Clay, 134 Churchill, Winston, 17–18 circular economy, 183–84 circular production, 254–57 Cisco, 25 Citicorp, 138 civil society, 187–92, 215, 289n.1 Clark, L A., 314n.39 Clark, T J., 137–38 Cleantech, 181 climate, economic growth and, 54 cloud-computing, 43, 175, 243 Club of Rome, 123 Cobbett, William, 89 Coca-Cola, 33 Cochrane and Campbell collaborations, 194 cognitive externalities, 59 Colding, J., 291n.25 Coleridge, Samuel Taylor, 89 collaborative consumption platforms, 252–53 collective intelligence/thinking: the Internet and quality of, 312n.16; orchestration of in new accommodations, 244–45, 275–76 Coltrane, John, 141 commons, tragedy of, 211–12 communism, 158 community as victim of capitalism, 86–87 Community Reinvestment Act, 324 Companies Act of 1862, 204 connectedness, 292n.9 connexity, 204 conservatives, criticism of markets by, 87–88 consumption: capitalism’s vulnerability to, 121–22; efficiency/productivity of, 219–20; the green economy and reduction of unnecessary, 183; innovation around the edges of, 182; sociability, as route to, 214–15; sustainable and collaborative, shift towards, 251–54; unequal wealth and productivity of, 272 corporate governance, 191 corporate social responsibility, 193 corporatism, 158 corruption, economic growth and, 55–56 Couchsurfing, 186, 253 coverture, 70 Cowen, Tyler, 303n.7 creation cycles: pattern of, 127; in Perez’s account of technological change, 156–60 credit: etymology of, 42; extension to people with low incomes, 49–50; the financial crisis of 2008 and, 24; money and, the role in capitalism of, 42–43 crises: the acceleration of solutions by, 27; of capitalism, 4–5, 284; distinction between barren and fertile, 22; financial crisis of 2008 (see financial crisis of 2008-2009); speed of change, impact on, critics of capitalism, 4–5, 9, 79–81, 282–83; change and long term dynamics, theories of, 117–19; destruction of the truly valuable, 84–87; empowerment of the strong over the weak, 81–84; happiness, undermining of, 93–99; human nature, appeal to one-sided version of, 101–3; life, threat to, 99–101; mindlessness, promotion of, 87–93 See also predation; utopias Crowdcube, 249, 316n.25 crowd-sourcing, 143 Cruz, Teddy, 304n.22 Cuba, 183–84 cultural contradictions of capitalism, 123–27 culture, economic growth and, 54–55 cyberpunk, 109 Dasgupta, Partha, 75 Davies, John, 73 da Vinci, Leonardo, 165 Davos, Switzerland, World Economic Forum, 29–30 declarations, 41 decoupling, 256 Defense Advanced Research Projects Agency (DARPA), 73, 240 See also Advanced Research Projects Agency democracy, capitalist markets and, 49–50 demography, birth rates and imbalances in, 119–20 Deng Xiaoping, 233 Denmark: Mindlab, 192; personal accounts provided by government, 250; Sundhed, 310n.29 Derrida, Jacques, 119 Deterding, Sebastian, 261 Dewey, John, 197, 235 Dicey, A C., 204 digital constitutional convention, 244 Disraeli, Benjamin, 87–88 divine will, productivity of capitalism as, 62 Dondi, Giovanni di, 149 Douglas, Mary, 214 Drucker, Peter, 173 Dubai, 23 DuPont, 33, 162 dystopias, 146 Easterlin, Richard, 94–95 Eastwood, Clint, 283 eBay, 60, 175 Ebbsfleet United, 253 ecological wealth, 203 economic growth: GDP as measure of, 200–203; as a generative idea of capitalism, 198–203; happiness and, 93–99, 274–75; knowledge as decisive for, 56–60, 236–38; patterns of, 127–28; sustainability and, 199–200; theories of/explanations for, 53–62 economics: environmental, 218; equilibrium vs dynamic markets, debate over, 297n.29; GDP, invention of, 77, 202; growth, tools for judging the quality of, 200; knowledge defined by legal rights, 241–42; laws of, 61; monetizing social value, 218–19; new thinking needed from, 77–78; optimization replaced by resilience in, 266; post-capitalist economy, inability to account for, 2; realistic and modest view of, 286 economy, the: capital without the negatives of capitalism, need for, 283–84; circular, 183–84; civil, 187–92; crises of, 135 (see also crises); etymology of, 70; green, 181–84; households in, reinvigoration of, 184–86; predation of systems that support the, 74–76 (see also predation); relational (see relational economy); service, shift from manufacturing to, 120–21, 176; silver, 167 ecosystems: climate change, discount rates applicable to, 228; cyclical patterns of, 127; destruction of, capitalism and, 122–23; economic thinking and metaphors of, 101; predation and, 75–76; sustainability and economic growth, 199–200; value, as producers of, 77–78 See also natural environment education: for collaboration and creativity, 262–64; economic growth and, 54; for-profit firms providing, difficulties of, 187, 309n.14; institutions of, needs regarding, 238–39 efficiency: change and, 130–31, 135–37; waste, implications of driving out, 218 Efremov, Ivan, 112 Egypt, 96 Eisenhower, Dwight, 231 Elderplan, 308n.10 electric cars, 256 Elias, Norbert, 205 Ellickson, Robert, 213 Elster, Jon, 293n.20 employment See labor energy: behavioral change regarding use of, 196; changing systems of, efficiency and, 131; ecological vs economic efficiency regarding, 136–37; feed-in tariffs for, 255; fossil fuels, future use of, 292n.10; the post-Great Depression economy, role in, 159; reductions in usage of, 183; smart energy grids, 256–57 Engels, Friedrich, 84 England See United Kingdom Eno, Brian, 115, 142 entrepreneurs and entrepreneurship: definitions of, 220–21, 292n.3; economic growth and, 55; in France, 313n.32; as generative idea of capitalism, 220–23; inequality and, lack of correlation between, 272; predation and, relationship of, 67; role in capitalism of, 32; social change and, 143, 222–23 environment, the See natural environment environmental economics, 218 equality/inequality: accommodations to address, 272–73; capitalism and, 48–51, 81–84; economic growth and, 60–61, 319n.55; global, 299n.2; the golden rule and, 66; income growth and, 298n.39; in Marxist theory and historical experience, 118; performance-related pay and, 271–72; spreading ownership and control of capital, challenge of, 246–47; in the United States, 274 Etsy, 186 Etzioni, Amitai, 134 European Central Bank, 24 European Commission, 2009 Business Panel on Future Innovation Policy, 193 exchange, systems of: money (see money); non-monetary, 269–71, 318n.51 existence values, 78 Expert Patients Programmes, 180 Fama, Eugene, 51 family, the: capitalism, link to, 268; capitalistic, thought experiment regarding, 45; care, raising the status of, 267–69; predation in, 70; time devoted to, 225 fascism, 158 fast food retailing, 185 Ferguson, Adam, 205 finance/financial sector: accountability and transparency in, 248–49; graduates attracted to, 285; innovation, wariness of, 165, 240; microcredit, 195; political parties, contributions to, 93; predation by, 68–69; real economy, separation from, 20–21, 247–48; regulation of, 68; social innovation and, 193–94 financial crisis of 2008–2009: bailouts and fiscal stimulus in response to, 23–27; central bankers’ blindness to signs of, 22–23; endemic crises of capitalism and, 19–20; finance and the real economy, separation between, 20–21; “fixing the future” as a response to, 315n.10; fundamental causes, failure to address, 24–26; in Iceland, 43–44, 278–79; imbalances, explanation focused on, 18–19; monetary fragility demonstrated by, 43; morality and the real economy, separation between, 21–22; optimism and hope,.overreaching of, 23; overlapping crises, leading to, 17–18; pathologies of the real economy and, 19; people in charge, responsibility of, 18; predation at the heart of, 27; public spending reductions, problems of, 26 Finland: North Karelia Project, 195–96; parliamentary committee for the future in, 167; public investment funds in, 192; share of GDP in innovation, 193; technological research strategy of, 164 Fisher, Irving, 270 flows, capitalism and, 34–35 Folke, C., 291n.25 Foxconn, 292n.2 France: cultural contradictions of capitalism in, 124; entrepreneurship in, 313n.32; manufacturing industries in, 121; Nantes, virtual currency in, 270; Sen-Fittousi-Stiglitz report, 203; Systemes d’échange Locaux, 269; utopian writing in, 106–7 Frank, Robert, 98 Frascati Manual, 307n.26 Fraunhofer Institute, 59, 180, 238 freedom, capitalist markets and, 48–49 Freeman, Christopher, 306n.14 free-riding, 67–68 Friedman, Milton, 163 friendship, maximizing, 214–18 Fundacion Chile, 192 Galbraith, John Kenneth, 151 Gamma, 147 Garden City movement, 111 Gates, Bill, 32, 58, 135, 248 GDP See gross domestic product Gellner, Ernest, 302n.2 gender, predation and, 70 General Electric, 33, 60, 256, 297n.24 General Motors, 33, 56, 138 general-purpose technologies, 152–53 generative ideas of capitalism, 198; entrepreneurship, 220–23; growth, 198–203; perfect markets and perfect communities, 207–12; relationships, maximizing friends and, 212–18; sociability, 204–7; time, 223–29; value, measurement, and waste, 218–20 geography, economic growth and, 54 Germany: civil society in, 188–89; GLS Bank, 249; manufacturing industries in, 120; purchasing power of the 60+ generation, 308n.6; settlement instituted by occupying powers, 231; solar power, investment in, 167; the state and capitalism in, 47–48; Talent, 269; unofficial currencies used in, 318n.51; Vauban, 182; work, legal prescriptions regarding, 258 Gilbert, Joseph, 146 Global Alliance for TB Drug Development, 150 Global Footprint Network, 123 Global Impact Investing Initiative, 249 golden rule, 66–67 Goldman Sachs, 100, 303n.6 Google, 60, 217, 259, 296n.22, 297n.24 Gorbachev, Mikhail, 233 Gore Associates, 259 government See state, the Grameen Bank, 195 Gramsci, Antonio, 283 Great Depression: cycles evident in, 157–59; as fertile crisis, 22 Greece, 91–92 green economy, 181–84 gross domestic product (GDP): development of, reason for, 202, 275; Europe’s percentage of world, change in, 14–15; measures of, 200–203, 275 Groupon, 253 growth, economic See economic growth Guatemala, 190 Gutierrez, Gustavo, 85 Haarde, Geir, 18 Habermas, Jürgen, 210 Hall, Peter, 142, 206 Hapoel Kiryat Shalom, 253 happiness: capitalist prosperity and, 93–99; measuring, 274–75; in time, 225 Hausman, Ricardo, 295n.9 Hayek, Friedrich, 45, 107, 117, 239, 315n.11 health care: eHealth portal in Denmark, 310n.29; for-profit firms providing, difficulties of, 187; future trends in, 179–81; QALYS and DALYS, measures of, 219, 227; the relational economy and, 176–81; themes of twentieth-century capitalism in, 179 See also care Heckman, James, 263 Hegel, Georg Wilhelm Friedrich, 129, 213 Heilbroner, Robert, 300n.16 Herbert, Zbigniew, 230 Hirsch, Fred, 202 Ho, Karen, 91 Hobbes, Thomas, 62 Hobsbawm, Eric, 151 Hochschild, Arlie, 175 Holling, C S., 127 home, predation in, 70 Honey-Bee Network, 143 households, 184–86 Howard, Ebenezer, 111 Huawei, 147 Hudson, W H., 108 Hughes, Langston, 79 Hu Jintao, 183 human capital, 315n.6, 315n.12 human nature, 101–3 IBM, 33, 58 Ibsen, Henrik, 190 Icarian societies, 107 Iceland: accommodation, steps toward, 278–79, 294n.27, 319n.60; financial collapse of, 43–44 Icelandic Modern Media Initiative, 279 i3 Education Innovation Fund, 192 IKEA, 186 Immelt, Jeff, 18 India: community activities, percentage of profits spent on, 249; economy of commodities in, 174; higher education, emphasis on, 56; Narayana Hrudalya hospitals in, 178; Open Source Drug Discovery project, 242; reforms of the 1970s in, 233; the rural population’s right to work on infrastructure projects, 234; Universal Identifier Project, 250; walking as a tool for change in, 143 Indonesia, 234 Industrial Technology Research Institute (ITRI), 164 inequality See equality/inequality information theory, 38 inheritance: free-riding and, 68; inequality of wealth and, 83 innovation: alignments in a mature system of, 169; by amateurs before the twentieth century, 162; capitalism and, 167–68; capital markets’ wariness regarding, 165; in capital punishment, 72–73; clusters/networks and, 59–60; consumption, around the edges of, 182; disruption accompanying, 134–35; economic growth and, 56–60; end of life as focus for, 180; equality/inequality and, lack of correlation between, 272; financial, 193–94, 246–47; global collaborations, 241; the government and, 46, 140–41, 148–50; incremental, 130; investing in, responding to financial crisis by, 315n.10; linear view of, 167; new measures of, 193; open, 59; opposition of powerful interests to, 153–54; pragmatism and, 197; reforms to support, 239–41; scripts governing behavior and, 185; skills, role of, 165–67; social, 192–97; systematization of, 162–69; well-defined problems prompting, 165 See also research & development; technology Innovation Index, 193, 296n.13 Institute for Healthcare Improvement, 192 institutions: economic growth and, 55; mindfulness and, 276; new accommodations shaping (see accommodations); predation and, 65–66; systemic crisis and, 138 Intel, 25 intellectual property: innovation and economic growth, as explanation for, 57–58, 296n.15; predation and, 76; weakening case for, 242 interdependence: of banks and the state, 46–47; friendships and, 217–18; hierarchy in capitalism and, 28–31, 35–36; positive result for capitalism of, 206–7 See also relationships interests, powerful: change and, 131–32, 137; innovation, efforts to block, 153–54 International Aids Vaccine Initiative, 150 International Monetary Fund (IMF): costs of 2008-2009 financial crisis, 17, 26; geopolitical shifts accelerated by financial crisis, 291n.19 Internet, the: annual growth of, 34; collaboration, as tool for teaching, 263–64; controls to contain harmful material on, 254; cooperation eclipsed by advertising on, 297n.23; invention of, 57, 73; open source software used on, 242; organizing principles of, 153; predation and, 147–48; “Travel Cost Method” applicable to, 313n.30; web aggregators, predation by, 76 interpretation, crises of, 136, 139 inversion, technique of, 104–5 Iran, 120 Ireland: empty offices and homes in, 23; financial burdens on citizens, 26; GDP accounted for by construction in 2006, 19 Islam: anti-materialism in, 85; capitalism and, 30–31 Israel: IT industry in, 166; R&D expenditure as a percentage of GDP, 161, 164 Italy: Banca del Tempo, 269; Banco Popolare Etica, 249, 316n.26; civil society in, 188; cooperatives in, 309n.16; Misthos, 269; specialized banks in, social innovation and, 192 iTunes University, 238 James, William, 197 Japan: cultural contradictions of capitalism in, 124; economic stagnation in, 199; Health Care Currency, 269–70; manufacturing industries in, 120; new accommodation, failure to establish, 234; People’s Life Indicators, 274; population growth rates in, 120; R&D expenditure as a percentage of GDP, 161 Jefferson, Thomas, 47 Jobs, Steve, 58 Johnson, Samuel, 72 Kahn, Edgar, 318n.53 Kaiser Permanente, 187, 192 Kane, Pat, 260 Kassab, Gilberto, 252 Kay, John, 57–58 Ketley, Richard, 189 Keynes, John Maynard, 77, 121, 141, 277, 293n.21 Khosla, Vinod, 206 Khrushchev, Nikita, 199 Kibbutzim, 105 Kickstarter, 249, 316n.25 King, Mervyn, 22–23 Kirzner, Israel, 221 Kiva, 193 knowledge: accommodations organized around, 241–45; degradation of, 20–21; economic growth and, 56–60, 236–38; as public good, 59 See also innovation; research & development; technology Kondratiev, Nikolai, 151, 156 Korea, Republic of: fertility rates, decline in, 119; green economy in, 181–82; Ohmynews, 254; redistribution of wealth and land, economic benefits from, 61; technological research strategy of, 164–65; television channels broadcasting live computer gaming tournaments in, 49; well-being and economic prosperity, inverse relationship of, 96 Korten, David, 113 Kropotkin, Pyotr Alexeyevich, 109 Kuhn, Thomas, 134 Kurzweil, Ray, 146 labor: cultural contradictions of capitalism and, 125–26; predation in the employer-employee relationship, 69–70; social economy/charities, number of people employed in, 309n.17; unpaid/volunteer, 188, 225–26; work, new accommodations regarding, 257–60 Lafargue, Paul, 110 Lawes, Sir John, 145–47 laws and rules, 33–34 lawyers, cost of, 33 Lefebvre, Henri, 35, 292n.14 LeGuin, Ursula, 112 Lenin, Vladimir Ilyich, 158 Lerner, Gerda, 298n.41 Liberation theology, 85 life: as higher value than money or consumption, 224; opposition of capitalism to, 99–101 Liftshare, 252 Limits to Growth, The (Club of Rome), 123 Lipietz, Alain, 113 Lipsey, Richard, 152 List, Friedrich, 47–48, 56 Litan, R., 294n.35 Locke, John, 73, 105 locusts, predatory side of capitalism symbolized by, 15–16, 297n.28 London Great Exhibition of 1851, 108 “long now,” 277 Louis XIV (king of France), 208 Luhmann, Niklas, 312n.20 Macchiavelli, Niccolo, 137 Mandeville, Bernard, 15, 89, 293n.21 Marchiori, Massimo, 296n.22 market, the: calculation and care in, 213–14; capitalism and, 28; collective decision making, as special case of, 210; mindlessness of, 88–89; pure idea of, 38; rules and laws as basis of, 33–34; sociability and civility, requirement for, 205 MaRs, 192 Marx, Karl: on capitalism, 15, 90, 92, 99, 108; circumstances, allowing for, 13; false consciousness, 72; “general intellect,” 56, 201; historical change, theory of, 117–19; on impermanence, 2, 116; utopianism and, 110, 112 Maurice of Nassau, Prince of Orange, 73, 307n.35 Maxmin, Jim, 308n.11 McLuhan, Marshall, 76 measurement: explosion of, 218–19; pathologies of capitalism from commitment to, 90–92 Medicines for Malaria Venture, 150 Meisenzahl, Ralf, 307n.30 Meltzer, Allen, 151 Mencken, H L., 99 Mercer, Louis Sebastien, 106 Merck, 25 Metcalfe’s Law, 306n.19 Mexico, 234, 269 military, predation and the, 73–74 Mill, John Stuart, 205 Miller, Arthur, 105 mindfulness, 276–77 mindlessness, 87–93 minds: change and, 132, 137–38; predation of, 70–72 Minsky, Hyman, 291n.17 Mises, Ludwig von, 221 Mokyr, Joel, 153, 307n.30 money: assets vs fiat, currency based on, 43; exchange systems not based on formal currency, 269–71, 318n.51–53; as frozen time, 224; history and role of, 42–45; as a means to an end, 223–24; shift in the organization of, 250–51; wise to not trust too much in, 45 monopoly: information technology and, 148; in Marxist theory and American history, 118; predation and, economic theory on, 63 Moore’s Law, 306n.19 moral hazard, 25 morality: blindness cultivated by the investor and trader regarding, 88; of capitalism, 39–42; the financial crisis of 2008 and, 21–22; of markets, 248; represented value and, 42–45 (see also value) More, Thomas, 73, 106, 111, 273 Morgan, J P., 135 Morocco, 168 Morris, William, 108, 110–11, 113 Morse, Samuel, 149 M-PESA, 193–94 Mulgan, John, 232 Münterfering, Franz, 297n.28 Musil, Robert, 28 Myrdal, Gunnar, 54 Nakasone, Yasuhiro, 234 Napster, 59, 153 Nash, John, 211 Nash equilibrium, 211, 312n.19 National Institute for Clinical Excellence, 195, 243 National Institutes of Health (NIH), 163 National Science Foundation (NSF), 162–63 National Time Accounting, 227–28 natural capital, 75 natural environment: behavioral change regarding, subtlety required for, 196–97; capitalism’s tentative movement regarding, 255; depletion of, vulnerability of capitalism to, 122–23; growth as part of, 199–200; predation and, 75–76, 128, 148 See also ecosystems; green economy nature: capitalism and, comparison of, 100–101; human (see human nature) negative externalities, 201–2 Nesta, 192 Netherlands, the, 231, 239 Neumark, David, 301n.41 New York: Brooklyn, Member to Member Elderplan, 269; the High Line, 304n.22; Ithaca HOURS, 269 New Zealand, 159, 232 Nietzsche, Friedrich, 27, 72 Nordhaus, William, 53, 58 North, Douglass, 55 North Karelia Project, 195–96 Norwegian Government Pension Fund, 249 Obama, Barack, 24 OECD See Organization for Economic Cooperation and Development Offer, Avner, 94 Olson, Mancur, 64, 297n.33 Olympics, “brand exclusion zone” in the London, 71 Omidyar, Pierre, 206 open innovation, 59 optimism: of capitalism, 23, 92; cultural contradictions and, 126–27 Oresme, Nicolas, 37 Organization for Economic Cooperation and Development (OECD): education and economic growth, linkage of, 54; mortality and spending on health, inverse correlation of, 178; Wikiprogress, 195 Orwell, George, 127 Owen, Robert, 111–12 ownership, virtues of widespread, 246 Pacey, Arnold, 149 Pareto, Vilfredo, 83 Paris Great Exhibition of 1900, 108–9 Park, Won-Soon, 192 Patients Like Me, 180 Paul, Lewis, 307n.35 Pauli, Wolfgang, 114 Peer2Peer University, 238 Peirce, Charles, 44, 197 Perez, Carlota, 156–61, 306n.14 perfect equilibrium, 208 performance, crises of, 135–36 permaculture, 113 Perrow, Charles, 18 Peters, Tom, 126 Petty, William, 307n.35 philanthrocapitalism, 93, 300n.19 Piff, Paul, 86–87 Pirate Party, 113 Plato, 106 Plautus (Titus Maccius Plautus), 62 play, 260–61 Polanyi, Karl, 33, 69–70 Popper, Karl, 129 population growth rates and generational relations, 119–20 positional goods, 202 positive and negative affect scale (PANAS), 314n.39 positive externalities, 200 Postlewaite, Andrew, 301n.41 power laws, 83, 155 Powers, Richard, 58 pragmatism, 197 Pratham, 195 predation: of capitalism, 3–4, 8–9, 62–72; cycles of, 127–28, 156–60; defense of by predators, 131; economic theory on, 63–66; the financial crisis of 2008 and, 27; future opportunities for, 76–77; the golden rule and, 66–67; ideology, victims’ acceptance of, 132; the means of destruction and, 72–76; nonprofits provide some assurance against, 187–88; rent-seeking, 64–66 See also critics of capitalism preventive investment, 310n.27 Prince, Chuck, 89 production, shift to new models of, 254–57 productivity: of capitalism, 8; as divine will, 62; economic growth, efforts to explain, 53–62 (see also economic growth); of life beyond work, 225–26; as moral dimension of capitalism, 39–42 product life cycles, 127 property rights: investment incentives and economic growth, contribution to, 58–59; new accommodations needed regarding, 242–43 public choice theory, 64 Rajan, Raghuram, 246 Rand, Ayn, 72 Rand Corporation, 187 Rawls, John, 105 R&D See research & development R&D Magazine, 150 Reagan, Ronald, 46, 272 reality, representations of, 38–39 reciprocity, ideal of, 208–9 regulation, predation and, 246 relational economy: capitalism and, 186–87; civil economy and, 187–92; friendship, maximizing, 214–18; the green economy and, 181–84; health care and, 176–81; households and, 184–86; the material economy and, 215–16; movement towards, 173–76, 184; social innovation and, 192–97 relational state, 317n.39 relationships: as capitalist generative idea, 212–18; change and the bonds of, 133, 138–39; time and, 229; value of social, measuring, 203 religion: anti-materialism in, 85–86; capitalism and the Protestant ethic, 39–40; cultural contradictions and, 126; language of and modern capitalism, 187 rent-seeking, 64–66 See also predation representations: reality vs measurement and, 90–92; of value, lived value vs., 36–45 research & development (R&D): defined in Frascati Manual, 314–5n.26; economic growth and, 56–57, 315n.12; medical, 181; systematization of innovation and spending on, 162–65 See also innovation; knowledge; technology resilience, 265–67, 291n.25 resource mobilization theories, 304n.28 ReUse, 304n.22 rhythmanalysis, 292n.14 Ricardo, David, 281, 299n.1 Roberts, Richard, 307n.30 Rockefeller, John D., 62, 118 Rockefeller Foundation, 57 Rockström, Johan, 298n.47 Rodrik, Dani, 233–34 Roosevelt, Franklin Delano, 140, 231, 270 Rousseau, Jean-Jacques, 235, 314n.4 Rowan, Nick Wingham, 316n.29 Russia: new accommodation, failure to implement, 234; predation in, 82; state capitalism in, 119 Ruttan, Vernon, 294n.36 Sachs, Jeff, 295n.4 Saint-Simon, Claude-Henri de, 106–7, 115 salutogenic approach, 262, 265 Sarkozy, Nicolas, 203 Saunders, Peter, 319n.55 Savanarola, Girolamo, 251 Sawayaka Welfare Foundation, 269–70 Say, Jean-Baptiste, 32 Schiller, Johann Christoph Friedrich von, 108 Schon, Donald, 134 Schopenhauer, Arthur, 10, 134 Schramm, C., 294n.35 Schumacher, E F., 85 Schumpeter, Joseph: on bureaucracy and democracy, 61; on capitalism, 18–19; on entrepreneurship, 32, 220–21; on the persistence of social structures, 132; reformers and innovators, on the difficulties facing, 134; the rhythm of capitalism, 151, 156; systematization of innovation, lament on, 163 Searle, John, 41 Second Life, 261 self-interest, distinction between exploitation and, 67 Sematech, 163 Semler, Ricardo, 259 Sennett, Richard, 89–90 settlements See accommodations Shackleton, Ernest, 266 Shannon, Claude, 38, 293n.17 share buybacks, 291n.24 shareholder activism, 248 Shodh Yatra, 143 Siberia, 295n.5 Sigurdardottir, Johanna, 278 Silicon Valley, 162 silver economy, 167 Simmel, Georg, 223 Simon, Herbert, 88 Singapore, 164, 239 Skype, 60 Small is Beautiful (Schumacher), 85–86 smart energy grids, 257 Smith, Adam: on capitalism, 3–4, 15; capitalism’s claims not evident to, 281; on consumption as the end of production, 251; design of systems and institutions, beauty of, 38; empire and colonization as concerns of, 74; income, types of, 64; instinctive conservatism of, 82; invisible hands of markets and legal/fiscal arrangements, 222; List and, comparative influence of, 47; markets, not capitalism, championed by, 79; markets dependent on mutual trust of strangers, 205; markets that clear, seeking of perfection in, 208; on owners being managers, 204; utility as bestower of beauty, 293n.16 sociability of capitalism, 204–7 social capital, 133, 138 social construction of mindfulness, 276–77 social entrepreneurship, 222–23 Social Impact Assessment methods, 218–19 social innovation, 192–97 Social Innovation Camps, 316n.21 social investment, 248, 310n.27 socialists, famous comment about, 81 social policy, 311n.31 social psychology, 102 Social Return on Investment, 219 social wealth, 203, 216, 275 Soete, Luc, 306n.14 Soros, George, 23 South Korea See Korea, Republic of Spain: civil society in, 188; cooperatives in, 309n.16; Mondragon group, 259 spillovers, 58 SS8, 147 St Georges Hill, 111 Stalin, Josef, 151 Standard & Poor’s, 91 Stark, David, 292n.3 state, the: banks and, interdependence of, 46–47; capitalism and, 45–48, 295n.37; entrepreneurship, support of, 222; experimentation and change by, 140–42; government intervention, public opinion regarding, 289n.5; infrastructures for payments and financial transactions, 250; innovation and, 56–57, 148–50, 239–41; lobbying and buying of politicians, 65; monarchies and empires as dominant forms of, 14, 285; predation by, 76, 128; relationships and, 317n.39; shaping of minds by, 132; space for creativity, protecting, 154; systemic crisis and, 138 Stockholm Environment Institute, 123 Stockholm Syndrome, 71 Stoppard, Tom, 128 Strategic Computing Initiative, 163 Strauss, Leo, 72 Stuxnet, 76 success, capitalism’s vulnerability to, 120–21 Summers, Lawrence, 61, 198 Sunlight Labs, 316n.21 sustainability: consumption and, 251–54; economic growth and, 199–200 See also ecosystems; green economy; natural environment Sutton-Smith, Brian, 260 Sweden: the Great Depression, impact of, 159; innovativeness of economy, tax rates and, 272; patient hotels in, 178; retail productivity in, 186; Saltsjðbaden accommodation, 230–31 Swinnerton, Sir John, 40 Swiss Federal Institute of Technology, 81 Switzerland: Alternative Bank, 249; Davos, World Economic Forum, 29–30; UBS, bailout of, 24 Sybil (Disraeli), 87–88 synthetic biology, 170 Taiwan See China, Republic of Taylor, Frederick, 110 technology: capitalism and, 145–46, 149–50; clean, language of, 255; the Cold War and expenditure on, 163–64; collaboration across sectors in developing, 149–50; double (predatory and productive) character of, 155; favoring, the question of, 146–48; future integration of the real and virtual worlds through, 172; general-purpose, 152–53; the green economy and, 181; ideas and, 169–71; investment in and results of, relationship between, 150; learning curve from growing scale of production, 155; long waves of change in, 151–61; in Marxist theory, 118; military, concentration or dispersal of power by, 305n.2; the paradox of stuff and declining significance of, 172–73, 175–76; Perez’s account of cycles of creation and predation, 156–60; predation and, 147–48; priorities for spending on, 161; science systems and, 161–69; shift from materialist to relational economy, implications of, 168–69; society and, co-evolution of, 154–56; the state’s role in, 56–57, 148–50, 239–41 See also innovation; research & development Tellegen, A., 314n.39 Terman, Frederick, 162 terrorism, youth unemployment rates and, 51 Thailand, 234 Thatcher, Margaret, 13, 233 Thoreau, Henry David, 105 Tilly, Charles, 33, 304n.32 time: measuring value and quality of, 226–27; mindfulness about, 277; non-monetary exchange systems for, 269–71; as primary currency of life, 224–29 Tocqueville, Alexis de, 48 Tolstoy, Lev Nikolayevich, 109 Toyota, 29, 226 trade: capitalism and, 28, 30–31; rules underlying, 33–34 transhumanism, 170 Trichet, Jean-Claude, 23 truth, accommodations and, 243 Tyze, 180 unemployment, predation on the employed and, 70 Unger, Roberto Mangabeira, 236, 238 Union of Soviet Socialist Republics, expansion of debt in, 233 United Kingdom: building society movement in, 189; capitalism and technology, entwined development of, 145–46; capitalism’s organic development in, 47; civil society in, 188–90; Co-operative bank, 249; crises of efficiency, interpretation and, 136; death duties in the early twentieth century, rates of, 273; engineers in eighteenth-century, rewarding of, 166; fertility rates, decline in, 119; financial edge over competitors in the eighteenth century, 42–43; happiness in, 95, 98; John Lewis, 259; manufacturing industries in, 121; markets, Thatcher’s extension of, 233; material and psychological needs, changing pattern of, 308n.3; National Institute for Clinical Excellence, 195, 243; obesity in, 177; Open University, 238; people’s lives, feelings about, 274; post-Great Depression economic and welfare policies in, 159; post–World War II accommodation in, 231; shipbuilding in the mid-nineteenth century, open innovation and, 59; Slivers of Time, 258; Studio Schools, 263, 315n.9; Triodos Bank, 249; utopian writing in, 107–8 United Kingdom Innovation Survey, 305n.8 United Nations, Brundtland Commission, 100–101 United Nations Millenium Ecosystem Assessment (MA) project, 77 United States: “balance sheet weakness” of, 293n.26; capitalism’s organic development in, 47; Citizen Schools, 263; cultural contradictions of capitalism in, 124–25; economy of the 1950s, high tax rates and, 272; Elderplan, 308n.10; entrepreneurship in, 55; financial crisis of 2008, responses to, 23–24; happiness in, 94–95; health care in the economy of, 176–77, 187; higher education, use of human capital and spending on, 315n.6; inequality in, 83, 274; information technology sector, dynamic impact of, 201; investment in innovation, 296n.18; lawyers, cost of, 33; manufacturing industries in, 121; Medicaid spending, end of life and, 180; the New Deal, 231; New York (see New York); post-Great Depression economic and welfare policies in, 159; R&D expenditure as a percentage of GDP, 161; RSF Social Finance, 249; someone to talk to about important issues, percentage of people lacking, 265; “Superpac” Supreme Court decision, 93; Task-Rabbit, 258; technological research strategy of, 162–63 university research, contribution to innovation and economic growth by, 58, 315n.13 Unwin, George, U.S Community Reinvestment Act, 248 utopias: capitalism and, 108–11; characteristics and varieties of, 104–6; eighteenth-and nineteenth-century examples of, 106–8; origins of writing, 106, 273–74; paradox of, 113–14; perfect markets/communities as capitalist, 207–12; practice, efforts to put into, 111–12; recent, 112–13; of science fiction, 146; usefulness of, 114–15 Vaillant, George, 213 value: capitalist destruction of the truly valuable, 84–87; as capitalist morality, 39–42; exchangeable and monetized, capitalist search for, 223–24; exchange systems, 269–71 (see also money); lived, types of goods and, 202; lived vs represented, 7–8, 36–39; represented, money as, 42–45; as root of capitalism, 35–39; social, measurement of, 194–95, 218–19; strategies for maximizing, 52; values, link to, 187 (see also morality) Vasconcelos, Diogo, 315n.10 VASTech, 147 Veblen, Thorstein, 68 vendor relationship management, 244 venture capital, financing of innovation by, 57 Vernadsky, Vladimir, 312n.16 Vinnova, 192 Volcker, Paul, 69 volunteer labor, 188 Vupen, 147 Wallerstein, Immanuel, 298n.43 Wall Street analysts, study of, 206–7 Walmart, 303n.6 Walras, Leon, 208 waste: from inequality of wealth, 272–73; produced by the average person each year, 34; value and, 218–20 Watson, D., 314n.39 wealth as a means, not an end, 271–73 Webb, Sidney and Beatrice, 105 Weber, Max, 40, 54, 72, 90, 91 Weil, Eric, 137 Welch, Jack, 247 welfare: dependence as strongest critique of, 261; new accommodation regarding, 264–65 Wells, H G., 169 Wen Jiabao, 43 Whole Foods, 259 Wikipedia, 242 Wilde, Oscar, 84, 104 Wilson, David Sloan, 217 Winstanley, Gerard, 111 Wolf, Martin, 17 work, new accommodations in the world of, 257–60 World Bank, 19 World Economic Forum, 29–30 World Social Forum, 112 World Wide Web: invention of, 57; technological imaginary and, co-evolution of, 169–70 See also Internet, the Xerox, 58 Zelizer, Viviana, 318n.54 Zopa, 249, 316n.25 Zuboff, Shoshanna, 308n.11 .. .The LOCUST and the BEE The LOCUST and the BEE PREDATORS AND CREATORS IN CAPITALISM’S FUTURE Geoff Mulgan PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2013 by Princeton... privatized, whether the DNA of rare insects or the rain forests of South America, and mining was advancing from the land to the oceans, and then to space That China had doubled its GDP in ten years,... his island, was growing old, sick, and irrelevant, Ayatollahs in Qom in Iran had tried and failed to export their alternative in the 1980s and were now losing the battle for the hearts and minds